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Chapter 8

GLOBAL
MARKETING

© 2014 Cengage Learning. All Rights Reserved. May
not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part. 1

Chapter 8 Global Marketing

Objectives
1. Describe the importance of global marketing
from the perspectives of the individual firm
and the nation.
2. Identify the major components of the
environment for global marketing.
3. Outline the basic functions of GATT, WTO,
NAFTA, FTAA, CAFTA-DR, and the European
Union.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2

Chapter 8 Global Marketing

Objectives
4. Identify the alternative strategies for
entering foreign markets.
5. Differentiate between a global marketing
strategy and a multidomestic marketing
strategy.
6. Describe the alternative marketing mix
strategies used in global marketing.
7. Explain the attractiveness of the United
States as a target market for foreign
marketers.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3

Chapter 8 Global Marketing

Introduction
▮ Global trade accounts for 25 percent of the
U.S. gross domestic product
▮ Exporting - Marketing domestically
produced goods and services in foreign
countries
▮ Importing - Purchasing foreign goods and
services

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4

S. in whole or in part. All Rights Reserved. or posted to a publicly accessible website. Chapter 8 Global Marketing Figure 8.Top U. May not be scanned. Trading Partners— Total Trade Including Exports and Imports © 2014 Cengage Learning. copied or duplicated. 5 .1 .

1 . or posted to a publicly accessible website. May not be scanned. 6 . copied or duplicated. in whole or in part. Chapter 8 Global Marketing Table 8.World’s Ten Largest Marketers (Ranked by Annual Sales) © 2014 Cengage Learning. All Rights Reserved.

All Rights Reserved. May not be scanned. copied or duplicated. or posted to a publicly accessible website. in whole or in part. 7 . Chapter 8 Global Marketing The Importance of Global Marketing ▮ Demand for foreign products is increasing in fast-growing economies ▮ Globalization and the Internet allow every marketer to be an international marketer © 2014 Cengage Learning.

8 . or posted to a publicly accessible website. Chapter 8 Global Marketing Service and Retail Exports ▮ Nearly four of every five dollars in the nation’s gross domestic product comes from services ▮ United States is the world’s largest exporter of services and retailing • Profitable exports include services such as engineering. legal services. and entertainment © 2014 Cengage Learning. May not be scanned. computing. copied or duplicated. in whole or in part. insurance. All Rights Reserved. financial.

copied or duplicated. 9 . in whole or in part. All Rights Reserved. May not be scanned. or posted to a publicly accessible website. Chapter 8 Global Marketing Benefits of Going Global ▮ Additional revenue ▮ New insights into customer behavior ▮ Alternative distribution strategies ▮ Advance notice of new products ▮ A major key to achieving success in foreign markets • Ability to adapt products to local preferences and culture © 2014 Cengage Learning.

All Rights Reserved. in whole or in part. or posted to a publicly accessible website. 10 . Chapter 8 Global Marketing International Economic Environment ▮ Factors that determine a nation’s prospects as a host for international business expansion • Size • Per-capita income • Stage of economic development © 2014 Cengage Learning. copied or duplicated. May not be scanned.

May not be scanned. or posted to a publicly accessible website. 11 . in whole or in part. All Rights Reserved. Chapter 8 Global Marketing International Economic Environment ▮ Infrastructure is an important economic factor to consider when planning to enter a foreign market ▮ Changes in exchange rates can complicate international marketing • Exchange rate .Price of one nation’s currency in terms of another country’s currency © 2014 Cengage Learning. copied or duplicated.

Chapter 8 Global Marketing International Social-Cultural Environment ▮ To be effective. in whole or in part. May not be scanned. marketers must understand a nation’s culture ▮ Language plays an important role in global marketing © 2014 Cengage Learning. All Rights Reserved. 12 . or posted to a publicly accessible website. copied or duplicated.

Chapter 8 Global Marketing International Technological Environment ▮ The Internet transcends political. May not be scanned. 13 . and cultural barriers to reach every corner of the globe ▮ Technology presents challenges for global marketers that extend beyond the Internet and other telecommunication innovations © 2014 Cengage Learning. copied or duplicated. All Rights Reserved. economic. in whole or in part. or posted to a publicly accessible website.

or posted to a publicly accessible website. Chapter 8 Global Marketing International Political-Legal Environment ▮ Global marketers must stay abreast of laws and trade regulations in each country in which they compete ▮ Firms set up internal political risk assessment units ▮ The political environment involves labor conditions in different countries © 2014 Cengage Learning. All Rights Reserved. in whole or in part. 14 . May not be scanned. copied or duplicated.

in whole or in part. or posted to a publicly accessible website. and navigation (FCN) treaties with other governments • Europe has pushed for mandatory ISO certification to standardize quality levels © 2014 Cengage Learning. Chapter 8 Global Marketing International Political-Legal Environment ▮ International law • U. May not be scanned. commerce. copied or duplicated. has friendship. 15 .S. All Rights Reserved.

