5

Developing a Global Vision

Dr. Close

Objectives

Discuss the importance of global marketing

Discuss the impact of multinational firms on
the world economy
Describe the external environment facing
global marketers
Identify ways of entering the global market
List the elements involved in
developing a global marketing mix

Emerging-Market Companies
COUNTRY
COMPANY
INDUSTRY
Amrica Mvil
Mexico
Telecom services
Cemex
Mexico
Building materials
China Mobile
China
Telecom services
CNOOC
China
Oil and gas
CVRD
Brazil
Mining
Embraer
Brazil
Aerospace
Gazprom
Russia
Oil and gas
Haier
China
Home appliances
Hisense
China
Electronics
Adapted from Emerging Giants, Business Week, July 31, 2006.
Huawei
China
Telecom equipment

Go Global

Target throughout the world

Global vision of multi-national firms
Fear? Why?

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
Then, why is international marketing so
hot?

Did you know?

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.
Exports account for 25 percent of U.S. economic
growth.
U.S. is worlds leading exporter of farm
products.

Rewards of Global Marketing

Recognizing and reacting to international
marketing opportunities
Using effective global marketing
strategies
Being aware of threats from foreign
competitors
Other rewards?

External Environments

Demographics (1)
Birthrate
Babies born/1000 people in population
In U.S, slower since baby boom (declining;
grandparents example)
Japan & Western Europe is also slower
More spending/child (indulged)

U.S. Birthrate 1935-2005

U.S. Demographics (2)

U.S. is a Transient society
16% moves each year (40% of those, out of
country)
A nation of strangers leads to chains

Regional
Growth
Fastest in the West
California (most populous; 1/8 Americans)

Density
Most on the East Coast (Why??)
Key for businesses: local area, traffic counts, food

Economic Development (1)

What are attractive markets?
GNI (Gross National Income): total market
value of goods/services produced in an
economy
Higher GNI
Allows more trade
Exchange concept = favors richer countries &
people
Criticism here

Economic Development (2)

What are attractive markets? (continued)
Lower GNP
Developing world
Growth
Example: U.S. and Canada will take 5x as long to double
their population as compared to Nicaragua & Saudi
Arabia
Less competition (M&M/Mars: Eastern Europe)

Challenges
Literacy: world (baby food, U.S. fast food)
Low income: 60% of world makes less than $2/day
Ethics (Nestle and what other company?)

International Trade
MERCOSUR (Latin America)
URUGUAY ROUND (>148 nations to
reduce tariffs)
WTO (replaced GATT)
NAFTA
CAFTA
EU
IMF

International Options

Exporting/importing (Wal-Mart)
Licensing (Sponge Bob)
Franchising (McDonalds)
Contract manufacturing
Joint venture
Direct foreign investment

Which are more risky?

Export

Sell domestically produced products to

buyers in other countries

Licensing

Legal process allowing use of

manufacturing/patents/knowledge

Contract
Manufacturing

Private-label manufacturing
by a foreign country

Joint Venture

Domestic firm buys/joins a foreign company to

create new entity

Direct Investment

Active ownership of a foreign

company/manufacturing facility

Export Intermediaries
Buyer
Buyerfor
forExport
Export

Assumes
Assumesall
allownership
ownershiprisks
risksand
and
sells
sellsglobally
globallyfor
forits
itsown
ownaccount.
account.

Export
Export Broker
Broker

Plays
Playsthe
thetraditional
traditionalbrokers
brokersrole
roleby
by
bringing
bringingbuyer
buyerand
andseller
sellertogether.
together.

Export
ExportAgent
Agent

Acts
Actslike
likeaamanufacturers
manufacturersagent
agentfor
for
the
theexporter
exporterin
inthe
theforeign
foreignmarket.
market.

Global Marketing Mix Strategies

One product, one message
Change existing product for a new country
market (Krispy Crme, anything else?)
Message adaptation
Price changes (exchange rates, dumping)
Barter

Product and Promotion

Same
Message

Change
Message

Same
Product

Change
Product

One Product
One Message

Product
Adaptation

Message
Adaptation

Product
Invention

Pricing
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
Dont assume that low-income countries
willing to accept lower quality

are

Developing a Global Marketing Mix

PROMOTION

PLACE

Channel Choice
One Product,
Channel Structure
One Message
Product Invention Country
Product Adaptation Infrastructure
Message
Adaptation

PRICE
Dumping
Countertrade
Exchange Rates
Purchasing Power

Your thoughts?
What are your ideas for selling abroad?
How difficult is global marketing?
What are the potential risks
and returns?

Summary

Demography
International trade
Economic development
International options
Global marketing mix