global marketing spring 2003 some abouts about me about this course about the project about the...
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Global Marketing
Spring 2003
Some Abouts About me About this course About the project About the
examination About grading
Text Structure Introduction to global marketing The global marketing
environment Global market opportunities Global marketing strategy Global marketing program Global marketing management
List of Questions What is global marketing? Do we have to go global? Why? Where shall we go? What shall we know before plunging
ourselves into the storming sea? How can we survive and thrive in a
foreign market?
Global Marketing
-- Introduction
What is Global Marketing?
What is marketing? The process of planning and
executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives.
The Three Principles of Marketing
Customer Value Value Equation: V=B/P
Differential Advantage Focus
What is global marketing? Practicing marketing in the global
environment. An organization that engages in
global marketing focuses its resources on global market opportunities and threats
Globalization An open economic system
Non-discrimination
Global brands
Global structures
Exports % share of world production
0
5
10
15
20
25
1913 1950 2000
Annual % Growth of trade and GDP
1959 – 96
0
2
4
6
8
10
12
World USA
GDP GDPTrade
Trade
GDP GDP
Effects of globalization on business
Cheap offshore production Reduced transport costs Virtual communication Standardization of logistics Global marketing
Export & Import By Regions 2002/01-10
进出口 出口 进口
总 值 50,025,801 26,249,924 23,775,878 19.7 20.6 18.7
亚洲 28,989,873 13,725,513 15,264,360 23.2 20.3 26 非洲 1,001,081 561,926 439,156 10.8 12.9 8.3 欧洲 9,116,406 4,750,486 4,365,920 13.9 18 9.8
拉丁美洲 1,438,463 783,826 654,637 16.2 13.3 19.8 北美洲 8,494,617 6,001,213 2,493,404 16.6 25 0.4 大洋洲 984,621 426,226 558,395 17.3 27.6 10.6
累计比上年同期增减% 国家(地区 ) 进出口额 出口额 进口额
Corporate Globalization-China’s Case
Walmart World Women Basket Ball
Games Haier in USA Tsingdao Beer
Global Marketing VS Domestic Marketing
More difficult: language, law, culture, trade and non-trade barriers, market research, and communication;
More complicated: currency, measures and weights, customs, monetary exchange, transportation, insurance, and counter-claim
More risky: credibility, currency exchange, political risk, transportation, and pricing
More opportunities and more profitable, hopefully.
Should we go global? Internal analysis
Resources, managerial mindset, strengths, weaknesses,etc.
External analysis Competition, opportunities, threats,
benefits, risks, etc. Cost VS Income
Management Orientation Management’s assumptions or
beliefs-both conscious and unconscious-about the nature of the world
Ethnocentric Polycentric Regiocentric Geocentric
Ethnocentric Home country is superior. Domestic Company:
No opportunities outside the home country;
International Company Products and practices that succeed in
the home country will be successful anywhere;
Foreign operations are secondary or subordinate
Nissan
Polycentric Each country is unique. Multinational Company:
Each subsidiary should develop its own business and marketing strategies according to the specific situation in that country.
Problem: Cost, control, headquarter out of game
Regiocentric & Geocentric Regiocentric: Each region is unique and
an integrated regional strategy is to be developed to serve that region.
Geocentric: The entire world is a potential market and integrated world market strategies should be developed.
Global or transnational company. Global Localization: Think globally, act
locally.
Philips VS Matsushita Philips Electronics
Polycentric: 7 models of TV based on 4 chassis, Variety
Matsushita Geocentric: global strategy, 2 models
of TV based on a single chassis, low price
Driving and Restraining Forces Affecting Global Integration and Global
Marketing
Driving Forces Technology
Internet, Satellite Dish, Globe Spanning TV Regional Economic Agreements
NAFTA, EU, ASEAN, GCC, APEC Market Needs and Wants
Converging, Global Brand, Transportation and Communication
Improvements Jet Plane, Large Cargo Ship, email, fax,
videoconferencing, cost deduction
Driving Forces Cont. Product development costs Quality World Economic Trends
More opportunities Less resistance World-wide deregulation and
privatization
Driving Forces Cont. Leverage
Experience transfers Scale economies Resource utilization Global strategy
The Global/Transnational Corporation
Restraining Forces Management Myopia Organization Culture
Integrate global vision and perspective with local market initiative and input
Mutual respect National controls and barriers
Tariff barriers and non-tariff barriers
The Global Economic Environment
Changes in The World Economy
Emergence of global markets Economic integration Global companies, global brands Capital movements far exceed the
volume of global merchandise and services trade
$4 trillion VS. London Eurodollar Market, $100 trillion, VS. Foreign exchange $250 trillion
Changes in The World Economy
Productivity VS. Employment Application of new technologies Increase in production efficiency Plant emigration Internal reforms
Changes in The World Economy
World economy becomes the dominant economic unit
The end of the cold war Collapse of USSR, ISC, E. European China, Vietnam, Cuba, North Korea
Economic Systems Market Allocation
Market economy Role of the state
Command Allocation Planned economy Role of the state
Mixed System Which plays the leading
role?
