Poma PPT Slides-Chapter 19-171879

Principles of Marketing: An Asian
Perspective
Instructor Supplements
Created by Geoffrey da Silva
The Global Marketplace
2012 Principles of Marketing: An Asian Perspective
19
Chapter 19 Outline
19.1
19.2
19.3
19.4
19.5
19.6
19.7
Global Marketing Today

Looking at the Global Marketing Environment
Deciding Whether to Go Global
Deciding Which Markets to Enter
Deciding How to Enter the Market
Deciding on the Global Marketing Program
Deciding on the Global Marketing Organization
Opening Case
Google in China: Running the Global Marketing Gauntlet
Just as international
markets provide
opportunities, they
sometimes present
challenges. Googles
odyssey into mainland
Chinaand back out again
vividly illustrates the
prospects and perils of
going global
19.1
Global Marketing Today
19.1
19.1 Global Marketing Today
Today, the world is shrinking rapidly with the advent of faster

communication, transportation, and financial flows.
Products developed in one are finding enthusiastic acceptance in

other countries.
Since 1990, the number of multinational corporations in the world

has grown from 30,000 to more than 63,000.
Between 2000 and 2008, total world trade grew by more than 7
percent annually, while global gross domestic product has grown at
only about 3 percent annually.
Foreign firms are expanding aggressively into new international

markets, and home markets are no longer as rich in opportunity.
Few industries are now safe from foreign competition.
Many American companies have now

made the world their market.
8
Global Marketing Firms
The Global Firm

A
global firm is one that, by operating in more than one country,

gains marketing, production, R&D, and financial advantages that are
not available to purely domestic competitors.
The
global company sees the world as one market.
It
minimizes the importance of national boundaries and develops

global brands.
10 2012 Principles of Marketing: An Asian Perspective
Globalization
Almost every company,
large or small, is touched
in some way by global
competition. Today,
companies are also buying
more supplies and
components abroad.
Many American companies have now made the world their market.
Globalization in Marketing: Key Questions

The rapid move towards globalization means that all companies will
have to answer basic questions:
a)
b)
c)
d)
What market position should we try to establish in our country,

in our economic region, and globally?
Who will our global competitors be and what are their
strategies and resources?
Where should we produce or source our products?
What strategic alliances should we form with other firms
around the world?
Globalization in Marketing: Key Questions

A company faces six major decisions in international marketing.
19.2
Looking at the Global Marketing Environment
19.2
19.2 Looking at the Global Marketing Environment
Global Marketing Environment
International Trade
Restrictions to Trade
Tariffs
Quotas
Exchange controls
Non-tariff trade barriers
The International Trade System

Tariffs
are taxes on certain imported products designed to raise revenue

or to protect domestic firms.
Quotas are limits on the amount of foreign imports that a country will
accept in certain product categories.
The purpose of a quota is to conserve on foreign exchange and to protect
local industry and employment.
Exchange controls are limits on the amount of foreign exchange and the
exchange rate against other currencies.
Nontariff trade barriers are such things as biases against U.S. company
bids, restrictive product standards, or excessive host-country regulations.
Types of industrial structures

The four types of industrial structures are as follows:
I.Subsistence
economies: The vast majority of people engage in simple

agriculture. They consume most of their output and barter the rest for
simple goods and services. They offer few market opportunities.
II.Raw material exporting economies: These economies are rich in one
or more natural resources but poor in other ways. These countries are
good markets for large equipment, tools and supplies, and trucks.

III.Emerging
economies: In an emerging economy, fast growth in

manufacturing results in rapid overall economic growth. The country
needs more imports of raw textile materials, steel, and heavy
machinery, and fewer imports of finished textiles, paper products, and
automobiles.
IV.Industrial
economies: Major exporters of manufactured goods,

services, and investment funds. They trade goods among themselves
and also export them to other types of economies for raw materials
and semifinished goods.
Facilitators of trade
WTO
and GATT
Region
EU
free trade zones
and NAFTA
The World Trade Organization and GATT
The General Agreement on Tariffs and Trade

(GATT) promotes world trade by reducing tariffs
in other international trade barriers. The WTO
overseas GATT, imposes trade sanctions, and
mediates global disputes.
Regional Free Trade Zones

