Chapter 7

Understanding and Reaching Global Consumers and

Markets
• https://www.youtube.com/watch?v=0Wea5lN4_yI
Amazon's Incredible Challenges in India
• Commercial Regulations
• Amazon has had to modify its operating platform in India due to
Indian trade regulations. Specifically, foreign companies, such as
Amazon, are prohibited from maintaining their own inventory and
selling products directly to Indian consumers.
Payment systems

• Only 60 percent of Indian consumers have bank accounts. And only 12

percent have credit or debit cards. Therefore, Amazon's payment
systems in India are drastically different from any the company has
tried before.

Uprooted competition. Amazon faces well-funded and capable

domestic competitors in India.
WORLD TRADE DYNAMICS

• The dollar value of world trade has nearly doubled in the last decade.
Manufactured goods and commodities account for 85% of world
trade. Service industries, including telecommunications,
transportation, insurance, education, banking and tourism, account
for the other 15 percent.
Global World
Trade Outlook
• The United States, China, Japan,
Western Europe and Canada
together account for more than two-
thirds of global trade in
manufactured goods and
commodities. China is the world's
leading exporter, followed by the
United States and Germany. The
United States is the world's top
importer, followed by China and
Germany. China, Germany and the
United States remain far ahead of
other countries in terms of imports
and exports.
Business Feedback Effect

• The increase in demand for exports from other nations boosts their
economic activity, resulting in higher national income, which
stimulates their demand for imports. In short, imports affect exports
and vice versa.
U.S. perspective on world trade.

• The role of the United States in world trade can be seen from two
perspectives:
• (1) gross domestic product
• (2) trade balance.
Gross Domestic Product

• It is the monetary value of all products and services produced in a

country for a year. The United States is among the world leaders in
exports due in large part to its global prominence in the aerospace,
chemical, office equipment, information technology, pharmaceutical,
telecommunications and professional services industries.
Balance of trade / Balanza
comercial

• The difference between the monetary

value of a nation's exports and imports is
called the trade balance. When a
country's exports exceed its imports, it
incurs a surplus in its trade balance.
• La diferencia entre el valor monetario de
las exportaciones e importaciones de una
nación se llama balanza comercial.
Cuando las exportaciones de un país
exceden sus importaciones, incurre en un
superávit en su balanza comercial.
MARKETING IN A DYNAMIC
GLOBAL ECONOMY/ MARKETING
EN UNA ECONOMÍA GLOBAL
DINÁMICA

Globalization focuses on the creation of

economic, cultural, political and
technological interdependence among
individual national institutions and
economies.
La globalización se centra en la creación de
interdependencia económica, cultural,
política y tecnológica entre las instituciones
y economías nacionales individuales.
Five developments have significantly influenced the global
marketing landscape and globalization over the past decade:

1. Economic protectionism on the part of each country.

2. Economic integration between countries.
3. Global competition between global companies for global consumers.
4. The presence of a global market space networked.
5. The increasing prevalence of economic espionage.
Economic protectionism by individual countries.

Protectionism is the practice of protecting one or more industries

within a country's economy from foreign competition through the use
of tariffs or quotas. The argument for protectionism is that it limits the
outsourcing of jobs, protects a nation's political security, discourages
economic dependence on other countries, and promotes the
development of domestic industries and employment.
Tariffs and quotas can discourage world trade, as shown in Figure 7–2.
Indeed, tariffs and quotas, among other restrictive trade measures,
have slowed global trade growth over the past decade.
Tariffs/ Tariffs

