Global Marketing

1
Global Marketing

• By Usman Waheed
• 923006641921

2
Chap 01

• Global Marketing

3
GLOBAL MARKETING

• Overview
• Global marketers consider the world
  as their market and different country markets as
  components of this world market

4
Defining Global Marketing

• 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

5
Defining Global Marketing

• Distinguishing Features of AMAs Definition
• 1. Includes nonprofit and for profit
  activities
• 2. Includes products, ideas, and services
• 3. Includes activities that precede and
  follow the production process
• 4. Includes the four Ps and regards them
  each as equally important

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Defining Global Marketing

• Global Marketing Defined
• the coordinated performance of marketing
  activities to create exchanges across countries
  that satisfy individual, organizational , and
  societal objectives

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Defining Global Marketing

• 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

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The Global Marketing Environment

• Focal Point--Consumer
• Use the Four Ps to Satisfy Consumers
• Economic, Financial, Political, and Cultural
  Environmental of Each Country Affect marketing
• Regional and Global Environments Affect Marketing

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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

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Why Should Firms Engage in Global Marketing?

• 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

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Why Should Firms Engage in Global Marketing?

• 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
• 3. Maurice G. Hardy Why expand into other
  countries? A. Keep competitors in their own
  countries b. Take advantage of growing
  opportunities in Europe and the Pacific

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Why Should Firms Engage in Global Marketing?

• 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

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What is Unique about Global Marketing? Country
market environments different

• Economic Environment ( Purchasing Power,
  Competitive Intensity, Economys Health)
• 1. Fiscal policies - tax rates and spending
  programs of government
• 2. Monetary policies - regulate money supply

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What is Unique about Global Marketing? Country
market environments different

• Financial Environment
• 1. Exchange rate - price of one currency
  in relation to another
• 2. Exchange rate fluctuations can
  adversely or favorably affect performance of a
  firm

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What is Unique about Global Marketing? Country
market environments different

• Political Environment
• 1. Tariff barriers - taxes on imports paid
  to customs officials - include
• a. Specific - fixed amount per
  physical unit of import
• b. Ad -valorem ( on the value ) -
  percentage of estimated value of import
• 2. Nontariff barriers include
• a. Import quotas b. Exchange
  controls
• c. Buy-domestic policies
• d. administrative red tape

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What is Unique about Global Marketing?Country
market environments different ?

• Cultural Environment
• 1. Differences encourage marketing
  adaptations
• 2. Similarities encourage standardization
• 3. Balancing the two is a key to success

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Marketing Mix Politics - How Do Government
Influence the Four Ps ?

• Product - Local Content Law
• Price - Government Approval for Price Changes
• Promotion - Permissible Budget Determined by
  Local Authorities
• Place - Mandated Distribution Channel or
  Territory

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Why Should We Study Global Marketing ?

• Influences Product Choices of Consumers
• Influences standard of living
• Influences Job Opportunities
• Influences the society

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Thank You!
20
The Global Economic Environment

• Global Marketing

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Whats happening?

• Asia Pacific
• Western Europe
• North America
• South America

Why and what are the implications?
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THE ECONOMIC ENVIRONMENT

• Overview
• Local, regional, and global economic
  environments are interactive. What happens within
  and among them profoundly influences marketing
  mix decisions.

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The Local Economy - The Country Where
Marketing Takes Place

• The Consumers
• 1. Disposable income (after-tax income)
• 2. What, when, where, and how much
  consumers buy is influenced by disposable income

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The Local Economy - The Country Where Marketing
Takes Place

• The Country
• 1. Healthy economies facilitate higher
  purchasing power for consumers

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The Local Economy - The Country Where Marketing
Takes Place

• 2 . Economic variables GDP GDP per capita GDP
  growth rates savings and investments rates
  inflation and unemployment rates imports and
  exports inflow and outflow of FDI number of
  global corporations in the country structure of
  industries commercial, fiscal, and monetary
  policies of the central government
• 3. These variables reflect the overall country,
  not specific groups of consumers--dont
  generalize

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The Local Economy - The Country Where Marketing
Takes Place

• The Competition - Know Where You Stand in
  Relation to the Competition
• 1. Porters five forces determining the
  state of competition rivalry among existing
  firms, potential impact of newcomers, power of
  suppliers, power of buyers, substitute goods
• 2. Prominence of each force varies by
  industry

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The Regional Economy

• Agreements Among Nations Include
• 1. Free-trade areas - no barriers among
  members, national barriers against the rest of
  the would
• 2. Customs unions - no barriers among
  members, adopt common barriers against the rest
  of the world
• 3. Common markets - form customs unions with
  free movement of labor and capital
• 4. Economic unions - one economy, one
  currency, unified fiscal and monetary policies

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The Regional Economy

• The European Economic Integration
• 1. 15 Western European countries moving
  towards economic union
• 2. EU - to enhance competitive edge of EU
  firms in relation to non - EU firms

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The Regional economy

• The Asian Pacific Economies
• 1. The NICs - South Korea, Taiwan, Hong Kong,
  Singapore - high-value-added competitors
• 2. Malaysia, Indonesia, Thailand,
  Philippines - entering high-value-added marketers
• 3. Trade in region has been fueled by
• a. Increasing domestic demand
• b. Expanding business involvement
  overseas
• c. Growing competitiveness of firms based
  in region