Stages of Market Development
Based on GNP Per Capita Lower-Income Countries
<$766 Lower-Middle-Income Countries
$766-$3036 China 10239.8/129=$799 Shanghai >$2000
Upper-Middle-Income Countries $3036-$9386
High-Income Countries >$9386
Low-Income Countries Preindustrial countries, less than $766 Limited industrialization, high percentage
of population in agriculture and farming High birth rates Low literacy rates Heavy reliance on foreign aid Political instability and unrest Africa, south of Sahara
Lower-Middle-Income Countries
Less developed countries (LDC) Early stage of industrialization Consumer markets expanding Low labor cost Labor-intensive products
manufacturing
Upper-Middle-Income Countries
Industrializing countries Percentage of people in agriculture
dropping sharply Degree of urbanization increasing High literacy Relatively low wage costs
High-Income Countries Industrialized Countries Sustained economic growth Knowledge-based Service sector New products and
innovations
Income and PPP Purchasing Power Parity Real Income Standard of Living The concentration of income
Regional, nationally, and within nations “Triad”: US, Canada, EU, and Japan
Income inequality in developing countries
Implication for Marketers
Profitability Chances and challenges Marketing’s Role Market potential
evaluation
Emerging Markets Evaluation
Size Growth Intensity Infrastructure Freedom Risk OverallCountries Rank Rank Rank Rank Rank Rank Rank
HONGKONG 21 6 1 1 4 2 1
SINGAPORE 24 8 14 2 12 1 2
S. KOREA 6 1 4 6 7 7 3
ISRAEL 23 9 3 5 9 3 4
CHINA 1 11 24 17 24 8 5
HUNGARY 22 19 5 4 2 4 6
CZECH REP. 18 23 15 3 2 6 7
POLAND 10 18 12 7 6 11 8
CHILE 19 3 9 10 1 5 9
INDIA 2 16 20 23 17 14 10
MEXICO 5 12 6 14 13 9 11
THAILAND 13 5 21 19 8 13 12
RUSSIA 3 2 22 12 22 23 13
TURKEY 9 7 7 9 20 21 14
Social and Cultural Environments
Differences Similarities Marketers’ two-folded task.
Recognize difference Find similarities
Culture Culture includes both conscious and
unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next.
Culture is learned, not born with. Culture can be changed.
Implications for Global Markers
Food, drink preferences KFC, Colgate, Coco-cola, Green Giant
Foods, and soy sauce Color, flower, and other preferences
White, green, chrysanthemum, Corbie, dog,
Converging global attitudes Cultural universals Be culturally sensitive!
High and Low-Context Cultures
Low-context: messages are explicit, words carry most of the information in a communication. “I mean what I say”.
High-context: much more information resides in the context of communication, including background, associations, and basic values of the communications rather in the verbal message. “Guess what I really mean.”
High and Low Context Cultures
Factor High Context Low Context
Lawyer Less important Very important
Space People breath on each other
Bubble of private space, no intrusion
Time Polychronic, things dealt simultaneously
Monochronic, linear
Negotiations
Lengthy, get to know each other
Quick, get things done
Countries
Japan, Middle East,
US, Northern Europe
Communication and Negotiation Language barriers
It’s a “yes” or “no”? “You are invited to take advantage of the
chambermaid”. “Ease your bosoms. This coffee has carefully
selected high quality beans and roasted by our all the experience.”
The lift is being fixed for the next day. During that time we regret you will be unbearable.”
Nonverbal communication Verbal VS. Nonverbal
Social Behavior Sneeze, belch, sharing food Saudi: Don’t ask the host about the health
of his spouse. Don’t show the soles of your shoes. Don’t touch or deliver with the left hand.
Japan, Korea, China, India Venezuela, Indonesia Africa “Madam” or “ma’am”
Analytical Approaches to Cultural Factors
Don’t assume you know everything. Don’t judge others by the culture you are
from. There are no perfect cultures in this world, or
there is no such culture superior than another.
Try to understand the beliefs, values, and motives of another culture
Be open, be understanding.
Maslow’s Hierarchy of Needs
Physiological
Safety
Social
Esteem
Self-actualization
Hofstede’s Cultural Typology Power distance Individualism or Collectivism Masculinity or Femininity Uncertainty avoidance
Power Distance The extent to which the less
powerful members of a society accept or expect that power to be distributed unequally.
High power distance Low power distance
Individualism or Collectivism Individualistic culture: Each
member of society is primarily concerned with his or her own interest and those of the immediate family.
Collectivist culture: All of society’s members are integrated into cohesive in-groups
Masculinity of Femininity Masculinity
A society in which men are expected to be assertive, competitive, and concerned with material success while women fulfill the role of nurturer and take care of the family
Femininity A society in which the social roles of men
and women overlap, with neither gender exhibiting overly ambitious or competitive behavior
Uncertainty Avoidance The extent to which the members of
a society are uncomfortable with unclear, ambiguous, or unstructured situations.
Environmental Sensitivity The extent to which products must
be adapted to the culture-specific needs of different national markets.P
rod
uct
Ad
ap
tatio
n
High
Low
Environmental SensitivityLow
High
Integrated Circuit
Computer
Food
Impact on Marketing Consumer behavior
Campbell in US VS in Italy Instant coffee in UK VS. in Sweden Cake in US VS. in UK
Personal aspect of international business
Suggested Solutions Stake: expatriate failure averages
$75,000, loss of business: $2.5 billion Research Training in cross-cultural competency
“Boot camp” “International exposure” “Workshop”
The Political, Legal, and Regulatory Environments
of Global Marketing
The Political Environment
Sovereignty Political risk Taxes Dilution of Equity Control Expropriation
Sovereignty The supreme and independent political
authority. Control the flow of goods across borders
Stage of development The political and economical system Protectionism: Agriculture
Privatization dilutes the command portion of a mixed economy
Global market integration erodes national economic sovereignty.