Are a government tax on products or services entering a

country, serve mainly to increase the prices of imports. The
average tariff on products manufactured in industrialized
countries is 4%.
Son un impuesto gubernamental sobre los productos o servicios
que ingresan a un país, sirven principalmente para aumentar los
precios de las importaciones. El arancel medio aplicado a los
productos fabricados en los países industrializados es del 4 por
ciento.
Economic integration between countries
Several countries with similar economic goals have formed
transnational trade groups or signed trade agreements with the
purpose of promoting free trade among member nations and
improving their individual economies. Two of the best-known examples
are the European Union (or simply the EU) and the Agreement between
the United States, Mexico and Canada (USMCA). About 46 percent of
all U.S. exports go to its free-trade partners.
The European
Union
It is made up of 27 member countries
that have removed most barriers to the
free flow of products, services, capital,
and labor across their borders (see
Figure 7–3).
U.S.-Mexico-Canada Agreement The Treaty

The United States-Mexico-Canada (USMCA) recently renegotiated

aspects of the North American Free Trade Agreement (NAFTA) that was
established in 1994. These agreements have much in common and
were created to govern trade relations between member countries, as
well as cross-border retail, manufacturing and investment.
Global competition between global companies for
global consumers.
Economic integration between countries has created a new reality for
sellers of all shapes and sizes. Today, global trade is driven by global
competition between global companies for global consumers.
Global competition / La competencia global
It exists when companies originate, produce and market their products
and services around the world. The fields of automotive,
pharmaceutical, garment, electronics, aerospace and
telecommunications represent well-known industries with sellers and
buyers on all continents.
• Existe cuando las empresas originan, producen y comercializan sus
productos y servicios en todo el mundo. Los campos del automóvil, la
industria farmacéutica, la confección, la electrónica, la industria
aeroespacial y las telecomunicaciones representan industrias bien
conocidas con vendedores y compradores en todos los continentes.
Three types of companies populate and compete
in the global market:
international companies
multinational enterprises
(1) Transnational corporations
(2) All three employ people in different countries, and many have
administrative, marketing and manufacturing operations (often
called divisions or subsidiaries) around the world.
A multinational company / Una empresa
multinacional
He sees the world as made up of unique pieces and
markets for each part differently.
• Ve el mundo como compuesto de piezas y mercados
únicos para cada parte de manera diferente.

Multinationals use a multi-domestic marketing strategy,

which means they have as many different product
variations, brand names and advertising programs as
countries in which they do business.
A transnational company/Una empresa
transnacional
It sees the world as a single market and emphasizes cultural similarities
between countries or the universal needs and desires of consumers
rather than differences.
Ve el mundo como un solo mercado y enfatiza las similitudes culturales
entre los países o las necesidades y deseos universales de los
consumidores en lugar de las diferencias.
Marketing global/Marketing global
Practice of standardizing marketing activities when there are cultural
similarities and adapting them when cultures differ. This approach benefits
marketers by allowing them to realize economies of scale from their
production and marketing activities.
• Práctica de estandarizar las actividades de marketing cuando hay
similitudes culturales y adaptarlas cuando las culturas difieren. Este
enfoque beneficia a los especialistas en marketing al permitirles realizar
economías de escala a partir de sus actividades de producción y
comercialización.
Global Brand / Marca Global
A brand marketed under the same name in several countries with
similar and centrally coordinated marketing programs. Global brands
have the same product formulation or service concept, offer the same
benefits to consumers, and use consistent advertising across multiple
countries and cultures.
• Una marca comercializada bajo el mismo nombre en varios países con
programas de marketing similares y coordinados centralmente. Las
marcas globales tienen la misma formulación de productos o concepto
de servicio, ofrecen los mismos beneficios a los consumidores y
utilizan publicidad consistente en múltiples países y culturas.
Global consumers / Los consumidores
globales
They consist of groups of consumers living in many countries or regions
of the world who have similar needs or are looking for similar features
and benefits of products or services.
• Consisten en grupos de consumidores que viven en muchos países o
regiones del mundo que tienen necesidades similares o buscan
características y beneficios similares de productos o servicios.
The presence of a global market space network

