Roadmap: Previewing the Concepts 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.
COCA-COLA – Successfully Going Global Background How They Did It Established in 1893 in Balances brand building Atlanta pharmacy. and global standardization 1900: Coke was available with local adaptation. in foreign countries. Consistent positioning, 1940s: built bottling plants packaging, and taste. abroad to supply soldiers. Brands, flavors, ads, price, Growth fueled by strong distribution and promotions marketing: “I’d like to buy are adapted to local the world a Coke” TV ad. markets. Now in emerging markets. Sprite: a global success.
Global Marketing in the 21 st Century The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming and accounts for 20 percent of GDP worldwide. Global competition is intensifying. Higher risks with globalization.
Marketing in Action Globalization by U.S. FirmsCoca-Cola has been a leader in globalization.
Global Firms A global firm is one that, byoperating in more than one country, gains marketing, production, R&D, and financial advantages that are not available to purely domestic competitors.
Key Influences in the Global Marketing Environment The International Political-Legal Trade System Environment Economic Cultural Environment Environment
Looking at the Global Marketing Environment The International Trade System: – Restrictions—tariffs, quotas, embargos, exchange controls, and nontariff trade barriers. The World Trade Organization and GATT: – Helps trade—reduces tariffs and other international trade barriers. Regional Free Trade Zones: – Groups of nations organized to work toward common goals in the regulation of international trade.
Let’s Talk!What types of U.S.companies wouldlike to see highertariffs and whattypes would like tosee lower tariffs orno tariffs?Why is this the GATT promotes international tradecase? by reducing tariffs.
Marketing in ActionExplore the European Union! Regional free trade zones such as the European Union help to simplify the process of going global. Explore their Web site for information that could be helpful to a marketer wishing to go global.Map of the European Union as of March 2006 http://europa.eu.int/index_en.htm
Economic Environment Industrial Structure: – Shapes a country’s product and service needs, income levels, and employment levels. Four types: – Subsistence economies – Raw material exporting economies – Industrializing economies – Industrial economies
Political-Legal Environment Attitudes toward international buying Government bureaucracy Political stability Monetary regulations – Countertrade Barter Compensation Counterpurchase
Cultural Environment Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Business norms and behavior vary from country to country. Companies that understand cultural nuances can use them to advantage when positioning products internationally.
Marketing in Action The Importance of CultureIgnoring culturaldifferences can resultin strong consumerbacklash. Nike wasforced to pull theseshoes from distributionafter learning that thestylized shoe logoresembled “Allah”when written in Arabic.
Impact of Marketing on Culture A common criticism of globalization is that it promotes the “Americanization” of foreign countries, and a loss of cultural identity. Globalization proponents argue that the cultural exchange of ideas and values works both ways.
Deciding Whether to Go International Reason to consider going global: – Foreign attacks on domestic markets. – Foreign markets with higher profit opportunities. – Stagnant or shrinking domestic markets. – Need larger customer base to achieve economies of scale. – Reduce dependency on single market. – Follow customers who are expanding.
Deciding Which Markets to Enter Before going abroad, the company should try to define its international marketing objectives and policies. – What volume of foreign sales is desired? – How many countries to market in? – What types of countries to enter?
Deciding Which Markets to Enter Identify a list of possible countries. Rank each with respect to market size, market growth, cost of doing business, competitive advantage, and risk. Goal is to estimate market potential, using these factors as well as demographic and geographic characteristics, and sociocultural, economic, and legal-political factors.
Marketing in Action Marketing to ChinaMany marketers areattracted to theChinese market dueto its substantialpopulation size andpotential for growth. Colgate’s effortshave expanded theirmarket share from7% to 35% in lessthan a decade.
Market Entry Strategies Exporting: – Indirect: Working via independent international marketing intermediaries. – Direct: Company handles its own exports.
Market Entry Strategies Joint Venturing: – Joining with foreign companies to produce or market products or services. Approaches: – Licensing – Contract manufacturing – Management contracting Toyoko’s Disneyland Resort is operated under – Joint ownership a licensing agreement.
Marketing in Action Joint Ownership KFC entered Japan through a joint ownershipagreement with Japanese conglomerate Mitsubishi.
Market Entry Strategies Direct Investment: – The development of foreign-based assembly or manufacturing facilities. – This approach has both advantages and disadvantages which must be carefully evaluated before making a decision.
Deciding on the Global Marketing Program Standardized Marketing Mix: – Selling largely the same products and using the same marketing approaches worldwide. Adapted Marketing Mix: – Producer adjusts the marketing mix elements to each target market, bearing more costs but hoping for a larger market share and return.
Marketing in Action Marketing Mix AdaptationIn India, McDonald’s serves chicken, fish, and veggie burgers, but no beef. Check out the Maharaja Mac!
Global Product Strategies Straight Product Extension: – Marketing a product in a foreign market without any change. Product Adaptation: – Adapting a product to meet local conditions or wants in foreign markets. Product Invention: – Creating new products or services for foreign markets.
Marketing in ActionGlobal Product Strategy Coca-Cola’s virtual vendor allows the curious to learn about Coca-Cola’s global product strategy.http://www2.coca-cola.com/
Global Promotion Strategies Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. – Communication Adaptation: Fully adapting an advertising Video Snippet message for Learn how the people local markets. at NIVEA approach – Changes may creating a global have to be made communication due to media availability. strategy for the firm’s brands.
Marketing in Action Promotion Adaptation Guy Larouche uses similar ads in European andArabian countries, but tones down the sensuality.
Marketing in Action Brand Name Blunders OOPS!!! Not all brand names translate well into English, or from English into a different language. Other Classic Blunders“Coke” translated into Chevy used the “Nova”Chinese characters was name verbatim, only tointerpreted by the find out that no vaChinese to mean “Bite means “It doesn’t go”the wax tadpole.” in Spanish.
Global Pricing Strategies Companies face many problems in setting their international prices. – Standard pricing methods such as uniform pricing, standard markup of costs everywhere, or charging what the market will bear ignores cost differentials and local market conditions.
Global Pricing Challenges 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 it charges in its home market. The Internet makes global price differences obvious and the euro has reduced the amount of price differentiation.
Marketing in Action Economic Impact of Global PricingThe adoption of the euro as a common currency byseveral nations has created a “pricing transparency”that is forcing companies to harmonize their pricesthroughout Europe.
Whole-Channel Concept for International Marketing
Global Distribution International firms must take a whole- channel view of distributing products to final consumers. Differences in the numbers and types of intermediaries serving each foreign market require time and money to navigate. Size and character of retail units differ as well, presenting challenges.
Deciding on the Global Marketing Organization Organize an export department Create international divisions – Geographical organizations – World product groups – International subsidiaries Become a global organization
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