Political Risk The risk of a change in
government policy that would adversely impact a company’s ability to operate effectively and profitably.
HK, Argentina, Venezuela,
Taxes Diverse geographic activities of
MNC Host country tax avoidance Bilateral tax treaties
Dilution of Equity Control Control ownership of foreign-
owned companies. Equity percentage in local projects
or joint ventures Become an insider
Expropriation Governmental action to dispossess
a company or investor. Compensation Nationalization: Ownership of the
property or assets in question is transferred to the host government.
Confiscation
Expropriation Creeping expropriation: limitations on
repatriation of profits, dividends, royalties, or technical assistance fees from local investments or technology arrangements.
Tariff and non-tariff barriers Intellectual property restrictions Remedies: buy insurance, follow the law
International Law Rules and principles that nation-
states consider binding upon themselves.
Public law, international commercial law
Common law VS code law
Which Law Applies? Be explicit in the contract The place of the domicile or
principal place of business of one of the parties
The place where the contract was entered
The place of performance of the contract
Intellectual Property Patents and Trademarks Registration Protection Counterfeiting: The unauthorized
copying and product of a product. Imitation: Use of a product name that
differs slightly from a well-known brand Piracy: The unauthorized publication or
reproduction of copyrighted work.
Intellectual Property Protection
The Paris Union: International Convention for the Protection of Industrial Property.
The Patent Cooperation Treaty European Patent Convention TRIPs: Trade Related Intellectual
Property Rights
Antitrust To combat restrictive business
practices and to encourage competition.
Consten’s case, Grundig Ruling: “Territorial protection proved
to be particularly damaging to the realization of the common market.”
IBM and Microsoft in Europe
Licensing Licensing is a contractual agreement in which
a licensor allows a licensee to use patents, trademarks, trade secrets, technology, or other intangible assets in return for royalty payments or other forms of compensation.
What assets? At what price? The right to “make”, “use”, or “sell”? Sublicense? “Exclusive or nonexclusive?”
Creation of competitor.
Trade Secrets Confidential information or
knowledge that has commercial value.
TRIPs requires signatory countries to protect against acquisition, disclosure, or use of trade secrets in a manner contrary to honest commercial practices.
Bribery and Corruption
- A World-wide problem
Conflict resolution Litigation Differences in language, legal
systems, currencies, traditional business customs and patterns, discovery procedure, and enforcement.
Complex, time consuming, costly
Arbitration International Chamber of Commerce The New York Convention AAA and China Beijing’s Conciliation
Center. Swedish Arbitration Institute International Council for Commercial
Arbitration UN Conference on International Trade
Law
The Regulatory Environment Governmental and nongovernmental International Economic Organizations Price control, valuation of imports and
exports, trade practices, labeling, food and drug regulations, employment conditions, collective bargaining, advertising content, competitive practices, etc.
Regional Economic Organizations
WTO EU NAFTA ……
Global Markets and Buyers
Trends of Global Market Markets in almost every world region
are expected growing. The fastest growing markets are the
developing countries. The fastest growing regions in the
developing world are East Asia The fastest growing country in East
Asia is China.
The BoomCountries 1974-1993 1994-2003Developed Countries 2.9% 2.7%Developing Countries 3.0% 4.8%East Asia 7.5% 7.6%South Asia 4.8% 5.3%Latin America 2.6% 3.4%East Europe 1.0% 2.7%Sub-Saharan Africa 2.0% 3.9%Middle East, North Africa
1.2% 3.8%
Economic Cooperation & Preferential Trade Arrangements
International economic cooperation
Free Trade Area (FTA) Customs Union Common Market Economic Union WTO and GATT
Regional Trade Areas
Chart 1: RTAs in force and under negotiation as of July 2000, by type of RTA
14824
67
1
FTAs in force
CUs in force
FTAs under negotiation
CUs under negotiation
Chart 2: Geographical Distribution of RTAs, both in force and under negotiation
0
20
40
60
80
100
120
Americas Asia Pacif ic Eastern Europe
& Central Asia
Euro-
Mediterranean
Sub-Saharan Cross Regional
Region
Num
ber
of R
TAs FTAs under negotiation
CUs under negotiation
FTAs in force
CUs in force
Free Trade Area (FTA) A group of countries that have
agreed to abolish all internal barriers to trade among themselves.
Certificates of origin
Customs Union Member countries agree to the
establishment of common external barriers.
The Central American Common Market, Southern Cone Common Market (Mercosur), and the Andean Group
Common Market Removal of internal barriers Establishment of external barriers Elimination of barriers to flow of
factors (labor and capital) within the market
Free markets not only for product, but also for services and capital.
Economic Union Creation of a unified central bank; Usage of a single currency-a struggle; Common policies on agriculture, social
services and welfare, regional development, transportation, taxation, competition and mergers
Political unity, a central government;
From GATT to WTO GATT: A treaty between 125 nations who
agreed to promote trade among members. Trade-disputes settlement, no power of
enforcement WTO: A forum for trade-related
negotiations. A system to settle trade disputes
Service industry: Market-entry barriers in banking, insurance, telecommunications, etc.
