Global Marketing

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• Chapter 7
• Global Marketing

2
Objectives

• Describe the importance of international
  marketing from the perspectives of the individual
  firm and the nation.
• Identify the major components of the environment
  for international marketing.
• Outline the basic functions of GATT, WTO, NAFTA,
  the proposed FTAA, and the European Union.
• Compare the alternative strategies for entering
  international markets.

3
Objectives

• Differentiate between a global marketing strategy
  and a multidomestic marketing strategy.
• Describe the alternative marketing mix strategies
  used in international marketing.
• Explain the attractiveness of the U. S. as a
  target market for foreign marketers.

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The Worlds 10 Largest Marketers
2001
2003
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FEDEX

• Benefits of Going Global
• Additional revenue
• New insights into consumer behavior
• Alternative distribution strategies
• Advance notice of new products
• New marketing techniques

6
Warner Lambert A Global Leader in
Pharmaceuticals The copy readsWere making
the world feel better
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To Be Successful Internationally

• Marketers must do their homework
• Capitalize on similarities
• Evaluate all market segments

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Investing in Foreign Market Considerations

• Demand - Do foreign consumers need the companys
  good or service?
• Competitive environment - How do supplies
  currently reach the market?
• Economic environment - What is the state of the
  nations economic health?
• Social-cultural environment - How do cultural
  factors affect business opportunities
• Political-legal environment - Do any legal
  restrictions complicate entering the market?
• Technological environment - To what degree are
  technological innovations used by consumers in
  the market?

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The Worlds Most Frequently Spoken Languages

• Language plays an important role in international
  marketing
• Marketers must make sure message is translated
  and conveys the intended meaning.
• Abbreviations and slang words and phrases may
  also cause misunderstandings.

Rank Language Number of Speakers 1 Chinese
(Mandarin) 1.2 billion 2 English 478
million 3 Hindi 437 million 4 Spanish 392
million 5 Russian 284 million
10
The Legal Environment for U.S. Firms Operating
Abroad

• McDonalds, like so many other international firms
  had to consider the following while making the
  decision to go international.
• International law
• U.S. law, and
• Legal requirements of host nations.

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Trade Barriers

• Tariffs
• Revenue tariffs are designed to raise funds for
  the importing government.
• Protective tariffs, which are usually higher than
  revenue tariffs, are designed to raise the retail
  price of an imported produce to match or exceed
  that of a similar domestic product.
• Administrative Barriers range from special
  permits and detailed inspections requirements to
  quotas on foreign-made items.
• Import quotas limit the number of units of
  products in certain categories
• Embargoa complete ban on the import of a
  product.
• Exchange control means that firms that gain
  foreign exchange by exporting must sell foreign
  currencies to the central bank or other foreign
  agency and importers must buy foreign currencies
  from the same organization.

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Multinational Economic Integration

• General Agreement on Tariffs and Trade (GATT).
  International trade accord that has helped reduce
  world tariffs
• World Trade Organization (WTO). Organization that
  replaces GATT and oversees agreements and makes
  binding decisions in mediating disputes, and
  reducing trade barriers.
• North American Free-Trade Agreement (NAFTA).
  Accord removing trade barriers among Canada,
  Mexico, and the United States.
• Free Trade Area of the Americas (FTAA). Proposed
  free trade area stretching the length of the
  entire Western hemisphere and designed to extend
  free trade benefits to additional nations in
  North, Central, and South America.
• European Union (EU). Customs union that is moving
  in the direction of an economic union by adopting
  a common currency, removing trade restrictions,
  and permitting free flow of goods and workers
  throughout the member nations.

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The European Union

• The treaty of Paris in 1957 created the European
  Union. At that time there were only six member
  countries. Today most Western European countries
  are members.
• In January of 2002 12 of the EU countries
  converted to the Euro.
• What three countries do you think did not convert
  to the Euro?

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European Union (EU)

• The best known multinational economic community
  is the European Union.
• Fifteen countries belong to the EU.
• The EU has 350 million people and combined gross
  domestic product of 5 trillion.

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What Drives GlobalizationWhy Marketers Decide to
Go Global
Globalization of Competitors
Globalization of Customers
Reduced Trade Barriers
Technology Advances
Enhanced Customer Responsiveness
New customers in Emerging Markets
Change driven by the customer 66
Source Data from Shaping the Value Chain for
Outstanding Performance, PricewaterhouseCoopers
survey of 200 leading European businesses, found
in Fortune, special advertising section, June 26,
2000, p,58.
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Steps in Deciding to Market Globally

• Secure top managements support.
• Research the export process and potential
  markets.
• Choose from among three basic strategies for
  entering international markets
• Importing
• Exporting
• Contractual agreements

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Levels of Involvement in International Marketing
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Multinational Corporations to Global Marketers

• A multinational corporation is a firm with
  significant operations and marketing activities
  outside its home country.
• International business companies are no longer
  exclusively U.S. based.
• Multinationals often employee huge foreign
  workforces relative to their American staffs.
• Multinationals have become global corporations
  that reflect the interdependence of world
  economies.

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International Marketing Approaches

• Two alternative approaches
• Global marketing strategy defines a standard
  marketing mix and implements it with minimal
  modifications in all foreign markets.
• Multidomestic marketing strategy assumes that
  differences between market characteristics and
  competitive situations in certain nations require
  firms to customize their marketing decisions to
  effectively reach individual marketplaces.

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Global Approach for Mac vs. PC 2007

• US ad by Omnicrom a nerdy
• PC guy trumped by hip Mac
• counterpart
• Japan
• Direct comparison ads scorned, rude to brag
• Tweaked characters
• Used local actors
• Tweaked nerd clothing to highlight work/home
  divide vs. personality
• PC in plain office attire, Mac in weekend fashion

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Proctor Gamble Global Planning

• Global product Crest, Head Shoulders, Camay,
  Pampers
• Product same but formula, flavor, smell vary
  among countries
• MTV Networks, British Sky Broadcasting, CNN
  International

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Cartoon Makeovers Transcreations

• Spider-Man in Indian market, 2004
• Pavitr Prabhakar gains powers from mysterious
  yogi rather than radioactive spider
• Sports traditional loincloth when fighting crime
• Disney Cuties Mickey Mouse line in China
• Tiny eyes, button nose, almost not-there mouths
  of Hello Kitty
• Favor warm comforting characters, especially in
  economic slump of 1990s lyashi
• Minnie with a cellphone
• Powerpuff Girls in Japan Powerpuff Girls Z
• Japanese -names for Blossom Buttercup
• TV show with Japanese theme accepting people
  who are different
• Long legs realistic outfits with short skirts
  hip-hung belts (Japanese girls like to dress
  like their favorite characters.)
• Superpowers from a chemical reaction by a rice
  cake

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Alternative International Product and Promotional
Strategies
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International Distribution StrategyInvolves Two
Steps

• The firm must decide on a method of entering the
  foreign market.
• It must determine how to distribute the product
  within the foreign market through that entry
  channel.

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The Worlds 10 Most Valuable Global Brands
70
60
50
2002 Brand Value (in billions)
40
30
20
10
0
Coca-Cola
Microsoft
IBM
GE
Intel
Nokia
Disney
McDonalds
Marlboro
Mercedes
Source Data from Interbrand Corp., J.P. Morgan
Chase Co found in The Best Global Brands,
Business Week, August 5, 2002, p93.