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Global Marketing

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Title: Global Marketing


1
Global Marketing
  • By Usman Waheed
  • 923006641921

2
Chap 01
  • Global Marketing

3
GLOBAL MARKETING
  • Overview
  • Global marketers consider the world
    as their market and different country markets as
    components of this world market

4
Defining Global Marketing
  • AMAs Definition of Marketing
  • Marketing is the process of planning and
    executing the conception, pricing, promotion, and
    distribution of ideas, goods, and services to
    create exchanges that satisfy individual and
    organizational objectives

5
Defining Global Marketing
  • Distinguishing Features of AMAs Definition
  • 1. Includes nonprofit and for profit
    activities
  • 2. Includes products, ideas, and services
  • 3. Includes activities that precede and
    follow the production process
  • 4. Includes the four Ps and regards them
    each as equally important

6
Defining Global Marketing
  • Global Marketing Defined
  • the coordinated performance of marketing
    activities to create exchanges across countries
    that satisfy individual, organizational , and
    societal objectives

7
Defining Global Marketing
  • Global marketing is conducted across countries
    (not domestic or foreign)
  • Global marketing coordinates activities across
    different country markets
  • Global marketing should be motivated by
    individual, organizational, and societal goals

8
The Global Marketing Environment
  • Focal Point--Consumer
  • Use the Four Ps to Satisfy Consumers
  • Economic, Financial, Political, and Cultural
    Environmental of Each Country Affect marketing
  • Regional and Global Environments Affect Marketing

9
Why Should Firms Engage in Global Marketing?
  • To Survive and Grow
  • 1. Learn to satisfy consumers in diverse
    conditions
  • 2. Manage marketing tasks more efficiently
    and effectively
  • 3. Preempt or counter competitive attacks
    in more than one market
  • 4. Expand customer base to include
    developed and developing nations

10
Why Should Firms Engage in Global Marketing?
  • To Diversify Product and Market Portfolios and
    Improve competitiveness
  • 1. Effects of seasonal and cyclical
    fluctuations in one market offset by others
  • 2. Diversification increases market size and
    enhances economies of scale

11
Why Should Firms Engage in Global Marketing?
  • To Capitalize on the Attractiveness of
    Additional Country Markets
  • 1. The U.S. is attractive-but wont
    accommodate unlimited growth
  • 2. Expand market size by expanding into other
    countries
  • 3. Maurice G. Hardy Why expand into other
    countries? A. Keep competitors in their own
    countries b. Take advantage of growing
    opportunities in Europe and the Pacific

12
Why Should Firms Engage in Global Marketing?
  • To Operate Within a Global Marketplace
  • 1. Goods, services, capital, technology,
    and labor are going global
  • 2. Reduced government restrictions are
    affecting global marketing
  • 3. Bilateral and multilateral negotiations
    are reducing restrictions

13
What is Unique about Global Marketing? Country
market environments different
  • Economic Environment ( Purchasing Power,
    Competitive Intensity, Economys Health)
  • 1. Fiscal policies - tax rates and spending
    programs of government
  • 2. Monetary policies - regulate money supply

14
What is Unique about Global Marketing? Country
market environments different
  • Financial Environment
  • 1. Exchange rate - price of one currency
    in relation to another
  • 2. Exchange rate fluctuations can
    adversely or favorably affect performance of a
    firm

15
What is Unique about Global Marketing? Country
market environments different
  • Political Environment
  • 1. Tariff barriers - taxes on imports paid
    to customs officials - include
  • a. Specific - fixed amount per
    physical unit of import
  • b. Ad -valorem ( on the value ) -
    percentage of estimated value of import
  • 2. Nontariff barriers include
  • a. Import quotas b. Exchange
    controls
  • c. Buy-domestic policies
  • d. administrative red tape

16
What is Unique about Global Marketing?Country
market environments different ?
  • Cultural Environment
  • 1. Differences encourage marketing
    adaptations
  • 2. Similarities encourage standardization
  • 3. Balancing the two is a key to success

17
Marketing Mix Politics - How Do Government
Influence the Four Ps ?
  • Product - Local Content Law
  • Price - Government Approval for Price Changes
  • Promotion - Permissible Budget Determined by
    Local Authorities
  • Place - Mandated Distribution Channel or
    Territory

18
Why Should We Study Global Marketing ?
  • Influences Product Choices of Consumers
  • Influences standard of living
  • Influences Job Opportunities
  • Influences the society

19
Thank You!
20
The Global Economic Environment
  • Global Marketing

21
Whats happening?
  • Asia Pacific
  • Western Europe
  • North America
  • South America

Why and what are the implications?
22
THE ECONOMIC ENVIRONMENT
  • Overview
  • Local, regional, and global economic
    environments are interactive. What happens within
    and among them profoundly influences marketing
    mix decisions.