Regional Economic Organizations
APEC: Asian Pacific Economic Cooperation
North American Free Trade Agreement Central American Common Market Andean Group Southern Cone Common Market Caribbean Community and Common
Market
Regional Economic Organizations Association of Southeast Asian
Nations The European Union Cooperation Council for the Arab
States of the Gulf Economic community of West
African States South African Development
Coordination Conference
Global Marketing Information Systems and
Research
Acquire Global Information Superabundance in developed
countries Scarcity in LDC and
underdeveloped countries Where and how to get the right
information Scanning
Global Marketing Information System
MIS defined Gathering, analyzing, classifying,
storing, retrieving, and reporting EDI: Electronic Data Interchange Beneton’s MIS Timely, cost-efficiently, actionable
Subject Agenda for a Global MIS
Markets Competition Foreign exchange Prescriptive information Resource information General conditions
Markets Demand estimates Consumer behavior Products Channels Communication media availability
and cost Market responsiveness
Competition Corporate strategies Business strategies Functional strategies
Foreign Exchange Balance of payments Interest rates Attractiveness of country currency Expectations of analysts
Prescriptive Information Laws, regulations, rulings
concerning taxes, earnings, dividends in both hose countries and home country
Resource Information Availability of human, financial,
information, and physical resources
General Conditions Overall review of sociocultural,
political, technological environments
Scanning Modes Surveillance
Informal information gathering Viewing and monitoring
Search Formal information gathering Investigation and Research
Rule of Thumb Create an efficient and effective
scanning system in both the home country and the host countries
Create a MIS system Expanding information coverage to
other regions of the world
Sources of Marketing Information
Human sources Overseas executives Friends, acquaintances, professional
colleagues, consultants, and prospective new employees
Personal relationship Direct perception
Seeing, feeling, hearing, smelling, or tasting
The design of Lexus
Formal Marketing Research Project-specific, systematic
gathering of data in the search scanning mode.
Identify the research problem Develop a research plan Collect data Analyze data Interpret and report findings
Step 1: Problem Definition A problem well defined is half
solved. Assess the nature of the market
opportunity. Existing Potential
Existing Market Market size, level of demand, rate
of product consumption Self-evaluation: competitiveness,
product appeal, price, distribution, promotional coverage and effectiveness
Potential Market Latent market
Undiscovered segment. Prime move advantage P&G in China
Incipient market Market booms when a particular
economic, technological, political, or sociocultural trend continues.
Step 2: Developing a Research Plan
How much can I get from the information?
How much do I have to spend for the information?
Research objective, methodologies, budgets, time.
Step 3: Data Collection Primary data
Observation Survey research Experiment
Secondary data Internal, external
Observation Method Counting Watching People meter Videotaping Virtual reality
Survey Method Interviews and Questionnaires
Telephone Interviews Focus Groups Mail Surveys Fax Surveys Online Surveys
Telephone Interviews Spoken instead of visual Quick, inexpensive Results could be biased Random dialing Answering machines and caller ID
Personal Interviews Face to face interaction Detailed information Sensitive question Slow Expensive Mall intercepts
Focus Groups Information-gathering procedure in marketing
research that typically brings together 8 to 12 individuals to discuss a given subject.
Quick and inexpensive Participants interaction Moderator Video taping, one-way mirror,
videoconferencing
Mail Surveys Low-cost, Anonymity Low response rate, slow Not suitable complex questions Who filled out the questionnaire? Bias due to difference between
respondents and nonrespondents
Fax Surveys Similar to mail surveys
Online Surveys Web Survey Email Survey Online focus group Speedy, higher response rates, cost
reduction, truthful answers Probability sample? Groups underrepresented on the
Internet, ownership of computers Authenticity of the respondent
Experimental Method Scientific investigation in which a
researcher manipulates a test group(s) and compares the results with those of a control group that did not receive the experimental controls or manipulations.
Test marketing Experiment group VS Control group
Sampling Probability sample Nonprobability sample Sample size Standard statistical test
Step 4: Data Analysis Demand pattern analysis Income elasticity measurements
Engels’ Law Market estimation by analogy Comparative analysis
Intra-company cross-national comparison
Cluster analysis
Market Estimation by Analogy Cross-sectional analysis Xa/Ya=Xb/Yb
Xa=demand for product X in country a Ya=factor that correlate with demand
for product X in country a Xb=demand for product X in country b Yb=factor that correlate with demand
for product X in country b.
Market Estimation by Analogy
Displacing a time series Xa1/Ya1=Xb2/Yb2
Xa1=demand for product X in country a during time period 1
Ya1=factor associated with demand for X in country a during time period 1
Xb2=demand for X in country b during time period 2
Yb2=factor correlating with demand for X in country b during time period 2.
Step 5: Interpreting and Reporting
Clear Concise Actionable Management oriented, no
technical jargons
Current Issues in Global MR Data availability Data deflation or inflation Comparability Response rate
Does MR really work? It’s late. I don’t know what I want. Differentiation-Coke VS. Pepsi in
Israel There is no market for fax. Really?
Integrated MIS Systemize the collection and analysis
of competitive intelligence to serve the needs of the organization as a whole.
Are top executives well informed? Do middle managers fully understand
the competitive situation? Do managers in different functional
areas share intelligence regularly?
Integrated MIS Does the company encounter
marketing blunders due to lack of intelligence?
Do we have an intranet where every employee can have access to online database?
Overload of data or underload of analysis
Segmentation, Targeting, and Positioning
Segmentation & Targeting Segmentation
Division of the total market into smaller, relatively homogeneous groups according to various characteristics.
Global Market Segmentation Targeting
Evaluation the segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond.
Criteria for Effective Segmentation
The market segment must present measurable purchasing power and size.
Marketers must find a way to effectively promote to and serve the market segment.
Marketers must identify segments sufficiently large to give them good profit potential.
The firm must target a number of segments that match its marketing capabilities.