Free trade zones or economic communities are groups of nations
organized to work toward common goals in the regulation of
international trade.
The European union represents one of the

worlds single largest markets. Its current
member countries contain more than half a
billion consumers and account for 20 percent
of the worlds exports.
ASEAN
ASEAN is a geo-political and economic

organization of 10 countries in Southeast Asia. It
aims to accelerate economic growth, social
progress and cultural development, and to
promote regional peace and stability.
Economic Environment
Economic Environment
Two
A.
B.
economic factors reflect the countrys attractiveness as a market:

Industrial structure
Income distribution
The
countrys industrial structure shapes its product and service

needs, income levels, and employment levels
Industrial structure and distribution

The four types of industrial structures are as follows:
I.Subsistence
economies: The vast majority of people engage in simple

agriculture. They consume most of their output and barter the rest for
simple goods and services. They offer few market opportunities.
II.Raw material exporting economies: These economies are rich in one
or more natural resources but poor in other ways. These countries are
good markets for large equipment, tools and supplies, and trucks.

III.Emerging
economies: In an emerging economy, fast growth in

manufacturing results in rapid overall economic growth. The country
needs more imports of raw textile materials, steel, and heavy
machinery, and fewer imports of finished textiles, paper products, and
automobiles.
IV.Industrial
economies: Major exporters of manufactured goods,

services, and investment funds. They trade goods among themselves
and also export them to other types of economies for raw materials
and semifinished goods.
Raw material exporting countries
Much of Saudi Arabias

economic revenue comes
from exporting oil.
Income Distribution
Industrialized
nations may have low-, medium-, and high-income
households.
Countries
with subsistence economies may consist mostly of

households with very low family incomes.
Still
other countries may have households with only either very low or
very high incomes.
Even
poor or developing economies may be attractive markets for all

kinds of goods.
Targeting at the mass lower income markets
In India, Fords $7,700 Figo

targets low to middle-income
consumers who want to move
off their motorbikes.
Countertrade
Countertrade
Besides
currency limits, a changing exchange rate also creates high

risks for the seller.
Most
international trade involves cash transactions.
Yet
many nations have too little hard currency to pay for their
purchases from other countries.
They
may want to pay with other items instead of cash, which has led
to a growing practice called countertrade.
Countertrade
Countertrade can take place as

barter, where goods or services
are exchanged directly. For
example, Vietnam exchanged
rice for fertilizer and coconuts
from the Philippines.
Political/Legal Environment
Political-Legal Environment
Nations
differ greatly in their political-legal environments. In

considering whether to do business in a given country, a company
should consider factors such as the countrys attitudes toward
international buying, government bureaucracy, political stability, and
monetary regulations.
Some
nations are very receptive to foreign firms; others are less

accommodating.
Political-Legal Environment
Companies
must consider a countrys monetary regulations. Sellers

want to take their profits in a currency of value to them.
Ideally,
the buyer can pay in the sellers currency or in other world

currencies. In addition to currency limits, a changing exchange rate
also creates high risks for the seller.
Cultural Environment
Each
country has its own folkways, norms, and taboos.
When
designing global marketing strategies, companies must

understand how culture affects consumer reactions in each of its world
markets.
In
turn, they must also understand how their strategies affect local
cultures
Marketing
Culture
The Impact of Culture on Marketing Strategy

Sellers
must understand the ways that consumers in different

countries think about and use certain products before planning a
marketing program.
Companies
that ignore cultural norms and differences can make some

very expensive and embarrassing mistakes
Cultural blunders in international marketing
Overlooking cultural differences

can result in embarrassing
mistakes. China imposed a
nationwide ban on this
blasphemous kung futhemed
ad campaign featuring LeBron
James crushing a number of
culturally revered Chinese
figures.
Business Norms and Behaviors

Business norms and behavior also vary from country to country. Here
are some examples:
American
executives like to get right down to business and engage in

fast and tough face-to-face bargaining. However, Japanese and other
Asian businesspeople often find this behavior offensive. They prefer to
start with polite conversation, and they rarely say no in face-to-face
conversations.
Business Norms and Behaviors

Asians
tend to sit or stand very close to one another when they queue or
talk businessin fact, almost nose-to-nose. The Asian business executive
tends to move closer as the American and Australian keep backing away.
Both may end up being offended. Asian business executives need to be
briefed on these kinds of factors before conducting business in another
country.
Chinese
businessmen like to hold a welcome banquet, especially for

major overseas visitors, prior to a business meeting discussion. They
believe it creates a good atmosphere for the discussion in the following
meeting.
The Impact of Marketing Strategy on Cultures

