The Global Marketing Environment

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• The Global Marketing Environment

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Global Marketing Issues

• Why Go Global?
• The Global Challenge

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Current Situation

• Limited Domestic Growth
• Low Population Growth
• U.S. population Growing slowly
• Intense Competition
• Domestic Managerial Production Capacity Exceeds
  Domestic Demand

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Current Situation

• International Opportunities Abound
• Population Growth HIGH(er)
• Many Markets Virtually Untapped
• EU at ____ M vs. ____ M in U.S.
• Wants Unlimited and Incomes Growing
• Foreign Trade Deficits

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8.2 B.
6 B.
5 B.
1 B.
It took over 100 years to grow by 4 Billion.
33 years to grow by 3.2 billion!
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World Population Growth

• The world population is exploding!
• To grow by 60.

8.2 Billion
5.0 Billion
1992 2025
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But Growth Concentrated in Less Developed
Countries

• Developed Less Developed
• 1990 1.2 B. 1990 4.0 B.
• 2015 1.4 B. 2015 6.8 B.

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70
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The Population of Worlds Metropolitan Area

• 1. Tokyo , Japan 33,750,000
• 2. Sao Paulo, Brazil 22,700,000
• 3. Mexico City 22,150,000
• 4. Seoul, Korea 22,000,000
• 5. New York, USA 21,750,000
• 6. Mumbai Area, India 18,800,000
• 7. Delhi (National Capital Territory), India
  18,100,000
• 8. Osaka area, Japan 16,570,000
• 9. Los Angeles, USA 16,450,000
• 10. Daerah/Jabotabek Area, Indonesia 16,400,000

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The Population of Worlds Cities
Rank City Population 1 Shanghai
(China) 12,762,953 2 Mumbai Bombay
(India) 12,692,717 3 Karachi (Pakistan) 11,627,3
78 4 Buenos Aires (Argentina) 11,548,541 5 Delhi
(India) 10,928,270 6 Manila
(Philippines) 10,443,877 7 Moscow
(Russia) 10,381,288 8 Seoul (South
Korea) 10,349,291 9 São Paulo
(Brazil) 10,021,437 10 Istanbul (Turkey )
9,797,536 11 Lagos (Nigeria) 8,789,133 12 Mex
ico City (Mexico) 8,657,045 13 Jakarta
(Indonesia) 8,540,306 14 Tokyo
(Japan) 8,336,611 15 New York City,
(USA) 8,108,040
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Global Population Comparisons (2003)
Country Population(thousands)
Growth USA 291,044 0.92 Japan
127,210 0.11 China 1,288,400 0.6 India 1,06
4,399 1.47 Mexico 102,291 1.43 France
59,725 0.42 Russia 143,425 -0.3 Nigeria
135,632 2.53
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Current and Emerging Export Markets

• Europe
• Asia, including
• Japan
• China (emerging)
• India (emerging)

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FIGURE 7-1 Illustrative world trade flows for
manufactured goods and commodities (billions of
dollars)
Slide 7-7
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The European Union (EU)

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EU Countries

• 25 member countries
• Austria Belgium Cyprus Czech Republic
  Denmark Estonia Finland France Germany
  Greece Hungary Ireland Italy Latvia
  Lithuania Luxembourg Malta Poland
  Portugal Slovakia Slovenia Spain Sweden
  The Netherlands United Kingdom
• 4 candidate countries
• Bulgaria Croatia Romania Turkey

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25 Member Countries of the European Community

• Population 452 Million
• Currency Euro (MOSTLY)
• Political Integration
• Reduction of internal barriers
• Opportunity vs. Threat?

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Also, keep an eye on

• MERCOSUR Assoc. of Latin and South American
  Countries (Argentina, Brazil, Paraguay, Uruguay,
  Bolivia, Chili)
• ASEAN - Assoc. of Seastern Asian Nations
• China, Hong Kong Taiwan
• CEA - Chinese Economic Area
• Indonesia, Malaysia, Singapore, Thailand,
  Philippines, Vietnam, Brunei

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U.S. Imports and Exports Top 5 Products (2003)
http//www.usitc.gov/tradeshifts/default.htm
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U.S. Imports and Exports Top 5 Countries (2003)
http//www.usitc.gov/tradeshifts/default.htm
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Trade Deficits and Surpluses Products vs.
Services

• U.S. runs a 187.3 billion trade deficit in
  Transportation equipment and Electronic products
• U.S. runs a 73.9 billion trade surplus for
  cross border services trade (2001)
• US Service Exports
• Travel and Tourism 27.5
• Royalties and License fees 14.5
• Air Transportation 10.6

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Current Situation

• A global approach has significant costs and risks
• Shortage of information
• Lack of expertise within US companies
• Trade restrictions/legal regulations
• Unstable economic conditions
• Weak distribution networks
• Cultural differences

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Trade Barriers and Restrictions

• Tariffs
• Volume limits
• Lack of hard currency (countertrade)
• Personnel restrictions/unions
• Economic Instability

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One Solution

• Trade Agreements and Free Trade Zones
• NAFTA
• EU
• MERCOSUR

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NAFTA - 1993North American Free Trade Agreement

• U.S, Mexico and Canada
• Gradual elimination of trade barriers
• Promoted free trade

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NAFTA Costs and Benefits?

• Increased trade
• All member economies have grown significantly
  from 1993-2003
• United States  38 economic growth
• Canada           30.9 growth
• Mexico           30 growth
• U.S. exports to Canada and Mexico grew from 134
  billion to 232 billion
• Shifts in production and jobs
• e.g., U.S. car manufacturing to Mexico

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NAFTA Costs and Benefits?

• Shifts in Trade Balance
• Weak Peso and Canadian dollar make Mexican and
  Canadian imports more desirable
• Weak economies in Canada and Mexico make U.S.
  exports less likely
• Result increased trade deficit (about 129
  billion, 2003)

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NAFTA and Trade Barriers

• Example
• Prior to NAFTA 32 percent tariff on brooms
  imported to U.S. from Mexico
• After NAFTA no such tariff, exports increased,
  but U.S. broom sales down 25 percent each year.

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Political-Legal Environment
At Least Four Political-Legal Factors Should be
Considered in Deciding Whether to do Business in
a Given Country
Regulations
Attitudes Toward International Buying
Government Bureaucracy
Political Stability
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Economic Environment
Economic Stability
Subsistence Economies
Industrial Structure
Types of Industrial Structure
Raw Material Exporting Economies
Industrial Economies
Income Distribution
Distribution Networks
Industrializing Economies
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Cultural Environment
Sellers Must Examine the Following Before
Planning a Marketing Program Within a
Given Country.
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Which Markets to Enter
Define Organizations Marketing Objectives and
Policies
What Volume of Foreign Sales is Desired?
How Many Countries Should the Firm Go Into?
What Types of Countries Should be Entered?
Rank by Market Size Growth, Cost of Doing
Business, Competitive Advantage, Risk Level.
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How to Enter International Markets
Slide 7-43
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Deciding on the Global Marketing Program
Adapted Marketing Mix Adjusts the Elements of the
Marketing Mix to Each International Target
Market. i.e. Japanese Barbie
Standardized Marketing Mix Uses Basically the
Same Elements of the Marketing Mix in all the
Companys International Markets. i.e Coca-Cola
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The Global ChallengeGlobal vs. Local
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The Global ChallengeGlobal vs. Local
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The Global ChallengeGlobal vs. Local
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The Global ChallengeGlobal vs. Local