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Chapter 8: Global Markets and International Marketing

Chapter 8: Global Markets and International Marketing. Pride/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans. Objectives. Understand the nature of global markets and international marketing.

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Chapter 8: Global Markets and International Marketing

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  1. Chapter 8:Global Markets and International Marketing Pride/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans

  2. Objectives • Understand the nature of global markets and international marketing. • Analyze the environmental forces affecting international marketing efforts. • Identify several important regional trade alliances, markets, and agreements. • Examine methods of involvement in international marketing activities. • Recognize that international marketing strategies fall along a continuum from customization to globalization.

  3. The Nature of Global Marketing Strategies • Developing and performing marketing activities across national boundaries • Provides growth opportunities • Promotes innovation • Fosters marketing of better, less expensive products @ The International UPS Market Once you connect to the UPS home site, you then have to select your country of service 

  4. The Nature of Global Marketing Strategy International Marketing This Spanish-language ad for Bounty paper towels is part of an extensive international marketing program.

  5. Environmental Forces inInternational Markets • Sociocultural • Economic • Political, legal and regulatory • Ethical and social responsibility • Competitive • Technological

  6. Sociocultural Forces • Focus of marketing within global market • Language, Symbols • Social norms, values, perceptions • Family, religion, education, health and recreation • Negotiations and decision-making • Influences on product acceptance Cultural DifferencesKellogg’s is using cultural differences in breakfast food consumption here.

  7. Economic Forces • Economic Differences Affecting International Marketing • Standards of living • Credit • Buying power • Income distribution • National resources • Exchange rates • Gross Domestic Product (GDP) • measures the value of goods and services produced or provided in any given year & is the best-recognized measure of economic performance in the world

  8. Comparative Analysis of Selected Countries

  9. Political, Legal, and Regulatory Forces • Trade Restrictions Affecting International Marketing • Import tariff • duty on imports • Quota • limit on amount of goods a country will accept • Embargo • governments suspension of trade w/ a product or country • Exchange controls • governments restriction of currency exchange • Balance of Trade • difference between nation’s exports & imports • US Trade Ticker

  10. Embargo Information • Click on the @ symbol below to see the convenient online guide to international shipping maintained by UPS. It includes a country-by-country listing of embargoed items. @

  11. Social Responsibility and Ethics Forces • Some companies establish ethics programs and standards for international business conduct. • intellectual property • labor conditions • payoffs and bribes • tips and gifts • Self-reference criterion • influence of one's culture on the behavior in a given situation. When put in a situation people tend to respond in a way that is closely associated with their culture

  12. Perceptions of the Least and Most Corrupt Countries

  13. Competitive Forces • attend to competitive forces in target countries • identify the interdependence of global competitors • be mindful of global customer

  14. A Ranking of the Most Competitive Countries in the World

  15. Competitive Forces Staying Ahead of the CompetitionAT&T’s extensive global network provides a competitive advantage.

  16. The World’s Top Ten Most Admired Companies

  17. Most Admired Firms by Industry @ Source: http://money.cnn.com/magazines/fortune/mostadmired/2009/champions/ (accessed Sept. 13, 2009) See Complete List at 

  18. More Lists • Click On The @ Symbol Below To See Additional Lists, Including: • Most Admired Companies by Location • Region • Americas • Europe • Asia/Australia • Top 10 for Financial Soundness • Best & Worst in Innovation @

  19. Technological Forces • Advances in technology have advanced international marketing • Voice mail • E-Mail • Fax • Cellular phones • The Internet • Others?

  20. Regional Trade Alliances, Markets, and Agreements • North America Free Trade Agreement (NAFTA) • The European Union (EU) • The Common Market of the Southern Cone (MERCOSUR) • Asia-Pacific Economic Cooperation (APEC) • The World Trade Organization (WTO) Various regional trade alliances and specific markets create opportunities or impose constraints on companies doing business internationally, including:

  21. NAFTA • The North AmericanFree Trade Agreement (NAFTA) • An alliance that merges Canada, Mexico, and the United States into a single market • Eliminates barriers • Eases investment • Simplifies trade

  22. The EU at a Glance Guide to the European Union @ Source: http://europa.eu/abc/european_countries/index_en.htm (accessed 9/14/09) Click on the @ symbol to access an interactive map of the European Union shown in the screen capture above 

