INTERNATIONAL MARKETING MKTG3417

1. INTERNATIONAL MARKETINGMKTG3417 Professor: Bob Carpenter

2. Today’s Agenda • Emerging Markets • Multi national Trading Regions • Global Strategy • Assignments

3. 1. The reasons for economic union 2. Patterns of international cooperation 3. The evolution of the European Community to the European Union 4. Strategic implications for marketing in Europe

4. 5. Evolving patterns of trade as Eastern Europe and the former Soviet states embrace the free-market system 6. The trade linkage of NAFTA and South America and its regional effects 7. The development of trade within the Asia-Pacific Rim

5. La Raison d’Etre • Economic Factors (similar/complementary economic bases) • Political Factors (similar political systems/comparable aspirations and general compatibility) • Geographic Proximity • Cultural Factors • Weakness in some must be balanced by strengths in others © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

6. Patterns of Multinational Cooperation • Five types of groupings, each requires greater levels of cooperation among member nations, and include: • Regional Cooperation Groups • Free Trade Area • Customs Union • Common Market • Political Union

7. Regional Cooperation Groups • The most basic economic integration and cooperation is RCD (regional cooperation for development). • In RCD governments agree to participate jointly to develop basic industries beneficial to each economy. • Each country makes an advance commitment to participate in financing of new JVs and to purchase a specified share of the output venture, e.g., Colombia and Venezuela built a hydroelectric dam on the Orinico river which both share © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

8. Free Trade Area • A group of countries that have agreed to reduce or eliminate trade barriers such as customs duties and non-tariff barriers (standards) • Examples of Free Trade Areas: NAFTA, and European Free Trade Area (EFTA) between Iceland, Liechtenstein, Norway, and Switzerland • Member countries can have different trade policies for other external countries © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

9. Customs Union • A customs union represents the next stage in economic cooperation. • Examples of Customs Unions: East African Customs Union between Ethiopia, Kenya, Sudan, Tanzania, Uganda, and Zambia; • Unions between France and Monaco, Italy and San Marino, Switzerland and Liechtenstein. • In addition to FTA features it adds a common external tariff on products imported from countries outside the union. © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

10. Common Market • A common market agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labour among member nations. • Latin America boasts three common markets: the Central American Common Market (CACM), the Andean Common Market, and the Southern Cone Common Market (MERCOSUR). • The three have roughly similar goals and seek eventual full economic integration.

11. Political Union • The highest level of cooperation among member countries • Examples of Political Unions: COMECON (Council for Mutual Economic Assistance), and U.S.S.R., but it no longer exists • A group of countries that have agreed to complete political and economic integration and cooperation among members, either voluntary or enforced

12. Global Markets and Multinational Market Groups • Many Multinational Market Groups have emerged due to recent trends that include: • The globalization of markets • The restructuring of Eastern Europe into independent market-driven economies • The dissolution of the Soviet Union into independent states • The worldwide trend toward economic cooperation • Enhanced global competition © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

13. European Market Regions

14. European Union Countries © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

15. European Parliament in Brussels © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

16. Greeks adopt the euro © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

17. Strategic Implications for Marketing in Europe • Many nations create coalitions of multinational market groups. • Opportunities • Market Barriers • Reciprocity • Multinational groups provide opportunities to international businesses through access to greatly enlarged markets with reduced or abolished country-by-country tariff barriers and restrictions. • The Canadian Government has as a current priority to explore the advantages of a free trade agreement with the EU. © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

18. Signs of free enterprise in Russia © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

19. The Commonwealth of Independent States © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

20. Commonwealth of Independent States © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

21. North American Free-Trade Area (NAFTA) United States Mexico Canada © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

22. NAFTA • NAFTA is a comprehensive trade agreement that addresses, and in most cases improves all aspects of doing business within North America • NAFTA requires the three countries to remove all tariffs and barriers to trade over 15 years, but each country will have its own tariff agreements with nonmember countries.

23. Southern Cone Free Trade Area (MERCOSUR) Argentina Bolivia Brazil Chile Paraguay Uruguay

24. Southern Cone Free Trade Area (MERCOSUR) • Mercosur is the second-largest common-market agreement in Latin America after NAFTA • Mercosur has assumed the leadership in setting the agenda for the creation of a free trade area of the Americas or, more likely, a South American Free Trade Area (SAFTA) © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

25. Latin American Economic Cooperation • Reasons and trends, which stimulated creation of Latin American market groups: • Tremendous foreign debt • Protectionist economic systems • Triple-digit inflation • State ownership of basic industries • Over-regulation of industry • State of economic chaos in most of Latin American countries

