CHAPTER 03 UNDERSTANDING THE GLOBAL MARKETPLACE MARKETING WITHOUT

LEARNING OBJECTIVES Identify the various levels in the Global Marketing Experience Curve Learn the essential information components for assessing a global market opportunity CHAPTER 03 Learn the stages of classification system for evaluating and marketing in an emerging market Define the key regional market zones and their marketing challenges Describe the strategies for entering new global markets Recognize key factors in creating a global product strategy Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 2

DISTINCT STAGES OF INTERNATIONAL MARKETING Companies with no Foreign Marketing Companies with Foreign Marketing CHAPTER 03 International Marketing Global Marketing Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 3

EXHIBIT 3. 2 Years to Expansion TEN EXAMPLES OF GLOBAL COMPANIES AND THEIR EXPANSION IN GLOBAL MARKETS First Expansion 29 Wal-Mart (est. 1962) 1991 - Wal-Mart opens two units in Mexico City. 20 Hewlett-Packard (est. 1939) 1959 – HP sets up a European marketing organization in Geneva, Switzerland, and a manufacturing plant in Germany. 26 Tyson Foods (est. 1963) 1989 - Tyson establishes a partnership with a Mexican poultry company, to create an international partnership. 25 Caterpillar (est. 1925) 1950 – Caterpillar Tractor Co. Ltd. in Great Britain is founded. 19 CHAPTER 03 U. S. Company Home Depot (est. 1979) 1998 – Home Depot enters the Puerto Rican market followed by Argentina. 18 Gap (est. 1969) 1987 - The first Gap store outside the United States opens in London on George Street. 12 Goodyear (est. 1898) 1910 - Goodyear’s Canadian plant opens. 10 Fed. Ex (est. 1971) 1981 - International delivery begins with service to Canada. 1 Pepsi. Co (est. 1965) 1966 - Pepsi enters Japan and Eastern Europe. Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 4

ASSESSING THE GLOBAL OPPORTUNITY Essential Information Economic CHAPTER 03 Specific Market Conditions Political and Legal Culture, Societal Trends Business Environment Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 5

ASSESSING THE GLOBAL OPPORTUNITY Emerging Markets Stage 1 – The Traditional Society Stage 2 – Preconditions for Take-Off CHAPTER 03 Stage 3 – Take-Off Stage 4 – Maturity Stage 5 – High Mass Consumption Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 6

ASSESSING THE GLOBAL OPPORTUNITY Multinational Regional Market Zones CHAPTER 03 Economic Geographic Proximity Political Culture Similarities Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 7

TOP FOUR REGIONAL MARKET ZONES CHAPTER 03 EXHIBIT 3. 7 Reprinted Courtesy of European

COMPOSITION OF THE EU SINCE ITS CREATION CHAPTER 03 EXHIBIT 3. 8 Mc. Graw

SELECT THE GLOBAL MARKET Identify Selection Criteria CHAPTER 03 Company Review

EXHIBIT 3. 10 KEY COMPANY CHARACTERISTICS IN GLOBAL MARKET EXPANSION Company Characteristics Philosophy Objectives Resources CHAPTER 03 Management Style Organization Financial Limitations Management/Marketing Skills Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved Products 11

MARKET ENTRY STRATEGIES Exporting ◦ Internet ◦ Exporter and Distributor CHAPTER 03 ◦ Direct

MARKET ENTRY STRATEGIES Contractual Agreements ◦ Licensing CHAPTER 03 ◦ Franchising Mc. Graw Hill/Irwin

MARKET ENTRY STRATEGIES Strategic Alliances CHAPTER 03 ◦ International Joint Venture Mc. Graw Hill/Irwin

MARKET ENTRY STRATEGIES Direct Foreign Investment ◦ Timing ◦ Legal Issues ◦ Transaction Costs CHAPTER 03 ◦ Technology Transfer ◦ Product Differentiation ◦ Marketing Communication Barriers Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 15

THE MOST COMMON INTERNATIONAL ORGANIZATIONAL STRUCTURE CHAPTER 03 EXHIBIT 3. 14 Reprinted from Philip R. Cateora and John L. Graham, International Marketing, 13 e, 2007. Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 16

ORGANIZATIONAL STRUCTURE CHOICES Decision Making Authority Degree Of Centralization CHAPTER 03 Mc. Graw Hill/Irwin

CHOOSE STRUCTURE Global Product Lines Geographic Regions Matrix Structure CHAPTER 03 Mc. Graw Hill/Irwin

PRODUCT CHOICES Direct Product Extension Product Adaptation Product Invention CHAPTER 03 Mc. Graw Hill/Irwin

INTERNATINOAL CHANNEL STRUCTURES CHAPTER 03 EXHIBIT 3. 17 Reprinted from Philip R. Cateora and John L. Graham, International Marketing, 13 e, 2007. Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 21

MARKET CHANNEL ISSUES Channel Factors Cost CHAPTER 03 Continuity Capital Character Control Coverage Mc.

MARKETING COMMUNICATIONS Advertising CHAPTER 03 Global marketing themes Global marketing with local content Basket of global advertising themes Local market ad generation Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 23

MARKETING COMMUNICATIONS Personal Selling Sales Promotion Public Relations CHAPTER 03 Mc. Graw Hill/Irwin Copyright

PRICING One World Price Local Market Conditions Price Cost-Based Price CHAPTER 03 Mc. Graw

PRICING Price Escalation Product export costs CHAPTER 03 Tariffs, import fees, taxes Exchange rate fluctuations Middlemen and transportation costs Mc. Graw Hill/Irwin Copyright © The Mc. Graw Hill Companies, Inc. All rights reserved 26