Lecture 13_Global International marketing CHAPTER REACHING GLOBAL MARKETS

Lecture 13_Global (International marketing) CHAPTER REACHING GLOBAL MARKETS Associate professor of Plekhanov REA marketing department Irina I. Skorobogatykh (Ph. D) © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -2

LECTURE QUESTIONS • Explain the effects of economic protectionism and the implications of economic integration for global marketing practices. • Understand the importance of environmental factors (cultural, economic, and political) in shaping global marketing efforts. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -5

LECTURE QUESTIONS • Describe different approaches firms use to enter and compete in global markets. • Identify specific challenges marketers face when crafting worldwide marketing programs. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -6

DYNAMICS OF WORLD TRADE • Decline of Economic Protectionism § Tariff § Quota §

How protectionism affects world trade © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

DYNAMICS OF WORLD TRADE • Rise of Economic Integration § European Union (EU) • Euro § North American Free Trade Agreement (NAFTA) § Asian Free Trade Agreements © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -10

The 25 countries of the European Union in 2004 © 2004 Mc. Graw-Hill Companies,

DYNAMICS OF WORLD TRADE • A New Reality: Global Competition Among Global Companies for Global Customers § Global Competition § Global Companies • International Firm • Transnational Firm • Multinational Firm § Global Marketing Strategy § Multidomestic Marketing Strategy © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -16

Global companies and marketing strategies © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

DYNAMICS OF WORLD TRADE • A New Reality: Global Competition Among Global Companies for Global Customers § Global Consumers • Emergence of a Networked Global Marketplace © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -20

Concept Check 1. What is protectionism? A: Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition, using through the use of tariffs or quotas. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -22

Concept Check 2. What is the difference between a multidomestic and a global marketing strategy? A: A multidomestic marketing strategy means that multinational firms have as many different product variations, brand names, and advertising programs as countries in which they do business. A global marketing strategy is used by a transnational firm to standardize marketing activities when there are cultural similarities and adapts them when cultures differ. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -23

A GLOBAL ENVIRONMENTAL SCAN • Cultural Diversity § Cross-Cultural Analysis § Values § Customs • Foreign Corrupt Practices Act § Cultural Symbols § Language • Back Translation © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -24

Cultural appreciation © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -25

A GLOBAL ENVIRONMENTAL SCAN • Economic Considerations § Economic Infrastructure § Consumer Income and Purchasing Power § Currency Exchange Rates • Political-Regulatory Climate § Political Stability § Trade Regulations © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -29

Concept Check 1. Cross-cultural analysis involves the study of _____. A: similarities and differences among consumers in two or more nations or societies © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -31

Concept Check 2. When foreign currencies can buy more U. S. dollars, are U. S. products more or less expensive for a foreign consumer? A: Less expensive. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -32

GLOBAL MARKET-ENTRY STRATEGIES • Exporting § Indirect Exporting § Direct Exporting • Licensing § Franchising • Joint Venture • Direct Investment © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -33

Alternative global market-entry strategies © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide

Concept Check 1. What mode of entry could a company follow if it has no previous experience in global marketing? A: Indirect exporting through intermediaries, which have the marketing know-how and resources necessary for the effort to succeed. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -40

Concept Check 2. How does licensing differ from a joint venture? A: Under licensing, a company offers the right to a trademark, patent, or other intellectual property in return for a royalty or fee. Under a joint venture, a foreign company and a local firm invest together to create a local business to share its ownership, control, and profits. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -41

CRAFTING A WORLDWIDE MARKETING EFFORT • Product and Promotion Strategies § Product Extension § Product Adaptation § Product Invention © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -42

Five product and promotion strategies for global marketing © 2004 Mc. Graw-Hill Companies, Inc.

CRAFTING A WORLDWIDE MARKETING EFFORT • Distribution (Place) Strategy • Pricing Strategy § Dumping § Gray Market or Parallel Importing © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -45

Channels of distribution in global marketing © 2004 Mc. Graw-Hill Companies, Inc. , Mc.

Global marketing practices that affect pricing © 2004 Mc. Graw-Hill Companies, Inc. , Mc.

Concept Check 1. Products may be sold in three ways. What are they? A: (1) In virtually the same form as in its home market (product extension), (2) With some changes (product adaptation), and (3) As a totally new product (product invention). © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -48

Concept Check 2. What is dumping? A: Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -49

Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition, usually through the use of tariffs or quotas. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -70

Tariff A tariff is a tax on goods and services entering a country. ©

Quota A quota is a restriction placed on the amount of of a product

World Trade Organization (WTO) The World Trade Organization (WTO) is a global institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issues binding decisions. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -73

Global Competition Global competition exists when firms originate, produce, and market their products and

Multidomestic Marketing Strategy Multinational firms use a multidomestic marketing strategy when they have as many different product variations, brand names, and advertising programs as countries in which they do business. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -75

Global Marketing Strategy Transnational firms employ a global marketing strategy, which is the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -76

Global Consumers Global consumers consist of customer groups living in many different countries who have similar needs or seek similar features and benefits from products or services. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -77

Cross-Cultural Analysis Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -78

Values A society’s values represent socially preferable modes of conduct or states of existence

Customs are what is considered normal and expected about the way people do things

Foreign Corrupt Practices Act The Foreign Corrupt Practices Act makes it a crime for U. S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -81

Cultural Symbols Cultural symbols are things that represent ideas or concepts. © 2004 Mc.

Back Translation Back translation is when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -83

Currency Exchange Rate A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -84

Exporting is producing goods in one country and selling them in another country. ©

Joint Venture A joint venture is when a foreign country and a local firm

Direct Investment Direct investment entails a domestic firm actually investing in and owning a

Dumping is when a firm sells a product in a foreign country below its

Gray Market A gray market is a situation where products are sold through unauthorized channels of distribution. Also called parallel importing. © 2004 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Slide 7 -89