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Global Marketing and World Trade

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One company attempted to run an ad in Chinese to wish the community a Happy New Year, but ... Hallmark cards failed when they were first introduced in ... – PowerPoint PPT presentation

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Title: Global Marketing and World Trade


1
C H A P T E R F I V E
GLOBAL MARKETING AND WORLD TRADE
Irwin/McGraw-Hill
2
How Purchasing Power differs Around the
World
3
How Purchasing Power Around The World
Lets Make The Discussion Real !

1
What percentage of the worlds population lives
on 1.00 or less per day??
4
How Purchasing Power Around The World
Lets Make The Discussion Real !

1
What percentage of the worlds population lives
on 1.00 or less per day??
Answer - 25
5
How Purchasing Power Around The World
Lets Make The Discussion Real !

2
What percentage of the worlds population lives
on 2.00 or less per day??
6
How Purchasing Power Around The World
Lets Make The Discussion Real !

2
What percentage of the worlds population lives
on 2.00 or less per day??
Answer 40 - 45
7
The World Economy - For Who?
  • What does this mean is you are living in Mexico
    on 2.00 per day …
  • What are your thoughts ...

8
Illustrative world trade flows (billions of
dollars)
Western Europe intratrade 1430
194
227
241
200
North America intratrade 465
Asia / Pacific Rim intratrade 632
393
382
279
365
Rest of world intratrade 175
381
140
137
313
9
Countertrade Effect
  • The practice of using barter rather than money
    for making global sales.
  • 20 of world trade involves countertrade.
  • Popular with many Eastern European nations.

10
Countertrade Effect
  • Example
  • Volvo sells cars to Russia - which has no money …
    but ...
  • Gets crude oil in return … and …
  • Sells the crude oil in Scandinavian countries for
    cash

11
Trade Feedback Effect
  • As a countrys exports increase, its national
    output and income increase, which leads to a
    increase in the demand for imports. Hence,
    imports affect exports and vice versa.
  • This Trade Feedback Effect is one argument for
    free trade among nations.

12
United States Perspective
  • US is the worlds leader in gross domestic
    product (GDP), which is the monetary value of all
    goods and services produced in a country during
    one year.
  • US share of world exports has shifted downward
    over the past 25 years, while its share of
    world imports has increased.

(continued)
13
United States Perspective
  • Balance of trade is the difference in the
    monetary value of a nations imports and exports.
    Since 1975 imports to the US have significantly
    exceeded exports each year. Japan and China
    combine for about half of the total US trade
    deficit.
  • The three largest importers of US goods are
    Canada, Japan, and Mexico. The three largest
    exporters to the US are Japan, Canada, and Mexico.

14
PP5-2 Porters diamond of national
competitive advantage
Company strategy structure and rivalry
  • Number of companies in an industry
  • Intensity of competition
  • Public or private owner

Demand conditions
Factor conditions
  • Natural resources
  • Education and skill levels
  • Wage rates
  • Size of market
  • Sophistication of consumers
  • Media exposure of products

Related and supporting industries
  • Existence of supplier clusters

15
PP5-3 How protectionism affects world trade
Protectionism
Tariffs
Quotas
Increase Prices
Limit Supply
Decreased Global Trade
16
PP5-EE Economic Protectionism
  • Protectionism is the practice of shielding one or
    more sectors of a countrys economy from foreign
    competition through the use of tariffs or quotas.
  • Tariffs are a government taxes on goods and
    services entering a country, primarily to raise
    the price on imports.
  • Quotas are restrictions placed on the amount of a
    product allowed to enter or leave a country.

17
PP5-4 15 Countries of the European Union
  • Great Britian
  • Ireland

Sweden
Finland
Belguim
Denmark
Germany
Netherlands
Luxembourg
Austria
Spain
Portugal
Italy
France
Greece
18
PP5-FF Rise of Economic Integration
  • European Union (EU)
  • 15 European countries forming a single market
    composed of 390 million consumers with a GDP only
    slightly less than that of the US.
  • The EU has resulted in
  • 1. fewer government regulations and tariffs
  • 2. greater uniformity in product and packaging
    standards
  • 3. fewer regulatory restrictions on
    transportation, advertising, and promotion
  • 4. removal of most tariffs that directly affect
    pricing

19
PP5-GG North American Free Trade Agreement
(NAFTA)
  • NAFTA
  • NAFTA became effective in 1994 and consists of
    the US, Canada and Mexico, creating a marketplace
    of about 380 million consumers.
  • Provisions are similar to those of the EU
  • Negotiations are under way to expand NAFTA to a
    34 country Free Trade Area of the Americas by
    2005, and will include the US, Canada, Mexico,
    and Latin American and Caribbean countries.