Types of Segmentation Geographical Demographical Psychographical Behavioral characteristics Product benefits
Geographical Segmentation Dividing an overall market into homogeneous
groups on the basis of population locations. Population distribution Wealth distribution Urbanization Climate Food preference Terrain
Demographic Segmentation Dividing consumer groups according to
characteristics such as sex, age, income, occupation, education, household size, and stage in the family life cycle.
Income Gender Age: Cohort effect Education Family Life Cycle
Psychographic Segmentation Dividing a population into homogeneous groups
on the basis of psychological and lifestyle profiles. Lifestyle
People’s decisions about how to live their daily lives, including family, job, social, and consumer activities.
VALS: Values and Lifestyles http://future.sri.com
Behavior Segmentation Usage rate: Light users, medium
users, heavy users User status: Potential users,
nonusers, ex-users, regulars, first-timers, users of competitors’ products
80/20 rule Brand loyalty
Global Targeting Evaluating, comparing, and select Criteria for Targeting
Current segment size and anticipated growth potential
Competition Compatibility and feasibility
Global Target Market Strategy
Standardized global marketing Create the same marketing mix for global
operation. Extensive distribution in the maximum number of retail outlets.
Concentrated global marketing Devise a marketing mix to reach a single
segment of the global market. Differentiate global marketing
Target two or more distinct market segments with different marketing mixes.
Global Product Positioning The location of your product in the
mind of your customer. Global positioning
Pierre Cardin Audi Ikea
Positioning Sony: Unit sale: 1 million, Profit: 1
billion RMB. Domestic brands combined:
Market share of color TV: 80%, 90% for DVD; Profit: 0.54 billion.
Changhong: unit sale 7,500,000 Toshiba: unit sale 500,000 Profit: equal
High Tech Positioning Based on technological features Computers, video and stereo
equipments, automobiles Technical products Special-interest products Products that demonstrate well
High-Touch Positioning Less emphasis on specialized
information, more on image Products that solve a common
problem Global village products
Global brands Products that use universal themes
Materialism, heroism, recreation, procreation
Sourcing:Exporting and Importing
Export Selling or Export Marketing
Export selling Does not involve tailoring the marketing
mix to suit the requirements of global markets, only “place” is changed
Export marketing Targets the customer in the context of the
total market environment.
Export Marketing An understanding of the target
market environment The use of marketing research and
the identification of market potential
Decisions concerning with every elements of the marketing mix
Buy Chinese Nationalism Customer value Harley Davidson
Roles of Global Marketing Strategy
Configuration of marketing Coordination of marketing
activities across countries Tapping opportunities in product
development and R & D
Sourcing Decision Criteria Factor costs and conditions Logistics Country infrastructure Political risk Market access Exchange rate, availability, and
convertibility of local money
Factor Costs Land, labor, material, and capital costs Can lower wage rates justify relocation?
VW’s approach and SMH’s approach Availability and abundance Three tiers of manufacturing factor costs Drive direct labor costs down Migration of low factor costs
Logistics Transportation cost RTAs cut down cost Value chain management Video
Country Infrastructure Power, transportation,
communication, service and component suppliers, labor pool, civil order, effective governance, foreign exchange
Political Risk Changes in government policy
Market Access Limited market access Buy local, product local, sell local
Foreign Exchange Importance of exchange rate Volatility of exchange rate Alternative country options for
supplying markets Video
Export-Related Problems Logistics
Arranging transportation Transport rate determination Handling documentation Obtaining financial information Distribution coordination Packaging Obtaining insurance
Servicing Exports Providing parts availability Providing repair service Providing technical advice Providing warehousing
Legal Procedure Government policy Product liability Licensing Customers/Duty
Sales Promotion Advertising Sales effort Marketing information
Foreign Market Intelligence Locating markets Trade restrictions Competition overseas
National Policies Governing Exports and Imports
Schizophrenic Encouraging export Restricting imports
Government programs supporting exports
Tariffs Nontariff barriers
Government Programs Supporting Export
Tax incentives Tax exemption or lower tax rate on
export earnings Tax refund
Subsidies Direct or indirect financial contributions
Governmental assistance Information, trade fairs, trade missions
Tariffs Customs duties levied on imported
goods Brussels Tariff Nomenclature (BTN),
1959 The Harmonized Tariff System (HTS),
1989 Export and import classification
number
Non-Tariff Barriers Any measure, other than a tariff, that is a
deterrent or obstacle to the sale of products in a foreign market.
Quotas and trade control Discriminatory procurement policies Restrictive customs procedures Selective monetary controls and
discriminatory exchange rate policies Restrictive administrative and technical
regulations
Quotas and Trade Control Government imposed- limits or
restrictions on the number of units or the total value of a particular product or product category
Discriminatory Procurement Policies
Government rules and administrative regulations, company policies that discriminate against foreign suppliers
Buy American Act
Restrictive Customs Procedures
Classifying and valuing commodities as a basis for levying import duties
Selective Monetary Controls and Discriminatory Exchange Rate Policies
Discriminatory exchange rate policy
Export deposit
Restrictive Administrative & Technical Regulations
Anti-dumping regulations, size regulations, and safety and health regulations
Japanese restrictive technical regulations
Double standards
Choosing Export Markets Create a product-market profile Potential market size Competitor activities Overall marketing mix Target one or more export markets
Market Selection Criteria Market potential Market access Shipping cost Potential competition Product fit Service requirements
Visiting the Potential Market
Confirm or contradict assumptions regarding market potential
Gather additional data Develop a marketing plan in
cooperation with the local agent or distributor
Market Access Considerations Tariff systems Preferential tariffs Duties
Tariff Systems Single column tariff
Tariff schedule in which the duty rate applies to imports from all countries on the same basis
Two-column tariff The initial single column of duties is
supplemented by a second column showing reduced rates as determined through tariff negotiations with other countries (MFN)
Preferential tariff A reduced tariff rate applied to imports from
certain countries
Types of Duties Ad Valorem Duties Specific Duties Alternative Duties Compound or Mixed Duties Antidumping Duties Countervailing Duties
Ad Valorem Duties Duty is expressed as a percentage
of the value of goods HTS: Customs value is landed CIF
cost at the port of entry
Specific Duties Duties expressed as a specific
amount of currency per unit of weight, volume, length, or number of other units of measurement.
