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5 Developing a Global Vision

5 Developing a Global Vision. Dr. Close. Objectives Discuss 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

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5 Developing a Global Vision

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  1. 5Developing a Global Vision Dr. Close

  2. Objectives • Discuss 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

  3. Emerging-Market Companies Adapted from “Emerging Giants,” Business Week, July 31, 2006.

  4. Go Global • Target throughout the world • Global vision of multi-national firms • Fear? Why?

  5. The Fear of Trade and Globalization • Millions of Americans have lost jobs • Millions fear losing jobs • Threat of outsourcing if workers do not accept pay cuts • Vulnerability to operations moving offshore • Then, why is international marketing so hot?

  6. 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 world’s leading exporter of farm products.

  7. Rewards of Global Marketing • Recognizing and reacting to international marketing opportunities • Using effective global marketing strategies • Being aware of threats from foreign competitors • Other rewards?

  8. External Environments

  9. Demographics (1) • Birthrate • Babies born/1000 people in population • In U.S, slower since baby boom (declining; grandparents example) • Japan & Western Europe is also slower • More spending/child (indulged)

  10. U.S. Birthrate 1935-2005

  11. U.S. Demographics (2) • U.S. is a Transient society • 16% moves each year (40% of those, out of country) • A nation of strangers leads to chains • Regional • Growth • Fastest in the West • California (most populous; 1/8 Americans) • Density • Most on the East Coast (Why??) • Key for businesses: local area, traffic counts, food

  12. Economic Development (1) • What are attractive markets? • GNI (Gross National Income): total market value of goods/services produced in an economy • Higher GNI • Allows more trade • Exchange concept = favors richer countries & people • Criticism here

  13. Economic Development (2) • What are attractive markets? (continued) • Lower GNP • Developing world • Growth • Example: U.S. and Canada will take 5x as long to double their population as compared to Nicaragua & Saudi Arabia • Less competition (M&M/Mars: Eastern Europe) • Challenges • Literacy: ¾ world (baby food, U.S. fast food) • Low income: 60% of world makes less than $2/day • Ethics (Nestle and what other company?)

  14. International Trade • MERCOSUR (Latin America) • URUGUAY ROUND (>148 nations to reduce tariffs) • WTO (replaced GATT) • NAFTA • CAFTA • EU • IMF

  15. International Options • Exporting/importing (Wal-Mart) • Licensing (Sponge Bob) • Franchising (McDonalds) • Contract manufacturing • Joint venture • Direct foreign investment

  16. Export Sell domestically produced products to buyers in other countries Licensing Legal process allowing use of manufacturing/patents/knowledge ContractManufacturing Private-label manufacturing by a foreign country Joint Venture Domestic firm buys/joins a foreign company to create new entity Direct Investment Active ownership of a foreign company/manufacturing facility Which are more risky?

  17. Buyer for Export Assumes all ownership risks and sells globally for its own account. Plays the traditional broker’s role by bringing buyer and seller together. Export Broker Export Agent Acts like a manufacturer’s agent for the exporter in the foreign market. Export Intermediaries

  18. Global Marketing Mix Strategies • One product, one message • Change existing product for a new country market (Krispy Crème, anything else?) • Message adaptation • Price changes (exchange rates, dumping) • Barter

  19. Same Product Change Product One Product One Message Product Adaptation Same Message Message Adaptation Product Invention Change Message Product and Promotion

  20. Pricing • Must 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 • Don’t assume that low-income countries are willing to accept lower quality

  21. PROMOTION One Product, One Message Product Invention Product Adaptation Message Adaptation Developing a Global Marketing Mix PLACE Channel Choice Channel Structure Country Infrastructure PRICE Dumping Countertrade Exchange Rates Purchasing Power

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

  23. Summary • Demography • International trade • Economic development • International options • Global marketing mix

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