Lamb, Hair, McDaniel
MKTG 2009-2010
4
CHAPTER
Designed by
Amy McGuire, B-books, Ltd.
Chapter 4
Developing a
Global Vision
Prepared by
Dana Freeman, B-books, Ltd.
Copyright ©2010 Cengage Learning Inc. All rights reserved.
1
Learning Outcomes
LO1
Discuss the importance of global
marketing
LO2
Discuss the impact of multinational firms
on the world economy
LO3
Describe the external environment facing
global marketers
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
2
Learning Outcomes
LO4
Identify the various ways of entering
the global marketplace
LO5
List the basic elements involved in
developing a global marketing mix
LO6
Discover how the Internet is affecting
global marketing
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
3
LO1
Rewards of Global Marketing
Discuss the
importance of
global marketing
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
4
Rewards of Global
Marketing
Global
Marketing
Marketing that targets
markets throughout
the world.
LO1
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
5
Rewards of Global
Marketing
Having a global vision means…
 Recognizing and reacting to
international marketing
opportunities
 Using effective global marketing
strategies
 Being aware of threats from foreign
competitors
LO1
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
6
Beyond the Book
LO1 Emerging Markets
Chapter 4
Ex e cu tive s' F ive -Ye a r P la n s fo r Em e rg in g M a rke ts
90
80
70
60
Exp e ct t o
50
Exp an d o r
L o cat e ( %) 40
30
20
10
0
Eas ter n
Latin
Southeas t
Eur ope
A mer ic a
A s ia
India
China
A ll Companies
M ar k e t
$1B+ Companies
Source: Deloitte's Global Manufacturing Industry Practice, Deloitte Touche Tohmatsu, May 1, 2007
Copyright ©2010 Cengage Learning Inc. All rights reserved.
7
Importance of Global
Marketing to the U. S.
 U.S. exports a fifth of industrial production.
 One of every 10 jobs in U.S. is supported
by exports.
 U.S. businesses export over $800 billion in
goods.
 Exports account for 25 percent of U.S.
economic growth.
 U.S. is world’s leading exporter of farm
products.
LO1
Chapter 4
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8
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
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
9
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 power
LO1
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
10
LO1 REVIEW LEARNING OUTCOME
The Importance of Global Marketing
Fears
Know global marketing
is important because
of economic
interdependencies
Identify
global marketing
opportunities
Benefits
Compete against
foreign competition
in domestic markets
Globally-minded
marketing managers:
Understand
global
distribution
networks
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
11
LO2
Multinational Firms
Discuss the impact of
multinational firms on
the world economy
Chapter 4
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12
Stages of Global Business
Development
1
Companies operate in one country and
sell into others
2
Set up foreign subsidiaries to handle sales
3
Operate an entire line of business in
another country
4
Virtual operation
LO2
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
13
Global Marketing
Standardization
Global Marketing
Standardization
Production of uniform
products that can be sold the
same way all over the world.
LO2
Chapter 4
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14
LO2 REVIEW LEARNING OUTCOME
Impact of Multinational Firms
• Human Resources
• Physical Resources
• Financial Resources
MNC
Chapter 4
Global
Marketing
Copyright ©2010 Cengage Learning Inc. All rights reserved.
15
LO3
External Environment Facing
Global Marketers
Describe the external
environment facing
global marketers
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
16
LO3
External Environment Facing
Global Marketers
Culture
Economic and
Technological
Development
Political
Structure
Demographic
Makeup
Natural
Resources
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
17
LO3 Culture
Culture
Chapter 4
The common set of values
shared by its citizens that
determine what is socially
acceptable.
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18
LO3
Chapter 4
Economic and
Technological Development
Developed
Country
Complex, sophisticated
industries
Less Developed
Country
Basic industries
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19
LO3 Political Structure and Actions
No private ownership
Minimal individual freedom
Little central government
Maximum personal freedom
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
20
LO3 Legal Considerations
Chapter 4
Tariff
A tax levied on goods entering
a country
Quota
Limit on the amount of a
product entering a country
Boycott
Exclusion of products from
a country
Exchange Control
Foreign exchange must be
sold to a control agency
Market Grouping
Common trade alliance
Trade Agreement
An agreement to stimulate
international trade
Copyright ©2010 Cengage Learning Inc. All rights reserved.
