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Business-Finance

Published on January 13, 2009

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Slide 1: Chapter 1 Chapter 15 The Global Marketplace Rest Stop: Previewing the Concepts : 15-2 Prentice Hall, Copyright 2009 Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. Describe three key approaches to entering international markets. Explain how companies adapt their marketing mixes for international markets. Identify the three major forms of international marketing organization. Rest Stop: Previewing the Concepts Case Study : 15-3 Prentice Hall, Copyright 2009 Why go global? Basketball is the #2 global sport, behind soccer. NBA finals were televised in 215 countries. Going global means growth. 10% of league’s overall revenues and 25% of licensed apparel sales comes from outside U.S. Growing presence of foreign born stars adds to the NBA’s global appeal. The NBA – A “Hot” Global Brand! Case Study How did they do it? Nine international offices, over 100 international staff and a Hispanic marketing office in Miami, FL. 132 NBA sponsored international events in the off-season. NBA Europe Live program takes off-season training for the 4 NBA teams to Europe. Future international expansion may target China. Global Marketing Today : 15-4 Prentice Hall, Copyright 2009 Global Marketing Today Several trends characterize the global marketplace today: The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming. Global competition is intensifying. Risks associated with globalization are increasing. Global Marketing Today : 15-5 Prentice Hall, Copyright 2009 Global Marketing Today Global firm: A firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors. Global Marketing Today : 15-6 Prentice Hall, Copyright 2009 Global Marketing Today Major international marketing decisions: Looking at the global marketing environment. Deciding whether to go international. Deciding which markets to enter. Deciding how to enter the market. Deciding on the global marketing program. Deciding on the global marketing organization. Looking at the Global Marketing Environment : 15-7 Prentice Hall, Copyright 2009 Looking at the Global Marketing Environment The International Trade System: Restrictions exist—tariffs, quotas, embargos, exchange controls, and nontariff trade barriers. The World Trade Organization and GATT: Helps trade—reduces tariffs and other international trade barriers; mediates global disputes. Regional Free Trade Zones: European Union (EU) North American Free Trade Agreement (NAFTA) Looking at the Global Marketing Environment : 15-8 Prentice Hall, Copyright 2009 Looking at the Global Marketing Environment Economic environment: Industrial structure shapes a country’s product and service needs, income levels, and employment levels. Four types of industrial structure: Subsistence economies Raw material exporting economies Industrializing economies Industrial economies Income distribution is a second important factor. Looking at the Global Marketing Environment : 15-9 Prentice Hall, Copyright 2009 Looking at the Global Marketing Environment Political-legal environments vary by: Attitudes toward international buying Government bureaucracy Political stability Monetary regulations Countertrade is a growing practice which takes several forms: Barter Compensation Counterpurchase Looking at the Global Marketing Environment : 15-10 Prentice Hall, Copyright 2009 Looking at the Global Marketing Environment Cultural environment: Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Mistakes can be embarrassing and costly. Business norms and behavior vary by country. Companies that understand cultural nuances can use them to advantage when positioning products internationally. Critics worry that marketing strategies may be negatively impacting global cultures. Deciding Whether to Go Global : 15-11 Prentice Hall, Copyright 2009 Reasons to consider going global: Foreign attacks on domestic markets may be countered by counterattacks abroad. Home market may be stagnant or shrinking while foreign markets offer higher profit opportunities. Customers may be expanding globally and require international servicing. Risks must be weighed against the firm’s ability to operate globally. Deciding Whether to Go Global Deciding Which Markets to Enter : 15-12 Prentice Hall, Copyright 2009 Before going abroad, the company should try to define its international marketing objectives and policies. What volume of foreign sales is desired? How many countries to market in? What types of countries to enter? Possible countries should be ranked based several factors. The market(s) with the greatest ROI should be chosen. Deciding Which Markets to Enter Deciding How to Enter the Market : 15-13 Prentice Hall, Copyright 2009 Deciding How to Enter the Market Several market entry strategies exist: Exporting: May be indirect or direct Joint venturing: Options include licensing, contract manufacturing, management contracting and joint ownership Direct investment: Includes assembly and manufacturing facilities Deciding How to Enter the Market : 15-14 Prentice Hall, Copyright 2009 Deciding How to Enter the Market Exporting: Entering a foreign market by selling goods produced in the company’s home country, often with little modification. Types of exporting: Indirect: Working through independent international