global marketing strategy

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MKT301_N2_Chapter5_PPTSlides.pdf

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Developing a

Global Vision

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website, in whole or in part.

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Global Marketing and Global Vision

• Global marketing: Targeting markets throughout the world

• Global vision • Recognizing and reacting to international

marketing opportunities

• Using effective global marketing strategies

• Being aware of threats from foreign competitors in all markets

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Gross Domestic Product (GDP)

• Total market value of all final goods and services produced in a country for a given period • Final refers to final products that are sold, not to

intermediate products used in the assembly of a final product

• GDP counts only final goods and services in its valuation of a country’s production

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Job Outsourcing and Inshoring

• Outsourcing: Sending U.S. jobs abroad • Leads to corporate growth, efficiency,

productivity, and revenue growth

• Inshoring: Returning production jobs to the United States because of rapid consumer product innovation • Innovation forces the need to keep product

designers, marketing researchers, logistic experts, and manufacturers in close proximity

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Whisky jobs under threat from outsourcing

overseas

• SAVE OUR SKOTCH has been launched in response to concerns that whisky jobs in Scotland are at risk from outsourcing oversees.

• Under current legislation, single malt whisky must be bottled in Scotland because it has special geographical status.

• Blended and single grain Scotch whiskies are not afforded the same protection, and concerns have been raised about an increasing trend for the bottling, labelling and blending of Scottish-produced whisky to be done outside of Scotland.

• The Save Our Scotch campaign aims to safeguard that reputation for quality by extending the same protection status afforded to single malt whisky to blended and single grain whiskies, something which would go a long way to providing bottling plant workers with greater job security.

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Benefits of Globalization

• Expands economic freedom

• Spurs competition

• Raises a nation’s productivity and living standards if it opens itself to the global market

• Offers access to foreign capital, global export markets, and advanced technology

• Promotes higher labor and environmental standards

• Acts as a check on government power

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Costs of Globalization

• Countries create trade barriers to boost exports and limit imports

• Globalization leads to people being laid off from their jobs • Most workers do not find jobs in other cities or

industries

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Stages of Global Business Development

• Multinationals: • Operate in one country and sell into others

• Set up foreign subsidiaries to handle sales

• Operate an entire line of business in another country

• Engage in virtual operation

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Who are the largest Multinationals?

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Corporate Tax Rate Implications

• Ireland’s business-friendly tax regime has drawn legions of multinational companies to the country,

• Now concern is growing that Dublin has become too dependent on such taxes, leaving it vulnerable to financial shock.

• Tax haul for 2017, taking it within touching distance of a balanced budget in 2018 for the first time in more than a decade

• Global companies employ more than 210,000 workers

• The top 10 firms account for about 6% of total tax revenue

• 12.5% corporate tax rate.

• Apple that use the country as a European hub. • Financial Times 1/31/2018

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Davos – World Economic Forum

• http://fortune.com/2018/01/26/7- takeaways-from-davos/

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Methods of Entering the Global Market

• Contract manufacturing: Private label manufacturing by a foreign company

• Joint venture: When a domestic firm buys part of a foreign company to create a new entity

• Direct foreign investment: Active ownership of a foreign company or of overseas manufacturing or marketing facilities

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Methods of Entering the Global Market

• Export agent: Intermediary who acts like a manufacturer’s agent for the exporter

• Licensing: Legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents trade secrets, or other proprietary knowledge

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Global Marketing Standardization

• Global marketing standardization • Production of uniform products that can be sold

the same way all over the world

• Multidomestic strategy provides a variety of strategies instead of offering the same product

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External Environment Faced by Global

Marketers

• Culture - Common set of values shared by the citizens of a society that determines what is socially acceptable

• Economic development • Complex and sophisticated industries are found

in developed countries

• Basic industries are found in less developed nations

• Global economy - Slow growth in America, China, Europe, and Japan have hampered progress

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External Environment Faced by Global

Marketers (continued)

• Political structure - Regulation gives businesses the framework they need to grow and prosper

• Demography makeup - Includes marketing considerations - Population density–Urban or rural

- Age

• Natural resources

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Legal Considerations

• Tariff - Tax levied on goods entering a country

• Quota - Limit on the amount of a specific product that can enter a country

• Boycott - Exclusion of all products from certain countries or companies

• Exchange control – Limits the amount of foreign currency

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Example Tariffs

• Paper Clips: A single paper clip manufactured and sold in the United States retails for less than a penny. Most paper clips sold in the U.S. are manufactured domestically as tariffs are as high as 126.94% on Chinese-manufactured paper clips.

• Canned Tuna: Canned tuna manufactured and sold in the U.S. has been protected by a 35% tariff • Tuna manufacturers outsource the cleaning of their fish to

countries with cheap labor, and then have domestic operations in California and Georgia package the final product.

• This takes advantage of a loophole where cheap labor can still be realized, and no tariff is paid due to the fact that the final product is packaged and sold domestically.

• Source: Investopia.com

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Legal Considerations (continued)

• Market grouping - Occurs when several countries agree to work together to form a common trade area that enhances trade opportunities

• Trade agreement - Stimulates international trade

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Methods of Entering the Global Market

• Exporting: Selling domestically produced products to buyers in other countries

• Buyer for export: Intermediary in the global market that assumes all ownership risks and sells globally for its own account

• Export broker: Intermediary who plays the traditional broker’s role by bringing buyer and seller together

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Methods of Entering the Global Market (continued 2)

• Contract manufacturing: Private label manufacturing by a foreign company

• Joint venture: When a domestic firm buys part of a foreign company to create a new entity

• Direct foreign investment: Active ownership of a foreign company or of overseas manufacturing or marketing facilities

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Global Marketing Mix

LO 5

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Four Ps of Global Marketing Strategy

• Product decisions

• Promotion adaptation

• Place distribution

• Pricing

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Product Decisions

• Some of the product decision strategies are: • One product, one message - Developing a single

product for all markets

• Product invention - Either creating a new product for a market or drastically changing an existing product

• Product adaptation - To alter a basic product to meet local conditions

• Promotion adaptation - Involves altering the promotional strategy without altering the basic product

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The Globalization of Oreos

Oreo Video - 5 minutes

https://www.youtube.com/watch?v=75NpeAN-z4k

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Placing, or Distribution

• Adequate distribution is necessary for success in global markets

• Lack of proper infrastructure and cultural differences can create problems

• Finding the right franchisee plays a major role in distribution

•27

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Pricing

• Marketers must: • Consider transportation and insurance costs, taxes,

and tariffs

• Determine what customers will spend when deciding on a final price

• Ensure that foreign buyers will pay the price

• Marketers may need to simplify a product to lower the price

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Exchange Rates

• Price of one’s country’s currency in terms of another country’s currency • If a country’s currency appreciates, less of that

country’s currency is needed to buy another country’s currency and vice versa

• Currency Converter

LO 5

http://usd.fxexchangerate.com/awg/

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Impact of the Internet

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e-Commerce

• Opening an e-commerce site puts a company in the international marketplace

• Internet-based economy remains hindered by brick and mortar rules, regulations, and habits

• Global marketers use social media: • Because it is popular around the world

• To understand customers

• For global brand building

• Resources to get started

LO 6

https://www.thebalance.com/import-export-business-websites-1953477