Chapter Seven Global Marketing Beginning Case Food represents a basic human necessity but also a luxury Kraft keeps producing Tang because it provides company with approximately 750 million in sales every year in various developing markets including China and Brazil o European consumer love Tang but not Easy Mac o For Italians food is meant to show others how much they care so setting out huge home cooked meal is preferred Must adjust approaches to potential global markets by recognizing their unique characteristics and consumer demands Globalization processes by which goods services capital people information and ideas flow across national borders o Different countries exist in very different stages of globalization o Financial meltdown in global markets also has led to suggestions of de globalization especially as flows of capital reverse and global trade shrinks Growth of the Global Economy Globalization of Marketing and Production Changes in technology are driving force for growth in global markets for decades Globalization of production off shoring manufacturers procurement of goods services from around the globe to take advantage of national differences in the cost quality of various factors of production o Financial services are by far the largest private sector market for off shoring o Not all about inexpensive labor can reflect constant global hunt for talent as it makes an effort to reduce costs General Agreement on Tariffs and Trade GATT purpose is to lower trade barriers such as high tariffs on imported goods and restrictions on number and types of imported products that inhibited free flow of goods across boarders World Trade Organization WTO established institution with global rules of trade among nations for trade to flow as smoothly predictably and freely as possible International Monetary Fund promote international monetary cooperation and facilitate the expansion and growth of international trade World Bank Group dedicated to fighting poverty and improving the living standards of people in developing world Nike and Wal Mart labor violations in factories in other nations these companies have continued to struggle to regain their footing and reputations o Strengths stemmed largely form supply chain efficiencies and its reputed willingness to work with international suppliers that enforced inhumane working conditions o Wal Mart faces conflict between low cost benefits it provides to consumers and increasing costs associated with responsible business practices Assessing Global Markets Economic Analysis Using Metrics greater the wealth of people in country generally better the opportunity a firm will have in particular country o Evaluating General Economic Environment healthy economies better provide opportunities for global marketing expansions Trade deficit the country imports more goods than it exports Potential for greater competition at home from foreign producers Trade surplus higher level of exports than imports because signals greater opportunity to export products to more markets firms prefer Gross domestic product market value of goods and services Gross national income consists of GDP plus net income earned from produced by country in a year investments abroad Purchasing power parity theory that states that if exchange rates of two countries are in equilibrium a product purchased in on will cost same in other if expressed in same currency These metrics help marketers understand the relative wealth of particular country although may not give full picture of economic health because based on material output Human development index composite metric of three indicators of quality of life in different countries o Life expectancy at birth o Educational attainment o Whether average incomes are sufficient to meet basic needs of life o Evaluating Market Size and Population Growth Rate Less developed nations are experiencing rapid population growth while many developed countries experiencing either zero or negative population growth Distinction determines where and how products and services can be delivered o Evaluating Real Income Firms can make adjustments to existing product or change price to meet unique needs of particular country market Shifts particularly common for low priced consumer goods India is worlds fastest growing retail market Restrictions are popular among Indians who are concerned that giant retailers will destroy India s small family owned stores and force Indians to change from familiar shop based shopping patterns to more Westernized experience Traditional approached have downsides including intricate web of middlemen which reduce profits and drive up consumer price Analyzing Infrastructure and Technological Capabilities o Infrastructure basic facilities services installations needed for community or society to function o Four key elements of country s infrastructure transportation distribution channels communications and commerce Analyzing Government Actions government actions can significantly influence firms ability to sell goods and services o Tariffs tax levied on good imported into country Make imported goods more expensive and thus less competitive with domestic products which in turn protects domestic industries from foreign competition Countries can utilize antidumping laws to protect domestic companies against foreign competition Dumping occurs when foreign producer sells its offering in foreign market at price less than its production costs to gain market share o Quotas designates maximum quantity of product that may be brought into a country during specified time period Devastating impact on firms ability to sell products in another country Tariffs artificially raise prices and therefore lower demand and quotas reduce availability of imported merchandise Benefit domestically made products because reduce foreign o Boycott groups refusal to deal commercially with some organization to o Exchange Control regulation of country s currency exchange rate Exchange rate measure of how much one currency is worth in competition protest against its policies relation to another it belongs o Trade Agreements particular country is signatory or trading bloc to which Trade agreements intergovernmental agreement designed to manage and promote trade activities for specific region Trading bloc consists of those countries that have signed the particular trade agreement Blocs confer an unfair advantage on their member nations because they offer favorable
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