Marketing

9th Canadian Edition

© 2017 McGraw-Hill Education. All rights reserved.

 7
Reaching Global Markets

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 Contents

‣ Learning Objectives
‣ Opening Case: Building a Two Billion Dollar Business in India
the Dell Inc. Way
‣ Chapter ‘s Topics
‣ Dynamics of World Trade
‣ Marketing in a Borderless Economic World
‣ A Global Environmental Scan
‣ Comparing Global Market-entry Strategies
‣ Crafting a Worldwide Marketing Program
‣ Video Case 7: Mary Kay, Inc.: Building a Brand in India
‣ Learning Reviews

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 Learning Objectives

1. Describe the scope and nature of world trade from a global

perspective and its implications for Canada.
2. Identify the major trends that have influenced the landscape
of global marketing in the past decade.
3. Identify the environmental factors that shape global
marketing efforts.
4. Name and describe the alternative approaches companies use
to enter global markets.
5. Explain the distinction between standardization and
customization when companies craft worldwide marketing
programs.

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 Building a Two Billion Dollar Business in India
the Dell Inc. Way

‣ With annual sales of $2.5 billion, dell

employs some 25,000 people in india.
‣ Dell’s success in india illustrates the
importance of understanding global
customers and reaching them by
adapting to their specific needs and
preferences:
‣ Low-cost products for emerging economies.
‣ individual sales affiliates
‣ Joined hands with Indian chain retailers
‣ Backs this hybrid retail model by offering
extended onsite service
‣ Exclusive stores allowing customers to browse,
touch, and feel the product
‣ Dell’s global initiative also involved a new local
advertising campaign.

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 DYNAMICS OF WORLD TRADE

World Trade

‣ Global Perspective
‣ Countertrade
‣ Trade Feedback Effect
‣ Canadian Perspective
‣ Gross Domestic Product (GDP)
‣ Balance of Trade

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DYNAMICS OF WORLD TRADE
FIGURE 7-1

Top Ten Global Exporters and Importers (Merchandise)

Export Value in
Import Value in
Rank Exporters Billions of Rank Importers
Billions of Dollars
Dollars
1 China 2,342 1 United States 2,413
2 United States 1,621 2 China 1,959
3 Germany 1,508 3 Germany 1,216
4 Japan 684 4 Japan 822
5 Netherlands 672 5 United Kingdom 684
6 France 583 6 France 678
7 Korea 573 7 Hong Kong 601
8 Italy 529 8 Netherlands 588
9 Hong Kong 524 9 Korea 526
10 United Kingdom 506 10 Canada 475

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 DYNAMICS OF WORLD TRADE

Competitive Advantage of Nations

‣ Factor conditions
‣ Demand conditions
‣ Related supporting industries
‣ Company strategy, structure, and rivalry

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DYNAMICS OF WORLD TRADE
FIGURE 7-2

Porter’s “diamond” of
national competitive
advantage

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DYNAMICS OF WORLD TRADE
World Trade

Dior has succeeded in

the global marketplace
as well as in their
domestic markets.

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 MARKETING IN A BORDERLESS ECONOMIC WORLD

Trends influencing the landscape of global

marketing

1. Gradual decline of economic protectionism by individual

countries.

2. Formal economic integration and free trade among nations.

3. Global competition among global companies for global
customers.

4. Development of networked global marketspace.

5. Growing prevalence of economic espionage

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MARKETING IN A BORDERLESS ECONOMIC WORLD
FIGURE 7-3

How protectionism affects world trade

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 MARKETING IN A BORDERLESS ECONOMIC WORLD

Examples of trade agreements

1. European Union
2. North American Free Trade Agreement
3. Trans-Pacific Partnership (TPP) Agreement

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MARKETING IN A BORDERLESS ECONOMIC WORLD
FIGURE 7-4

The countries of the

European Union in
2016

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 MARKETING IN A BORDERLESS ECONOMIC WORLD

Global Competition among Global Companies

for Global Customers
‣ Global Competition
‣ Strategic alliances
‣ Global Companies
‣ Multidomestic marketing strategy
‣ Global marketing strategy
‣ Global Brand
‣ Global Consumers

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MARKETING IN A BORDERLESS ECONOMIC WORLD
Global Companies

Mr. Clean has a

different name in
different countries and
regions in the world.
However, his image
remains the same.

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MARKETING IN A BORDERLESS ECONOMIC WORLD
Global Brand

Nestlé features
multiple country and
language web sites
that customize content
and communicate with
consumers in their
native tongue.

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 A GLOBAL ENVIRONMENTAL SCAN

Cultural Diversity

‣ Values
‣ Customs
‣ Cultural Symbols
‣ Semiotics
‣ Language
‣ Back translation
‣ Cultural ethnocentricity
‣ Consumer ethnocentrism

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A GLOBAL ENVIRONMENTAL SCAN
Cultural Symbols

What cultural lesson

did Coca-Cola
executives learn when
they used the
Parthenon in a global
advertising campaign?

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A GLOBAL ENVIRONMENTAL SCAN
Language

The Mini is marketed in

many countries using
many languages, such
as English and Italian.
The Italian translation
is “Stop Looking at My
Rear.”

