nullGlobal MarketingGlobal MarketingSpring 2003Some AboutsSome AboutsAbout me
About this course
About the project
About the examination
About grading
Text StructureText StructureIntroduction to global marketing
The global marketing environment
Global market opportunities
Global marketing strategy
Global marketing program
Global marketing management
List of QuestionsList of QuestionsWhat is global marketing?
Do we have to go global?
Why?
Where shall we go?
What shall we know before plunging ourselves into the storming sea?
How can we survive and thrive in a foreign market?
Global Marketing
-- IntroductionGlobal Marketing
-- IntroductionWhat is Global Marketing?What is Global Marketing?What is marketing?What is marketing?The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives. The Three Principles of MarketingThe Three Principles of MarketingCustomer Value
Value Equation: V=B/P
Differential Advantage
FocusWhat is global marketing?What is global marketing?Practicing marketing in the global environment.
An organization that engages in global marketing focuses its resources on global market opportunities and threats
Globalization Globalization An open economic system
Non-discrimination
Global brands
Global structures
Exports % share of world productionExports % share of world productionAnnual % Growth of trade and GDP
1959 – 96Annual % Growth of trade and GDP
1959 – 96GDPGDPEffects of globalization on businessEffects of globalization on businessCheap offshore production
Reduced transport costs
Virtual communication
Standardization of logistics
Global marketing
Export & Import By Regions
2002/01-10
Export & Import By Regions
2002/01-10
Corporate Globalization
-China’s CaseCorporate Globalization
-China’s CaseWalmart
World Women Basket Ball Games
Haier in USA
Tsingdao Beer
Global Marketing VS Domestic MarketingGlobal Marketing VS Domestic MarketingMore difficult: language, law, culture, trade and non-trade barriers, market research, and communication;
More complicated: currency, measures and weights, customs, monetary exchange, transportation, insurance, and counter-claim
More risky: credibility, currency exchange, political risk, transportation, and pricing
More opportunities and more profitable, hopefully.
Should we go global?Should we go global?Internal analysis
Resources, managerial mindset, strengths, weaknesses,etc.
External analysis
Competition, opportunities, threats, benefits, risks, etc.
Cost VS IncomeManagement OrientationManagement OrientationManagement’s assumptions or beliefs-both conscious and unconscious-about the nature of the world
Ethnocentric
Polycentric
Regiocentric
Geocentric
EthnocentricEthnocentricHome country is superior.
Domestic Company:
No opportunities outside the home country;
International Company
Products and practices that succeed in the home country will be successful anywhere;
Foreign operations are secondary or subordinate
NissanPolycentricPolycentricEach country is unique.
Multinational Company:
Each subsidiary should develop its own business and marketing strategies according to the specific situation in that country.
Problem: Cost, control, headquarter out of gameRegiocentric & GeocentricRegiocentric & GeocentricRegiocentric: Each region is unique and an integrated regional strategy is to be developed to serve that region.
Geocentric: The entire world is a potential market and integrated world market strategies should be developed.
Global or transnational company.
Global Localization: Think globally, act locally.Philips VS MatsushitaPhilips VS MatsushitaPhilips Electronics
Polycentric: 7 models of TV based on 4 chassis, Variety
Matsushita
Geocentric: global strategy, 2 models of TV based on a single chassis, low price
Driving and Restraining Forces Affecting Global Integration and Global MarketingDriving and Restraining Forces Affecting Global Integration and Global MarketingDriving ForcesDriving ForcesTechnology
Internet, Satellite Dish, Globe Spanning TV
Regional Economic Agreements
NAFTA, EU, ASEAN, GCC, APEC
Market Needs and Wants
Converging, Global Brand,
Transportation and Communication Improvements
Jet Plane, Large Cargo Ship, email, fax, videoconferencing, cost deduction
Driving Forces Cont.Driving Forces Cont.Product development costs
Quality
World Economic Trends
More opportunities
Less resistance
World-wide deregulation and privatization
Driving Forces Cont.Driving Forces Cont.Leverage
Experience transfers
Scale economies
Resource utilization
Global strategy
The Global/Transnational CorporationRestraining ForcesRestraining ForcesManagement Myopia
Organization Culture
Integrate global vision and perspective with local market initiative and input
Mutual respect
National controls and barriers
Tariff barriers and non-tariff barriersThe Global Economic EnvironmentThe Global Economic EnvironmentChanges in The World Economy Changes in The World Economy Emergence of global markets
Economic integration
Global companies, global brands
Capital movements far exceed the volume of global merchandise and services trade
$4 trillion VS. London Eurodollar Market, $100 trillion, VS. Foreign exchange $250 trillion
Changes in The World EconomyChanges in The World EconomyProductivity VS. Employment
Application of new technologies
Increase in production efficiency
Plant emigration
Internal reformsChanges in The World EconomyChanges in The World EconomyWorld economy becomes the dominant economic unit
The end of the cold war
Collapse of USSR, ISC, E. European
China, Vietnam,
Cuba, North Korea
Economic SystemsEconomic SystemsMarket Allocation
Market economy
Role of the state
Command Allocation
Planned economy
Role of the state
Mixed System
Which plays the leading role?