23
The Local Economy - The Country Where
Marketing Takes Place
  • The Consumers
  • 1. Disposable income (after-tax income)
  • 2. What, when, where, and how much
    consumers buy is influenced by disposable income

24
The Local Economy - The Country Where Marketing
Takes Place
  • The Country
  • 1. Healthy economies facilitate higher
    purchasing power for consumers

25
The Local Economy - The Country Where Marketing
Takes Place
  • 2 . Economic variables GDP GDP per capita GDP
    growth rates savings and investments rates
    inflation and unemployment rates imports and
    exports inflow and outflow of FDI number of
    global corporations in the country structure of
    industries commercial, fiscal, and monetary
    policies of the central government
  • 3. These variables reflect the overall country,
    not specific groups of consumers--dont
    generalize

26
The Local Economy - The Country Where Marketing
Takes Place
  • The Competition - Know Where You Stand in
    Relation to the Competition
  • 1. Porters five forces determining the
    state of competition rivalry among existing
    firms, potential impact of newcomers, power of
    suppliers, power of buyers, substitute goods
  • 2. Prominence of each force varies by
    industry

27
The Regional Economy
  • Agreements Among Nations Include
  • 1. Free-trade areas - no barriers among
    members, national barriers against the rest of
    the would
  • 2. Customs unions - no barriers among
    members, adopt common barriers against the rest
    of the world
  • 3. Common markets - form customs unions with
    free movement of labor and capital
  • 4. Economic unions - one economy, one
    currency, unified fiscal and monetary policies

28
The Regional Economy
  • The European Economic Integration
  • 1. 15 Western European countries moving
    towards economic union
  • 2. EU - to enhance competitive edge of EU
    firms in relation to non - EU firms

29
The Regional economy
  • The Asian Pacific Economies
  • 1. The NICs - South Korea, Taiwan, Hong Kong,
    Singapore - high-value-added competitors
  • 2. Malaysia, Indonesia, Thailand,
    Philippines - entering high-value-added marketers
  • 3. Trade in region has been fueled by
  • a. Increasing domestic demand
  • b. Expanding business involvement
    overseas
  • c. Growing competitiveness of firms based
    in region

30
The Regional Economy
  • The north America Free Trade Agreement
    (NAFTA)
  • 1. U.S., Canada, Mexico
  • 2. Designed to increase size of north
    American market, reduce trade barriers within,
    increase competitive edge of member firms

31
The Global economy
  • Increasing Trade and Investment
  • 1. Why exports increased
  • a . Businesses - to improve
    competitiveness and performance
  • b. Governments - to stimulate domestic
    economic growth
  • 2. Foreign direct investment growing faster
    than exports
  • a . Role in transferring technology,
    managerial expertise, financial resources
  • b. Five major sources U.S., United
    Kingdom, Germany, France, Japan

32
The Global Economy
  • Increasing Interdependence - Our fate is tied
    to that of others
  • Increasing Competition - More players, More
    intensive competition
  • Increasing Complexity - Policies designed for
    one country affect the performance of others

33
THE GLOBALIZATION OF THE U.S. ECONOMY
  • Future Growth Cannot Rely Exclusively on Domestic
    Market
  • Firms with Global Operations can Better
  • 1. Develop new products
  • 2. Establish new markets
  • 3. Cross-subsidize products and markets -
    use financial resources from one market to fight
    in another

34
Thank You!
35
Chapter 03
  • The Financial Environment

36
The Financial Environment
  • Overview
  • Understanding and managing the key elements
    of the financial environment are requisites for
    successful global marketing

37
Key Features of the global Financial System
  • Acceptability and Convertibility of Currencies
    from Different countries
  • Hard Currencies Are Freely Traded in Foreign
    Exchange markets
  • Soft Currencies Are Not Freely Traded

38
Key Feature of the Global Financial System
  • Exchange Rates - The Price of One Currency in
    Terms of Another
  • 1. Floating exchange rates are determined by
    market conditions alone
  • 2. Managed float is determined by
    government-managed demand and supply

39
Key Feature of the Global Financial System
  • Depreciation and Appreciation of One currency in
    Relation to Another
  • Price
  • Demand
  • Profit
  • Market penetration

40
Managing exchange Risks Through Spot
Transactions and Forward Transactions
  • Four Types of exchange Risks
  • 1. Transaction exposure - when converting
    currencies at a later date
  • 2. Translation exposure - when exchange
    rates upon consolidation differ from those at
    time of transaction
  • 3. Tax exposure - when changing exchange
    rates result in a different tax liability
  • 4. Economic exposure - long-term exposure
    and its affect on present value of future cash
    flow

41
Managing exchange Risks Through Spot Transactions
and Forward Transactions
  • Three Methods of Protecting against Exchange
    Rate Losses
  • 1. Natural hedging - buying and selling in
    the same currency
  • 2. Currency forwards - contracts
    guaranteeing an exchange rate
  • 3. Options - the rights of a contract
    without the obligation to fulfill it

42
Financial Institutions and Their Roles in
Business
  • Commercial Banks Facilitate Global Marketing by
  • 1. Providing free consulting services
  • 2. Providing collection, payment, and document
    preparation services
  • 3. Exchanging currencies and providing financial
    and hedging facilities
  • 4. Collecting financial documents
  • 5. Transferring funds and providing credit
    information on buyers
  • 6. Providing letters of introduction and letters
    of credit

43
Financial Institutions and Their Roles in
Business
  • Export-Import Bank ( Eximbnak ) Assists U.S.
    Exporters Through
  • 1. Direct loans
  • 2. Guarantees
  • 3. Engineering multiplier program
  • 4. Operation and maintenance service program
  • 5. Working capital guarantees
  • 6. Export credit insurance

44
The Global Currency Market and Its Major
Players
  • Global Wholesale and Retail Market for
    Currencies
  • Eurocurrency Market - Currencies traded outside
    their origin
  • Asian Dollar Market - Banks in Singapore and
    Hong Kong Dealing in Dollars
  • European Monetary System for the European Union

45
Thank You!
46
Chapter 04
  • THE POLITICAL AND LEGAL ENVIRONMENT

47
THE POLITICAL AND LEGAL ENVIRONMENT
  • Overview
  • After global marketers understand why and how
    governments regulate their business activities,
    they can better analyze and respond to
    governmental actions

