External factors influencing global marketing
Pros and cons of globalization
• Gross domestic product (GDP): • Total market value of all final goods and services
produced in a country in a given period • Does not include intermediate parts used in the
assembly of a final product
Global marketing in the United States
“Recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being
aware of threats from foreign competitors in all markets”
What is a global vision?
Outsourcing and inshoring
1. Companies operate in one country and sell into others
2. Companies set up foreign subsidiaries 3. Companies set up an entire line of business in
another country 4. Executives and C-suite are in multiple countries and
make decisions virtually
When the company becomes highly involved in international trade, they are called a multinational
corporation.
Stages of global business development
Pros Cons
Accounts for 20 percent of U.S. private Jobs
Technology is capital intensive and does not necessarily increase employment
Provides 25 percent of all private wages
Support governments that benefit the company and not necessarily the country and its people
Spend $ 680 billion in R&D May take away more wealth than they generate
Stages of global business development
• Global marketing standardization: • Production of uniform products that can be sold
the same way all over the world
• Multidomestic strategy: • Creates subsidiaries that can compete
independently in their own domestic markets • Allows for more product variation
Global marketing strategies
External factors influencing global marketing
• Culture and cultural values • Economic development
• Gross national income (GNI) • Purchasing power parity (PPP) • Balance of trade
• The global economy
External factors
• Political structure • Legal considerations:
• Tariffs • Quotas • Boycotts • Exchange control • Market grouping • Trade agreement
External factors
• Uruguay Round (1994) • Global trade agreement • Reduced tariffs worldwide • Protects patents • Eases licensing processes for financial, legal, and
accounting services • Opens agricultural opportunities • Reduces clothing quotas • Added the WTO
Trade agreements
• Trans-Pacific Partnership (TPP) • Finalized 2015; not yet passed by Congress in US • President Trump does not support • Reduces tariffs on cars and agriculture • Reduces other barriers like customs procedures,
rules for government agencies, and barriers in trade for services
Trade agreements
• North American Free Trade Agreement (NAFTA; 1993)
• US, Canada, and Mexico • Free trade of agricultural goods, manufactured
products, and raw materials
Trade agreements
• Free trade in much of Europe • 27 members, no UK • But, even with standard regulations, it is
difficult to standardize business in the EU
The European Union
• Demographics: • Wealth • Population
• Greatest consumption growth: • Retired and elderly in developed countries • China’s working age population • North America’s working age population
External factors
• Natural resources
External factors
• Why “go global”?
• Exporting: Selling domestically produced products to buyers in other countries
• Buyer for export: Intermediary in the global market that assumes all ownership risks and sells globally for its own account
• Export broker: Intermediary who plays the traditional broker’s role by bringing buyer and seller together
• Export agent: Intermediary who acts like a manufacturer’s agent for the exporter
Global marketing strategy
• Licensing: Legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents trade secrets, or other proprietary knowledge
• Franchising: Outsources delivery of the product to a foreign franchisee, who invests time and money for the already developed business
Global marketing strategy
• Contract manufacturing: Private label manufacturing by a foreign company
• Joint venture: When a domestic firm buys part of a foreign company to create a new entity
• Direct foreign investment: Active ownership of a foreign company or of overseas manufacturing or marketing facilities
Global marketing strategy
Global marketing strategy
• Product decisions • Promotion adaptation • Place distribution • Pricing
Global marketing mix
• Product decisions • Global market standardization • Product invention/adaptation
Global marketing mix
• Product decisions • Global market standardization • Product invention/adaptation
Global marketing mix
• Promotion adaptation: • Maintain the same product but change
promotional strategy
Global marketing mix
• Pricing: • Consider tariffs and taxes • Distribution costs • Purchasing power parity
• Dumping: • Sales of exported product at a lower price than
that charged for a similar product in the home market of the exporter
• Countertrade: • All of part of the payment for good or service is in
the form of other goods or services
Global marketing mix
Global marketing mix