Stages of Market Development
Based on GNP Per CapitaStages of Market Development
Based on GNP Per CapitaLower-Income Countries
<$766
Lower-Middle-Income Countries
$766-$3036
China 10239.8/129=$799
Shanghai >$2000
Upper-Middle-Income Countries
$3036-$9386
High-Income Countries
>$9386Low-Income CountriesLow-Income CountriesPreindustrial countries, less than $766
Limited industrialization, high percentage of population in agriculture and farming
High birth rates
Low literacy rates
Heavy reliance on foreign aid
Political instability and unrest
Africa, south of Sahara
Lower-Middle-Income CountriesLower-Middle-Income CountriesLess developed countries (LDC)
Early stage of industrialization
Consumer markets expanding
Low labor cost
Labor-intensive products manufacturingUpper-Middle-Income CountriesUpper-Middle-Income CountriesIndustrializing countries
Percentage of people in agriculture dropping sharply
Degree of urbanization increasing
High literacy
Relatively low wage costs
High-Income CountriesHigh-Income CountriesIndustrialized Countries
Sustained economic growth
Knowledge-based
Service sector
New products and innovations
Income and PPP Income and PPPPurchasing Power Parity
Real Income
Standard of Living
The concentration of income
Regional, nationally, and within nations
“Triad”: US, Canada, EU, and Japan
Income inequality in developing countries
Implication for MarketersImplication for MarketersProfitability
Chances and challenges
Marketing’s Role
Market potential evaluation
Emerging Markets EvaluationEmerging Markets EvaluationSocial and Cultural EnvironmentsSocial and Cultural EnvironmentsDifferences
Similarities
Marketers’ two-folded task.
Recognize difference
Find similaritiesCultureCultureCulture includes both conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next.
Culture is learned, not born with.
Culture can be changed.Implications for Global MarkersImplications for Global MarkersFood, drink preferences
KFC, Colgate, Coco-cola, Green Giant Foods, and soy sauce
Color, flower, and other preferences
White, green, chrysanthemum, Corbie, dog,
Converging global attitudes
Cultural universals
Be culturally sensitive!High and Low-Context CulturesHigh and Low-Context CulturesLow-context: messages are explicit, words carry most of the information in a communication. “I mean what I say”.
High-context: much more information resides in the context of communication, including background, associations, and basic values of the communications rather in the verbal message. “Guess what I really mean.”High and Low Context CulturesHigh and Low Context CulturesCommunication and NegotiationCommunication and NegotiationLanguage barriers
It’s a “yes” or “no”?
“You are invited to take advantage of the chambermaid”.
“Ease your bosoms. This coffee has carefully selected high quality beans and roasted by our all the experience.”
The lift is being fixed for the next day. During that time we regret you will be unbearable.”
Nonverbal communication
Verbal VS. NonverbalSocial BehaviorSocial BehaviorSneeze, belch, sharing food
Saudi: Don’t ask the host about the health of his spouse. Don’t show the soles of your shoes. Don’t touch or deliver with the left hand.
Japan, Korea, China, India
Venezuela, Indonesia
Africa
“Madam” or “ma’am”
Analytical Approaches
to Cultural FactorsAnalytical Approaches
to Cultural FactorsDon’t assume you know everything.
Don’t judge others by the culture you are from.
There are no perfect cultures in this world, or there is no such culture superior than another.
Try to understand the beliefs, values, and motives of another culture
Be open, be understanding.Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of NeedsPhysiologicalSafetySocialEsteemSelf-actualizationHofstede’s Cultural TypologyHofstede’s Cultural TypologyPower distance
Individualism or Collectivism
Masculinity or Femininity
Uncertainty avoidance
Power DistancePower DistanceThe extent to which the less powerful members of a society accept or expect that power to be distributed unequally.