• The use of Internet technology as a tool for the exchange of products,

services and information on a global scale is the fourth development
affecting globalization and world trade. More than 7 billion
businesses, educational institutions, government agencies and
households worldwide are projected to have access to the Internet by
2025. The broad scope of this technology testifies to its potential to
promote global trade.
The prevalence of economic espionage
• Economic espionage is the clandestine collection of trade secrets or proprietary
information about a company's competitors. This practice is common in high-
tech industries such as electronics, specialty chemicals, industrial equipment,
aerospace, and pharmaceuticals, where know-how and trade secrets separate
global industry leaders from their followers.
• El espionaje económico es la recopilación clandestina de secretos comerciales
o información patentada sobre los competidores de una empresa. Esta práctica
es común en industrias de alta tecnología como la electrónica, los productos
químicos especializados, los equipos industriales, la industria aeroespacial y los
productos farmacéuticos, donde los conocimientos técnicos y los secretos
comerciales separan a los líderes mundiales de la industria de sus seguidores.
A GLOBAL ENVIRONMENTAL SCAN

• Global companies perform continuous environmental scans of the five

sets of environmental factors (social, economic, technological,
competitive and regulatory forces). This section focuses on three
types of uncontrollable environmental variables— cultural, economic,
and political-regulatory that affect global marketing practices in ways
strikingly different from those of domestic markets.
Cultural diversity /
Diversidad cultural
Marketers must be sensitive to the cultural
underpinnings of different societies if they
are to initiate and consummate mutually
beneficial exchange relationships with global
consumers.
Los especialistas en marketing deben ser
sensibles a los fundamentos culturales de las
diferentes sociedades si quieren iniciar y
consumar relaciones de intercambio
mutuamente beneficiosas con los
consumidores globales.
Análisis intercultural /
Análisis intercultural

It involves the study of similarities and

differences between consumers in two
or more nations or societies.
• Implica el estudio de similitudes y
diferencias entre los consumidores en
dos o más naciones o sociedades.
Values / Los
valores
The values of a society represent modes of conduct
or states of personally or socially preferable
existence that tend to persist over time.
Understanding and working with these aspects of a
society are important factors in global marketing.
• Los valores de una sociedad representan modos
de conducta o estados de existencia personal o
socialmente preferibles que tienden a persistir en
el tiempo. Comprender y trabajar con estos
aspectos de una sociedad son factores
importantes en el marketing global.
Customs / Las
aduanas
They are what is considered normal and
expected about the way people do
things in a specific country. Clearly,
customs can vary significantly from
country to country.
• Son lo que se considera normal y se
espera sobre la forma en que las
personas hacen las cosas en un país
específico. Claramente, las aduanas
pueden variar significativamente de un
país a otro.
The prevalence of bribery in global marketing

• This has led to an agreement between the world's major exporting

nations to make bribery of foreign government officials a criminal
offense. This agreement is modeled after the Foreign Corrupt
Practices Act (1977), as amended by the International Anti-Dumping
and Fair Competition Act (1998).
Cultural symbols / Los símbolos culturales
They are things that represent ideas and concepts in a specific culture.
Symbols and symbolism play an important role in intercultural analysis
because different cultures attribute different meanings to things.
• Son cosas que representan ideas y conceptos en una cultura
específica. Los símbolos y el simbolismo juegan un papel importante
en el análisis intercultural porque las diferentes culturas atribuyen
diferentes significados a las cosas.
Semiotics / La semiótica
It examines the correspondence between symbols and
their role in assigning meaning to people. By skillfully
using cultural symbols, global marketers can link positive
symbolism to their products, services, and brands to
enhance their appeal to consumers.
• Examina la correspondencia entre los símbolos y su
papel en la asignación de significado para las personas.
Al usar hábilmente símbolos culturales, los especialistas
en marketing globales pueden vincular el simbolismo
positivo a sus productos, servicios y marcas para
mejorar su atractivo para los consumidores.
Specialists in global language marketing.

