Boone Kurtz - Expanded PPT - Ch08

Chapter 8
GLOBAL
MARKETING
© 2014 Cengage Learning. All Rights Reserved. May

not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part. 1
Chapter 8 Global Marketing
Objectives
1. Describe the importance of global marketing
from the perspectives of the individual firm
and the nation.
2. Identify the major components of the
environment for global marketing.
3. Outline the basic functions of GATT, WTO,
NAFTA, FTAA, CAFTA-DR, and the European
Union.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2
Objectives
4. Identify the alternative strategies for
entering foreign markets.
5. Differentiate between a global marketing
strategy and a multidomestic marketing
strategy.
6. Describe the alternative marketing mix
strategies used in global marketing.
7. Explain the attractiveness of the United
States as a target market for foreign
marketers.
Introduction
▮ Global trade accounts for 25 percent of the
U.S. gross domestic product
▮ Exporting - Marketing domestically
produced goods and services in foreign
countries
▮ Importing - Purchasing foreign goods and
services
Figure 8.1 - Top U.S. Trading Partners—

Total Trade Including Exports and Imports
Table 8.1 - World’s Ten Largest Marketers

(Ranked by Annual Sales)
The Importance of Global Marketing

▮ Demand for foreign products is increasing in
fast-growing economies
▮ Globalization and the Internet allow every
marketer to be an international marketer
Service and Retail Exports

▮ Nearly four of every five dollars in the
nation’s gross domestic product comes from
services
▮ United States is the world’s largest exporter
of services and retailing
• Profitable exports include services such as
engineering, financial, computing, legal
services, insurance, and entertainment
Benefits of Going Global

▮ Additional revenue
▮ New insights into customer behavior
▮ Alternative distribution strategies
▮ Advance notice of new products
▮ A major key to achieving success in foreign
markets
• Ability to adapt products to local preferences
and culture
International Economic Environment

▮ Factors that determine a nation’s prospects
as a host for international business
expansion
• Size
• Per-capita income
• Stage of economic development
International Economic Environment

▮ Infrastructure is an important economic
factor to consider when planning to enter a
foreign market
▮ Changes in exchange rates can complicate
international marketing
• Exchange rate - Price of one nation’s currency
in terms of another country’s currency
International Social-Cultural Environment
▮ To be effective, marketers must understand

a nation’s culture
▮ Language plays an important role in global
marketing
International Technological Environment
▮ The Internet transcends political, economic,

and cultural barriers to reach every corner
of the globe
▮ Technology presents challenges for global
marketers that extend beyond the Internet
and other telecommunication innovations
International Political-Legal Environment
▮ Global marketers must stay abreast of laws

and trade regulations in each country in
which they compete
▮ Firms set up internal political risk
assessment units
▮ The political environment involves labor
conditions in different countries
▮ International law
• U.S. has friendship, commerce, and
navigation (FCN) treaties with other
governments
• Europe has pushed for mandatory ISO
certification to standardize quality levels
▮ U.S. law
• Various trade regulations, tax laws, and import
and export requirements affecting international
marketing
• Export Trading Company Act of 1982 exempts
exporters from antitrust regulations
• Foreign Corrupt Practices Act makes it illegal
to bribe a foreign official in an attempt to
solicit new or repeat sales abroad
▮ Legal requirements of host nations

• Example: Despite China’s many advances in
recent years, the Chinese government continues
to censor the Internet
Trade Barriers
▮ Barriers fall into two major categories
• Tariff - Tax levied against imported goods
• Administrative barriers
▮ GATT and WTO agreements have eliminated
many tariffs on many products
• Countries frequently use nontariff barriers to
boost exports and control the flows of
imported products
Tariffs
▮ Two types of tariffs
• Revenue tariffs - Designed to raise funds for
the importing government
• Protective tariffs - Designed to raise the retail
price of an imported product to match or
exceed that of a similar domestic product
Other Trade Barriers

