1. McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2. LEARNING OBJECTIVES (LO) After reading Chapter 7, you should be able to:
Describe the nature and scope of world trade from a global perspective and its implications for Asian countries.
Identify the major trends that have influenced the landscape of global marketing in the past decade.
LO2
Identify the environmental factors that shape global marketing efforts.
LO3
1-2
Understanding and Reaching Global Consumer Markets

3. LEARNING OBJECTIVES (LO) After reading Chapter 7, you should be able to:
Name and describe the alternative approaches companies use to enter global markets.
LO4
Explain the distinction between standardization and customization when companies craft worldwide marketing programs.
LO5
1-3
Understanding and Reaching Global Consumer Markets

4. TATA A Global Conglomerate Opening Story – TATA Group of Companies
TATA Group, housed in India, operates over 100 companies in 80 countries across six continents. How do they do it?
1-4
Opening Story – TATA Group of Companies

5. Dynamics of World Trade
Trade Flows
Global Perspective
Countertrade
Trade Feedback Effect
Asian Perspective
Barter Trade still exists, in the form of Countertrade
U.S., Japan, W. Europe, Canada and China make up two-thirds of the world’s trade in manufactured goods & services
Balance of Trade: Trade Exports – Imports. Results in Trade Surplus (/Deficit)
Gross Domestic Product (GDP)
Balance of Trade
LO1
1-5
World Trade: A Global Perspective

6. FIGURE 7-1 The United States, China, and Germany are the leaders in global merchandise trade by a wide margin. China and Germany export more manufactured goods and commodities than they import. The United States imports more manufactured goods and commodities than it exports.
LO1
1-6
World Trade: A Global Perspective

7. Dynamics of World Trade
Dynamic & Trade Flows
Porter’s “Diamond”
Factor Conditions
Demand Conditions
Related and Supporting Industries
Company Strategy, Structure, and Rivalry
LO1
1-7
World Trade: A Global Perspective

8. FIGURE 7-2 Porter’s diamond of national competitive advantage: 4 key elements on why some countries become world leaders
LO1
1-8
World Trade: A Global Perspective

9. Sharp Aquos TV & Bruno Magli Shoes
What elements of Porter’s Diamond of National Competitive Advantage
Where are Sharp & Bruno Magli from? Aside from the food, what are the reputations of products of these countries?
What do you think of products from: China, Germany, Switzerland, Thailand, Malaysia, Singapore?
LO1
1-9
World Trade: A Global Perspective

10. Marketing in a Borderless Economic World
Trend: Decline of Economic Protectionism
Protectionism
Tariffs
Quota
General Agreement on Tariffs and Trade (GATT)
America and Malaysia are both examples of countries that utilise Protectionism. What are some examples of the industries/products they protect?
World Trade Organization (WTO)
LO2
1-10
Major Trends in Global Marketing

11. FIGURE 7-3 Protectionism hinders world trade through tariffs and quotas policies of countries, raising prices and limiting supply
LO2
1-11
Major Trends in Global Marketing

12. Marketing in a Borderless Economic World
Trend: Rise of Economic Integration
European Union
Euro
North American Free Trade Agreement (NAFTA)
Singapore is extremely keen to set up FTAs. Why?
By the time you read these notes, the EU/Euros may have collapsed, or kicked some other country out.
Three country flag image attributed to Alex Covarrubias.
See
Asian Free Trade Agreements
LO2
1-12
Major Trends in Global Marketing

13. FIGURE 7-4 The European Union in 2007 consists of 27 countries with more than 500 million consumers
LO2
1-13
Major Trends in Global Marketing

14. Marketing in a Borderless Economic World Trend: Global Competition
Divisions or Subsidiaries
Many Singaporean actors/singers often seek to go abroad to further their careers. Is this considered Global Competition?
Strategic Alliances
LO2
1-14
Major Trends in Global Marketing

15. Marketing in a Borderless Economic World Trend: Global Companies
International Firms
Multinational Firms
Multidomestic Marketing Strategy
Transnational Firms
Global Marketing Strategy
Global Brand
LO2
1-15
Major Trends in Global Marketing

16. Marketing in a Borderless Economic World Trend: Global Consumers
1-16
Major Trends in Global Marketing

17. Marketing in a Borderless Economic World Trend: Global Consumers
Nestle is superb at communicating with consumers in their native language – here, Hungarian.
LO2
1-17
Major Trends in Global Marketing

