Chapter 9 Reaching Global Markets 9 1 The Nature of Global Marketing Strategy International Marketing involves developing and performing marketing activities across national boundaries o Huge opportunities for growth o May countries offer benchmarking research to help their domestic firms become more globally competitive o Governmental organizations provide knowledge of internationalization process o Born Globals Google eBay etc typically small technology based firms export their products almost immediately after being established in market niches 9 2 Environmental Forces in Global Markets Firms entering international markets find they must make significant adjustments to their marketing strategies A successful marketing strategy requires a careful environmental analysis 9 2A Sociocultural Forces Because marketing activities are mainly social in purpose they are influenced by beliefs and values regarding family religion education health and recreation o India half of Taco Bell s menu is vegetarian chicken is used instead of beef o Soccer is the major advertising outlet in most other countries not football o Cultural differences in the emphasis placed on relationships status decision making styles have been known to complicate dealings between Americans and foreigners o Buyer s perceptions of other countries can influence product adoption and use When people are unfamiliar with products from another country their perceptions of the country as a whole may affect their attitude toward the product o When products are introduced from one nation into another acceptance is far more likely if similarities exist between the two cultures 9 2B Economic Forces Global marketers need to understand international trade systems economic stability of individual nations as well as trade barriers that may stifle marketing efforts Differences in standard of living credit buying power income distribution exchange rates etc The rising power of raw materials could increase inflation in developing countries where demand is growing Asia particularly China is increasingly making up a significant percentage of the fashion industry s revenue Many countries have adopted a floating exchange rate which allows the currencies of those countries to fluctuate or float according to the foreign exchange market o China is being criticized for undervaluing its currency giving itself an advantage in selling exports as well as decreasing demand for manufacturers and exporters from other countries Gross Domestic Product GDP an overall measure of a nation s economic standing it is the market value of a nation s total outputs of goods and services for a given period of time Two classifications for growing nations o Overlooked Saudi Arabia Morocco o Frontier Sri Lanka Kenya Nigeria 9 2C Political Legal and Regulatory Forces Chinese government censorship prevents Facebook from interacting with consumers China is an example of state directed capitalism o State backed companies to not have as many competitors because the government is supporting them leading to increased cost low competition Import Tariff any duty levied by a nation on goods bought outside its borders and brought into the country o Raise the price of foreign goods o Impede free trade between nations o Designed to raise revenue for a country or protect domestic proudcts Quota a limit on the amount of goods and importing country will accept for certain product categories in a specific period of time Embargo a government s suspension of trade in a particular product or with a given country o Usually target specific goods or countries for health or political reasons Exchange Controls government restrictions on the amount of a particular currency that can be bought or sold may also limit international trade o Can force businesspeople to buy and sell foreign products through a central agency such as a central bank o Countries can also promote trade by forming free trade zones later discussed Balance of Trade the difference in value between a nation s exports and its imports o When a nation exports more products than it imports a favorable balance of trade exists because money is flowing into the country 9 2D Ethical and Social Responsibility Forces Because U S trade and corporate policy as well as U S law prohibits direct involvement in payoffs and bribes U S companies may have a hard time competing with foreign firms that engage in these practices o It is illegal for US firms to attempt to make large payments or bribes to influence policy decisions in foreign governments It is essential for global marketers to understand the major laws in the countries in which their companies operate Self Reference Criterion SRC the unconscious reference to one s own cultural values experiences and knowledge o We react on the basis of knowledge we have accumulated over a lifetime which is usually grounded in our culture of origin Cultural Relativism the concept that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures o Some companies refuse to do business in countries where workers are abused o Business for Social Responsibility BSR tracks emerging issues and trends provides information on corporate leadership and best practices conducts training and assists organizations in developing practical business ethics tools 9 2E Competitive Forces The increasingly interconnected international marketplace and advances in technology have resulted in competitive forces that are unique to the international marketplace Although competitors drive competition nations establish the infrastructure and the rules for the types of competition that can take place o Antitrust laws in the EU are a bit stricter than in the US 9 2F Technological Forces China is considered to be the next big market for electric vehicles 9 3 Regional Trade Alliances Markets and Agreements Include the North American Free Trade Agreement European Union Southern Common Market Asia Pacific Economic Cooperation Association of Southeast Asian Nations and World Trade Organization 9 3A The North American Free Trade Agreement NAFTA Merged Canada Mexico and the US into one market of nearly 444 million consumers Virtually eliminated all tariffs on goods produced and traded among these countries Canada is the single largest trading partner of the US supports millions of US jobs o US purchases 73 of Canada s exports and supplies 63 of
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