CH07

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Slide 1: 

REACHING GLOBAL MARKETS CHAPTER

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: Identify the major trends that have influenced the landscape of global marketing in the past decade. Identify the environmental factors that shape global marketing efforts.

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: Name and describe the alternative approaches companies use to enter global markets. Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

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MATTEL’S GLOBAL MARKETING IS MORE THAN CHILD’S PLAY

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Decline of Economic Protectionism Protectionism Tariff Quota World Trade Organization (WTO) DYNAMICS OF WORLD TRADE

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FIGURE 7-1 How protectionism affects world trade

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Rise of Economic Integration European Union North American Free Trade Agreement (NAFTA) Asian Free Trade Agreements Euro DYNAMICS OF WORLD TRADE

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FIGURE 7-2 The countries of the European Union in 2006; Bulgaria and Romania are expected to join in 2007

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Euro TV Ad What are the benefits of economic integration?

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Global Competition A New Reality: Global Competition among Global Companies for Global Consumers DYNAMICS OF WORLD TRADE

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Diet PepsiWhat is global competition?

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Global Companies A New Reality: Global Competition among Global Companies for Global Consumers International Firm Multinational Firm Transnational Firm Global Brand Global Marketing Strategy Multidomestic Marketing Strategy DYNAMICS OF WORLD TRADE

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FIGURE 7-A Global companies and marketing strategies

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Global Consumers A New Reality: Global Competition among Global Companies for Global Consumers Emergence of a Networked Global Marketspace DYNAMICS OF WORLD TRADE

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McDonald’s WebsiteWhat is a networked global marketspace?

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Concept Check 1. What is protectionism? A: Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition, using through the use of tariffs or quotas.

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Concept Check 2. What is the difference between a multidomestic marketing strategy and a global marketing strategy? A: A multidomestic marketing strategy means that firms have as many different product variations, brand names, and advertising programs as countries in which they do business. A global marketing strategy standardizes marketing activities when there are cultural similarities and adapts them when cultures differ.

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A GLOBAL ENVIRONMENTAL SCAN Cultural Diversity Foreign Corrupt Practices Act (1977) Cultural Symbols Cross-Cultural Analysis Values Customs Back Translation Language

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FIGURE 7-B Cultural appreciation

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Eiffel Tower (Paris) and Parthenon (Athens) What cultural lesson did Coca-Cola learn?

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A GLOBAL ENVIRONMENTAL SCAN Economic Considerations Economic Infrastructure Consumer Income and Purchasing Power Currency Exchange Rates

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Coca-Cola (Russia)How do marketers adapt toa country’s infrastructure?

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A GLOBAL ENVIRONMENTAL SCAN Political-Regulatory Climate Political Stability Trade Regulations

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Concept Check 1. Cross-cultural analysis involves a study of _______. A: similarities and differences among consumers in two or more nations or societies

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Concept Check 2. When foreign currencies can buy more U.S. dollars, are U.S. products more or less expensive for a foreign consumer? A: less expensive

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GLOBAL MARKET-ENTRY STRATEGIES Indirect Exporting Direct Exporting Exporting Licensing Franchising Joint Venture Direct Investment

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FIGURE 7-3 How purchasing power differs around the world

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Nestle in China What global market-entry strategy and why?

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Concept Check 1. What mode of entry could a company follow if it has no previous experience in global marketing? A: indirect exporting through intermediaries

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Concept Check A: In licensing, the firm offers the right to a trademark, patent, or trade secret in return for a royalty or fee. In a joint venture, a foreign and a local firm invest together to produce some product or service. The two companies share ownership, control, and profits of the new entity. 2. How does licensing differ from a joint venture?

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CRAFTING A WORLDWIDE MARKETING PROGRAM Product Adaptation Product Invention Product and Promotion Strategies Product Extension

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FIGURE 7-4 Five product and promotion strategies for global marketing

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Gillette For Women Venus Why use an identical global message forGreece, Germany, and the U.S.?

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CRAFTING A WORLDWIDE MARKETING PROGRAM Dumping Distribution Strategy Pricing Strategy Gray Market or Parallel Importing

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FIGURE 7-5 Channels of distribution in global marketing

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Concept Check A: (1) in the same form as in its home market (product extension); (2) with some changes (product adaptation); and (3) as a totally new product (product invention). 1. Products may be sold globally in three ways. What are they?

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Concept Check 2. What is dumping? A: Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost.

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GETTING TO KNOW THE WTO GOING ONLINE

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1. Countries are constantly seeking WTO membership. How many countries are now members of this organization? Which country is the newest member? Going Online

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2. What are the 10 most common misunderstandings about the WTO identified by this organization? Going Online

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CNS BREATHE RIGHT STRIPS:GOING GLOBAL VIDEO CASE 7

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VIDEO CASE 7CNS Breathe Right

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FIGURE 1 CNS three- stage approach to penetrate and develop new markets VIDEO CASE 7CNS Breathe Right

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1. What are the advantages and disadvantages for CNS taking Breathe Right strips into international markets? VIDEO CASE 7CNS Breathe Right

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2. What are the advantages to CNSof (a) using its three-stage processto enter new global markets and(b) having specific criteria to move through the stages? VIDEO CASE 7CNS Breathe Right

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3. Using the CNS criteria, with what you know, which countries should have the highest priority for CNS? VIDEO CASE 7CNS Breathe Right

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4. Which single segment of potential Breathe Right strip users would you target to enter new markets? VIDEO CASE 7CNS Breathe Right

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5. Which marketing mix variables should CNS emphasize the most to succeed in a global arena? Why? VIDEO CASE 7CNS Breathe Right

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EXAMPLES OF VALUES, CUSTOMS, CULTURAL SYMBOLS, AND LANGUAGE SUPPLEMENTALLECTURE NOTE 7-1

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REINTRODUCING THEMINI® BRANDTO THE U.S. IN-CLASS ACTIVITY 7-1

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History of the Classic Mini

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MINI Brand Launch at the 2002 NAIAS

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MINI Cooper Convertible andMINI Cooper S Convertible

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MINI Cooper Convertible

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MINI Cooper Convertible Brochure

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MINI Cooper Convertible Billboard

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Protectionism Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas.

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Tariff A tariff is a government tax on goods or services entering a country, primarily serving to raise prices on imports.

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Quota A quota is a restriction placed on the amount of of a product allowed to enter or leave a country.

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World Trade Organization The World Trade Organization (WTO) is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

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Global Competition Global competition exists when firms originate, produce, and market their products and services worldwide.

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Multidomestic Marketing Strategy A multidomestic marketing strategy is used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.

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Global Marketing Strategy A global marketing strategy is used by transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

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Global Brand A global brand is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.

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Global Consumers Global consumers consist of customer groups living in many different countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

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Cross-Cultural Analysis Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies.

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Values Values is a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time.

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Customs Customs are what is considered normal and expected about the way people do things in a specific country.

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The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain businessin a foreign country. Foreign Corrupt PracticesAct (1977)

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Cultural symbols are things that represent ideas or concepts. Cultural Symbols

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Back translation is when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors. Back Translation

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A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency. Currency Exchange Rate

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Exporting is producing goods in one country and selling them in another country. Exporting

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A joint venture is when a foreign country and a local firm invest together to create a local business. Joint Venture

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Direct investment entails a domestic firm actually investing in and owning a foreign subsidiary or division. Direct Investment

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Dumping is when a firm sells aproduct in a foreign country belowits domestic price or below its actual cost. Dumping

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A gray market is a situation where products are sold through unauthorized channels of distribution. Also called parallel importing. Gray Market