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nThe Global Marketplace

•Chapter Fifteen•Lecture Slides

–Express Version

•Course•Professor•Date

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nLooking Ahead

• After studying this chapter you should be able to:

• Discuss how the international trade system, economic, politico-legal, and cultural environments affect a company’s international marketing decisions

• Describe three key approaches to entering international markets

• Explain how companies adapt their marketing mixes for international markets

• Identify the three major forms of international marketing organization

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nImportance of International Trade

• International trade is very important to Canadian businesses– Exports made up 45% of our GDP in 2000 versus

25% for the U.S.– Depend on imports for wide range of goods and

services– Encourages competitive pricing– Creates jobs for Canadians; 1 in 3 jobs is tied to

trade– Stimulates technological advances, improves

learning and productivity– Can be risky

• Environmental factors supporting trade– Faster communication, transportation, and financial

flows make the world “smaller”

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nMajor Decisions in Global Marketing

Looking at the global marketing

environment

Deciding whether to gointernational

Decidingwhich markets

to enter

Deciding on the global marketing

organization

Deciding on the global marketing

program

Deciding how to enter

the market

Figure 15-1

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nThe International Trade System

• Restrictions to trade– Tariff– Quota– Embargo– Exchange controls– Nontariff barriers

• World Trade Organization (WTO)– Voluntary trade association, 144 members doing 90% of

world trade– Succeeded General Agreement on Trade and Tariffs

(GATT), in effect since 1948– Objective to promote international trade by removing

barriers through negotiation

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nThe International Trade System (continued)

• Economic communities– Groups of nations working toward common goal– Regional free trade zones– European Economic Community (EEC); adoption of

common currency to facilitate trade– North American Free Trade Agreement (NAFTA)

• Economic environment– Industrial structures

• Subsistence economies• Raw-material exporting economies• Industrializing economies• Industrial economies

– Income distribution

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nThe International Trade System (continued)

• Politico-legal environment– Attitudes towards international buying– Government bureaucracy– Political stability– Monetary regulations– Ethical issues between cultures

• Cultural environment– Differences in consumption between countries– Differences in language, norms of behaviour, taboos,

customs, and attitudes– Need to be sensitive to avoid mistakes

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nIndicators of Market Potential

• Demographic characteristics– Size/density of population, rate of growth, degree of

urbanization, age structure and composition

• Geographic characteristics– Physical size, topography, climate conditions

• Economic factors– GNP per capita, income distribution, growth, investment

• Technological factors– Skills, production and consumption technology, education

• Sociocultural factors– Values, lifestyles, ethnic groups, linguistic fragmentation

• National goals and plans– Industry priorities, infrastructure investment plans

Table 15-1

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nMarket Entry Strategies

Figure 15-2

Exporting

Indirect

Direct

Joint venturing

Licensing

Contractmanufacturing

Managementcontracting

Joint ownership

Direct investment

Assembly facilities

Manufacturingfacilities

Amount of commitment, risk, control, and profit potential

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nInternational Product & Promotion Strategies

Straightextension

Productadaptation

Productinvention

Communicationadaptation

Dualadaptation

Don’t changeproduct

Figure 15-1

Adaptproduct

Develop newproduct

Don’t changepromotion

Adaptpromotion

Product

Promotion

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nDistribution Channels

Figure 15-4

Seller

Seller’sheadquartersorganization

forinternational

marketing

Channelsbetweennations

Channelswithin

nations

Finaluser

orbuyer

Whole-Channel Concept for International Marketing

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nThe Global Marketing Organization

• Organize an export department• Create an international division• Becoming a global organization

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nLooking Back

• International trade system

• Economic, politico-legal, cultural environments

• 3 key approaches to international markets

• Adapting the marketing mix

• 3 forms of international marketing organization