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The Regional Economy

• The north America Free Trade Agreement
  (NAFTA)
• 1. U.S., Canada, Mexico
• 2. Designed to increase size of north
  American market, reduce trade barriers within,
  increase competitive edge of member firms

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The Global economy

• Increasing Trade and Investment
• 1. Why exports increased
• a . Businesses - to improve
  competitiveness and performance
• b. Governments - to stimulate domestic
  economic growth
• 2. Foreign direct investment growing faster
  than exports
• a . Role in transferring technology,
  managerial expertise, financial resources
• b. Five major sources U.S., United
  Kingdom, Germany, France, Japan

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The Global Economy

• Increasing Interdependence - Our fate is tied
  to that of others
• Increasing Competition - More players, More
  intensive competition
• Increasing Complexity - Policies designed for
  one country affect the performance of others

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THE GLOBALIZATION OF THE U.S. ECONOMY

• Future Growth Cannot Rely Exclusively on Domestic
  Market
• Firms with Global Operations can Better
• 1. Develop new products
• 2. Establish new markets
• 3. Cross-subsidize products and markets -
  use financial resources from one market to fight
  in another

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Thank You!
35
Chapter 03

• The Financial Environment

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The Financial Environment

• Overview
• Understanding and managing the key elements
  of the financial environment are requisites for
  successful global marketing

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Key Features of the global Financial System

• Acceptability and Convertibility of Currencies
  from Different countries
• Hard Currencies Are Freely Traded in Foreign
  Exchange markets
• Soft Currencies Are Not Freely Traded

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Key Feature of the Global Financial System

• Exchange Rates - The Price of One Currency in
  Terms of Another
• 1. Floating exchange rates are determined by
  market conditions alone
• 2. Managed float is determined by
  government-managed demand and supply

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Key Feature of the Global Financial System

• Depreciation and Appreciation of One currency in
  Relation to Another
• Price
• Demand
• Profit
• Market penetration

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Managing exchange Risks Through Spot
Transactions and Forward Transactions

• Four Types of exchange Risks
• 1. Transaction exposure - when converting
  currencies at a later date
• 2. Translation exposure - when exchange
  rates upon consolidation differ from those at
  time of transaction
• 3. Tax exposure - when changing exchange
  rates result in a different tax liability
• 4. Economic exposure - long-term exposure
  and its affect on present value of future cash
  flow

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Managing exchange Risks Through Spot Transactions
and Forward Transactions

• Three Methods of Protecting against Exchange
  Rate Losses
• 1. Natural hedging - buying and selling in
  the same currency
• 2. Currency forwards - contracts
  guaranteeing an exchange rate
• 3. Options - the rights of a contract
  without the obligation to fulfill it

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Financial Institutions and Their Roles in
Business

• Commercial Banks Facilitate Global Marketing by
• 1. Providing free consulting services
• 2. Providing collection, payment, and document
  preparation services
• 3. Exchanging currencies and providing financial
  and hedging facilities
• 4. Collecting financial documents
• 5. Transferring funds and providing credit
  information on buyers
• 6. Providing letters of introduction and letters
  of credit

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Financial Institutions and Their Roles in
Business

• Export-Import Bank ( Eximbnak ) Assists U.S.
  Exporters Through
• 1. Direct loans
• 2. Guarantees
• 3. Engineering multiplier program
• 4. Operation and maintenance service program
• 5. Working capital guarantees
• 6. Export credit insurance

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The Global Currency Market and Its Major
Players

• Global Wholesale and Retail Market for
  Currencies
• Eurocurrency Market - Currencies traded outside
  their origin
• Asian Dollar Market - Banks in Singapore and
  Hong Kong Dealing in Dollars
• European Monetary System for the European Union

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Thank You!
46
Chapter 04

• THE POLITICAL AND LEGAL ENVIRONMENT

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THE POLITICAL AND LEGAL ENVIRONMENT

• Overview
• After global marketers understand why and how
  governments regulate their business activities,
  they can better analyze and respond to
  governmental actions

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Why Do Governments Intervene?

• To stay in power
• To achieve socioeconomic goals
• Macro-systemic concerns identified by Boddewyn
  and Cracco
• 1. To protect the national interest
• 2. To maintain national sovereignty
• 3. To preserve the national identity

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Types of Interventions

• In ownership and Control
• 1. Confiscation - takeover without compensation
• 2. Expropriation - takeover with compensation
• 3. Domestication - relinquishment of ownership
  and control to locals

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Types of Interventions

• Other Forms of Intervention
• 1. Exchange controls
• 2. Export requirement as percentage of local
  output
• 3. Import restrictions
• 4. Taxation increases

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Types of Intervention

• Some Marketing Mix Regulations
• 1. Local content law (product)
• 2. Price ceiling (price)
• 3. Distribution territory specifications (place)
• 4. Local advertising agency requirement
• (promotion)

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Assessing Political Risk - Estimating the
likelihood of Governmental Intervention