48
Why Do Governments Intervene?
  • To stay in power
  • To achieve socioeconomic goals
  • Macro-systemic concerns identified by Boddewyn
    and Cracco
  • 1. To protect the national interest
  • 2. To maintain national sovereignty
  • 3. To preserve the national identity

49
Types of Interventions
  • In ownership and Control
  • 1. Confiscation - takeover without compensation
  • 2. Expropriation - takeover with compensation
  • 3. Domestication - relinquishment of ownership
    and control to locals

50
Types of Interventions
  • Other Forms of Intervention
  • 1. Exchange controls
  • 2. Export requirement as percentage of local
    output
  • 3. Import restrictions
  • 4. Taxation increases

51
Types of Intervention
  • Some Marketing Mix Regulations
  • 1. Local content law (product)
  • 2. Price ceiling (price)
  • 3. Distribution territory specifications (place)
  • 4. Local advertising agency requirement
  • (promotion)

52
Assessing Political Risk - Estimating the
likelihood of Governmental Intervention
  • Seeking Experts Opinions
  • 1. Current and retired government officials
    familiar with the local situation
  • 2. Academics specializing in a region and its
    politics
  • Conducting In-House Research to Monitor
    Political developments

53
Assessing Political Risk - Estimating the
likelihood of Governmental Intervention
  • Utilizing Secondary Sources Who Provide Risk
    Indexes
  • 1. BERI (Business Environment Risk Index)
  • 2. Business International (BI)
  • 3. Frost Sullivan
  • 4. PSSI (Political System Stability Index)

54
Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance
  • Identify with the country - Dont maintain a
    foreign image
  • Help the host country achieve its societal goals
  • 1. Improve local management skills
  • 2. Increase local productivity
  • 3. Increase local employment

55
Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance
  • Promote Vertical Integration by Linking
    Corporate Activities Across Countries
  • Stay Ahead of Intervention by Upgrading
    Bargaining Power
  • 1. Keep introducing new products and technology
  • 2. Increase exports

56
Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance
  • Insure Against Political Risk
  • 1. Overseas Private Investment Corporation (OPIC)
  • 2. Foreign Credit Insurance Association (FCIA)

57
Thank you!
58
Chapter 05
  • The Culture Enviroment

59
THE CULTURAL ENVIRONMENT
  • Overview
  • Developing marketing activities in harmony
    with the local culture can mean the difference
    between success and failure in a market

60
Characteristics of Culture - What They All Have
in Common
  • Culture Is Prescriptive -Defines What Is
    Acceptable
  • Culture Is Learned - not Genetic
  • Culture is Dynamic - An Interactive Relationship
    Between Behavior and Culture
  • Culture Is Subjective - Meanings Vary by Culture

61
Low-Context and High-Context Cultures - Verbal
And Nonverbal Messages Determine meaning
  • Low-Context Cultures - What Is Said Is More
    Important Than How or Where It Is Said
  • 1. U.S.
  • 2. Germany
  • High-Context cultures - What Is Said and How or
    Where It is Said Are Significant
  • 1. Asia
  • 2. Latin America
  • 3. Middle East

62
Monochronic and Polychronc Cultures - Hall and
Hall
  • Monochronic
  • 1. Linear information processing
  • 2. Focus on one thing at a time
  • 3. Hold to rigid schedules
  • Polychronic
  • 1. Work on several tasks at a time
  • 2. Human transactions are important

63
Culture and Verbal Communications - Understanding
Through language
  • One Language - English -Meaning can Vary by
    Country
  • Using Language to Interpret the World
  • What Works here May Not Work There

64
Culture and Nonverbal Communication - Can
Actions Speak Louder Than Words ?
  • Perception of Time Affects the Quality of
    Marketing Interactions
  • 1. For some, time is linear and fixed
  • 2. For others, time is on a continuum
  • Perception of Space Influences Business Decisions
  • 1. Product size
  • 2. Retail store layout
  • 3. Office design
  • 4. Feng Shui

65
Culture and Nonverbal Communication - Can
Actions Speak Louder Than Words ?
  • Symbols Are Communication Shorthand
  • 1. Colors convey symbolic meaning
  • 2. Numbers - lucky or unlucky
  • 3. Products - luxury or necessary
  • Negotiations - Sometimes a Handshake Seals the
    Deal
  • Gift Giving

66
Self-Reference Criterion - Unconscious Reference
to Ones Own Cultural Values
  • Lees Four-Step Process to Avoid Self-Reference
    Mistakes
  • 1. Define goal in terms of own cultural traits
  • 2. Define goal in terms of foreign cultural
    traits
  • 3. Isolate SRC influence and anticipate the
    complications
  • 4. Redefine problem without SRC influence and
    find solution
  • Multicultural Training Programs to Improve
    Cross-Cultural Interactions

67
Understanding Cultural Universals Can Help
Marketers Develop effective Product Strategies
68
Thank you!
69
Chap 06
  • Global Product Strategies

70
GLOBAL PRODUCT STRATEGIES
  • Overview
  • Although all four elements of the marketing
    mix are essential for success, a products
    performance determines whether consumers will
    engage in repeat purchases

71
What Is a Product ?
  • Anything with exchange Value (Objects, Ideas,
    Organizations, People)
  • The Total Product
  • 1. Tangible attributes raw materials, size,
    weight, features, design, packaging
  • 2. Intangibles brand image, styling, other
    benefits (installation, delivery, credit,
    warranty, after-sale service, return policy)

72
The Product Development Process
  • Generating Ideas
  • 1. To tap new or existing markets, complement
    product lines, improve products
  • 2. From consumers, competitors, employees,
    inventors, research organizations, universities
  • 3. Global firms advantage - exposure to
    numerous country markets