High power distance
Low power distanceIndividualism or CollectivismIndividualism or CollectivismIndividualistic culture: Each member of society is primarily concerned with his or her own interest and those of the immediate family.
Collectivist culture: All of society’s members are integrated into cohesive in-groupsMasculinity of FemininityMasculinity of FemininityMasculinity
A society in which men are expected to be assertive, competitive, and concerned with material success while women fulfill the role of nurturer and take care of the family
Femininity
A society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behaviorUncertainty AvoidanceUncertainty AvoidanceThe extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations.Environmental SensitivityEnvironmental SensitivityThe extent to which products must be adapted to the culture-specific needs of different national markets.Product AdaptationHighLowEnvironmental SensitivityLowHighIntegrated
CircuitComputerFoodImpact on Marketing Impact on Marketing Consumer behavior
Campbell in US VS in Italy
Instant coffee in UK VS. in Sweden
Cake in US VS. in UK
Personal aspect of international businessSuggested SolutionsSuggested SolutionsStake: expatriate failure averages $75,000, loss of business: $2.5 billion
Research
Training in cross-cultural competency
“Boot camp”
“International exposure”
“Workshop”
The Political, Legal, and Regulatory Environments of Global MarketingThe Political, Legal, and Regulatory Environments of Global MarketingThe Political EnvironmentThe Political EnvironmentSovereignty
Political risk
Taxes
Dilution of Equity Control
Expropriation
SovereigntySovereigntyThe supreme and independent political authority.
Control the flow of goods across borders
Stage of development
The political and economical system
Protectionism: Agriculture
Privatization dilutes the command portion of a mixed economy
Global market integration erodes national economic sovereignty.Political RiskPolitical RiskThe risk of a change in government policy that would adversely impact a company’s ability to operate effectively and profitably.
HK, Argentina, Venezuela,
TaxesTaxesDiverse geographic activities of MNC
Host country tax avoidance
Bilateral tax treatiesDilution of Equity ControlDilution of Equity ControlControl ownership of foreign-owned companies.
Equity percentage in local projects or joint ventures
Become an insider
ExpropriationExpropriationGovernmental action to dispossess a company or investor.
Compensation
Nationalization: Ownership of the property or assets in question is transferred to the host government.
ConfiscationExpropriationExpropriationCreeping expropriation: limitations on repatriation of profits, dividends, royalties, or technical assistance fees from local investments or technology arrangements.
Tariff and non-tariff barriers
Intellectual property restrictions
Remedies: buy insurance, follow the lawInternational LawInternational LawRules and principles that nation-states consider binding upon themselves.
Public law, international commercial law
Common law VS code lawWhich Law Applies?Which Law Applies?Be explicit in the contract
The place of the domicile or principal place of business of one of the parties
The place where the contract was entered
The place of performance of the contractIntellectual PropertyIntellectual PropertyPatents and Trademarks
Registration
Protection
Counterfeiting: The unauthorized copying and product of a product.
Imitation: Use of a product name that differs slightly from a well-known brand
Piracy: The unauthorized publication or reproduction of copyrighted work.Intellectual Property ProtectionIntellectual Property ProtectionThe Paris Union: International Convention for the Protection of Industrial Property.
The Patent Cooperation Treaty
European Patent Convention
TRIPs: Trade Related Intellectual Property RightsAntitrustAntitrustTo combat restrictive business practices and to encourage competition.
Consten’s case, Grundig
Ruling: “Territorial protection proved to be particularly damaging to the realization of the common market.”
IBM and Microsoft in EuropeLicensing Licensing Licensing is a contractual agreement in which a licensor allows a licensee to use patents, trademarks, trade secrets, technology, or other intangible assets in return for royalty payments or other forms of compensation.
What assets? At what price? The right to “make”, “use”, or “sell”? Sublicense? “Exclusive or nonexclusive?”
Creation of competitor.Trade SecretsTrade SecretsConfidential information or knowledge that has commercial value.
TRIPs requires signatory countries to protect against acquisition, disclosure, or use of trade secrets in a manner contrary to honest commercial practices. Bribery and Corruption
- A World-wide problemBribery and Corruption
- A World-wide problemConflict resolutionConflict resolutionLitigation
Differences in language, legal systems, currencies, traditional business customs and patterns, discovery procedure, and enforcement.
