IME 3

1
IME 3

• Think Globally and Act Locally Marketing in a
  Multinational Environment

2
Chapter Objectives

• Understand the big picture of international
  marketing
• Understand how economic, political, legal, and
  cultural issues influence global marketing
  strategies and outcomes Explain the strategies a
  firm can use to enter global markets
• Understand the arguments for standardization
  versus localization of marketing strategies in
  global markets

3
World Trade

• World trade refers to the flow of goods and
  services among different countries - the value of
  all the exports and imports of the worlds
  nations
• What products do you own that were made in the
  U.S.? In other countries?

4
Factors affecting entry to other Countries
5
Market Conditions to Consider

• How much domestic demand exists for the firms
  products?
• What is the potential for market demand abroad?
• Is the firm able to secure a competitive
  advantage in foreign markets?
• What competitive advantages does each country
  have relative to competing countries?

6
Competitive Advantage of Nations

• Michael Porter describes four keys to a nations
  competitive advantage relative to other countries
• Demand conditions
• Related and supporting industries
• Factor conditions
• Company strategy, structure, rivalry

7
Borders, Roadblocks, and Communities

• Protectionism is a government policy which seeks
  to provide home companies an advantage over
  foreign companies by implementing trade barriers
• Import quotas
• Embargoes
• Tariffs
• Red tape

8
GATT and the WTO

• The General Agreement on Tariffs and Trade (GATT)
  was developed by the United Nations after World
  War II and sought to moderate trade conflicts
• It has been replaced (1995) by the World Trade
  Organization (WTO)

9
WTO

• Objective to help trade flow smoothly, freely,
  fairly, and predictably
• Role acts as a forum for negotiations among
  countries, settles trade disputes, and assists
  developing countries with training programs

10
Economic Communities

• Countries band together to form an alliance
• Such economic communities coordinate trade
  policies and ease restrictions on trade across
  the member borders
• EU (European Union)
• NAFTA (North American Free Trade Agreement)
• ASEAN (Association of Southeast Asian Nations

11
The Global Marketing Environment

• Economic Environment
• Political and Legal Environment
• Cultural Environment

12
Economic Environment

• Indicators of Economic Health
• Demographic Characteristics
• Economic Infrastructure
• Internet Coverage
• Levels of Economic Development

13
Indicators of Economic Health

• Gross Domestic Product (GDP) - the dollar value
  of goods and services a country produces within
  its borders within one year
• Gross National Product (GNP) - the value of all
  goods and services produced by a countrys
  individuals or organizations whether in or out of
  country borders

14
Economic Indicators

• Countrys Demographic Characteristics
• birth rates
• size of different age groups
• Economic Infrastructure
• quality of a countrys distribution, financial,
  and communications systems
• Internet Coverage
• percent of population online

15
Economic Development

• Less Developed Countries (LDC)
• lowest stage of economic development
• Developing Countries
• economies shift from agriculture to industry
  standards of living, education, and use of
  technology rise
• Developed Countries
• economically advanced countries the G7 countries
  (U.S., U.K., Canada, France, Italy, Germany,
  Japan)

16
Political and Legal Environment

• Political Issues
• economic sanctions
• nationalization
• expropriation
• Regulatory Issues
• product requirements
• local content rules
• Human Rights Issues

17
Cultural Environment

• Values
• Norms and Customs
• Symbols and Superstitions
• Language
• Ethnocentricity
• Cultural Change

18
Ethnocentrism

• The tendency to prefer products or people of
  ones own culture over those from other countries
• Ethnocentric consumers are likely to feel
  ethically wrong in buying products from other
  countries because they want to support their
  domestic economy

19
(No Transcript)
20
How Global Should a Global Marketing Strategy Be?

• Market Entry Strategies
• Product Decisions
• Price Decisions
• Distribution Decisions

21
Market Entry Strategies
Domestic strategy
-
Exporting strategy
Contracting licensing, franchising, or
subcontracting
Level of commitment, risk and control
Strategic alliance

Direct investment
22
Standardization versus Localization

• Standardization suggests that greater
  efficiencies and economies of scale are generated
  when all marketing is the same in each country
• Localization recognizes that customer
  satisfaction will be highest when the marketing
  mix is tailored to local needs and wants

23
Product Decisions

• Sell the same product in the new market (straight
  extension strategy)
• Modify the product for the new market (product
  adaptation strategy)
• Develop a brand new product for that new market
  (product invention strategy)
• Ford Probe

24
Promotional Decisions

• Will the same promotional message work in the
  different markets?
• Standardized strategies are more likely to work
  when cultural factors are similar, and when
  target customers are in cosmopolitan urban areas

25
Price Decisions

• Costs associated with transportation, tariffs,
  differences in currency exchange rates, and
  bribes may make a product more expensive in one
  country than another
• Gray marketing - unauthorized party imports
  products and sells them for less.
• Dumping - a company prices its products lower
  than at home in order to establish a market