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Chapter 19

The Global Marketplace

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Global Marketing into the Twenty-First Century

The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows.International trade is booming and now accounts for a quarter of the United States’ GDP.Between 1996 and 2006, U.S. exports are expected to increase 51%.Global competition is intensifying and few U.S. industries are now safe from foreign competition.

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Global Marketing into the Twenty-First Century

To compete, many U.S. companies are continuously improving their products, expanding into foreign markets, and becoming global firms.Global firms face several major problems: High debt, inflation, and unemployment have resulted

in highly unstable governments & currencies, Governments placing more regulations on foreign

firms, Protectionist tariffs and trade barriers, Corruption.

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Major Decisions in International Marketing (Fig. 19.1)

Looking at the global marketing environmentLooking at the global marketing environment

Deciding whether to go international Deciding whether to go international

Deciding which markets to enter Deciding which markets to enter

Deciding how to enter the market Deciding how to enter the market

Deciding on the global marketing program Deciding on the global marketing program

Deciding on the global marketing organizationDeciding on the global marketing organization

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Looking at the Global Marketing Environment

The International Trade Systemi.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers

The International Trade Systemi.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers

The World Trade Organization and GATTTreaty designed to promote world trade by reducing

tariffs and other international trade barriers

The World Trade Organization and GATTTreaty designed to promote world trade by reducing

tariffs and other international trade barriers

Regional Free Trade ZonesGroup of nations organized to work toward

common goals in the regulation of international trade

Regional Free Trade ZonesGroup of nations organized to work toward

common goals in the regulation of international trade

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Types of IndustrialStructure

Subsistence Economies

Raw Material Exporting Economies

Industrializing Economies

Industrial Economies

Economic Environment

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Attitudes TowardInternational

Buying

Attitudes TowardInternational

Buying

GovernmentBureaucracyGovernmentBureaucracy Political

StabilityPolitical Stability

MonetaryRegulationsMonetary

Regulations

At Least Four Political-Legal Factors Should be Considered in Deciding Whether to do

Business in a Given Country:

Political-Legal Environment

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Cultural Environment

How CustomersThink About and

Use Products

Cultural Traditions,Preferences, and

Behaviors

BusinessNorms andBehavior

Sellers Must Examine the Following Before Planning a Marketing Program Within a Given Country.

Liz Dolan, a Marketing Director at Nike, speaks about forming an image in a foreign country.

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Deciding Whether to Go International

Reasons companies might consider international expansion: Global competitors attacking the domestic market, Foreign markets might offer higher profit opportunities, Domestic markets might be shrinking, Need an enlarged customer base to achieve economies

of scale, Reduce dependency on any one market, Customers might be expanding abroad.

Most companies do not act until some situation or event thrusts them into the international market.

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Deciding Which Markets to Enter

Define Organization’s Marketing Objectives and Policies

Define Organization’s Marketing Objectives and Policies

What Volume of Foreign Sales is Desired?What Volume of Foreign Sales is Desired?

How Many Countries Should the Firm Go Into?How Many Countries Should the Firm Go Into?

What Types of Countries Should be Entered?What Types of Countries Should be Entered?

Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

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Discussion ConnectionsAssess China as a market for McDonald’s. What factors make it attractive? What factors make it less attractive?

Assess Canada as a market for McDonald’s. In what ways is Canada more attractive than

China? In what ways is it less attractive?

If McDonald’s could operate in only one of these countries, which one would you choose and why?

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Deciding How to Enter the Market (Fig. 19.2)

Exporting

•Indirect

•Direct

Exporting

•Indirect

•Direct

Joint venturing

•Licensing•Contract manufacturing•Management Contracting•Joint Ownership

Joint venturing

•Licensing•Contract manufacturing•Management Contracting•Joint Ownership

Direct investment

•Assembly facilities•Manufacturing facilities

Direct investment

•Assembly facilities•Manufacturing facilities

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Chan

ges

in P

rodu

ct,

Ad

vert

isin

g,

Dis

trib

uti

on C

han

nels

, &

Pri

ce Standardized Marketing Mix

Uses Basically the Same Elements of the Marketing Mix in all

the Company’s International Markets.

i.e Coca-Cola

Adapted Marketing Mix

Adjusts the Elements of the Marketing Mix to Each International Target Market. i.e. Japanese Barbie

Deciding on the Global Marketing Program

The Maharaja Mac is an example of an Adapted Marketing Mix

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The Coca-Cola logo is the same throughout the world.

This is an example of astandardized marketing mix.

Which other companiesuse a standardized marketing mix?

Do some companies use a blend of adapted and standardized marketingmix? Which ones?

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Five International Product and Promotion Strategies (Fig. 19.3)

1. StraightExtension

2. CommunicationAdaptation

3. ProductAdaptation

4. DualAdaptation

Don’t ChangeProduct

AdaptProduct

Product

Don’tChange

Promotion

AdaptPromotio

n

Pro

moti

on

5. Product Invention

Develop New

Product

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International PricingCompanies face many problems in setting their international prices.Possibilities in setting prices include: Chare a uniform price all around the world. Charge what consumers in each country could pay. Use a standard markup of its costs everywhere.

International prices tend to be higher than domestic prices because of price escalation.Companies may become guilty of dumping – when a foreign subsidiary charges less than its costs or less than in its home market.

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Whole-Channel Concept for International Marketing (Fig. 19.4)

Seller

Seller’s headquarters organization for international marketing

Seller’s headquarters organization for international marketing

Channels betweennations

Channels betweennations

Channels within nations

Channels within nations

Final user or buyer

Final user or buyer

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Deciding on the Global Marketing Organization

Export DepartmentExport Department

International DivisionInternational Division

Global OrganizationGlobal Organization

Degree of Involvement in International Marketing

Activities

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Review of Concept Connections

Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions.Describe three key approaches to entering international markets.Explain how companies adapt their marketing mixes for international markets.Identify the three major forms of international marketing organization.