▮ Import quotas - Limit the number of units of
products in certain categories that can cross a
country’s border for resale
▮ Embargo - Complete ban on the import of
specified products
▮ Subsidies - Government financial support of a
private industry
▮ Exchange control - Method used to regulate
international trade among importing
organizations by controlling access to foreign
currencies
Dumping
▮ Controversial practice of selling a product in
a foreign market at a price lower than what
it receives in the producer’s domestic
market
Multinational Economic Integration

▮ Free-trade area in which participating
nations agree to free trade among
themselves, abolishing tariffs and trade
restrictions
▮ Custom union establishes a free-trade area
and uniform tariffs for nonmember nations
▮ Common market extends a customs union
by seeking to reconcile all government
regulations affecting trade
General Agreement on Tariffs and Trade

(GATT)
▮ International trade accord that has helped
reduce world tariffs
▮ In 1994, Uruguay round produced several
important outcomes
• Reduced farm subsidies
• Increased protection for patents, copyrights,
and trademarks
• Included services under international
trading rules
• Phased out import quotas on textiles and
clothing from developing nations
World Trade Organization (WTO)

▮ Succeeded GATT
▮ Oversees GATT agreements
▮ Serves as a forum for trade negotiations
▮ Mediates trade disputes
▮ Monitors national trade policies
▮ Works to reduce trade barriers throughout
the world
World Trade Organization (WTO)

▮ WTO has made slow progress toward its
major policy initiatives
• Liberalizing world financial services
• Telecommunications
• Maritime markets
North American Free Trade Agreement

(NAFTA)
▮ Accord removing trade barriers among
Canada, Mexico, and the United States
▮ Particularly important to U.S. marketers
because Canada and Mexico are two of its
largest trading partners
The Free Trade Area of the Americas and

CAFTA-DR
▮ Proposed free trade area stretching the
length of the entire Western hemisphere
▮ Designed to extend free trade benefits to
additional nations in North, Central, and
South America
• Central American Free Trade Agreement–DR
(CAFTA-DR) - Trade agreement among the
United States, Central American nations, and
the Dominican Republic
European Union (EU)

▮ Customs union that is moving in the
direction of an economic union by:
• Adopting a common currency
• Removing trade restrictions
• Permitting free flow of goods and workers
throughout the member nations
▮ Goal is to remove all barriers to free trade
among its members
Figure 8.2 - The 27 Members of the

European Union
Going Global
▮ Reasons for marketers to go global
• Saturation of the target market
• Strong domestic market share
• Globalization of customers
• New customers in emerging markets
• Globalization of competitors
• Reduced trade barriers
• Advances in technology
• Enhanced customer responsiveness
Strategies for Entering Foreign Markets

▮ Three basic choices
• Importing and exporting
• Contractual agreements such as franchising,
licensing, and subcontracting
• International direct investment
Figure 8.3 - Levels of Involvement in

Global Marketing
Importing and Exporting

▮ Decision to import, or bring in foreign goods
to sell domestically or use as component
parts, depends on:
• Ability of supplier to maintain quality
• Flexibility in filling orders that vary
• Response time in filling orders
• Total costs
Importing and Exporting

▮ First-time exporters can reach foreign
customers through:
• Export-trading companies
• Export-management companies
• Offset agreement
Franchising
▮ Contractual arrangement in which a
wholesaler or retailer agrees to meet the
operating requirements of a manufacturer
or other franchiser
▮ Benefits are risk reduction, standardized
operations, and greater recognizability
▮ Success depends on ability to adapt to local
customer preferences
Foreign Licensing
▮ Agreement that grants foreign marketers
the right to distribute a firm’s merchandise
or to use its trademark, patent, or process in
a specified geographic area
▮ Gives access to local partner’s marketing
information and distribution channels, and
protection from legal barriers
▮ Allows quick entry into a foreign market
with a known product
Subcontracting
▮ Contractual agreements that assign the
production of goods or services to local or
smaller firms
▮ Can prevent mistakes involving local culture
and regulations
▮ Can provide protection from import duties
International Direct Investment

