chapter 5 copyright ©2012 by cengage learning inc. all rights reserved 1 lamb, hair, mcdaniel...
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Chapter 5 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1
Lamb, Hair, McDaniel
CHAPTER 5
Developing a Global Vision
2011-2012
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Chapter 5 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2
LO 1 Discuss the importance of global marketing
LO 2 Discuss the impact of multinational firms on the world economy
LO 3 Describe the external environment facing global marketers
Learning OutcomesLearning Outcomes
Chapter 5 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3
LO 4 Identify the various ways of entering the global marketplace
LO 5 List the basic elements involved in developing a global marketing mix
LO 6 Discover how the Internet is affecting global marketing
Learning OutcomesLearning Outcomes
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Discuss the importance of
global marketing
Rewards of Global MarketingRewards of Global Marketing
LO1
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Rewards of Global Marketing
Recognizing and reacting to international marketing opportunities
Using effective global marketing strategies
Being aware of threats from foreign competitors
Having a global vision means…
LO1
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Importance of Global Marketing to the U. S.
Derives 12 percent of gross domestic product (GDP) from world trade.
27 percent of manufacturing jobs in U.S. are supported by exports.
U.S. businesses export over $1.7 trillion in goods and services annually.
More smaller companies are aggressively pursuing international markets.
LO1
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The Fear of Trade and Globalization
Millions of Americans have lost jobs Millions fear losing jobs Threat of outsourcing if workers do not
accept pay cuts Vulnerability to operations moving
offshore
LO1
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Benefits of Globalization
Expands economic freedom Spurs competition Raises productivity and living standards Offers access to foreign capital, global
export markets, and advanced technology
Promotes higher labor and environmental standards
Acts as a check on government powerLO1
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Discuss the impact of
multinational firms on the world economy
Multinational FirmsMultinational Firms
LO2
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Stages of Global Business Development
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Companies operate in one country and sell into othersCompanies operate in one country and sell into others
Set up foreign subsidiaries to handle salesSet up foreign subsidiaries to handle sales
Virtual operationVirtual operation
Operate an entire line of business in another countryOperate an entire line of business in another country
LO2
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Blocking Foreign Investment
• Many governments, such as China, Russia, and Canada, are blocking foreign purchases of factories, land and companies.
• The U.S. could be accused of this as well.
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LO2
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Global Marketing Standardization
Production of uniform products that can be sold the same way all over the world.
Global MarketingStandardization
Global MarketingStandardization
LO2
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Describe the external environment facing
global marketers
External Environment Facing Global External Environment Facing Global MarketersMarketers
LO3
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External Environment Facing Global Marketers
Natural Resources
Natural Resources
Demographic Makeup
Demographic Makeup
Economic and Technological Development
Economic and Technological Development
CultureCulture
Political StructurePolitical
Structure
LO3
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Culture
CultureCulture The common set of
values shared by its
citizens that
determine what is
socially acceptable.
LO3
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Culture
Factors to keep in mind when dealing with different cultures:
1. Language and cultural idioms
2. Customs and traditions
3. Values and expectations of sales presentations
LO3
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Economic and Technological Development
Developed Country
Developed Country
Less DevelopedCountry
Less DevelopedCountry
Complex, sophisticated industries
Complex, sophisticated industries
Basic industriesBasic industries
LO3
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Economic Development:China and India
• China and India have two of the highest growth rates in the world.
• Have the world’s two largest populations.
• Among highest levels of income disparity.
• Great linguistic and cultural diversity.
LO3
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Political Structure and ActionsNo private ownership
Minimal individual freedom
Little central governmentMaximum personal freedom
LO3
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Legal Considerations
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
A tax levied on goods entering a country
Limit on the amount of a product entering a country
Exclusion of products from a country
Foreign exchange must be sold to a control agency
Common trade alliance
An agreement to stimulateinternational trade
LO3
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Political and Legal Considerations
The Uruguay Round made changes in world trading practices
Entertainment, pharmaceuticals, integrated circuits, and software
Financial, legal, and accounting services
Agriculture
Textiles and apparel
And created a new trade organization: The World Trade OrganizationLO3
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Doha Round
• Began in 2001
• Highly contentious from the beginning
• Failed in summer, 2008
• First multilateral free trade act failure since WWI
• Cost of Failure: $100 billion annually
LO3
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Political and Legal Considerations
CAFTACAFTA NAFTANAFTA European Union
European Union
Agreementsand Organizations
Agreementsand Organizations
LO3
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LO6
Exhibit 5.2Exhibit 5.2Members of G-20Members of G-20
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Demographic Makeup
Marketing Considerations:Population densityUrban or ruralAge
LO3
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Natural Resources
Shortages in natural resources create: International dependencies Shifts of wealth Inflation and recession Export opportunities if resources are
abundant Stimulus for military intervention
LO3
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Identify the various ways of entering theglobal marketplace
Global Marketing byGlobal Marketing bythe Individual Firmthe Individual Firm
LO4
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Why “Go Global”?
