Part Two
Using Technology
for Customer
Relationships in a
Global Environment
Chapter 05
Global Markets and
International
Marketing
Chapter Learning Objectives
1. To understand the nature of global markets and
international marketing
2. To analyze the environmental forces affecting
international marketing efforts
3. To identify several important regional trade
alliances, markets, and agreements
4. To examine methods of involvement in
international marketing activities
5. To recognize that international marketing
strategies fall along a continuum from
customization to globalization
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Chapter Outline
• The Nature of Global Marketing Strategy
• Environmental Forces in International Markets
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–
–
–
–
–
Sociocultural Forces
Economic Forces
Political, Legal, and Regulatory Forces
Social Responsibility and Ethics Forces
Competitive Forces
Technological Forces
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Chapter Outline (cont’d)
• Regional Trade Alliances, Markets, and
Agreements
– The North American Free Trade Agreement (NAFTA)
– The European Union (EU)
– The Common Market of the Southern Cone
(MERCOSUR)
– Asia-Pacific Economic Cooperation (APEC)
– The World Trade Organization (WTO)
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Chapter Outline (cont’d)
• Modes of Entry into International Markets
–
–
–
–
–
Importing and Exporting
Licensing and Franchising
Contract Manufacturing
Joint Ventures
Direct Ownership
• Customization Versus Globalization of
International Marketing Mixes
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The Nature of Global Marketing Strategy
• International Marketing
– Developing and performing marketing activities
across national boundaries
– Provides growth opportunities, promotes innovation,
fosters marketing of better, less
expensive products
• Some companies enter global
markets gradually but others
are “born global” and begin
international activities almost
immediately
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Sociocultural Forces
• Beliefs and values about:
–
–
–
–
–
Family
Religion
Education
Health
Recreation
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Economic Forces
• Economic Differences Affecting International
Marketing
–
–
–
–
–
–
Standards of living
Credit
Buying power
Income distribution
National resources
Exchange rates
• Gross Domestic Product (GDP)
– The market value of a nation’s total
output of goods and services for a given period;
an overall measure of economic standing
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Source: CIA, The World Fact Book, www.cia.gov/cia/publications/factbook/index.html (accessed Jan. 5, 2007); globalEdge Resource Desk,
http://globaledge.msu.edu/ (accessed Jan. 5, 2007); “Population Explosion!” CLickZ Stats, Apr. 12, 2006, www.clickz.com/showPage.html?page=151151.
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Source: CIA, The World Fact Book, www.cia.gov/cia/publications/factbook/index.html (accessed Jan. 5, 2007); globalEdge Resource Desk,
http://globaledge.msu.edu/ (accessed Jan. 5, 2007); “Population Explosion!” CLickZ Stats, Apr. 12, 2006, www.clickz.com/showPage.html?page=151151.
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Political, Legal, and Regulatory Forces
• Trade Restrictions Affecting International
Marketing
– Import tariff
• A duty levied by a nation
on goods bought outside
its borders and brought in
– Quota
• A limit on the amount of
goods an importing country
will accept for certain product
categories in a specific period
of time
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Trade Restrictions (cont’d)
– Embargo
• A governmental suspension of trade in a particular product
or with a given country
– Exchange controls
• Government restrictions on the amount of a particular
currency that can be bought or sold
– Balance of Trade
• The difference between the value of a nation’s imports and
exports
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Social Responsibility and Ethics Forces
• Differences in legal and ethical standards have
caused some companies to establish ethics
programs and standards for international
business conduct.
• Differences may revolve around such things as
intellectual property, labor conditions, payoffs
and bribes, and tips and gifts.
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Source: Adapted from”Transparency International Corruption Perceptions Index 2006,” Transparency International, November 6, 2006,
www.transparency.org/content/download/10825/92857/version/1/CPI_2006_presskit_eng.pdf.
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Source:The Global Competitiveness Report 2006–2007, World Economic Forum.
