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Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4

1

Designed by Eric Brengle B-books, Ltd.

CHAPTER

4

Developing a Global Vision

Prepared byDeborah Baker

Texas Christian University

MarketingLamb, Hair, McDaniel

9

2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4

Learning Outcomes

Discuss the importance of global marketing

Discuss the impact of multinational firms

on the world economy

Describe the external environment facing

global marketers

LOI

LO2

LO3


Learning Outcomes

Identify the various ways of entering the

global marketplace

List the basic elements involved in

developing a global marketing mix

Discover how the Internet is affecting

global marketing

LO5

LO6

LO4


Discuss the importance of global marketing

Rewards of Global MarketingLOI


LOI

Global MarketingGlobal MarketingMarketing that targets

markets throughout the

world.

Rewards of Global Marketing


LOI Rewards of Global Marketing

Recognizing and reacting to international marketing opportunities

Using effective global marketing strategies

Being aware of threats from foreign competitors

Having a global vision means…


LOI Emerging-Market Companies

COMPANY COUNTRY INDUSTRY

América Móvil Mexico Telecom services

Cemex Mexico Building materials

China Mobile China Telecom services

CNOOC China Oil and gas

CVRD Brazil Mining

Embraer Brazil Aerospace

Gazprom Russia Oil and gas

Haier China Home appliances

Hisense China Electronics, appliances

Huawei Technologies China Telecom equipment

Adapted from “Emerging Giants,” Business Week, July 31, 2006.


Importance of Global Marketing to the U. S.

LOI

U.S. exports a fifth of industrial production.

One of every 10 jobs in U.S. is supported by exports.

U.S. businesses export over $800 billion in goods.

Exports account for 25 percent of U.S. economic growth .

U.S. is world’s leading exporter of farm products.


The Fear of Trade and Globalization LOI

Millions of Americans have lost jobs

Millions fear losing jobs

Threat of outsourcing if workers do not accept pay cuts

Vulnerability to operations moving offshore

10Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 LOI

Benefits of Globalization

Expands economic freedom

Spurs competition

Raises productivity and living standards

Offers access to foreign capital, global export markets, and advanced technology

Promotes higher labor and environmental standards

Acts as a check on government power


REVIEW LEARNING OUTCOMEThe Importance of Global Marketing

LOI

Identifyglobal marketing

opportunities

Identifyglobal marketing

opportunities

Compete againstforeign competitionin domestic markets

Compete againstforeign competitionin domestic markets

Understandglobal

distributionnetworks

Understandglobal

distributionnetworks

Globally-minded marketing managers:

FearsFears BenefitsBenefitsKnow global marketing is important because

of economic interdependencies

Know global marketing is important because

of economic interdependencies


Discuss the impact of multinational firms

on the world economy

Multinational FirmsLO2


LO2 Stages of Global Business Development

11

22

44

33

Companies operate in one country and sell into othersCompanies operate in one country and sell into others

Set up foreign subsidiaries to handle salesSet up foreign subsidiaries to handle sales

Virtual operationVirtual operation

Operate an entire line of business in another countryOperate an entire line of business in another country


LO2

Global MarketingStandardization

Global MarketingStandardization

Production of uniform

products that can be sold

the same way all over the

world.

Global Marketing Standardization


REVIEW LEARNING OUTCOMEImpact of Multinational Firms

LO2

Growth

Revenue

Profits

GlobalMarketing

GlobalMarketing

MNC

• Human Resources• Physical Resources• Financial Resources


Describe the external environment facing

global marketers

External Environment Facing Global MarketersLO3


LO3External Environment Facing

Global Marketers

Natural Resources

Natural Resources

Demographic Makeup

Demographic Makeup

Economic and Technological Development

Economic and Technological Development

CultureCulture

Political StructurePolitical

Structure


LO3 Culture

CultureCulture The common set of values

shared by its citizens that

determine what is socially

acceptable.

