Chapter 7

Marketing: Reaching Global Markets
 

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AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
  • •Describe the nature and scope of world trade from a global perspective and its implications for the United States
•
  • •Explain the effects of economic protectionism and the implications of economic integration for global marketing practices.
 
  • •Understand the importance of environmental factors (cultural, economic, and political) for global marketing efforts
•
  • •Describe alternative approaches firms use to enter and compete in global markets
 
  • •Identify specific challenges marketers face when crafting worldwide marketing programs.
 
 

 

REACHING GLOBAL MARKETS
NOW THE WORLD CAN BREATH EASIER…ONE NOSE AT A TIME
 

 

DYNAMICS OF WORLD TRADE
  • •World Trade Flows
•           Global perspective
 
 

 

FIGURE 7-1  Illustrative world trade flows for manufactured goods and commodities
(billions of dollars)

DYNAMICS OF WORLD TRADE
•Global perspective (cont)
•United States perspective
•Competitive Advantage of Nations
  • §Factor conditions
  • §Demand conditions
  • §Related supporting industries
  • §Company strategy, structure, and rivalry
  • §Economic Espionage
 
 

 

Countertrade
Countertrade is the process of using barter rather than money for making global sales.
 
 

 

Trade Feedback Effect
The trade feedback effect is the phenomenon of imports affecting
exports and vice versa.
 
 

 

Gross Domestic Product
The gross domestic product is the monetary value of all goods and services produced in a country during one year.
 
 

 

Balance of Trade
The difference between the monetary value of a nation’s exports and imports is called the balance of trade.
 

 

Economic Espionage Act
The Economic Espionage Act makes the theft of trade secrets by foreign entities a federal crime in the United States.
 

 

FIGURE 7-2  Porter’s “diamond” of national competitive advantage

Concept Check
1.  What is the trade feedback effect?
A:  The phenomenon in which a country’s imports affect its exports and vice versa.
 
2.  What variables influence why some companies and industries in a country succeed globally while others lose ground or fail?
 
A:  Factor conditions; demand conditions; related and supporting industries; and company strategy, structure, and rivalry.
 
 

 

EMERGENCE OF A BORDERLESS ECONOMIC WORLD
  • •Rise of Economic Integration
  • •European Union
  • North American Free Trade Agreement
  • •Asian Free Trade Agreements
 
 

 

FIGURE 7-3  How protectionism affects world trade

FIGURE 7-4  The countries
of the European Union in 2002

Protectionism
Protectionism is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas.
 

 

Tariffs
Tariffs are a government tax on goods and services entering a country.
 

 

Quota
A quota is a restriction placed on the amount of a product allowed to enter or leave a country.
 
 

 

World Trade Organization
The World Trade Organization is a permanent institution that sets rules governing trade between its members.
 

 

EMERGENCE OF A BORDERLESS ECONOMIC WORLD
•A New Reality:  Global Competition among Global Companies for Global Customers
 
  • •Global Companies
•Emergence of  Networked Global Marketplace
 
 

 

Global Competition
Global competition exists when firms originate, produce, and market their products and services worldwide.

 

 

Strategic Alliances
Global strategic alliances are agreements among two or more independent firms to cooperate for the purpose of achieving common goals.
 

 

Multidomestic Marketing Strategy
Multinationals using a multidomestic marketing strategy have as many different product variations, brand names, and advertising programs as countries in which they do business.

 

 

Global Marketing Strategy
A global marketing strategy is the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.
 

 

Global Consumers
Global consumers consist of customer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

 

 

Concept Check
1. What is protectionism?
A:  It is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas.
 
2.  The North American Free Trade Agreement was designed to promote free trade among which countries?
 
A:  United States, Canada, and Mexico
 
3.  What is the difference between a multidomestic marketing strategy an a global marketing strategy?
 
A:  A multidomestic marketing strategy means that firms have as many different product variations, brand names, and advertising programs as countries in which they do business.   A global marketing strategy standardizes marketing activities when there are cultural similarities and adapts them when cultures differ.
 

 

 

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