• They must know not only the native languages of the countries in
which they market their products and services, but also the nuances
and idioms of a language. Although there are about 100 official
languages in the world, anthropologists estimate that at least 3,000
different languages are spoken.
Reverse translation / La traducción inversa
Where a translated word or phrase is retranslated into
the original language by a different interpreter to detect
errors.
• Donde una palabra o frase traducida es retraducida al
idioma original por un intérprete diferente para
detectar errores.
Cultural ethnocentrism / Etnocentrismo
cultural
The tendency of people to view favorably their own
values, customs, symbols and language is well known.
However, the belief that aspects of one's culture are
superior to those of another is called cultural
ethnocentrism and is a sure impediment to global
marketing success.
• La tendencia de las personas a ver favorablemente sus
propios valores, costumbres, símbolos e idioma es bien
conocida. Sin embargo, la creencia de que los aspectos
de la cultura de uno son superiores a los de otro se
llama etnocentrismo cultural y es un impedimento
seguro para el éxito del marketing global.
Consumer ethnocentrism / El etnocentrismo
del consumidor
It is the tendency to believe that it is inappropriate, indeed immoral, to
buy products made abroad.
• Es la tendencia a creer que es inapropiado, de hecho inmoral,
comprar productos fabricados en el extranjero.
Economic considerations

• Global marketing is also affected by economic considerations.

Therefore, a scan of the global market should include:
• (1) an assessment of the economic infrastructure in these countries.
• (2) the measurement of consumer incomes in different countries.
• (3) the recognition of a country's currency exchange rates.
Economic infrastructure / La infraestructura
económica
A country's communications, transportation, financial and distribution
systems is a critical consideration in determining whether to try to
market to a country's consumers and organizations.
• Los sistemas de comunicaciones, transporte, financieros y de
distribución de un país, es una consideración crítica para determinar
si se debe tratar de comercializar a los consumidores y organizaciones
de un país.
Tipo de cambio / Tipo de cambio
A currency exchange rate is the price of one country's currency
expressed in terms of another country's currency, such as the U.S. dollar
expressed in Japanese yen, euros, Swiss francs, or the pound sterling.
Failure to take exchange rates into account when setting product prices
for global markets can have dire consequences.
• Un tipo de cambio de moneda es el precio de la moneda de un país
expresado en términos de la moneda de otro país, como el dólar
estadounidense expresado en yenes japoneses, euros, francos suizos o
la libra esterlina. No tener en cuenta los tipos de cambio al fijar los
precios de los productos para los mercados globales puede tener
consecuencias nefastas.
Political-regulatory
climate
• Assessing the political and regulatory
climate for commercialization in a
country or region of the world involves
not only identifying the current
climate, but also determining how
long a favorable or unfavorable
climate will last. An assessment of a
country's or regional political-
regulatory climate includes an analysis
of its political stability and trade
regulations.
Political stability
Politically stable countries and regions of the world
for trade Trade between nations or regions depends
on political stability. Billions of dollars in trade have
been lost in the Middle East and Africa as a result of
political infighting, terrorism and war. Losses like
these encourage careful selection of.
Political stability in a country is affected by
numerous factors, including a government's
orientation toward foreign companies and trade
with other countries.
Trade regulations

• Countries have a variety of rules governing business practices within

their borders. These rules often serve as trade barriers.
COMPARISON OF GLOBAL MARKET
ENTRY STRATEGIES
Once a company has decided to enter the global market, it must select
a means of market entry. There are four general options:
export
licences
joint venture
• direct investment.
• Como lo demuestra la Figura 7–4, la cantidad de compromiso
financiero, riesgo, control de comercialización y potencial de
ganancias aumenta a medida que la empresa pasa de la exportación a
la inversión directa.
 Export/ Exportar
It is to produce products in one country and sell them in
another country.
• Es producir productos en un país y venderlos en otro
país.

