Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 1 Global Marketing Strategies.

Copyright Copyright ©©2009 Pearson Education, Inc. Publishing as Prentice Hall2009 Pearson Education, Inc. Publishing as Prentice Hall 11Chapter 12 Global Marketing StrategiesChapter 12 Global Marketing Strategies

Global Marketing Strategies


GlobalizationGlobalization

Grant Thornton study: 56% of Grant Thornton study: 56% of CEOs at medium-sized companies CEOs at medium-sized companies see globalization as an opportunity see globalization as an opportunity

McKinsey study: McKinsey study: 2000: Global markets produced and 2000: Global markets produced and

consumed 20% of the world’s $28 consumed 20% of the world’s $28 trillion in GDPtrillion in GDP

2027: Global markets will account for 2027: Global markets will account for 80% of the world’s $73 trillion GDP 80% of the world’s $73 trillion GDP


Why “Go Global?”Why “Go Global?”

Offset sales declines in the Offset sales declines in the domestic marketdomestic market

Increase sales and profitsIncrease sales and profits Extend products’ life cyclesExtend products’ life cycles Lower manufacturing costsLower manufacturing costs Lower the cost of productsLower the cost of products


Why “Go Global?”Why “Go Global?”

Improve competitive positionImprove competitive position Raise quality levelsRaise quality levels Become more customer-orientedBecome more customer-oriented Increase chances of successIncrease chances of success


Questions to Consider Questions to Consider Before Going GlobalBefore Going Global

1.1. Is there a profitable market in which our Is there a profitable market in which our company has the potential to be company has the potential to be successful over the long run? (see Table successful over the long run? (see Table 12.1)12.1)

2.2. Do we have and are we willing to commit Do we have and are we willing to commit adequate resources of time, people, and adequate resources of time, people, and capital to a global campaign?capital to a global campaign?

3.3. Are domestic pressures forcing our Are domestic pressures forcing our company to consider global company to consider global opportunities?opportunities?


Questions to Consider Questions to Consider Before Going GlobalBefore Going Global

4.4. Do we understand the cultural Do we understand the cultural differences, history, economics, differences, history, economics, values, opportunities, and risks of values, opportunities, and risks of conducting business in the country conducting business in the country we are considering?we are considering?

5.5. Is there a viable exit strategy for our Is there a viable exit strategy for our company if conditions change or the company if conditions change or the new venture does not succeed?new venture does not succeed?

6.6. Can we afford Can we afford notnot to go global? to go global?

Nine Strategies for Going Nine Strategies for Going GlobalGlobal

Creating a Web site

Relying on tradeintermediaries

Creating jointventures

Foreignlicensing

Internationalfranchising

Counter-trading And bartering

Exporting

Establishing Internationallocations

Importing andoutsourcing

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7


Strategies For Strategies For "Going Global""Going Global"

Creating a Web siteCreating a Web site

World Internet Users by Region

Oceania/Australia, 1.7%

Middle East, 1.7%

Africa, 2.9%

Latin America/Caribbean,

9.0%

North America, 20.4%

Europe, 28.2%

Asia, 36.1%


3.6%

10.0%

11.0%

18.4%

39.4%

54.4%

69.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

InternetPenetration Rate(Percentage of Population Using the Internet)

Africa

Middle East

Asia

Latin America/Caribbean

Europe

Oceania/Australia

North America

Reg

ion

Internet Penetration RatePercentage of Population Using the Internet



Creating a Web siteCreating a Web site Relying on trade intermediariesRelying on trade intermediaries

Strategies for Strategies for "Going Global""Going Global"


Trade IntermediariesTrade Intermediaries

Export Management Companies Export Management Companies (EMCs)(EMCs)

Export Trading Companies (ETCs)Export Trading Companies (ETCs) Manufacturer’s Export Agents (MEAs)Manufacturer’s Export Agents (MEAs) Export merchantsExport merchants Resident buying officesResident buying offices Foreign distributorsForeign distributors


Joint venturesJoint ventures

Creating a Web siteCreating a Web site Relying on trade intermediariesRelying on trade intermediaries



Joint VenturesJoint Ventures

Domestic joint ventureDomestic joint venture – two or more – two or more U.S. companies form an alliance for U.S. companies form an alliance for the purpose of exporting their goods the purpose of exporting their goods and services abroadand services abroad

