1. 5 Global Markets and International Marketing

2. Copyright © Houghton Mifflin Company. All rights reserved.5 | 2 Agenda The Nature of International Marketing Environmental Forces in International Markets Regional Trade Alliances, Markets, and Agreements International Involvement Customization Versus Globalization of International Marketing Strategies

3. Copyright © Houghton Mifflin Company. All rights reserved.5 | 3 The Nature of International Marketing International Marketing –Developing and performing marketing activities across national boundaries Provides growth opportunities Promotes innovation Fosters marketing of better, less expensive products

4. Copyright © Houghton Mifflin Company. All rights reserved.5 | 4 Wal-Mart Around the World Source: “Wal-Mart International Operations,” Wal-Mart, www.walmartstores.com (accessed July 29, 2004). Country# of stores# of employees Argentina114,000 Brazil257,000 Canada23662,000 China3418,000 Germany9214,000 Japan40030,000 Korea153,000 Mexico640100,000 Puerto Rico5312,500 United Kingdom272125,000

5. Copyright © Houghton Mifflin Company. All rights reserved.5 | 5 Environmental Forces in International Markets Cultural, Social, and Ethical Forces –Beliefs and values about: Family Religion Education Health Recreation

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7. Copyright © Houghton Mifflin Company. All rights reserved.5 | 7 Environmental Forces in International Markets (cont’d) Economic Differences Affecting International Marketing –Standards of living –Credit –Buying power –Income distribution –National resources –Exchange rates

8. Copyright © Houghton Mifflin Company. All rights reserved.5 | 8 Environmental Forces in International Markets (cont’d) Trade Restrictions Affecting International Marketing –Import tariff A duty levied by a nation on goods bought outside its borders and brought in –Quota A limit on the amount of goods an importing country will accept for certain product categories in a specific period of time Border

9. Copyright © Houghton Mifflin Company. All rights reserved.5 | 9 Environmental Forces in International Markets (cont’d) Trade Restrictions Affecting International Marketing (cont’d) –Embargo A governmental suspension of trade in a particular product or with a given country –Exchange controls Government restrictions on the amount of a particular currency that can be bought or sold

10. Copyright © Houghton Mifflin Company. All rights reserved.5 | 10 Environmental Forces in International Markets (cont’d) Balance of Trade –The difference between the value of a nation’s imports and exports Gross Domestic Product (GDP) –The market value of a nation’s total output of goods and services for a given period; an overall measure of economic standing

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12. Copyright © Houghton Mifflin Company. All rights reserved.5 | 12 Hourly Wages: U.S. Vs. India Source: Matthew Grimm, “Profits vs. Jobs,” American Demographics, June 1, 2004, www.demographics.com.microsites.magazinearticle.asp?…. OccupationU.S.India Telephone Operator$12.57Under $1.00 Medical (Health Record) Technologists / Transcriptionists $13.17$1.50-2.00 Payroll Clerk$15.17$1.50-2.00 Legal Assistant / Paralegal$17.86$6.00-8.00 Accountant$23.35$6.00-15.00 Financial Researcher/ Analyst$33.00-35.00$6.00-15.00

13. Copyright © Houghton Mifflin Company. All rights reserved.5 | 13 Environmental Forces in International Markets (cont’d) Political and Legal Forces –Governmental policies, laws, and regulations –Import barriers (quotas, port-of-entry taxes) –Standards of ethics (payoffs, bribes) Technological Forces –Telecommunications (e-mail, cell phones, Internet) –Extent of technological infrastructure

14. Copyright © Houghton Mifflin Company. All rights reserved.5 | 14 More Information Before doing business in a specific country, marketers need to conduct research. An excellent source for country-specific information is the U.S. Central Intelligence Agency, which publishes an annual World Fact Book (www.cia.gov/cia/publications/factbook/index. html). This guide offers detailed information on every country’s geography, population, government and military, economy, infrastructure, and significant transnational issues.www.cia.gov/cia/publications/factbook/index. html

15. Copyright © Houghton Mifflin Company. All rights reserved.5 | 15 Regional Markets: Continental Airlines serves the Latin American market with over 500 weekly flights. Courtesy of Continental Airlines.

