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Global Marketing

Global Marketing. Professor Lawrence Feick University of Pittsburgh. CBA/BSC Picnic!. Saturday, September 12, 3-6 PM WPU Lawn Featuring bands The Simpletons Blend Food Prizes. Outline. The importance of foreign trade Deciding which countries Deciding how to enter

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Global Marketing

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  1. Global Marketing Professor Lawrence Feick University of Pittsburgh

  2. CBA/BSC Picnic! • Saturday, September 12, 3-6 PM • WPU Lawn • Featuring bands • The Simpletons • Blend • Food • Prizes

  3. Outline • The importance of foreign trade • Deciding which countries • Deciding how to enter • Deciding on selling using a localized or standardized marketing mix

  4. Definitions • Exports: domestically produced products sold in foreign markets • Imports: products produced in a foreign market and sold in the domestic market • Balance of trade: approximately = exports - imports

  5. The importance of foreign tradeUS GDP and foreign trade in nominal billions of USD Source: US International Trade Administration, USDC

  6. Who are our top trading partners?1997 US trade data in millions of USD Source: International Trade Administration, USDC

  7. Top 10 US Exports and Imports Major Export Product Amount (billions) Amount (billions) Major Import Product 1. Agricultural products $54.9 1. Computers and office equipment $62.8 2. Electrical machinery 53.1 2. Crude oil 42.8 3. Computers and office equipmt. 36.4 3. Clothing 39.5 4. General industrial machinery 24.4 4. Telecommunications equipment 34.4 5. Motor vehicle parts 23.4 5. Agricultural products 29.3 6. Specialized industrial machnry. 23.3 6. Cars produced in Canada 24.4 7. Power generating equipment 21.9 7. General industrial machinery 24.1 8. Telecommunications equipmt. 19.0 8. Cars produced in Japan 21.1 9. Scientific instruments 18.6 9. Power generating equipment 20.5 10. Chemicals-organic 16.6 10. Motor vehicle parts 20.1

  8. Foreign market entry: decisions How to enter? Go International? Which Countries?

  9. Typical triggers to initial internationalization • Saturation or competition in domestic market • Movement overseas of domestic customers • Diversification of risk • Sourcing opportunities in overseas markets • Government incentives to export

  10. Foreign market entry: which countries? Product factors Company factors Country factors Country choices

  11. Company factors • Geographic and language distance • Preexisting ties with customers going abroad

  12. Product factors • Product-market fit • Product adaptability

  13. Country factors: screening criteria • Macro variables • GDP, inflation, population size, political risk • General market factors • size, growth, taxes, duties, regulation, support • Customer characteristics • segments, preferences, buying power • Competitor characteristics • size, strength, importance of the market to them

  14. Foreign market entry:how to enter? High Foreign Direct Investment Foreign assembly and production Degree of Risk and Control Contractual Agreements Franchising, Licensing,and Contracting Exporting Direct and indirect Exporting Low

  15. Foreign market entry: exporting • Indirect exporting • using a trading company • Direct exporting • using sales reps or manufacturers reps in the foreign country

  16. Foreign market entry: contractual agreements • Licensing • for a fee, grant rights to use patent or trademark to foreign company • Franchising • special form of licensing that dictates operations and marketing procedures • Contract manufacturing • produce locally under contract from firm

  17. Foreign market entry:foreign production • Assembly • produce locally from subunits [completely (CKD) or semi (SKD) knocked down] parts shipped in • usually has high labor, small capital investment • Full production

  18. Typical initial internationalization • Opportunistic exports of unadapted products • Usually to close, same language markets • Contracted marketing activities using distributors, trading companies, etc

  19. Should we standardize the marketing mix across borders? • Benefits of standardization • cost savings, communication benefits, MNC customers, exploit good ideas, better control • Benefits of localization • better meet local customer needs, allow discretion of local managers • Which elements of the mix to standardize?

  20. When to standardize... • Similar macro environments • socio-cultural, economic, technological, regulatory, political-legal, competitive • Intrinsically borderless products

  21. How hard is it to find similar macro environments? • Start with culture...

  22. Culture defined • …values, attitudes, beliefs, artifacts, and … symbols represented in the pattern of life adopted by people that help them interpret, evaluate and communicate as members of society (Rice 1993) • …underlying framework that guides an individual’s perceptions of events …and selection of responses (Johansson 1997)

  23. Understanding culture • Includes shared interpretations, meanings, understandings of a group • Reflected in knowledge, values, beliefs, art, music, dance, material artifacts, language • Culture is learned • People are to culture as fish are to water

  24. Example: US culture • Some core values • individualism, freedom, industriousness, self-determination, materialism, impatience, present focus, youth, secularism • The importance of subcultures

  25. Example: Other cultures • How different from US? • core values? • subcultures?

  26. Culture’s impact on marketing • Taste and preferences • pizza topping preferences • Values • impact on ads • Language • product names, slogans

  27. Pizza Hut: most popular pizza toppings by country • US-pepperoni • England-corn and tuna • India-pickled ginger • Japan-squid • Guatemala-black bean sauce • Australia-eggs • Bahamas-barbecued chicken

  28. A US ad for Guerlain’s Champs-Elysees perfume A Middle Eastern adaptation of the Guerlain ad

  29. Culture’s impact on choices of brand names • Nova • Calpis water • Kodak

  30. So, when does a standardized mix seem to work? • Consumer products bought on functional characteristics • stereos, computers, cameras • Common cross-border segments, especially high end, image products • jewelry, cosmetics

  31. Standardized products (continued) • Industrial products • airplane engines, semiconductors, medical equipment, etc • Services • banking, accounting, advertising • Brands positioned on country-of-origin • Fosters’ beer, Marlboro cigarettes

  32. When is standardizing least likely to work? • Consumer products where unique taste differences are important • foods • personal care products • clothing

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