26. Latin American Economic Cooperation

27. Latin American Integration Association (LAIA) Argentina Mexico Bolivia Paraguay Brazil Peru Chile Uruguay Columbia Venezuela Ecuador

28. Central America Common Market (CACM) Guatemala Costa Rica El Salvador Nicaragua Honduras

29. Caribbean Community and Common Market (CARICOM) Antigua Jamaica Barbuda Montserrat Barbados St. Kitts-Nevis Belize Anguilla Dominica St. Lucia Grenada St. Vincent Guyana Trinidad-Tobago

30. Association of Southeast Asian Nations (ASEAN) Brunei Philippines Cambodia Singapore Indonesia Thailand Laos Vietnam Malaysia Myanmar

31. Association of Southeast Asian Nations (ASEAN) + 3 Brunei Philippines Cambodia Singapore Indonesia Thailand Laos Vietnam Malaysia S. Korea Myanmar China Japan

32. Far Eastern Market Group

33. Asia-Pacific Economic Cooperation (APEC) Japan Philippines Australia South Korea Russia Brunei Malaysia Singapore Canada Mexico Taiwan Chile New Zealand Thailand China Papua New Guinea U.S.A. Hong Kong Peru Vietnam Indonesia

34. Economic Community of West African States (ECOWAS) Benin Guinea-Bissau Burkina Faso Liberia Cote d’ Ivoire Mali Gambia Mauritania Ghana Niger Guinea Nigeria

35. Southern African Development Community (SADC) Angola Gabon Botswana Mali Lesotho Mauritania Namibia Niger Malawi Senegal Mauritius Togo

36. East African Customs Union Ethiopia Kenya Sudan Tanzania Uganda Zambia

37. Maghreb Economic Community Algeria Libya Morocco Tunisia Mauritania

38. Economic Community of West Africa States Benin Liberia Burkina Faso Mali Cape Verde Mauritania Cote d’Ivoire Niger Gambia Nigeria Ghana Senegal Guinea Sierra Leone Guinea-Bissau Togo

39. African Market Groups © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

40. African Market Groups © 2006 McGraw-Hill Ryerson, Ltd. All rights reserved.

41. Arab Common Market Iraq Kuwait Jordan Syria Egypt

42. Regional Trading Groups and Emerging Markets • The two opposing views regarding the direction of global trade in the future: • The world is diving into major regional trading groups such as European Union, NAFTA, and the ASEAN Free Trade Area that are now and will continue to be the major markets of the future. • Global economic power may be shifting away from the traditional industrialized markets to the developing world and its emerging markets.

44. 1. How global marketing management differs from international marketing management 2. The increasing importance of international strategic alliances 3. The need for planning to achieve company goals 4. The important factors for each alternative market-entry strategy

45. Introduction • Increasingly firms are entering foreign markets • Executing a global perspective requires planning, organization, and willingness to try new approaches – such as engaging in collaborative relationships and redefining the scope of company operations • Important elements of this process are global marketing management, competition in the global marketplace, strategic planning, and alternative market-entry strategies

46. Global Marketing Management Global Marketing Management: An Old Debate and a New View • Global Marketing Management thought has undergone substantial revision • In the 1970s the argument was framed as “standardization vs. adaptation” • In the 1980s it was “globalization vs. localization” or “Think local, act local” • In the 1990s it was “global integration vs. local responsiveness” • The fundamental question is whether the global homogenization of consumer tastes allowed global standardization of the marketing mix

47. Global Marketing Management • As global markets continue to homogenize and diversify simultaneously, the best companies will avoid the trap of focusing on country as the primary segmentation variable • Other segmentation variables are often more important – e.g. climate, language group, media habits, age, or income

48. The Nestle Way • Nestlé sells more than 8,500 products produced in 489 factories in 193 countries • The “Nestlé way” is to dominate its markets; its strategy can be summarized in four points: • think and plan long term • decentralize • stick to what you know, and • adapt to local tastes • Nestlé is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water

49. Benefits of Global Marketing • Economies of scale in production and marketing can be important competitive advantages for global companies • Unifying product development, purchasing, and supply activities across several countries it can save costs • Transfer of experience and know-how across countries through improved coordination and integration of marketing activities • Diversity of markets by spreading the portfolio of markets served brings an important stability of revenues and operations to many global firms When large market segments can be identified:

50. Global Branding Strategies • Global branding is becoming one of the key drivers of firm growth in markets throughout the world • Effective branding can increase returns by as much as five percent • By using a well-organized branding strategy, companies can differentiate themselves from competitors and thereby become less vulnerable • Global branding is also a strong factor in building customer loyalty • Branding allows the communications between company and customers to be homogenized, thus reducing the need to customize messages and images “Brands are all about trust…”