• Seeking Experts Opinions
• 1. Current and retired government officials
  familiar with the local situation
• 2. Academics specializing in a region and its
  politics
• Conducting In-House Research to Monitor
  Political developments

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Assessing Political Risk - Estimating the
likelihood of Governmental Intervention

• Utilizing Secondary Sources Who Provide Risk
  Indexes
• 1. BERI (Business Environment Risk Index)
• 2. Business International (BI)
• 3. Frost Sullivan
• 4. PSSI (Political System Stability Index)

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Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance

• Identify with the country - Dont maintain a
  foreign image
• Help the host country achieve its societal goals
• 1. Improve local management skills
• 2. Increase local productivity
• 3. Increase local employment

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Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance

• Promote Vertical Integration by Linking
  Corporate Activities Across Countries
• Stay Ahead of Intervention by Upgrading
  Bargaining Power
• 1. Keep introducing new products and technology
• 2. Increase exports

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Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance

• Insure Against Political Risk
• 1. Overseas Private Investment Corporation (OPIC)
• 2. Foreign Credit Insurance Association (FCIA)

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Thank you!
58
Chapter 05

• The Culture Enviroment

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THE CULTURAL ENVIRONMENT

• Overview
• Developing marketing activities in harmony
  with the local culture can mean the difference
  between success and failure in a market

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Characteristics of Culture - What They All Have
in Common

• Culture Is Prescriptive -Defines What Is
  Acceptable
• Culture Is Learned - not Genetic
• Culture is Dynamic - An Interactive Relationship
  Between Behavior and Culture
• Culture Is Subjective - Meanings Vary by Culture

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Low-Context and High-Context Cultures - Verbal
And Nonverbal Messages Determine meaning

• Low-Context Cultures - What Is Said Is More
  Important Than How or Where It Is Said
• 1. U.S.
• 2. Germany
• High-Context cultures - What Is Said and How or
  Where It is Said Are Significant
• 1. Asia
• 2. Latin America
• 3. Middle East

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Monochronic and Polychronc Cultures - Hall and
Hall

• Monochronic
• 1. Linear information processing
• 2. Focus on one thing at a time
• 3. Hold to rigid schedules
• Polychronic
• 1. Work on several tasks at a time
• 2. Human transactions are important

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Culture and Verbal Communications - Understanding
Through language

• One Language - English -Meaning can Vary by
  Country
• Using Language to Interpret the World
• What Works here May Not Work There

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Culture and Nonverbal Communication - Can
Actions Speak Louder Than Words ?

• Perception of Time Affects the Quality of
  Marketing Interactions
• 1. For some, time is linear and fixed
• 2. For others, time is on a continuum
• Perception of Space Influences Business Decisions
• 1. Product size
• 2. Retail store layout
• 3. Office design
• 4. Feng Shui

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Culture and Nonverbal Communication - Can
Actions Speak Louder Than Words ?

• Symbols Are Communication Shorthand
• 1. Colors convey symbolic meaning
• 2. Numbers - lucky or unlucky
• 3. Products - luxury or necessary
• Negotiations - Sometimes a Handshake Seals the
  Deal
• Gift Giving

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Self-Reference Criterion - Unconscious Reference
to Ones Own Cultural Values

• Lees Four-Step Process to Avoid Self-Reference
  Mistakes
• 1. Define goal in terms of own cultural traits
• 2. Define goal in terms of foreign cultural
  traits
• 3. Isolate SRC influence and anticipate the
  complications
• 4. Redefine problem without SRC influence and
  find solution
• Multicultural Training Programs to Improve
  Cross-Cultural Interactions

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Understanding Cultural Universals Can Help
Marketers Develop effective Product Strategies
68
Thank you!
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Chap 06

• Global Product Strategies

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GLOBAL PRODUCT STRATEGIES

• Overview
• Although all four elements of the marketing
  mix are essential for success, a products
  performance determines whether consumers will
  engage in repeat purchases

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What Is a Product ?

• Anything with exchange Value (Objects, Ideas,
  Organizations, People)
• The Total Product
• 1. Tangible attributes raw materials, size,
  weight, features, design, packaging
• 2. Intangibles brand image, styling, other
  benefits (installation, delivery, credit,
  warranty, after-sale service, return policy)

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The Product Development Process

• Generating Ideas
• 1. To tap new or existing markets, complement
  product lines, improve products
• 2. From consumers, competitors, employees,
  inventors, research organizations, universities
• 3. Global firms advantage - exposure to
  numerous country markets

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The Product Development Process

• Screening Ideas
• 1. Acceptable versus unacceptable
• 2. Criteria compatibility, production fit,
  philosophical fit, competitive fit, potential
• 3. Misclassifying or ignoring ideas can be
  costly
• Business Evaluation
• 1. Cost-benefit analysis
• 2. Commercial viability-existing and prospective
  markets

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The Product Development Process

• Product Development
• 1. Determine tangible and intangible attributes
• 2. Consider marketing components that enhance
  appeal
• Test market - Select Representative Markets to
  test Consumer's Response
• 1. Adapted products - within each country market
• 2. Standardized products - representative
  markets

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The Product Development Process

