CHAPTER 15: UNDERSTAND THE GLOBAL MARKETPLACE: MARKETING WITHOUT BORDERS Part 6: Bring It All...
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Transcript of CHAPTER 15: UNDERSTAND THE GLOBAL MARKETPLACE: MARKETING WITHOUT BORDERS Part 6: Bring It All...
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CHAPTER 15:UNDERSTAND THE GLOBAL MARKETPLACE: MARKETING WITHOUT BORDERS
Part 6: Bring It All Together—Global and Performance Dimensions
McGraw-Hill Education
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LEARNING OBJECTIVES
Identify the various levels in the Global Marketing Experience Curve
Learn the essential information components for assessing a global market opportunity
Define the key regional market zones and their marketing challenges
Describe the strategies for entering new global markets
Recognize key factors in creating a global product strategy
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Marketing Is Not Limited By Borders
Worldwide distribution networks, sophisticated communication tools, greater product standardization, and the Internet have opened world markets.
Large and small companies do business globally.
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The Global Experience Learning Curve
Companies with no Foreign Marketing
Companies with Foreign Marketing
International Marketing
Global Marketing
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Ten Examples of Global Companies and their Expansion in Global Markets
EXHIBIT 15.2
Years to Expansion U. S. Company First Expansion
29 Wal-Mart (est. 1962) 1991 - Wal-Mart opens two units in Mexico City.
20Hewlett-Packard (est. 1939)
1959 – HP sets up a European marketing organization in Geneva, Switzerland, and a manufacturing plant in Germany.
26 Tyson Foods (est. 1963)1989 - Tyson establishes a partnership with a Mexican poultry company, to create an international partnership.
25 Caterpillar (est. 1925)1950 – Caterpillar Tractor Co. Ltd. in Great Britain isfounded.
19 Home Depot (est. 1979)1998 – Home Depot enters the Puerto Rican marketfollowed by Argentina.
18 Gap (est. 1969)1987 - The first Gap store outside the United Statesopens in London on George Street.
12 Goodyear (est. 1898) 1910 - Goodyear’s Canadian plant opens.
10 FedEx (est. 1971)1981 - International delivery begins with service to Canada.
1 PepsiCo (est. 1965) 1966 - Pepsi enters Japan and Eastern Europe.
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The Global Experience Learning Curve
Essential Information
Economic
Culture, Societal Trends
Business Environme
nt
Political and Legal
Specific Market
Conditions
3-6
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ASSESSING THE GLOBAL OPPORTUNITY:
Emerging Markets
Stage 1 – The Traditional Society
Stage 2 – Preconditions for Take-Off
Stage 3 – Take-Off
Stage 4 – Maturity
Stage 5 – High Mass Consumption
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The Global Experience Learning Curve
Multinational Regional Market Zones consists of a group of countries that create formal relationships for mutual economic benefit through lower tariffs and reduced trade barriers. Example: NAFTA
Economic Geographic Proximity
Political Culture Similarities
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Marketing in Regional Market Zones
As market zones lower tariffs and reduce trade barriers, companies view zone members more holistically.
Regional marketing allows for reduced costs in distribution and increased effectiveness in advertising and pricing strategies.
When countries lower internal barriers to trade, they sometimes raise external ones that negate the advantages of operating in the market zone.
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Top Four Regional Market ZonesEXHIBIT 15.7
Reprinted Courtesy of European Commission
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Composition of the EU Since Its CreationEXHIBIT 15.8
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SELECT THE GLOBAL MARKET
Deciding which countries to enter can be high risk as poor decisions lead to high costs and poor long-term investments.
Identify Selection Criteria Supports firm’s overall objectives plus
financial, and market objectives View competition, target market size and
growth rate Company Review
Does the company have the personnel, managerial, and financial resources to enter the market?
