Chapter 8 - Global Marketing

Why do big American businesses fail in China?
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Why do big American businesses fail in China?
1. Chinese don't get our "big box" theory
2. Chinese don't do real estate like we do
3. Chinese hire someone to do their home improvement
Rewards of Global Marketing
- Recognizing & reacting to international marketing opportunities
- Using effective global marketing strategies
- Being aware of threats from foreign competitors
Globilization
- The creation of a global economy
- The creation of a global culture
- The concentration of power in a smaller number of hands and/ or nations
- The erasure of the borders that divide us
Examples of Global Marketing gone well
Kit Kat
- means "good luck" in China
- is available in 47 flavors in Japan
The Fear of Trade & Globilization
- Millions of Americans have lost jobs
- Millions fear losing jobs
- Threat of outsourcing if workers don't accept pay cuts
- Vulnerability of operations moving offshore
Benefits of Globilization
- Expands economic freedom
- Spurs competition
- Raises productivity and living standards
- Offers access to foreign capital, global export markets, and advanced technology
- Promotes higher labor and environmental standards
- Acts as a check on government power
"Burgernomics"
based on the theory of purchasing power parity (PPP)
Purchasing Power Parity (PPP)
the idea that a dollar should buy the same amount in all countries
Big Mac Index & Burgernomics
- PPP
- Exchange rates between two countries should equalize prices of an identical good in each country
Example of an "identical good": McDonald's BigMac
Big Mac Index
The exchange rate that would mean Big Macs cost the same everywhere
Organizations involved in World TradeGATT IMF WTO World Bank GroupGATTGeneral Agreements on Tariffs & Trade - Found in 1948 - Exists in 23 countries - A document, later turned into the WTO - Goal: to lower trade barriersIMFInternational Monetary Fund - Originally part of GATT - Promotes international monetary cooperationWTOWorld Trade Organization - Goal: to lower trade barriers - A concept taken from the GATT documentWorld Bank GroupThe bank who provides loans to developing nationsEconomic Analysis General Economic Environment- Gross Domestic Product - Purchasing Power Party - Gross National Income - Human Development IndexEvaluating Real IncomeFirm makes adjustment to an existing product to meet the unique needs of a particular country's marketAnalyzing Infrastructure & Technological CapabilitiesTransportation, Communication, Distribution Channel, CommerceAnalyzing Government Actions- Quota - Boycott - Exchange control - Trade agreement - TariffTariffs- Tax - Artificially raises prices - Lowers demandQuotas- Maximum limits - Reduces availability of impacted goodsTariffs & Quotas BOTHbenefit domestically made products because they reduce foreign competitionWhen the dollar increases in value:- imports are cheaper - exporting is more expensiveTrade AgreementsEuropean Union NAFTAEuropean Union27 countriesNAFTAUS, Canada, MexicoHofestede's DimensionsCULTURE: - Uncertainty Avoidance - Individualism - Masculinity - Time Orientation - Power DistanceUncertainty AvoidanceDegree of ambiguity that your culture acceptsIndividualism"It's all about me" - opposite of collectivismMasculinityDistribution of gender roles in a societyTime OrientationIs your society long term or shot term oriented?Power DistanceScale in which you accept the power is not equalExamples of global marketing gone poorlyPuffs Tissues - means "brothel" Mineral Water - "drug dealer" in SpanishChoosing a Global Marketing StrategyTarget Market (STP)Target Market (STP)- Cultural nuances - Subcultures - View of products & consumer role - Different positioning - Adaption - Single positioning strategiesGlobal Marketing Mix : Product/ Service Strategies1. Sell the same in both home market & host country market 2. Same product with minor adaptions 3. Sell totally new products/ servicesGlobal Marketing Mix: Pricing Strategies- Tariffs - Quotas - Anti dumping policies - Economic conditions - Competitive factorsTariffsQuotasAnti- Dumping PoliciesEconomic ConditionsCompetitive FactorsChoosing a global entry strategy- Export - Franchising - Strategic Alliance - Joint Venture - Direct InvestmentExportFranchisingStrategic AllianceJoint VentureDirect Investment