73
The Product Development Process
  • Screening Ideas
  • 1. Acceptable versus unacceptable
  • 2. Criteria compatibility, production fit,
    philosophical fit, competitive fit, potential
  • 3. Misclassifying or ignoring ideas can be
    costly
  • Business Evaluation
  • 1. Cost-benefit analysis
  • 2. Commercial viability-existing and prospective
    markets

74
The Product Development Process
  • Product Development
  • 1. Determine tangible and intangible attributes
  • 2. Consider marketing components that enhance
    appeal
  • Test market - Select Representative Markets to
    test Consumer's Response
  • 1. Adapted products - within each country market
  • 2. Standardized products - representative
    markets

75
The Product Development Process
  • Product Introduction
  • 1. Standardization- marketing unmodified
    products in multiple countries
  • a . Premise consumes share some common values,
    beliefs, and consumption patterns a standardized
    product will satisfy them
  • b. Advantages economies of scale, price
    competitiveness, uniform image

76
The Product Development Process
  • 2. Adaptation - modifying product to reflect
    characteristics of a market
  • a. premise consumers are not the same adapted
    products are needed
  • b. Advantages fit between product and
    consumer, expanded penetration

77
The Product Development Process
  • 3. Mandatory product adaptations due to
  • a. Governmental regulations
  • b. Technological considerations (e.g.,
    voltage, infrastructure)
  • c. Cultural imperatives - is it acceptable to
    consumers
  • d. measurement standards volume, length,
    weight, quantity

78
Product Adoption
  • Relative Advantage - To satisfy Needs Better Than
    the Competition
  • Compatibility - The Fit of Product to Norms,
    Values, and Tastes of Market
  • Trialability - Ease of Sampling a New Product
  • Complexity - Easier to Use, More Likely to Be
    Adopted
  • Observability - To What Extent Benefits Can Be
    Observed and Understood

79
Product management (Product-Market Portfolio
Matrix)
  • Competitive Strength Market Share, Products Fit
    to Customer Expectations, Marketing Ability,
    Product Positioning, Channel Cooperation, Profit
    Potential
  • Country Attractiveness Market Size, Growth Rate,
    Competitive Environment, Governmental
    Regulations, Political Stability

80
The U.S. Economy and the Product Composition
of Its exports ( Largely High-Value-Added
Products )
81
Competitive Product Developments
82
Chap 07
  • Global Pricing Decision

83
Global Pricing Decisions
  • Overview
  • Of the four Ps, price alone generates
    revenue. Competitive pricing enhances market
    position and earnings

84
Pricing Methods
  • Cost-Oriented Methods - Focus on Cost, Not
    Market Conditions
  • 1. Markup pricing - adding markup to unit cost of
    product
  • a. Information needed fixed cost, variable
    cost, expected sales, markup
  • b. Appeal is simplicity
  • c. Risks overpricing and underpricing

85
Pricing Methods
  • 2. Standard pricing - charging the same price in
    all countries
  • a. Drawbacks lacks marketing orientation,
    difficult to implement
  • b. Advantage firm wont be blamed for price
    discrimination

86
Pricing Methods
  • 3. Target return pricing - setting a target rate
    or return
  • a. Information needed total investment,
    desired target return, unit cost, expected sales
  • b. Drawbacks lacks marketing orientation,
    sales and cost estimates must be accurate

87
Pricing Methods
  • Market-Oriented Methods - Focus on Both Market
    Conditions and Cost
  • 1. Market-based pricing - may attract
    accusations of unfair pricing and encourage the
    practice of gray marketing
  • 2. Strategic pricing-setting minimum standard
    price while giving local managers freedom to
    charge more

88
Strategic Issues in Global Pricing
  • Managing Price Escalation - Increased Cost Due to
    international Product transfers
  • 1. Ship components, assemble locally
  • 2. Downsize
  • 3. Shorten distribution channel
  • 4. Increase overall productivity

89
Strategic Issues in Global Pricing
  • Transfer Pricing - Price Charged for Goods
    Transferred Intraorganizationally
  • Exchange Rate Fluctuations - Must Be managed to
    Control Gray Marketing and Accusations of Dumping

90
Strategic Issues in Global Pricing
  • Gray marketing or Parallel Imports - Buying in
    Low-Price Countries, Selling in High-Price
    Countries
  • 1. Causes market-based pricing and exchange
    rate fluctuations
  • 2. Remedial measures narrow price
    differential, differentiate product

91
Strategic Issues in Global Pricing
  • Dumping - Selling at Price Below Normal Value in
    Export Market
  • 1. Sporadic - to reduce surplus inventory
  • 2. Predatory - to drive out competitors, to
    gain market control
  • 3. Persistent - high prices in protected
    markets,low in competitive markets

92
Terms of Payment
  • EXW (Ex Works) - For Goods at Point of Origin
  • FAS (Free Alongside Ship) - For Goods Delivered
    Alongside Vessel
  • FOB (Free on Board) - For Goods Aboard Vessel
  • CF (Cost and Freight) - For Goods at Overseas
    Port

93
Terms of Payment
  • CIF (Cost, Insurance, Freight) - For Goods at
    Point of Debarkation
  • CPT (Carriage Paid To) - same as CF for
    Nonwater Transportation
  • CIP (Carriage and Insurance Paid To) - Same as
    CIF for nonwater Modes

