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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 Then, why is international marketing so Then, why is international marketing so
hot?hot?
Rewards of Global Marketing Recognizing and reacting to
international marketing opportunities
Using effective global marketing strategies
Being aware of threats from foreign competitors
Other rewards?Other rewards?
Did you know?…
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. Exports account for 25 percent of U.S.
economic growth. U.S. is world’s leading exporter of farm products.
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Marketing GoalsGlobal Marketing Goals
Offensive goalsOffensive goals Increase long term growth and profit prospectsIncrease long term growth and profit prospects Maximize total sales revenueMaximize total sales revenue Take advantage of economies of scaleTake advantage of economies of scale Improve overall market positionImprove overall market position
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Marketing GoalsGlobal Marketing Goals
Defensive goalsDefensive goals To compete with foreign companies on their own turfTo compete with foreign companies on their own turf Gain access to technological innovations in other Gain access to technological innovations in other
countriescountries Take advantage of differences in operating costsTake advantage of differences in operating costs Preempt competitors’ global movesPreempt competitors’ global moves Avoid being locked out of future markets by arriving Avoid being locked out of future markets by arriving
too latetoo late
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
The Competitive Advantage of The Competitive Advantage of NationsNations
Porter's diamond presents four factors that Porter's diamond presents four factors that determine the competitive advantage of determine the competitive advantage of disadvantage of a nationdisadvantage of a nation Factor conditionsFactor conditions Demand conditionsDemand conditions Related and supporting industriesRelated and supporting industries Company strategy, structure, and rivalryCompany strategy, structure, and rivalry
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Porter’s Diamond of National Porter’s Diamond of National AdvantageAdvantage
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Marketing IssuesGlobal Marketing Issues
Cultural MisunderstandingCultural Misunderstanding Managers tend to use their own cultural values and Managers tend to use their own cultural values and
priorities as a frame of referencepriorities as a frame of reference Political UncertaintyPolitical Uncertainty
Government instabilityGovernment instability Social unrestSocial unrest Armed conflictArmed conflict
Import RestrictionsImport Restrictions Tariffs, quotas, and other types of restrictions hinder Tariffs, quotas, and other types of restrictions hinder
global businessglobal business
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Marketing IssuesGlobal Marketing Issues
Exchange Controls and Ownership RestrictionsExchange Controls and Ownership Restrictions Established by nations experiencing BOP problemsEstablished by nations experiencing BOP problems
Economic ConditionsEconomic Conditions
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Organizing the Multinational Organizing the Multinational CompanyCompany
Multidomestic company – Pursues different strategies Multidomestic company – Pursues different strategies in each of its foreign marketsin each of its foreign markets
The global company – Views the world as one market The global company – Views the world as one market and pits its resources against competition in an and pits its resources against competition in an integrated fashionintegrated fashion Three alternative structuresThree alternative structures
Worldwide product divisions Worldwide product divisions Divisions responsible for all products sold within a Divisions responsible for all products sold within a
geographic regiongeographic region A matrix system – A combination of both these A matrix system – A combination of both these
arrangementsarrangements
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Factors Fostering Global StrategyFactors Fostering Global Strategy
External FactorsExternal Factors Market Factors – Degree of homogeneous market needs, Market Factors – Degree of homogeneous market needs,
transferable brands, and the ability to globalize transferable brands, and the ability to globalize distribution channelsdistribution channels
Economic Factors – Worldwide economies of scale, Economic Factors – Worldwide economies of scale, learning curves, global resourcing, etc.learning curves, global resourcing, etc.
Environmental Factors – Communications ability, Environmental Factors – Communications ability, favorable governmental policies, etc.favorable governmental policies, etc.