16. Copyright © Houghton Mifflin Company. All rights reserved.5 | 16 Regional Trade Alliances, Markets, and Agreements The North American Free Trade Agreement (NAFTA) –An alliance that merges Canada, Mexico, and the United States into a single market Eliminates barriers Eases investment Simplifies trade

17. Copyright © Houghton Mifflin Company. All rights reserved.5 | 17 Regional Trade Alliances, Markets, and Agreements (cont’d) The European Union (EU) –An alliance that promotes trade among its member countries in Europe Market unification Common currency (euro) Economic efficiency

18. Copyright © Houghton Mifflin Company. All rights reserved.5 | 18 Regional Trade Alliances, Markets, and Agreements (cont’d) The Common Market of the Southern Cone (MERCOSUR) –An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America

19. Copyright © Houghton Mifflin Company. All rights reserved.5 | 19 Regional Trade Alliances, Markets, and Agreements (cont’d) Asia-Pacific Economic Cooperation (APEC) –An alliance that promotes open trade and economic and technical cooperation among member nations throughout the world

20. Copyright © Houghton Mifflin Company. All rights reserved.5 | 20 Regional Trade Alliances, Markets, and Agreements (cont’d) General Agreement on Tariffs and Trade (GATT) –An agreement among nations to reduce worldwide tariffs and increase international trade Dumping: selling products at unfairly low prices World Trade Organization (WTO) –An entity that promotes free trade among member nations Provides legal ground rules for international commerce and trade policy

21. Copyright © Houghton Mifflin Company. All rights reserved.5 | 21 Levels of Involvement in Global Marketing FIGURE 5.1

22. Copyright © Houghton Mifflin Company. All rights reserved.5 | 22 International Involvement Importing –The purchase of products from a foreign source Exporting –The sale of products to foreign markets Trading Companies –Link buyers and sellers in different countries Not involved in actual manufacture of products Market and take title to goods to facilitate overseas exchange trading

23. Copyright © Houghton Mifflin Company. All rights reserved.5 | 23 International Involvement (cont’d) Licensing –An alternative to direct investment requiring the licensee to pay commissions or royalties on sales or supplies used in manufacturing Franchising –A form of licensing in which the franchiser grants the franchisee the right to market its product in accordance with the franchiser’s standards

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25. Copyright © Houghton Mifflin Company. All rights reserved.5 | 25 International Involvement (cont’d) Contract Manufacturing –Hiring a foreign firm to produce a designated volume of product to specification Joint Ventures –A partnership between a domestic firm and a foreign firm or government Strategic alliance –A partnership formed to create a competitive advantage on a worldwide basis

26. Copyright © Houghton Mifflin Company. All rights reserved.5 | 26 International Involvement (cont’d) Direct Ownership –A situation in which a company owns subsidiaries or other facilities overseas Multinational Enterprise –A firm that has operations or subsidiaries in many countries

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28. Copyright © Houghton Mifflin Company. All rights reserved.5 | 28 Procter & Gamble’s Global Brands Source: “Global Operation,” Procter & Gamble, www.pg.com/company/who_we_are/global_products.jhtml (accessed August 3, 2004). BrandDescriptionRegions Available AceBleachEurope, Middle East AlldaysLightweight panti-linerNorth America, Europe, Middle East, Africa AlwaysLightweight panti-linerNorth America, Latin America, Europe, Middle East, Africa AscendHair-color productMiddle East, Asia BessBathroom tissueEurope, Middle East BounceDryer sheetsNorth America, Latin America, Asia CiertoDishwashing soapLatin America FairyDishwashing products & detergents Europe, Middle East FebreezeOdor-eliminating fabric sprayNorth America, Latin America, Europe, Middle East, Africa HipoglosDiaper-rash lotionLatin America

29. Copyright © Houghton Mifflin Company. All rights reserved.5 | 29 Customization Versus Globalization of International Marketing Strategies Customization –Adjusting marketing mixes according to cultural, regional, and national differences Globalization –The development of marketing strategies that treat the entire world (or its major regions) as a single entity Includes standardization of products, promotion campaigns, prices, and distribution channels “Think globally, act locally”

30. Copyright © Houghton Mifflin Company. All rights reserved.5 | 30 Customization Versus Globalization

31. Copyright © Houghton Mifflin Company. All rights reserved.5 | 31 Customization Versus Globalization of International Marketing Strategies (cont’d) Effect of a Firm Having a Global Presence –Provides global competitive opportunities for creating value through adapting to local market differences exploiting economies of global scale and scope. acquiring optimal locations for activities and resources. maximizing the transfer of knowledge across locations.