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Developing A

Global Vision

Globalization
Global marketers often face
unique problems in the
external environment
compared to domestic
marketers.
Different cultural values
and ideas, for example can
present unique challenges.

Globalization
Market buildings of all kinds
including Iranian firms whose
detergent bears the name
Barf (means snow in
Persia) is struggling for the
same goal along the old silk
Road to China: building a
brand name in Russia until
1991 were domains of the
Soviet Union.

Globalization
Led by Coke, Pepsi, Procter &
Gamble, Colgate, etc. these firms
brave bureaucracies and novice
consumers to gain in a region
where huge oil and gas reserves
are fueling a rapid growing
consumer market.
Pepsi had a hard time struggle to
shake off the stigma of having
been the main cola of the old

The word Global


has assumed a new
meaning, referring to a boundless mobility
and competition in social, business and
intellectual world) arenas.
Global Marketing (marketing to target
markets throughout the world) has become an
imperative for businesses.
Managers must develop a global vision not
only to recognize and react to international
marketing opportunities but also to remain
competitive at home

In summary, Global Vision


means recognizing and
reacting to international
marketing opportunities ,
being aware of threats from
foreign competitors in all
markets, and effectively using
international distribution

Importance of Global Marketing:


In the U.S. many countries depend more on
international commerce than for example the
European unions.
US exports about a fifth of its industrial
production and a third of its farm products.
One of every 16 jobs in the U.S. is directly or
indirectly supported by exports.
U.S. businesses exports over $500 billion in
goods to foreign countries every year.
U.S. also is the worlds leading exporter of
grains selling more than $12 billion to foreign
countries.
Chemical, office machinery and computers,
automobiles, aircraft and electrical and
industrial machinery make up almost half of

Multinational Firms
USA and the European Union
has a large number of firms
that are global marketers
A company that is heavily engaged in international
trade, beyond exporting and importing is call a
multinational corporation - (MNC)
Multinational corporation move resources, goods,
services and skills across national boundaries
without regard to the country in which the
headquarters is locate.
Some of these firms can be seen as follows:

MULTINATIONAL CORPORATIONS - (1998)


RAN
K

COMPANY

COUNTR
Y

REVENUE
($
MILLIONS)

EMPLOYEES

General Motors

US

178,174

608,000

Ford Motors

US

153,627

363,892

Mitsui

Japan

142,688

40,000

Mitsubishi

Japan

128,922

36,000

Royal Dutch (Shell)

Britain

128,141

105,000

Itochu

Japan

126,631

6,675

Exxon

US

122,279

80,000

Wal-Mart Stores

US

119,299

825,000

Marubeni

Japan

111,121

64,000

10

Sumitomo

Japan

102,395

29,500

MULTINATIONAL ADVANTAGE
Large multinationals have several
advantages over other companies.
These firms can overcome trade
problems.
Example:
1) Taiwan and South Koreans have long had an
embargo I against Japanese cars for
political reasons yet Honda USA a
Japanese owned company based in US
sends their products to Taiwan and Korea.
2) BASF, a major drug and chemical
manufacturer its product is always
challenged by the environmentalist in its
home based. So BASF moved its cancer and

Global Marketing Standardization


This means that production of uniform
products that can be sold the same
way all over the world.
This presumes that the markets
throughout the world are becoming
more alike.
Uniform production should enable
companies to lower production and
marketing costs and increase profit.
However, research indicates that
superior sales profits do not

Global Marketing Standardization


Example
1) Macdonalds changes its salad
dressings for French tastes and sells
beers and mineral water
2) Macdo does not sell beef burger in
India because of its religious beliefs
but veggie hamburgers
3) Cokes sprite has a different
formulation in Japan.
4) Colgate toothpaste is marketed the
same way globally, although its
advanced Gum Protection Formula is

EXTERNAL ENVIRONMENT
FACING GLOBAL MARKETERS
1)Culture
2)Economic/Technological
Development
3)Political Structure
4)Demographic Profile
5)Natural Resources

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS
1) Culture Central to any society is the common
set of values share by its citizens that
determine what is socially acceptable.
These values and roles have a tremendous
effect on peoples preferences and thus on
marketers options.
Example:
INCA Kola a fruity greenish-yellow carbonated
drink is the largest selling soft drink in Peru.
The drink has become a symbol of national
pride and heritage. The drink contains only
fruits indigenous to that country.
People states that they drink Inca Kola because it

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS

2) Level of Economic/Technological
Development
In general, complex and sophisticated
industries are found in developed
countries. Higher average family
incomes are common in the more
developed countries.
Larger incomes mean greater
purchase power and demand not
only for consumer goods and
services but also for the machinery
and workers required to produce

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS
The Case of Big Mac
COUNTRIES
PRICE

U.S.A.
Beijing- (cheapest)
Geneva - (most
expensive)
Denmark
Malaysia

$2.42
$1.16
$4.02
$3.95
$1.55

To appreciate the marketing opportunities let


us examine the 5 stages of economic
/technological development traditional
society, pre-industrial society, take-off
economy, industrialized society and fully
industrialized society.

