Chapter 5 Developing a Global Vision Copy

5Developing a Global VisionDr. Close

ObjectivesDiscuss the importance of global marketing

Discuss the impact of multinational firms on the world economy Describe the external environment facing global marketers

Identify ways of entering the global market

List the elements involved in developing a global marketing mix

Emerging-Market CompaniesAdapted from Emerging Giants, Business Week, July 31, 2006.

COMPANYCOUNTRYINDUSTRYAmrica MvilMexicoTelecom servicesCemexMexicoBuilding materialsChina MobileChinaTelecom servicesCNOOCChinaOil and gasCVRDBrazilMiningEmbraerBrazilAerospaceGazpromRussiaOil and gasHaierChinaHome appliancesHisenseChinaElectronicsHuaweiChinaTelecom equipment

Go GlobalTarget throughout the worldGlobal vision of multi-national firmsFear? Why?

The Fear of Trade and Globalization Millions of Americans have lost jobsMillions fear losing jobsThreat of outsourcing if workers do not accept pay cutsVulnerability to operations moving offshoreThen, why is international marketing so hot?

Did you know?U.S. exports a fifth of industrial production. One of every 10 jobs in U.S. is supported by exports.U.S. businesses export over $800 billion.Exports account for 25 percent of U.S. economic growth.U.S. is worlds leading exporter of farm products.

Rewards of Global MarketingRecognizing and reacting to international marketing opportunities Using effective global marketing strategies Being aware of threats from foreign competitors

Other rewards?

External Environments

Demographics (1)BirthrateBabies born/1000 people in populationIn U.S, slower since baby boom (declining; grandparents example)Japan & Western Europe is also slowerMore spending/child (indulged)

U.S. Birthrate 1935-2005

U.S. Demographics (2)U.S. is a Transient society16% moves each year (40% of those, out of country)A nation of strangers leads to chainsRegionalGrowthFastest in the WestCalifornia (most populous; 1/8 Americans)DensityMost on the East Coast (Why??)Key for businesses: local area, traffic counts, food

Economic Development (1)What are attractive markets?GNI (Gross National Income): total market value of goods/services produced in an economyHigher GNIAllows more tradeExchange concept = favors richer countries & peopleCriticism here

Economic Development (2)What are attractive markets? (continued)Lower GNPDeveloping worldGrowthExample: U.S. and Canada will take 5x as long to double their population as compared to Nicaragua & Saudi ArabiaLess competition (M&M/Mars: Eastern Europe)ChallengesLiteracy: world (baby food, U.S. fast food)Low income: 60% of world makes less than $2/dayEthics (Nestle and what other company?)

International TradeMERCOSUR (Latin America)URUGUAY ROUND (>148 nations to reduce tariffs)WTO (replaced GATT)NAFTACAFTAEUIMF

International OptionsExporting/importing (Wal-Mart)Licensing (Sponge Bob)Franchising (McDonalds)Contract manufacturingJoint ventureDirect foreign investment

Which are more risky?

Export Intermediaries

Global Marketing Mix StrategiesOne product, one messageChange existing product for a new country market (Krispy Crme, anything else?)Message adaptationPrice changes (exchange rates, dumping)Barter

Product and Promotion

PricingMust consider transportation and insurance costs, taxes and tariffs Determine what customers will spend Ensure that foreign buyers will pay price

May need to simplify a product to lower price

Dont assume that low-income countries are willing to accept lower quality

Developing a Global Marketing MixPROMOTION

One Product, One MessageProduct InventionProduct AdaptationMessageAdaptationPLACE

Channel ChoiceChannel StructureCountry InfrastructurePRICE

DumpingCountertradeExchange RatesPurchasing Power

Your thoughts?What are your ideas for selling abroad? How difficult is global marketing? What are the potential risks and returns?

SummaryDemographyInternational tradeEconomic developmentInternational optionsGlobal marketing mix

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