▮ High involvement and high risk are the
major characteristics
▮ Firms choosing this method often have a
competitive advantage
▮ Several forms
• Acquisition
• Joint venture
From Multinational Corporation to Global

Marketer
▮ Multinational corporation - Significant
operations and marketing activities outside
its home country
• Examples: General Electric, Siemens, Mitsubishi
▮ Important changes since 1960
• No longer exclusively U.S. based
• Multinationals no longer think of their foreign
operations as mere outsourcing appendages
From Multinational Corporation to Global

Marketer
▮ Employ large foreign workforces relative to
American staffs
▮ Reflect interdependence of world
economies, growth of international
competition, and globalization of world
markets
Developing an International Marketing

Strategy
▮ Global marketing strategy - Standardized
marketing mix with minimal modifications
that a firm uses in all of its domestic and
foreign markets
• Can effectively market some goods and services
to segments in many nations that share cultures
and languages
• Can be highly effective for luxury products that
target upscale consumers everywhere
• Major benefit is its low cost to implement
Developing an International Marketing

Strategy
▮ Multidomestic marketing strategy -
Application of market segmentation to
foreign markets by tailoring the firm’s
marketing mix to match specific target
markets in each nation
Figure 8.4 - Alternative International

Product and Promotional Strategies
International Distribution Strategy

▮ Marketers must set up proper channels and
anticipate extensive physical distribution
problems
▮ A distribution decision involves two steps
• The firm must decide on a method of entering
the foreign market
• It must determine how to distribute the
product within the foreign market through
that entry channel
Pricing Strategy
▮ Competitive, economic, political, and legal
factors can limit pricing decisions
▮ Adaptation to local markets
▮ Emergence of commodity marketing
organizations
Countertrade
▮ Form of exporting whereby goods and
services are bartered rather than sold for
cash
▮ May be imposed in less developed nations
that lack sufficient foreign currency to
obtain goods and services they want
▮ Way to control balance-of-trade problems
The United States as a Target for

International Marketers
▮ U.S. is an inviting target for foreign
companies
▮ Increasingly, foreign multinationals invest in
U.S. assets as they seek to produce goods
locally and control distribution channels
Strategic Implications of Marketing in the

21st Century
▮ Marketers are pioneers in bringing new
technologies to developing nations
▮ Greatest competitive advantage belongs to
marketers who capitalize on the similarities
of their target markets and adapt to the
differences
▮ New and better products in developing
markets will create and maintain
relationships for the future
Nederlander Video
http://www.cengage.com/marketing/book_content/boone_9781133628460
/videos/ch08.html
Scripps Networks Interactive & Food

Network Video
http://www.cengage.com/marketing/book_content/boone_9781133628460
/videos/part2.html

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Chapter 8

© 2014 Cengage Learning. All Rights Reserved. May

Figure 8.1 - Top U.S. Trading Partners—

Table 8.1 - World’s Ten Largest Marketers

The Importance of Global Marketing

Service and Retail Exports

Benefits of Going Global

International Economic Environment

International Economic Environment

International Social-Cultural Environment

▮ To be effective, marketers must understand

International Technological Environment

▮ The Internet transcends political, economic,

International Political-Legal Environment

▮ Global marketers must stay abreast of laws

International Political-Legal Environment

International Political-Legal Environment

International Political-Legal Environment

▮ Legal requirements of host nations

Other Trade Barriers

Multinational Economic Integration

General Agreement on Tariffs and Trade

World Trade Organization (WTO)

World Trade Organization (WTO)

North American Free Trade Agreement

The Free Trade Area of the Americas and

European Union (EU)

Figure 8.2 - The 27 Members of the

Strategies for Entering Foreign Markets

Figure 8.3 - Levels of Involvement in

Importing and Exporting

Importing and Exporting

International Direct Investment

From Multinational Corporation to Global

From Multinational Corporation to Global

Developing an International Marketing

Developing an International Marketing

Figure 8.4 - Alternative International

International Distribution Strategy

The United States as a Target for

Strategic Implications of Marketing in the

Scripps Networks Interactive & Food

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