Alternative Duties Both advalorem and specific duties
are used to calculate the tariff, usually the one that yields the higher amount of duty is chosen
Compound or Mixed Duties Duties provided for specific, plus
ad valorem, rates to be levied on the same articles.
Antidumping Duties Dumping
The sale of merchandise in export markets are unfair prices.
Injury is caused to the domestic producers
Special additional import charges equal to the dumping margin
Countervailing Duties Additional duties levied to offset
subsidies granted in the exporting country.
Other Import Charges Variable import levies
When the prices of imported products would undercut those of domestic products
Temporary import surcharges Provide additional protection for local
industry in response to balance-of-payments deficits
Compensatory import taxes Value-added tax
Organizing For Exporting Organizing in the home country Organizing in the target market
country
Organizing in the Home Country
In-house export organization External independent export
organizations
In-House Export Organization The company’s appraisal of the
opportunities in export marketing Its strategy for allocating resources
to markets on a global basis
External Independent Export Organizations
Export trading companies Market information gathering Communication with markets Setting prices Ensuring parts availability
Organizing in the Market Country Direct market representation
Control and communication Independent representation
Small sales volume Find good local distributor
Piggyback marketing Arrangement where by one manufacture
obtains distribution of products through another’s distribution channels.
Export Financing/Methods of Payment
Currency availability in the buyer’s country
Creditworthiness of the buyer Seller’s relationship with the buyer Letter of Credit Documentary Collections
Letter of Credit Assurance of being paid Payment obligation: buyer’s bank
instead of the buyer The documents instead of the
goods
Documentary Collections Bill of exchange (draft) A negotiable instrument which is
easily transferable from one party to another
Counter Trade Alternative finance methods for
international trade other than money Scarcity of hard currency Exchange control Inability to finance imports through
bank loans Barter and mixed forms of counter
trade
Simple Barter Direct exchange of goods and
services between two parties Exchange fluctuation, shadow
price
Counterpurchase Each delivery in an exchange is
paid for in cash Two separate contracts
Compensating Trading Two contracts
The supplier agrees to build a plant or provide plant equipment, patents or technology
The supplier agrees to take payment in the form of the plant’s output equal to its investments
Entry & Expansion
Entry Decision Process Sourcing Marketing organization Distribution Marketing strategy Strategy implementation
Ownership & Control
Licensing Joint ventures Investment/
Ownership
Licensing Contract Patent, trade secret, brand,
trademark, company name, technical know-how
Pros and cons Cross-technology exchange
Joint Ventures Ownership partition Sharing of risk and competitive
advantage Pros and cons
Ownership/Investment Foreign direct investment 100% ownership; WFOE (wholly
foreign owned enterprise) Acquisition VS. direct expansion
Expansion Strategies
1Narrow Focus
2Country Focus
3Country
Diversification
4Global
Diversification
Concentration Diversification
Concentration
Diversification
Market
Cou
ntr
y
Alternative Strategies Stages of development
Domestic International Multinational Global Transnational
Competitive Analysis & Strategy
Forces Influencing Competition
Threats of New Entrants
Rivalry Among Existing Competitors
Threat of SubstituteProducts or Services
Bargaining PowerOf Suppliers
Bargaining PowerOf Buyers
Threat of New Entrants Economies of scale Product differentiation Capital requirement Switching costs Access to distribution channels Government policy Cost advantages Expected competitor response
Threat of Substitute Products Availability of substitute products Price
Bargaining Power of Suppliers Size and number Input importance, differentiation,
switching costs Availability of alternative products Supplier product or brandname
Bargaining Power of Buyers Bulk purchase Undifferentiated supplier’s
products Portion of cost Backward vertical integration
Rivalry Among Competitors Mature industry, market share High fixed cost industry Lack of differentiation or absence
of switching cost High strategic stakes in an industry
National Competitive Advantage
Factor conditions Demand conditions Related and supporting industry Firm structure and rivalry
Factor Conditions Human Physical Knowledge Capital Infrastructure
Demand Conditions The composition of home demand The size and pattern of growth of
home demand The means by which a nation’s
home demand pulls the nation’s products and services into foreign markets
Related & Supporting Industries
Value chain Proximity
Firm Strategy, Structure, and Rivalry
Strategy Structure Domestic rivalry
Other Forces Chance Government Non-market factors
Competitive Advantage Customer value Competitive advantage Successful strategy
Models of Competitive Strategy
Generic Business intent
Generic Strategies
Cost Leadership Differentiatio
n
Cost FocusFocused
Differentiation
BroadTarget
NarrowTarget
Lower Cost
Differentiation
Competitive Advantage
Com
petitiv
e
Scop
e
Cost-Leadership Low-cost producer Broadly-defined markets Experience curve and scale
economy Low prices Barrier
Differentiation Unique value Broad market Premium price
