Marketing

Chapter 7

Global Marketing

Dhruv Grewal
Michael Levy

McGraw-Hill/Irwin Copyright 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
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Proctor and Gamble Chinas Success

Keys to success:
Partner, relationships, product, and price adjustments

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Growth of Global Market

Globalization of Production

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General Agreement on Tariffs and
Trade (GATT)

International
Monetary Fund (IMF)

World Trade
Organization (WTO)

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Assessing Global Markets

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Economic Analysis

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Test Your Knowledge

The greater the __________ of a country, generally, the better

the opportunity a firm will have in that particular country.
A) political freedom
B) wealth
C) population
D) cultural similarities
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Evaluating General Economic

Environment

Trade deficit vs. trade surplus

Gross Domestic Product (GDP)
Gross National Income (GNI)
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Purchasing Power Parity

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Global Human Development Index

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Evaluating Market Size and Population

Growth Rate

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Evaluating Real Income

1. Evaluate income
2. Adjust product
packaging
3. Adjust product pricing
4. Win

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Analyzing Infrastructure and Technological
Capabilities

Transportation
Communication
Distribution Channel
Commerce

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Test Your Knowledge

Why is the communication system in a foreign market so

important?
A) To allow consumers to access information about
the products and services available.
B) To allow consumers to tell their friends about new
products.
C) To assist foreign-based workers in providing
information to the home office.
D) To ensure government knowledge of trade
agreements.
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Analyzing Government Actions

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Tariff and Quotas

Tariffs Quotas
Tax Maximum limit
Artificially raises Reduces
prices availability of
Lowers demand imported goods

Both benefit domestically made products

because they reduce foreign competition
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Boycott

Groups such as Ethical Consumer publish current

boycott lists.

Discussion question

Have you ever boycotted

a product?

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Ethical Dilemma 7.2: Protesting the War

with the Wallet

Dissatisfied global consumers

Voiced dissatisfaction with US war
policy
Avoidance of U.S. products and
services
How do firms respond to these
actions?

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Exchange Control

Exchange rate

Countertrade

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Trade Agreements

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Test Your Knowledge

A __________ consists of those countries that have signed a

particular trade agreement.
A) foreign coalition
B) global band
C) trading bloc
D) trading coalition
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The European Union (EU)

Monetary and Trade Union

Euro (not in the UK)
Membership not consists of
Western and Eastern European
countries
Newest petitioner Turkey
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Analyzing Sociocultural Factors

Uncertainty
Avoidance
Power
Distance

Culture Individualism

Time
Orientation
Masculinity

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Country Clusters

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Choosing a Global Entry Strategy

Export
Franchising
Strategic alliance
Joint venture
Direct investment

Discussion question

Why do you think most firms first try exporting?

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Choosing a Global Marketing Strategy:

Target Market (STP)

Cultural nuances
Subcultures
View of product and
consumer role

Different positioning
Adaptation
Single positioning
strategy

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Test Your Knowledge

In the past, global marketplace dominance was determined by

such things as ability to develop and promote brand name
products, and later in new product development. What are firms
currently exploiting in their bid for dominant globalization?
A) trade agreements
B) financial superiority
C) cheap labor
D) technological skills
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Adapting for Global Success

How do firms successfully introduce a

new product to a global market?
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Case in Point: Nescafe in China

Nestle wants to introduce its top

Challenge global instant coffee brand
Nescafe to China.

Chinese consumers were not

coffee drinkers thus needed to be
educated in how to consume the
Answer product. Nescafe 3 in 1, coffee,
creamer and sweetener in one.
Ideal mix for Chinese market easily
reconstituted for best taste.

Nescafe dominates the in-home

Results coffee category in China.
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The Global Marketing Mix: Product or

Service Strategies

Sell the same

product or service in
both the home Sell totally new
country market and products or
host country market services

Sell a product or
service similar to that
sold in home country
but include minor
adaptations

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Adding Value 7.1: MTV Conquers the

World

Seen in 374.4 million households

164 countries, 34 channels, 18
languages
Mix of standardized and local
content benefited local music and
artists
EX: Salam Dangdut in Indonesia
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Global Marketing Mix: Global Pricing
Strategies

Tariffs

Competitive
Quotas
factors
Price

Economic Anti-dumping
Conditions Policies
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Managing the Global Marketing Mix

How do firms manage the

global marketing mix?
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Case in Point: Wal-Marts Failed
Experiment

To continue to grow the most

Challenge successful retailer in the U.S.,
Wal-Mart.

Wal-Mart enters Germany with

Answer the same value proposition
(EDLP) it has in the U.S.

Stiff competition from entrenched

local competitors, a sluggish
economy as well as problems with
Results workers and regulators led to
Wal-Mart exiting the market in 2006.
The sale to competitor Metro resulted
in pre-tax loss of $1Billion.
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Global Marketing Mix: Global Distribution

Strategies

Some global channels are very long and

complex.
Consumer shop local small local stores.
Suppliers must be creative in delivering to
these outlets.
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Global Marketing Mix: Global
Communication Strategies

Literacy levels vary by country

Firms choose whether to adapt to language
differences
Cultural and religious differences also
matter
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Test Your Knowledge

When creating a global distribution strategy, why is it important

to shorten distribution channels wherever possible?
A) To increase consumer confidence
B) To reduce control of supply chain
C) To reduce time-to-market
D) To model current culture
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Ethical Issues in Global Marketing:

Environmental Concerns

Waste Management
80/20 Rule: 80% of waste created
by 20% of the population
Many developing countries dont
manage waste well
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Cleaning up the Earth

How can countries balance development

and environmental impact?
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Case in Point: Mexico Cleans Up Its Act

To manage environmental impact

Challenge while undergoing economic
expansion.

Using funds provided by North

American Commission for
Environmental Cooperation (CEC)
Answer and the North American Development
Bank (NADBank) improved air
quality.

Mexico now produces lower levels of

some pollutants than either the U.S.
Results or Canada and have lower energy
use per capita. Proving
environmental impact can be
managed.
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Ethical Concerns: Global Labor Issues

Fair Wages
Working
conditions
Child Labor
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Ethical Concerns: Impact on Host Country

Culture

Cultural imperialism
Active, formal policy
Subtle, general attitude
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Chapter 7 Glossary
Countertrade: Trade between two countries where goods are traded for other
goods and not for hard currency.
Cultural imperialism: The belief that ones own culture is superior to that of
other nations.
Exchange rate: The measure of how much one currency is worth in relation
to another.
Globalization of production: Also known as offshoring, refers to
manufacturers procurement of goods and services from around the globe to
take advantage of national differences in the cost and quality of various factors
of production.
Gross Domestic Product (GDP): The market value of the goods and
services produced by a country in a year.
Gross National Income (GNI): GDP plus the net income earned from
investments abroad.
Infrastructure: The basic facilities, services, and installations needed for a
community or society to function.
Trade deficit: Occurs when a country imports more goods than it exports.
Trade surplus: Occurs when a country exports more goods than it imports.
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Chapter 7 Glossary for Global Entry

Strategies
Direct investment: Exit strategy that requires a firm to maintain 100
percent ownership of its plants, operation facilities, and offices in a
foreign country, often through the formation of wholly owned
subsidiaries.
Exporting: Producing goods in one country and selling them in
another.
Franchising: A contractual agreement between a firm, the franchisor,
and another firm or individual, the franchisee.
Joint venture: Formed when a firm entering a new market pools its
resources with those of a local firm to form a new company in which
ownership, control, and profits are shared.
Strategic alliance: Collaborative relationship between independent
firms, though the partnering firms do not create an equity partnership;
that is, they do not invest in one another.