Chapter 4 Copyright ©2010 Cengage Learning Inc. All rights reserved. 1 MKTG Designed by Amy...

Chapter 4 Copyright ©2010 Cengage Learning Inc. All rights reserved. 1

MKTG

Designed byAmy McGuire, B-books, Ltd.

Prepared byDana Freeman, B-books, Ltd.

Lamb, Hair, McDaniel 2009-2010

4CHAPTERDeveloping a Global Vision

Chapter 4 Copyright ©2010 by Cengage Learning Inc. All rights reserved 2

Learning Outcomes

Discuss the importance of global marketing

Discuss the impact of multinational firms on the world economy

Describe the external environment facing global marketers

LO1

LO2

LO3


Learning Outcomes

Identify the various ways of entering the global marketplace

List the basic elements involved in developing a global marketing mix

Discover how the Internet is affectingglobal marketing

LO4

LO5

LO6


Discuss the importance of

global marketing

Rewards of Global MarketingRewards of Global MarketingLO1


LO1

Rewards of Global Marketing

Marketing that targets

markets throughout

the world.

Global Marketing

Global Marketing


LO1

Rewards of Global Marketing

Recognizing and reacting to international marketing opportunities

Using effective global marketing strategies

Being aware of threats from foreign competitors

Having a global vision means…


LO1B

eyond

the

Book

Emerging Markets

Source: Deloitte's Global Manufacturing Industry Practice, Deloitte Touche Tohmatsu, May 1, 2007

0

10

20

30

40

50

60

70

80

90

Expect to Expand or Locate (%)

ChinaIndiaSoutheastAsia

LatinAmerica

EasternEurope

Market

Executives' Five-Year Plans for Emerging Markets

All Companies

$1B+ Companies


LO1

Importance of Global Marketing to the U. S. U.S. exports a fifth of industrial production. One of every 10 jobs in U.S. is supported by

exports. U.S. businesses export over $800 billion in

goods. Exports account for 25 percent of U.S.

economic growth. U.S. is world’s leading exporter of farm

products.


LO1

The Fear of Trade and Globalization

Millions of Americans have lost jobs Millions fear losing jobs Threat of outsourcing

if workers do not accept pay cuts

Vulnerability to operations moving offshore


LO1

Benefits of Globalization

Expands economic freedom Spurs competition Raises productivity and living standards Offers access to foreign capital, global

export markets, and advanced technology Promotes higher labor and environmental

standards Acts as a check on government power


REVIEW LEARNING OUTCOMELO1

The Importance of Global Marketing

Identifyglobal marketing

opportunities

Identifyglobal marketing

opportunities

Compete againstforeign competitionin domestic markets

Compete againstforeign competitionin domestic markets

Understandglobal

distributionnetworks

Understandglobal

distributionnetworks

Globally-minded Globally-minded marketing managers:marketing managers:

FearsFears BenefitsBenefitsKnow global marketing is important because

of economic interdependencies

Know global marketing is important because

of economic interdependencies


Discuss the impact of

multinational firms on the world economy

Multinational FirmsMultinational FirmsLO2


Stages of Global Business Development

LO2

11

22

44

33

Companies operate in one country and sell into othersCompanies operate in one country and sell into others

Set up foreign subsidiaries to handle salesSet up foreign subsidiaries to handle sales

Virtual operationVirtual operation

Operate an entire line of business in another countryOperate an entire line of business in another country


Global Marketing Standardization

LO2

Production of uniform products that can be sold the same way all over the world.

Global MarketingStandardization

Global MarketingStandardization



Impact of Multinational Firms

Growth

Revenue

Profits

GlobalMarketing

GlobalMarketing

MNC

• Human Resources• Physical Resources• Financial Resources


Describe the external environment facing

global marketers

External Environment Facing External Environment Facing Global Marketers Global MarketersLO3


External Environment Facing Global Marketers

LO3

Natural Resources

Natural Resources

Demographic Makeup

Demographic Makeup

Economic and Technological Development


CultureCulture

Political StructurePolitical

Structure


CultureLO3

CultureCulture The common set of values

shared by its citizens that

determine what is socially

acceptable.



