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Global Marketing

Chapter 19

Case Study
Coca-Cola – Successfully Going
Global

Background

Established in 1893 in
Atlanta pharmacy.

1900: Coke was available in
foreign countries.

1940s: built bottling plants
abroad to supply soldiers.

Growth fueled by strong
marketing: “I’d like to buy
the world a Coke” TV ad.

Now in emerging markets.

How They Did It
 Balances brand building
and global standardization
with local adaptation.
 Consistent positioning,
packaging, and taste.
Brands, flavors, ads, price,
distribution, and
promotions are adapted to
local markets.
 Sprite: a global success.

Global Marketing
in the Twenty-First Century

Faster
communication,
transportation, and
financial flows
International trade
booming
Intensifying global
competition
Foreign competition
in home markets

Looking at the Global Marketing Environment The International Trade System Regional Free Trade Zones     Economic communities are free trade zones European Union (EU) North American Free Trade Agreement (NAFTA) European Free Trade Association (EFTA) .

NAFTA has been very good for Canada.R. Multilateral trade negotiations by the free world nations to negotiate tariff reductions is known as GATT agreements (general agreements on tariffs & trade).Global Market Place      Foreign trade represents 43% of Canada’s GDP.) is now known as Investment Canada .A. USA accounts for 80% of our business.I. Foreign Investment Review Agency (F.

Global Marketing in the Twenty-First Century   Era of free trade Government assistance • Team Canada  Global is risky • • • • • Economics Regulations Tariffs Trade barriers Corruption .

gains R&D. by operating in more than one country. financial. and production advantages that are not available to purely domestic competitors . marketing.Global Marketing in the Twenty-First Century  Global Firm • A firm that.

Global Marketing Environment: The International Trade System  Common trade restrictions: • • • • • Tariffs Quotas Embargos Exchange controls Non-tariff barriers .

also known as import duties  Quota: a limit on the amount of goods that an importing company will accept in certain product categories  Embargo: a ban on the import of a certain product Figure 19.1 p. designed to protect domestic manufacturers and raise revenue.The International Trade System   Barriers to international trade: Tariff: a tax levied by a government against certain imported products.628 .

Major Decisions in International Marketing Looking Lookingatatthe the global globalmarketing marketing environment environment Deciding Deciding Whether Whetherto togo go international international Deciding Deciding which whichmarkets markets to toenter enter Deciding Decidinghow how to toenter enterthe the market market Deciding Decidingon onthe the global globalmarketing marketing program program Deciding Decidingon onthe the global globalmarketing marketing organization organization .

Economic Environment  Industrial structure • Subsistence economies • Raw-material exporting economies • Industrializing economies • Industrial economies • Service economies  Income distribution National Bank .

few opportunities for trade • Raw-material-exporting economies: rich in one or more natural resources but poor in other needs. with a small wealthy upper class.1 .The International Trade System   Two factors in the economic influence attractiveness: environment Types of economies: • Subsistence economies: most people engage in simple agriculture. consume their output and trade for basic needs. good markets for large equipment and infrastructure. but low-income for most of the population Figure 19.

investment funds. good markets for increasing middle class • Industrial economies: major exporters of manufactured goods. mostly due to favorable labor costs.1 . technology. and expertise  Income distribution: • How income is distributed within the economy will influence the size and attractiveness of international markets Figure 19.The International Trade System  Types of economies: • Industrializing economies: manufacturing accounts for 10% to 20% of the economy. needs raw materials to fuel growing industry.

compensation (buyback).The International Trade System  Political-legal environment: four factors influence attractiveness of international markets: • Attitudes toward international buying • Government bureaucracy • Political stability (ie Venezuela) • Monetary regulations  Counter trade: international trade involving the direct or indirect exchange of goods for other goods instead of cash. includes barter.1 . and counter purchase Figure 19.

diplomatic Lack of promotion Meeting and greeting .Cultural Environment  Every country has: • Folkways • Norms • Taboos  Business behaviour • • • • Personal distance Direct vs.

The International Trade System  Cultural environment: two directions of influence • Impact of culture on marketing strategy: companies need to be careful when translating their marketing programs to different cultures to avoid offense. not all products will sell Figure 19.1 .

Deciding Whether to go International    Must become aware Reasons: • Global competitors • Counterattack • Higher profits • Shrinking domestic market • Reduce market dependence Weigh risks and assess global ability .

