The Global Marketplace

For Brands and Products

Marketing 3349

Chip Besio

Great American Brands

Caterpillar – 61% of sales from outside USJohnson and Johnson – 49% of sales

Otis Elevator – 81% of sales

Great American Brands

Mc Donald’s65% of $23.5 billion Sales from Outside U.S.32,000 restaurant in 122 countries serve more than 100,000 people per day

Mc Donald’s RussiaOpened in Moscow in 199026 Cash Registers (more than a Wal-Mart

Supercenter)900 Seats (average US – 50 seats)240 restaurants in 40 Russian cities – 80 in

Moscow850,000 customers per year – 2 times avg.

Global Marketing into the Twenty-First Century

The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows.

International trade is booming and now accounts for a quarter of the United States’ GDP.

Between 1990 and 2010, global companies grew from 30,000 to 60,000

Between 2000 and 2008 world trade grew by 7%/yr. outstripping GDP growth of 3%

Global competition is intensifying and few U.S. industries are now safe from foreign competition.

Global Companies Exceed GDP in Some Countries

Of the 150 largest economies in the world:89 are countries, 61 are companies

Wal-Mart the world’s largest company has annual revenues that are larger than all but the top 25 countries.World trade in 2010 was $19.7 trillion about 28% of world GDP

Global Marketing into the Twenty-First Century

To compete, many U.S. companies are continuously improving their products, expanding into foreign markets, and becoming global firms.

Global firms face several major problems: High debt, inflation, and unemployment have

resulted in highly unstable governments & currencies,

Governments placing more regulations on foreign firms,

Protectionist tariffs and trade barriers, Corruption.

Major Decisions in International Marketing

Looking at the global marketing environmentLooking at the global marketing environment

Deciding whether to go international Deciding whether to go international

Deciding which markets to enter Deciding which markets to enter

Deciding how to enter the market Deciding how to enter the market

Deciding on the global marketing program Deciding on the global marketing program

Deciding on the global marketing organizationDeciding on the global marketing organization

Looking at the Global Marketing Environment

The International Trade Systemi.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers

The International Trade Systemi.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers

The World Trade Organization and GATTTreaty designed to promote world trade by

reducing tariffs and other international trade barriers

The World Trade Organization and GATTTreaty designed to promote world trade by

reducing tariffs and other international trade barriers

Regional Free Trade ZonesGroup of nations organized to work toward

common goals in the regulation of international trade

Regional Free Trade ZonesGroup of nations organized to work toward

common goals in the regulation of international trade

Economic EnvironmentSubsistence Economies

Industrial Economies

Raw Material Exporting Economies

Industrializing Economies

Types of IndustrialStructure

Political-Legal Environment

At Least Four Political-Legal Factors Should be Considered in Deciding Whether to do

Business in a Given Country:

Attitudes TowardInternational

Buying

Attitudes TowardInternational

Buying

GovernmentBureaucracyGovernmentBureaucracy

Political StabilityPolitical Stability

MonetaryRegulationsMonetary

Regulations

Cultural EnvironmentSellers Must Examine the Following Before Planning a Marketing Program Within a Given Country.

How CustomersThink About

andUse Products

Cultural Traditions,

Preferences, andBehaviors

BusinessNorms andBehavior

Deciding Whether to Go International

Reasons companies might consider international expansion: Global competitors attacking the domestic market, Foreign markets might offer higher profit

opportunities, Domestic markets might be shrinking, Need an enlarged customer base to achieve

economies of scale, Reduce dependency on any one market, Customers might be expanding abroad.

Most companies do not act until some situation or event thrusts them into the international market.

Deciding Which Markets to Enter

Define Organization’s Marketing Objectives and Policies

Define Organization’s Marketing Objectives and Policies

What Volume of Foreign Sales is Desired?What Volume of Foreign Sales is Desired?

How Many Countries Should the Firm Go Into?How Many Countries Should the Firm Go Into?

What Types of Countries Should be Entered?What Types of Countries Should be Entered?

Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

Discussion Connections Assess China as a market for McDonald’s.

What factors make it attractive? What factors make it less attractive?

Assess Canada as a market for McDonald’s. In what ways is Canada more attractive than

China? In what ways is it less attractive?

If McDonald’s could operate in only one of these countries, which one would you choose and why?

Deciding How to Enter the Market Exporting

•Indirect

•Direct

Exporting

•Indirect

•Direct

Joint venturing

•Licensing•Contract manufacturing•Management Contracting•Joint Ownership

Joint venturing

•Licensing•Contract manufacturing•Management Contracting•Joint Ownership

Direct investment

•Assembly facilities•Manufacturing facilities

Direct investment

•Assembly facilities•Manufacturing facilities

Deciding on the Global Marketing Program

Ch

an

ges in

Pro

du

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A

dvert

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g,

Dis

trib

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C

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Pri

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Adapted Marketing Mix

Adjusts the Elements of the

Marketing Mix to Each International Target Market. i.e.

Japanese Barbie

Standardized Marketing Mix

Uses Basically the Same Elements of the Marketing Mix

in all the Company’s

International Markets. i.e Coca-

Cola

The Coca-Cola logo is the same throughout the world.

This is an example of astandardized marketing mix.

Which other companiesuse a standardized marketing mix?

Do some companies use a blend of adapted and standardized marketingmix? Which ones?

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The Maharaja Mac is an example of an Adapted Marketing Mix

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Five International Product and Promotion Strategies

1. StraightExtension

3. ProductAdaptation

5. Product Invention

4. DualAdaptation

2. Communi-cation

Adaptation

Product

AdaptProduc

t

Don’t ChangeProduct

Develop New

Product

Pro

moti

on

Don’tChange

Promotion

AdaptPromotio

n

International Pricing

Companies face many problems in setting their international prices.

Possibilities in setting prices include: Charge a uniform price all around the world. Charge what consumers in each country could

pay. Use a standard markup of its costs everywhere.

International prices tend to be higher than domestic prices because of price escalation.

Companies may become guilty of dumping – when a foreign subsidiary charges less than its costs or less than in its home market.

Whole-Channel Concept for International MarketingSeller

Seller’s headquarters organization for international marketing

Seller’s headquarters organization for international marketing

Channels betweennations

Channels betweennations

Channels within nations

Channels within nations

Final user or buyer

Final user or buyer

Deciding on the Global Marketing Organization

Export DepartmentExport Department

International DivisionInternational Division

Global OrganizationGlobal Organization

Degree of Involvement in International Marketing Activities

High

Low