94
Modes of Payment
  • Cash in Advance
  • Open Account - Payment for Goods at Future Date

95
Modes of Payment
  • Letter of Credit - Issued by a Bank
  • 1. Revocable - can be altered by buyer after
    issuance
  • 2. Irrevocable - cannot be altered without an
    agreement between the buyer and the seller
  • 3. Confirmed -seller assured of payment by
    sellers bank
  • 4. Confirmed Irrevocable

96
Modes of Payment
  • Draft or Bill of Exchange - Negotiable
    Instrument
  • 1. Sight ---payable upon presentation
  • 2. Time ---payable within specified period
  • 3. Date - payable on specific future date

97
Modes of Payment
  • Forfating - seller Paid by Bank, Not Buyer
  • Countertrade - Payment in Whole or in Part by
    Goods or Services
  • 1. Barter - no money changes hands
  • 2. Counterpurchse - goods purchased from each
    other with cash
  • 3. Compensation deals - payment in both cash
    and goods
  • 4. Buyback arrangements

98
Chap 08
  • Global Logistics Channels

99
GLOBAL LOGISTICS CHANNELS
  • Overview
  • Moving raw materials and finished products from
    one country to another creates challenges unique
    to global distribution

100
Features of Global Logistics
  • Global Flow of Materials - Components Moved
    Elsewhere for Assembly
  • Global Distribution of Products - Finished
    Products Moved to Final Markets

101
Features of Global Logistics
  • Functions of the Global Distribution Channels Can
    Include
  • 1. Collect, analyze, and transmit information
  • 2. Initiate and maintain contacts with buyers
  • 3. Receive, process, and execute orders
  • 4. Arrange shipping, insurance, and delivery
  • 5. Take title to goods
  • 6. Make the sale

102
Features of Global Logistics
  • Channel Intermediaries Include
  • 1. Merchant middlemen - take title and assume
    risks
  • 2. Agent middlemen - do not take title
  • Goals of Channel Management
  • 1. Efficiently move products from home country
    to host country
  • 2. Deliver satisfaction t final customers
    competitively

103
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers
  • Host Country Distributors Are Merchant Middlemen
  • 1. Buy from firm, sell to retailers or final
    consumes
  • 2. Often enjoy exclusive rights for product or
    region
  • 3. It is a long-term commitment - choose
    carefully
  • 4. Robinson listed provisions of what to
    include in the contract

104
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers
  • Host Country Retailers Are Merchant Middlemen
  • 1. Buy from firm, sell to final consumes
  • 2. Japanese retailers - greater in number,
    serve fewer customers than U.S. counterparts
  • 3. International retail outlets in the rise

105
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers
  • Import Jobbers Are Merchant Middlemen in Host
    Country
  • 1. Buy from firm, sell to intermediaries or
    final consumers
  • 2. Do not have exclusive territories
  • 3. Firm may employ several in one country

106
The Direct Channel of Global Distribution -
Dealing directly with Overseas Middlemen or
Consumers
  • Manufacturers representatives are Agent
    Middlemen
  • 1. Do not take title but represent firm
  • 2. Choose carefully - often difficult to
    terminate relationships
  • Consumers - No Intermediaries

107
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Export Drop Shippers
  • 1. Take orders from buyer and tell seller to
    ship to buyer
  • 2. Buyer pays drop shipper who pays firm
  • 3. Do not hold inventories, offer minimal
    promotional help

108
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Export Merchants
  • 1. Buy from firm, sell abroad
  • 2. Assume risk
  • 3. Advantage to firm easy to establish
    marketing presence
  • Export Trading Companies (ETCs) Can Act as Export
    Department for Firm or Take Title to Products

109
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Manufacturers Export Agents (MEAs) Are Agent
    Middlemen
  • 1. Represent firm and provide selling services
  • 2. Use own name, not the firms
  • 3. Services are specified in contract

110
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Export Management Companies (EMCs) Are Agent
    Middlemen
  • 1. Provide extensive marketing services
  • 2. Earn commission, or salary, or work on
    retainer

111
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • 3. Advantages
  • a. Are helpful in markets where firm has
    little experience
  • b. Require less investment (financial and
    personnel) in market

112
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • 4. Disadvantages
  • a. May not make necessary investments
  • b. May demand startup costs
  • c. May underrepresent firm
  • d. reduce gross margins, impede customer
    communications, hinder market assessment

113
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Export Brokers Are Agent Middlemen
  • 1. Work for fee or commission
  • 2. Relationship is sporadic

114
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Webb-Pomerence Association
  • 1. U.S. firms can legally combine resources to
    expand exports
  • 2. Cannot reduce U.S. competition by doing so
  • 3. Association performs functions for members

115
Designing a Distribution Channel Within a Host
Country - Important Factors
  • Consumer Characteristics - Know Where , When,
    What, How and Why They Buy
  • Product Characteristics Influence Channel
    Decisions
  • Market Characteristics
  • 1. Assess strengths of existing distribution
    structure
  • 2. Adapt to local conditions as needed

116
The Indirect Channel of Global Distribution
-Relying on Home-Country Intermediaries
  • Channel Costs
  • 1. Development costs - initial outlay
  • 2. Maintenance costs - operation expenses
  • 3. Level of customer service directly related
    to cost
  • Coverage - Concentrated Within Major Cities or
    Spanning the Whole Country

117
Managing Channel Alliances - Relationships Evolve
  • Communicating with Channel Members
  • 1. Communicate goals to them
  • 2. Receive feedback from them
  • 3. Employ telecommunications technology to
    achieve goals

118
Managing Channel Alliances - Relationships Evolve
  • Motivating Channel Members
  • 1. Offer training
  • 2. Provide promotional displays
  • 3. Participate in cooperative advertising

119
Managing Channel Alliances - Relationships Evolve
  • Controlling Channel Members
  • 1. Develop performance criteria
  • 2. Evaluate performance against criteria
  • 3. Take corrective actions if needed
  • 4. Design system for timely attention to
    channel performance

120
Managing Channel Alliances - Relationships Evolve
  • 5. Challenges for effective control
  • a. Reliable performance data may be lacking
  • b. cost of gaining data may exceed benefit
  • c. Changes in environment may outdate criteria

121
Evaluating Channel Performance - Measurement
Criteria
  • Sales Analysis - Actual Versus Expected
  • Level of Service - Does It meet Consumer Needs?
  • Level of Inventory - Is it Adequate t Meet Demand?

