Chapter 6
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Chapter 6. MARKETING IN GLOBAL MARKETS. Global marketing is very broad in scope Multiple reasons why firms choose to engage in global marketing Elements of the environment of global marketing are different than those for domestic markets

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Chapter 6

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Chapter 6

Chapter 6

MARKETING IN GLOBAL MARKETS


Chapter 6

Global marketing is very broad in scope

Multiple reasons why firms choose to engage in global marketing

Elements of the environment of global marketing are different than those for domestic markets

Disadvantages and advantages of strategies for foreign market entry

Marketing mix strategies cannot be simply copied from domestic marketing mix strategies

Learning Objectives


Chapter 6

Simplest: the firm makes one or more marketing decisions across national boundaries

Complex: the firm establishes manufacturing and marketing facilities overseas and coordinates strategies across markets

Uncontrollable variables like economic structures, cultural values, legal, political infrastructure, differ significantly between markets along with controllable factors like cost, price, distribution structures, advertising

International Marketing


Chapter 6

Export: Marketing of goods and services across national/political boundaries

Multinational: Activities, interests or operations in more than one country; control over marketing activities from outside the country in which the product will actually be sold; each market is an independent profit center

Global: Entire organization focused on selection, exploration of global marketing opportunities; marshalling of resources around the globe; achieve synergy, global competitive advantage

Toyota is a company that has gone through all the above stages

Degrees of Commitment


Chapter 6

Large Market size

Stability through diversification

Profit potential

Unsolicited orders

Proximity of markets

Excess capacity

Offer by foreign distributor

Increasing growth rate

Smoothing out business cycles

Motivations


Chapter 6

Too much red tape

Trade barriers

Transportation difficulties

Lack of trained personnel

Lack of incentives

Lack of coordinated assistance

Unfavorable conditions overseas

Slow payment by buyers

Lack of competitive products

Payment defaults

Language barriers

Trepidations


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Ranked in order of least to greatest risk and investment:

Exporting

Licensing

Joint venture

Direct Investment

U.S. commercial centers

Trade intermediaries

Alliances

Stages of Going International


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More effective for small and medium firms

More control over risk, cost, resource commitment

Products in maturity stage of domestic lifecycle

Products with ‘seasonal demand’

Exporting


Chapter 6

Indirect: sales made through the firm’s domestic sales department; no overseas sales force

Semi-direct: combination export manager, manufacturer’s export agent, Webb-Pomerene Export Association, piggyback exporting

Direct: export department conducts market research, establishes physical distribution, obtains necessary documentation, sells directly to a foreign firm

Types of Export


Chapter 6

Provide technology, right to use licensor’s manufacturing process, brand name, patents, sales knowledge, to a foreign firm in return for payment

Limited profit potentials

Binding commitment to a firm that may turn out to be incompetent

Good option when there is scarce capital, import / government restriction

Franchising e.g., McDonalds

Licensing


Chapter 6

Partnership between a domestic and foreign firm e.g., GM & Toyota

Joint Ventures


Chapter 6

Invest in wholly-owned subsidiaries, full-scale production and marketing

Allows the firm to compete more aggressively

Necessitates detailed understanding of local business conditions, customs, labor, and other factors

Direct Investment


Chapter 6

Additional resources for promotion e.g., familiarizing with local customs; providing business facilities like exhibition space; translation and clerical services; facilitating contacts between sellers, buyers, government officials; provide trade-related information

U.S. Commercial Centers


Chapter 6

Entrepreneurial middlemen

Buy U.S.-produces goods at 15% below a manufacturer’s best discount and then resell the product in overseas markets

Good for small companies who do not have the time or resources to develop relationship with foreign companies

Trade Intermediaries


Chapter 6

To better compete in global markets or enter new markets a good strategy for a firm is to form alliances with other companies

e.g., Miller and Budweiser’s alliance with global breweries like Molson and Corona to fight off a stiff competitor from Heineken;

