Chapter 3 – Global Marketing

Joint Ventures
A company joins investors in a foreign market to create a local business in which the company shares joint ownership and control. Joint ventures share expenses and risk across companies located in the home country and in other countries.
Domestic Marketing
= focuses on customers in the home country
– no language or cultural barriers
– do not sell or license products in other countries
– transportation costs create a barrier to entry, excluding out-of-country competitors
International Marketing
= refers to exporting products to one or more countries outside the domestic market and remaining invested solely in the domestic country
– little or no investment outside the home country
– Company headquarters and production facilities remain in the home country
– International marketers participate in joint ventures with companies in other countries
Global Marketing
= selling or licensing products for sale across the world
– possibility of adapting services and product characteristics to local markets
– looks a great deal like “production orientation” marketing carried out on a global scale.
Market attractiveness
Criteria for evaluating: customer needs, customer purchasing power, market size, market growth rate, and market access.
Competitive Risk
Competitors’ potential responses to the product’s entry into the local market.
Economic Risk
The risk that arises from macroeconomic conditions like exchange rates, inflation, and government regulation.
Political Risk
The risk that arises as a result of political changes or instability in a country.
– Demonstrations, strikes, civil strife, abrupt government changes, terrorism
Legal Risk
Legal risk includes inadequate protection of contracts and intellectual property.
Market-entry strategies
four generic options based on risk, control, costs, and potential return:
(1) exporting,
(2) licensing,
(3) joint venture
(4) foreign direct investment.
Exporting
– can be as straightforward as shipping goods produced in the home country to a distributor and/or retailer in the foreign market
– Financial risk is relatively low because the distributor or retailer takes on the risk of selling the product.
– little control over the product.
– The exporting company may complement product distribution with a communications message to teach new customers to love the product.
Licensing
= a firm in one country agrees to permit a company in another country to use the manufacturing, processing, trademark, know-how, patent, or some other skill or value.
– measure of control to the licensor when writing a contract
– burden of risk for developing the product on the back of the licensee
– licensor only receives a sales royalty, that is, a small portion of the sales revenue
– not have close control over manufacturing quality or marketing, and may quickly lose control of technological know-how.
Foreign direct investment
With foreign direct investment, companies have complete control, but costs and risks are high. Among the risks is the difficulty of expat managers understanding and appreciating cultural factors when marketing products.
Standardization
= firm uses the same standardized marketing mix in the foreign market as it uses in the domestic market. Product, price, promotion, and distribution are standardized across countries.
– advantage: cost reductions gained by economies of scale. Considerable savings are gained in product (lower production costs) and promotion (lower costs in media advertising and sales literature)
– disadvantage: may not fit the needs of the local market.
Customization
= adapt or modify the marketing mix to suit the local market.
Glocal
= “go global but act local.”
This strategy is based on a standard platform (global) combined with some modification for the market (local).