All Rights Reserved. and import and export requirements affecting international marketing • Export Trading Company Act of 1982 exempts exporters from antitrust regulations • Foreign Corrupt Practices Act makes it illegal to bribe a foreign official in an attempt to solicit new or repeat sales abroad © 2014 Cengage Learning.S. or posted to a publicly accessible website. 16 . May not be scanned. law • Various trade regulations. tax laws. in whole or in part. Chapter 8 Global Marketing International Political-Legal Environment ▮ U. copied or duplicated.

or posted to a publicly accessible website. 17 . in whole or in part. May not be scanned. All Rights Reserved. copied or duplicated. the Chinese government continues to censor the Internet © 2014 Cengage Learning. Chapter 8 Global Marketing International Political-Legal Environment ▮ Legal requirements of host nations • Example: Despite China’s many advances in recent years.

All Rights Reserved. or posted to a publicly accessible website. in whole or in part. 18 . May not be scanned. copied or duplicated. Chapter 8 Global Marketing Trade Barriers ▮ Barriers fall into two major categories • Tariff .Tax levied against imported goods • Administrative barriers ▮ GATT and WTO agreements have eliminated many tariffs on many products • Countries frequently use nontariff barriers to boost exports and control the flows of imported products © 2014 Cengage Learning.

or posted to a publicly accessible website.Designed to raise the retail price of an imported product to match or exceed that of a similar domestic product © 2014 Cengage Learning. 19 . copied or duplicated.Designed to raise funds for the importing government • Protective tariffs . All Rights Reserved. in whole or in part. May not be scanned. Chapter 8 Global Marketing Tariffs ▮ Two types of tariffs • Revenue tariffs .

Chapter 8 Global Marketing Other Trade Barriers ▮ Import quotas . or posted to a publicly accessible website. copied or duplicated.Complete ban on the import of specified products ▮ Subsidies .Government financial support of a private industry ▮ Exchange control . All Rights Reserved. 20 .Limit the number of units of products in certain categories that can cross a country’s border for resale ▮ Embargo . May not be scanned. in whole or in part.Method used to regulate international trade among importing organizations by controlling access to foreign currencies © 2014 Cengage Learning.

21 . Chapter 8 Global Marketing Dumping ▮ Controversial practice of selling a product in a foreign market at a price lower than what it receives in the producer’s domestic market © 2014 Cengage Learning. May not be scanned. or posted to a publicly accessible website. copied or duplicated. in whole or in part. All Rights Reserved.

or posted to a publicly accessible website. abolishing tariffs and trade restrictions ▮ Custom union establishes a free-trade area and uniform tariffs for nonmember nations ▮ Common market extends a customs union by seeking to reconcile all government regulations affecting trade © 2014 Cengage Learning. in whole or in part. Chapter 8 Global Marketing Multinational Economic Integration ▮ Free-trade area in which participating nations agree to free trade among themselves. copied or duplicated. May not be scanned. All Rights Reserved. 22 .

and trademarks • Included services under international trading rules • Phased out import quotas on textiles and clothing from developing nations © 2014 Cengage Learning. 23 . All Rights Reserved. Uruguay round produced several important outcomes • Reduced farm subsidies • Increased protection for patents. copyrights. or posted to a publicly accessible website. copied or duplicated. in whole or in part. May not be scanned. Chapter 8 Global Marketing General Agreement on Tariffs and Trade (GATT) ▮ International trade accord that has helped reduce world tariffs ▮ In 1994.

in whole or in part. or posted to a publicly accessible website. All Rights Reserved. Chapter 8 Global Marketing World Trade Organization (WTO) ▮ Succeeded GATT ▮ Oversees GATT agreements ▮ Serves as a forum for trade negotiations ▮ Mediates trade disputes ▮ Monitors national trade policies ▮ Works to reduce trade barriers throughout the world © 2014 Cengage Learning. May not be scanned. 24 . copied or duplicated.

in whole or in part. 25 . May not be scanned. copied or duplicated. Chapter 8 Global Marketing World Trade Organization (WTO) ▮ WTO has made slow progress toward its major policy initiatives • Liberalizing world financial services • Telecommunications • Maritime markets © 2014 Cengage Learning. All Rights Reserved. or posted to a publicly accessible website.

in whole or in part. 26 . Mexico.S. and the United States ▮ Particularly important to U. All Rights Reserved. marketers because Canada and Mexico are two of its largest trading partners © 2014 Cengage Learning. or posted to a publicly accessible website. May not be scanned. Chapter 8 Global Marketing North American Free Trade Agreement (NAFTA) ▮ Accord removing trade barriers among Canada. copied or duplicated.