Earn additional profits Leverage a unique product
or technological advantage Possess exclusive market
information Saturated domestic markets Excess capacity Utilize “economies of scale”
LO4
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LO4
Exhibit 5.3Exhibit 5.3Risk Levels for Five Methods of Entering Risk Levels for Five Methods of Entering the Global Marketplacethe Global Marketplace
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Entering the Global Marketplace
Licensing Legal process allowing use of manufacturing/patents/knowledge
ContractManufacturing
Private-label manufacturing by a foreign country
Joint Venture Domestic firm buys/joins a foreign company to create new entity
Export Sell domestically produced products to buyers in other countries
Direct Investment Active ownership of a foreign company/manufacturing facility
LO4
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Export Intermediaries
Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.
Assumes all ownership risks and sells globally for its own account.
Export BrokerExport Broker Plays the traditional broker’s role by bringing buyer and seller together.
Plays the traditional broker’s role by bringing buyer and seller together.
Export AgentExport Agent Acts like a manufacturer’s agent for the exporter in the foreign market.
Acts like a manufacturer’s agent for the exporter in the foreign market.
LO4
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List the basic elements
involved in developing a global marketing mix
The Global Marketing MixThe Global Marketing Mix
LO5
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The Global Marketing Mix
The first step in creating a marketing mix is developing a thorough understanding of the global target market…
HOWEVER
…global marketing research is conducted in vastly different environments.
LO5
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Product and Promotion
One ProductOne Message
Product Adaptation
PromotionAdaptation
Product Invention
SameSameProductProduct
SameSameMessageMessage
ChangeChangeMessageMessage
ChangeChangeProductProduct
LO5
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Place (Distribution)
Adequate distribution is necessary for success in global markets– Lack of distribution infrastructure and cultural
differences create problems Logistics and shipping costs have been a growing
challenge for U.S. companies looking to move production overseas.
Global trade has added to strains and charges for all forms of transportation.
LO5
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Pricing Must consider transportation and insurance costs,
taxes and tariffs
Determine what customers will spend
Ensure that foreign buyers will pay price
May need to simplify a product to lower price
Don’t assume that low-income countries are willing to accept lower quality
LO5
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Exchange Rates
The price of one’s currency in
terms of another country’s
currency.
Exchange Rates
Exchange Rates
LO5
a system in which prices of different currencies move up and down based on the demand for and the supply of each currency.
Floating Exchange Rates is…
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Dumping
LO5
the sale of an exported product at a price lower than that charged for the same or a like product in the “home” market of the exporter.
Dumping is…
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DumpingDumping may occur as a result of exporter business
strategies that include:
1. Trying to increase an overseas market share
2. Temporarily distributing products to overseas markets to offset slack demand at home
3. Lowering unit costs by exploiting large-scale production
4. Attempting to maintain stable prices during periods of exchange rate fluctuations
LO5
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Countertrade
A form of trade in which all or
part of the payment for goods
or services is in the form of
other goods or services.
CountertradeCountertrade
LO5
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Discover how the Internet is affecting
global marketing
The Impact of the InternetThe Impact of the Internet
LO6
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The Impact of the Internet
• Opening an e-commerce site puts a company in the international marketplace
• Internet Economy remains hindered by brick and mortar rules, regulations, and habitsLO6
Chapter 5 Copyright ©2012 by Cengage Learning Inc. All rights reserved 43
Beyo
nd
th
e
BookChapter 5 Videos
Method – Developing a Global Vision
What is innovative about how method envisions moving into foreign markets?
Would method’s strategy for global expansion work for other companies or industries? Which ones? Explain.
http://www.cengage.com/marketing/book_content/1439039429_lamb/company_clips/ch05.html
Chapter 5 Copyright ©2012 by Cengage Learning Inc. All rights reserved 44
Beyo
nd
th
e
Book
Part 1 Videos
The World of Marketing
Watch the video about the Putting Lot and think about how it was organized
in relation to the first 5 chapters
http://www.cengage.com/marketing/book_content/1439039429_lamb/part_videos/part01.html