Developing a Global Vision

1
Developing a Global Vision
2
Objectives

• Discuss the opportunities and risks of global
  marketing.
• Understand the difference between global
  marketing and global marketing standardization.
• 3. Describe the external environment facing
  global marketers.
• 4. Identify the various ways of entering the
  global marketplace.
• 5. List the basic elements involved in developing
  a global marketing mix.

3
Deciding whether to go abroad Opportunities and
Risks
Opportunities

• Offer more competitive products

• Higher possible profit opportunities

• Larger customer base to achieve economies of
  scale

• Reduce dependency on one market

4
Deciding whether to go abroad Opportunities and
Risks
Risks

• Failure to understand foreign
  countrys business culture.

• Underestimating foreign regulations

• Lack of managers with international experience

5
Famous Blunders

• Hallmarks failure in France.
• Philips introduced coffeemakers that didnt fit
  in Japanese kitchens
• Coca-Cola two-liter bottle in Spain.
• S.C. Johnsons wax floor polish in Japan.

Back
6
Advantages of Multinational Firms

• Overcome trade and regulatory problems

• Shift costs from one plant to another as market
• conditions change

• Save in labor costs by moving operations
  to low-cost countries

7
Global Marketing Standardization ?
Global Marketing individuals and organizations
using a global vision to effectively market goods
and services across national boundaries.
Global Marketing Standardization The world is
becoming a common marketplace in which people
no matter where they live desire the same
products and lifestyles. Global companies must
forget the idiosyncratic differences between
countries and cultures and instead concentrate on
satisfying universal drives.
8
Global Marketing Standardization ?

• Are products like McDonalds, Pepsi, and
  Coca-Cola
• examples of global marketing
  standardization?

• Example Gillette
• The most important decision I made was to
  globalize. We decided not to tailor products to
  any marketplace, but to treat all market places
  the same. And it worked in most countries.
• 1.2 billion people use at least one Gillette
  product daily
• Captured 91 of the market in Latin America and
  69 of the market in India
• Huge economies of scale by selling few types of
  razor blades
• www.Gillette.com

9
External Environment Factors
Environmental Factors
10
Culture
Common set of values that forms basis for family,
educational, religious, and social class systems

• Language

• Notion of time

• Etiquette

• Religion

• Customs and traditions

11
Global Language Goofs

• Coors Turn it Loose slogan became in Spanish
• Suffer from Diarrhea

• Got Milk? translated in Spanish into Are you
  Lactating?

• Toyotas MR2 sounded like a swearword in French

Back
12
Legal Considerations
Legal Structures Encourage or Limit Trade
13
Regional Free Trade Zones
Examples

• NAFTA North American Free Trade Agreement
• United States, Canada and Mexico
• Eliminate all trade barriers and investment
• restrictions
• 390 million people
• 7.9 trillion worth of goods and services

• EU European Union
• Creation of a single European market
• 360 million people
• 6.4 trillion worth of goods and services
• United States of Europe

14
Demographic Makeup
Marketing Considerations

• Population density

• Rise of global middle class

• Urban or rural

• Personal income

• Supply of professionals

15
Global Marketing by the Individual Firm
Risk Levels for Entry
High risk/ high return
Risk
Low risk/ low return
Return
16
Exports Selling domestically produced products
to buyers in another country

• Indirect Export
• Intermediaries, export merchant
• Lower investments
• Bring know-how and services
• Export-trading company
• Export-management company
• Direct Export
• Domestic-based export department
• Overseas sales branch
• Traveling export sale representatives
• Foreign-based distributors or agents
• test the waters

Back
17
Licensing Licensor licenses a foreign company
to use a manufacturing process, trademark,
patent, trade secret, or other item of value for
a fee or royalty.

• Potential disadvantages
• Less control
• If very successful, the firm has given up profits
• When the contract ends, may have new competitor
• Use proprietary ingredients or components
• Franchising
• Franchiser offers a complete brand concept and
  operating system, franchisee pays fees to
  franchiser
• McDonalds, KFC, Avis.

Back
18
Joint Venture Foreign investors join with local
investors to create a joint venture company in
which they share ownership and control

• Examples
• Coca-Cola and Nestlé
• Develop the international market for ready to
  drink tea and coffee.
• Whirlpool and Philipss
• White-goods market in Europe
• Huge potential for marketing strategy
  disagreements

Back
19
Direct InvestmentDirect ownership of
foreign-based assembly or manufacturing
facilities.

• Strengthen firms image in host country
• A firm may develop a deeper relationship with
  government, customers, local suppliers and
  distributors
• Help to adapt products of local environment
• Helps if locally purchased products must contain
  domestic content
• Firms retain full control over investments

Back
20
The Global Marketing Mix
Product and Promotion
Same Product
Change Product
One Product One Message
Same Message
Promotion Adaptation
Change Message
21
The Global Marketing MixOne Product/One Message
or Straight Extension

• Successes
• Proctor Gambles Head and Shoulders in China
• Kodak in China
• Nike and Reebok
• Disasters
• Campbells Soup lost 30 million with condensed
  soups in England

Back
22
The Global Marketing MixMessage or
Communication Adaptation

• Same message vary only language and colors
• Successful Exxons Put a tiger in your tank
• Unsuccessful Clairols Mist Stick in Germany.
• Mist is slang for manure
• Same global theme, but adapt copy
• Camay Soap woman bathing with
• In Venezuela, man in the bathroom
• In Italy, only a mans hand was seen
• In Japan, the man waited outside
• Global pool of ads or country-specific ads
• Kraft uses very different ads for Cheez Whiz
• Puerto Rico, put it on everything
• Canada, considered a breakfast toast spread
• US, considered junk food

Back
23
The Global Marketing Mix

• Product Adaptation slightly alter product to
  meet local preferences conditions
• Smaller products or packages
• Stronger or weaker flavors
• Product Invention creating new product or
  drastically changing an existing product

Back
24
The Global Marketing Mix
Pricing

• Must consider transportation and insurance
  costs, taxes and tariffs

• Determine what customers will spend

• Dumping of goods

25
The Global Marketing Mix
Distribution
Foreign distribution systems offer U.S. firms
many challenges . . .

• Japanese distribution system is the most
  complicated in the world
• To sell soap, PGs must sell to a general
  wholesaler -gt
• product wholesaler -gt product specialty
  wholesaler -gt
• regional wholesaler -gt local wholesaler -gt
  retailer

• Distribution channels and physical
  infrastructure may be inadequate

• Retail institutions may differ from
  companys domestic market