Foreign joint ventureForeign joint venture – a domestic firm – a domestic firm forms an alliance with a company in forms an alliance with a company in the target nation the target nation Most important ingredient: Choosing the Most important ingredient: Choosing the

right partnerright partner Another key to success: Establishing Another key to success: Establishing

common objectivescommon objectives


Foreign licensingForeign licensing International franchisingInternational franchising

Creating a Web siteCreating a Web site Relying on trade intermediariesRelying on trade intermediaries Joint venturesJoint ventures



Steps to International Steps to International Franchising SuccessFranchising Success

1.1. Identify the country or countries that Identify the country or countries that are best suited to the business are best suited to the business conceptconcept

2.2. Generate leads for potential Generate leads for potential franchiseefranchisee

3.3. Select quality candidatesSelect quality candidates

4.4. Structure the franchise dealStructure the franchise deal Direct franchisingDirect franchising Area developmentArea development Master franchising Master franchising


Counter-trading and barteringCounter-trading and bartering ExportingExporting

Creating a Web siteCreating a Web site Relying on trade intermediariesRelying on trade intermediaries Joint venturesJoint ventures Foreign licensingForeign licensing International franchisingInternational franchising



ExportingExporting

Small companies account for 97% of Small companies account for 97% of all companies involved in exporting, all companies involved in exporting, but…but…

They generate just 29% of the U.S. They generate just 29% of the U.S. export sales export sales

More than 250,000 U.S. companies More than 250,000 U.S. companies now export; twice as many are now export; twice as many are capable of exporting but are not capable of exporting but are not doing sodoing so

Source: Elizabeth Clark, Small and Medium-Sized Exporting Companies: A Source: Elizabeth Clark, Small and Medium-Sized Exporting Companies: A Statistical Handbook, International Trade Administration, Office of Trade Statistical Handbook, International Trade Administration, Office of Trade and Industry Information (Washington, DC: 2005), p. 19. and Industry Information (Washington, DC: 2005), p. 19.

Number of Countries to Which Small and Medium-Sized Businesses Export

One country, 62%

2-4 countries, 25%

5-9 countries, 8%

10 or more countries, 5%


Steps to Successful Steps to Successful ExportingExporting

1. Recognize that even the tiniest 1. Recognize that even the tiniest companies and least experienced companies and least experienced entrepreneurs have the potential to entrepreneurs have the potential to exportexport

2. Analyze your product or service2. Analyze your product or service

3. Analyze your commitment3. Analyze your commitment

4. Research markets and pick your 4. Research markets and pick your targettarget


5. Develop a distribution strategy5. Develop a distribution strategy6. Find your customer6. Find your customer

U.S. Department of CommerceU.S. Department of Commerce International Trade AdministrationInternational Trade Administration

7.7. Find financing for export salesFind financing for export sales SBA, EX-IM Bank, OPIC, and othersSBA, EX-IM Bank, OPIC, and others

8. Ship your goods8. Ship your goods9. Collect your money9. Collect your money

(Continued)(Continued)

Steps to Successful Steps to Successful ExportingExporting

How a Letter of Credit How a Letter of Credit WorksWorks

$

Foreign buyer agrees to buy products;Foreign buyer agrees to buy products;seller agrees to ship goods if buyerseller agrees to ship goods if buyerarranges a letter of credit.arranges a letter of credit.

Buyer requests that his bank grant aBuyer requests that his bank grant aletter of credit, which assures exporterletter of credit, which assures exporterpayment if she presents documents payment if she presents documents proving goods were actually shipped.proving goods were actually shipped.Bank makes out letter of credit to sellerBank makes out letter of credit to sellerand sends it to seller’s bank (called the and sends it to seller’s bank (called the confirming bank).confirming bank).

Seller ships goods to buyer Seller ships goods to buyer according to letter of credit’s according to letter of credit’s terms and submits shipping terms and submits shipping documents to bank issuing documents to bank issuing letter of credit.letter of credit.

$Letterof Credit

Seller’s Bank Buyer's Bank

Buyer’s bank makes payment Buyer’s bank makes payment to seller’s (confirming) bank. to seller’s (confirming) bank. Confirming bank then pays Confirming bank then pays seller amount specified in seller amount specified in letter of credit.letter of credit.

