Chapter 6
MARKETING IN GLOBAL
MARKETS
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• Global marketing is very broad
in scope
• Multiple reasons why firms
choose to engage in global
marketing
• Elements of the environment of
global marketing are different
than those for domestic markets
• Disadvantages and advantages
of strategies for foreign market
entry
• Marketing mix strategies cannot
be simply copied from domestic
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• Higher profit potential, more market share & sales
• Proximity to cheaper raw material and labor
• Market saturation, stiff competition & adverse economic
conditions in domestic markets
• Product life cycle extension and opening of new markets
abroad e.g., China, Eastern Europe
• Emergence of an interdependent global economy
characterized by fast communication, transportation and
financial flows that create new opportunities and
challenges and dictates an appropriate response for
survival
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• Simplest: the firm makes one or
more marketing decisions across
national boundaries
• Complex: the firm establishes
manufacturing and marketing
facilities overseas and coordinates
strategies across markets
• Uncontrollable variables like
economic structures, cultural values,
legal, political infrastructure, differ
significantly between markets along
with controllable factors like cost,
price, distribution structures,
advertising
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Export: Marketing of goods and services
across national/political boundaries
•
Multinational: Activities, interests or
operations in more than one country; control
over marketing activities from outside the
country in which the product will actually be
sold; each market is an independent profit
center
•
Global: Entire organization focused on
selection, exploration of global marketing
opportunities; marshalling of resources
around the globe; achieve synergy, global
competitive advantage
•
Toyota is a company that has gone through
all the above stages
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Standardized firms:
View the whole world as one
entity, not a collection of national
markets (e.g., Levi’s jeans)
Compete by optimal combination
of price, quality, reliability and
delivery of products that are
identical in design and function;
advantages of cost and
effectiveness
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Branding, positioning and
promotion may have to reflect
local conditions
Critics argue that all aspects of
marketing labeling, packaging,
materials, colors, names,
product features, advertising
themes, media, execution, price,
sales promotion need to be
customized for each country
(e.g., Yoplait yogurt)
Best option is a combination of
both that fits the business
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• Large Market size
• Stability through
diversification
• Profit potential
• Unsolicited orders
• Proximity of markets
• Excess capacity
• Offer by foreign distributor
• Increasing growth rate
• Smoothing out business
cycles
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Too much red tape
Trade barriers
Transportation difficulties
Lack of trained personnel
Lack of incentives
Lack of coordinated assistance
Unfavorable conditions overseas
Slow payment by buyers
Lack of competitive products
Payment defaults
Language barriers
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Ranked in order of least to
greatest risk and investment:
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Exporting
Licensing
Joint venture
Direct Investment
U.S. commercial centers
Trade intermediaries
Alliances
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 More effective for small and medium
firms
 More control over risk, cost, resource
commitment
 Products in maturity stage of
domestic lifecycle
 Products with ‘seasonal demand’
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• Indirect: sales made through the firm’s domestic
sales department; no overseas sales force
• Semi-direct: combination export manager,
manufacturer’s export agent, Webb-Pomerene
Export Association, piggyback exporting
• Direct: export department conducts market
research, establishes physical distribution, obtains
necessary documentation, sells directly to a foreign
firm
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• Provide technology, right to use
licensor’s manufacturing process,
brand name, patents, sales
knowledge, to a foreign firm in
return for payment
• Limited profit potentials
• Binding commitment to a firm that
may turn out to be incompetent
• Good option when there is scarce
capital, import / government
restriction
• Franchising e.g., McDonalds
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Partnership
between a
domestic and
foreign firm
e.g., GM &
Toyota
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• Invest in wholly-owned
subsidiaries, full-scale
production and
marketing
• Allows the firm to
compete more
aggressively
• Necessitates detailed
understanding of local
business conditions,
customs, labor, and
other factors
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Additional resources for promotion e.g.,
familiarizing with local customs; providing
business facilities like exhibition space;
translation and clerical services; facilitating
contacts between sellers, buyers,
government officials; provide trade-related
information
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• Entrepreneurial middlemen
• Buy U.S.-produces goods at 15% below a
manufacturer’s best discount and then
resell the product in overseas markets
• Good for small companies who do not
have the time or resources to develop
relationship with foreign companies
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To better compete in global
markets or enter new
markets a good strategy for a