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Key Company Characteristics in Global Market Expansion
EXHIBIT 3.10
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Company Characteristics
Philosophy
ObjectivesProducts
Management/Marketing
SkillsResources
Financial Limitations
Organization
Management Style
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DEVELOP GLOBAL MARKET STRATEGIES Market Entry Strategies Exporting requires minimal investment
and risk The Internet has increased both domestic and
international sales through the use of credit cards and other payment systems plus global delivery systems like FedEx and UPS.
Exporters provide expertise in understanding global shipping
Distributors know local market conditions best.
Direct Sales Force is expensive but needed with technology or high-end industrial products.
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Market Entry Strategies
Contractual Agreements are non-equity relationships with another company, often in the target country. Licensing
May be required by law, direct importing may be restricted, or the company has limited financial resources
Franchising Franchise agreements allow the firm to retain
control of quality
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Market Entry Strategies
Strategic Alliances spread risk of foreign investment among partners. Dominates the airline industry with oneworld, Skyteam, and Star. International Joint Venture allows
companies to enter markets that would be closed because of legal restrictions or cultural barriers
Two or more companies that Share management duties in a defined
structure Form the venture, not individuals Hold equal equity positions
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Market Entry Strategies
Direct Foreign Investment Timing Legal Issues Transaction Costs Technology Transfer Product Differentiation Marketing Communication Barriers
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Organizational Structure Choices
Decision-Making Authority becomes more complicated with added layers of authority and differences in global time zones. Clearly defined protocols for decision-making are needed.
The Degree Of Centralization affects resource allocation and personnel. Centralized Decentralized Regionalized
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The Most Common International Organizational Structure
EXHIBIT 15.12
Reprinted from Philip R. Cateora and John L. Graham, International Marketing, 13e, 2007.
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Choose Structure
Global Product Lines works for firms with a broad, diverse range of products. Example: Siemans
Geographic Regions builds autonomous regional organizations that work well when local government relationships are critical. Ex.ample: Halliburton
Matrix Structure is a hybrid of the first two and is used by most global firms.
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Product Choices
•No changes in the product•No extra R&D or manufacturing costs
Direct Product Extension
•Product is changed to meet local market needs and legal requirements•Changes range from regional to city levels
Product Adaptation
•Backward invention takes a discontinued product from one market into another.•Forward invention creates new products for new markets
Product Invention
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Consumer Issues
Quality is viewed differently around the world.
Fitting the Product to the Culture is a challenge with brand names, product colors and features.
Brand Strategy decisions reflect either a global, regional, or local brand.
The Country-of-Origin effect is the positive or negative perception of the product based on the producing country.
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INTERNATIONAL Channel StructuresEXHIBIT 15.13
Reprinted from Philip R. Cateora and John L. Graham, International Marketing, 13e, 2007.
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Market Channel Issues
Channel Factors
CostCapital
Control
Coverage
Character
Continuity
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Marketing Communications Advertising
Global marketing
themes
Global marketing with local content
Basket of global
advertising themes
Local market ad generation
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Marketing Communications Personal Selling
Companies need sensitivity in selecting, hiring, and training their global sales force to accommodate local business cultures.
Sales Promotion The need to stimulate consumer trial and
purchase can be greater outside the U.S. Public Relations
The expansion of global communications has greatly increased the importance of international public relations.
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Pricing
With a One World Price, the company assigns one price for its products in every global market. Examples: oil, diamonds
A Local Market Conditions Price reflects the response to competitors in the local area.
A Cost-Based Price does not reflect local conditions and is based on cost plus final markup.
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Pricing
Price Escalation
Product export costs
Tariffs, import fees, taxes
Exchange rate fluctuations
Middlemen and transportation costs
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Pricing
Global Pricing Issues Dumping refers to the practice of charging
less than actual costs or less than the product price in the company’s home markets.
Gray Marketing involves the unauthorized diversion of branded products into global markets. Gray markets distributors (who are often authorized distributors) divert products from low-price to high-price markets.