Social
critics contend that large American multinationals such as

McDonalds, Coca-Cola, Starbucks, Nike, Microsoft, Disney, and MTV
are Americanizing the worlds cultures.
Critics
worry that, under such McDomination, countries around the

globe are losing their individual cultural identities.
Such
concerns have sometimes led to a backlash against American

globalization.
Americanization
Social critics contend that large American

multinationals arent just globalizing their
brands, they are Americanizing the worlds
cultures. In China, most people never drank
coffee before Starbucks entered the market.
The need for adaptation

Therefore, the basic principle for companies to succeed abroad is to
adapt to local cultural values and traditions rather than trying to force
their own.
Adaptation in international marketing
he consistent success of Ocean Park may be due

to its adoption of a blend of both Chinese and
Western cultures. Disneyland Hong Kong has had
trouble competing with its more established local
rival, and visitor attendance fell by 20 percent in
the parks second year.
Reviewing the Key Concepts

Discuss how the international trade system and the economic,
political-legal, and cultural environments affect a companys
international marketing decisions.
19.3
Deciding Whether to Go Global
19.3
19.3 Deciding Whether to Go Global
Go Global?
Global competitors might attack the home market
More growth in foreign markets
Customers might be expanding abroad
Going Global
Not all companies need to venture into international markets to
survive.
Any of several factors might draw a company into the international
arena.
a) Global competitors might attack the companys home market by
offering better products or lower prices.
b) The company might want to counterattack these competitors in their
home markets to tie up their resources.
c) The companys customers might be expanding abroad and require
international servicing.
d) International markets might simply provide better opportunities for
growth.
Going Global
Coca-Cola has emphasized international growth

in recent years to offset stagnant or declining
U.S. soft drink sales.
Risks
Difficult to understand foreign buyers
Making products competitive
Adapting to foreign business conditions
International experience of managers
International regulations
Risks in Global Marketing

Before going abroad, the company must weigh several risks and answer
many questions about its ability to operate globally.
a) Can
it learn to understand the preferences and buyer behavior of

consumers in other countries?
b) Can it offer competitively attractive products?
c) Will it be able to adapt to other countries business cultures and deal
effectively with foreign nationals?
d) Do the companys managers have the necessary international
experience?
e) Has management considered the impact of regulations and the political
environments of other countries?
19.4
Deciding Which Markets to Enter
19.4
19.4 Deciding Which Markets to Enter
Which markets to enter?
Deciding Which Markets To Enter

Before
going abroad, the company should:

I.Define its international marketing objectives and policies.
II.Decide what volume of foreign sales it wants.
III.Choose how many countries it wants to market.
IV.Decide on the types of countries to enter.
V.Evaluate each selected country.
Deciding Which Markets To Enter
Colgates decision to enter the

huge Chinese market seems
fairly straightforward. using
aggressive promotional and
education programs, Colgate
has expanded its market
share from 7 percent in 1995
to more than 35 percent
today.
Entry criteria
Possible global markets should be ranked on several factors:
MARKET SIZE
COST OF DOING
BUSINESS
COMPETITIVE
ADVANTAGE
RISK LEVEL
Indicators of Market Potential
19.5
Deciding How to Enter the Market
19.5
19.5 Deciding How to Enter the Market
Market entry strategies
Exporting
Exporting
Exporting is the simplest way to enter a foreign market.

Indirect exporting is working through independent international
marketing intermediaries.
Indirect exporting involves less investment and less risk.
Direct exporting is where the company handles their own exports.
The investment and risk are somewhat greater in this strategy, but
so is the potential return.
Joint Venture
Joint Venture
Joint Venturing is joining with foreign companies to produce or

market products or services.
There are four types of joint ventures:

A. Licensing
B. Contract manufacturing
C. Management contracting
D.Joint ownership
A.
Licensing
Licensing is a simple way for a manufacturer to enter

international marketing.
The company enters into an agreement with a licensee in the

foreign market.
For a fee or royalty, the licensee buys the right to use the
companys manufacturing process, trademark, patent, trade
secret, or other item of value.
A.
Licensing
In Japan, the Morinaga Milk Company produces

