Global market

what are the four trends in the past decade that have affected world trade?

PICM

-decline of economic protectionism by individual countries
-economic integration and free trade among nations.
-Global competition among global companies for global customers.
-Development of networked global marketspace.
Protectionism
shielding one or more industries within a country’s economy from foreign competition, usually through the use of tariffs or quotas
tariff
tax on goods or services entering a country. Because a tariff raises the price of an imported product, tariffs give a price advantage to domestic products competing in the same market.
quota
restriction placed on the amount of a product allowed to enter or leave a country.
what do tariffs and quota do
discourageworld trade WTO to address trade issues
what have countries with similar economic goals formed?
Regional Trade Groupings (RTGs)
transnational trade groups or signed trade agreements
– to promote free trade and enhance individual economies
3 best types of agreement
Eu(1993, removed barriers free flow of goods and services, single market)
NAFRA
ASEAN free trade areas (east asia, eg reduced tarriffs)
what agreement exist between NZ and austrlia
Closer relations agreement
what is world trade drive by – why
global competition among global companies for global consumers
– borderless economic world
global competition
when firms originate, produce and market their products and services worldwide.
examples of industries within global compeititon
cars, pharmaceutical, clothing, electronics, aerospace, telecommunications
eg pepsi over 190 countries quarter of all soft drink sold international.
what does global compeititon do
broadens the competitive landscape for marketers
3 types of comapnies that compete in the global marketplace
international firms
multinational
transnational
international firm
marekt existing products and services in other countries the same as it does at home eg Avon
multinational
world consist on unique regions and therefore markets to each region or country differently
transantional
world is one market and emphasises universal consuemers needs and wants more than differences
what are divisions or subsidiares
people who are employed from different countries and have many administrative, marketing and manufacturing operations
what is a multidomestic marketing strategy – who is it used by
multinationals, producing many different product variations, brand names and advertising programs as countries or region in which they do business
example of multidomestic strategy
multipurpose cleaner known as Mr Clean in North America and Asia is sold under different names in different parts of the world eg Mastro Limpio in Latin American and Mr propert in Africa and Europe
global marketing strategy – who is it used by
transnational firms – adapting standarised marketing activities, popular among business to business marketers
eg mcdonalds, gilette, motorola
global brand
a brand marketed under the same name in multiple countries with similar and centrall co-ordinated marketing programs
what is similar about global brands and there home countries
the havethe same product formulation
service concept
deliver the same benefits to consumrs
consistent advertsing across multiple countries and cultures
adaption is only used when necessary to better connect the brand to consumers in different markets
eg mds serving beer in germany
global consumers
customers living around the world who have similar needs or seek similar benefits from products or services
what has internet been used for
a tool for exchanging goods, services and infromation on a global scale
– promote world trade
what has the networked global marketspace enabled
exchange of goos, ervices and info from comapnies anywhere to customer anywhere at any time at a lower cost
– only if possess the telecommunications infrastructure necessary to support internet/web based technology
– prospective buyers on every continent
– different language websites
what environmental, global comapanies scan
social
economic
technological
competitive
regulatory forces
3 types of uncontrollable environment variable
cultural
economic
political variables
marketers – cultural diversity
– sensitive to cultures to for sucessful exchnge relationships with consumers
– undertake a cross-cultural analysis
– understand values , customs language and cultural symbols
cross-cultural analysis
studyingsimilarities and differences among consumers in two or more nations or societies
values
represent socially preferable modes of conduct or states of existence that tend to persist over time eg honestly
eg mcdonalds does not sell hamburgers in india because cow is considered sacred by 85% of population
customs
what is considered normal and expected about the way people do things in a specific country.
eg expectations about giving gifts, however bribes or payoffs to commit illegal acts is considered corrupt in most socities
eg japense women give japense men chocolate on valentines day
in nz anti corruption legilsation, makes it a criminal offence however in greece, bribes paid to foreign companies are tax deductible expense
cultural symbols
things that represent ideas or concepts
– difffernt cultures attach different meanings to things
western culture superstious about number 13
tiffany and co sells fine glassware in japan in set of 5 not four because four means death
– postively tie symbolism to products and services to increase attractiveness
language
– basic of native tonuge – around 3000 differently spoken – 11 in EU
english
spanish and french = principle language
– best to communicate in own lanague
17 in india
– known unique expressions
Vicks in US is slang for sexual intimacy in germany so is called Wicks
economic scans of the global market place should consider 3 things