  23. Bolivia Brazil Argentina Chile MERCOSUR • The Common Market of the Southern Cone (MERCOSUR) • An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America

  24. Asia-Pacific Economic Cooperation • Asia-Pacific Economic Cooperation (APEC) • An alliance that promotes open trade and economic and technical cooperation among member nations throughout the world • Australia, Brunei, Canada, Indonesia, Japan, Republic of Korea (South), Malaysia, New Zealand, Philippines, Singapore, Thailand, United States, Republic of China (Taiwan), Hong Kong, People's Republic of China, Mexico, Papua New Guinea, Chile, Peru, Russian Federation and Vietnam.

  25. GATT and WTO • General Agreement on Tariffs and Trade (GATT) • reduces worldwide tariffs and increase international trade based on negotiation among member countries • originally signed by 23 nations in 1947 • place where int’l trade problems can be resolved • Dumping • selling products outside your country at unfairly low prices • World Trade Organization (WTO) • An entity that promotes free trade among member nations • a forum for trade negotiations & dispute resolution • 148 member nations

  26. Modes of Entry Into Int’l Markets:Importing and Exporting • Importing - the purchase of products from a foreign source • Exporting - the sale of products to foreign markets Business Across Borders Ethos Water supports a cause and exports resources to provide clean water for children in Africa.

  27. Figure 8.1 Levels of Involvement in Global Marketing

  28. Licensing and Franchising • Licensing - an alternative to direct investment that requires a licensee to pay commission or royalties on sales or supplies used in manufacturing • Franchising - a form of licensing in which a franchiser, in exchange for a financial commitment, grants a franchisee the right to market its product in accordance with the franchiser’s standards Franchising Subway offers an extensive global franchise network.

  29. Exploration • Visit the Subway Web Site by clicking on the @ symbol below and explore the opportunities for franchising throughout the world. @

  30. Contract Manufacturing and Outsourcing • Contract Manufacturing - the practice of hiring a foreign firm to produce a designated volume of product to specification • Outsourcing - the practice of contracting manufacturing or other tasks to companies in countries where labor and supplies are less expensive

  31. Joint Ventures • Joint Ventures - a partnership between a domestic firm and a foreign firm or government • Strategic Alliances - partnerships formed to create a competitive advantage on a worldwide basis

  32. Direct Ownership • Direct Ownership - a situation in which a company owns subsidiaries or other facilities overseas • Multinational Enterprise - firms that have operations or subsidiaries in many countries

  33. The Ten Largest Global Corporations

  34. International Marketing Mix Issues

  35. Table 8. 5 International Marketing Mix Issues

  36. Customization Versus Globalization of International Marketing Mixes • Mass customization - the use of standard platforms with custom applications • Globalization - the development of marketing strategies that treat the entire world (or its major regions) as a single entity • Global Presence Generates Five Opportunities for Creating Value: • Adapt to local market differences • Exploit economies of global scale • Exploit economies of global scope • Mine optimal locations for activities and resources • Maximize the transfer of knowledge across locations

  37. Customization Versus Globalization of International Marketing Mixes Globalization Although offering some modifications to packaging, Pepsi treats the world as one market.

  38. Discussion Question • Click on the Television below and watch a Russian commercial for Pepsi. Then, discuss whether it tends to be at the customization or globalization end of the continuum.

  39. After Reviewing This Chapter You Should: • Understand the nature of global markets and international marketing. • Be able to analyze the environmental forces affecting international marketing efforts. • Know several important regional trade alliances, markets, and agreements. • Recognize the methods of involvement in international marketing activities. • Be aware that international marketing strategies fall along a continuum from customization to globalization.

  40. Key Concepts • International marketing • Gross domestic product (GDP) • Import tariff • Quota • Embargo • Exchange controls • Balance of trade • Cultural relativism • North American Free Trade Agreement (NAFTA) • European Union (EU) • Common Market of the Southern Cone (MERCOSUR) • Asia-Pacific Economic Cooperation (APEC) • World Trade Organization (WTO) • General Agreement on Tariffs and Trade (GATT) • Dumping • Importing • Exporting • Trading company • Licensing • Franchising • Contract manufacturing • Outsourcing • Joint venture • Strategic alliances • Direct ownership • Multinational enterprise • Globalization

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