Central. in whole or in part. and South America • Central American Free Trade Agreement–DR (CAFTA-DR) . and the Dominican Republic © 2014 Cengage Learning. or posted to a publicly accessible website. May not be scanned. All Rights Reserved.Trade agreement among the United States. Chapter 8 Global Marketing The Free Trade Area of the Americas and CAFTA-DR ▮ Proposed free trade area stretching the length of the entire Western hemisphere ▮ Designed to extend free trade benefits to additional nations in North. Central American nations. copied or duplicated. 27 .

All Rights Reserved. Chapter 8 Global Marketing European Union (EU) ▮ Customs union that is moving in the direction of an economic union by: • Adopting a common currency • Removing trade restrictions • Permitting free flow of goods and workers throughout the member nations ▮ Goal is to remove all barriers to free trade among its members © 2014 Cengage Learning. or posted to a publicly accessible website. copied or duplicated. May not be scanned. in whole or in part. 28 .

May not be scanned. copied or duplicated. in whole or in part. or posted to a publicly accessible website. All Rights Reserved.The 27 Members of the European Union © 2014 Cengage Learning. 29 . Chapter 8 Global Marketing Figure 8.2 .

copied or duplicated. in whole or in part. or posted to a publicly accessible website. Chapter 8 Global Marketing Going Global ▮ Reasons for marketers to go global • Saturation of the target market • Strong domestic market share • Globalization of customers • New customers in emerging markets • Globalization of competitors • Reduced trade barriers • Advances in technology • Enhanced customer responsiveness © 2014 Cengage Learning. All Rights Reserved. 30 . May not be scanned.

in whole or in part. and subcontracting • International direct investment © 2014 Cengage Learning. All Rights Reserved. or posted to a publicly accessible website. licensing. 31 . May not be scanned. Chapter 8 Global Marketing Strategies for Entering Foreign Markets ▮ Three basic choices • Importing and exporting • Contractual agreements such as franchising. copied or duplicated.

May not be scanned. in whole or in part. copied or duplicated.Levels of Involvement in Global Marketing © 2014 Cengage Learning. Chapter 8 Global Marketing Figure 8. or posted to a publicly accessible website. All Rights Reserved.3 . 32 .

May not be scanned. All Rights Reserved. or posted to a publicly accessible website. depends on: • Ability of supplier to maintain quality • Flexibility in filling orders that vary • Response time in filling orders • Total costs © 2014 Cengage Learning. Chapter 8 Global Marketing Importing and Exporting ▮ Decision to import. 33 . in whole or in part. or bring in foreign goods to sell domestically or use as component parts. copied or duplicated.

Chapter 8 Global Marketing Importing and Exporting ▮ First-time exporters can reach foreign customers through: • Export-trading companies • Export-management companies • Offset agreement © 2014 Cengage Learning. May not be scanned. or posted to a publicly accessible website. copied or duplicated. 34 . in whole or in part. All Rights Reserved.

copied or duplicated. in whole or in part. and greater recognizability ▮ Success depends on ability to adapt to local customer preferences © 2014 Cengage Learning. 35 . standardized operations. May not be scanned. All Rights Reserved. Chapter 8 Global Marketing Franchising ▮ Contractual arrangement in which a wholesaler or retailer agrees to meet the operating requirements of a manufacturer or other franchiser ▮ Benefits are risk reduction. or posted to a publicly accessible website.

or process in a specified geographic area ▮ Gives access to local partner’s marketing information and distribution channels. and protection from legal barriers ▮ Allows quick entry into a foreign market with a known product © 2014 Cengage Learning. All Rights Reserved. Chapter 8 Global Marketing Foreign Licensing ▮ Agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark. patent. copied or duplicated. in whole or in part. May not be scanned. or posted to a publicly accessible website. 36 .

copied or duplicated. in whole or in part. May not be scanned. Chapter 8 Global Marketing Subcontracting ▮ Contractual agreements that assign the production of goods or services to local or smaller firms ▮ Can prevent mistakes involving local culture and regulations ▮ Can provide protection from import duties © 2014 Cengage Learning. 37 . or posted to a publicly accessible website. All Rights Reserved.

