Reaching Global Markets: Hapter

CHAPTER
REACHING
GLOBAL
MARKETS
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-1
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
1. Identify the major trends that have influenced

the landscape of global marketing in the past
decade.
2. Identify the environmental factors that shape

global marketing efforts.
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
3. Name and describe the alternative approaches

companies use to enter global markets.
4. Explain the distinction between

standardization and customization when
companies craft worldwide marketing
programs.
MATTEL’S GLOBAL MARKETING IS
MORE THAN CHILD’S PLAY
DYNAMICS OF WORLD TRADE
• Decline of Economic Protectionism
 Protectionism
 Tariff
 Quota
 World Trade Organization (WTO)
FIGURE 7-1 How protectionism affects
world trade
• Rise of Economic Integration
 European Union
• Euro
 North American Free Trade Agreement

(NAFTA)
 Asian Free Trade Agreements
FIGURE 7-2 The countries of the European
Union in 2006; Bulgaria and Romania are
expected to join in 2007
Euro TV Ad
What are the benefits of economic integration?
• A New Reality: Global Competition among

Global Companies for Global Consumers
 Global Competition
Diet Pepsi
What is global competition?

 Global Companies
• International Firm • Transnational Firm
• Multinational Firm  Global Marketing

Strategy
 Multidomestic
Marketing Strategy
• Global Brand
FIGURE 7-A Global companies and
marketing strategies

 Global Consumers
• Emergence of a Networked Global
Marketspace
McDonald’s Website
What is a networked global marketspace?
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.
Concept Check
2. What is the difference between a

multidomestic marketing strategy and a
global marketing strategy?
A: A multidomestic marketing strategy means that firms

have as many different product variations, brand
names, and advertising programs as countries in
which they do business. A global marketing strategy
standardizes marketing activities when there are
cultural similarities and adapts them when cultures
differ.
A GLOBAL ENVIRONMENTAL SCAN
• Cultural Diversity
 Cross-Cultural Analysis
 Values
 Customs
• Foreign Corrupt Practices Act (1977)
 Cultural Symbols
 Language
• Back Translation
FIGURE 7-B Cultural appreciation
Eiffel Tower (Paris) and Parthenon (Athens)
What cultural lesson did Coca-Cola learn?
• Economic Considerations
 Economic Infrastructure
 Consumer Income and Purchasing Power
 Currency Exchange Rates
Coca-Cola (Russia)
How do marketers adapt to
a country’s infrastructure?
• Political-Regulatory Climate
 Political Stability
 Trade Regulations
Concept Check
1. Cross-cultural analysis involves a

study of _______.
A: similarities and differences among
consumers in two or more nations or
societies
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
GLOBAL MARKET-ENTRY
STRATEGIES
• Exporting
 Indirect Exporting
 Direct Exporting
• Licensing
 Franchising
• Joint Venture
• Direct Investment
FIGURE 7-3 How purchasing power differs
around the world
Nestle in China
What global market-entry strategy and why?
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
Concept Check
2. How does licensing differ from a

joint venture?
A: In licensing, the firm offers the right to a

trademark, patent, or trade secret in return for a
royalty or fee. In a joint venture, a foreign and
a local firm invest together to produce some
product or service. The two companies share
ownership, control, and profits of the new
entity.
CRAFTING A WORLDWIDE
MARKETING PROGRAM
• Product and Promotion Strategies
 Product Extension
 Product Adaptation
 Product Invention
FIGURE 7-4 Five product and promotion
strategies for global marketing
Gillette For Women Venus
Why use an identical global message for
Greece, Germany, and the U.S.?
CRAFTING A WORLDWIDE
MARKETING PROGRAM
• Distribution Strategy
• Pricing Strategy
 Dumping
 Gray Market or Parallel Importing
FIGURE 7-5 Channels of distribution in
global marketing
Concept Check
1. Products may be sold globally in

three ways. What are they?
A: (1) in 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).
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.
GOING ONLINE
GETTING TO KNOW THE WTO
Going Online
1. Countries are constantly seeking

WTO membership. How many
countries are now members of this
organization? Which country is the
newest member?
Going Online
2. What are the 10 most common

misunderstandings about the WTO
identified by this organization?
VIDEO CASE 7
CNS BREATHE RIGHT STRIPS:

GOING GLOBAL
VIDEO CASE 7
CNS Breathe Right
VIDEO CASE 7
CNS Breathe Right
FIGURE 1 CNS three-

stage approach to
penetrate and develop
new markets
VIDEO CASE 7
CNS Breathe Right
1. What are the advantages and

disadvantages for CNS taking
Breathe Right strips into international
markets?
VIDEO CASE 7
CNS Breathe Right
2. What are the advantages to CNS

of (a) using its three-stage process
to enter new global markets and
(b) having specific criteria to move
through the stages?
VIDEO CASE 7
CNS Breathe Right
3. Using the CNS criteria, with what

you know, which countries should
have the highest priority for CNS?
VIDEO CASE 7
CNS Breathe Right
4. Which single segment of potential

Breathe Right strip users would you
target to enter new markets?
VIDEO CASE 7
CNS Breathe Right
5. Which marketing mix variables

should CNS emphasize the most to
succeed in a global arena? Why?
SUPPLEMENTAL
LECTURE NOTE 7-1
EXAMPLES OF VALUES,
CUSTOMS, CULTURAL
SYMBOLS, AND LANGUAGE
IN-CLASS ACTIVITY 7-1
REINTRODUCING THE
MINI® BRAND
TO THE U.S.
History of the Classic Mini
MINI Brand Launch at the 2002 NAIAS
MINI Cooper Convertible and
MINI Cooper S Convertible
MINI Cooper Convertible
MINI Cooper Convertible Brochure
MINI Cooper Convertible Billboard
Protectionism
Protectionism
Protectionism isis the
the practice
practice of
of shielding
shielding
one
one or
or more
more industries
industries within
within aa country’s
country’s
economy
economy from
from foreign
foreign competition
competition
through
through the
the use
use of
of tariffs
tariffs or
or quotas.
quotas.
Tariff
A
A tariff
tariff is
is aa government
government tax
tax on
on goods
goods or
or
services
services entering
entering aa country,
country, primarily
primarily
serving
serving to
to raise
raise prices
prices on
on imports.
imports.
Quota
A
A quota
quota isis aa restriction
restriction placed
placed on
on the
the
amount
amount ofof of
of aa product
product allowed
allowed to
to enter
enter
or
or leave
leave aa country.
country.
World Trade Organization
The
The World
World Trade
Trade Organization
Organization (WTO)
(WTO)
is
is aa permanent
permanent institution
institution that
that sets
sets rules
rules
governing
governing trade
trade between
between its
its members
members
through
through panels
panels ofof trade
trade experts
experts who
who
decide
decide onon trade
trade disputes
disputes between
between
members
members andand issue
issue binding
binding decisions.
decisions.
Global Competition
Global
Global competition
competition exists
exists when
when firms
firms
originate,
originate, produce,
produce, and
and market
market their
their
products
products and
and services
services worldwide.
worldwide.
Multidomestic Marketing
Strategy
A
A multidomestic
multidomestic marketing
marketing strategy
strategy is
is
used
used by
by multinational
multinational firms
firms that
that have
have as
as
many
many different
different product
product variations,
variations, brand
brand
names,
names, and
and advertising
advertising programs
programs asas
countries
countries in
in which
which they
they do
do business.
business.
Global Marketing Strategy
A
A global
global marketing
marketing strategy
strategy is
is used
used by
by
transnational
transnational firms
firms that
that employ
employ the
the
practice
practice of
of standardizing
standardizing marketing
marketing
activities
activities when
when there
there are
are cultural
cultural
similarities
similarities and
and adapting
adapting them
them when
when
cultures
cultures differ.
differ.
Global Brand
A
A global
global brand
brand is
is aa brand
brand marketed
marketed under
under
the
the same
same name
name in
in multiple
multiple countries
countries with
with
similar
similar and
and centrally
centrally coordinated
coordinated
marketing
marketing programs.
programs.
Global Consumers
Global
Global consumers
consumers consist
consist of
of customer
customer
groups
groups living
living inin many
many different
different countries
countries
or
or regions
regions ofof the
the world
world who
who have
have similar
similar
needs
needs or
or seek
seek similar
similar features
features and
and
benefits
benefits from
from products
products or
or services.
services.
Cross-Cultural Analysis
Cross-cultural
Cross-cultural analysis
analysis involves
involves the
the
study
study of
of similarities
similarities and
and differences
differences