Complex, time consuming, costlyArbitrationArbitrationInternational Chamber of Commerce
The New York Convention
AAA and China Beijing’s Conciliation Center.
Swedish Arbitration Institute
International Council for Commercial Arbitration
UN Conference on International Trade Law
The Regulatory EnvironmentThe Regulatory EnvironmentGovernmental and nongovernmental
International Economic Organizations
Price control, valuation of imports and exports, trade practices, labeling, food and drug regulations, employment conditions, collective bargaining, advertising content, competitive practices, etc.Regional Economic OrganizationsRegional Economic OrganizationsWTO
EU
NAFTA
……Global Markets and BuyersGlobal Markets and BuyersTrends of Global MarketTrends of Global MarketMarkets in almost every world region are expected growing.
The fastest growing markets are the developing countries.
The fastest growing regions in the developing world are East Asia
The fastest growing country in East Asia is China.The BoomThe BoomEconomic Cooperation & Preferential Trade ArrangementsEconomic Cooperation & Preferential Trade ArrangementsInternational economic cooperation
Free Trade Area (FTA)
Customs Union
Common Market
Economic Union
WTO and GATT
Regional Trade AreasRegional Trade AreasnullFree Trade Area (FTA)Free Trade Area (FTA)A group of countries that have agreed to abolish all internal barriers to trade among themselves.
Certificates of originCustoms UnionCustoms UnionMember countries agree to the establishment of common external barriers.
The Central American Common Market, Southern Cone Common Market (Mercosur), and the Andean GroupCommon MarketCommon MarketRemoval of internal barriers
Establishment of external barriers
Elimination of barriers to flow of factors (labor and capital) within the market
Free markets not only for product, but also for services and capital.Economic UnionEconomic UnionCreation of a unified central bank;
Usage of a single currency-a struggle;
Common policies on agriculture, social services and welfare, regional development, transportation, taxation, competition and mergers
Political unity, a central government;
From GATT to WTOFrom GATT to WTOGATT: A treaty between 125 nations who agreed to promote trade among members.
Trade-disputes settlement, no power of enforcement
WTO: A forum for trade-related negotiations. A system to settle trade disputes
Service industry: Market-entry barriers in banking, insurance, telecommunications, etc.
Regional Economic OrganizationsRegional Economic OrganizationsAPEC: Asian Pacific Economic Cooperation
North American Free Trade Agreement
Central American Common Market
Andean Group
Southern Cone Common Market
Caribbean Community and Common MarketRegional Economic OrganizationsRegional Economic OrganizationsAssociation of Southeast Asian Nations
The European Union
Cooperation Council for the Arab States of the Gulf
Economic community of West African States
South African Development Coordination Conference
nullnullnullnullnullGlobal Marketing Information Systems and ResearchGlobal Marketing Information Systems and ResearchAcquire Global Information Acquire Global Information Superabundance in developed countries
Scarcity in LDC and underdeveloped countries
Where and how to get the right information
ScanningGlobal Marketing Information SystemGlobal Marketing Information SystemMIS defined
Gathering, analyzing, classifying, storing, retrieving, and reporting
EDI: Electronic Data Interchange
Beneton’s MIS
Timely, cost-efficiently, actionable
Subject Agenda for a Global MISSubject Agenda for a Global MISMarkets
Competition
Foreign exchange
Prescriptive information
Resource information
General conditionsMarketsMarketsDemand estimates
Consumer behavior
Products
Channels
Communication media availability and cost
Market responsivenessCompetitionCompetitionCorporate strategies
Business strategies
Functional strategies
Foreign ExchangeForeign ExchangeBalance of payments
Interest rates
Attractiveness of country currency
Expectations of analystsPrescriptive InformationPrescriptive InformationLaws, regulations, rulings concerning taxes, earnings, dividends in both hose countries and home countryResource InformationResource InformationAvailability of human, financial, information, and physical resourcesGeneral ConditionsGeneral ConditionsOverall review of sociocultural, political, technological environmentsScanning ModesScanning ModesSurveillance
Informal information gathering
Viewing and monitoring
Search
Formal information gathering
Investigation and Research
Rule of ThumbRule of ThumbCreate an efficient and effective scanning system in both the home country and the host countries
Create a MIS system
Expanding information coverage to other regions of the worldSources of Marketing InformationSources of Marketing InformationHuman