5 stages of Economic /
Technological
Development

a) Traditional society,
b) Pre-industrial society
c) Take-off economy
d) Industrialized society
e) Fully industrialized
society.

5 stages of Economic / Technological


Development
a) Traditional society - Countries in the
traditional stage are the earliest phase
of development.
Traditional Society is largely
agricultural, with a social structure &
value system that provide little
opportunity for upward mobility.
To introduce units of technology is
probably a wasted effort.
Example:
.In Ghana, for instance, a tollway 16 miles
long and 6 lanes wide, intended to
modernized distribution, does not
connect to any city or village or other

5 stages of Economic / Technological


Development
b) Pre-Industrial society - involves economic
and social change and the emergence of
a middle class with an entrepreneurial
spirit.
Effective marketing in these countries is
very difficult because they lack the
modern distribution and communication
system.
Example:
a) Madagascar and Uganda are in this
stage
b) Peru did not establish a television
network until 1975

5 stages of Economic / Technological


Development
c) Take-Off Economy - It is a period of
transition from developing to developed
nation. New industries arise and a
generally healthy social and political
climate emerges
Example:
a) Kenya although not politically inclined,
oil exploration is increasing and is set to
become the worlds largest exporter of
tea.
b) Vietnam promise large tax breaks to
foreign investors who promise jobs.
Gold Medal Footwear headquartered in
Taiwan, now employs 500 young workers

5 stages of Economic / Technological


Development
d) Industrializing Society - It is in this
period that technology spreads from
several sectors of the economy and
powered the takeoff to the rest of the
nation. Countries begin to produce
capital and durable consumer goods. It
foster economic growth as a result large
middle class begins to emerge and there
is a demand for luxury and services
goods.
Example:
a) China fastest growing economy in the
world (10% per year)
b) Philippines, Vietnam, Malaysia and

5 stages of Economic / Technological


Development

e) Fully Industrialized Society In this stage, they are


exporters of manufactured
goods, many of which are
based on technology like
automobile, computers,
airplanes, oil exploration
equipment and
telecommunication
equipments.

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS
3) Political Structure Government policies
run the country from no private ownership
and minimal individual freedom to little
central government and maximum
personal freedom.
Many countries are changing from a centrally
planned economy to a market oriented
one like Hungary and Poland.
Many of the reforms have increased foreign
trade and investment. Example in Poland,
foreigners are now allowed to invest in all
areas of industry, including agriculture,
manufacturing and trade.
More than 5,000 Russian managers are

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS

4) Legal Considerations Many legal structures are


designed to either
encourage or limit trade,
like
(a) Tariff
(b) Quotas
(c) Boycotts
(d) Exchange Control

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS
4) Legal Considerations - Many legal
structures are designed to either
encourage or limit trade, like
(a)Tariff tax levied on the goods entering a
country. For example trucks imported into
the US faces a 25% tariff. These tariffs
tend to decrease barrier to trade but
often are replaced by quotas, boycotts
and other restrictions.
(b) Quotas Limit on the amount of a specific
product that can enter a country. USA has
strict quotas for imported textiles, sugar
and many dairy products. This was set as
a means of protection from foreign

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS
(c) Boycott Exclusions of all products from
certain countries or companies.
Government use boycotts to exclude firms
from countries with whom they have a
political dispute.
Example:
Several Arab countries boycotted CocaCola because it maintained distributions
in Israel.
(d) Exchange Control It is a law compelling
a company earning foreign exchange from
its exports to sell it to a control agency. A
company who wishes to buy goods abroad

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS

(e)Market Groupings Also commonly


known as Trade Alliances. This
occurs when several countries agree
to work together to form a common
trade area that enhances trade
opportunities.
Examples
1) EEC European Economic Community
2) ASEAN Association of South East
Asian
Nations
3) NAFTA North American Free Trade
Agreement

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS

(f)Trade Agreements Are


organizations, which intends to
lower trade barriers worldwide. The
Uruguay Round of trade
negotiation, created the World
Trade Organization (WTO) adopted
in 1994, signed by 117 nations in
Marrakesh, Morocco.
For the first time, there is an
agreement covering services,
intellectual property rights and

EXTERNAL ENVIRONMENT FACING GLOBAL


MARKETERS
5) Natural Resources This is the final factor
in the external environment that has
become more evident in the past decade
is the shortage of natural resources.
) Petroleum shortages have created huge
amount of wealth for oil producing
countries, such as Norway, Saudi Arabia,
Indonesia, Mexico and Venezuela.
) Warm climate and lack of water means
that many African countries will remain
importers of foodstuffs.
) US rely heavily on Africa for precious
metals

Global Marketing
by Individual Firms

Many firms form multinational


partnership called strategic
alliances to assist them in
penetrating global markets.
5 Methods of entering the global
market place in order of risks:
1) Export
2) Licensing
3) Contract Manufacturing
4) Joint Venture
5) Direct Investment

