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Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 1
MKTG
Designed byAmy McGuire, B-books, Ltd.
Prepared byDeborah Baker, Texas Christian University
Lamb, Hair, McDaniel 2008-2009
4CHAPTERDeveloping a Global Vision
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 2
Learning Outcomes
Discuss the importance of global marketing
Discuss the impact of multinational firms on the world economy
Describe the external environment facing global marketers
LO1
LO2
LO3
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 3
Learning Outcomes
Identify the various ways of entering the global marketplace
List the basic elements involved in developing a global marketing mix
Discover how the Internet is affectingglobal marketing
LO4
LO5
LO6
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 4
LO1
Rewards of Global Marketing
Marketing that targets
markets throughout
the world.
Global Marketing
Global Marketing
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 5
LO1
Rewards of Global Marketing
Recognizing and reacting to international marketing opportunities
Using effective global marketing strategies
Being aware of threats from foreign competitors
Having a global vision means…
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 6
LO1
Importance of Global Marketing to the U. S. U.S. exports a fifth of industrial production. One of every 10 jobs in U.S. is supported by
exports. U.S. businesses export over $800 billion in
goods. Exports account for 25 percent of U.S.
economic growth. U.S. is world’s leading exporter of farm
products.
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 7
LO1
The Fear of Trade and Globalization
Millions of Americans have lost jobs Millions fear losing jobs Threat of outsourcing
if workers do not accept pay cuts
Vulnerability to operations moving offshore
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 8
LO1
Benefits of Globalization
Expands economic freedom Spurs competition Raises productivity and living standards Offers access to foreign capital, global
export markets, and advanced technology Promotes higher labor and environmental
standards Acts as a check on government power
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 9
REVIEW LEARNING OUTCOMELO1
The Importance of Global Marketing
Identifyglobal marketing
opportunities
Identifyglobal marketing
opportunities
Compete againstforeign competitionin domestic markets
Compete againstforeign competitionin domestic markets
Understandglobal
distributionnetworks
Understandglobal
distributionnetworks
Globally-minded Globally-minded marketing managers:marketing managers:
FearsFears BenefitsBenefitsKnow global marketing is important because
of economic interdependencies
Know global marketing is important because
of economic interdependencies
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 10
Stages of Global Business Development
LO2
11
22
44
33
Companies operate in one country and sell into othersCompanies operate in one country and sell into others
Set up foreign subsidiaries to handle salesSet up foreign subsidiaries to handle sales
Virtual operationVirtual operation
Operate an entire line of business in another countryOperate an entire line of business in another country
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 11
Global Marketing Standardization
LO2
Production of uniform products that can be sold the same way all over the world.
Global MarketingStandardization
Global MarketingStandardization
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 12
REVIEW LEARNING OUTCOMELO2
Impact of Multinational Firms
Growth
Revenue
Profits
GlobalMarketing
GlobalMarketing
MNC
• Human Resources• Physical Resources• Financial Resources
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 13
External Environment Facing Global Marketers
LO3
Natural Resources
Natural Resources
Demographic Makeup
Demographic Makeup
Economic and Technological Development
Economic and Technological Development
CultureCulture
Political StructurePolitical
Structure
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 14
CultureLO3
CultureCulture The common set of values
shared by its citizens that
determine what is socially
acceptable.
