Chapter 8 - Global Marketing

Components of a country market assessment

Economic Analysis

Infrastructure and Tech

Sociocultural Analysis

Government Actions

Economic Analysis consists of:

• General economic mix

• Market size/Pop growth

• Real income

Infrastructure and Technological Analysis Consists of:

• Transportation

• Distribution Channels

• Communication

• Commerce

Government Actions consist of:

• Tariff

• Quota

• Exchange Control

• Trade Agreements

GDP

Gross Domestic Product: Defined as the market value of the goods and services produced by a country in a year; the most widely used standardized measure of output.

GNI

Gross National Income: Consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy).

Bottom of the Pyramaid

A term used for economic settings in which consumers earn very low wages.

Trade Deficit

When a country imports more than they export

Trade Surplus

When a country exports more than they import

PPP

Purchasing Power Parity: A theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other, expressed in the same currency.

BRICS

Brazil, Russia, India, China, South Africa

Infrastructure

The basic facilities, services, and installations needed for a community or society to function, such as transportation and communications systems, water and power lines, and public institutions like schools, post offices, and prisons.

4 Key Elements of Infrastructure

Transportation, Distribution, Communication, Commerce

Tariff

Taxes implemented on imported goods

Quota

Designates a maximum of a product that may be brought into a country during a specified time period.

Exchange Control

The regulation of a country’s currency exchange rate.

Trade Agreements

Intergovernmental agreement designed to manage and promote trade activities for specific regions.

2 levels of understanding culture

Visible Artifacts: Dress/Language/Symbols

Underlying Values

Hofstedes Cultural Dimensions

Power Distance

Uncertainty Avoidance

Individualism

Masculinity

Time Orientation

Indulgence

Power Distance

willingness to accept social inequity as natural

Uncertainty Avoidance

extent to which society relies on orderliness, consistency, structure, and formalized procedures to address situations that happen in everyday lives

Individualism

perceived obligation to and dependence on groups

Masculinity

extent to which dominant values are make oriented

Time Orientation

short vs long term commitments to projects

Indulgence

extent as to which society allows for the gratification of fun and enjoyment needs or else suppresses and regulates such pursuits

Why is Brazil part of BRICS?

Imagine Brazil as a resilient ship navigating turbulent economic seas. Despite a stormy recession in 2015, it emerged stronger by expanding its educated crew and implementing robust social programs. This transformation allowed over half of its 217 million citizens to join the middle class, propelling Brazil to become the world’s twelfth-largest economy.

Why is Russia Part of BRICS?

Russia's economy, once buoyed by energy exports and a strong middle class, faced challenges after the 2022 Ukraine invasion. Sanctions led to reduced exports and foreign business exits. Despite resilience through continued energy sales and military investments, the draft-induced workforce shortage and declining real estate and leisure markets hint at potential long-term economic declines.

Why is India part of BRICS?

India, like a bustling market, is a hub of opportunity with its 1.4 billion people. Imagine a young, vibrant crowd at a tech fair, eager to explore global trends. With a median age of 28.7 years, this skilled, English-speaking workforce attracts firms seeking innovation, especially in technical fields, amid growing urbanization and middle-class expansion.

Why is China part of BRICS?

Imagine China's economy as a dragon awakening. Post-1978, it shifted from a slumbering state of strict control to a dynamic market-driven force, achieving rapid growth. With a vast population, it now rivals the U.S. in retail sales and dominates global e-commerce. Yet, like a balancing act, it faces challenges in personal freedom and demographic shifts.

Why is South Africa part of BRICS?

South Africa, despite being a smaller economy within BRICS, is notable for its developed commercial standards and transportation infrastructure. Its economy relies heavily on natural resources exports, mainly to China and India. The legacy of apartheid continues to challenge economic growth, but recent reforms aim to enhance sustainability and inclusivity by promoting private-sector activities.

Global Entry Strategies

• Direct Investment

• Joint Venture

• Strategic Alliance

• Franchising

• Exporting

Exporting

Producing goods in one country and selling them in another.

Franchising

A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.

ex: McDonald’s lets a local business owner in India open and run a McDonald’s location using its brand and system.

Strategic Alliance

A collaborative relationship between independent firms, though the partnering firms do not create an equity partnership; that is, they do not invest in one another.

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.

ex: Starbucks partners with a local company in China to open stores together and share ownership.

Direct Investment

When a firm maintains 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries.

ex: Tesla builds a factory in Germany and fully owns and operates it.

Which distribution strategy has the highest risk and why?

Foreign Direct Investment because it’s hard to enter AND leave market.

What are three reasons why STP is harder in foreign markets than local?

1 - harder to understand different cultural nuances

2- subculture within each country must be considered

3 - consumers view the product/ their role as consumers differently in each country

3 global expansion strategies

1 - Same universal product

2 - same product, minor adaptations

3 - totally new or different products/services

2 global marketing components

1 - determining target markets to pursue

2 - developing a marketing mix that will sustain competitive advantage over timeq

Trading Bloc

Consists of those countries that have signed a particular trade agreement.