122
Chap 09
  • Global Promotion Strategies

123
GLOBAL PROMOTION STRATEGIES
  • Overview
  • Marketing communications include advertising,
    sales promotion, personal selling, and public
    relations. When communicating with publics in
    more than one country, firms must work within the
    limitations of each market to maximize their
    promotional objectives.

124
Elements of the Communication Process
  • Sender
  • Encoding
  • Message
  • Medium of Transmission
  • Receiver
  • Decoding
  • Response
  • Feedback
  • Noise

125
Global Advertising - Any Paid Form of Nonpersonal
communication Where the Sponsor Is Identified
  • Often Controversial
  • Benefits Derived from Advertising
  • 1. Economic
  • a. Sales increase
  • b. Production increases
  • c. Per-unit cost of product goes down -
    economies of scale

126
Global Advertising - Any Paid Form of Nonpersonal
communication Where the Sponsor Is Identified
  • d. Price decreases
  • e. Sales increase further
  • f. Competition increases - yielding higher
    productivity and better product quality
  • 2. Social
  • a. Employment is generated
  • b. Higher standard of living

127
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • Advertising Message
  • 1. Standardize when country markets are
    similar
  • 2. Adapt when they are different
  • 3. Avoid taboos of target market - dont
    offend

128
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • Budget and Allocation Based on Internal and
    External Conditions
  • 1. Internal conditions
  • a. management orientation
  • b. Advertising objectives
  • c. Resources available

129
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • 2. External conditions
  • a. Governmental regulations
  • b. Competitors advertising strategies
  • c. Market attractiveness
  • d. Media restrictions

130
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • Media Options and Country Characteristics -
    Effectiveness Versus Economy
  • 1. Television
  • a. Developed countries (DCs) - countrywide
    availability
  • b. LDCs - concentrated in major cities, per
    capita ownership of TVs is lower
  • c. Limitations ads may be bunched,
    broadcasting times vary, ads regulated

131
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • 2. Radio
  • a. DCs - popularity on the rise, many
    program options available
  • b. LDCs - good medium to reach uneducated
    urban and rural customers
  • 3. Magazines

132
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • 4. Newspapers
  • a. Advantages fast and economical
  • b. Disadvantages some LDCs dont compile
    demographic data they have space limitations and
    content specifications

133
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • 5. Direct mail
  • a. DCs - more common
  • b. LDCs - limited opportunities, lack of
    reliable lists, undependable delivery, low
    literacy rates
  • 6. Catalogs - limited to DCs for same reasons
    as for direct mail

134
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • 7. Facsimile - controversial
  • 8. Videos
  • a. Time not limited to 30- or 60- second
    slots
  • b. DCs - whole video can be an ad
  • c. LDCs - movie d\videos contain ads
  • 9. Cinema - these ads more common in LDCs
  • 10. Billboards - all countries

135
Planning an Advertising Campaign - Specify
Objectives Then Decide On
  • Advertising Regulations - Know Them and Adapt
    Message Accordingly
  • Agency Selection
  • 1. Global agency
  • 2. Local agency
  • 3. Combination of both

136
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • Consumer Sales Promotion Techniques - Can Foster
    Long- Term Objectives
  • 1. Coupons - maintain current customers,
    attract new ones
  • 2. Rebates - maintain current customers,
    attract new ones
  • 3. Free samples - encourage new users by
    eliminating cost
  • 4. Mail-in premiums

137
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • 5. In-pack premiums - promotional benefit
    packaged with the product
  • 6. Bonus packs - more product for the same
    price
  • 7. Trading stamps - increase store patronage
  • 8. Contests and sweepstakes - enhance name
    recognition and stimulate sales

138
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • Trade Sales Promotion Techniques - Persuade
    Channel Members to Carry Products or to Increase
    Sales
  • 1. Sales contests - increase sales
  • 2. Price-off offers - push new products or
    move large quantities
  • 3. Advertising allowances

139
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • 4. Display allowances
  • 5. Free goods
  • 6. Push money - money to carry and to push
    products

140
Global Personal Selling - Keeping Buyers Happy,
the Firm Informed
  • The Personal Selling Process
  • 1. Panning what, how, when
  • 2. Prospecting who
  • 3. Preparing what buyers need, competitors
    offer

141
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • 4. Selling
  • a. Approaching customer
  • b. Making presentation
  • c. Answering questions
  • d. Closing sale
  • 5. Following up - establishing solid link

142
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • Managing the Global Sales Force
  • Sales Force Compensation
  • 1. Straight salary
  • a. Advantages sales force security, easy
    to administer
  • b. Disadvantage lower sales if
    unmotivated sales force

143
Global Sales Promotions - Short-Term Efforts to
Increase Sales
  • 2. Straight commission - fixed percentage or
    varying percentage
  • a. Advantage encourages performance
  • b. Disadvantage salespeople may stop with
    quotas
  • 3. Combination salary and commission

144
Global Public Relations - Tools for Building a
Favorable Image
  • Employee Relations - Create Favorable Ambassadors
    to the Community
  • Customer Relations - Show Firm Cares About
    Customers
  • Press Relations - Keep Shapers of Public Opinion
    on Firms Side
  • Government Relations - Be a Good Citizen

145
Chap 10
  • Global Business Involvement

146
GLOBAL BUSINESS INVOLVEMENT MARKET ENTRY
STRATEGIES
  • Overview
  • Entry strategies vary in terms of their
    advantages, disadvantages, and levels of
    involvement. The marketing options open to firms
    are in part determined by mode f entry.

