Chapter 15

1. Chapter 15 The Global Marketplace

2. Road Map:Previewing the Concepts • Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. • Describe three key approaches to entering international markets. • Explain how companies adapt their marketing mixes for international markets. • Identify the three major forms of international marketing organization.

3. Global Marketing into the Twenty-First Century • The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. • International trade is booming and now accounts for a quarter of the United States’ GDP. • Between 1996 and 2006, U.S. exports are expected to increase 51%. • Global competition is intensifying and few U.S. industries are now safe from foreign competition.

4. Global Marketing into the Twenty-First Century • To compete, many U.S. companies are continuously improving their products, expanding into foreign markets, and becoming global firms. • Global firms face several major problems: • High debt, inflation, and unemployment have resulted in highly unstable governments & currencies, • Governments placing more regulations on foreign firms, • Protectionist tariffs and trade barriers, • Corruption.

5. McDonald’s in Beijing • Many U.S. companies have long been successful, including McDonald’s, at international marketing. • http://www.mcdonalds.com/

6. Major International Marketing Decisions (Fig. 15-1)

7. The International Trade System i.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers The World Trade Organization and GATT Treaty designed to promote world trade by reducing tariffs and other international trade barriers Looking at the Global Marketing Environment Regional Free Trade Zones Group of nations organized to work toward common goals in the regulation of international trade

8. Discussion Question • When exporting goods to a foreign country, a marketer may be faced with trade restrictions. Discuss the effects that a tariff might have on an exporter’s marketing mix.

9. Economic Environment Subsistence Economies Industrial Structure Types of Industrial Structure Raw Material Exporting Economies Industrial Economies Industrializing Economies Income Distribution

10. Political-Legal Environment At Least Four Political-Legal Factors Should be Considered in Deciding Whether to do Business in a Given Country: Monetary Regulations Attitudes Toward International Buying Government Bureaucracy Political Stability

11. How Customers Think About and Use Products Cultural Traditions, Preferences, and Behaviors Business Norms and Behavior Cultural Environment Sellers Must Examine the Following Before Planning a Marketing Program Within a Given Country.

12. Deciding Whether to Go International • Reasons companies might consider international expansion: • Global competitors attacking the domestic market, • Foreign markets might offer higher profit opportunities, • Domestic markets might be shrinking, • Need an enlarged customer base to achieve economies of scale, • Reduce dependency on any one market, • Customers might be expanding abroad. • Most companies do not act until some situation or event thrusts them into the global arena.

13. Define Organization’s Marketing Objectives and Policies What Volume of Foreign Sales is Desired? Deciding Which Markets to Enter How Many Countries Should the Firm Go Into? What Types of Countries Should be Entered? Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

14. Deciding How to Enter the Market (Fig. 15-2)

15. Interactive Student Assignments • Pair with the student on your left to discuss the following situation. • Once a company has decided to sell in a foreign country, it must determine the best mode of entry. Assume that you were the marketing manager for Mountain Dew and devise a plan and pick a mode of entry for marketing your product in China.

16. Changes in Product, Advertising, Distribution Channels, & Price Deciding on the Global Marketing Program Adapted Marketing Mix Adjusts the Marketing Mix Elements to Each International Target Market. i.e. Japanese Barbie Standardized Marketing Mix Selling Largely the Same Products and Using the same Marketing Approaches Worldwide . i.e Coca-Cola

17. Five Global Product and Promotion Strategies (Fig. 15-3)

18. International Pricing • Companies face many problems in setting their international prices. • Possibilities in setting prices include: • Charge a uniform price all around the world. • Charge what consumers in each country could pay. • Use a standard markup of its costs everywhere. • International prices tend to be higher than domestic prices because of price escalation. • Companies may become guilty of dumping – when a foreign subsidiary charges less than its costs or less than it charges in its home market.

19. Whole-Channel Concept for International Marketing (Fig. 15-4)

20. Degree of Involvement in International Marketing Activities 1. Organize an Export Department Deciding on the Global Marketing Organization 2. Create an International Division 3. Become a Global Organization

21. Rest Stop: Reviewing the Concepts • Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. • Describe three key approaches to entering international markets. • Explain how companies adapt their marketing mixes for international markets. • Identify the three major forms of international marketing organization.