firm is to form alliances with
other companies
e.g., Miller and Budweiser’s
alliance with global
breweries like Molson and
Corona to fight off a stiff
competitor from Heineken;
Star Alliance and One World
in the airline industry
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• Corporate level – data on
potential markets; resources to
be allocated
• Business level – external
environment, level of
commitment, resources
/capabilities, assessment of
stakeholders
• Functional level – integration
of all elements that achieve
objectives
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• Product /
Promotion
• Pricing
• Distribution
& Logistics
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• One product, one
message, worldwide
• Product extension,
promotion adaptation
• Product adaptation,
promotion extension
• Dual adaptation
• Product invention
• Brand
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 Analyze factors that influence international pricing e.g., cost
structures, competitor pricing levels, exchange rates
 Confirm the impact of corporate strategies
 Evaluate strategic pricing options and select most
appropriate approach
 Implement strategy through a variety of tactics
 Manage price and financing international transactions
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Customer sensitivity to prices
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The more distinctive the product
The greater the perceived quality
Less aware consumers are of substitutes
Difficulty of making comparisons
If price of a product represents a small proportion of
customer’s total expenditure
As the perceived benefit increases
If the product is used in association with a product
bought previously
If costs are shared with other parties
If the product cannot be stored
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Problems of price co-ordinations
• Dumping: selling a product in a foreign
country below domestic price or below
actual cost; helps build market share
through competitive pricing; helps get rid
of burdening surplus
• Gray market / parallel importing:
products sold through unauthorized
channels of distribution
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Distribution channels: means of distribution of the goods
from the manufacturer to end user; headquarters, channels
between countries, channel structure within countries
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Logistics: physical distribution management; concerned with
planning, implementing, control of physical flow of materials
from points of origin to use at a profit
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Uncontrollable factors e.g., wholesaling, retailing structures,
quality of services, infrastructure, differs widely between
nations
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Social / cultural:
 Language
 Colors
 Customs and taboos
 Values
 Aesthetics
 Time
 Business norms
 Religion
 Social structures
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Political / legal
Economic
Competitive
Technology
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Examples (socio-cultural)
• Language: e.g., in Canada
labels must be in both English
and French
• Colors: e.g., in Japan black
and white are colors of
mourning and should not be
used on a product’s package
• Customs and taboos: e.g.,
McDonald’s in India serves
mutton hamburgers as beef
and pork are religiously
tabooed meat
• Values: e.g., Americans are
materialistic, Indians’
philosophy is non-materialism
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• Aesthetics: e.g., Americans
believe suntans are attractive,
Japanese do not
• Time: e.g., Americans value
punctuality and deadlines;
Latin Americans consider
deadlines rude and pushy
• Business norms: e.g.,
Americans are more verbose
than Japanese who prefer
periods of silence in
negotiations
• Religious beliefs: e.g., in
conservative Islamic countries
women have less or no say in
household buying decisions
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Government intervention:
 Contracts for supply and
delivery
 Registration and enforcement
of trademarks, brand names,
labeling
 Patents
 Marketing communications
 Pricing
 Product safety, acceptability,
environmental issues
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Political Stability
Monetary circumstances
(exchange rate)
Trading Blocs &
Agreements e.g., NAFTA
Customs Unions
Tariffs
Expropriation
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Technological problems:
• Training foreign workers to
operate unfamiliar equipment
• Poor transportation system;
increase costs
• Maintenance standards vary
• Poor communication facilities
hinders use of mass media ads
• Lack of data processing facilities
makes planning, implementing
and controlling marketing
strategy difficult
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Economic Growth:
 Industrialized: private enterprises, consumer
orientation, modern technology, high per capita
income e.g., U.S.A., Japan
 Developing: transitioning from agricultural to
industrial; rising levels of income, education e.g.,
Brazil
 Less-developed nations: low standards of living,
low literacy, limited technology e.g., Bangladesh
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Gain differential advantage by
investing resources in the target
market
Local firms may successfully adapt
imitation strategies
Unsuccessful local firms are often
bought out by multinationals
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• Financial performance e.g.,
return on investment
• Market penetration e.g.,
volume and value of sales
• Customer growth
• Distribution e.g., number of
outlets
• Brand awareness and
value
• New product introductions,
diffusion
• Company image including
quality and added value
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