5 Methods of entering the global


market place in order of risks:
High Risk/
High
return

Risk

Expor
t

Low
Risk/
Low
return

Licens
ing

Contra
ct
Manuf
acturin
g

Joint
Ventur
e

Direct
Invest
ment

Return

5 Methods of entering the global


market place in order of risks:
1) Export Selling domestically produced
products to buyers in another country.
Some countries assist small businesses at
specific international trade fairs and
charges small fees . Instead of selling
directly to foreign buyers, a company may
decide to sell to intermediaries located in
its domestic markets:
(a) Buyer for export intermediary in the
global
market that assumes all ownership
risks and sells
globally for its own account
(b) Export Broker Intermediary bringing
buyer and

5 Methods of entering the global


market place in order of risks:
2) Licensing- The legal process
whereby a licensor agrees to let
another firm use its manufacturing
process, trademarks, patents, trade
secrets or other proprietary
knowledge.
Examples:
- Spalding company gives licensing
agreements to use its sport
goods.
- Fruit-of-the-Loom lends its name
through

5 Methods of entering the global


market place in order of risks:
3) Contract Manufacturing It is a
private-label manufacturing by a
foreign company.
The foreign company produces a
certain volume of products to
specification, with the domestic
firms brand name.
Domestic firm usually handles the
marketing
Example:

5 Methods of entering the global


market place in order of risks:
4) Joint Venture When a domestic
firm buys part of a foreign company
or joins with a foreign company to
create a new entity.
This is relatively quick and
inexpensive way to go global. But
this is risky and others fall victim to
a takeover.
Example:
- America Online, Inc. entered into a
series of joint ventures to build less

5 Methods of entering the global


market place in order of risks:
5) Direct Investment - Active
ownership of a foreign company or
of overseas manufacturing or
marketing facilities.
It has the greatest potential reward
and the greatest potential risk.
Sometime firms make direct
investment because they can not
find a suitable local partner.
Example:
- Federal Express lost $1.2 billion in its

Global Marketing Mix


To succeed, firm seeking to enter foreign
trade must adhere to the principles of
marketing mix. Information gathered on
foreign markets through research is the
basis for the 4 Ps of marketing (product,
place (distribution), promotion and
price.). The following marketing mix can
be developed for a global target market:
Product & Promotion
- One Product one message
- Product Invention
- Message Adaptation
- Product Adaptation
- Pricing
- Dumping
- Countertrade

Global Marketing Mix


Product & Promotion
- One Product one message market
one
important decision is whether to
alter the
product or the promotion for the
global
marketplace. Other options are
to radically
change the product or to adjust
either the
promotional message.

Global Marketing Mix


One Product, One Message
- The strategy for global marketing
standardization is developing a
single
product for all markets and
promoting it
the same way all over the world.
Example
- Procter & Gamble uses the same
product and promotional themes for
Head & Shoulders in China as it
does in the U.S.

Global Marketing Mix


Product Invention
- Product invention can be taken to
mean
either creating a new product
for a market
or drastically change an existing
product.
Example:
- Japanese market, Nabisco had to
remove the cream filling from its
Oreo because Japanese children
though they were too sweet.
- Frito Lays most popular potato chip

Global Marketing Mix


Message Adaptation
- The concept here is to maintain
the same
basic product but alter the
promotional
strategy.
Example
-

Harley Davison ads reads: one steady


constant in an increasingly screwed-up
world would not appeal to Japanese. The
Japanese ads combine American images
has been effective.

American riders passing a geisha in a

Global Marketing Mix


Product Adaptation
- The idea is to slightly alter a basic
product to meet local conditions.
Examples:
- Japanese housewives could not fit
American-size Joy dish soap on their
shelves Procter & the bottle to a
company cylinder that took less
space.
- The brand Kiddiwinks is a word for
British babies in the U.S. the name
was changed to Binky because of
positive parental reactions in a

Global Marketing Mix


Pricing
- Once marketing managers have
determined
a global product and
promotional strategy,
they can select on pricing.
Exporters most not only cover their
costs on production, insurance,
transportation, taxes, tariffs as
well as what customers are willing
to spend on particular product.
Sometimes products are simplified in
order to lower the price.

Global Marketing Mix


Dumping
- is considered the sale of an
exported
product at a price lower than that
charge
for the same or like product in
home
market of the exporter.
Dumping may occur as a result of exporter
business strategy;
a) Try to increase an overseas market share
b) Temporary distribute product in overseas
market to offset slack demand in home
market

Global Marketing Mix


Countertrade
- is a form of trade in which all or
part of the
payment for goods or services is
in the form
of other goods or services.
It is a form of Barter (swapping goods
for goods).
Example:
- PepsiCo sends Pepsi syrup to Russian
bottling plants in payment gets
Stolichnaya vodka, which is then marketed
in the west.

Global Marketing Mix


Distribution
- Solving promotional, price and
product
problems does not guarantee
global
marketing success. The product
still has to
get adequate distribution.
Example:
- Europeans dont play sports as much
as Americans do, so they dont visit
sporting goods store as often.
Reebook started selling its shoes in

ASSIGNMENT
(Explain more of the following)
minimum 3-5 sentences each
1) Buyer for export
2) Global Vision
3) Exporting
4) Global vision
5) Keiretsu
6) Maastricht Treaty
7) Mercosur
8) Pre-Industrial society
9) Entrepreneurial insights
10) Multinational Corporations

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