You are on page 1of 22

AMAs Definition of Marketing: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution

of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

Global Marketing: the coordinated performance of marketing activities to create exchanges across countries that satisfy individual, organizational , and societal objectives. Global marketing is conducted across countries (not domestic or foreign)

Global marketing coordinates activities across different country markets Global marketing should be motivated by individual, organizational, and societal goals Economic, Financial, Political, and Cultural Environmental of Each Country Affect marketing

Why Should Firms Engage in Global Marketing?

To Survive and Grow 1. Learn to satisfy consumers in diverse conditions 2. Manage marketing tasks more efficiently and effectively 3. Preempt or counter competitive attacks in more than one market 4. Expand customer base to include developed and developing nations

To Diversify Product and Market Portfolios and Improve competitiveness 1. Effects of seasonal and cyclical fluctuations in one market offset by others 2. Diversification increases market size and enhances economies of scale

To Capitalize on the Attractiveness of Additional Country Markets 1. The U.S. is attractive-but wont accommodate unlimited growth 2. Expand market size by expanding into other countries

To Operate Within a Global Marketplace 1. Goods, services, capital, technology, and labor are going global 2. Reduced government restrictions are affecting global marketing 3. Bilateral and multilateral negotiations are reducing restrictions

Global Market Entry Strategies:

Exporting as an Entry Strategy: Exporting represents the least commitment on the part of the firm entering a foreign market Since many countries do not offer a large enough opportunity to justify local production, exporting allows a company to centrally manufacture its products for several markets and therefore to obtain economies of scale.

Indirect Exporting:
Several types of intermediaries located in the domestic market are ready to assist a manufacturer in contacting international markets or buyers. The major advantage for managers using a domestic intermediary lies in that individual`s knowledge of foreign market conditions.

Direct Exporting:
Direct exporting includes setting up an export department within the firm or having the firm`s sales force sell directly to foreign customers or marketing intermediaries. A company engages in direct exporting when it exports through intermediaries located in the foreign markets. this method of market entry provides the company with a greater degree of control over its distribution channels than would indirect exporting.

Foreign Production as an Entry Strategy:

Many companies realize that to serve local customers better, exporting into that market is not a sufficiently strong commitment to realize strong local presence. As a result, these companies look for ways to strengthen their base by entering into one of several ways to manufacture.

Licensing is similar to contract manufacturing, as the foreign licensee receives specifications for producing products locally, but the licensor generally receives a set fee or royalty rather than finished products. Licensing may offer the foreign firm access to brands, trademarks, trade secrets or patents associated with products manufactured.

Using licensing as a method of market entry, a company can gain market presence without an equity (capital) investment. The foreign company, or licensee gains the right to commercially exploit the patent or trademark on either an exclusive (the exclusive right to a certain geographic region) or an unrestricted basis.

Franchising is a special form of licensing in which the franchiser makes a total marketing program available including the brand name, logo, products and method of operation. Usually the franchise agreement is more comprehensive than a regular licensing agreement About 80 percent of all McDonald`s restaurants are franchised

Local Manufacturing:
Many companies find it to their advantage to manufacture locally instead of supplying the particular market with products made elsewhere. Numerous factors such as local costs, market size, tariffs, laws and political considerations may affect a choice to manufacture locally. it may be contract manufacturing, assembly or fully integrated production.

Under contract manufacturing, a company arranges to have its products manufactured by an independent local company on a contractual basis. A firm contracts with a foreign firm to manufacture parts or finished products or to assemble parts into finished products. The manufacturer`s responsibility is restricted to production. Afterward, products are turned over to the international company which usually assumes the marketing responsibilities for sales, promotion and distribution.

Lower labor costs abroad are the major incentive for using this entry mode. In an assembly operation, the international firm locates a portion of the manufacturing process in the foreign country. Typically, assembly consists only of the last stages of manufacturing and depends on the ready supply of components or manufactured parts to be shipped in from another country. Assembly usually involves heavy use of labor rather than extensive investment in equipments. Motor vehicle manufacturers and electronics industries have made extensive use of assembly operations in numerous countries.

Establishing a fully integrated local production unit involves the greatest commitment a company can make for a foreign market. Since building a plant involves a substantial outlay in capital, companies only do so where demand appears assured. the primary reason is to take advantage of lower costs in a country, thus providing a better basis for competing with local firms or other foreign companies already present. Also, high transportation costs and tariffs may make imported goods uncompetitive.

Ownership Strategies:
Joint Ventures: In a joint venture, an investing firm owns roughly 25 to 75 percent of a foreign firm, allowing the investing firm to affect management decisions of the foreign firm. the foreign company invites an outside partner to share stock ownership in the new unit. The particular participation of the partners may vary, with some companies accepting either a minority or majority position

A company whose common stock is 100% owned by another company, called the parent company. A company can become a wholly owned subsidiary through acquisition by the parent company. This arrangement is common among high-tech companies who want to retain complete control and ownership of their technology.

Strategic Alliances: In an alliance, two entire firms pool their skills and resources directly in a collaboration and each expects to profit from the other`s experience. Although a new entity may be formed, it is not a requirement. Alliances can be in the forms of technologybased alliances, production-based alliances or distribution-based alliances.

Entering Markets Through Mergers and Acquisitions:

the need to enter markets more quickly than through building a base from scratch or entering some type of collaboration has made the acquisition route extremely attractive. A major advantage of acquisitions is that they can quickly position a firm in a new business. By purchasing an existing player, a firm does not have to take the time to establish its presence. Acquiring an existing firm also takes a potential competitor out of the market. acquisitions can be a very expensive way to enter a market.