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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.
Importance of global marketing
l Economies of scale l Lower marketing costs l Power and scope l Consistency in brand image Uniformity of marketing practices
Global Marketing in the 21st Century
International Marketing Decisions
2. Looking at the global environment 3. Deciding whether to go international 4. Deciding which markets to enter
5. Deciding how to enter the markets 6. Deciding on the global marketing problem 7. Deciding on the global marketing organization
Global Marketing Environment
l The International Trade System
Tariffs, quotas, embargos, exchange controls, nontariff trade barriers World Trade Organization Regional free trade zones
• European Union • North American Free Trade Agreement • Other free trade areas
l Economic Environment
• Raw material exporting economies • Industrializing economies • Industrial economies
l Political-Legal Environment
q q q q
Attitudes toward international buying Government bureaucracy Political stability Monetary regulations
l Cultural Environment
Impact of Culture on Marketing Strategy
• Cultural traditions, preferences, behavior
Impact of Marketing Strategy on Cultures
• Globalization vs. Americanization
Looking at the Global Marketing Environment Deciding Whether to Go International Deciding Which Markets to Enter Deciding How to Enter the Market Deciding on the Global Marketing Program Deciding on the Global Marketing Organization
Deciding Whether to Go international
l Not all companies need to go international
Local businesses Domestic can be easier and safer
l May be drawn international by global competitor’s attack l If domestic market growth low, global may bring higher sales l The company needs to evaluate its abilities and the consumer and business environments in other countries.
l Factors drawing companies into the international arena:
Global firms offering better products or lower prices can attack the company’s domestic market. The company discovers that some foreign markets present higher profit opportunities than the domestic market. The company needs a larger customer base to achieve economies of scale. The company wants to reduce its dependence on any one market. The company’s customers are going abroad and need servicing.
l Before going abroad, the company must weigh several risk:
The company might not understand foreign customer preferences and fail to offer a competitively attractive product. The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals. The company might realize that it lacks managers with international experience. The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate property.
Table 13.1: Blunders in International Marketing
Hallmark cards failed when they were introduced in France. The French dislike syrupy sentiment and prefer writing their own cards. Philips began to earn a profit in Japan only after it had reduced the size of its coffeemakers to fit into smaller Japanese kitchens and its shavers to fit smaller Japanese hands. Coca-Cola had to withdraw its two-liter bottle in Spain after discovering that few Spaniards owned refrigerators with large enough compartments to accommodate it. General Foods’ Tang initially failed in France because it was positioned as a substitute for orange juice at breakfast. The French drink little orange juice and almost none at breakfast. Kellogg’s Pop-Tarts failed in Britain because the percentage of British homes with toasters was significantly lower than in the United States and the product was too sweet for British tastes.
Deciding Which Markets to Enter
l Define international marketing polices and objectives, and sales volume goals l Decide how many countries to target l Decide on the types of countries to enter l Screen and rank each of the possible international markets using several criteria q Market size, market growth, cost of doing business, competitive advantage, risk level l Companies prefer to sell neighboring countries because they understand these countries better and control cost better.
Deciding How to Enter the Market
Amount of Commitment, Risk, Control, and Profit Potential
l Indirect export:
l The work through independent intermediaries to export their products q Occasional exporting: passive level of involvement in which the company export from times to times. q Active exporting:when company committed to expand its export to particular market.
Companies decide to handle their own export.the investment and risk are some greater but potential return.
l Licensingl License a foreign company to use trademark, manufacturing process, trade secret, or other item for a fee or royalty l Joint ventures: Join with local investors l Direct investment: -Ultimate form is direct
ownership of foreign-based assembly or manufacturing facilities. l Can buy part or full interest in a local company.
Deciding on the Global Marketing Program
l Standardized Marketing Mix
Same basic product, advertising, distribution, and other elements of the marketing mix are used in all international markets. The marketing mix elements are adjusted for each international target market.
l Adapted Marketing Mix
Deciding on the Global Marketing Program
Five International Product and Promotion Strategies
Don’t Change Product Adapt Product
Don’t Change Promotion
Straight Extension Communication Adaptation
Product Adaptation Dual Adaptation
Develop New Product
EXPORT COACHING, EXPORTMARKETING PLANS, MARKET DEVELOPEMNT PLANS, STUDY,PREPARATION, EXECUTION, CONTROL,CONTINUOUS ASSISTANCE
l Product Strategies for the Global Market
Straight product expansion
• Marketing the product with no changes
• Altering the product to meet local conditions or the wants of the foreign market
• Creating new products or services for foreign markets
Communication adaptation Dual adaptation Standardized global communication
• Advertising themes are standardized from country to country with slight modifications
l Global Promotion Strategies
• Advertising messages are fully adapted to local markets
Dual adaptation: company adopt both the product and communication.
• Companies have three choices
– Set a uniform price everywhere: same price all over the world – Set a market-based price in each country : what country can afford, – Set a cost-based price in each country: standard markup on cost.
Whole-Channel Concept for Distribution
Seller’s Headquarters Channels Between Nations Channels Within Nations Final User or Buyer
COMPANY SPECIFIC INTERNATIONAL DISTRIBUTION CHANNELS RESEACH & DEVELOPEMENT
l Place (distribution channels)
q q q
Seller’s international marketing headquarters Channels between nations Channels within foreign nations Whole-channel view
• • • • • Seller’s headquarters organization Channels between nations Channels within nations Numbers and types of intermediaries Size and character of retail units abroad
l Global Distribution Channels