• Product Introduction
• 1. Standardization- marketing unmodified
  products in multiple countries
• a . Premise consumes share some common values,
  beliefs, and consumption patterns a standardized
  product will satisfy them
• b. Advantages economies of scale, price
  competitiveness, uniform image

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The Product Development Process

• 2. Adaptation - modifying product to reflect
  characteristics of a market
• a. premise consumers are not the same adapted
  products are needed
• b. Advantages fit between product and
  consumer, expanded penetration

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The Product Development Process

• 3. Mandatory product adaptations due to
• a. Governmental regulations
• b. Technological considerations (e.g.,
  voltage, infrastructure)
• c. Cultural imperatives - is it acceptable to
  consumers
• d. measurement standards volume, length,
  weight, quantity

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Product Adoption

• Relative Advantage - To satisfy Needs Better Than
  the Competition
• Compatibility - The Fit of Product to Norms,
  Values, and Tastes of Market
• Trialability - Ease of Sampling a New Product
• Complexity - Easier to Use, More Likely to Be
  Adopted
• Observability - To What Extent Benefits Can Be
  Observed and Understood

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Product management (Product-Market Portfolio
Matrix)

• Competitive Strength Market Share, Products Fit
  to Customer Expectations, Marketing Ability,
  Product Positioning, Channel Cooperation, Profit
  Potential
• Country Attractiveness Market Size, Growth Rate,
  Competitive Environment, Governmental
  Regulations, Political Stability

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The U.S. Economy and the Product Composition
of Its exports ( Largely High-Value-Added
Products )
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Competitive Product Developments
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Chap 07

• Global Pricing Decision

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Global Pricing Decisions

• Overview
• Of the four Ps, price alone generates
  revenue. Competitive pricing enhances market
  position and earnings

84
Pricing Methods

• Cost-Oriented Methods - Focus on Cost, Not
  Market Conditions
• 1. Markup pricing - adding markup to unit cost of
  product
• a. Information needed fixed cost, variable
  cost, expected sales, markup
• b. Appeal is simplicity
• c. Risks overpricing and underpricing

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Pricing Methods

• 2. Standard pricing - charging the same price in
  all countries
• a. Drawbacks lacks marketing orientation,
  difficult to implement
• b. Advantage firm wont be blamed for price
  discrimination

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Pricing Methods

• 3. Target return pricing - setting a target rate
  or return
• a. Information needed total investment,
  desired target return, unit cost, expected sales
• b. Drawbacks lacks marketing orientation,
  sales and cost estimates must be accurate

87
Pricing Methods

• Market-Oriented Methods - Focus on Both Market
  Conditions and Cost
• 1. Market-based pricing - may attract
  accusations of unfair pricing and encourage the
  practice of gray marketing
• 2. Strategic pricing-setting minimum standard
  price while giving local managers freedom to
  charge more

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Strategic Issues in Global Pricing

• Managing Price Escalation - Increased Cost Due to
  international Product transfers
• 1. Ship components, assemble locally
• 2. Downsize
• 3. Shorten distribution channel
• 4. Increase overall productivity

89
Strategic Issues in Global Pricing

• Transfer Pricing - Price Charged for Goods
  Transferred Intraorganizationally
• Exchange Rate Fluctuations - Must Be managed to
  Control Gray Marketing and Accusations of Dumping

90
Strategic Issues in Global Pricing

• Gray marketing or Parallel Imports - Buying in
  Low-Price Countries, Selling in High-Price
  Countries
• 1. Causes market-based pricing and exchange
  rate fluctuations
• 2. Remedial measures narrow price
  differential, differentiate product

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Strategic Issues in Global Pricing

• Dumping - Selling at Price Below Normal Value in
  Export Market
• 1. Sporadic - to reduce surplus inventory
• 2. Predatory - to drive out competitors, to
  gain market control
• 3. Persistent - high prices in protected
  markets,low in competitive markets

92
Terms of Payment

• EXW (Ex Works) - For Goods at Point of Origin
• FAS (Free Alongside Ship) - For Goods Delivered
  Alongside Vessel
• FOB (Free on Board) - For Goods Aboard Vessel
• CF (Cost and Freight) - For Goods at Overseas
  Port

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Terms of Payment

• CIF (Cost, Insurance, Freight) - For Goods at
  Point of Debarkation
• CPT (Carriage Paid To) - same as CF for
  Nonwater Transportation
• CIP (Carriage and Insurance Paid To) - Same as
  CIF for nonwater Modes

94
Modes of Payment

• Cash in Advance
• Open Account - Payment for Goods at Future Date

95
Modes of Payment

• Letter of Credit - Issued by a Bank
• 1. Revocable - can be altered by buyer after
  issuance
• 2. Irrevocable - cannot be altered without an
  agreement between the buyer and the seller
• 3. Confirmed -seller assured of payment by
  sellers bank
• 4. Confirmed Irrevocable

96
Modes of Payment

• Draft or Bill of Exchange - Negotiable
  Instrument
• 1. Sight ---payable upon presentation
• 2. Time ---payable within specified period
• 3. Date - payable on specific future date

97
Modes of Payment

• Forfating - seller Paid by Bank, Not Buyer
• Countertrade - Payment in Whole or in Part by
  Goods or Services
• 1. Barter - no money changes hands
• 2. Counterpurchse - goods purchased from each
  other with cash
• 3. Compensation deals - payment in both cash
  and goods
• 4. Buyback arrangements

