Global Marketing Strategies. Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-1

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1 Global Marketing Strategies Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-1

2 Globalization Grant Thornton study: 56% of CEOs at medium-sized companies see globalization as an opportunity Since 1948 the value of world merchandise exports has risen from $58 billion to $12.5 trillion Emerging market economies are growing faster than mature markets China, India, Russia, Mexico, Brazil Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-2

3 Why Go Global? Offset sales declines in the domestic market Increase sales and profits Extend products life cycles Lower manufacturing costs Lower the cost of products Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-3

4 Why Go Global? Improve competitive position Raise quality levels Become more customer-oriented Increase chances of success Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-4

5 Questions to Consider Before Going Global 1. Is there a profitable market in which our company has the potential to be successful over the long run? (see Table 12.1) 2. Do we have and are we willing to commit adequate resources of time, people, and capital to a global campaign? 3. Are domestic pressures forcing our company to consider global opportunities? Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-5

6 Questions to Consider Before Going Global 4. Do we understand the cultural differences, history, economics, values, opportunities, and risks of conducting business in the country we are considering? 5. Is there a viable exit strategy for our company if conditions change or the new venture does not succeed? 6. Can we afford not to go global? Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-6

7 Nine Strategies for Going Global Importing and outsourcing Creating a Web site Relying on trade intermediaries Establishing international locations Creating joint ventures Exporting Foreign licensing Counter-trading and bartering International franchising Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-7

8 Strategies For "Going Global" Creating a Web site Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-8

9 Internet Users Worldwide st Qtr 2nd Qtr 3rd Qtr 4th Qtr East West North Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-9

10 Internet Penetration Rate by World Region st Qtr 2nd Qtr 3rd Qtr 4th Qtr East West North Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-10

11 Strategies for "Going Global" Creating a Web site Relying on trade intermediaries Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-11

12 Trade Intermediaries Export Management Companies (EMCs) Export Trading Companies (ETCs) Manufacturer s Export Agents (MEAs) Export merchants Resident buying offices Foreign distributors Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-12

13 Strategies for "Going Global" Creating a Web site Relying on trade intermediaries Joint ventures Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-13

14 Joint Ventures Domestic joint venture two or more U.S. companies form an alliance for the purpose of exporting their goods and services abroad Foreign joint venture a domestic firm forms an alliance with a company in the target nation Most important ingredient: Choosing the right partner Another key to success: Establishing common objectives Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-14

15 Strategies for "Going Global" Creating a Web site Relying on trade intermediaries Joint ventures Foreign licensing International franchising Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-15

16 Steps to International Franchising Success 1. Identify the country or countries that are best suited to the business concept 2. Generate leads for potential franchisee 3. Select quality candidates 4. Structure the franchise deal Direct franchising Area development Master franchising Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-16

17 Strategies for "Going Global" Creating a Web site Relying on trade intermediaries Joint ventures Foreign licensing International franchising Counter-trading and bartering Exporting Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-17

18 Exporting Small companies account for 90.7% of all companies involved in exporting, but They generate just 21% of U.S. export sales More than 250,000 U.S. companies now export; twice as many are capable of exporting but are not doing so Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-18

19 Small Business Exporting Survey, st Qtr 2nd Qtr 3rd Qtr 4th Qtr East West North Source: NSBA/SBEA Small Business Exporting Survey, Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-19

20 Number of Countries to Which Small Businesses Export st Qtr 2nd Qtr 3rd Qtr 4th Qtr East West North Source: Elizabeth Clark, Small and Medium-Sized Exporting Companies: A Statistical Handbook, International Trade Administration, Office of Trade and Industry Information (Washington, DC: 2005), p. 19. Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-20

21 Steps to Successful Exporting 1. Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export 2. Analyze your product or service 3. Analyze your commitment 4. Research markets and pick your target Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-21

22 Steps to Successful Exporting 5. Develop a distribution strategy 6. Find your customer U.S. Department of Commerce International Trade Administration 7. Find financing for export sales SBA, EX-IM Bank, OPIC, and others 8. Ship your goods 9. Collect your money (Continued) Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-22

23 How a Letter of Credit Works Seller Buyer Foreign buyer agrees to buy products; seller agrees to ship goods if buyer arranges a letter of credit. Seller ships goods to buyer according to letter of credit s terms and submits shipping documents to bank issuing letter of credit. Seller s Bank Buyer's Bank $ Letter of Credit $ $ Buyer requests that his bank grant a letter of credit, which assures exporter payment if she presents documents proving goods were actually shipped. Bank makes out letter of credit to seller and sends it to seller s bank (called the confirming bank). Buyer s bank makes payment to seller s (confirming) bank. Confirming bank then pays seller amount specified in letter of credit. Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-23

24 Strategies for "Going Global" Creating a Web site Relying on trade intermediaries Joint ventures Foreign licensing International franchising Counter-trading and bartering Exporting Establishing international locations Importing and outsourcing Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-24

25 Importing and Outsourcing Make sure that importing or outsourcing is right for your business Establish a cost target for your product Do your research before you leave home Be sensitive to cultural differences Do your groundwork Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-25

26 Importing and Outsourcing Protect your company s intellectual property Select a manufacturer Provide an exact model of the product you want manufactured Stay in constant contact with the manufacturer and try to build a long-term relationship Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-26

27 Barriers to International Trade Domestic Barriers: Attitude - "My company is too small to export" Lack of information about how to get started Lack of export financing Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-27

28 Barriers to International Trade International Barriers: Tariffs - Taxes a government imposes on goods and services imported into that country Quotas - Limits on the amount of a product imported into a country Embargoes - Total bans on imports of certain products Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-28

29 Barriers to International Trade International Barriers: Dumping - selling large quantities of a product in a foreign country below cost to gain market share Political barriers - rules, regulations and risks Business barriers - business practices and laws Cultural barriers - differing languages, philosophies, traditions, and accepted business practices Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-29

30 International Trade Agreements World Trade Organization (WTO) 153 member countries that account for more than 97% of all world trade North American Free Trade Agreement (NAFTA) Created a single free trade zone with the U.S., Canada, and Mexico Central America Free Trade Agreement (CAFTA) Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-30

31 Guidelines for Success in International Markets Make yourself at home in all three of the world's key markets - North America, Europe, and Asia Appeal to the similarities within the various regions in which you operate but recognize the differences in their particular cultures Be willing to commit the necessary resources to make your global efforts successful Develop new products for the world market Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-31

32 Guidelines for Success in International Markets Use the many resources available to research potential markets and to determine the ideal target for your products Familiarize yourself with foreign customs and languages Learn to understand your customers from the perspective of their culture, not your own Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-32

33 Guidelines for Success in International Markets "Glocalize" - Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service Make positive and preferably visible contributions to the local community Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-33

34 Guidelines for Success in International Markets Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication technology Hire local managers to staff foreign offices and branches Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-34

35 Guidelines for Success in International Markets Do whatever seems best wherever it seems best, even if people at home lose jobs or responsibilities Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-35

36 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Chapter 12 Global Marketing Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 12-36