Transcript LECTURE 28.ppt

LECTURE-28
Tapping Into
Global Markets
Chapter Questions
 What factors should a company review
before deciding to go abroad?
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How can companies evaluate and select
specific foreign markets to enter?
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What are the major ways of entering a
foreign market?
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To what extent must the company adapt its
products and marketing program to each
foreign country?
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How should the company manage and
organize its international activities?
What is a Global Firm?
A global firm is one that operates in more than
one country and captures R&D, production,
logistical, marketing, and financial advantages in
its costs and reputation that are not available to
purely domestic competitors.
Major Decisions in
International Marketing
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Deciding whether to go
Deciding which markets to enter
Deciding how to enter
Deciding on the marketing program
Deciding on the marketing organization
The internationalization process
The process by which a company enters a
foreign market.
 Firms regards foreign markets as risky due to
the fact that, as these markets are unknown to it.
 Firm faces high marketing cost to enter in an
International market.
 To avoid cost & risk. Its strategy is to go abroad
at a slow & cautious pace.
Desired Country
Characteristics for Market Entry
 Rank high on market attractiveness
 Rank low in market risk
 Possess a competitive advantage
A typical internationalization process
1. Initially, the firm might license patents,
trademarks, or technology to a foreign company
in exchange for a fee or royalty.
2. The firm sees a potential for extra sales by
exporting and uses a local agent or distributor to
enter a foreign market.
A typical internationalization process
3. The firm may use exporting as a “vent” for its
surplus production and might have no long-term
commitment to the international market.
4. As exports become more important, the MNE
will set up an office for its sales representative
or a sales subsidiary.
A typical internationalization process
5. The firm might set up local packaging and/or
assembly operations.
6. Finally, the firm will set up a wholly-owned
subsidiary (FDI).
Entry into foreign markets:
the internationalization process
Entry into foreign markets: the internationalization process
Why do firms become MNEs?
1. To diversify themselves against the risks and
uncertainties of the domestic business cycle.
2. To tap the growing world market for goods and
services.
3. In response to foreign competition.
4. To reduce costs.
5. To overcome barriers to entry into foreign
markets.
6. To take advantage of technological expertise by
manufacturing goods directly.
Top Global Firms Based
in Developing Markets
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China Mobile
Lenovo Group
Infosys Technologies
Haier
Huawei Technologies
Economic integration:
an overall perspective
The establishment of transnational rules and
regulations that enhance economic trade and
cooperation among countries.
Trade creation and diversion
 Trade creation: A process in which members
of an economic integration group begin to focus
their efforts on those goods and services for
which they have a comparative advantage and
start trading more extensively with each other.
 Trade diversion: A process in which members
of an economic integration group decrease
trade with non-member countries in favor of
trade with each other.
Levels of economic integration
 Free Trade Area: barriers to trade (such as
tariffs) among member countries are removed (e.g.
NAFTA USA, Canada & Mexico)
 Customs Union: tariff between member
countries are eliminated and a common trade
policy toward non-member countries is
established (e.g. Andean Pact Bolivia, Colombia, Ecuador,Peru & Venezuela)
 Common Market: elimination of trade barriers
among member countries, a common external
trade policy, and mobility of factors of production
among member countries (e.g. EU progressed
beyond this.)
Levels of economic integration (cont.)
 Economic union: A deep form of integration
characterized by free movement of goods,
services, and factors of production among
member countries and full integration of
economic policies (e.g. EU)
 Political union: An economic union in which
there is full economic integration, unification of
economic policies, and a single government (e.g.
USA & UAE)
Key Developing Markets
Brazil
Russia
China
South Africa
Global Marketing
Advantages
Disadvantages
 Economies of scale
 Lower marketing
 Differences in
costs
 Power and scope
 Consistency in brand
image
 Ability to leverage
 Uniformity of
marketing practices
consumer needs,
wants, usage patterns
 Differences in
consumer response
to marketing mix
 Differences in brand
development process
 Differences in
environment
What Marketing Aspects Might Be
Adapted for International Marketing?
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Product features
Labeling
Colors
Materials
Sales promotion
Advertising media
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Brand name
Packaging
Advertising execution
Prices
Advertising themes
Commandments of Global Branding
 Understand similarities and differences in the
global branding landscape
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Do not take shortcuts in brand building
Establish a marketing infrastructure
Embrace integrated marketing communications
Establish brand partnerships
Commandments of Global Branding
(cont.)
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Balance standardization and customization
Balance global and local control
Establish operable guidelines
Implement a global brand-equity measurement
system
 Leverage brand elements
Levels of Product Adaptation
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Production of regional product versions
Production of country versions
Production of city versions
Production of retailer versions
Price Choices
 Set a uniform price everywhere
 Set a market-based price in each country
 Set a cost-based price in each country
What is a Gray Market?
A gray market consists of branded products
diverted from normal or authorized distributions
channels in the country of product origin or cross
international borders; dealers in lower priced
countries sell products in higher priced
countries.
Global Organization Strategies
 World as single market
 Multinational
 Glocal
Bibliography
 Marketing Management – A South Asian Perspective
by Philip Kotler, Kevin Lane Keller, Abraham Koshy &
Mithileshwar Jha, 13th Edition, Published by Pearson
Education, Inc.
 Advertising Principles & Practice by Wells, Moriarty &
Burnett Published by Pearson Education, Inc.
 Principles of Advertising & IMC by Tom Duncan 2nd
Edition, Published by McGraw-Hill Irwin.
 Principles of Marketing by Philip Kotler & Gary Armstrong
Thirteenth Edition, Published by Prentice Hall
The End:
“Take care of your reputation.
It’s your most valuable asset”