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5. Chapter. Global Markets and Marketing. The significance of international marketing to firms. What makes foreign markets attractive. Challenges in designing marketing strategies. Developing Global Brands. The Significance of International Trade. Access to products otherwise unavailable

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  1. 5 Chapter Global Markets and Marketing The significance of international marketing to firms. What makes foreign markets attractive. Challenges in designing marketing strategies. Developing Global Brands

  2. The Significance of International Trade • Access to products otherwise unavailable • Foodstuffs • Minerals and other natural resources • What don’t we have in U.S.? • Comparative Advantage • Advantage in natural resources • Advantage in human resources

  3. Exports as a Percent of GDP in Selected Countries (2006) Country Exports as a % of GPD United States 11% United Kingdom 28 France 27 Germany 45 Japan 16 Canada 36 Mexico 28 China 39 Source: http://datafinder.worldbank.org/exports-goods-services-gdpYear: 2006

  4. Environmental Considerations in International Marketing • Social and Cultural Forces • Economic Environment • Infrastructure • Level of economic development • Political and Legal Forces • Trade Barriers • Tariff: A tax imposed on a product entering a country. • Import quota • Local-content laws • Boycott or embargo • Free-Traders vs. Protectionists

  5. Trade agreements both inhibit and encourage international marketing • General Agreement on Tariffs and Trade (GATT) - now called the World Trade Organization (WTO) • The European Union (EU) • North American Free Trade Agreement (NAFTA) • The Asia-Pacific Economic Cooperation forum (APEC)is a trade pact with 19 member nations that account for 45 percent of world trade.

  6. EU Members (and candidates)2009

  7. NAFTA Canada 30.7 United States 283.0 Mexico 95.8 Venezuela 23.2 Colombia 37.7 Ecuador 12.2 Brazil 161.8 Peru 24.8 Uruguay 3.2 Argentina 36.1 Chile 14.8 Paraguay 5.2 Bolivia 8.0

  8. Japan 126.4 India 984 Bhutan 0.6 APEC South Korea 46.5 China 1,243 Taiwan 21.8 Nepal 22.0 Hong Kong 6.7 Pakistan 141.9 Vietnam 76.2 Bangladesh 127.6 Philippines 73.1 Thailand 61.2 Brunei 0.3 Singapore 3.2 Papua New Guinea 4.6 Maldives 0.3 Sri Lanka 18.7 Australia 18.7 Malaysia 22.1 Indonesia 199.7 New Zealand 3.8

  9. Designing the International Marketing Mix • Marketing Research • Statistical data are scarce and often not reliable. • There is a lack of uniformity among countries regarding the definition of measures. • Product Planningdecisions include: • Product adaptation. • Branding and labeling. • Pricingissuesare: • Cost-plus pricing. Price Differential. • Dumping. Foreign Exchange. • Countertrade or barter.

  10. Designing the International Marketing Mix (Con’t.) • Distribution systemsconsist of: • Domestic foreign-trade middlemen. • Foreign-trade middlemen located abroad. • Wholesalers and retailers operating within foreign markets. • Manufacturer’s sales branches and offices located in foreign countries. • Bribes, kickbacks, and extortion payments are common in many international distribution systems. • Gray marketing (export diversion) • Advertising focuses on: • Standardization. • Adapting media strategy and message details. Pringles Ad

  11. Strategic Planning for International Marketing • Global Strategy - the same marketing plan is employed throughout the world. • Regional Strategy - used when geographic areas have much in common, but are distinct from other geographic areas. • Local Strategy - used when there are few marketing mix dimensions that can be transferred from one market to another

  12. Global Branding Strategy • What is is? • Why such a desire to do it? • Few brands/products REALLY do it completely. • #1 Global brand of Shampoo?

  13. Brand Name Problems... • You’ve probably heard some of the classic blunders made by American companies: • Chevy Nova in Mexico • Clairol Mist Stick in Germany • Look at some interesting foreign brands...

  14. Crapsy Fruit: French cereal Happy End: German toilet paper Bimbo: Mexican Toasted Bread Plopp: Scandinavian chocolate Poor Candidates for Global Brands • Pocari Sweat: • Japanese Sport Drink • Skinless: • Japanese condoms • Zit: • German lemonade • Super Piss: • Scandinavian car lock de-icer Source: Newsweek March 17, 1997

  15. International Trade Balance Info.

  16. The Role of International Trade Balances • A country’s balance of paymentsis an accounting record of all its transactions with all the other nations in the world. • A country’s trade balanceis the difference between what it exports and what it imports. • When exports exceed imports, trade surplus • When imports exceed exports, trade deficit

  17. A country’s expenditures across all categories must equal income across all categories • If total expenditures are more than total income, the country must borrow to make up the difference. • If a country’s debt grows, it is faced with pressure to raise taxes and lower government spending.

  18. The U.S. has large expenditures in four categories that significantly affect its balance of payments. • Military forces stationed overseas • Foreign aid • Oil imports • American tourist travel abroad To offset these expenditures and maintain equilibrium in the balance of payments, U.S. businesses need to generate a substantial trade balance.

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