 The Decision to go International Reasons for entering international markets: • • • •  Growth opportunities outside of domestic markets As a counterattack against competition at home Reduce dependence on existing markets Need a larger customer base to achieve economies of scale Factors to consider: • Marketing objectives • Volume of foreign sales – How many countries – Types of countries to enter Figure 19.1 .

Indicators of Market Potential: Demographic Characteristics      Size of population Rate of population growth Degree of urbanization Population density Age structure and composition of the population .

Indicators of Market Potential: Geographic Characteristics    Physical size of a country Topographical characteristics Climate conditions .

Indicators of Market Potential: Economic Factors     GNP per capita Income distribution Rate of growth of GNP Ratio of investment to GNP .

Indicators of Market Potential: Technological Factors     Level of technological skill Existing production technology Existing consumption technology Education levels .

Indicators of Market Potential: Socio-cultural Factors     Dominant values Lifestyle patterns Ethnic groups Linguistic fragmentation .

Indicators of Market Potential: National Goals and Plans   Industry priorities Infrastructure investment plans .

Indicators of Market Potential Indicators of Market Potential Demographic characteristics Geographic characteristics Economic factors Size of population Rate of population growth Degree of urbanization Population density Age structure/composition Physical size of country Topographical characteristics Climate conditions GNP per capita Income distribution Rate of growth of GNP Ratio of investment to GNP Technological factors Sociocultural factors National goals and plans Level of technological skill Existing production technology Existing consumption technology Education levels Dominant values Lifestyle patterns Ethnic groups Linguistic fragmentation Industry priorities Infrastructure investment plans Table 19.1 p.637 .

control.control.2 Exporting Joint venturing Direct investment Direct Indirect Licensing Contract manufacturing Management contracting Joint ownership Assembly facilities Manufacturing facilities Amount Amountof ofcommitment. risk.Deciding How to Enter Markets: Market Entry Strategies p. commitment.638 fig 19.risk.and andprofit profitpotential potential .

Market Entry Strategies  Exporting: • Entering a foreign market by selling goods produced in the company’s home country.2 . international marketing intermediaries. often with little modification • Indirect exporting: selling through independent. may use local distributors or company personnel – The simplest and least risky way to enter foreign markets – May be a temporary effort or sustained Figure 19. • Direct exporting: handling their own export program.

patent. may create a competitor – May be a requirement for entering a foreign market. China Figure 19.Market Entry Strategies  Joint venturing: • Entering a foreign market by joining with domestic or foreign companies to produce or market products or services • Licensing: entering into an agreement with a foreign licensee for the right to use a manufacturing process.2 . trademark. or other item of value for a fee or royalty • Offers quick entry but involves more risk as the company may lose some control over their business. trade secret.

also known as outsourcing • Management contracting: the domestic firm supplies (exports) management services to a foreign manufacturer • Joint ownership: a company joins with investors in a foreign market to create a local business in which they share ownership Figure 19. Market Entry Strategies Joint venturing: • Contract manufacturing: a company contracts with manufacturers in a foreign market to produce the product or provide its service.2 – More risky due to control and profit repatriation issues .

 Market Entry Strategies Direct investment: • Entering a foreign market by developing foreignbased assembly or manufacturing facilities • The highest amount of commitment. control and potential for profit of the market entry strategies • Political stability of the foreign country is a major concern.2 . new governments may nationalize (seize the assets of) whole industries – Creates jobs within the markets the company want to sell to Figure 19. risk.

715  Standardized marketing mix or adapted marketing mix? • • • • Marketing concept applies World brands Adapt only if local wants cannot be changed or avoided Matter of degree GLOCAL  Think globally but act locally =  Standardize where possible.  Q: Why has Starbucks enjoyed success in China. when other major chains have failed? (see the article) .Deciding on Global Marketing Program p. adapt where necessary.

Global Marketing Programs  Standardized marketing mix: using the same marketing mix elements for all of the company’s international markets  Adapted marketing mix: adjusting the marketing mix elements to better suit each international target market entered  Essentially five options when attempting to make product and promotion decisions for foreign markets: Fig 19.642 .3 p.

Deciding on Global Marketing Program: Promotion     Message Colors Communication adaptation strategy Media availability .

Deciding on Global Marketing Program: Price      Higher than domestic Foreign subsidiaries Currencies Influence of the internet Moving towards standardizing .

Comment What factors should my firm consider when expanding overseas? Direct Investment is the best method to expand overseas.Questions to consider When it comes to international marketing. Comment . it is always best to adapt the marketing mix.