Focused Differentiation Narrow target market Unique products Premium price
Cost Focus Narrow market Lower price
Strategic Position Variety-based positioning Customer-needs-based positioning Customer-access-based positioning
Strategic Intent
Continuous improvement Continuous innovation Continuous acquisition of
new competitive advantage
Cooperative Strategies
Cooperative or Competitive? Trade barriers down Markets globalized Consumer needs and wants
converged Product life cycles shortened Business environment: dynamism,
turbulence, unpredictability
Global Strategic Partnerships Participants remain independent Share of benefits and control Ongoing contribution Mergers, acquisitions, joint
ventures
GSP Attributes Joint long-term strategy, global
leadership Reciprocal relationship Global vision and efforts Horizontal alliance Vertical alliance Partners as well as competitors
GSP Success Factors
Mission Strategy Governance Culture Organization Management
Keiretsu In Japan Cooperative strategy in Japan Interbusiness alliance or enterprise
group Bank-ownership of stocks Cross-ownership of stocks The “big six”
Implications of Chinese Companies
Launch GSA from home Developing core competitive
advantage Know your partners Be long-term oriented
Product Decisions
Product Defined A bundle of physical, service, and
symbolic attributes designed to enhance buyers’ want satisfaction
Consumer-Business Durable-nondurable
Products Based on Global Vision
National product International product Global product R & D cost incentive
Global Brands Guided by the same strategic
principles Same name, similar image Similar positioning Marketing mix may vary
Building Global Brand Strategic branding to long-term
profitability Increasing quality, low price,
communication
Global Product Positioning Serving a specific market segment by
achieving a certain position in buyers’ minds. Attribute or benefit Quality/Price Use/User
High-Tech VS. High-Touch High-Tech Positioning
Physical product features Technical information
High-Touch Positioning More on image High-involvement
Product Design Considerations Preferences Cost Laws and regulations Compatibility Country of origin
Geographic Expansion
2. Product Extension, Communications Adaptation
4. Dual Adaptation
1. Dual Extension 3. Product Adaptation Communication ExtensionProduct
Same Different
Com
mu
nic
atio
n Different
Same
Pricing Decisions
Price Boundary P=f (C, C, D) Price floor Price ceiling Optimum price
International Pricing Issues Discount and allowance Price elasticity Government perception Anti-dumping law Fluctuating exchange rates Transportation, channel cost Taxes
Global Pricing Strategies Market Skimming Penetration Pricing Market Holding Cost plus/Price escalation Sourcing
Market Skimming Set a high or premium price relative to
competitive offerings Introduction stage No or limited competition Distinguishing, segmentation based on
price Revenue maximization Demand control
Penetration Pricing Set a low entry price to secure
market acceptance Entry into another industry Saturate the market Lure customers to new stores Highly elastic demand
Cost Plus/Price Escalation Price=Unit
Cost+shipping+Ancillary+Profit Transportation, duty, distributor
margins and taxes Sourcing Local production and marketing
Dumping Sale of an imported product at a
price lower than that normally charged in a domestic market or country of origin.
Price, damage, causal effects Uruguay Round GATT Anti-Dumping Agreement (ADA)
Similar Products Product definition Product differentiation Raw material
Normal Price Market Economy
Market price in domestic market Exporter’s price to a third country Structural price
Non-market Economy Selling price in a substitute country Structural price Price of a third country
Price Determination FOB or CIF? Domestic price
Selling at loss Affiliation, Strategic Alliance
Structural cost Direct inputs, indirect inputs, profits
Export price to a third country Distributor dumping
Damage Determination Amount of sales of the dumping product Selling price of the dumping product Related economic indicators
Profit margin Price trend Market share Employment rate Usage of the productivity
Causal Effect Voluntary price cut by domestic
manufacturers Dumping caused by other non-
dumping imports Small market share Realistic damage VS. potential
damage
China: The TARGET 500 cases, 4000 products, $10
billion Export-oriented economy Competing over price Lack of organization Reluctance to respond and defend
India’s Case
India’s Case序号
国家或地区 已经作出终裁
已经初裁尚未终裁
已经立案尚未初裁
立案后被中止
总计
1 中国 39 9 1 2 51
2 欧盟 12 5 3 20
3 韩国 15 3 18
4 日本 13 4 17
5 美国 11 4 1 16
6 中国台湾省 10 4 2 16
7 新加坡 2 6 4 2 14
8 俄罗斯 11 11
9 泰国 6 3 9
10 印度尼西亚 6 1 7
其他 81
总计 260
What Should We Do? What can the government do? What can companies do?
Absence is no rescue! 375% duty on Chinese garlic, Chain effects
Find a good attorney Work with local importers and distributors Stop fighting against each other! Tracking the market Product differentiation Foreign direct investment instead of exporting
Currency Fluctuations A strong RMB Exchange rate clauses
Exchange rate review period Comparison basis Fluctuation range
Global Pricing Alternatives Extension/Ethnocentric
Price be the same around the world Importers absorb freight and duties
Adaptation/Polycentric Up to subsidiary managers Gray markets
Invention/Geocentric
Global Distribution
Channel of Distribution An organized system of marketing
institutions and their interrelationships that promotes the physical flow of goods and services, along with title that confers ownership, from producer to consumer or business user.
