ch03 Marketing

Developing a Global Vision
Chapter 3
Prepared by
Deborah Baker
Texas Christian University
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 1

©2005 South-Western/Thomson Learning
Learning Objectives
1. Discuss the importance of global

marketing.
2. Discuss the impact of multinational firms

on the world economy.
3. Describe the external environment facing

global marketers.

Learning Objectives (continued)
4. Identify the various ways of entering the

global marketplace.
5. List the basic elements involved in

developing a global marketing mix.
6. Discover how the Internet is affecting

global marketing.

1 Learning Objective
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Discuss the
importance of
global marketing.

1 Global Marketing
Marketing that targets

markets throughout
the world.

1 Global Vision
 Recognize and react to international

marketing opportunities
 Be aware of threats from

foreign competitors
 Use international
distribution networks

1 Importance of Global Marketing
 U.S. exports a fifth of industrial production and one-third of its farm

products
 One of every sixteen jobs in U.S. is supported by exports

1 Importance of Global Marketing
 A third of U.S. corporate profits is

from international trade and
investment
 Exports accounted for 20% of

growth in economic activity (2000)
 U.S. is world’s leading exporter

of grain

1 The Negatives of Global Trade
 Millions of Americans have lost jobs
 Millions fear losing jobs
 Workers face pay-cut demands
 Service and white-collar jobs are

vulnerable to operations move

1 The Advantages of Global Trade
 Rise from poverty for foreign nations

 Per capita income increases
 Productivity and living
standard increase
 Inflation not as threatening
 Open economy spurs innovation
 Export jobs may pay more

Impact of Terrorism
1
on Global Trade
 Globalization is slower and costlier

 Paying more to provide security
 Stocking of more inventory
 Tighter immigration policies
 Obsession with political risk

Discuss the impact

of multinational
firms on the world
economy.

2 Multinational Corporation
A company that is heavily

engaged in international
trade, beyond exporting and
importing.

Leading Multinational
2
Firms

2 Multinational Advantage
 Overcome trade problems

 Sidestep regulatory problems
 Shift production from
one plant to another
 Leverage ideas
around the world
 Save in labor costs

2 Global Marketing Standardization
Production of uniform products

that can be
sold the same way
all over the world.

2 Global Marketing Standardization
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 World markets are

becoming more alike
 Standardized products can

be sold the same way worldwide
 Successful companies may vary

products for global markets
Describe the
external
environment facing
global marketers.

3 The External Environment
Culture
Culture Economic
Economic and
and
Technological
Technological
Development
Development
Environmental Political
Political
Environmental Structure
Factors Structure
Factors
Demographic
Demographic
Makeup
Makeup
Natural
Natural
Resources
Resources
3 Culture
The common set of values

shared by its citizens
that determine what is socially
acceptable.

3 Culture
 Language
 Religion
 Superstitions
 Etiquette
 Customs
 Traditions
 Notion of time

Economic and
3
Technological Development
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Type
Type ofof Description
Description
Society
Society
Traditional
Traditional Agricultural,
Agricultural, Little
Little Upward
Upward Mobility
Mobility
Pre-Industrial
Pre-Industrial Social
Social and
and Economic
Economic Change
Change
Takeoff
Takeoff New
New Industries
Industries
Industrializing
Industrializing Spread
Spread of of Technology
Technology
Fully
Fully Exporter,
Exporter, Technology
Technology as
as Driver
Driver
Industrial
Industrial of
of New
New Innovation
Innovation
3 Political Structure Extremes
No private ownership
Minimal individual freedom
Little central government

Maximum personal freedom

3 Legal Considerations
Tariff
Tariff
Quota
Quota
Boycott
Boycott
Exchange
Exchange Control
Control
Legal
Legal Structures
Structures
Encourage
Encourage oror Market
Market Grouping
Grouping
Limit
Limit Trade
Trade
Trade
Trade Agreement
Agreement
3 Legal Considerations
A tax levied on goods entering

Tariff a country
Limit on the amount of a
Quota product entering a country
Exclusion of products from
Boycott a country
Foreign exchange must be
Exchange Control sold to a control agency
Market Grouping Common trade alliance
An agreement to stimulate
Trade Agreement international trade
3 Trade Agreements: Uruguay Round
 Reduces tariffs by one-third world-

wide
 Patent/copyright protection
 Services under international rules
 Reduction of farm subsidies

3 Political and Legal Considerations
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Examples
Examples
FTAA
FTAA NAFTA
NAFTA European
European Union
Union

3 Demographic Makeup
Marketing
Marketing
Considerations
Considerations  Population density
 Urban or rural
 Personal income
 Rise of global middle
class
 Supply of professionals

3 Natural Resources
Differences
Differences in
in
Resources
Resources
create…
create…
 International dependencies
 Shifts of wealth
 Inflation and recession
 Export opportunities if resources
are abundant
 Stimulus for military intervention
Identify the various

ways of entering
the global
marketplace.