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 A GLOBAL ENVIRONMENTAL SCAN

Economic Considerations

‣ Stage of Economic Development

‣ Bottom of the Pyramid
‣ Economic Infrastructure
‣ Consumer Income and Purchasing Power
‣ Microfinance
‣ Currency exchange rates

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 A GLOBAL ENVIRONMENTAL SCAN

Political-Regulatory Climate

‣ Political Stability
‣ Trade Regulations

The PRS Group maintains multiple

databases of country-specific information
and projections, including country
political risk ratings.

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 COMPARING GLOBAL MARKET-ENTRY
STRATEGIES

‣ Exporting
‣ Licensing
‣ Joint Venture
‣ Direct Investment

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COMPARING GLOBAL MARKET-ENTRY STRATEGIES
FIGURE 7-5

Alternative global market-entry strategies

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Franchising
McDonald’s uses franchising
as a market-entry strategy,
and more than 60 percent
of the company’s sales
come from foreign
operations. Note that the
golden arches appear
prominently—one aspect of
its global brand promise.

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 CRAFTING A WORLDWIDE MARKETING
PROGRAM

‣ Product and Promotion Strategies

‣ Product extension
‣ Product adaptation
‣ Product invention
‣ Distribution Strategy
‣ Pricing Strategy
‣ Dumping
‣ Grey market

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CRAFTING A WORLDWIDE MARKETING PROGRAM
FIGURE 7-6

Five product and promotion strategies for global marketing

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CRAFTING A WORLDWIDE MARKETING PROGRAM
FIGURE 7-7

Channels of distribution in global marketing

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Product and Promotion Strategies

Gillette delivers the

same global message
whenever possible, as
shown in the Gillette
for Women Venus ads
from Canada, Mexico,
and France

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 VIDEO CASE 7
Mary Kay, Inc.: Building a Brand in India

Video on Connect:
http://highered.mheducation.com/sites/1259268802/student_view0/video_cases_and_transcripts.html

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 VIDEO CASE 7-1
Mary Kay, Inc.: Building a Brand in India

‣ Is Mary Kay an international firm, a multinational

firm, or a transnational firm based on its marketing
strategy? Why?

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 VIDEO CASE 7-2
Mary Kay, Inc.: Building a Brand in India

‣ What global market-entry strategy did Mary Kay use

when it entered India?

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 VIDEO CASE 7-3
Mary Kay, Inc.: Building a Brand in India

‣ Is Mary Kay a global brand? Why or why not?

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LEARNING REVIEWS

34
34
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 Learning Review: DYNAMICS OF WORLD TRADE

What is the trade feedback effect?

The trade feedback effect is when a country's imports

affect its exports and exports affect its imports.

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 Learning Review: DYNAMICS OF WORLD TRADE

What variables influence why some companies

and industries in a country succeed globally
while others lose ground or fail?

According to Michael Porter, they include:

‣ Factor conditions, such as natural resources
‣ Demand conditions
‣ Related and supporting industries
‣ Company strategy, structure and rivalry

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 Learning Review: MARKETING IN A BORDERLESS ECONOMIC WORLD

What is protectionism?

Protectionism is the practice of shielding one or more

sectors of a country's economy from foreign competition
through the use of tariffs or quotas.

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 Learning Review: MARKETING IN A BORDERLESS ECONOMIC WORLD

Among which countries was the North

American Free Trade Agreement was designed
to promote free trade?

The North American Free Trade Agreement (NAFTA),

effective since 1994, lifted many trade barriers
between Canada, the United States, and Mexico.

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 Learning Review: MARKETING IN A BORDERLESS ECONOMIC WORLD

What is the difference between a

multidomestic marketing strategy an a global
marketing strategy?
Multidomestic marketing strategy is a multinational
firm's offering as many different product variations,
brand names, and advertising programs as countries in
which it does business. A global marketing strategy is
the standardization of marketing activities when there
are cultural similarities and adopting them when
culture differ.

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 Learning Review: A GLOBAL ENVIRONMENTAL SCAN

Semiotics involves the study of:

Cultural symbols and their role in the assignment of

meaning for people.

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 Learning Review: A GLOBAL ENVIRONMENTAL SCAN

When foreign currencies can buy more

Canadian dollars, are Canadian products more
or less expensive for a foreign consumer?

Canadian products are less expensive for a foreign

consumer when foreign currencies can buy more
Canadian dollars.

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 Learning Review: COMPARING GLOBAL MARKET-ENTRY STRATEGIES FIGURE

What mode of entry could a company follow if

it has no previous experience in global
marketing?

Indirect exporting is ideal for the company that has no

overseas contacts but wants to market abroad.

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 Learning Review: COMPARING GLOBAL MARKET-ENTRY STRATEGIES FIGURE

How does licensing differ from a joint venture?

Licensing is a contractual agreement whereby a

company allows another firm to use its brand name,
patent, trade secret, or other property for a royalty
fee. A joint venture is an arrangement in which a
foreign company and a local firm invest together to
create a local business, sharing ownership, control, and
profits of the new company.

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 Learning Review: CRAFTING A WORLDWIDE MARKETING PROGRAM

Products may be sold globally in three ways.

What are they?

The three ways products may be sold globally are:

‣ Product extension,
‣ Product adaptation, and
‣ Product invention.

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 Learning Review: CRAFTING A WORLDWIDE MARKETING PROGRAM

What is dumping?

Dumping is when a firm sells a product in a foreign

country below its domestic price or below it actual
cost.

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