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Global Marketing. Professor Lawrence Feick University of Pittsburgh. CBA/BSC Picnic!. Saturday, September 12, 3-6 PM WPU Lawn Featuring bands The Simpletons Blend Food Prizes. Outline. The importance of foreign trade Deciding which countries Deciding how to enter

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Global marketing l.jpg

Global Marketing

Professor Lawrence Feick

University of Pittsburgh


Cba bsc picnic l.jpg
CBA/BSC Picnic!

  • Saturday, September 12, 3-6 PM

  • WPU Lawn

  • Featuring bands

    • The Simpletons

    • Blend

  • Food

  • Prizes


Outline l.jpg
Outline

  • The importance of foreign trade

  • Deciding which countries

  • Deciding how to enter

  • Deciding on selling using a localized or standardized marketing mix


Definitions l.jpg
Definitions

  • Exports: domestically produced products sold in foreign markets

  • Imports: products produced in a foreign market and sold in the domestic market

  • Balance of trade: approximately = exports - imports


The importance of foreign trade us gdp and foreign trade in nominal billions of usd l.jpg
The importance of foreign tradeUS GDP and foreign trade in nominal billions of USD

Source: US International Trade Administration, USDC


Who are our top trading partners 1997 us trade data in millions of usd l.jpg
Who are our top trading partners?1997 US trade data in millions of USD

Source: International Trade Administration, USDC


Top 10 us exports and imports l.jpg
Top 10 US Exports and Imports

Major Export Product

Amount (billions)

Amount (billions)

Major Import Product

1. Agricultural products

$54.9

1. Computers and office equipment

$62.8

2. Electrical machinery

53.1

2. Crude oil

42.8

3. Computers and office equipmt.

36.4

3. Clothing

39.5

4. General industrial machinery

24.4

4. Telecommunications equipment

34.4

5. Motor vehicle parts

23.4

5. Agricultural products

29.3

6. Specialized industrial machnry.

23.3

6. Cars produced in Canada

24.4

7. Power generating equipment

21.9

7. General industrial machinery

24.1

8. Telecommunications equipmt.

19.0

8. Cars produced in Japan

21.1

9. Scientific instruments

18.6

9. Power generating equipment

20.5

10. Chemicals-organic

16.6

10. Motor vehicle parts

20.1


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Foreign market entry: decisions

How to

enter?

Go

International?

Which

Countries?


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Typical triggers to initial internationalization

  • Saturation or competition in domestic market

  • Movement overseas of domestic customers

  • Diversification of risk

  • Sourcing opportunities in overseas markets

  • Government incentives to export


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Foreign market entry: which countries?

Product

factors

Company

factors

Country

factors

Country

choices


Company factors l.jpg
Company factors

  • Geographic and language distance

  • Preexisting ties with customers going abroad


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Product factors

  • Product-market fit

  • Product adaptability


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Country factors: screening criteria

  • Macro variables

    • GDP, inflation, population size, political risk

  • General market factors

    • size, growth, taxes, duties, regulation, support

  • Customer characteristics

    • segments, preferences, buying power

  • Competitor characteristics

    • size, strength, importance of the market to them


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Foreign market entry:how to enter?

High

Foreign Direct Investment

Foreign assembly and production

Degree

of Risk

and

Control

Contractual Agreements

Franchising, Licensing,and Contracting

Exporting

Direct and indirect Exporting

Low


Foreign market entry exporting l.jpg
Foreign market entry: exporting

  • Indirect exporting

    • using a trading company

  • Direct exporting

    • using sales reps or manufacturers reps in the foreign country


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Foreign market entry: contractual agreements

  • Licensing

    • for a fee, grant rights to use patent or trademark to foreign company

  • Franchising

    • special form of licensing that dictates operations and marketing procedures

  • Contract manufacturing

    • produce locally under contract from firm


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Foreign market entry:foreign production

  • Assembly

    • produce locally from subunits [completely (CKD) or semi (SKD) knocked down] parts shipped in

    • usually has high labor, small capital investment

  • Full production


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Typical initial internationalization

  • Opportunistic exports of unadapted products

  • Usually to close, same language markets

  • Contracted marketing activities using distributors, trading companies, etc


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Should we standardize the marketing mix across borders?

  • Benefits of standardization

    • cost savings, communication benefits, MNC customers, exploit good ideas, better control

  • Benefits of localization

    • better meet local customer needs, allow discretion of local managers

  • Which elements of the mix to standardize?


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When to standardize...

  • Similar macro environments

    • socio-cultural, economic, technological, regulatory, political-legal, competitive

  • Intrinsically borderless products



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Culture defined

  • …values, attitudes, beliefs, artifacts, and … symbols represented in the pattern of life adopted by people that help them interpret, evaluate and communicate as members of society (Rice 1993)

  • …underlying framework that guides an individual’s perceptions of events …and selection of responses (Johansson 1997)


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Understanding culture

  • Includes shared interpretations, meanings, understandings of a group

  • Reflected in knowledge, values, beliefs, art, music, dance, material artifacts, language

  • Culture is learned

  • People are to culture as fish are to water


Example us culture l.jpg
Example: US culture

  • Some core values

    • individualism, freedom, industriousness, self-determination, materialism, impatience, present focus, youth, secularism

  • The importance of subcultures


Example other cultures l.jpg
Example: Other cultures

  • How different from US?

    • core values?

    • subcultures?


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Culture’s impact on marketing

  • Taste and preferences

    • pizza topping preferences

  • Values

    • impact on ads

  • Language

    • product names, slogans


Pizza hut most popular pizza toppings by country l.jpg
Pizza Hut: most popular pizza toppings by country

  • US-pepperoni

  • England-corn and tuna

  • India-pickled ginger

  • Japan-squid

  • Guatemala-black bean sauce

  • Australia-eggs

  • Bahamas-barbecued chicken


Slide28 l.jpg

A US ad for Guerlain’s Champs-Elysees perfume

A Middle Eastern adaptation of the Guerlain ad



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So, when does a standardized mix seem to work?

  • Consumer products bought on functional characteristics

    • stereos, computers, cameras

  • Common cross-border segments, especially high end, image products

    • jewelry, cosmetics


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Standardized products (continued)

  • Industrial products

    • airplane engines, semiconductors, medical equipment, etc

  • Services

    • banking, accounting, advertising

  • Brands positioned on country-of-origin

    • Fosters’ beer, Marlboro cigarettes


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When is standardizing least likely to work?

  • Consumer products where unique taste differences are important

    • foods

    • personal care products

    • clothing


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