Chapter 8 Global Marketing

Assessing Global Markets

  • Globalization offers marketers numerous opportunities.

  • Market viability assessment includes four sets of criteria which help create a comprehensive view of market potential.

Economic Analysis Using Metrics

Major Economic Factors

  • Firms assess three key factors to determine market viability:

    1. General Economic Environment

    2. Market Size and Population Growth Rate

    3. Real Income

Evaluating the General Economic Environment

  • Key metrics for analysis:

    • Trade Deficit: Imports exceed exports.

    • Trade Surplus: Exports exceed imports.

    • Gross Domestic Product (GDP): Total value of goods produced in a country.

    • Gross National Income (GNI): Total income earned by residents of a country.

    • Purchasing Power Parity (PPP): Comparison of different countries' currencies through a "basket of goods" approach.

  • Example: Netflix's affordable plans for lower-income customers in India.

Evaluating Market Size and Population Growth Rate

  • Uneven population growth and distribution must be considered:

    • BRICS nations (Brazil, Russia, India, China, South Africa) exhibit strong growth rates.

    • Urban areas tend to have denser populations, influencing market strategies.

Evaluating Real Income

  • Firms often adjust prices for different markets, targeting bottom-of-the-pyramid segments.

  • Example: The Economist’s Big Mac Index shows pricing differences across countries.

    • Venezuela: $1.76

    • USA: $5.15

    • Switzerland: $7.71

Analyzing Infrastructure and Technological Capabilities

  • Four essential infrastructure elements impacting marketing:

    1. Transportation

    2. Distribution Channels

    3. Communications

    4. Commerce

Analyzing Governmental Actions

  • Government actions can significantly influence market performance:

    • Tariffs: Taxes on imports that increase prices and lower demand.

    • Quotas: Limits on the quantity of imports, reducing availability.

    • Exchange Control: Regulation of currency exchange rates.

    • Trade Agreements: Agreements between governments that facilitate trade; regional trade agreements account for more than half of international trade.

Analyzing Sociocultural Factors

  • Understanding cultural dynamics is crucial for successful global marketing:

    • Culture has visible artifacts and underlying values.

The Appeal of BRICS Countries

  • Countries of focus:

    • Brazil

    • Russia

    • India

    • China

    • South Africa

Choosing a Global Entry Strategy

  • Strategies vary based on risk levels and company capability:

    1. Exporting: Least financial risk but limited rewards.

    2. Franchising: Franchisee operates under franchisor's brand.

    3. Strategic Alliance: Collaborative relationships without equity partnerships.

    4. Joint Venture: Pooling resources with local firms; shared ownership and profits.

    5. Direct Investment: 100% ownership in a foreign market; high risk but potential for high return.

    • Example: Lenovo's investment strategies in various global markets.

Choosing a Global Marketing Strategy

  • Selecting target markets involves complexities due to:

    • Sub-cultures

    • Cultural nuances

    • Different consumer roles

    • Adaptation of marketing strategies based on local practices and perceptions.