among
among consumers
consumers in in two
two or
or more
more nations
nations
or
or societies.
societies.
Values
Values
Values isis aa society’s
society’s personally
personally or
or
socially
socially preferable
preferable modes
modes of
of conduct
conduct oror
states
states of
of existence
existence that
that tend
tend to
to persist
persist over
over
time.
time.
Customs
Customs
Customs are are what
what is
is considered
considered normal
normal
and
and expected
expected about
about the
the way
way people
people do
do
things
things in
in aa specific
specific country.
country.
Foreign Corrupt Practices
Act (1977)
The
The Foreign
Foreign Corrupt
Corrupt Practices
Practices Act
Act
(1977)
(1977) isis aa law,
law, amended
amended by by the
the
International
International Anti-Dumping
Anti-Dumping and and Fair
Fair
Competition
Competition Act Act (1998),
(1998), that
that makes
makes itit aa
crime
crime for
for U.S.
U.S. corporations
corporations toto bribe
bribe an
an
official
official of
of aa foreign
foreign government
government or or
political
political party
party toto obtain
obtain or
or retain
retain business
business
in
in aa foreign
foreign country.
country.
Cultural Symbols
Cultural
Cultural symbols
symbols are
are things
things that
that represent
represent
ideas
ideas or
or concepts.
concepts.
Back Translation
Back
Back translation
translation isis when
when aa translated
translated
word
word or
or phrase
phrase is
is retranslated
retranslated into
into the
the
original
original language
language by by aa different
different
interpreter
interpreter to
to catch
catch errors.
errors.
Currency Exchange Rate
A
A currency
currency exchange
exchange rate
rate is
is the
the price
price of
of
one
one country’s
country’s currency
currency expressed
expressed in
in terms
terms
of
of another
another country’s
country’s currency.
currency.
Exporting
Exporting
Exporting isis producing
producing goods
goods in
in one
one
country
country and
and selling
selling them
them in
in another
another
country.
country.
Joint Venture
A
A joint
joint venture
venture isis when
when aa foreign
foreign
country
country and
and aa local
local firm
firm invest
invest together
together to
to
create
create aa local
local business.
business.
Direct Investment
Direct
Direct investment
investment entails
entails aa domestic
domestic
firm
firm actually
actually investing
investing in
in and
and owning
owning aa
foreign
foreign subsidiary
subsidiary or
or division.
division.
Dumping
Dumping
Dumping is is when
when aa firm
firm sells
sells aa
product
product in
in aa foreign
foreign country
country below
below
its
its domestic
domestic price
price or
or below
below its
its actual
actual cost.
cost.
Gray Market
A
A gray
gray market
market isis aa situation
situation where
where
products
products are
are sold
sold through
through unauthorized
unauthorized
channels
channels of
of distribution.
distribution. Also
Also called
called
parallel
parallel importing.
importing.

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CHAPTER

1. Identify the major trends that have influenced

2. Identify the environmental factors that shape

3. Name and describe the alternative approaches

4. Explain the distinction between

• Decline of Economic Protectionism

• Rise of Economic Integration

 North American Free Trade Agreement

• A New Reality: Global Competition among

• A New Reality: Global Competition among

• Multinational Firm  Global Marketing

• A New Reality: Global Competition among

A: Protectionism is the practice of

2. What is the difference between a

A: A multidomestic marketing strategy means that firms

1. Cross-cultural analysis involves a

2. When foreign currencies can buy

1. What mode of entry could a company

A: indirect exporting through

2. How does licensing differ from a

A: In licensing, the firm offers the right to a

• Product and Promotion Strategies

1. Products may be sold globally in

A: (1) in the same form as in its home

A: Dumping is when a firm sells a

GETTING TO KNOW THE WTO

1. Countries are constantly seeking

2. What are the 10 most common

CNS BREATHE RIGHT STRIPS:

FIGURE 1 CNS three-

1. What are the advantages and

2. What are the advantages to CNS

3. Using the CNS criteria, with what

4. Which single segment of potential

5. Which marketing mix variables

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