147
Entry Strategies
  • Exporting --Historically Most Popular
  • 1. Types
  • a. Direct - firm handles all tasks to sell
    within host country
  • b. Indirect - firm delegates the tasks to an
    intermediary

148
Entry Strategies
  • 2. Advantages
  • a. Minimizes political risk
  • b. Useful when market potential is hard to
    assess
  • c. Offers channel flexibility
  • d. Prepares firm for greater involvement
  • e. Offers ease in market withdrawal

149
Entry Strategies
  • 3. Disadvantages
  • a. Exchange rate fluctuations and
    governmental intervention can affect earnings
  • b. Lack of market presence can affect
    response time
  • c. Loss of marketing control can affect
    corporate image

150
Entry Strategies
  • Licensing - Payment of Fee or Royalty for Use of
    Anything of Value
  • 1. Advantages
  • a. To firm, cost effective
  • b. To importing country, brings technology
    and managerial expertise

151
Entry Strategies
  • 2. Disadvantages
  • a. Can restrict firms full realization of
    market potential
  • b. Can create third market competitors
  • c. Can result in loss of control over
    technology and product quality
  • d. Can result in conflicts between parties

152
Entry Strategies
  • Franchising - Payment of Fee and Royalty in
    Exchange for Anything of Value Plus Operational
    and Managerial Help
  • 1. Advantages same as for licensing
  • 2. Disadvantages same as for licensing

153
Entry Strategies
  • Contract Manufacturing - Contractual Partner
    manufactures Parts or Product for Firm
  • 1. Advantages
  • a. Firm can focus exclusively on marketing
  • b. Economical means of expansion

154
Entry Strategies
  • 2. Disadvantages
  • a. Partner may turn competitor
  • b. Loss of control over manufacturing
  • c. Products may not always be available on
    time

155
Entry Strategies
  • Management Contracting - Selling Managerial or
    Technical Expertise
  • 1. Advantages
  • a. Utilizes excess managerial talent
  • b. Establishes contacts in host country
  • c. Offers ease of remitting consulting fees
  • d. Provides resources t its nearby
    operations
  • 2. Disadvantages limited duration may
    necessitate withdrawal from country

156
Entry Strategies
  • Turnkey Operations - Complete the Project Before
    Turning It Over to Owner
  • 1. Advantages projects are large, long-term,
    an profitable
  • 2. Disadvantage outcome is more uncertain
    over longer period of time

157
Entry Strategies
  • Foreign Direct Investment
  • 1. Joint ventures (JVs) - partners share
    ownership, risk, profit, and control
  • a. Between foreign-owned firm and privately
    owned local firm
  • b. Between foreign-owned firm and local state
    firm or government
  • c. Between several foreign-owned firms with
    no local participation

158
Entry Strategies
  • 2. Wholly-owned subsidiaries (WOSs)
  • 3. Advantages of both JVs and WOSs
  • a. Greater control
  • b. Entry into closed markets
  • c. Potential for vertical integration
  • d. Access to supplies
  • e. Ability to respond to competitive
    challenges

159
Entry Strategies
  • 4. Disadvantage of JVs potential for
    disagreements among partners
  • 5. Disadvantage of WOSs greater risk

160
Entry Strategies
  • Strategic Alliances - Cooperation Between Firms
    Without creating a New Entry
  • 1. Advantages
  • a. market access
  • b. Shared RD expenses, resources, and risks

161
Entry Strategies
  • 2. Disadvantages
  • a. Potential to lose competitive edge
  • b. Possible ineffectual communications among
    partners from different cultures

162
Factors Influencing Entry Strategies
  • Internal Conditions - Specific to the Firm
  • 1. Objectives - what firm wants to achieve in
    relation to the product
  • 2. Management orientation - biases affect entry
    strategy decisions
  • 3. Resources - impose constraints that affect
    entry strategies
  • 4. Type of product - what strategy best fits
    the characteristics of the product

163
Factors Influencing Entry Strategies
  • External conditions
  • 1. Market potential - which strategy will
    maximize market potential
  • 2. Competitive environment - existing and
    expected

164
Factors Influencing Entry Strategies
  • 3. Home country regulations - affect how and
    where firm can sell
  • 4. Host country regulations - affect entry
    options
  • 5. Political risk - high risk favors less
    involvement low risk favors more

165
Stages of Business Involvement
  • The International Product Life-Cycle Hypothesis
  • 1. New-predate stage manufactured at home,
    some exports to developed countries (DCs),
    domestic sales dominate, no competition, high
    price, patent protection

166
Stages of Business Involvement
  • 2. Maturing-product stage DC demand rises,
    increasing exports yield to production in DCs,
    domestic exports decline, competition increases,
    prices fall, DCs produce for selves and export
  • 3. Standardized-product stage fierce price
    competition, production shifts to developing
    countries, they start exporting to DCs who become
    net importers

167
Chap 11
  • Strategic Global

168
STRATEGIC GLOBAL MARKET MANAGEMENT
  • Overview
  • The nuts and bolts of strategies deal with
    when, where, how, why, and by whom the necessary
    actions are performed to achieve a firms
    objectives

