Chapter 5 MKTG6

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Chapter 1 Copyright 2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 5

Developing a Global Vision

2012-2013

P h i l A

s h l e

y / L i f e

s i z e / G e t t y I m a

g e s


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Rewards ofGlobal Marketing

Recognizing and reacting to

international marketingopportunities

Using effective globalmarketing strategies

Being aware of threats fromforeign competitors

Having a global vision means

1 2013 by Cengage Learning Inc. All Rights Reserved.2


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Importance of GlobalMarketing to the U. S.

Derives 12 percent of gross domesticproduct (GDP) from world trade.

7 percent of U.S. employment issupported by exports.U.S. businesses export over $1.7trillion in goods and services

annually.More smaller companies areaggressively pursuing internationalmarkets.



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The Fear of Tradeand Globalization

Millions of Americans have lost jobsMillions fear losing jobsThreat of outsourcing if workers do notaccept pay cutsVulnerability to operations moving

offshore



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Benefits ofGlobalization

Expands economic freedomSpurs competition

Raises productivity and living standardsOffers access to foreign capital, globalexport markets, and advancedtechnologyPromotes higher labor andenvironmental standards

Acts as a check on government power1 2013 by Cengage Learning Inc. All Rights Reserved.5


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Stages of GlobalBusiness Development

1

2

4

3

Companies operate in one country andsell into others

Set up foreign subsidiaries to handle sales

Virtual operation

Operate an entire line of business inanother country



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Are Multinationals Beneficial?

Pros Account for 19 percent of

U.S. private Jobs

Provide 25 percent ofprivate wages 74 percent of R&D

spending

48 percent of totalexports

Cons Technology is capital

intensive and does notnecessarily increaseemployment.

Support governments thatbenefit the company, notnecessarily the countryand its people

May take away morewealth than they generate

2013 by Cengage Learning Inc. All Rights Reserved.7 2


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Global MarketingStandardization

Production of uniformproducts that can be sold thesame way all over the world.

Global MarketingStandardization


Subsidiaries of multinationalfirms are allowed to compete

independently in domesticmarkets.

Multidomestic

strategy


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External Environment FacingGlobal Marketers

Natural

ResourcesDemographic

Makeup

EconomicDevelopment

Culture

PoliticalStructure



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Culture

Culture

The common set of valuesshared by its citizens thatdetermine what is socially

acceptable.



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Culture

Factors to keep in mind when dealingwith different cultures:1. Language and cultural idioms2. Customs and traditions3. Values and expectations of sales

presentations



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Economic Development

DevelopedCountry

Less DevelopedCountry

Complex, sophisticatedindustries

Basic industries



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Economic Development:China and India

China and India have two of thehighest growth rates in the world.

Have the worlds two largestpopulations. Among highest levels of income

disparity. Great linguistic and cultural diversity.



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Political Structure and ActionsNo private ownership

Minimal individual freedom

Little central governmentMaximum personal freedom



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2013 by Cengage Learning Inc. All Rights Reserved.15

Legal Considerations

Tariff

Quota

Boycott

Exchange Control

Market Grouping

Trade Agreement

A tax levied on goods enteringa country

Limit on the amount of aproduct entering a country

Exclusion of products froma country

Foreign exchange must besold to a control agency

Common trade alliance

An agreement to stimulateinternational trade

3


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Political and Legal Considerations

The Uruguay Round made changesin world 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



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Doha Round

Began in 2001 Highly contentious from the

beginning Stalemate over lowering tariffs onindustrial goods in exchange forcutting U.S. farm subsidies.

More protectionism has madetalks increasingly difficult.



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Political and LegalConsiderations

CAFTA NAFTA EuropeanUnion

Agreementsand Organizations



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Exhibit 5.2Members of G-20



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Demographic Makeup

Marketing Considerations:Population density

Urban or rural Age



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Natural Resources

Shortages in natural resources create: International dependenciesShifts of wealthInflation and recessionExport opportunities if resources areabundant

Stimulus for military intervention



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Why Go Global?

Earn additional profitsLeverage a unique productor technological advantagePossess exclusive marketinformationSaturated domestic markets

Excess capacityUtilize economies of scale



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Exhibit 5.3Risk Levels for Five Methods of Entering

the Global Marketplace



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Export Intermediaries

Buyer for Export Assumes all ownership risks andsells globally for its own account.

Export Broker Plays the traditional brokers role bybringing buyer and seller together.

Export AgentActs like a manufacturers agent forthe exporter in the foreign market.



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The Global Marketing Mix

The first step in creating a marketing mix isdeveloping a thorough understanding of theglobal target market

HOWEVER

global marketing research is

conducted in vastly different environments.



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Product and Promotion

One Product

One MessageProduct

Adaptation

Promotion

Adaptation

Product

Invention

SameProduc t

SameMessage

ChangeMessage

ChangeProduc t



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Place (Distribution)

Adequate distribution is necessary forsuccess in global markets

Lack of distribution infrastructure andcultural differences create problems

Logistics and shipping costs have been agrowing challenge for U.S. companies

looking to move production overseas. Global trade has added to strains and

charges for all forms of transportation.



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PricingMust 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

Dont assume that low -income countries arewilling to accept lower quality



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Exchange Rates

The price of ones currency interms of another countryscurrency.

Float ing Exc h an g e Rates


a system in which prices of differentcurrencies move up and down basedon the demand for and the supply ofeach currency.


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Dumping

the sale of an exported product at aprice lower than that charged for thesame or a like product in the home

market of the exporter.

D u m p i n g is



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Dumping

Dumping may occur as a result of exporter businessstrategies that include:

1. Trying to increase an overseas market share

2. Temporarily distributing products to overseasmarkets to offset slack demand at home

3. Lowering unit costs by exploiting large-scaleproduction

4. Attempting to maintain stable prices duringperiods of exchange rate fluctuations



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Countertrade

A form of trade in which all orpart of the payment for goodsor services is in the form of

other goods or services.

Countertrade



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The Impact of the Internet

Opening an e-commerce site puts acompany in the international marketplace

Internet Economy remains hindered bybrick and mortar rules, regulations, andhabits

6 2013 by Cengage Learning Inc All Rights Reserved34

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Chapter 5 MKTG6

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