IIC

assessment of the economic infrastructure in different countries ( transportation, financial and distribution systems, assumed to be in place, telephones, radio and internet may be limited in developing countrie)
measurement of consumer income in different countries (1998 nz 16000 however less than 200 n developing countries, effect purchasing power)
recognition of a country’s currency exchange rates. (eg fluxtuation, must aquire more money to purhcase goods from overseas, or may have more to spend)
assessing political – regulatory climate – SR
identifying current climate but how long a favoruable or unfavoruable climate will last
– analysis of poltcal stability and trade regulations
political stability
middle east, money last due to war, careful selection of political stable countries eg governement ideas about comapnies and trade
trade regulations
rules that govern business practises
eg malaysia government, advertising cannot promote an excessively aspiration lifestyle
what happens once a company has decided to enter the global marketplace
means of market entry
4 mens of market entry
exporting
licensing
joint venture
direct investment
list from the firms least financial commitment to most in terms of market entry strategies
exporting
licensing
joint venture
direct investment
Exporting
producing goods in one country and selling them in another country.
what does exporting mean for the comapny
– does not have to change products, its organisation or corperate goals
indirect exporting
sells its domestically produced goods in a foreign country through an intermediary.
– no oversaeas contacts but can market abroad
– often a distributor, with know how resource eg botanic foods in US
direct exporting
firm sells its domestically produced goods in a foreign country without intermediaries.
– only if they beleive their volume of sales will be large enough
– more risk but increase profits
licensing
company offers the right to a trademark, patent, trade secret or other similarly valued items of intellectual property in return for a royalty or a fee.
benefit of licensing for the licensor
– low rise
– easy to enter foreign market with virtually no cost
benefits of licensing for the liscensee
– gain ifnromation that allows it to start with a competitive advantage
– country gains employment by having the product manufactured locally `
disadvantages to the liensor
– give up control of the product
– licensee can modify the product and enter the market with product and marketing knowledge gianed at the expense of the company that got them started
– if liscee is a poor choice, could harm name or reptuation
what do licensors try to do to prevent disadvantages
keep linscees dependnat on them for improvement and sucessful operation
what is a varaition of licensing
franchising
franching
company contracts with an individual to set up an operation to provide products or services under the company’s established brand name,
why do people franchise
its the fastest growing market entry strategy
how big is the franchise market
2005 in aus = over 110 billion
joint venture
foreign company and a local firm invest together to create a local business
what does the local firm and foreign company share in a joint venture
ownership, control and profits of the new company
how is investment made in joint ventures
investing and buying share in the other or creating a third and sepeare entity
nz example of joint venture
ANZ banking group joined with ING group called ING Austrlia, largest fund managers in life insurers
advantages of joint venture
-did not previously have financial, physical or managerial resources to enter a foreign market alone
positve example of joint venture
Ericssson (telecommunications)(money and technology) and french switch maker( knowledge of the french market) made US 100 million,
disadvantages of joint venture
– disagree about policies or courses of action
– goverenmental bueraucaracy
– may want to return profits to its host country
direct investment
domestic firm actually investing in and owning a foreign subsidiary or division.
example of direct investement
ernest and young, international accounting and management consulting firm entered hungary, establishing a joint venture with a local company, later aquired the company, making it a subsidary
advantages of direct investment
cost saving
– inderstanding local market condition
– less location restrictuon
– may outweigh the risks
what must marketers do to to implemtn a sucessful marketing program
customise its design based on evnrionemtn scan and experience and market reserach
how do global comapnies match product and promotion efforts in global markets?
3 ways
production extension
product adaption
product invention
production extension
Selling virtually the same product in other countries
product adaption
Changing a product in some way to make it more appropriate for a country’s climate or consumer preferences
product invention
invent totally new products designed to satisfy common needs across countries.
5 promotion and product strategies
what is dual adaption
adapt product and promotion
what is communication adaption strategy
adapt promotion with same product
what is product invention strategy
creating new product and either keeping or changing promotion
product adaption strategy
adapt product keep promotiion
product extension strategy
same promotion same product
what can a countries economic infrastructure determine
the use and avaliability or retailer or wholesaler, transportation, communcation and warehousing facilities
first step in distribution in global markets
seller (responsible for distribution to consumer)
second step in distribution in global markets
moving the product from one country to another
– can be handled by intermediaries eg merchant wholesalers who buy and sell the product or agent who bring buyers and sellers together or resdient buyer in foreign country
third step in distribution in global markets
once in foreign nation, results in the countries distribution channels
despite free trade agreements what can countries do
place compeitive, political and legal contraints of pricing flexibility of global comapnies
wal-mart told by german anti trust authories the prices were too low relative to competitors, facing fines for violating countries trade practises
what is dumping
a firm sells a product in a foreign country below its domesitc price or below its actual cost
when does dumping occur
when prices appear too low in a country and case face fines
what is grey market or parallel importing
products are sold through unauthorised channels of distribution
– individual buy products in a lower priced country from a manufactuers authorised retailer, ship them to a higher priced country and sell them below the manufactuers suggested retail price through unauthorised retailers