Competitive Factors – Global moves by competitors, Competitive Factors – Global moves by competitors, preemptive strikespreemptive strikes
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Factors Fostering Global StrategyFactors Fostering Global Strategy
Internal FactorsInternal Factors Structure – Ease of installing a centralized global Structure – Ease of installing a centralized global
authorityauthority Management processes – Capabilities and resources Management processes – Capabilities and resources
available to perform operational functions on a global available to perform operational functions on a global scalescale
Culture – Ability to project a global identity, increased Culture – Ability to project a global identity, increased tolerancetolerance
People – Availability of foreign nationals, frequent travel, People – Availability of foreign nationals, frequent travel, commitments to multicountry careerscommitments to multicountry careers
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Ten Commandments of Global Ten Commandments of Global BrandingBranding
Understanding similarities and differences in the global Understanding similarities and differences in the global branding landscapebranding landscape
Do not take short cuts in global brandingDo not take short cuts in global branding Establish marketing infrastructureEstablish marketing infrastructure Embrace integrated marketing communicationsEmbrace integrated marketing communications Establish brand partnershipsEstablish brand partnerships Balance standardization and customizationBalance standardization and customization Balance global and local controlBalance global and local control Establish operable guidelinesEstablish operable guidelines Implement a global brand equity measurement systemImplement a global brand equity measurement system Leverage brand elementsLeverage brand elements
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Marketing ResearchGlobal Marketing Research
Population characteristics – Managers should be Population characteristics – Managers should be familiar with total population and the regional, urban, familiar with total population and the regional, urban, rural, and interurban distributionrural, and interurban distribution
Ability to buy – Four broad measures to be examinedAbility to buy – Four broad measures to be examined Gross national product or per capita national incomeGross national product or per capita national income Distribution of incomeDistribution of income Rate of growth in buying powerRate of growth in buying power Extent of available financingExtent of available financing
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Marketing ResearchGlobal Marketing Research
Willingness to buy – Cultural framework of consumer Willingness to buy – Cultural framework of consumer motives and behavior is integral to the understanding motives and behavior is integral to the understanding of foreign customerof foreign customer
Differences in Research Tasks and ProcessesDifferences in Research Tasks and Processes Language barriersLanguage barriers Data content Data content Timeliness Timeliness Availability in the U.S.Availability in the U.S.
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Product StrategyGlobal Product Strategy
Global marketing research can help determine Global marketing research can help determine whether there is an unsatisfied needwhether there is an unsatisfied need For which a new product could be developed to serve For which a new product could be developed to serve
foreign marketforeign market That could be met with an existing domestic product, That could be met with an existing domestic product,
either as is or adapted to foreign marketeither as is or adapted to foreign market
Product and Promotion
One ProductOne Message
Product Adaptation
MessageAdaptation
Product Invention
SameSameProductProduct
SameSameMessageMessage
ChangeChangeMessageMessage
ChangeChangeProductProduct
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Distribution StrategyGlobal Distribution Strategy
Global Pricing
Rigidity in price structures found in many foreign Rigidity in price structures found in many foreign markets also poses an issue…markets also poses an issue…
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
McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved
Global Advertising and Sales Global Advertising and Sales Promotion StrategyPromotion Strategy
Language barriersLanguage barriers Media are traditionally used Media are traditionally used
Limited media available – Unable to reach out to target Limited media available – Unable to reach out to target audienceaudience
Deciding on the type of agency – To prepare and Deciding on the type of agency – To prepare and place the firm’s advertisementplace the firm’s advertisement
Sales promotionSales promotion Used as a strategy for bypassing restrictions on Used as a strategy for bypassing restrictions on
advertisements placed by some foreign governmentsadvertisements placed by some foreign governments Effective means for reaching people in rural locations Effective means for reaching people in rural locations
where media support for advertising is virtually where media support for advertising is virtually nonexistentnonexistent
Which are more risky global growth strategies?
LicensingLegal process allowing use of
manufacturing/patents/knowledge
ContractManufacturing
Private-label manufacturing by a foreign country
Joint VentureDomestic firm buys/joins a foreign
company to create new entity
Export Sell domestically produced products to buyers in other
countries
Direct InvestmentActive ownership of a foreign
company/manufacturing facility
Developing a Global Marketing Mix
PROMOTION
One Product, One MessageProduct InventionProduct
AdaptationMessageAdaptation
PLACE
Channel Choice
Channel Structure
Country Infrastructure
PRICE
Dumping
Countertrade
Exchange Rates
Purchasing Power