The Global Marketplace

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Chapter 19

• The Global Marketplace

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Global Marketing into the Twenty-First Century

• The world is shrinking rapidly with the advent of
  faster communication, transportation, and
  financial flows.
• International trade is booming and now accounts
  for a quarter of the United States GDP.
• Between 1996 and 2006, U.S. exports are expected
  to increase 51.
• Global competition is intensifying and few U.S.
  industries are now safe from foreign competition.

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Global Marketing into the Twenty-First Century

• To compete, many U.S. companies are continuously
  improving their products, expanding into foreign
  markets, and becoming global firms.
• Global firms face several major problems
• High debt, inflation, and unemployment have
  resulted in highly unstable governments
  currencies,
• Governments placing more regulations on foreign
  firms,
• Protectionist tariffs and trade barriers,
• Corruption.

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Major Decisions in International Marketing (Fig.
19.1)
Looking at the global marketing environment
Deciding whether to go international
Deciding which markets to enter
Deciding how to enter the market
Deciding on the global marketing program
Deciding on the global marketing organization
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Looking at the Global Marketing Environment
The International Trade System i.e. Tariff,
Quota, Embargo, Exchange Control, and Nontariff
Trade Barriers
The World Trade Organization and GATT Treaty
designed to promote world trade by reducing
tariffs and other international trade barriers
Regional Free Trade Zones Group of nations
organized to work toward common goals in the
regulation of international trade
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Economic Environment
Subsistence Economies
Industrial Structure
Types of Industrial Structure
Raw Material Exporting Economies
Industrial Economies
Industrializing Economies
Income Distribution
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Political-Legal Environment
At Least Four Political-Legal Factors Should be
Considered in Deciding Whether to do Business in
a Given Country
Monetary Regulations
Attitudes Toward International Buying
Government Bureaucracy
Political Stability
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Cultural Environment
Sellers Must Examine the Following Before
Planning a Marketing Program Within a
Given Country.
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Deciding Whether to Go International

• Reasons companies might consider international
  expansion
• Global competitors attacking the domestic market,
• Foreign markets might offer higher profit
  opportunities,
• Domestic markets might be shrinking,
• Need an enlarged customer base to achieve
  economies of scale,
• Reduce dependency on any one market,
• Customers might be expanding abroad.
• Most companies do not act until some situation or
  event thrusts them into the international market.

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Deciding Which Markets to Enter
Define Organizations Marketing Objectives and
Policies
What Volume of Foreign Sales is Desired?
How Many Countries Should the Firm Go Into?
What Types of Countries Should be Entered?
Rank by Market Size Growth, Cost of Doing
Business, Competitive Advantage, Risk Level.
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Discussion Connections

• Assess China as a market for McDonalds.
• What factors make it attractive?
• What factors make it less attractive?
• Assess Canada as a market for McDonalds.
• In what ways is Canada more attractive than
  China?
• In what ways is it less attractive?
• If McDonalds could operate in only one of these
  countries, which one would you choose and why?

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Deciding How to Enter the Market (Fig. 19.2)

• Exporting
• Indirect
• Direct

• Joint venturing
• Licensing
• Contract manufacturing
• Management Contracting
• Joint Ownership

• Direct investment
• Assembly facilities
• Manufacturing facilities

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Deciding on the Global Marketing Program
Adapted Marketing Mix Adjusts the Elements of the
Marketing Mix to Each International Target
Market. i.e. Japanese Barbie
Standardized Marketing Mix Uses Basically the
Same Elements of the Marketing Mix in all the
Companys International Markets. i.e Coca-Cola
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Five International Product and Promotion
Strategies (Fig. 19.3)
Product
Develop New Product
Dont Change Product
Adapt Product
1. Straight Extension
3. Product Adaptation
Dont Change Promotion
5. Product Invention
2. Communication Adaptation
4. Dual Adaptation
Promotion
Adapt Promotion
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International Pricing

• Companies face many problems in setting their
  international prices.
• Possibilities in setting prices include
• Chare a uniform price all around the world.
• Charge what consumers in each country could pay.
• Use a standard markup of its costs everywhere.
• International prices tend to be higher than
  domestic prices because of price escalation.
• Companies may become guilty of dumping when a
  foreign subsidiary charges less than its costs or
  less than in its home market.

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Whole-Channel Concept for International Marketing
(Fig. 19.4)
Seller
Sellers headquarters organization for
international marketing
Final user or buyer
Channels between nations
Channels within nations
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Deciding on the Global Marketing Organization
Export Department
International Division
Global Organization
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Review of Concept Connections

• Discuss how the international trade system,
  economic, political-legal, and cultural
  environments affect a companys international
  marketing decisions.
• Describe three key approaches to entering
  international markets.
• Explain how companies adapt their marketing mixes
  for international markets.
• Identify the three major forms of international
  marketing organization.