Sunkist fruit juices, drinks, and dessert items.
B. Contract Manufacturing
Contract manufacturing occurs when the company contracts

with manufacturers in the foreign market to produce its product or
provide its service.
The drawbacks are:
Decreased control over the manufacturing process
Loss of potential profits on manufacturing
The benefits are:
The chance to start faster, with less risk
The later opportunity either to form a partnership with or to buy
out the local manufacturer
C. Management Contracting
Management contracting takes place when the domestic firm

supplies management know-how to a foreign company that
supplies the capital.
This is a lowrisk method of getting into a foreign market, and it

yields income from the beginning.
The arrangement is not sensible if the company can put its

management talent to better uses or if it can make greater profits
by undertaking the whole venture.
D. Joint Ownership
Joint Ownership ventures consist of one company joining forces

with foreign investors to create a local business in which they
share joint ownership and control.
A company may buy an interest in a local firm, or the two parties
may form a new business venture.
Joint ownership may be needed for economic or political reasons.
Joint ownership has drawbacks:
The partners may disagree over policies.
Whereas U.S. firms emphasize the role of marketing, local
investors may rely on selling.
D. Joint Ownership
KFC entered Japan through a joint

ownership venture with Japanese
conglomerate Mitsubushi.
Direct Investment
Direct Investment
Direct Investment is the development of foreign based assembly

or manufacturing facilities.
Advantages:
Lower costs in the form of cheaper labor or raw materials,
foreign government investment incentives, and freight savings.
The firm may improve its image in the host country.
Development of a deeper relationship with government,
customers, local suppliers, and distributors.
The firm keeps full control over the investment.
Direct Investment
The main disadvantage of direct investment is that the firm faces

many risks including:
Restricted or devalued currencies
Falling markets
Government changes

Describe three key approaches to entering international markets.
19.6
19.6
19.6 Deciding on the Global Marketing Program
Global Marketing Program
Standardized global marketing is using largely the same marketing

strategy approaches and marketing mix worldwide.
Adapted global marketing is adjusting the marketing strategy and
mix elements to each target market, bearing more costs but hoping for
a larger market share and return.
Some global marketers believe that technology is making the world a
smaller place and that consumer needs around the world are becoming
more similar.
This paves the way for global brands and standardized global
marketing. Global branding and standardization, in turn, result in
greater brand power and reduced costs from economies of scale.
Marketing Mix Adaptation

Because cultural differences are hard to change, most marketers
adapt their products, prices, channels, and promotions to fit
consumer desires in each country
In India, McDonalds serves chicken, fish, and

vegetable burgers, and the Maharaja Mactwo
all-chicken patties, special sauce, lettuce, cheese,
pickles, onions, on a sesame-seed bun.
Product
Straight Extension
Product Adaptation
Product Invention
Product Strategies in International Marketing
Five strategies exist that allow for adapting product and marketing
communication strategies to a global market (Figure 19.3).
Straight product extension means marketing a product in a foreign

market without any change.
Product adaptation involves changing the product to meet local

conditions or wants.
Product invention consists of creating something new to meet the

needs of consumers in a given country.
Product Strategies in International Marketing
Promotion
Promotion Strategies in International Marketing
Companies can either:

1. Adopt the same communications strategy they use in the home
market
2. Change it for each local market
Advertising themes are changed sometimes to avoid taboos in other
countries. (See Real Marketing 19.3)
Communication adaptation is fully adapting their advertising
messages to local markets.
Media also needs to be adapted internationally because media
availability and regulations vary from country to country.
Impact of color in marketing
Colors are changed sometimes

to avoid taboos in other
countries. Red is a lucky color in
China, and is commonly used in
many aspects of Chinese life
Communication Adaptation
Coca-Cola sells its low-calorie beverage as Diet

Coke in North America, the united Kingdom, and
the Middle and Far East but as Light elsewhere.
Price
Pricing Strategy in International Marketing
Regardless of how companies go about pricing their products, their

foreign prices probably will be higher than their domestic prices for
comparable products.
It is a price escalation problem. It must add the cost of transportation,
tariffs, importer margin, wholesaler margin, and retailer margin to its
factory price.
To overcome this problem when selling to less-affluent consumers in
developing countries, many companies make simpler or smaller
versions of their products that can be sold at lower prices.
Dumping occurs when a company either charges less than its costs or
less than it charges in its home market.
International Pricing
Recent economic and technological forces have had an impact on

global pricing.
For example, in the European Union, the transition to the euro is
reducing the amount of price differentiation.
As consumers recognize price differentiation by country, companies
are being forced to harmonize prices throughout the countries that
have adopted the single currency.
Companies and marketers that offer the most unique or necessary
products or services will be least affected by such price
transparency.
International Pricing
Sixteen European union countries have

adopted the euro as a common
currency, creating pricing
transparency and forcing companies
to harmonize their prices throughout
Europe.
Impact of the Internet on Pricing in Global Markets
The Internet is making global price differences more obvious.

