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Global Marketing

McGraw-Hill/Irwin

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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

CHAPTER

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 8 – Global Marketing

Describe the components of a country market assessment.

Understand the marketing opportunities in BRIC countries.

Identify the various market entry strategies.

Highlight the similarities and differences between a domestic marketing strategy and a global marketing strategy.

Global Marketing

LO1

LO2

LO3

LO4

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LEARNING OBJECTIVES

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These are the learning objectives for this chapter.

Assessing Global Markets

General economic environment

Market size and population growth

Real income

Economic analysis using metrics

Transportation

Channels

Communication

Commerce

Infrastructure and technology

Tariff

Quota

Exchange control

Trade agreement

Government actions

Power distance

Uncertainty avoidance

Individualism

Masculinity

Time orientation

Sociocultural analysis

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Any entry into a new market, especially into a new country, requires careful planning. A formal market assessment prevents firms from making costly mistakes.

Economic Analysis General Economic Environment

NationMaster Website

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Each of these standardized measures allow for comparisons across countries. The use of each depends on specific circumstances. Many reports now feature GNI rather than GDP, because it includes the economic impact of firms that earn income from their global operations, unlike GDP, which dramatically undercounts the impact of those activities on the economy of the firms’ home markets. The human development index is interesting to students. Ask students what it might include as an indicator of quality of life in the country. It includes life expectancy at birth, educational attainment and whether average incomes are sufficient to meet the basic needs of life in that country. The web link brings you to the current index which can be viewed as a map OR as a bar chart.

Gross domestic product

Gross national income

Purchasing power parity

Human development index

Evaluating Market Size and Population Growth Rate

Population 2002

Population 2050

REUTERS/Arko Datta/Corbis.

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Ask students: is it in the best interest of a rapidly developing country to encourage foreign retailers to stimulate the economy even though they might harm small family owned businesses? Students are likely to reflect on the landscape of the U.S. retail industry and notice the harm of some large retailers.

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.

Narinder Nanu/AFP/Getty Images

REUTERS/Fayza Kabli

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Group activity: Break students into groups. Have each group choose a less developed country for a new marketing venture. Then have each group represent a firm considering marketing a new product or service in that country. What adjustments would they have to make to their marketing strategy to be successful with their new venture? There is more detail on this activity on the following slide…

Analyzing Infrastructure and Technological Capabilities

Communication

Commerce

Transportation

Distribution Channel

Stockdisc

©MIXA/PunchStock

Royalty-Free/CORBIS

PhotoLink/Getty Images

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A firm’s ability to conduct business in a particular country is in large measure determined by that country’s infrastructure.

Group activity: Continue with the group activity above. Have students assess how the current infrastructure in their chosen country will affect the success of their new venture.

Analyzing Government Actions

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Remind students that this category includes not just the impact of governmental actions but also those of non-governmental organizations (NGOs).

Government actions

Quota

Exchange control

Trade agreement

Tariff

Analyzing Sociocultural Factors

Culture

Power distance

Uncertainty avoidance

Individualism

Masculinity

Time orientation

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Perhaps no other aspect of globalization has posed more difficulties to marketers than culture. Outsiders often have trouble understanding the detailed meanings associated with proper communication in a foreign culture.

CHECK YOURSELF

What are key metrics that can help analyze the economic environment of a country?

What types of government actions should we be concerned about as we evaluate a country?

What are five important cultural dimensions?

Why are each of the BRIC countries viewed as potential candidates for global expansion?

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The general economic environment, the market size and population growth rate, and real income.

Tariffs, quotas, boycotts, exchange controls, and trade agreements

Cultural Dimensions include power distance, uncertainty avoidance, individualism, masculinity and time orientation

Brazil’s ability to weather, and even thrive during, the most recent economic storm, has transformed it into a global contender. Russia has undergone multiple up- and downturns in its economy. However, its overall growth prospects appear promising, especially as a consumer market. With more than 1.1 billion people, or approximately 15 percent of the world’s population, together with expanding middle and upper classes, India is one of the world’s fastest growing markets. China’s leadership, while maintaining communist political ideals, has embraced market-oriented economic development, which has led to startlingly rapid gains.

Choosing a Global Entry Strategy

Risk

Control

Direct

Investment

Export

Joint

Venture

Strategic

Alliance

Franchising

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Ask students: Why do you think most firms try exporting first? In each strategy, the risks and rewards change. As risk increases, so do the potential rewards. Exporting represents the lowest risk level for the firm.

Group activity: Divide into groups that represent different firms. Each group should outline its product offering and the entry strategy it would choose for its global strategy. Ask students: Why is your chosen entry strategy appropriate for your offering? What criteria did you use to determine your strategy? What risks does your strategy entail, and are the potential rewards worth those risks?