18. 500 Million Consumers, US$100 Billion to Spend
Marketing Matters
The Global Teenager
500 Million Consumers, US$100 Billion to Spend
How much discretionary income do you have? How much disposable income? (this was mentioned in an earlier chapter) How much do you spend?
LO2
1-18
Major Trends in Global Marketing

19. A Global Environmental Scan
Cultural Diversity
Cross-Cultural Analysis
Values
Customs
Foreign Corrupt Practices Act (1977)
International Anti-Dumping and Fair Competition Act (1998)
LO3
1-19
Environmental Factors affecting Global Marketing Efforts

20. A Global Environmental Scan
Cultural Diversity
Cultural Symbols
What cultural lesson did Coca-Cola executives learn when they used the Eiffel Tower and the Parthenon in their recent global advertising campaign?
Different cultures imbue different significance to the number 13 and the thumbs-up gesture.
#13
Semiotics
LO3
1-20
Environmental Factors affecting Global Marketing Efforts

21. A Global Environmental Scan
Cultural Diversity
Language
Unintended Meanings
serves an excellent warning to the pitfalls of back-translation and using Google Translate without checking
Back Translation
Consumer Ethnocentricity
LO3
1-21
Environmental Factors affecting Global Marketing Efforts

22. A Global Environmental Scan Economic Considerations
Stage of Economic Development
Developed Countries: Japan
Developing Countries
What state of economic development is Singapore in? Israel? Hungary?
Made the Move: Brazil
Remain Locked: Sri Lanka
LO3
1-22
Environmental Factors affecting Global Marketing Efforts

23. A Global Environmental Scan Economic Considerations
Economic Infrastructure
Consumer Income and Purchasing Power
The textbook contains examples of how P&G adapted to the economic infrastructure in China.
Denizen jeans was created by Levi’s to target the young/youth market in China and developing countries like South America
Microfinance: India
Currency Exchange Rate
LO3
1-23
Environmental Factors affecting Global Marketing Efforts

24. A Global Environmental Scan Political-Regulatory Climate
Political Stability
Trade Regulations
LO3
1-24
Environmental Factors affecting Global Marketing Efforts

25. FIGURE 7-6 Alternative Approaches to Global Market Entry
1-25
Entering Global Markets: Alternative Approaches

26. Comparing Global Market-Entry Strategies
Exporting
Exporting
Indirect Exporting
Direct Exporting
LO4
1-26
Entering Global Markets: Alternative Approaches

27. Comparing Global Market-Entry Strategies
Licensing
Contract Manufacturing
Contract Assembly
McDonald’s uses a franchise business model: 66% of sales come from non-US countries.
Franchising
LO4
1-27
Entering Global Markets: Alternative Approaches

28. Comparing Global Market-Entry Strategies
Joint Ventures & Direct Investments
Joint Venture
Pepsi-Co markets Frito-Lay products like Cheetos, Ruffles and Doritos in Israel, in a joint-venture with the Strauss group.
Nestle has made a direct investment to product its ice-cream products like the Drumstick in China
Direct Investment
LO4
1-28
Entering Global Markets: Alternative Approaches

29. Crafting a Worldwide Marketing Program
Product Strategies
Product Extension
Product Adaptation
Are these strategies standardization or customization?
Product Invention
LO5
1-29
Standardization vs Customization

30. FIGURE 7-6 Five product and promotion strategies for global marketing
Are these strategies standardization or customization?
LO5
1-30
Standardization vs Customization

31. Crafting a Worldwide Marketing Program
Promotion Strategies
Identical Message
Why can Gillette Venus deliver the same global message throughout the world?
Communication Adaptation
Dual Adaptation
LO5
1-31
Standardization vs Customization

32. Crafting a Worldwide Marketing Program
Distribution (Place) & Pricing Strategies
Channels Usually Long and Complex
Countries Impose Pricing Constraints
Prices May Be Too High or Too Low
Dumping is similar to the ‘penetration’ pricing strategy.
The grey market of parallel imports is sometimes legal and sometimes a ‘black market’, depending on the particular country
Dumping
Gray Market
LO5
1-32
Standardization vs Customization

33. FIGURE 7-7 Five product and promotion strategies for global marketing
1-33
Standardization vs Customization