21
LO3
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 Organization
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
22
LO3
Political and Legal
Considerations
Agreements
and Organizations
CAFTA
European
Union
NAFTA
http://www.wto.org
Online
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
23
LO3 Demographic Makeup
Marketing Considerations:




Chapter 4
Population density
Urban or rural
Personal income
Age
Copyright ©2010 Cengage Learning Inc. All rights reserved.
24
LO3 Shortages in Natural Resources…
…Create:
 International
dependencies
 Shifts of wealth
 Inflation and recession
 Export opportunities if
resources are abundant
 Stimulus for military
intervention
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
25
LO3 Natural Resources





Chapter 4
Petroleum
Foodstuffs
Precious metal
Timber
Water
Copyright ©2010 Cengage Learning Inc. All rights reserved.
26
LO3 REVIEW LEARNING OUTCOME
External Environment Facing Global Marketers
Natural
Resources
• dependence
• independence
Cultural
• values
• language
• customs
• traditions
Demography
• urban v. rural
• young v. old
• purchasing
power
Global
Marketing
Mix
Political Structure
• tariffs
• quotas
• boycotts
• exchange controls
• market controls
• trade agreements
Chapter 4
Economic
Development
Technological
Development
Copyright ©2010 Cengage Learning Inc. All rights reserved.
27
LO4
Global Marketing by
the Individual Firm
Identify the various
ways of entering the
global marketplace
Chapter 4
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28
Global Marketing Questions
 What are our options in selling abroad?
 How difficult is global marketing?
 What are the potential risks
and returns?
LO4
http://www.cat.com
Online
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
29
Why “Go Global”?
LO4
Chapter 4
 Earn additional profits
 Leverage a unique
product or technological
advantage
 Possess exclusive
market information
 Saturated domestic
markets
 Excess capacity
 Utilize “economies of
scale”
Copyright ©2010 by Cengage Learning Inc. All rights reserved
30
Risk Levels for Global Entry
Risk
Joint
Venture
Export
Direct
Investment
High
risk/
high
return
Licensing
Low risk/low
return
Return
LO4
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
31
Entering the Global Marketplace
Sell domestically produced products
to buyers in other countries
Export
Licensing
Legal process allowing use of
manufacturing/patents/knowledge
Contract
Manufacturing
Private-label manufacturing
by a foreign country
Joint Venture
Domestic firm buys/joins a foreign
company to create new entity
Direct Investment
Active ownership of a foreign
company/manufacturing facility
LO4
Chapter 4
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32
Export Intermediaries
Buyer for Export
Assumes all ownership risks and
sells globally for its own account.
Export Broker
Plays the traditional broker’s role by
bringing buyer and seller together.
Export Agent
Acts like a manufacturer’s agent for
the exporter in the foreign market.
LO4
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
33
LO4 REVIEW LEARNING OUTCOME
Entering the Global Marketplace
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
34
LO5
The Global Marketing Mix
List the basic elements
involved in developing
a global marketing mix
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
35
Product and Promotion
Same
Message
Change
Message
LO5
Same
Product
Change
Product
One Product
One Message
Product
Adaptation
Message
Adaptation
Product
Invention
http://www.disney.go.com
Online
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
36
Place (Distribution)
 Adequate distribution is necessary for success
in global markets
– Some countries have complicated systems
– Lack of distribution infrastructure and
cultural differences create problems
 Innovative distribution systems can create
competitive advantage
LO5
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
37
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
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
38
Exchange Rates
Exchange
Rates
The price of one’s currency in terms
of another country’s currency.
LO5
Chapter 4
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39
Dumping
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
Chapter 4
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40
Countertrade
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.
LO5
Chapter 4
Copyright ©2010 by Cengage Learning Inc. All rights reserved
41
LO5 REVIEW LEARNING OUTCOME
Developing a Global Marketing Mix
PROMOTION
PLACE
One Product, One
Message
Product Invention
Product Adaptation
Message Adaptation
Chapter 4
PRICE
Channel Choice
Channel Structure
Country
Infrastructure
Copyright ©2010 Cengage Learning Inc. All rights reserved.
Dumping
Countertrade
Exchange Rates
Purchasing Power
42
LO6 The Impact of the Internet
Discover how the
Internet is affecting
global marketing
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
43
LO6 REVIEW LEARNING OUTCOME
The Impact of the Internet
Chapter 4
Copyright ©2010 Cengage Learning Inc. All rights reserved.
44
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Chapter 1