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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
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
marketing activities to create exchanges across countries that satisfy individual, organizational , and societal objectives
Thank You!
Whats happening?
Asia Pacific Western Europe North America South America
4. Economic unions - one economy, one currency, unified fiscal and monetary policies
Thank You!
Chapter 03
The Financial Environment
Currencies from Different countries Hard Currencies Are Freely Traded in Foreign Exchange markets Soft Currencies Are Not Freely Traded
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
Thank You!
Chapter 04
THE POLITICAL AND LEGAL ENVIRONMENT
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)
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
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)
Thank you!
Chapter 05
The Culture Enviroment
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
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
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 Ones Own Cultural Values Lees Four-Step Process to Avoid SelfReference 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
Understanding Cultural Universals Can Help Marketers Develop effective Product Strategies
Thank you!
Chap 06
Global Product Strategies
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)
Business Evaluation
1. Cost-benefit analysis 2. Commercial viability-existing and prospective markets
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
The U.S. Economy and the Product Composition of Its exports ( Largely High-ValueAdded Products )
Chap 07
Global Pricing Decision
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 wont 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
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 sellers 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
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 Manufacturers representatives are Agent Middlemen 1. Do not take title but represent firm 2. Choose carefully - often difficult to terminate relationships Consumers - No Intermediaries
Chap 09
Global Promotion Strategies
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
Chap 10
Global Business Involvement
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 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
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
Chap 11
Strategic Global
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 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
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
Chap 12
Ethics and Global Marketing
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
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
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