98
Chap 08

• Global Logistics Channels

99
GLOBAL LOGISTICS CHANNELS

• Overview
• Moving raw materials and finished products from
  one country to another creates challenges unique
  to global distribution

100
Features of Global Logistics

• Global Flow of Materials - Components Moved
  Elsewhere for Assembly
• Global Distribution of Products - Finished
  Products Moved to Final Markets

101
Features of Global Logistics

• Functions of the Global Distribution Channels Can
  Include
• 1. Collect, analyze, and transmit information
• 2. Initiate and maintain contacts with buyers
• 3. Receive, process, and execute orders
• 4. Arrange shipping, insurance, and delivery
• 5. Take title to goods
• 6. Make the sale

102
Features of Global Logistics

• Channel Intermediaries Include
• 1. Merchant middlemen - take title and assume
  risks
• 2. Agent middlemen - do not take title
• Goals of Channel Management
• 1. Efficiently move products from home country
  to host country
• 2. Deliver satisfaction t final customers
  competitively

103
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers

• Host Country Distributors Are Merchant Middlemen
• 1. Buy from firm, sell to retailers or final
  consumes
• 2. Often enjoy exclusive rights for product or
  region
• 3. It is a long-term commitment - choose
  carefully
• 4. Robinson listed provisions of what to
  include in the contract

104
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers

• Host Country Retailers Are Merchant Middlemen
• 1. Buy from firm, sell to final consumes
• 2. Japanese retailers - greater in number,
  serve fewer customers than U.S. counterparts
• 3. International retail outlets in the rise

105
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers

• Import Jobbers Are Merchant Middlemen in Host
  Country
• 1. Buy from firm, sell to intermediaries or
  final consumers
• 2. Do not have exclusive territories
• 3. Firm may employ several in one country

106
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers

• Manufacturers representatives are Agent
  Middlemen
• 1. Do not take title but represent firm
• 2. Choose carefully - often difficult to
  terminate relationships
• Consumers - No Intermediaries

107
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Export Drop Shippers
• 1. Take orders from buyer and tell seller to
  ship to buyer
• 2. Buyer pays drop shipper who pays firm
• 3. Do not hold inventories, offer minimal
  promotional help

108
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Export Merchants
• 1. Buy from firm, sell abroad
• 2. Assume risk
• 3. Advantage to firm easy to establish
  marketing presence
• Export Trading Companies (ETCs) Can Act as Export
  Department for Firm or Take Title to Products

109
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Manufacturers Export Agents (MEAs) Are Agent
  Middlemen
• 1. Represent firm and provide selling services
• 2. Use own name, not the firms
• 3. Services are specified in contract

110
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Export Management Companies (EMCs) Are Agent
  Middlemen
• 1. Provide extensive marketing services
• 2. Earn commission, or salary, or work on
  retainer

111
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• 3. Advantages
• a. Are helpful in markets where firm has
  little experience
• b. Require less investment (financial and
  personnel) in market

112
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• 4. Disadvantages
• a. May not make necessary investments
• b. May demand startup costs
• c. May underrepresent firm
• d. reduce gross margins, impede customer
  communications, hinder market assessment

113
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Export Brokers Are Agent Middlemen
• 1. Work for fee or commission
• 2. Relationship is sporadic

114
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Webb-Pomerence Association
• 1. U.S. firms can legally combine resources to
  expand exports
• 2. Cannot reduce U.S. competition by doing so
• 3. Association performs functions for members

115
Designing a Distribution Channel Within a Host
Country - Important Factors

• Consumer Characteristics - Know Where , When,
  What, How and Why They Buy
• Product Characteristics Influence Channel
  Decisions
• Market Characteristics
• 1. Assess strengths of existing distribution
  structure
• 2. Adapt to local conditions as needed

116
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries

• Channel Costs
• 1. Development costs - initial outlay
• 2. Maintenance costs - operation expenses
• 3. Level of customer service directly related
  to cost
• Coverage - Concentrated Within Major Cities or
  Spanning the Whole Country

117
Managing Channel Alliances - Relationships Evolve

• Communicating with Channel Members
• 1. Communicate goals to them
• 2. Receive feedback from them
• 3. Employ telecommunications technology to
  achieve goals

118
Managing Channel Alliances - Relationships Evolve

• Motivating Channel Members
• 1. Offer training
• 2. Provide promotional displays
• 3. Participate in cooperative advertising

119
Managing Channel Alliances - Relationships Evolve

• Controlling Channel Members
• 1. Develop performance criteria
• 2. Evaluate performance against criteria
• 3. Take corrective actions if needed
• 4. Design system for timely attention to
  channel performance

120
Managing Channel Alliances - Relationships Evolve

• 5. Challenges for effective control
• a. Reliable performance data may be lacking
• b. cost of gaining data may exceed benefit
• c. Changes in environment may outdate criteria

121
Evaluating Channel Performance - Measurement
Criteria

• Sales Analysis - Actual Versus Expected
• Level of Service - Does It meet Consumer Needs?
• Level of Inventory - Is it Adequate t Meet Demand?