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4

Biz FlixLost in Translation

19

LO3


LO3Economic and

Technological Development

Developed Country

Developed Country

Less DevelopedCountry

Less DevelopedCountry

Complex, sophisticated industriesComplex, sophisticated industries

Basic industriesBasic industries


LO3 Political Structure and Actions

No private ownershipMinimal individual freedom

Little central governmentMaximum personal freedom


LO3 Legal Considerations

Tariff

Quota

Boycott

Exchange Control

Market Grouping

Trade Agreement

A tax levied on goods entering a country

Limit on the amount of a product entering a country

Exclusion of products from a country

Foreign exchange must be sold to a control agency

Common trade alliance

An agreement to stimulateinternational trade

23Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 LO3

Political and Legal Considerations

The Uruguay Round made changes inworld trading practices

Entertainment, pharmaceuticals, integrated circuits, and software

Financial, legal, and accounting services

Agriculture

Textiles and apparel

And created a new trade organization: The World Trade Organization

24Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 4 LO3

Political and Legal Considerations

CAFTACAFTA NAFTANAFTA European Union

European Union

Agreementsand Organizations

Agreementsand Organizations

http://www.wto.org

Online


LO3

Marketing Considerations:

Population density

Urban or rural

Personal income

Age

Demographic Makeup


LO3

Create…

International dependencies

Shifts of wealth

Inflation and recession

Export opportunities if resources are abundant

Stimulus for military intervention

Shortages in Natural Resources

27Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved

Chapter 4

LO3 Natural Resources

Petroleum

Foodstuffs

Precious metal

Timber

Water


REVIEW LEARNING OUTCOMEExternal Environment Facing Global Marketers

LO3


Identify the various ways of entering the

global marketplace

Global Marketing by the Individual FirmLO4


Chapter 4

LO4 Global Marketing Questions

What are our options in selling abroad?

How difficult is global marketing?

What are the potential risks and returns?

http://www.cat.com

Online


Chapter 4

LO4 Why “Go Global”?

Earn additional profits

Leverage a unique product or technological advantage

Possess exclusive market information

Saturated domestic markets

Excess capacity

Utilize “economies of scale”


LO4 Risk Levels for Global Entry

Lowrisk/lowreturn

Highrisk/highreturn

Risk

Return

Export Licensing

ContractManu-

facturing

JointVenture

DirectInvest-ment


LO4 Entering the Global Marketplace

Licensing Legal process allowing use of manufacturing/patents/knowledge

ContractManufacturing

Private-label manufacturing by a foreign country

Joint Venture Domestic firm buys/joins a foreign company to create new entity

Export Sell domestically produced

products to buyers in other countries

Direct Investment Active ownership of a foreign company/manufacturing facility


LO4 Export Intermediaries

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

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

Export BrokerExport Broker Plays the traditional broker’s role

by bringing buyer and seller together.

Plays the traditional broker’s role by bringing buyer and seller

together.

Export AgentExport Agent Acts like a manufacturer’s agent

for the exporter in the foreignmarket.

Acts like a manufacturer’s agent for the exporter in the foreign

market.


REVIEW LEARNING OUTCOMEEntering the Global Marketplace

LO4


List the basic elements involved in developing a global marketing mix

The Global Marketing MixLO5


LO5 Product and Promotion

One ProductOne Message

Product Adaptation

MessageAdaptation

Product Invention

SameSameProductProduct

SameSameMessageMessage

ChangeChangeMessageMessage

ChangeChangeProductProduct

http://www.disney.go.com

Online


LO5 Place (Distribution)

Adequate distribution is necessary for success in global markets– Some countries have complicated systems

– Lack of distribution infrastructure and cultural differences create problems

Innovative distribution systems can create competitive advantage


LO5 Pricing

Must consider transportation and insurance costs, taxes and tariffs

Determine what customers will spend

Ensure that foreign buyers will pay price

May need to simplify a product to lower price

Don’t assume that low-income countries are willing to accept lower quality


LO5 Exchange Rates

Exchange RatesExchange Rates The price of one’s currency

in terms of another

country’s currency.


LO5

1. Trying to increase an overseas market share

2. Temporarily distributing products to overseas markets to offset slack demand at home

3. Lowering unit costs by exploiting large-scale production

4. Attempting to maintain stable prices during periods of exchange rate fluctuations

Dumping


LO5

CountertradeCountertrade 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.

Countertrade


REVIEW LEARNING OUTCOMEDeveloping a Global Marketing Mix

PROMOTION

One Product, One Message

Product InventionProduct AdaptationMessage Adaptation

LO5

PLACE

Channel Choice

Channel Structure

Country Infrastructure

PRICE

Dumping

Countertrade

Exchange Rates

Purchasing Power


Discover how the Internet is affecting

global marketing

The Impact of the InternetLO6


REVIEW LEARNING OUTCOMEThe Impact of the Internet

LO6

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Documents

global marketersdescribe

global marketing mix

global export markets

learning outcomesdiscuss

various ways

exports account

lost jobs millions

jobs threat of outsourcing