© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 7-1.

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REACHING GLOBAL

MARKETS

CHAPTER

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

1. Describe the nature and scope of world trade from a global perspective and its implications for the United States.

2. Identify the major trends that have influenced the landscape of global marketing in the past decade.

3. Identify the environmental factors that shape global marketing efforts.

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

4. Name and describe the alternative approaches companies use to enter global markets.

5. Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

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FIGURE 7-1FIGURE 7-1 Illustrative world trade flows for manufactured goods and commodities (billions of dollars)

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FIGURE 7-2FIGURE 7-2 Porter’s diamond of national competitive advantage

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MARKETING IN A BORDERLESS ECONOMIC WORLD

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• Decline of Economic Protectionism

Protectionism

Tariffs

Quota

World Trade Organization (WTO)

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MARKETING IN A BORDERLESS ECONOMIC WORLD

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• Rise of Economic Integration

European Union

North American Free Trade Agreement (NAFTA)

Asian Free Trade Agreements

• Euro

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FIGURE 7-4FIGURE 7-4 The countries of the European Union in 2005

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MARKETING IN A BORDERLESS ECONOMIC WORLD

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Global Companies

• A New Reality: Global Competition among Global Companies for Global Consumers

• International Firms

• Multinational Firms

• Transnational Firms

• Global Brand

Global Marketing Strategy

Multidomestic Marketing Strategy

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FIGURE 7-AFIGURE 7-A Global companies and marketing strategies

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A GLOBAL ENVIRONMENTAL SCAN

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• Cultural Diversity

• Foreign Corrupt Practices Act (1977)

Cultural Symbols

• Semiotics

Cross-Cultural Analysis

Values

Customs

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FIGURE 7-B FIGURE 7-B Cultural appreciation

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A GLOBAL ENVIRONMENTAL SCAN

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• Cultural Diversity

• Back Translation

Cultural Ethnocentricity

• Consumer Ethnocentrism

Language

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• PRAM

• NAPPY

• SOLICITOR

• LORRY

• SMALLS

• GANGWAY

• LIFT

• FORTNIGHT

• TORCH

• WIRELESS

• BABY CARRIAGE

• DIAPER

• LAWYER

• TRUCK

• UNDERWEAR

• AISLE

• ELEVATOR

• TWO WEEKS

• FLASHLIGHT

• RADIO

WHAT LANGUAGE DO WE SPEAK?

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Countertrade

Countertrade is the practice of using barter rather than money for making global sales.

Countertrade is the practice of using barter rather than money for making global sales.

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Gross Domestic Product

Gross domestic product is the monetary value of all goods and services produced in a country during one year.

Gross domestic product is the monetary value of all goods and services produced in a country during one year.

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Balance of Trade

Balance of trade is the difference between the monetary value of a nation’s exports and imports.

Balance of trade is the difference between the monetary value of a nation’s exports and imports.

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Economic Espionage Act (1996)

The Economic Espionage Act (1996) isa law that makes the theft of trade secrets by foreign entities a federal crime in the United States.

The Economic Espionage Act (1996) isa law that makes the theft of trade secrets by foreign entities a federal crime in the United States.

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Protectionism

Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas.

Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas.

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Tariffs

Tariffs are a government tax on goodsor services entering a country, primarily serving to raise prices on imports.

Tariffs are a government tax on goodsor services entering a country, primarily serving to raise prices on imports.

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Quota

A quota is a restriction placed on the amount of of a product allowed to enteror leave a country.

A quota is a restriction placed on the amount of of a product allowed to enteror leave a country.

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World Trade Organization

The World Trade Organization (WTO) is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

The World Trade Organization (WTO) is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

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Global Competition

Global competition exists when firms originate, produce, and market their products and services worldwide.

Global competition exists when firms originate, produce, and market their products and services worldwide.

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Strategic Alliances

Strategic alliances are agreements among two or more independent firmsto cooperate for the purpose of achieving common goals.

Strategic alliances are agreements among two or more independent firmsto cooperate for the purpose of achieving common goals.

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Multidomestic Marketing Strategy

A multidomestic marketing strategy is used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.

A multidomestic marketing strategy is used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.

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Global Marketing Strategy

A global marketing strategy is usedby transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

A global marketing strategy is usedby transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

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Global Brand

A global brand is a brand marketedunder the same name in multiple countries with similar and centrally coordinated marketing programs.

A global brand is a brand marketedunder the same name in multiple countries with similar and centrally coordinated marketing programs.

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Global Consumers

Global consumers consist of customer groups living in many different countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

Global consumers consist of customer groups living in many different countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

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Cross-Cultural Analysis

Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies.

Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies.

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Values

Values is a society’s personally or socially preferable modes of conductor states of existence that tend to persist over time.

Values is a society’s personally or socially preferable modes of conductor states of existence that tend to persist over time.

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Customs

Customs are what is considered normal and expected about the way people do things in a specific country.

Customs are what is considered normal and expected about the way people do things in a specific country.

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The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain businessin a foreign country.

The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain businessin a foreign country.

Foreign Corrupt PracticesAct (1977)

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Cultural symbols are things that represent ideas or concepts.Cultural symbols are things that represent ideas or concepts.

Cultural Symbols

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Semiotics are a field of study that examines the correspondence between symbols and their role in the assignment of meaning for people.

Semiotics are a field of study that examines the correspondence between symbols and their role in the assignment of meaning for people.

Semiotics

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Back translation is when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors.

Back translation is when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors.

Back Translation

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Consumer ethnocentrism is the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products.

Consumer ethnocentrism is the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products.

Consumer Ethnocentrism

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A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency.

A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency.

Currency Exchange Rate

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Exporting is producing goods in one country and selling them in another country.

Exporting is producing goods in one country and selling them in another country.

Exporting

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A joint venture is when a foreign country and a local firm invest together to create a local business.

A joint venture is when a foreign country and a local firm invest together to create a local business.

Joint Venture

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Direct investment entails a domestic firm actually investing in and owning a foreign subsidiary or division.

Direct investment entails a domestic firm actually investing in and owning a foreign subsidiary or division.

Direct Investment

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Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost.

Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost.

Dumping

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A gray market is a situation where products are sold through unauthorized channels of distribution. Also called parallel importing.

A gray market is a situation where products are sold through unauthorized channels of distribution. Also called parallel importing.

Gray Market