122
Chap 09

• Global Promotion Strategies

123
GLOBAL PROMOTION STRATEGIES

• Overview
• Marketing communications include advertising,
  sales promotion, personal selling, and public
  relations. When communicating with publics in
  more than one country, firms must work within the
  limitations of each market to maximize their
  promotional objectives.

124
Elements of the Communication Process

• Sender
• Encoding
• Message
• Medium of Transmission
• Receiver
• Decoding
• Response
• Feedback
• Noise

125
Global Advertising - Any Paid Form of Nonpersonal
communication Where the Sponsor Is Identified

• Often Controversial
• Benefits Derived from Advertising
• 1. Economic
• a. Sales increase
• b. Production increases
• c. Per-unit cost of product goes down -
  economies of scale

126
Global Advertising - Any Paid Form of Nonpersonal
communication Where the Sponsor Is Identified

• d. Price decreases
• e. Sales increase further
• f. Competition increases - yielding higher
  productivity and better product quality
• 2. Social
• a. Employment is generated
• b. Higher standard of living

127
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• Advertising Message
• 1. Standardize when country markets are
  similar
• 2. Adapt when they are different
• 3. Avoid taboos of target market - dont
  offend

128
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• Budget and Allocation Based on Internal and
  External Conditions
• 1. Internal conditions
• a. management orientation
• b. Advertising objectives
• c. Resources available

129
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• 2. External conditions
• a. Governmental regulations
• b. Competitors advertising strategies
• c. Market attractiveness
• d. Media restrictions

130
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• Media Options and Country Characteristics -
  Effectiveness Versus Economy
• 1. Television
• a. Developed countries (DCs) - countrywide
  availability
• b. LDCs - concentrated in major cities, per
  capita ownership of TVs is lower
• c. Limitations ads may be bunched,
  broadcasting times vary, ads regulated

131
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• 2. Radio
• a. DCs - popularity on the rise, many
  program options available
• b. LDCs - good medium to reach uneducated
  urban and rural customers
• 3. Magazines

132
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• 4. Newspapers
• a. Advantages fast and economical
• b. Disadvantages some LDCs dont compile
  demographic data they have space limitations and
  content specifications

133
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• 5. Direct mail
• a. DCs - more common
• b. LDCs - limited opportunities, lack of
  reliable lists, undependable delivery, low
  literacy rates
• 6. Catalogs - limited to DCs for same reasons
  as for direct mail

134
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• 7. Facsimile - controversial
• 8. Videos
• a. Time not limited to 30- or 60- second
  slots
• b. DCs - whole video can be an ad
• c. LDCs - movie d\videos contain ads
• 9. Cinema - these ads more common in LDCs
• 10. Billboards - all countries

135
Planning an Advertising Campaign - Specify
Objectives Then Decide On

• Advertising Regulations - Know Them and Adapt
  Message Accordingly
• Agency Selection
• 1. Global agency
• 2. Local agency
• 3. Combination of both

136
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• Consumer Sales Promotion Techniques - Can Foster
  Long- Term Objectives
• 1. Coupons - maintain current customers,
  attract new ones
• 2. Rebates - maintain current customers,
  attract new ones
• 3. Free samples - encourage new users by
  eliminating cost
• 4. Mail-in premiums

137
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• 5. In-pack premiums - promotional benefit
  packaged with the product
• 6. Bonus packs - more product for the same
  price
• 7. Trading stamps - increase store patronage
• 8. Contests and sweepstakes - enhance name
  recognition and stimulate sales

138
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• Trade Sales Promotion Techniques - Persuade
  Channel Members to Carry Products or to Increase
  Sales
• 1. Sales contests - increase sales
• 2. Price-off offers - push new products or
  move large quantities
• 3. Advertising allowances

139
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• 4. Display allowances
• 5. Free goods
• 6. Push money - money to carry and to push
  products

140
Global Personal Selling - Keeping Buyers Happy,
the Firm Informed

• The Personal Selling Process
• 1. Panning what, how, when
• 2. Prospecting who
• 3. Preparing what buyers need, competitors
  offer

141
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• 4. Selling
• a. Approaching customer
• b. Making presentation
• c. Answering questions
• d. Closing sale
• 5. Following up - establishing solid link

142
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• Managing the Global Sales Force
• Sales Force Compensation
• 1. Straight salary
• a. Advantages sales force security, easy
  to administer
• b. Disadvantage lower sales if
  unmotivated sales force

143
Global Sales Promotions - Short-Term Efforts to
Increase Sales

• 2. Straight commission - fixed percentage or
  varying percentage
• a. Advantage encourages performance
• b. Disadvantage salespeople may stop with
  quotas
• 3. Combination salary and commission

144
Global Public Relations - Tools for Building a
Favorable Image

• Employee Relations - Create Favorable Ambassadors
  to the Community
• Customer Relations - Show Firm Cares About
  Customers
• Press Relations - Keep Shapers of Public Opinion
  on Firms Side
• Government Relations - Be a Good Citizen

145
Chap 10

• Global Business Involvement

146
GLOBAL BUSINESS INVOLVEMENT MARKET ENTRY
STRATEGIES

• Overview
• Entry strategies vary in terms of their
  advantages, disadvantages, and levels of
  involvement. The marketing options open to firms
  are in part determined by mode f entry.

