Part 2: Understanding Buyers
and Markets
5. Consumer Behavior
6. Business-to-Business (B2B)
Marketing
7. Serving Global Markets
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Chapter 7
Serving Global
Markets
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Chapter Objectives
1. Describe the importance of international marketing from
the perspectives of the individual firm and the nation.
2. Identify the major components of the environment for
international marketing.
3. Outline the basic functions of GATT, WTO, NAFTA, and
the proposed FTAA, and the European Union.
4. Compare the alternative strategies for entering
international markets.
5. Differentiate between a global marketing strategy and a
multidomestic marketing strategy.
6. Describe the alternative marketing mix strategies used
in international marketing.
7. Explain the attractiveness of the U. S. as a target
market for foreign marketers.
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The Importance of Global Marketing
 Global marketing is rapidly becoming a
necessity
 For 20 years, U.S. exports have grown about
10 percent annually
 The Internet makes it possible for every
marketer to become an international marketer
 International Trade accounts for at least 25%
of U.S. GDP
Exporting: Marketing domestically
produced goods and services abroad
Importing: Purchasing foreign goods,
services, and raw materials
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 Figure 7.1
Top 10 U.S. Trading Partners
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 Table 7.1
The World’s 10 Largest Marketers Ranked
by Sales
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 Service and Retail Exports
U.S. is a big exporter of services and retailing
U.S. is the world’s largest exporter of services
Over $145 billion is spent annually by foreign
nationals visiting the U.S.
The most profitable U.S. service exports are
business and technical services
Financial services industry is going global via
the Internet
Entertainment is another major service export
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 Benefits of Going Global
Additional revenues
New insights into consumer behavior
Alternative distribution strategies
Advance notice of new products
Positioned well to compete effectively with
foreign competitors
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The International Marketplace
 Market Size
Over 6 billion people (1.2 billion people in
China)
Goods and services need to be adapted to
meet needs in developing countries
Urban population increasing faster than a
rural
As a nation develops, an increasingly
affluent, educated, and cosmopolitan middleclass emerges
Marketers in developing countries may face
infrastructure challenges
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 Buyer Behavior
Behavior differs among both nations and
market segments within each nation
Change marketing mix, or change local
buyer behavior
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7-10
Buyer Behavior Research Must Focus on:
Demand: Do foreign consumers need the
company’s good or service?
Competitive environment: How do
supplies currently reach the market?
Economic environment: What is the state
of the nation’s economic health?
Social-cultural environment: How do
cultural factors affect business
opportunities?
Political-legal environment: Do any legal
restrictions complicate entering the market?
Technological environment: To what
degree are technological innovations used
by consumers in the market?
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7-11
The International Marketing Environment
International
economic
environment
International
technological
environment
International
Marketing
mix
International
social-cultural
environment
International
political-legal
environment
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7-12
 International Economic Environment
A nation’s size, per-capita income, and
stage of economic development determine
its desirability for international expansion
Other considerations include:
Country infrastructure
Exchange rate implications
Soft currencies
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7-13
 International Social-Cultural Environment
A nation’s culture, including language,
education, religious attitudes, and social
values, must be considered
Examples:
Movies must often be adapted for
foreign markets
Restaurant menus are often printed in
several languages
The use of pictures can also help when
language is a problem
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 Table 7.2
The World’s Most Frequently Spoken
Languages
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 International Technological Environment
The Internet transcends political,
economic, and cultural barriers, reaching
into every corner of the Globe
It is critical to understand how the Web is
reshaping social and cultural values
Other challenges:
Genetic reengineering
Genetically modified organisms (GMOs)
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7-16
 International Political-Legal Environment
Marketers must know the current laws and
regulations for each country in which they
operate
U.S. businesses impacted by International
Law, U.S. Law, and Host country Laws
Political conditions often influence
international marketing
Political risk assessment (PRA)
 Friendship, Commerce, and Navigation
(FCN) treaties
ISO certification requirements
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 Trade Barriers
Tariffs are taxes levied against imported