38 . All Rights Reserved. Chapter 8 Global Marketing International Direct Investment ▮ High involvement and high risk are the major characteristics ▮ Firms choosing this method often have a competitive advantage ▮ Several forms • Acquisition • Joint venture © 2014 Cengage Learning. in whole or in part. May not be scanned. copied or duplicated. or posted to a publicly accessible website.

copied or duplicated. or posted to a publicly accessible website.S. Mitsubishi ▮ Important changes since 1960 • No longer exclusively U. 39 . in whole or in part. Siemens. May not be scanned. All Rights Reserved. based • Multinationals no longer think of their foreign operations as mere outsourcing appendages © 2014 Cengage Learning. Chapter 8 Global Marketing From Multinational Corporation to Global Marketer ▮ Multinational corporation .Significant operations and marketing activities outside its home country • Examples: General Electric.

40 . Chapter 8 Global Marketing From Multinational Corporation to Global Marketer ▮ Employ large foreign workforces relative to American staffs ▮ Reflect interdependence of world economies. All Rights Reserved. and globalization of world markets © 2014 Cengage Learning. growth of international competition. May not be scanned. or posted to a publicly accessible website. copied or duplicated. in whole or in part.

Chapter 8 Global Marketing Developing an International Marketing Strategy ▮ Global marketing strategy . copied or duplicated. or posted to a publicly accessible website. in whole or in part.Standardized marketing mix with minimal modifications that a firm uses in all of its domestic and foreign markets • Can effectively market some goods and services to segments in many nations that share cultures and languages • Can be highly effective for luxury products that target upscale consumers everywhere • Major benefit is its low cost to implement © 2014 Cengage Learning. 41 . All Rights Reserved. May not be scanned.

May not be scanned. in whole or in part. 42 . Chapter 8 Global Marketing Developing an International Marketing Strategy ▮ Multidomestic marketing strategy - Application of market segmentation to foreign markets by tailoring the firm’s marketing mix to match specific target markets in each nation © 2014 Cengage Learning. All Rights Reserved. or posted to a publicly accessible website. copied or duplicated.

in whole or in part. copied or duplicated.4 . Chapter 8 Global Marketing Figure 8. All Rights Reserved. 43 . May not be scanned. or posted to a publicly accessible website.Alternative International Product and Promotional Strategies © 2014 Cengage Learning.

or posted to a publicly accessible website. May not be scanned. All Rights Reserved. copied or duplicated. 44 . Chapter 8 Global Marketing International Distribution Strategy ▮ Marketers must set up proper channels and anticipate extensive physical distribution problems ▮ A distribution decision involves two steps • The firm must decide on a method of entering the foreign market • It must determine how to distribute the product within the foreign market through that entry channel © 2014 Cengage Learning. in whole or in part.

May not be scanned. 45 . political. economic. and legal factors can limit pricing decisions ▮ Adaptation to local markets ▮ Emergence of commodity marketing organizations © 2014 Cengage Learning. Chapter 8 Global Marketing Pricing Strategy ▮ Competitive. or posted to a publicly accessible website. in whole or in part. copied or duplicated. All Rights Reserved.

copied or duplicated. or posted to a publicly accessible website. All Rights Reserved. May not be scanned. 46 . Chapter 8 Global Marketing Countertrade ▮ Form of exporting whereby goods and services are bartered rather than sold for cash ▮ May be imposed in less developed nations that lack sufficient foreign currency to obtain goods and services they want ▮ Way to control balance-of-trade problems © 2014 Cengage Learning. in whole or in part.

Chapter 8 Global Marketing The United States as a Target for International Marketers ▮ U. copied or duplicated. foreign multinationals invest in U.S.S. May not be scanned. assets as they seek to produce goods locally and control distribution channels © 2014 Cengage Learning. in whole or in part. or posted to a publicly accessible website. is an inviting target for foreign companies ▮ Increasingly. All Rights Reserved. 47 .

Chapter 8 Global Marketing Strategic Implications of Marketing in the 21st Century ▮ Marketers are pioneers in bringing new technologies to developing nations ▮ Greatest competitive advantage belongs to marketers who capitalize on the similarities of their target markets and adapt to the differences ▮ New and better products in developing markets will create and maintain relationships for the future © 2014 Cengage Learning. May not be scanned. copied or duplicated. or posted to a publicly accessible website. in whole or in part. 48 . All Rights Reserved.

May not be scanned.com/marketing/book_content/boone_9781133628460 /videos/ch08.cengage.html Scripps Networks Interactive & Food Network Video http://www.com/marketing/book_content/boone_9781133628460 /videos/part2. Chapter 8 Global Marketing Nederlander Video http://www. in whole or in part. 49 . or posted to a publicly accessible website. All Rights Reserved.cengage.html © 2014 Cengage Learning. copied or duplicated.