Chapter 15: global marketing

Global Firm

Operates in more than one country

• Gains research and development, production,

marketing, and financial advantages in its

costs and reputation

Decision to Go Global: Factors

• Attack on a company’s home market by global

competitors

• Expanding customer base in international markets

• Better opportunities for growth

International Trade System: Trade Barriers

Tariffs or duties

• Quotas and exchange controls

International Trade System: Non-trade Barriers

Biases against the bids

• Restrictive product standards

• Excessive host-country regulations or enforcement

World Trade Organization

Promotes world trade by reducing tariffs and other international trade barriers

• Negotiates to reassess trade barriers and establish new rules for international trade

• Imposes international trade sanctions and mediates global trade disputes

Regional Free Trade Zones: Economic Community

Group of nations organized to work toward common goals in

the regulation of international trade

• European Union (EU)

• North American Free Trade Agreement (NAFTA)

• Central American Free Trade Agreement

(CAFTA-DR)

• Union of South American Nations (UNASUR)

Economic Environment:

Factors reflecting a country’s market

attractiveness:

Industrial structure

• Subsistence economies

• Raw material exporting economies

• Emerging economies

• Industrial economies

Income distribution

Low-, medium-, and/or high-income households depending on the industrial structure of the nation

Political-Legal Environment

Considerations for a company to do business in a country:

• Country’s attitude toward international buying

• Government bureaucracy

• Political stability

• Monetary regulations

International trade variables

• Cash transactions

• Barter

Impact of Culture on Marketing Strategy

Companies can:

• Avoid expensive and embarrassing mistakes

• Take advantage of cross-cultural opportunities

Market Entry: Exporting

Entering international market by selling goods produced in home country often with little to NO modification

• least change

Market Entry: Joint Venturing

Joining with company within a global market to produce/market abroad

• licensing

• contract manufacturing

• management contracting

• joint ownership

Market Entry: Direct Investment

Enter global market by assembling facilities within market

• manufacturing facilities

• lower cost + incentives

• full control over objectives

• HIGH RISK

Straight Product Extension

DONT change product, DONT change communications

• adds new items within the same product category, like new flavors, sizes, or formulations of an existing product (COCA COLA)

Product Adaptation

changing a product's physical or non-physical aspects to fit local needs, regulations, or tastes.

• Cars adapting to driving side (LHD/RHD)

• Labeling: Changing colors or adding specific information to meet foreign regulatory standards.

• leave positioning + communication UNCHANGED

Communication adaption

adapt AD messages to local markets + internationally

• promotion adapts to

Dual adaptation

Adapting both the product and and the promotion to fit the local market

ex: spotify — localizes its content and marketing efforts in various countries

Global Company

Company that operates in more than one country ——- gains marketing, production and development advantages

• world = potential marketing

Global niching

• operate in small set of chosen countries

Step 1: Political Context

Regulations + limitations in country

• work around political obstacles

• commitment can be released quickly + efficiently

Step 2: Economic

Level of industrial development —- shapes income, employment, and service needs/products

• high economy = low growth rate and intense competition

• focus on value delivered

Step 3: Sociocultural context

Culture affects consumer reactions in global markets

• business norms vary regionally

• take advantage of cross cultural opportunities

• differential positioning + market branding succesfully

Step 4: Technological Context

Electronic Networks

• smart devices

• digital commerce platforms (buyer —- seller)

Step 5: Legal/Institutional Context

Global trade perspectives + country specific internal legal perspective

• tarriffs (trade negotiations)

• GATT — resolve trade disputes

Step 6: Environment/Ecological

Promote sustainable business practices

• measure economic, marketing, and operational impact on business success

Indirect exporting

independent marketing intermediaries

• low investment + low risk

Direct exporting

high investment + high risk

• higher returns

Licensing

signed agreement to use company manufacturing process, trademarks, and patents

• entry at minimal risk (DISNEY)

• minimal control + minimal return on investment

Contract manufacturing

contract with manufacturers on global market to produce its product or provide its service

• reduce investment + costs

Management contracting

Domestic company supplies the management know-how to a company in another country that supplies the capital

• low risk + HIGH income

• ex: hilton hotel

Joint ownership

Company creates a local business with investors in a global market who share ownership and control

• merge strengths + develop opportunity

Standardized global marketing

applying marketing strategy approaches + marketing mix worldwide

Adapted global marketing

adjust strategy + mix elements to each target market

• higher costs

• higher shares/profits

“think globallly____”

ACT LOCALLY

• balance standardization (global aspect) + adaption (local market)

Product Invention

Creating entirely new product to meet needs of consumers in other countries

Whole Channel View

International Seller —— Channel between nations —— channels within nations ——- FINAL user/buyer

Geographical department (export)

Country manager responsible for salespeople + branches

World department (export)

Each responsible for worldwide sales of different product groups

Global department (export)

Each unit is responsible for its own global sales + profits