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Marketing Management

Chapter-21

Tapping into Global Markets

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MARKETING MANAGEMENT12th edition

21 Tapping Into

Global Markets

Kotler Keller

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Chapter Questions

What factors should a company review before deciding to go abroad?

How can companies evaluate and select specific foreign markets to enter?

What are the major ways of entering a foreign market?

To what extent must the company adapt its products and marketing program to each foreign country?

How should the company manage and organize its international activities?

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Global (International ) Company

Global (International) Company : A Global Firm is a firm that operates/sells in more than one country; and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

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Five Modes of Entry into Foreign Markets

Indirect

Exporting

Direct

ExportingLicensing

Joint

Ventures

Direct

Investment

Commitment, Risk, Control, Profit Potential

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Deciding How to Enter the Global Market

DirectInvestment

JointVentures

Licensing

Exporting

Mode of

Entry

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Deciding How to Enter the Global Market

Once a company decides to target a particular country, it has to determine the best mode of entry. Its broad choices are as follows.

a. Exportingb. Licensingc. Joint Venturesd. Direct Investment

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Deciding How to Enter the Global Market

a. Exporting : The normal and the least risky way to get involved in an international market is through exporting.

b. Licensing : Licensing is also a simple way to become involved in international marketing. The licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, or other item of value for a fee or royalty. The licensor gains entry at little risk; the licensee gets production expertise or a well-known product or brand name.

There are several variations on a licensing arrangement; however Franchising is a most complete form of licensing. McDonald’s, KFC, and Avis have entered scores of countries by franchising.

Franchising is a specialized form of licensing (contractual agreement) in which the franchiser sells intangible property to the franchisee and insists on rules to conduct the business.

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Deciding How to Enter the Global Market

KFC in JapanFranchise

Coca-ColaLicensing

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McDonald’s Franchises Are Sold Worldwide

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Deciding How to Enter the Global Market

c. Joint Ventures : Foreign investors may join with local investors to create a joint venture company in which they share ownership and control. Example : Whirlpool took a 53% stake in the Dutch electronics group Philips to progress into the European market. Example : P&G formed a joint venture with its Italian archrival Fater to cover babies’ bottoms in the UK and Italy.

d. Direct Investment : The ultimate and riskiest form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities. Example : General Motors has invested billions of dollars in auto manufacturers around the world, such as Shanghai GM, Fiat Auto Holdings, Isuzu, Daewoo, Suzuki, and many others.

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Deciding How to Enter the Global Market

Whirlpool Joint Ventured with Philips to enter European market

Shanghai GMNew plant in Shanghai

Direct Investment by GM

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Global Marketing

Advantages

Economies of scale Lower marketing costs Power and scope Consistency in brand

image Ability to leverage Uniformity of marketing

practices

Disadvantages

Differences in consumer needs, wants, usage patterns

Differences in consumer response to marketing mix

Differences in brand development process

Differences in environment

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Activity