marketing intermediaries. Direct: Company handles its own exports. Deciding How to Enter the Market : 15-15 Prentice Hall, Copyright 2009 Joint venturing: Joining with foreign companies to produce or market a product or service. Approaches: Licensing Contract manufacturing Management contracting Joint ownership Deciding How to Enter the Market Slide 16: 15-16 Prentice Hall, Copyright 2009 Licensing: A company enters into an agreement with a licensee in a foreign market, offering the right to use a patent, manufacturing process, trademark, trade secret, or other item of value for a fee or royalty. Contract manufacturing: A company contracts with manufacturers in a foreign market to produce the product or provide its service. Deciding How to Enter the Market Slide 17: 15-17 Prentice Hall, Copyright 2009 Management contracting: A joint venture in which the domestic firm supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products. Joint ownership: A joint venture in which a company joins investors in a foreign market to create a local business in which the firm shares joint ownership and control. Deciding How to Enter the Market Slide 18: 15-18 Prentice Hall, Copyright 2009 Direct Investment: The development of foreign-based assembly or manufacturing facilities. Advantages: Lower costs due to cheap labor or raw materials Firm may improve image in host country Better adaptation of products to country Disadvantages: Currency risks, market failure, government change Deciding How to Enter the Market Deciding on the Global Marketing Program : 15-19 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Program Standardized marketing mix: Using basically the same marketing strategy and mix in all international markets. Adapted marketing mix: Adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hoping for a larger market share and return. Deciding on the Global Marketing Program : 15-20 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Program Global product strategies: Straight product extension: Marketing a product in a foreign market without any change. Product adaptation: Adapting a product to meet local conditions or wants in foreign markets. Product invention: Creating new products or services for foreign markets. Deciding on the Global Marketing Program : 15-21 Prentice Hall, Copyright 2009 Global promotion strategies: Firms can either adopt the same communication strategy they used in the market or change it for each local market. Some global firms use a standardized advertising theme around the world with minor adaptations. Other firms follow a communication adaptation strategy by fully adapting an advertising message for local markets. Changes may also have to be made due to media availability. Deciding on the Global Marketing Program Deciding on the Global Marketing Program : 15-22 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Program Global pricing strategies: Companies face many problems in setting their international prices. Standard pricing methods ignore cost differentials and local market conditions. International prices tend to be higher than domestic prices because of price escalation. Some global firms create simpler versions of products to sell abroad. Deciding on the Global Marketing Program : 15-23 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Program Global pricing strategies: Setting prices for foreign subsidiaries can be problematic: Charging too much results in higher tariff duties and lower income taxes. Charging too little can result in charges of dumping if price is less than the product costs or less than is being charged in the home market. The euro has reduced the amount of price differentiation and the Internet makes price differences more obvious. Deciding on the Global Marketing Program : 15-24 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Program Global distribution: International firms must take a whole-channel view of distributing products to final consumers and consider: Channels between nations Channels within nations The entire global value delivery network Deciding on the Global Marketing Program : 15-25 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Program Global distribution channels differ by: The numbers and types of intermediaries. Size and character of retail units differ as well, presenting challenges. The transportation infrastructure. Limitations in the distribution network of China will create challenges for many marketers. Deciding on the Global Marketing Organization : 15-26 Prentice Hall, Copyright 2009 Deciding on the Global Marketing Organization International marketing efforts can be managed by: Organizing an export department. Creating international divisions: Geographical organizations World product groups International subsidiaries Becoming a global organization. Rest Stop: Reviewing the Concepts : 15-27 Prentice Hall, Copyright 2009 Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. Describe three key approaches to entering international markets. Explain how companies adapt their marketing mixes for international markets. Identify the three major forms of international marketing organization. Rest Stop: Reviewing the Concepts Slide 28: 15-28 Prentice Hall, Copyright 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc.   Publishing as Prentice Hall

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