This entry option allows a company to make the least

number of changes in terms of its product, its
organization, and even its corporate goals. Host countries
generally do not like this practice because it provides less
local employment than under alternative means of entry.
Indirect export / La
exportación indirecta
It is when a company sells its domestically
produced products in the foreign country
through an intermediary. It has the least
amount of commitment and risk, but will
probably return the least profit.
• Es cuando una empresa vende sus
productos producidos en el país en el país
extranjero a través de un intermediario.
Tiene la menor cantidad de compromiso y
riesgo, pero probablemente devolverá la
menor ganancia.
Direct export / La
exportación directa
It is when a company sells its domestically produced
products abroad without intermediaries. Companies
engage in direct export when they believe their
sales volume will be large enough and easy to
obtain, making intermediaries unnecessary.
• Es cuando una empresa vende sus productos
producidos en el país en el extranjero sin
intermediarios. Las empresas se involucran en la
exportación directa cuando creen que su volumen
de ventas será lo suficientemente grande y fácil
de obtener, lo que hace que los intermediarios
sean innecesarios.
Licensing
• Under the license, a company offers the right to a trademark, patent,
trade secret, or other intellectual property item of similar value in
exchange for a royalty or fee. The advantages for the licensing
company are low risk and a free entry of capital into a foreign country.
The licensee obtains information that allows him to start with a
competitive advantage, and the foreign country gains employment by
manufacturing the product locally.
The franchise /
La franquicia
Franchising is one of the fastest growing
market entry strategies. More than
75,000 franchises of U.S. companies are
located in countries around the world.
• La franquicia es una de las estrategias
de entrada al mercado de más rápido
crecimiento. Más de 75,000
franquicias de empresas
estadounidenses se encuentran en
países de todo el mundo.
Joint venture
• When a foreign company and a local company invest together to
create a local business, it is called a joint venture. These two
companies share ownership, control and profits of the new company.
For example, the Strauss Group has a joint venture with PepsiCo to
market Cheetos, Doritos and other Frito-Lay snacks in Israel and the
Strauss Group's Sabra hummus in North America.
Direct investment

• The biggest commitment a company can make when entering the

global market is direct investment, which involves a domestic
company actually investing and owning a foreign subsidiary or
division.
DEVELOPMENT OF A GLOBAL MARKETING
PROGRAM

• Product strategies and promotions.

Global companies have five strategies for matching
products and their promotional efforts in global markets.
As Figure 7-5 shows, strategies focus on
whether a company extends or adapts its
product and promotional message to
consumers in different countries and
cultures.
• A product can be sold globally in one of
three ways:
(1) in the same form as in your local market
(2) with some adaptations
(3) as an entirely new product.
Product extension: Selling virtually the same product in other countries is a
product extension strategy.
• Extensión del producto: Vender prácticamente el mismo producto en
otros países es una estrategia de extensión de producto.

Adaptation of the product. Changing a product in some way to make it

more appropriate for a country's consumer preferences or climate is a
product adaptation strategy.
• Adaptación del producto. Cambiar un producto de alguna manera para
hacerlo más apropiado para las preferencias de los consumidores o el
clima de un país es una estrategia de adaptación del producto.
Distribution strategy

• Distribution is critically important in global marketing.

The availability and quality of retailers and wholesalers,
as well as transportation, communication and storage
facilities, are often determined by the stage of
economic development of a country.
• It is described that the channel through which a product
manufactured in one country must travel to reach its destination in
another country. The first step involves the seller; its headquarters is
the starting point and is responsible for successful distribution to the
final consumer.
Pricing strategy

• Global companies also face many

challenges in determining a pricing
strategy as part of their global
marketing effort. Individual
countries, even those with free trade
agreements, can impose
considerable competitive, political
and legal restrictions on the pricing
latitude of global companies.
Video
https://www.youtube.com/watch?v=_0Ib1-nKFOQ
Dumping / El
dumping
It is when a company sells a product in a
foreign country below its domestic price
or below its actual cost.
• Es cuando una empresa vende un
producto en un país extranjero por
debajo de su precio interno o por
debajo de su costo real.
Grey market / Mercado gris

A grey market, also called parallel

importation, is a situation in which
products are sold through unauthorized
distribution channels.
• Un mercado gris, también llamado
importación paralela, es una situación
en la que los productos se venden a
través de canales de distribución no
autorizados.