Marketing Management - Assignment

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Chapter 8

Global Marketing

Learning Objectives

Learning Objective 8.1 Describe the components of a

country market assessment.

Learning Objective 8.2 Understand the marketing

opportunities in BRIC countries.

Learning Objective 8.3 Identify the various market entry

strategies.

Learning Objective 8.4 Highlight the similarities and

differences between a domestic marketing strategy

and a global marketing strategy.

Globalization

The processes by

which goods,

services, capital,

people, information,

and ideas flow

across national

borders.

deepblue4you/Getty Images 4

Assessing Global Markets

EXHIBIT 8.1 Components of a Country Market Assessment

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Evaluating the General Economic Environment Using Economic Metrics

Trade deficit or

surplus

Gross domestic product (GDP)

Purchasing power parity

(PPP)

Gross national income (GNI)

Evaluating Market Size and Population Growth Rate

Population growth dispersal: strong demand

in BRIC (Brazil, Russia, India, China) nations

Distribution of the population within a

particular region: rural vs. urban

Shutterstock / Pablo Scapinachis 7

Exhibit 8.2 Big Mac Index

Source: The Economist, “The Big Mac Index,” July 13, 2017,

www.economist.com/content/big-mac-index.

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McGraw-Hill Global Education Holdings, LLC 8

Evaluating Real Income

Firms can make

adjustments to an existing

product or change the price

to meet the unique needs of

a particular country market.

For the Chinese market,

Haier sells washing

machines that can wash

both clothes and vegetables.

Shutterstock/Africa Studio 9

Analyzing Infrastructure and Technological Capabilities

Marketers are especially concerned with four

key elements of a country’s infrastructure:

• Transportation.

• Distribution Channels.

• Communications.

• Commerce.

Analyzing Governmental Actions

Tariffs and Quotas

Tariffs

• Tax on Imported

good.

• Artificially raises

prices.

• Lowers demand.

Quotas

• Minimum or

maximum limit.

• Reduces availability

of imported goods.

Both benefit domestically made products because

they reduce foreign competition.

Exchange Control

Regulation of a country’s currency

exchange rate: the measure of how much

one currency is worth in relation to

another.

In recent years, the value of the U.S.

dollar has changed significantly

compared with other important world

currencies.

Prices are nearly always lower in the

country of origin because there are no

customs or import duties to pay, and

international transportation expenses are

less than domestic ones.

Trade Agreements

A trade agreement is an intergovernmental

agreement designed to manage and promote trade

activities for a specific region, and a trading bloc

consists of those countries that have signed a

particular trade agreement.

• There have been recent challenges to long-

established regional trade agreements (RTAs),

• Yet RTAs account for more than half of

international trade.

Source: Information about EU members is from http://europa.eu/about-eu/countries/./index_en.htm 14

http://europa.eu/about-eu/countries/index_en.htm

Analyzing Sociocultural Factors

Understanding another culture is crucial to the

success of a global marketing initiative.

Exists on two levels:

• Visible artifacts.

• Underlying values.

Participants in a parade during the 23rd International

Mariachi & Charros festival in Guadalajara Mexico

Kobby Dagan/Shutterstock 15

Ethical & Societal Dilemma 8.2: Dolce & Gabbana Faces Public Scrutiny in China

Dolce & Gabbana learned a tough lesson about the

importance of embracing and promoting a local

audience’s culture in a positive way.

An international fashion crisis ensued when designer Dolce & Gabbana released videos

satirizing the Chinese dialect and dining customs. Alibaba and JD.com, China’s two largest e-

commerce sites, retaliated by removing Dolce & Gabbana products from their online stores.

Davydenko Yuliia/Shutterstock 16

Geert Hofstede’s Cultural Dimensions

Power distance

Uncertainty avoidance

Individualism Masculinity

Time orientation

IndulgenceCulture

Exhibit 8.3: Country Clusters Power Distance and Individualism

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Source: Geert Hofstede, Gert Jan Hofstede, and Michael Minkov, Cultures and Organizations, Software of the Mind, Third Revised Edition, McGraw-Hill 2010, ISBN: 0-07-

166418-1. © Geert Hofstede B.V. quoted with permission. 18

The Appeal of the BRIC Countries

Great potential for growth in the global community:

• Brazil.

• Russia.

• India.

• China.

PROGRESS CHECK (1 of 3)

1. What metrics can help analyze the economic

environment of a country?

2. What types of governmental actions should we

be concerned about as we evaluate a country?

3. What are some important cultural dimensions?

4. Why are each of the BRIC countries viewed as

potential candidates for global expansion?

Exhibit 8.4: Global Entry Strategies

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Exporting

Exporting means producing

goods in one country and

selling them in another.

This entry strategy requires

the least financial risk but

also allows for only a limited

return to the exporting firm.

Rolex exports its watches to countries all over the

world from its factory in Switzerland.

Jeafish Ping/Shutterstock 22

Franchising

A franchising contract allows the

franchisee to operate a

business—a retail product or

service firm or a B2B provider—

using the name and business

format developed and supported

by the franchisor.

Many of the best-known retailers

in the United States are also

successful global franchisors,

including McDonald’s, Pizza Hut,

Starbucks, Domino’s Pizza, KFC,

and Holiday Inn.

Elizabeth Cummings/Ecummings00/123RF 23

Strategic Alliance

Collaborative

relationships between

independent firms.

The partnering firms do

not create an equity

partnership.

Xinhua/Alamy Stock Photo 24

Joint Venture

A joint venture is formed when a firm entering a market pools its resources with those of a local firm.

Ownership, control, and profits are shared.

The local partner offers the foreign entrant greater understanding of the market and access to resources such as vendors and real estate.

Atstock Productions/Shutterstock 25

Direct Investment

Direct investment requires a

firm to maintain 100 percent

ownership of its plants,

operation facilities, and offices

in a foreign country, often

through the formation of wholly

owned subsidiaries.

Requires the highest level of

investment and exposes the

firm to significant risks,

including the loss of its

operating and/or initial

investments.

China-based Lenovo purchased U.S.-based IBM’s PC division

and Motorola’s handset business unit and has parallel

headquarters in both Beijing and North Carolina.

Source: Lenovo 26

PROGRESS CHECK (2 of 3)

1. Which global entry strategy has the least risk

and why?

2. Which global entry strategy has the most risk

and why?

Choosing a Global Marketing Strategy: Segmentation, Targeting, and Positioning (STP)

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The Global Marketing Mix: Global Product or Service Strategies

Return to the parent-slide glossary term.

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The Global Marketing Mix: Global Pricing Strategies

The Global Marketing Mix: Global Distribution Strategies

Global distribution networks form complex value chains.

In developing countries consumers may shop at small, family-owned stores.

Suppliers must be creative in delivering to these outlets.

Virojt Changyencham/Moment/Getty Images 31

The Global Marketing Mix: Global Communication Strategies

Literacy levels vary by country.

Differences in language and customs affect

communication.

Cultural and religious differences also matter.

Shutterstock / Pyty 32

PROGRESS CHECK (3 of 3)

1. What are the components of a global marketing

strategy?

2. What are the three global product strategies?

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