Marketing Management

Chapter-21

Tapping into Global Markets

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MARKETING MANAGEMENT
12th edition

21
Tapping Into
Global Markets

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Kotler
nt Keller
 Chapter Questions

 What factors should a company review before deciding to go

abroad?
 How can companies evaluate and select specific foreign markets
to enter?
 What are the major ways of entering a foreign market?
 To what extent must the company adapt its products and
marketing program to each foreign country?
 How should the company manage and organize its international
activities?

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 Global (International ) Company
 Global (International) Company : A Global Firm is a firm that
operates/sells in more than one country; and captures R&D,
production, logistical, marketing, and financial advantages in its
costs and reputation that are not available to purely domestic
competitors.

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 Five Modes of Entry into Foreign Markets

Indirect Direct Joint Direct

Licensing
Exporting Exporting Ventures Investment

Commitment, Risk, Control, Profit Potential

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 Deciding How to Enter the Global Market

Exporting

Mode
Direct
of Licensing
Investment
Entry

Joint
Ventures

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 Deciding How to Enter the Global Market
 Once a company decides to target a particular country, it has
to determine the best mode of entry. Its broad choices are as
follows.

a. Exporting
b. Licensing
c. Joint Ventures
d. Direct Investment

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 Deciding How to Enter the Global Market
a. Exporting : The normal and the least risky way to get
involved in an international market is through exporting.
b. Licensing : Licensing is also a simple way to become involved
in international marketing. The licensor issues a license to a
foreign company to use a manufacturing process, trademark,
patent, or other item of value for a fee or royalty. The
licensor gains entry at little risk; the licensee gets production
expertise or a well-known product or brand name.
 There are several variations on a licensing arrangement;
however Franchising is a most complete form of licensing.
McDonald’s, KFC, and Avis have entered scores of countries
by franchising.
 Franchising is a specialized form of licensing (contractual
agreement) in which the franchiser sells intangible property
to the franchisee and insists on rules to conduct the business.
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 Deciding How to Enter the Global Market

KFC in Japan Coca-Cola

Franchise Licensing

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 McDonald’s Franchises Are Sold Worldwide

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 Deciding How to Enter the Global Market
c. Joint Ventures : Foreign investors may join with local
investors to create a joint venture company in which they
share ownership and control. Example : Whirlpool took a
53% stake in the Dutch electronics group Philips to progress
into the European market. Example : P&G formed a joint
venture with its Italian archrival Fater to cover babies’
bottoms in the UK and Italy.

d. Direct Investment : The ultimate and riskiest form of foreign

involvement is direct ownership of foreign-based assembly or
manufacturing facilities. Example : General Motors has
invested billions of dollars in auto manufacturers around the
world, such as Shanghai GM, Fiat Auto Holdings, Isuzu,
Daewoo, Suzuki, and many others.
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 Deciding How to Enter the Global Market

Shanghai GM
Whirlpool Joint Ventured with New plant in Shanghai
Philips to enter European market Direct Investment by GM

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 Global Marketing
Advantages
 Economies of scale
 Lower marketing costs
 Power and scope
 Consistency in brand image
 Ability to leverage
 Uniformity of marketing
practices
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Disadvantages
 Differences in consumer
needs, wants, usage
patterns
 Differences in consumer
response to marketing mix
 Differences in brand
development process
 Differences in environment
13
 Activity

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