Marketing Concepts Marketing in the Big Wide World

1. Marketing ConceptsMarketing in the Big Wide World MKTG 3110 Spring 2015 Mrs. Tamara L. Cohen Class #7

2. Valentine’s Dayaround the world USA– express love for sweethearts, spouse, teachers, parents, others JAPAN– 2 different dates; 2 different levels FRANCE– strong association since Middle Ages ITALY– in Turin betrothed couples announced engagement on V. Day LATIN AMERICA - El Día del Amor y la Amistad SOUTH KOREA – White Day & Black Day SOUTH AFRICA – only for lovers or crushes; anonymous cards

3. Thailand

4. Guatemala City, Guatemala

5. Shanghai, China

6. Germering, Germany

7. Manila, Philippines

8. Gaza City, Palestine

9. Arbil, Northern Iraq

10. Jammu, India

11. Taipei, Taiwan

12. Harare, Zimbabwe

13. London, England

14. Romania

15. KEY TERMS • Balance of Trade • SURPLUS • DEFICIT • Emerging Markets • Barter / Countertrade • Tariffs • Quotas • Global competition Global companies Global consumers Global brands • Globalization • Dumping • Semiotics • Ethnocentrism • Currency exchange rates

16. KEY CONCEPTS • Protectionism • World Trade Organization (WTO) • Cultural diversity • values, customs, symbols • language problems • Strategic alliances • European Union • NAFTA • Bottom of the Pyramid • Microfinance • Political risk • Market entry strategies • Exporting • Licensing / Franchising • Joint Ventures • Foreign Direct Investment

17. How much world trade is there? • A LOT (±$20 trillion) • “International trade is the exchange of capital, goods, & services across international borders… Without international trade, nations would be limited to the goods and services produced within their own borders.” • What grows global markets? • Globalization • Greater access to markets • Global competition • Multinational corporations US & world trade • Balance of Trade DEFICIT • Biggest US trading partners Canada, China, Mexico, Japan, Germany

18. Peopleaccelerate global trade. Who are the ‘Globalizers’?

19. Process of Globalization • Global transactions touch us every day • Imports & exports come from & go to remote areas • Technology & e-business facilitate spread of trade

20. Growth in Emerging Economies “We used to design the same products for global requirements and distribute the same product globally … we started … talking to emerging country customers, designing a product for emerging countries, and initially launching the product in only emerging countries.”¹ Dell LISTENED Changes in Dell’s global strategy: • sales & distribution • ‘experience centers’

21. Emerging Markets BUZZZZ • 28 - 150 emerging markets worldwide • 4 Tigers = Hong Kong, Singapore, South Korea, Taiwan • 4 Lions = Egypt, Morocco, Tunisia, South Africa BRIC = Brazil, Russia, India, China CIVETS = Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa

22. Comparing revenue of the world's 10 most global firms to the GDP of nations

23. Countertrade Global marketer must know: Which markets will require countertrade? • Eastern Europe • old USSR states • some Latin American countries • some African countries Why countertrade? • when cash reserves low Countertrade may include • direct exchange of goods • part payment in goods, part in cash

24. 1972Pepsi concentrate bartered for Stolichnaya vodka. 1990Pepsi barter trade with Russia reached $3 billion 2005Coke > Pepsi in Russia 1959Pepsi introduced to Russia Pepsi’s famous barter deal with Russia

25. Barter Ships for oil - Brazil proposed that South Korea supply drill ships, in return for stakes in Brazil’s Santos oil fields, which Korea would also manage

26. Counterpurchase Fred Krupp Huttenwerke AG of Germany sold $9 million of large capacity hydraulic cranes to Machinoimport in USSR - used countertrade tools & equipment in German plants, or resold them.

