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Chapter 05

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Chapter 05

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  1. Part Two Using Technologyfor Customer Relationships in a Global Environment Chapter 05 Global Markets and International Marketing

  2. Chapter Learning Objectives • To understand the nature of global markets and international marketing • To analyze the environmental forces affecting international marketing efforts • To identify several important regional trade alliances, markets, and agreements • To examine methods of involvement in international marketing activities • To recognize that international marketing strategies fall along a continuum from customization to globalization

  3. Chapter Outline • The Nature of Global Marketing Strategy • Environmental Forces in International Markets • Sociocultural Forces • Economic Forces • Political, Legal, and Regulatory Forces • Social Responsibility and Ethics Forces • Competitive Forces • Technological Forces

  4. Chapter Outline (cont’d) • Regional Trade Alliances, Markets, and Agreements • The North American Free Trade Agreement (NAFTA) • The European Union (EU) • The Common Market of the Southern Cone (MERCOSUR) • Asia-Pacific Economic Cooperation (APEC) • The World Trade Organization (WTO)

  5. Chapter Outline (cont’d) • Modes of Entry into International Markets • Importing and Exporting • Licensing and Franchising • Contract Manufacturing • Joint Ventures • Direct Ownership • Customization Versus Globalization of International Marketing Mixes

  6. The Nature of Global Marketing Strategy • International Marketing • Developing and performing marketing activities across national boundaries • Provides growth opportunities, promotes innovation, fosters marketing of better, lessexpensive products • Some companies enter globalmarkets gradually but othersare “born global” and begininternational activities almostimmediately

  7. Sociocultural Forces • Beliefs and values about: • Family • Religion • Education • Health • Recreation

  8. Economic Forces • Economic Differences Affecting International Marketing • Standards of living • Credit • Buying power • Income distribution • National resources • Exchange rates • Gross Domestic Product (GDP) • The market value of a nation’s total output of goods and services for a given period;an overall measure of economic standing

  9. Source: CIA, The World Fact Book, www.cia.gov/cia/publications/factbook/index.html (accessed Jan. 5, 2007); globalEdge Resource Desk, http://globaledge.msu.edu/ (accessed Jan. 5, 2007); “Population Explosion!” CLickZ Stats, Apr. 12, 2006, www.clickz.com/showPage.html?page=151151.

  10. Source: CIA, The World Fact Book, www.cia.gov/cia/publications/factbook/index.html (accessed Jan. 5, 2007); globalEdge Resource Desk, http://globaledge.msu.edu/ (accessed Jan. 5, 2007); “Population Explosion!” CLickZ Stats, Apr. 12, 2006, www.clickz.com/showPage.html?page=151151.

  11. Border Political, Legal, and Regulatory Forces • Trade Restrictions Affecting International Marketing • Import tariff • A duty levied by a nation on goods bought outside its borders and brought in • Quota • A limit on the amount of goods an importing countrywill accept for certain product categories in a specific periodof time

  12. Trade Restrictions (cont’d) • Embargo • A governmental suspension of trade in a particular product or with a given country • Exchange controls • Government restrictions on the amount of a particular currency that can be bought or sold • Balance of Trade • The difference between the value of a nation’s imports and exports

  13. Social Responsibility and Ethics Forces • Differences in legal and ethical standards have caused some companies to establish ethics programs and standards for international business conduct. • Differences may revolve around such things as intellectual property, labor conditions, payoffs and bribes, and tips and gifts.

  14. Source:Adapted from”Transparency International Corruption Perceptions Index 2006,” Transparency International, November 6, 2006, www.transparency.org/content/download/10825/92857/version/1/CPI_2006_presskit_eng.pdf.

  15. Source:The Global Competitiveness Report 2006–2007, World Economic Forum.

  16. Regional Trade Alliances,Markets, and Agreements • The North AmericanFree Trade Agreement (NAFTA) • An alliance that merges Canada, Mexico, and the United States into a single market • Eliminates barriers • Eases investment • Simplifies trade

  17. Regional Trade Alliances,Markets, and Agreements (cont’d) • The European Union (EU) • An alliance that promotes trade among its member countries in Europe • Market unification • Common currency (euro) • Economic efficiency

  18. Bolivia Brazil Argentina Chile Regional Trade Alliances,Markets, and Agreements (cont’d) • The Common Market of the Southern Cone (MERCOSUR) • An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America Paraguay Uruguay

  19. Regional Trade Alliances,Markets, and Agreements (cont’d) • Asia-Pacific Economic Cooperation (APEC) • An alliance that promotes open trade and economic and technical cooperation among member nations throughout the world

  20. Regional Trade Alliances,Markets, and Agreements (cont’d) • World Trade Organization (WTO) • An entity that promotes free trade among member nations • Provides legal ground rulesfor international commerce and trade policy • General Agreement on Tariffs and Trade (GATT) • An agreement among nations to reduceworldwide tariffs and increaseinternational trade • Dumping: selling products atunfairly low prices

  21. Figure 5.1: Levels of Involvementin Global Marketing

  22. International Involvement • Importing • The purchase of products from a foreign source • Exporting • The sale of products to foreign markets • Importing and exporting may be facilitated by • Exporting agencies • Trading companies

  23. BIG PACK of Asia International Involvement (cont’d) • Licensing • An alternative to direct investment requiring the licensee to pay commissions or royalties on sales or supplies used in manufacturing • Franchising • A form of licensing in which the franchiser grants the franchisee the right to market its product in accordance with the franchiser’s standards

  24. International Involvement (cont’d) • Contract Manufacturing • The practice of hiring a foreign firm to produce a designated volume of product to specification • Outsourcing • The practice of contracting manufacturing or other tasks to companies in countries where labor and supplies are less • Joint Venture • A partnership between a domestic firm and a foreign firm or government • Strategic Alliance • A partnership (possibly of traditional rivals) formed to create a competitive advantage on a worldwide basis

  25. Figure 5.2: Projected U.S.Jobs Moving Offshore Source: “Will the New Congress Shift Gears on Free Trade?” The Wall Street Journal, November 18–19, 2006, p. A7.

  26. International Involvement (cont’d) • Direct Ownership • A situation in which a company owns subsidiaries or other facilities overseas • Multinational Enterprise • A firm that has operations or subsidiaries in many countries

  27. Source: “The Fortune Global 500,” Fortune, July 24, 2006, http://money.cnn.com/magazines/fortune/global500/2006/index.html.

  28. Customization Versus Globalization of International Marketing Strategies • Customization • Adjusting marketing mixes according to cultural, regional, and national differences • Globalization • The development of marketing strategies that treat the entire world (or its major regions) as a single entity • Includes standardization of products, promotion campaigns, prices, and distribution channels • “Think globally, act locally”

  29. Standardization of International Marketing • Easiest marketing mix variables to standardize • Brand name • Product characteristics • Packaging • Labeling • More difficult to standardize • Media allocation • Retail outlets • Pricing

  30. International Marketing Requires Strategic Planning • Effect of a Firm Having a Global Presence • Provides global competitive opportunities for creating value through • adapting to local market differences • exploiting economies of global scale and scope. • acquiring optimal locations for activities and resources. • maximizing the transfer of knowledge across locations.

  31. After reviewing this chapter you should: • Understand the nature of global markets and international marketing. • Be able to analyze the environmental forces affecting international marketing efforts. • Be able to identify several important regional trade alliances, markets, and agreements. • Be able to examine methods of involvement in international marketing activities. • Recognize that international marketing strategies fall along a continuum from customization to globalization.