MKTG

5CHAPTERDeveloping a Global Vision

Emerging-Market Companies

Adapted from “Emerging Giants,” Business Week, July 31, 2006.

COMPANY COUNTRY INDUSTRY

América Móvil Mexico Telecom services

Cemex Mexico Building materials

China Mobile China Telecom services

CNOOC China Oil and gas

CVRD Brazil Mining

Embraer Brazil Aerospace

Gazprom Russia Oil and gas

Haier China Home appliances

Hisense China Electronics

Huawei China Telecom equipment

Go Global

Target throughout the world Global vision of multi-national firms Fear? Why?Fear? Why?

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?

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.

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?

External Environments

Demographics (1)

Birthrate Babies born/1000 people in population In U.S, slower since baby boom (declining;

grandparents example) Japan & Western Europe is also slower More spending/child (indulged)

U.S. Birthrate 1935-2005

U.S. Demographics (2) U.S. is a Transient society

16% moves each year (40% of those, out of country)

A nation of strangers leads to chains Regional

Growth Fastest in the West California (most populous; 1/8 Americans)

Density Most on the East Coast (Why??) Key for businesses: local area, traffic counts,

food

Economic Development (1)

What are attractive markets? GNI (Gross National Income): total market

value of goods/services produced in an economy

Higher GNI Allows more trade Exchange concept = favors richer countries &

people Criticism here

Economic Development (2)

What are attractive markets? (continued) Developing world

Growth Example: U.S. and Canada will take 5x as long to

double their population as compared to Nicaragua & Saudi Arabia

Less competition (M&M/Mars: Eastern Europe) Challenges

Literacy: ¾ world (baby food, U.S. fast food) Low income: 60% of world makes less than $2/day Ethics (Nestle and what other company?)

International Trade

MERCOSUR (Latin America) URUGUAY ROUND (>148 nations to

reduce tariffs) WTO (replaced GATT) NAFTA CAFTA EU IMF

International Options

Exporting/importing (Wal-Mart) Licensing (Sponge Bob) Franchising (McDonalds) Contract manufacturing Joint venture Direct foreign investment

Which are more risky?

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

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.

Global Marketing Mix Strategies One product, one message Change existing product for a new

country market (Krispy Crème, anything else?)

Message adaptation Price changes (exchange rates,

dumping) Barter

Product and Promotion

One ProductOne Message

Product Adaptation

MessageAdaptation

Product Invention

SameSameProductProduct

SameSameMessageMessage

ChangeChangeMessageMessage

ChangeChangeProductProduct

Pricing

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

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