147
Entry Strategies

• Exporting --Historically Most Popular
• 1. Types
• a. Direct - firm handles all tasks to sell
  within host country
• b. Indirect - firm delegates the tasks to an
  intermediary

148
Entry Strategies

• 2. Advantages
• a. Minimizes political risk
• b. Useful when market potential is hard to
  assess
• c. Offers channel flexibility
• d. Prepares firm for greater involvement
• e. Offers ease in market withdrawal

149
Entry Strategies

• 3. Disadvantages
• a. Exchange rate fluctuations and
  governmental intervention can affect earnings
• b. Lack of market presence can affect
  response time
• c. Loss of marketing control can affect
  corporate image

150
Entry Strategies

• Licensing - Payment of Fee or Royalty for Use of
  Anything of Value
• 1. Advantages
• a. To firm, cost effective
• b. To importing country, brings technology
  and managerial expertise

151
Entry Strategies

• 2. Disadvantages
• a. Can restrict firms full realization of
  market potential
• b. Can create third market competitors
• c. Can result in loss of control over
  technology and product quality
• d. Can result in conflicts between parties

152
Entry Strategies

• Franchising - Payment of Fee and Royalty in
  Exchange for Anything of Value Plus Operational
  and Managerial Help
• 1. Advantages same as for licensing
• 2. Disadvantages same as for licensing

153
Entry Strategies

• Contract Manufacturing - Contractual Partner
  manufactures Parts or Product for Firm
• 1. Advantages
• a. Firm can focus exclusively on marketing
• b. Economical means of expansion

154
Entry Strategies

• 2. Disadvantages
• a. Partner may turn competitor
• b. Loss of control over manufacturing
• c. Products may not always be available on
  time

155
Entry Strategies

• Management Contracting - Selling Managerial or
  Technical Expertise
• 1. Advantages
• a. Utilizes excess managerial talent
• b. Establishes contacts in host country
• c. Offers ease of remitting consulting fees
• d. Provides resources t its nearby
  operations
• 2. Disadvantages limited duration may
  necessitate withdrawal from country

156
Entry Strategies

• Turnkey Operations - Complete the Project Before
  Turning It Over to Owner
• 1. Advantages projects are large, long-term,
  an profitable
• 2. Disadvantage outcome is more uncertain
  over longer period of time

157
Entry Strategies

• Foreign Direct Investment
• 1. Joint ventures (JVs) - partners share
  ownership, risk, profit, and control
• a. Between foreign-owned firm and privately
  owned local firm
• b. Between foreign-owned firm and local state
  firm or government
• c. Between several foreign-owned firms with
  no local participation

158
Entry Strategies

• 2. Wholly-owned subsidiaries (WOSs)
• 3. Advantages of both JVs and WOSs
• a. Greater control
• b. Entry into closed markets
• c. Potential for vertical integration
• d. Access to supplies
• e. Ability to respond to competitive
  challenges

159
Entry Strategies

• 4. Disadvantage of JVs potential for
  disagreements among partners
• 5. Disadvantage of WOSs greater risk

160
Entry Strategies

• Strategic Alliances - Cooperation Between Firms
  Without creating a New Entry
• 1. Advantages
• a. market access
• b. Shared RD expenses, resources, and risks

161
Entry Strategies

• 2. Disadvantages
• a. Potential to lose competitive edge
• b. Possible ineffectual communications among
  partners from different cultures

162
Factors Influencing Entry Strategies

• Internal Conditions - Specific to the Firm
• 1. Objectives - what firm wants to achieve in
  relation to the product
• 2. Management orientation - biases affect entry
  strategy decisions
• 3. Resources - impose constraints that affect
  entry strategies
• 4. Type of product - what strategy best fits
  the characteristics of the product

163
Factors Influencing Entry Strategies

• External conditions
• 1. Market potential - which strategy will
  maximize market potential
• 2. Competitive environment - existing and
  expected

164
Factors Influencing Entry Strategies

• 3. Home country regulations - affect how and
  where firm can sell
• 4. Host country regulations - affect entry
  options
• 5. Political risk - high risk favors less
  involvement low risk favors more

165
Stages of Business Involvement

• The International Product Life-Cycle Hypothesis
• 1. New-predate stage manufactured at home,
  some exports to developed countries (DCs),
  domestic sales dominate, no competition, high
  price, patent protection

166
Stages of Business Involvement

• 2. Maturing-product stage DC demand rises,
  increasing exports yield to production in DCs,
  domestic exports decline, competition increases,
  prices fall, DCs produce for selves and export
• 3. Standardized-product stage fierce price
  competition, production shifts to developing
  countries, they start exporting to DCs who become
  net importers

167
Chap 11

• Strategic Global

168
STRATEGIC GLOBAL MARKET MANAGEMENT

• Overview
• The nuts and bolts of strategies deal with
  when, where, how, why, and by whom the necessary
  actions are performed to achieve a firms
  objectives

169
Strategic Analysis

• Strengths and Weaknesses
• 1. Identify key success factors specific to a
  given business
• a. Technology - turning concepts into
  products
• b. Marketing - ability in product, price,
  place, and promotion

