Developing a Global Vision

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Prepared by Deborah Baker Texas Christian University

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Learning Objectives
1. Discuss the importance of global marketing.

2. Discuss the impact of multinational firms on the world economy. 3. Describe the external environment facing global marketers.

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Learning Objectives (continued)

4. Identify the various ways of entering the global marketplace.

5. List the basic elements involved in developing a global marketing mix. 6. Discover how the Internet is affecting global marketing.

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Learning Objective

Discuss the importance of global marketing.

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Global Marketing

Marketing that targets markets throughout the world.

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Global Vision
Recognize and react to international marketing opportunities Be aware of threats from foreign competitors Use international distribution networks
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Importance of Global Marketing
U.S. exports a fifth of industrial production and one-third of its farm products
One of every sixteen jobs in U.S. is supported by exports

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Importance of Global Marketing
A third of U.S. corporate profits is from international trade and investment
Exports accounted for 20% of growth in economic activity (1999) U.S. is worlds leading exporter of grain
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The Negatives of Global Trade
Millions of Americans have lost jobs
Millions fear losing jobs Workers face pay-cut demands Service and white-collar jobs are vulnerable to operations move
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The Advantages of Global Trade
Rise from poverty for foreign nations
Per capita income increases Productivity and living standard increase Inflation not as threatening Open economy spurs innovation

Export jobs may pay more

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Learning Objective
Discuss the impact of multinational firms on the world economy.

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Multinational Corporation

A company that is heavily engaged in international trade, beyond exporting and importing.

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Multinational Advantage
Overcome trade problems
Sidestep regulatory problems

Shift production from one plant to another

Tap new technology from around the world Save in labor costs
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Global Marketing Standardization

Production of uniform products that can be sold the same way all over the world.

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Global Marketing Standardization
World markets are becoming more alike
Standardized products can be sold the same way worldwide

Successful companies may vary products for global markets

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Learning Objective
Describe the external environment facing global marketers.

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The External Environment
Culture Economic and Technological Development

Environmental Factors

Political Structure

Demographic Makeup
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Culture

The common set of values shared by its citizens that determine what is socially acceptable.

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Culture
Language
Religion Superstitions Etiquette Customs Traditions Notion of time
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Lessons About the Notion of Time
1. Know appropriate arrival time. 2. Understand the line between work time and social time. 3. Study the rules of the waiting game. 4. Learn to reinterpret doing nothing. 5. Ask about accepted sequences. 6. Are people on clock time or event time?
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Economic and Technological Development

Type of Society Traditional Pre-Industrial Takeoff Industrializing Fully Industrial
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Description Agricultural, Little Upward Mobility Social and Economic Change New Industries Spread of Technology Exporter, Technology as Driver of New Innovation
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Political Structure Extremes
No private ownership Minimal individual freedom

Little central government Maximum personal freedom

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Legal Considerations
Tariff

Quota
Boycott Exchange Control

Legal Structures Encourage or Limit Trade

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Market Grouping Trade Agreement

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Legal Considerations
Tariff
A tax levied on goods entering a country Limit on the amount of a product that can enter a country Exclusion of products from a country Foreign exchange must be sold to a control agency Common trade alliance An agreement to stimulate international trade
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Quota Boycott
Exchange Control Market Grouping Trade Agreement
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Trade Agreements: Uruguay Round
Reduces tariffs by one-third worldwide
Patent/copyright protection Services under international rules

Reduction of farm subsidies

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Political and Legal Considerations
Examples

Mercosur NAFTA

European Union

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Demographic Makeup
Marketing Considerations

Population density
Urban or rural

Personal income
Rise of global middle class Supply of professionals
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Natural Resources
Differences in natural resources create:
International dependencies Shifts of wealth Inflation and recession Export opportunities if resources are abundant Stimulus for military intervention
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Learning Objective
Identify the various ways of entering the global marketplace.

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Global Marketplace Questions

What are our options in selling abroad? How difficult is global marketing?
What are the potential risks and returns?
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Why Go Global?
Earn additional profits
Leverage a unique product or technological advantage Possess exclusive market information

Utilize economies of scale

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Risk Levels for Global Entry

Risk
Direct Investment

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High risk/ high return

Joint Contract Venture ManuLicensing facturing Export

Low risk/ low return

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Entering the Global Marketplace

Export Licensing Contract Manufacturing
Joint Venture Direct Investment
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Sell domestically produced products to buyers in other countries.

Legal process allowing use of manufacturing/patents/knowledge. Private-label manufacturing by a foreign country Domestic firm buys/joins a foreign company to create new entity. Active ownership of a foreign company/manufacturing facility.
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Export Intermediaries
Buyer for Export

Assumes all ownership risks and sells globally for its own account.

Export Broker

Plays the traditional brokers role by bringing buyer and seller together.

Export Agent
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Acts like a manufacturers agent for the exporter in the foreign market.
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Learning Objective
List the basic elements involved in developing a global marketing mix.

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Product and Promotion

Same Product Change Product

Same Message

One Product One Message

Product Adaptation

Change Message
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Message Adaptation

Product Invention

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Pricing
Must consider transportation and insurance costs, taxes and tariffs
Determine what customers will spend Ensure that foreign buyers will pay them

May need to simplify a product to lower price

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Dumping

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The sale of an exported product at a price lower than that charged for the same or a like product in the exporters

home market.

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Countertrade
A form of trade in which

all or part of the payment for goods or services is in the form of other goods or services.

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Distribution Challenges
Japanese distribution system is the most complicated in the world
Retail institutions may differ from companys domestic market

Distribution channels and physical infrastructure may be inadequate

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Learning Objective

Discover how the Internet is affecting global marketing.

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Going Global
Internet e-commerce sites
Language translation software Global shippers

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