Lamb, Hair, McDaniel
MKTG2007-2008
4
CHAPTER
Chapter 4
Developing a
Global Vision
Copyright ©2008 by South-Western, a division of Thomson Learning. 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
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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
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3
LO1
Rewards of Global Marketing
Discuss the
importance of
global marketing
Chapter 4
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4
Rewards of Global
Marketing
Global
Marketing
Marketing that targets
markets throughout
the world.
LO1
Chapter 4
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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
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6
Beyond the Book
LO1 Emerging-Market Companies
Chapter 4
COMPANY
COUNTRY
INDUSTRY
América Móvil
Mexico
Telecom services
Cemex
Mexico
Building materials
China Mobile
China
Telecom services
CNOOC
China
Oil and gas
CVRD
Brazil
Mining
Embraer
Brazil
Aerospace
Gazprom
Russia
Oil and gas
Haier
China
Home appliances
Hisense
China
Electronics, appliances
Huawei Technologies
China
Telecom equipment
Adapted from “Emerging Giants,” Business Week, July 31, 2006.
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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
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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
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10
LO1 REVIEW LEARNING OUTCOME
The Importance of Global Marketing
Fears
Know global marketing
is important because
of economic
interdependencies
Identify
global marketing
opportunities
Compete against
foreign competition
in domestic markets
Globally-minded
marketing managers:
Chapter 4
Benefits
Understand
global
distribution
networks
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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
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13
Economic and
Technological Development
3
Type of
Society
Description
Traditional
Agricultural, Little Upward Mobility
Pre-Industrial
Social and Economic Change
Takeoff
New Industries
Industrializing
Spread of Technology
Fully
Industrial
Exporter, Technology as Driver
of New Innovation
Chapter 4
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14
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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15
LO2 REVIEW LEARNING OUTCOME
Impact of Multinational Firms
• Human Resources
• Physical Resources
• Financial Resources
MNC
Chapter 4
Global
Marketing
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16
LO3
External Environment Facing
Global Marketers
Describe the external
environment facing
global marketers
Chapter 4
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17
LO3
External Environment Facing
Global Marketers
Culture
Economic and
Technological
Development
Political
Structure
Demographic
Makeup
Natural
Resources
Chapter 4
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18
LO3 Culture
Culture
Chapter 4
The common set of values
shared by its citizens that
determine what is socially
acceptable.
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19
Biz Flix
LO3
Chapter 4
Lost in
Translation
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20
LO3
Chapter 4
Economic and
Technological Development
Developed
Country
Complex, sophisticated
industries
Less Developed
Country
Basic industries
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21
LO3 Political Structure and Actions
No private ownership
Minimal individual freedom
Little central government
Maximum personal freedom
Chapter 4
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22
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
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23
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
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24
LO3
Political and Legal
Considerations
Agreements
and Organizations
CAFTA
NAFTA
European
Union
http://www.wto.org
Online
Chapter 4
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25
LO3 Demographic Makeup
Marketing Considerations:




Chapter 4
Population density
Urban or rural
Personal income
Age
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26
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
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27
LO3 Natural Resources





Chapter 4
Petroleum
Foodstuffs
Precious metal
Timber
Water
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28
LO3 REVIEW LEARNING OUTCOME
External Environment Facing Global Marketers
Chapter 4
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29
LO4
Global Marketing by
the Individual Firm
Identify the various
ways of entering the
global marketplace
Chapter 4
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30
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
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31
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”
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32
Risk Levels for Global Entry
Risk
Joint
Contract Venture
ManuExport Licensing facturing
Low risk/low
return
Direct
Investment
High
risk/
high
return
Return
LO4
Chapter 4
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33
Entering the Global Marketplace
Export
Sell domestically produced products
to buyers in other countries
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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34
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
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35
LO4 REVIEW LEARNING OUTCOME
Entering the Global Marketplace
Chapter 4
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36
LO5
The Global Marketing Mix
List the basic elements
involved in developing
a global marketing mix
Chapter 4
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37
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
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38
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
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39
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
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40
Exchange Rates
Exchange
Rates
The price of one’s currency in terms
of another country’s currency.
LO5
Chapter 4
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41
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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42
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
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43
LO5 REVIEW LEARNING OUTCOME
Developing a Global Marketing Mix
PROMOTION
PLACE
Channel Choice
One Product, One
Channel Structure
Message
Country Infrastructure
Product Invention
Product Adaptation
Message Adaptation
Chapter 4
PRICE
Dumping
Countertrade
Exchange Rates
Purchasing Power
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44
LO6 The Impact of the Internet
Discover how the
Internet is affecting
global marketing
Chapter 4
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45
LO6 REVIEW LEARNING OUTCOME
The Impact of the Internet
Chapter 4
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46