20
PP5-HH Global Competition among Global Companies
for Global Customers
  • Exists when firms originate, produce, and market
    their products and services worldwide.
  • The automobile, pharmaceutical, apparel,
    electronics, aerospace, and telecommunication
    fields represent industries with sellers and
    buyers on every continent.

21
PP5-II Strategic Alliances
  • Strategic alliances are agreements among two
    or more independent firms to cooperate for the
    purpose of achieving common goals such as
    competitive advantage or customer value creation.
    They are becoming a common way in which firms
    are meeting the demands of global competition.

22
Global companies and marketing strategies
Type of Marketing Strategy
Type of Global Company
Extension of its home country marketing strategy
International Firm
Multi-domestic marketing strategy
Multinational Firm
Global marketing strategy
Transnational Firm
23
PP5-JJa Three Types of Global Companies
  • International Firm engages in trade and
    marketing in different countries as an extension
    of the marketing strategy in its home country.
    Generally, they market their existing products
    and services in other countries the same way they
    do in their come country.
  • Multinational Firm views world as consisting of
    unique parts and markets to each part
    differently. Multinationals use multi-domestic
    marketing strategies, which means they have many
    different product variations, brand names, and
    advertising programs as countries in which they
    do business.

(continued)
24
PP5-JJb Three Types of Global Companies
  • Transnational Firm views world as one market and
    emphasizes cultural similarities or universal
    consumer needs and wants more than differences.
    They employ global marketing strategies, which
    means standardized strategies adapted as cultures
    dictate.

25
PP5-KK Global Consumers
  • Global Consumers consist of customer groups
    living in many countries or regions of the world
    who have similar needs or seek similar features
    and benefits from products and services.

26
Cultural Appreciation
Values
Customs
Aspects of culture
Symbols
Language
27
Cultural Appreciation
  • Lets Jump Ahead to Some Examples

28
PP5-MMa Cultural Diversity
  • Values represent personal or socially preferable
    modes of conduct or states of existence that are
    enduring. Why doesnt McDonalds sell hamburgers
    in India?
  • Customs are norms and expectations about the way
    people do things in a specific country. Why were
    3M executives perplexed concerning lukewarm sales
    of Scotch-Brite floor cleaner in the Philippines?

(continued)
29
PP5-MMb Cultural Diversity
  • Cultural Symbols are things that represent ideas
    and concepts. By wisely using cultural symbols,
    global marketers can tie positive symbolism to
    their products and services.
  • Language Global marketers should not only know
    the native tongues of countries in which they
    market, but also the nuances and idioms of a
    language.

30
Cultural Diversity - Bloopers!
  • Hispanic Americans - The Fastest Growing
    Subculture
  • The Perdue Slogan It takes a tough man to make a
    tender chicken was translated …
  • It takes a sexually excited man to make a chick
    affectionate
  • Budweiser was promoted as the queen of beers
  • A burrito was mistakenly call a burrada, which
    means …
  • Big Mistake

31
Cultural Diversity - Bloopers!
  • Hispanic Americans - The Fastest Growing
    Subculture
  • Coors beers slogan - get loose with Coors
    appeared in Spanish as
  • Get the runs with Coors

32
Cultural Diversity - Bloopers!
  • Asian Americans / Asian Cultures
  • In Japan Coca-Cola advertised Coke Adds Life
    translated as
  • Coke brings your ancestors back from the dead
  • One company attempted to run an ad in Chinese to
    wish the community a Happy New Year, but …
  • The characters were printed upside down!

33
Cultural Diversity - Bloopers!
  • Asian Americans / Asian Cultures
  • KFC described its product as finger-licking
    good in an ad to the Chinese, but …
  • The Chinese dont lick their fingers when the
    food is good.
  • A footwear ad depicted Japanese women performing
    footing binding, it is a …
  • Practice done exclusively in China.

