Global Marketing And Its Development

Global Marketing

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Chap 01 Global Marketing

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

Defining Global Marketing • AMA’s 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

Defining Global Marketing •

Distinguishing Features of AMA’s 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 P’s and regards them each as equally important

Defining Global Marketing •

Global Marketing Defined:

•

… the coordinated performance of

marketing activities to create exchanges across countries that satisfy individual, organizational , and societal objectives

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 ✹

The Global Marketing Environment • Focal Point--Consumer • Use the Four P’s to Satisfy Consumers • Economic, Financial, Political, and Cultural Environmental of Each Country Affect marketing(EFPC) • Regional and Global Environments Affect Marketing

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

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

Why Should Firms Engage in Global Marketing? •

To Capitalize on the Attractiveness of Additional Country Markets 1. The U.S. is attractive-but won’t 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

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

What is Unique about Global Marketing? Country market environments different

• Economic Environment ( Purchasing Power, Competitive Intensity, Economy’s Health) 1. Fiscal policies - tax rates and spending programs of government 2. Monetary policies - regulate money supply

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

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

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

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

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

The Global Economic Environment Global Marketing

What’s happening? • • • •

Asia Pacific Western Europe North America South America

Why and what are the implications?

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

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

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

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--don’t generalize

The Local Economy - The Country Where Marketing Takes Place • The Competition - Know Where You Stand in Relation to the Competition 1. Porter’s 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

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

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

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

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

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

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

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

Chapter 03 The Financial Environment

The Financial Environment •

Overview Understanding and managing the key elements of the financial environment are requisites for successful global marketing

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

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 governmentmanaged demand and supply

Key Feature of the Global Financial System • Depreciation and Appreciation of One currency in Relation to Another – – – –

Price Demand Profit Market penetration

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

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

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

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

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

Chapter 04 THE POLITICAL AND LEGAL ENVIRONMENT

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

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

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

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

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)

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

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)

Managing Political Risk Through Lobbying, Proactive Measures, and Insurance • Identify with the country - Don’t 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

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

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)

Chapter 05 The Culture Enviroment

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

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

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

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

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

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. 2. 3. 4.

Product size Retail store layout Office design Feng Shui

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

Self-Reference Criterion - Unconscious Reference to One’s Own Cultural Values  Lee’s Four-Step Process to Avoid SelfReference Mistakes 1. 2. 3. 4.

Define goal in terms of own cultural traits Define goal in terms of foreign cultural traits Isolate SRC influence and anticipate the complications Redefine problem without SRC influence and find solution  Multicultural Training Programs to Improve CrossCultural Interactions

Understanding Cultural Universals Can Help Marketers Develop effective Product Strategies

Chap 06 Global Product Strategies

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

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)

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

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

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

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

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

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

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

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

The U.S. Economy and the Product Composition of Its exports ( Largely High-ValueAdded Products )

Competitive Product Developments

Chap 07 Global Pricing Decision

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

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

Pricing Methods 2. Standard pricing - charging the same price in all countries a. Drawbacks: lacks marketing orientation, difficult to implement b. Advantage: firm won’t be blamed for price discrimination

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

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

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

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

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

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

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 • C&F (Cost and Freight) - For Goods at Overseas Port

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

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

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 seller’s bank 4. Confirmed Irrevocable

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

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

Chap 08 Global Logistics Channels

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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?

Chap 09 Global Promotion Strategies

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.

Elements of the Communication Process • • • • • • • • •

Sender Encoding Message Medium of Transmission Receiver Decoding Response Feedback Noise

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

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

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 - don’t offend

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

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

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

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

Planning an Advertising Campaign Specify Objectives; Then Decide On 4. Newspapers a. Advantages: fast and economical b. Disadvantages: some LDCs don’t compile demographic data; they have space limitations and content specifications

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

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

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

Global Sales Promotions - ShortTerm 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

Global Sales Promotions - ShortTerm 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

Global Sales Promotions - ShortTerm 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

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

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

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

Global Sales Promotions - ShortTerm 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

Global Sales Promotions - ShortTerm 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

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 Firm’s Side • Government Relations - Be a Good Citizen

Chap 10 Global Business Involvement

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.

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

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

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

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

Entry Strategies 2. Disadvantages a. Can restrict firm’s 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chap 11 Strategic Global

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 firm’s objectives

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

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

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

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

Strategies • Strategic Business Unit (SBU) Portfolio Strategy Using the Boston Consulting Group’s 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

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

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

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

Some Global Strategic Considerations • Production Location and Souring --Don’t Base Decisions in Cost alone • The Double Squeeze--newly Industrialized countries Compete with DCs in Low- and High-Value-Added Products

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 SpecialInterest Groups

Chap 12 Ethics and Global Marketing

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

Why Ethics? • Gellerman: Manages Rationalize Unethical Actions 1. It is legal (ethical) 2. It is in our interest (mine, company’s) 3. We won’t get caught 4. The company will back me on this

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

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?

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

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

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

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

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

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

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

HOW IS THAT………………..

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