$

BuyerSeller



Establishing international locationsEstablishing international locations Importing and outsourcingImporting and outsourcing

Creating a Web siteCreating a Web site Relying on trade intermediariesRelying on trade intermediaries Joint venturesJoint ventures Foreign licensingForeign licensing International franchisingInternational franchising Counter-trading and barteringCounter-trading and bartering ExportingExporting



Importing and Importing and OutsourcingOutsourcing

Make sure that importing or Make sure that importing or outsourcing is right for your businessoutsourcing is right for your business

Establish a cost target for your Establish a cost target for your productproduct

Do your research before you leave Do your research before you leave homehome

Be sensitive to cultural differences Be sensitive to cultural differences Do your groundworkDo your groundwork


Importing and Importing and OutsourcingOutsourcing

Protect your company’s intellectual Protect your company’s intellectual property property

Select a manufacturerSelect a manufacturer Provide an exact model of the Provide an exact model of the

product you want manufacturedproduct you want manufactured Stay in constant contact with the Stay in constant contact with the

manufacturer and try to build a long-manufacturer and try to build a long-term relationship term relationship


Barriers to Barriers to International TradeInternational Trade

Attitude - "My company is too Attitude - "My company is too small to export"small to export"

Lack of information about how Lack of information about how to get startedto get started

Lack of export financingLack of export financing

Domestic Domestic

BarriersBarriers::


TariffsTariffs - Taxes a government - Taxes a government imposes on goods and services imposes on goods and services imported into that countryimported into that country

QuotasQuotas - Limits on the amount - Limits on the amount of a product imported into a of a product imported into a countrycountry

EmbargoesEmbargoes - Total bans on - Total bans on imports of certain products imports of certain products

International International

BarriersBarriers::



DumpingDumping - selling large quantities of a - selling large quantities of a product in a foreign country below cost to product in a foreign country below cost to gain market sharegain market share

Political barriersPolitical barriers - rules, regulations and risks- rules, regulations and risks BusinessBusiness barriersbarriers – business practices and – business practices and

lawslaws Cultural barriersCultural barriers - differing languages, - differing languages,

philosophies, traditions, and accepted philosophies, traditions, and accepted business practicesbusiness practices


International International

BarriersBarriers::


International Trade International Trade AgreementsAgreements World Trade Organization (WTO)World Trade Organization (WTO)

150 member countries that account 150 member countries that account for more than 90% of all world trade for more than 90% of all world trade

North American Free Trade North American Free Trade Agreement (NAFTA)Agreement (NAFTA) Created a single free trade zone with Created a single free trade zone with

the U.S., Canada, and Mexico the U.S., Canada, and Mexico Central America Free Trade Central America Free Trade

Agreement (CAFTA)Agreement (CAFTA)


Guidelines for Success Guidelines for Success in International in International MarketsMarkets

Make yourself at home in all three of the Make yourself at home in all three of the world's key markets - North America, Europe, world's key markets - North America, Europe, and Asiaand Asia

Appeal to the similarities within the various Appeal to the similarities within the various regions in which you operate but recognize regions in which you operate but recognize the differences in their particular culturesthe differences in their particular cultures

Be willing to commit the necessary resources Be willing to commit the necessary resources to make your global efforts successful to make your global efforts successful

Develop new products for the world marketDevelop new products for the world market



Use the many resources available to Use the many resources available to research potential markets and to research potential markets and to determine the ideal target for your determine the ideal target for your products products

Familiarize yourself with foreign Familiarize yourself with foreign customs and languagescustoms and languages

Learn to understand your customers Learn to understand your customers from the perspective of from the perspective of theirtheir culture, culture, not your own not your own


"Glocalize" - Make global decisions "Glocalize" - Make global decisions about products, markets, and about products, markets, and management, but allow local management, but allow local employees to make tactical employees to make tactical decisions about packaging, decisions about packaging, advertising, and serviceadvertising, and service

Make positive and preferably visible Make positive and preferably visible contributions to the local community contributions to the local community



Train employees to think globally, Train employees to think globally, send them on international trips, send them on international trips, and equip them with state-of-the-and equip them with state-of-the-art communication technologyart communication technology

Hire local managers to staff Hire local managers to staff foreign offices and branchesforeign offices and branches



Do whatever seems best Do whatever seems best wherever it seems best, even if wherever it seems best, even if people at home lose jobs or people at home lose jobs or responsibilitiesresponsibilities

Consider using partners and joint Consider using partners and joint ventures to break into foreign ventures to break into foreign markets you cannot penetrate on markets you cannot penetrate on your ownyour own



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Copyright ©2009 Pearson Education, Copyright ©2009 Pearson Education, Inc. Publishing as Prentice HallInc. Publishing as Prentice Hall

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 1 Global Marketing Strategies.

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