Star Alliance and One World in the airline industry

Alliances


Chapter 6

Corporate level – data on potential markets; resources to be allocated

Business level – external environment, level of commitment, resources /capabilities, assessment of stakeholders

Functional level – integration of all elements that achieve objectives

Marketing Plan


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Product / Promotion

Pricing

Distribution & Logistics

Integration: Marketing Mix


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One product, one message, worldwide

Product extension, promotion adaptation

Product adaptation, promotion extension

Dual adaptation

Product invention

Brand

Product / Promotion


Chapter 6

Analyze factors that influence international pricing e.g., cost structures, competitor pricing levels, exchange rates

Confirm the impact of corporate strategies

Evaluate strategic pricing options and select most appropriate approach

Implement strategy through a variety of tactics

Manage price and financing international transactions

Pricing


Customer sensitivity to prices

Customer sensitivity to prices

  • The more distinctive the product

  • The greater the perceived quality

  • Less aware consumers are of substitutes

  • Difficulty of making comparisons

  • If price of a product represents a small proportion of customer’s total expenditure

  • As the perceived benefit increases

  • If the product is used in association with a product bought previously

  • If costs are shared with other parties

  • If the product cannot be stored


Problems of price co ordinations

Problems of price co-ordinations

  • Dumping: selling a product in a foreign country below domestic price or below actual cost; helps build market share through competitive pricing; helps get rid of burdening surplus

  • Gray market / parallel importing: products sold through unauthorized channels of distribution


Chapter 6

Distribution channels: means of distribution of the goods from the manufacturer to end user; headquarters, channels between countries, channel structure within countries

Logistics: physical distribution management; concerned with planning, implementing, control of physical flow of materials from points of origin to use at a profit

Uncontrollable factors e.g., wholesaling, retailing structures, quality of services, infrastructure, differs widely between nations

Distribution & Logistics


Chapter 6

Social / cultural:

Language

Colors

Customs and taboos

Values

Aesthetics

Time

Business norms

Religion

Social structures

Political / legal

Economic

Competitive

Technology

Environment


Examples socio cultural

Language: e.g., in Canada labels must be in both English and French

Colors: e.g., in Japan black and white are colors of mourning and should not be used on a product’s package

Customs and taboos: e.g., McDonald’s in India serves mutton hamburgers as beef and pork are religiously tabooed meat

Values: e.g., Americans are materialistic, Indians’ philosophy is non-materialism

Aesthetics: e.g., Americans believe suntans are attractive, Japanese do not

Time: e.g., Americans value punctuality and deadlines; Latin Americans consider deadlines rude and pushy

Business norms: e.g., Americans are more verbose than Japanese who prefer periods of silence in negotiations

Religious beliefs: e.g., in conservative Islamic countries women have less or no say in household buying decisions

Examples (socio-cultural)


Chapter 6

Government intervention:

Contracts for supply and delivery

Registration and enforcement of trademarks, brand names, labeling

Patents

Marketing communications

Pricing

Product safety, acceptability, environmental issues

Political Stability

Monetary circumstances (exchange rate)

Trading Blocs & Agreements e.g., NAFTA

Customs Unions

Tariffs

Expropriation

Political / Legal


Chapter 6

Technological problems:

Training foreign workers to operate unfamiliar equipment

Poor transportation system; increase costs

Maintenance standards vary

Poor communication facilities hinders use of mass media ads

Lack of data processing facilities makes planning, implementing and controlling marketing strategy difficult

Technology


Chapter 6

Gain differential advantage by investing resources in the target market

Local firms may successfully adapt imitation strategies

Unsuccessful local firms are often bought out by multinationals

Competition


Chapter 6

Financial performance e.g., return on investment

Market penetration e.g., volume and value of sales

Customer growth

Distribution e.g., number of outlets

Brand awareness and value

New product introductions, diffusion

Company image including quality and added value

Marketing Objectives


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