170
Strategic Analysis

• c. Information management - the acquisition
  an use f information
• d. management skill - decision making and
  behavior of managers
• 2. Rate self on key factors in relation to
  competitors

171
Strategic Analysis

• Opportunities and Threats - Existing and
  Potential
• 1. First identify then rank order
• 2. Key areas customers, special-interest
  groups, competitors, governments, technologies,
  markets

172
Strategies

• Product-market Growth matrix - Four Basic Growth
  Strategies
• 1. Market Penetration--use existing products
  to penetrate existing markets
• 2. Product development--sell new or adapted
  products in existing markets
• 3. Market development--sell existing products
  in new markets
• 4. Diversification--introduce new or adapted
  products into new markets

173
Strategies

• Strategic Business Unit (SBU) Portfolio Strategy
  Using the Boston Consulting Groups Growth-Share
  Matrix
• 1. Stars high-growth market, high market
  shares
• 2. Problem children high-growth market, how
  market shares
• 3. Cash cows low-growth market, high market
  shares
• 4. Dogs low-growth market, low market shares

174
Strategies

• Corporate Competitive Strategy--Six Alternatives
  Based on Scope of Operations and Levels of Market
  Penetration
• 1. Global high-share strategy --for high market
  share using standardized products
• 2. Global niche strategies--to gain global
  presence with specialized products

175
Strategies

• 3. Regional high-share strategies -- for high
  market share within a region
• 4. Regional niche strategies -- for specialized
  markets within a region
• 5. National high-share strategies--high market
  share within a country
• 6. National niche strategies--for specialized
  markets within a country

176
Strategic Predispositions

• Ethnocentrism--Basing decisions on Home Country
  values and Interests
• Polycentrism--Basing Decisions on the Values of
  Each Country Where Firm Operates
• Regiocentrism--Basing Decisions on Values of a
  Specific Region
• Geocentrism--Basing Decisions on Worldwide
  Opportunities

177
Some Global Strategic Considerations

• Production Location and Souring --Dont Base
  Decisions in Cost alone
• The Double Squeeze--newly Industrialized
  countries Compete with DCs in Low- and
  High-Value-Added Products

178
Some Global Strategic Considerations

• Business and Politics--Government Influences Its
  Firm's Competitive Advantage
• Post-Marketing Concerns--Satisfying Consumers
  Within Environmental Constraints and in Harmony
  with Special-Interest Groups

179
Chap 12

• Ethics and Global Marketing

180
ETHICS AND GLOBL MARKETING

• Overview
• Ethics is needed for long-term success.
  Internal and external forces encourage firms to
  become ethical global citizens. Management
  strategies, codes of conduct, ethical
  philosophies, and decision-making checklists are
  some of the tools firms are using to foster
  ethical actions

181
Why Ethics?

• Gellerman Manages Rationalize Unethical Actions
• 1. It is legal (ethical)
• 2. It is in our interest (mine, companys)
• 3. We wont get caught
• 4. The company will back me on this

182
Why Ethics?

• Cooke Fourteen Signs of Ethical Risk
• Ethics Is Good for Long- Term Survival
• Simss Strategies for Promotion Ethical Behavior
• 1. CEO should encourage it
• 2. Develop formal process to reinforce it
• 3. Managements philosophy should
  institutionalize it at all levels

183
Ethical Philosophies

• Utilitarianism
• 1. Focuses on consequences of action
• 2. Strives f r greatest good for greatest
  number of people
• 3. But what constitutes a society?

184
Ethical Philosophies

• Egoism
• 1. Focuses on consequences of action
• 2. Strives for greatest good for oneself
• 3. Inherent weaknesses
• a. Would not take stand against blatant
  infractions
• b. Cannot resolve conflicting interests of
  two or more parties

185
Ethical Philosophies

• Deontology
• 1. Focuses on universal principles of right and
  wrong
• 2. Motives and character of actor more
  important than consequences of action

186
Ethical Philosophies

• Relativism
• 1. Right and wrong are culture specific -- no
  universal rules
• 2. Can be used to defend actions harmful to
  customers in other countries

187
Ethical Codes for Marketing --How Some Firms Help
manages Ask the Right Questions Before Making
Decisions

• Codes of Conduct Range from General to Specific
• Seven- Step Checklist for Ethical Decision making
• 1. Recognize and clarify dilemma
• 2. Get the facts
• 3. List the options

188
Ethical Codes for Marketing --How Some Firms Help
manages Ask the Right Questions Before Making
Decisions

• 4. Test each Is it legal? right? beneficial ?
• 5. Make decision
• 6. Double check How would I feel if my family
  found out? What if the paper found out?
• 7. Take action

189
Some External Factors Encouraging Ethical
Consideration by Executives

• Information Technology -- Markets Are not
  Isolated What Happens Here Is Reported There
• Visible Destruction of Environment Results from
  Unethical Practices

190
Some External Factors Encouraging Ethical
Consideration by Executives

• Special- Interest Groups Are Gaining Power to
  Promote Ethical Corporate Behavior
• Market Forces Favor Ethical Companies in the
  Long- Run