Marketing Final – Chapter 15: The Global Market Place

Global firm
a firm that by operating in more than one country, gains R&D production marketing and financial advantages in its costs and reputation that are not available to purely domestic competitors
Economic community
a group of nations organised to work toward common goals in the regulation of international trade:
– subsistence econonomies
– raw material exporting economies
– emerging (BRICS)
– industrial
exporting
entering foreign markets by selling goods produced in the company’s home country, often with little modification
joint venturing
entering foreign markets by joining with foreign companies to produce or market a product or service
liscensing
entering foreign markets through developing an agreement with a license in the foreign market
contract manufacturing
a joint venture in which a company contracts with manufacturers in a foreign market to produce its products or provide its service
management contracting
a joint venture in which the domestic firm supplies the management know how to a foreign company that supplies the capital: the domestic firm exports management services rather than products
joint ownership
a cooperative venture in which a company creates a local business with investors in a foreign market who share ownerhsip and control
direct investment
entering a foreign market by developing foreign based assembly or manufacturing facilities
standardised global marketing
an international marketing strategy that basically uses the same marketing strategy and mix in all of the company’s international markets
adapted global marketing
an international Marketing approach that adjusts the marketing strategy and mix elements to each international target market, which creates more costs but hopefully produces a larger market share and return
straight production extension
marketing a product in a foreign market without making any changes to the product
product adaptation
adapting a product to meet local conditions or wants in foreign markets
product invention
creating new products or services for foreign markets
communication adaptation
a global communication strategy of fully adapting advertising messages to local markets
whole channel view
designing international channels that take into account the entire global supply chain and marketing channel, forging an effective global value delivery network
global firm
– Operates in more than one country
– Gains research and development, production, marketing, and financial advantages in its costs and reputation

Problems faced
>Highly unstable governments and currencies
>Restrictive government policies and regulations
>High trade barriers and corruption

Decisions to go global
Influential factors
>Attack on a company’s home market by global competitors
>Expanding customer base in international markets
>one more
International Trade Systems
Trade barriers
>Tariffs or duties
>Quotas and exchange controls
>Nontariff trade barriers
– Biases against the bids
-Restrictive product standards
– Excessive host-country regulations or enforcement
WTO
– Established by the General Agreement on Tariffs and Trade (GATT) in 1995
– Promotes world trade by reducing tariffs and other international trade barriers
– Negotiates to reassess trade barriers and establish new rules for international trade
– Imposes international trade sanctions and mediates global trade disputes
Regional Free Trade Zones
Economic community: Group of nations organized to work toward common goals in the regulation of international trade
>European Union (EU)
>North American Free Trade Agreement (NAFTA)
>Central American Free Trade Agreement
(CAFTA-DR)
>Union of South American Nations (UNASUR)
Economic Environment
Factors reflecting a country’s market attractiveness:

Industrial structure:
– Subsistence economies
– Raw material exporting economies
– Emerging economies
– Industrial economies

Income distribution
– Low-, medium-, and/or high-income households depending on the industrial structure of the nation

Political-Legal Environment
Considerations for a company to do business in a country:
Country’s attitude toward international buying
Government bureaucracy
Political stability
Monetary regulations

International trade involves:
Cash transactions
Barter

Impact of Culture on Marketing Strategy
Companies that understand cultural nuances can:
– Avoid expensive and embarrassing mistakes
– Take advantage of cross-cultural opportunities
Deciding Which Markets to Enter
A company should:
>Define its international marketing objectives and policies
>Decide what volume of foreign sales it wants
>Choose in how many countries it wants to market
>Decide on the types of countries to enter
>Evaluate each market
Indicators of Market Potential
Demographic characteristics: education, population size and growth, population age composition

Geographic characteristics: climate, country size, population density, transportation, market accesabilities

Economic factors: GDP size and growth, income distribution, industrial infrastructure, natural resources, financial and HR

Social cultural factors: lifestyle, beliefs, values, languages, cultural and social norms

Political and legal factors: national priorities, political stability, government attitudes toward global trade, government beauraucracy, monetary and trade regulations

Market Entry Strategies
Exporeting: Indirect vs. Direct
Joint Venturing: liscencing, contract manufacturing, joint ownership, management contracting
Direct investment: assembly facilities, manufacturing facilities

—> amount of commitment risk, control and profit potential (more in direct investment less in exporting)

Deciding on the global marketing program
Standardized global marketing:
Using the same marketing strategy and mix in all of the company’s international markets

Adapted global marketing:
– Adjusting the marketing strategy and mix elements to each international target market
>Creates more costs
>Produces a larger market share and return

Five Global Product and Communications Strategies
– Straight extension (product don’t change – communication don’t change)
– Communication adaptation (product don’t change, communications adapt)

– Product adaptation ( products adapt, communications don’t change)
– Dual adaptation (products adapt, adapt communications)

– Product invention (Develop new product)

– Straight extension
product don’t change communication don’t change
– Communication adaptation
product don’t change
communications adapt
– Product adaptation
products adapt
communications don’t change
– Dual adaptation
products adapt
adapt communications
– Product invention
Develop new product
Global Price Considerations
set a uniform price globally
set according to the customers
use a standard markup of the company’s costs everywhere
Whole channel concept for international marketing
international seller
channels between nations
channels within nations
final user or buyer
–> global value delivery network
Deciding on the global marketing organisation
Methods of managing international marketing activities:
– Organizing an export department
– Creating international divisions
>>Geographical organizations
>>World product groups
>>International subsidiaries
Becoming a global organization
Major international marketing decisions
1. looking at the global marketing environment
2. deciding whether to go global
3. deciding which markets to enter
4. deciding how to enter the market
5. deciding on the global marketing program
6. deciding on the global marketing organisation