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 15
Economic and Technological Development
LO3
Developed Country
Developed Country
Less DevelopedCountry
Less DevelopedCountry
Complex, sophisticated industries
Complex, sophisticated industries
Basic industriesBasic industries
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 16
Political Structure and ActionsLO3
No private ownershipMinimal individual freedom
Little central governmentMaximum personal freedom
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 17
Legal ConsiderationsLO3
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
A tax levied on goods entering a country
Limit on the amount of a product entering a country
Exclusion of products from a country
Foreign exchange must be sold to a control agency
Common trade alliance
An agreement to stimulateinternational trade
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 18
Political and Legal ConsiderationsLO3
The Uruguay Round made changes inworld trading practices
Entertainment, pharmaceuticals, integrated circuits, and software
Financial, legal, and accounting services
Agriculture
Textiles and apparel
And created a new trade organization: The World Trade Organization
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 19
Political and Legal ConsiderationsLO3
CAFTACAFTA NAFTANAFTA European Union
European Union
Agreementsand Organizations
Agreementsand Organizations
http://www.wto.org
Online
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 20
Demographic MakeupLO3
Marketing Considerations: Population density Urban or rural Personal income Age
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 21
Shortages in Natural ResourcesLO3
Create… International
dependencies Shifts of wealth Inflation and recession Export opportunities if
resources are abundant
Stimulus for military intervention
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 22
Natural ResourcesLO3
Petroleum Foodstuffs Precious metal Timber Water
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 23
REVIEW LEARNING OUTCOMELO3
External Environment Facing Global Marketers
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 24
LO4
Global Marketing Questions
http://www.cat.com
Online
What are our options in selling abroad?
How difficult is global marketing?
What are the potential risks and returns?
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 25
LO4
Why “Go Global”?
Earn additional profits Leverage a unique
product or technological advantage
Possess exclusive market information
Saturated domestic markets
Excess capacity Utilize “economies of
scale”
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 26
LO4
Risk Levels for Global Entry
Low risk/low return
Highrisk/highreturn
Risk
Return
ExportLicensing
ContractManu-
facturing
JointVenture
DirectInvest-ment
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 27
LO4
Entering the Global Marketplace
Licensing Legal process allowing use of manufacturing/patents/knowledge
ContractManufacturing
Private-label manufacturing by a foreign country
Joint Venture Domestic firm buys/joins a foreign company to create new entity
Export Sell domestically produced products to buyers in other countries
Direct Investment Active ownership of a foreign company/manufacturing facility
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 28
LO4
Export Intermediaries
Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.
Assumes all ownership risks and sells globally for its own account.
Export BrokerExport Broker Plays the traditional broker’s role by bringing buyer and seller together.
Plays the traditional broker’s role by bringing buyer and seller together.
Export AgentExport Agent Acts like a manufacturer’s agent for the exporter in the foreign market.
Acts like a manufacturer’s agent for the exporter in the foreign market.
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 29
REVIEW LEARNING OUTCOMELO4
Entering the Global Marketplace
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 30
Product and Promotion
LO5
One ProductOne Message
Product Adaptation
MessageAdaptation
Product Invention
SameSameProductProduct
SameSameMessageMessage
ChangeChangeMessageMessage
ChangeChangeProductProduct
http://www.disney.go.com
Online
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 31
Place (Distribution)
LO5
Adequate distribution is necessary for success in global markets– Some countries have complicated systems– Lack of distribution infrastructure and
cultural differences create problems
Innovative distribution systems can create competitive advantage
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 32
Pricing
LO5
Must consider transportation and insurance costs, taxes and tariffs
Determine what customers will spend
Ensure that foreign buyers will pay price
May need to simplify a product to lower price
Don’t assume that low-income countries are willing to accept lower quality
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 33
Exchange Rates
LO5
The price of one’s currency in terms
of another country’s currency.
Exchange Rates
Exchange Rates
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 34
Dumping
LO5
1. Trying to increase an overseas market share
2. Temporarily distributing products to overseas markets to offset slack demand at home
3. Lowering unit costs by exploiting large-scale production
4. Attempting to maintain stable prices during periods of exchange rate fluctuations
Chapter 4 Copyright ©2009 by Cengage Learning Inc. All rights reserved 35
Countertrade
LO5
A form of trade in which all or
part of the payment for goods or
services is in the form of other
goods or services.
CountertradeCountertrade
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 36
REVIEW LEARNING OUTCOMELO5
Developing a Global Marketing Mix
PROMOTION
One Product, One Message
Product Invention
Product Adaptation
Message Adaptation
PLACE
Channel Choice
Channel Structure
Country Infrastructure
PRICE
Dumping
Countertrade
Exchange Rates
Purchasing Power
Chapter 4 Copyright ©2009 Cengage Learning Inc. All rights reserved. 37
REVIEW LEARNING OUTCOMELO6
The Impact of the Internet