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Regional Trade Alliances,
Markets, and Agreements
• The North American
Free Trade Agreement
(NAFTA)
– An alliance that merges
Canada, Mexico, and
the United States into
a single market
• Eliminates barriers
• Eases investment
• Simplifies trade
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Regional Trade Alliances,
Markets, and Agreements (cont’d)
• The European Union (EU)
– An alliance that promotes
trade among its member
countries in Europe
• Market unification
• Common currency (euro)
• Economic efficiency
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Regional Trade Alliances,
Markets, and Agreements (cont’d)
• The Common Market of the
Southern Cone (MERCOSUR)
– An alliance that promotes
the free circulation of goods,
services, and production
factors, and has a common
external tariff and commercial
policy among member nations
in South America
Bolivia
Brazil
Paraguay
Uruguay
Argentina
Chile
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Regional Trade Alliances,
Markets, and Agreements (cont’d)
• Asia-Pacific Economic Cooperation (APEC)
– An alliance that promotes open trade and economic
and technical cooperation among member nations
throughout the world
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Regional Trade Alliances,
Markets, and Agreements (cont’d)
• World Trade Organization (WTO)
– An entity that promotes free trade among member
nations
• Provides legal ground rules
for international commerce
and trade policy
• General Agreement on Tariffs and Trade (GATT)
– An agreement among nations to reduce
worldwide tariffs and increase
international trade
• Dumping: selling products at
unfairly low prices
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Figure 5.1: Levels of Involvement
in Global Marketing
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International Involvement
• Importing
– The purchase of products from a foreign source
• Exporting
– The sale of products to foreign markets
• Importing and exporting may be facilitated by
– Exporting agencies
– Trading companies
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International Involvement (cont’d)
• Licensing
– An alternative to direct investment requiring the
licensee to pay commissions or royalties on sales or
supplies used in manufacturing
• Franchising
– A form of licensing in
which the franchiser
grants the franchisee
the right to market its
product in accordance
with the franchiser’s
standards
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BIG PACK
of Asia
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International Involvement (cont’d)
• Contract Manufacturing
– The practice of hiring a foreign firm to produce a
designated volume of product to specification
• Outsourcing
– The practice of contracting manufacturing or other
tasks to companies in countries where labor and
supplies are less
• Joint Venture
– A partnership between a domestic firm and a foreign
firm or government
• Strategic Alliance
– A partnership (possibly of traditional rivals) formed to
create a competitive advantage on a worldwide
basis
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Figure 5.2: Projected U.S.
Jobs Moving Offshore
Source: “Will the New Congress Shift Gears on Free Trade?” The Wall Street Journal, November 18–19, 2006, p. A7.
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International Involvement (cont’d)
• Direct Ownership
– A situation in which a company owns subsidiaries or
other facilities overseas
• Multinational Enterprise
– A firm that has operations
or subsidiaries in many
countries
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Source: “The Fortune Global 500,” Fortune, July 24, 2006, http://money.cnn.com/magazines/fortune/global500/2006/index.html.
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Customization Versus Globalization of
International Marketing Strategies
• Customization
– Adjusting marketing mixes according to cultural,
regional, and national differences
• Globalization
– The development of marketing strategies that treat
the entire world (or its major regions) as a single
entity
• Includes standardization of products, promotion
campaigns, prices, and distribution channels
• “Think globally, act locally”
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Standardization of International Marketing
• Easiest marketing mix variables to standardize
–
–
–
–
Brand name
Product characteristics
Packaging
Labeling
• More difficult to standardize
– Media allocation
– Retail outlets
– Pricing
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International Marketing Requires
Strategic Planning
• Effect of a Firm Having a Global Presence
– Provides global competitive opportunities for
creating value through
• adapting to local market differences
• exploiting economies of global scale
and scope.
• acquiring optimal locations for
activities and resources.
• maximizing the transfer of
knowledge across locations.
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After reviewing this chapter you should:
1. Understand the nature of global markets and
international marketing.
2. Be able to analyze the environmental forces
affecting international marketing efforts.
3. Be able to identify several important regional
trade alliances, markets, and agreements.
4. Be able to examine methods of involvement in
international marketing activities.
5. Recognize that international marketing
strategies fall along a continuum from
customization to globalization.
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5 | 35