When firms sell their wares over the Internet, customers can see
how much products sell for in different countries.
This is forcing companies toward more standardized international
pricing.
Distribution
Distribution Channel Strategies in International Marketing
The whole-channel view takes into account the entire global

supply chain and marketing channel. It recognizes that to compete
well internationally, the company must effectively design and
manage an entire global value delivery network.
Figure 19.4 shows the two major links between the seller and the
final buyer.
Distribution Channel Strategies in International Marketing
Channels Between and Within Nations
Channels between nations moves company products from points of

production to the borders of countries within which they are sold.
Channels within nations moves the products from their market

entry points to the final consumers.
Distribution channels vary between countries
Distribution channels may vary

greatly from nation to nation, as
suggested by this picture of a
delivery donkey delivering CocaCola in Morocco.
Distribution channels vary between countries
Distribution channels vary greatly

from nation to nation. In its efforts
to sell rugged, affordable phones to
Indian consumers, Nokia forged its
own distribution structure, including
a fleet of distinctive blue Nokiabranded vans that prowl rutted
country roads to visit remote
villages.

Explain how companies adapt their marketing mixes for international
markets.
19.7
19.7
19.7 Deciding on the Global Marketing Organization
Global marketing organization
Global marketing organization
Organize an
export
department
Create
international
division
Become
global
organization

A
firm normally gets into international marketing by simply shipping

out its goods. If its international sales expand, the company
organizes an export department.
Many
companies get involved in several international markets and

ventures. An international division may be created to handle all its
international activity.
International Division
International divisions are organized in a variety of ways.
i.Geographical
organizations: Country managers who are responsible

for salespeople, sales branches, distributors, and licensees in their
respective countries.
ii.World product groups: Each responsible for worldwide sales of
different product groups.
iii.International subsidiaries: Each responsible for its own sales and
profits.
Global Organizations
Global organizations are companies that have stopped thinking of
themselves as national marketers who sell abroad and have started
thinking of themselves as global marketers

Identify the three major forms of international marketing
organization.
Company Case
Haier: Internationalization
Thank
you

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Principles of Marketing: An Asian

The Global Marketplace

2012 Principles of Marketing: An Asian Perspective

Global Marketing Today

2012 Principles of Marketing: An Asian Perspective

2012 Principles of Marketing: An Asian Perspective

2012 Principles of Marketing: An Asian Perspective

19.1 Global Marketing Today

Today, the world is shrinking rapidly with the advent of faster

Products developed in one are finding enthusiastic acceptance in

Since 1990, the number of multinational corporations in the world

2012 Principles of Marketing: An Asian Perspective

19.1 Global Marketing Today

Foreign firms are expanding aggressively into new international

Many American companies have now

2012 Principles of Marketing: An Asian Perspective

19.1 Global Marketing Today

Global Marketing Firms

2012 Principles of Marketing: An Asian Perspective

19.1 Global Marketing Today

The Global Firm

global firm is one that, by operating in more than one country,

global company sees the world as one market.

minimizes the importance of national boundaries and develops

10 2012 Principles of Marketing: An Asian Perspective

19.1 Global Marketing Today

19.1 Global Marketing Today

Globalization in Marketing: Key Questions

What market position should we try to establish in our country,

12 2012 Principles of Marketing: An Asian Perspective

19.1 Global Marketing Today

Globalization in Marketing: Key Questions

13 2012 Principles of Marketing: An Asian Perspective

14 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

Global Marketing Environment

15 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

16 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

17 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

The International Trade System

are taxes on certain imported products designed to raise revenue

18 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

Types of industrial structures

economies: The vast majority of people engage in simple

19 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

Types of industrial structures

economies: In an emerging economy, fast growth in

economies: Major exporters of manufactured goods,

20 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

free trade zones

21 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

The World Trade Organization and GATT

The General Agreement on Tariffs and Trade

22 2012 Principles of Marketing: An Asian Perspective

19.2 Looking at the Global Marketing Environment

Regional Free Trade Zones