goods
Revenue Tariffs designed to raise funds
for the importing government
Protective Tariffs are usually higher
and are designed to raise the retail price
of an imported product to match or
exceed that of a similar domestic
product
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Administrative Barriers
Import Quotas
Embargos
Subsidies
Exchange Controls
Dumping
The controversial practice of selling a product
in a foreign market at a price lower than what
it commands in the producer’s domestic
market
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7-19
Multinational Economic Integration
 Free trade area: Region in which participating
nations agree to the free trade of goods among
themselves, abolishing tariffs and trade
restrictions
Customs union
Common market
 GATT: International trade accord that has
helped reduce world tariffs
 World Trade Organization (WTO): succeeds
GATT to oversee agreements, mediate
disputes, and reduce trade barriers
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7-20
 NAFTA
Accord removing trade barriers among
Canada, Mexico, and the United States
 The Free Trade Area of the Americas
Proposed free trade area stretching the length
of the entire Western hemisphere and
designed to extend free trade benefits to
additional nations in North, Central, and South
America
 European Union
Customs union that is becoming a true
economic union by adopting a common
currency and permitting free flow of goods and
workers throughout the member nations
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 Figure 7.5
The 25
Members of
the European
Union
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Going Global
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First Steps in Deciding to Market Globally
 Secure top management’s support
 Research the export process and potential
markets
Sources for Analyzing Foreign Markets
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 Strategies for Entering International
Markets
Three basic strategies for entering
international markets include:
Exporting
Contractual agreements like franchising,
licensing, and subcontracting
International Direct Investment
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7-25
 Figure 7.7
Levels of Involvement in International
Marketing
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 Contractual Agreements
Franchising: A contractual arrangement where
a wholesaler or retailer (the Franchisee) agrees
to make some payment and to meet the
operating requirements of a manufacturer or
other franchiser in exchange for the right to use
the firm’s name and to market its goods or
services
Foreign Licensing: an agreement that grants
foreign marketers the right to distribute a firm’s
merchandise or to use its trademark, patent, or
process in a specified geographic area.
Subcontracting: a contractual agreement where
a firm hires a local company to produce goods or
services in a specific geographic area.
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7-27
 International Direct Investment
An additional strategy for entering global
markets
Requires direct investment in foreign firms,
production, and/or marketing facilities
U.S. firms have invested nearly $2.2 trillion
overseas
Foreign firms have invested nearly $2.1
trillion in the U.S.
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7-28
From Multinational Corporation to
Global Marketer
 A multinational corporation is a firm with
significant operations and marketing
activities outside its home country
 Examples: General Electric, Siemens,
Toyota, ExxonMobil
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Developing an International
Marketing Strategy
 Global marketing strategy
Standardized marketing mix with minimal
modifications that a firm uses in all of its
domestic and foreign markets.
 Multi-domestic marketing strategy
Application of market segmentation to foreign
markets by tailoring the firm’s marketing mix
to match specific target markets in each
nation
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7-30
 International Product and Promotional Strategies
Same
Promotion
Same Product
Product Adaptation
New Product
Straight Extension
Wrigley’s gum
Coca-Cola
Eastman Kodak
Cameras and Film
Product Adaptation
Campbell’s soup
Exxon gasoline
Product
Invention
Nonelectric
sewing
machines
Manually
operated
washing
machines
Different
Promotion
Promotion
Adaptation
Bicycles/motorcycles
Outboard motors
Dual Adaptation
Coffee
Some clothing
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7-31
 Figure 7.9
The World’s 10
Most Valuable
Brands
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7-32
 International Distribution Strategy
Decide on a method of entering the foreign
market
Decide how to distribute the product within the
foreign market through that entry channel
 International Pricing Strategy
Competitive, economic, political, and legal
constraints often limit pricing decisions
Must adapt to local markets and change when
conditions change
 Countertrade form of exporting whereby goods
and services are bartered rather than sold for
cash.
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7-33
The U.S. as a Target for
International Marketers
 The U.S. is an inviting target for many foreign
marketers
 It offers a large population with high levels of
discretionary income, political stability, a
generally favorable attitude toward foreign
investment and a relatively stable economy
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