27. Marketing in a borderless economic world? Is Protectionism really waning? Tariffs still most common barrier to entry Quotas discouraged by WTO GATT limited trade barriers & promoted world trade through reduction of tariffs; did not address non-tariff barriers WTO deals with rules of trade between nations; ensures trade flows smoothly

28. World Trade Organization members&observers

29. Protectionism hinders world trade when countries raise prices & limit supply through tariff & quota policies PROTECTIONISM TARIFFS QUOTAS INCREASE PRICE LIMIT SUPPLY DECREASE WORLD TRADE

30. Tariffs = government tax levied on a product as it enters or leaves a nation • directly increases price of imported product more expensive + less appealing • export tariff 2. transit tariff 3. import tariff + • protect domestic producers • increase government revenue _ • domestic producers less competitive • increase consumer prices

31. Quotas = restriction on quantity of a good that can enter or leave a country during a certain time • most common non-tariff barrier IMPORT QUOTA • protects domestic producers • foreign companies compete for market access competition consumer prices consumer choices EXPORT QUOTA supply of product in home market, e.g. natural resources essential to local business or long-term survival supply on world market global price

32. Strategic Alliances • Countries form strategic alliances to cooperate to reduce or eliminate barriers to facilitate the international flow of products, people, and capital. PROS specialization efficiency trade consumption standards of living political benefits CONS trade diverted to cheaper countries protectionism national sovereignty divergent rules /standards

33. North AmericanFree Trade Agreement NAFTA Pop: 444 million GDP: $16 trillion Members: 3 began: 1994

34. European Union Pop: 500 million GDP: $15 trillion Members: 28 began: 1951

35. Pop: 633 million GDP: $1.1 trillion Members: 10 Began: 1967 Association of SouthEastAsian Nations GOALS: • Promote economic, social, and cultural development • Safeguard economic and political stability • Serve as a forum to resolve disputes

36. Global Competition • when companies originate, produce & market their products & services worldwide • widens competitive landscape for marketers • can give rise to global strategic alliances

37. Global Companies • international company • multinational company (MNC) • transnational company

38. Global companies & marketing strategy

39. Global Brands • brand is marketed under the same name in multiple countries, using similar and centrally-coordinated marketing programs • strong corporate identity • same product formulation, same benefits, consistent advertising across borders • e.g. McDonald’s’ “food, fun, and families” in 118 countries; but some aspects customized

40. Global Consumers • consumer groups living in many countries or regions of the world, who have similar needs or seek similar features & benefits from products or services • global middle class; youth market; elites • companies that have developed these markets:

41. Networked Global Marketspace • Internet enables exchange of goods, services & information anywhere, any time, & at lower price • global electronic commerce grown especially by B2B • most active B2B commerce countries: US, Canada, UK, Germany, Sweden, Japan, India, China, Taiwan

42. Networked Global Marketspace:

43. Cultural appreciation

44. Cultural literacy Cross-cultural analysis Values Customs Cultural symbols Language Ethnocentrism

45. In-class exercise

47. Language Blunders Japanese knife manufacturer labeled its exports to the United States with “Caution: Blade extremely sharp! Keep out of children.” English sign in a Moscow hotel read, “You are welcome to visit the cemetery where famous Russians are buried daily, except Thursday.” Sign for non-Japanese-speaking guests in a Tokyo hotel read, “You are respectfully requested to take advantage of the chambermaids.” Sign in English at Copenhagen ticket office read, “We take your bags and send them in all directions.” Braniff Airlines’ English-language slogan “Fly in Leather” was translated into “Fly Naked” in Spanish.

48. Mixed Signals • Middle East, West Africa, South America, Iran, Sardinia, Bangladesh: rude, insulting; obscene gesture • Italy, Germany, Greece, Hungary: #1, or ‘okay’ • Russia, Finland, Australia: ‘good’, ‘well done’ • UK: farewell or greeting between young men • Japan: male gender • Egypt, Iraq, Israel: ‘perfect’ • SCUBA diving: “go up (to the surface)” • Hitchhiker: “I need a ride”

49. World Map of Literacy

50. Economic Considerations • Developed or developing country • Economic infrastructure- communications, transportation, financial, distribution systems • Consumer income & purchasing power • Currency exchange rates - price of one currency in terms of another • Bottom of the Pyramid 2.5 billion people; < $2.50/day • Microfinance- offering small, collateral-free loans to people outside conventional capital markets