LO3

Developed Country

Developed Country

Less DevelopedCountry

Less DevelopedCountry

Complex, sophisticated industries

Complex, sophisticated industries

Basic industriesBasic industries


Political Structure and ActionsLO3

No private ownershipMinimal individual freedom

Little central governmentMaximum personal freedom


Legal ConsiderationsLO3

Tariff

Quota

Boycott

Exchange Control

Market Grouping

Trade Agreement

A tax levied on goods entering a country

Limit on the amount of a product entering a country

Exclusion of products from a country

Foreign exchange must be sold to a control agency

Common trade alliance

An agreement to stimulateinternational trade


Political and Legal ConsiderationsLO3

The Uruguay Round made changes inworld trading practices

Entertainment, pharmaceuticals, integrated circuits, and software

Financial, legal, and accounting services

Agriculture

Textiles and apparel

And created a new trade organization: The World Trade Organization


Political and Legal ConsiderationsLO3

CAFTACAFTA NAFTANAFTA European Union

European Union

Agreementsand Organizations

Agreementsand Organizations

http://www.wto.org

Online


Demographic MakeupLO3

Marketing Considerations: Population density Urban or rural Personal income Age


Shortages in Natural Resources…LO3

…Create: International

dependencies Shifts of wealth Inflation and recession Export opportunities if

resources are abundant Stimulus for military

intervention


Natural ResourcesLO3

Petroleum Foodstuffs Precious metal Timber Water



External Environment Facing Global Marketers

Cultural

EconomicDevelopment

• values• language• customs• traditions

TechnologicalDevelopment

Political Structure• tariffs• quotas• boycotts• exchange controls• market controls• trade agreements

Demography• urban v. rural• young v. old• purchasing power

NaturalResources• dependence• independence

GlobalMarketing

Mix


Identify the various ways of entering theglobal marketplace

Global Marketing byGlobal Marketing bythe Individual Firmthe Individual FirmLO4


LO4

Global Marketing Questions

http://www.cat.com

Online

What are our options in selling abroad?

How difficult is global marketing?

What are the potential risks and returns?


LO4

Why “Go Global”?

Earn additional profits Leverage a unique

product or technological advantage

Possess exclusive market information

Saturated domestic markets

Excess capacity Utilize “economies of

scale”


LO4

Risk Levels for Global Entry

Low risk/low return

Highrisk/highreturn

Risk

Return

ExportLicensing

ContractManu-

facturing

JointVenture

DirectInvest-ment


LO4

Entering the Global Marketplace

Licensing Legal process allowing use of manufacturing/patents/knowledge

ContractManufacturing

Private-label manufacturing by a foreign country

Joint Venture Domestic firm buys/joins a foreign company to create new entity

Export Sell domestically produced products to buyers in other countries

Direct Investment Active ownership of a foreign company/manufacturing facility


LO4

Export Intermediaries

Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.

Assumes all ownership risks and sells globally for its own account.

Export BrokerExport Broker Plays the traditional broker’s role by bringing buyer and seller together.

Plays the traditional broker’s role by bringing buyer and seller together.

Export AgentExport Agent Acts like a manufacturer’s agent for the exporter in the foreign market.

Acts like a manufacturer’s agent for the exporter in the foreign market.



Entering the Global Marketplace


List the basic elements

involved in developing a global marketing mix

The Global Marketing MixThe Global Marketing MixLO5


Product and Promotion

LO5

One ProductOne Message

Product Adaptation

MessageAdaptation

Product Invention

SameSameProductProduct

SameSameMessageMessage

ChangeChangeMessageMessage

ChangeChangeProductProduct

http://www.disney.go.com

Online


Place (Distribution)

LO5

Adequate distribution is necessary for success in global markets– Some countries have complicated systems– Lack of distribution infrastructure and

cultural differences create problems

Innovative distribution systems can create competitive advantage


Pricing

LO5

Must consider transportation and insurance costs, taxes and tariffs

Determine what customers will spend

Ensure that foreign buyers will pay price

May need to simplify a product to lower price

Don’t assume that low-income countries are willing to accept lower quality


Exchange Rates

LO5

The price of one’s currency in terms

of another country’s currency.

Exchange Rates

Exchange Rates


Dumping

LO5

1. Trying to increase an overseas market share

2. Temporarily distributing products to overseas markets to offset slack demand at home

3. Lowering unit costs by exploiting large-scale production

4. Attempting to maintain stable prices during periods of exchange rate fluctuations


Countertrade

LO5

A form of trade in which all or

part of the payment for goods or

services is in the form of other

goods or services.

CountertradeCountertrade



Developing a Global Marketing Mix

PROMOTION

One Product, One Message

Product Invention

Product Adaptation

Message Adaptation

PLACE

Channel Choice

Channel Structure

Country Infrastructure

PRICE

Dumping

Countertrade

Exchange Rates

Purchasing Power


Discover how the Internet is affecting

global marketing

The Impact of the InternetThe Impact of the InternetLO6



The Impact of the Internet

Chapter 4 Copyright ©2010 Cengage Learning Inc. All rights reserved. 1 MKTG Designed by Amy...

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