CHECK YOURSELF

Which global entry strategy has the least risk and why?

Which global entry strategy has the most risk and why?

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This entry strategy requires the least financial risk but also allows for only a limited return to the exporting firm. Global expansion often begins when a firm receives an order for its product or service from another country, in which case it faces little risk because it has no investment in people, capital equipment, buildings, on infrastructure.

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. This entry strategy requires the highest level of investment and exposes the firm to significant risks, including the loss of its operating and/or initial investments

Choosing a Global Marketing Strategy: Target Market (STP)

Courtesy Ford India Pvt. Ltd.

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Adjusting the marketing mix and positioning strategy to meet the needs of a new market may represent the most complex topic for global marketing.

Chapter 8 discusses segmentation, targeting, and positioning in greater detail.

Group Activity: Divide the class into groups. Have them choose a product that they want to introduce into another country. (It may be the same product/firm they used in previous group activity). Have students consider how they would adapt their positioning strategy in the new country.

Cultural nuances

Subcultures

View of product and consumer role

Different positioning

Adaptation

Single positioning strategy

The Global Marketing Mix: Product or Service Strategies

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Ask Students: What products are the easiest to standardize? What makes these products easy to standardize?

Products at the extreme ends of high tech (i.e., electronics, computers, software versus paper and pencil) or high touch (i.e., luxury goods, jewelry versus staple products) continuums are easy to standardize, but those in the middle generally require varying levels of adaptation to local markets.

Sell the same product or service in both the home country market and host country

Sell a product or service similar to that sold in home country but include minor adaptations

Sell totally new products or services

Global Marketing Mix: Pricing Strategies

Price

Tariffs

Quotas

Anti-dumping

Policies

Economic

Conditions

Competitive

factors

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In addition to competitive, cost, and other considerations, global pricing involves additional dimensions that increase its complexity.

Global Marketing Mix: Global Distribution Strategies

Some global channels are very long and complex.

Consumer shop local small local stores.

Suppliers must be creative in delivering to these outlets.

Courtesy of CJ Tucker, NASA/GSFC

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Delivering products to local retailers can be incredibly difficult and frustrating. Infrastructure issues often prevent traditional distribution methods and require creative adjustments. Global firms must find distribution strategies that enable them to reach even really remote markets. For instance, Avon sells and delivers cosmetics to customers using canoes. This example could also prompt an ethical discussion on whether or not firms should be marketing hedonic products or services to consumers with very little disposable income. This YouTube ad (always check before class) is for FedEx and shows how it international distribution can be difficult for many companies.

YouTube link: http://www.youtube.com/watch?v=MrMURochE6Y

Global Marketing Mix: Global Communication Strategies

Photo by Jeff Kravitz/FilmMagic/Getty Images

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Ask students: How do firms market their products in countries with very low literacy levels? Imagine you are promoting a new soft drink. How would you do it without written communication?

Literacy levels vary by country

Firms choose whether to adapt to language differences

Cultural and religious differences also matter

CHECK YOURSELF

What are the components of a global marketing strategy?

What are the three global product strategies?

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Determining the target markets to pursue and developing a marketing mix that will sustain a competitive advantage over time.

Global product strategies:

Sell the same product or service in both the home country market and the host country.

Sell a product or service similar to that sold in home country but include minor adaptations.

Sell totally new products or services.

A boycott pertains to a group’s refusal to deal commercially with some organization to protest against its policies.

Glossary

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A boycott pertains to a group’s refusal to deal commercially with some organization to protest against its policies.

Cultural imperialism is the belief that one’s own culture is superior to that of other nations.

Glossary

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Cultural imperialism is the belief that one’s own culture is superior to that of other nations.

Exchange control refers to the regulation of a country’s currency exchange rate, the measure of how much one currency is worth in relation to another.

Glossary

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Exchange control refers to the regulation of a country’s currency exchange rate, the measure of how much one currency is worth in relation to another.

The purpose of the General Agreement on Tariffs and Trade (GATT) was to lower trade barriers such as high tariffs on imported goods and restrictions on the number and types of imported products that inhibited the free flow of goods across borders.

Glossary

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Infrastructure is the basic facilities, services, and installations needed for a community or society to function.

Glossary

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Infrastructure is the basic facilities, services, and installations needed for a community or society to function.

A quota designates the maximum quantity of a product that may be brought into a country during a specified time period.

Glossary

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A quota designates the maximum quantity of a product that may be brought into a country during a specified time period.

A tariff is a tax levied on a good imported into a country.

Glossary

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A tariff is a tax levied on a good imported into a country.

A trade agreement is an intergovernmental agreement designed to manage and promote trade activities for a specific region.

Glossary

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A trade agreement is an intergovernmental agreement designed to manage and promote trade activities for a specific region.