34
Cultural Diversity - Bloopers!
  • A Quick Tour Around The World …
  • Hallmark cards failed when they were first
    introduced in France, because …
  • The French dislike syrupy sentiment and prefer
    writing their own cards
  • Coca-Cola had to withdraw its two-liter bottle
    from Spain,
  • Few Spaniards owned refrigerators large for
    the bottles

35
Cultural Diversity - Bloopers!
  • A Quick Tour Around The World …
  • Philips Electronics could not sell its
    coffeemakers and electric shavers in Japan
  • Then PE made them smaller to fit in Japanese
    kitchens and smaller Japanese hands - and guess
    what - success

36
Cultural Diversity - Bloopers!
  • A Quick Tour Around The World …
  • Kelloggs Pop-Tarts failed in Britain, why …
  • The percentage of households with toasters was
    low and the product was too sweet
  • Tang positioned as orange juice initially failed
    in France, why…
  • The French drink little orange juice and none
    in the morning!

37
Cultural Diversity - Bloopers!
  • A Quick Tour Around The World …
  • Crest failed in Mexico when the U.S. ad campaign
    was used
  • Decay- prevention and scientific evidence were
    not appealing to Mexicans
  • Johnsons wax failed initially in Japan, why …
  • Wax makes the floors too slippery for Japanese
    who do not wear shoes in their homes

38
Cultural Diversity - U.S. and Japan
  • Japanese Culture America Culture
  • Japanese language English Language
  • Homogeneous population Diverse population
  • Group, not individual, important Individualistic
  • General focus Specific focus
  • Unspoken agreements Get the facts straight
  • Hold back emotions in public Display emotions in
    public
  • Process-oriented Results-oriented
  • Fun-oriented Humor-oriented
  • Nonverbal communication Verbal communication
  • Interested in who is speaking Interested in what
    is spoken

39
PP5-7 5 Product Promotion Strategies for
Global Marketing
  • Same Product Adapt
    Product Create New Product
  • Same
  • Promotion
  • Adapt
  • Promotion

Product Extension Strategy
Product Adaptation Strategy
Product Invention Strategy
Communication adaptation strategy
Dual Adaptation Strategy
40
PP5-NN Economic Considerations
  • Stage of Economic Development
  • Economic Infrastructure
  • Consumer Income and Purchasing Power
  • Currency Exchange Rates

41
PP5-OO Political-Regulatory Climate
  • Political Stability
  • PRS Group is an agency that tracks the risk
    associated
  • with trading in various countries. Generally,
    trade
  • among nations depends upon political stability.
  • Trade Regulations
  • ISO 9000 standards refer to standards for
    registration
  • and certification of a manufacturers quality
    management and quality assurance system.

42
PP5-6 Alternative global market-entry strategies
High
Amount of a firms financial commitment, risk,
marketing control, and profit potential
Low
Joint Venture
Direct Ownership
Exporting
Licensing
43
PP5-QQ Crafting a Worldwide Marketing Effort
  • Product and Promotion Strategies
  • Selling Products Globally
  • 1. Product Extension
  • 2. Product Adaptation
  • 3. Product Invention
  • By recognizing cultural and buying motive
    differences, firms can sell the same products to
    different countries by adapting their
    advertising.
  • Some companies use dual adaptation, which means
    modifying both product and promotion messages.

44
PP5-8 Channels of Distribution in Global
Marketing
Channels Within Foreign Nations
Sellers International Marketing Headquarters
Channels Between Nations
45
PP5-RR Crafting a Worldwide Marketing Effort
  • Pricing Strategy
  • Countries may impose considerable competitive,
    political, and legal constraints of the pricing
    latitude of global companies.
  • Economic factors such as the costs of production,
    selling, and tariffs, plus transportation and
    storage costs, also affect global pricing
    decisions.
  • Dumping is when a firm sells a product in a
    foreign country below its domestic price or below
    its actual cost.
  • Gray Market (parallel importing) is a situation
    where products are sold through unauthorized
    channels of distribution.

46
PP5-D Global Marketing Practices That Affect
Pricing
  • Dumping is when firms sell a product in a
  • foreign country below its domestic price or
  • below its actual cost.
  • Gray Marketing or Parallel Importing is a
  • situation where products are sold through
  • unauthorized channels of distribution.
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