4 Global Marketplace Questions
 What are our options in selling

abroad?
 How difficult is global marketing?
 What are the potential risks

and returns?

4 Why “Go Global”?
 Earn additional profits

 Leverage a unique product or
technological advantage
 Possess exclusive market information
 Utilize “economies of scale”

4 Risk Levels for Global Entry
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Risk High
Direct risk/
Joint Invest- high
Contract Venture ment return
Manu-
Export Licensing facturing
Low
risk/
low
Return
return
4 Entering the Global Marketplace
Sell
Selldomestically
domesticallyproduced
produced
Export
Export products
productstotobuyers
buyersin
inother
othercountries.
countries.
Legal
Legalprocess
processallowing
allowinguse
useof
of
Licensing
Licensing manufacturing/patents/knowledge.
manufacturing/patents/knowledge.
Contract
Contract Private-label
Private-labelmanufacturing
manufacturingby
byaa
Manufacturing foreign
foreigncountry
country
Manufacturing
Domestic
Domesticfirm
firmbuys/joins
buys/joinsaaforeign
foreign
Joint
Joint Venture
Venture company
companyto tocreate
createnew entity..
newentity
Direct
Direct Active
Activeownership
ownershipof
ofaaforeign
foreign
Investment company/manufacturing
company/manufacturingfacility.
facility.
Investment
4 Export Intermediaries
Assumes
Assumesall
allownership
ownershiprisks
risksand
and
Buyer
Buyer for
for Export
Export sells
sellsglobally
globallyfor
forits
itsown
ownaccount.
account.
Plays
Playsthe
thetraditional
traditionalbroker’s
broker’srole
role
Export
ExportBroker
Broker by
bybringing
bringingbuyer
buyerand
andseller
sellertogether.
together.
Acts
Actslike
likeaamanufacturer’s
manufacturer’sagent
agentfor
for
Export
Export Agent
Agent the
theexporter
exporterin
inthe
theforeign market..
foreignmarket

List the basic

elements involved
in developing a
global marketing
mix.

5 Product and Promotion
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On
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Same Change
http://www.mcdonalds.com
http://www.mcdonalds.com Product Product
Same One
One Product
Product Product
Product
Message One
One Message
Message Adaptation
Adaptation
Change Message
Message Product
Product
Message Adaptation
Adaptation Invention
Invention

5 Pricing
 Must consider transportation and

insurance costs, taxes and tariffs
 Determine what customers will spend
 Ensure that foreign buyers will

pay them
 May need to simplify a product

to lower price

5 Dumping
The sale of an exported product at a

price lower than that charged for the
same or a like product
in the exporter’s
“home” market.

5 Countertrade
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.

5 Distribution Challenges
 Japanese distribution system is the

most complicated in the world
 Retail institutions may

differ from company’s
domestic market
 Freight-rail systems may

not be compatible

Discover how the

Internet is affecting
global marketing.

6 Going Global
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 Internet e-commerce sites
 Language translation software
 Global shippers


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Developing a Global Vision

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 1

1. Discuss the importance of global

2. Discuss the impact of multinational firms

3. Describe the external environment facing

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 2

4. Identify the various ways of entering the

5. List the basic elements involved in

6. Discover how the Internet is affecting

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 3

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 4

Marketing that targets

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 5

 Recognize and react to international

 Be aware of threats from

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 6

 U.S. exports a fifth of industrial production and one-third of its farm

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

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 7

 A third of U.S. corporate profits is

 Exports accounted for 20% of

 U.S. is world’s leading exporter

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 8

 Millions of Americans have lost jobs

 Millions fear losing jobs

 Workers face pay-cut demands

 Service and white-collar jobs are

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 9

 Rise from poverty for foreign nations

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 10

 Globalization is slower and costlier

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 11

Discuss the impact

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 12

A company that is heavily

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 13

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 14

 Overcome trade problems

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 15

Production of uniform products

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 16

 World markets are

 Standardized products can

 Successful companies may vary

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 18

The common set of values

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 20

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 21

Little central government

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 23

A tax levied on goods entering

 Reduces tariffs by one-third world-

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 26

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 27

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 28

Identify the various

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 30

 What are our options in selling

 How difficult is global marketing?

 What are the potential risks

Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel 31

 Earn additional profits