Flows
Physical flow Title flow Payment flow Information flow Promotion flow
Channel Objectives Creation of utilities Place Time Form Information
Global Distribution Barriers
A new market, no direct presence Separation of production and markets Little knowledge of the local
distribution system and distributors Government regulations Bargaining power of the local
distributors
Forms of Presence Direct involvement
Company-owned or franchised sales force, retail stores, etc
Sales office and sales branch Indirect involvement
Independent agents, distributors, wholesalers or retailers
Title and ownership of goods, commission
Direct Selling Manufacturer selling direct to the end
customer Door-to-door sales Mail order Telemarketing TV selling Internet selling Manufacture-owned stores
Marketing Intermediaries A business firm, either wholesaler or retailer, that
operates between producers and consumers or business users, also called a middleman.
Wholesaling intermediary A comprehensive term that describes wholesalers as
well as agents and brokers. Retailer
A marketing intermediary selling goods and services to the ultimate consumer
Wholesaling Intermediaries Manufacture-owned facilities
Sales branch Sales office
Independent wholesaling intermediaries Merchant wholesalers Agents and brokers
Distribution Intensity The number of intermediaries through
which a manufacturer distributes its goods. Intensive distribution Selective distribution Exclusive distribution
Intensive Distribution A channel policy in which a manufacturer of a
convenience product attempts to saturate the market.
Place products or services in as many outlets as possible
Cigarettes, snack foods, gums, candy, soft drinks, household chemicals
Location convenience Coverage and sales
Selective Distribution A channel policy in which a firm chooses
only a limited number of retailers to handle its product line.
Cost reduction Control over marketing programs Shopping products
Exclusive Distribution A channel policy in which a firm grants exclusive
rights to a single wholesaler or retailer to sell its products in a particular geographic area.
Automobiles, fitness equipments, specialty products
Loss in coverage, gain in prestige Close cooperation between the
producer and distributor, more control
Closed Sales Territory An exclusive geographic selling region
defined and enforced by a manufacturer for a distributor.
Distributor competition
Tying Agreements An arrangement that requires a marketing
intermediary to carry a manufacturer’s full product line in exchange for an exclusive dealership.
Channel Design Decision Market Product Producer Middlemen Competition
Customer Factors Number, geographic
distribution, income, shopping habits, promotion sensitivity
Number of customers VS. Number of channel intermediaries
Retailer selling volume or average order size
Product Factors Degree of standardization Business or consumer Perishable or durable Size Service requirements Technology intensive or not? Unit value
Producer Factors Resources Specialization Length of product line Channel control or channel power
Middleman Factors Cherry picking Demand, selling cost, profit
margin, commission Direct first, then through
middleman Subsidize the cost of
distributor’s sales reps
Competitive Factors Competition intensity
HighShort channel LowLong channel
Goal Market shareLong channel Market penetrationShort channel
Long Channel Big single order
size Easy account
collection and dispatch
Easy to maintain due to limited number of accounts
Close relationship
Difficulty in market penetration
Blind market spot Low profit margin Less information
about market and customers
Too many stakes on wholesalers
Short Channel Deep market penetration More control over sales
terminals and marketing programs
High gross profit margin Fast market feedback Less control by
distributors
Big number of orders adds to difficulty of order processing and payment collection
Difficult to maintain and help
Less distributor loyalty due small single order size
Evaluating The Alternatives
Direct distribution Manufactured owned
sales force Finding, hiring, training,
motivating sales force Rent, utility, deco Dedication Product knowledge Base salary plus 1%
commission Less market access
Independent intermediary
Well trained sales force Big Client base No base salary, 5%
commission Product knowledge Competing products More knowledge and
access to the market
Criteria Economic criteria Control criteria Adaptability criteria
Economic Criteria
Sellin
g C
osts
($)
Level of Sales ($)
Independent IntermediaryDirect Distribution
A
$50,000$30,000
$4,000
$75,000
Control Criteria Wholesaler
Less control Less product technical knowledge Carrying competing brands
Sales Office More control
Adaptive Criteria Adaptability of the channel Flexibility to respond to market
changes, consumer purchasing pattern changes
Channel Management Process
Marketing research on target market, competitors, available distributors, media
Determining channel structure; Recruiting and training distributors; Evaluation, negotiation, and signing contracts; Terminal design and development; Promotion, sales assistance, terminal
maintenance; Management, training, adjustment, reward, and
improvement
Selection Home country’s trade department Home country’s embassy or
consulate in the host country, Business Counselor
Local chamber of commerce or local trade organizations
Local distributor commitment
Selection Network resource; coverage, depth; Control over price, assortment Terminal and sales force management; Credibility; payment reliability; Service capability; Financial resources; Warehousing and transportation Commitment to the product is the key.
Terms and Responsibilities Price policy
Price list, schedule of discounts, allowances
Conditions of sales Payment terms, producer guarantees,
Distributors’ territorial rights Performance and cancellation Mutual services and responsibilities
Distributor Evaluation Sales volume Sales increase speed Percentage of product sales of the total
distributor sales; Selling cost against sales Inventory level Number of product lines carried Terminal display and price execution Service provided to downstream
distributors and customers
Motivating Channel Members
Coercive power Reward power Legitimate power Expert power Referent power
Producer–Distributor Relationships
Enemies Customers or
clients Partners
Conflict Competition Cooperation
Trends In Global Distribution
Flattened channel Involve as few intermediaries as possible Short channel preferred
Channel power moving from producers to retailers;
Booming of super-large retail chains and disappearance of small stores
Application of high-tech in physical distribution of goods or services