169
Strategic Analysis
  • Strengths and Weaknesses
  • 1. Identify key success factors specific to a
    given business
  • a. Technology - turning concepts into
    products
  • b. Marketing - ability in product, price,
    place, and promotion

170
Strategic Analysis
  • c. Information management - the acquisition
    an use f information
  • d. management skill - decision making and
    behavior of managers
  • 2. Rate self on key factors in relation to
    competitors

171
Strategic Analysis
  • Opportunities and Threats - Existing and
    Potential
  • 1. First identify then rank order
  • 2. Key areas customers, special-interest
    groups, competitors, governments, technologies,
    markets

172
Strategies
  • Product-market Growth matrix - Four Basic Growth
    Strategies
  • 1. Market Penetration--use existing products
    to penetrate existing markets
  • 2. Product development--sell new or adapted
    products in existing markets
  • 3. Market development--sell existing products
    in new markets
  • 4. Diversification--introduce new or adapted
    products into new markets

173
Strategies
  • Strategic Business Unit (SBU) Portfolio Strategy
    Using the Boston Consulting Groups Growth-Share
    Matrix
  • 1. Stars high-growth market, high market
    shares
  • 2. Problem children high-growth market, how
    market shares
  • 3. Cash cows low-growth market, high market
    shares
  • 4. Dogs low-growth market, low market shares

174
Strategies
  • Corporate Competitive Strategy--Six Alternatives
    Based on Scope of Operations and Levels of Market
    Penetration
  • 1. Global high-share strategy --for high market
    share using standardized products
  • 2. Global niche strategies--to gain global
    presence with specialized products

175
Strategies
  • 3. Regional high-share strategies -- for high
    market share within a region
  • 4. Regional niche strategies -- for specialized
    markets within a region
  • 5. National high-share strategies--high market
    share within a country
  • 6. National niche strategies--for specialized
    markets within a country

176
Strategic Predispositions
  • Ethnocentrism--Basing decisions on Home Country
    values and Interests
  • Polycentrism--Basing Decisions on the Values of
    Each Country Where Firm Operates
  • Regiocentrism--Basing Decisions on Values of a
    Specific Region
  • Geocentrism--Basing Decisions on Worldwide
    Opportunities

177
Some Global Strategic Considerations
  • Production Location and Souring --Dont Base
    Decisions in Cost alone
  • The Double Squeeze--newly Industrialized
    countries Compete with DCs in Low- and
    High-Value-Added Products

178
Some Global Strategic Considerations
  • Business and Politics--Government Influences Its
    Firm's Competitive Advantage
  • Post-Marketing Concerns--Satisfying Consumers
    Within Environmental Constraints and in Harmony
    with Special-Interest Groups

179
Chap 12
  • Ethics and Global Marketing

180
ETHICS AND GLOBL MARKETING
  • Overview
  • Ethics is needed for long-term success.
    Internal and external forces encourage firms to
    become ethical global citizens. Management
    strategies, codes of conduct, ethical
    philosophies, and decision-making checklists are
    some of the tools firms are using to foster
    ethical actions

181
Why Ethics?
  • Gellerman Manages Rationalize Unethical Actions
  • 1. It is legal (ethical)
  • 2. It is in our interest (mine, companys)
  • 3. We wont get caught
  • 4. The company will back me on this

182
Why Ethics?
  • Cooke Fourteen Signs of Ethical Risk
  • Ethics Is Good for Long- Term Survival
  • Simss Strategies for Promotion Ethical Behavior
  • 1. CEO should encourage it
  • 2. Develop formal process to reinforce it
  • 3. Managements philosophy should
    institutionalize it at all levels

183
Ethical Philosophies
  • Utilitarianism
  • 1. Focuses on consequences of action
  • 2. Strives f r greatest good for greatest
    number of people
  • 3. But what constitutes a society?

184
Ethical Philosophies
  • Egoism
  • 1. Focuses on consequences of action
  • 2. Strives for greatest good for oneself
  • 3. Inherent weaknesses
  • a. Would not take stand against blatant
    infractions
  • b. Cannot resolve conflicting interests of
    two or more parties

185
Ethical Philosophies
  • Deontology
  • 1. Focuses on universal principles of right and
    wrong
  • 2. Motives and character of actor more
    important than consequences of action

186
Ethical Philosophies
  • Relativism
  • 1. Right and wrong are culture specific -- no
    universal rules
  • 2. Can be used to defend actions harmful to
    customers in other countries

187
Ethical Codes for Marketing --How Some Firms Help
manages Ask the Right Questions Before Making
Decisions
  • Codes of Conduct Range from General to Specific
  • Seven- Step Checklist for Ethical Decision making
  • 1. Recognize and clarify dilemma
  • 2. Get the facts
  • 3. List the options

188
Ethical Codes for Marketing --How Some Firms Help
manages Ask the Right Questions Before Making
Decisions
  • 4. Test each Is it legal? right? beneficial ?
  • 5. Make decision
  • 6. Double check How would I feel if my family
    found out? What if the paper found out?
  • 7. Take action

189
Some External Factors Encouraging Ethical
Consideration by Executives
  • Information Technology -- Markets Are not
    Isolated What Happens Here Is Reported There
  • Visible Destruction of Environment Results from
    Unethical Practices

190
Some External Factors Encouraging Ethical
Consideration by Executives
  • Special- Interest Groups Are Gaining Power to
    Promote Ethical Corporate Behavior
  • Market Forces Favor Ethical Companies in the
    Long- Run
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