1. Chapter 7
Understanding and
Reaching Global
Consumer and
Markets
Marketing Management
Presented by
Prince Cielo

2. Dynamics of World Trade
Global Perspective
• Countertrade
 the practice of using barter rather than money for making
global sales
• Trade Feedback Effect
Asian Perspective
• Gross Domestic Product (GDP)
 the total market value of all final goods and services produced
in a country in a given year.
• Balance of Trade
 difference between the monetary value of a nations exports
and imports.
Trade Flows

3. Porter’s Diamond
• Factor Conditions
• Demand Conditions
• Related and Supporting Industries
• Company Strategy, Structure, and Rivalry
Dynamic & Trade Flows
Dynamics of World Trade

4. Figure 1.
Porter’s diamond of national competitive advantage:
4 key elements on why some countries become
World leaders.

5. Factor Condition
 reflect a nations ability to turn its natural resources, education, and
infrastructure into a competitive advantage.
Demand Condition
 includes both the number and sophistication of domestic customers for
an industry’s product.
Related and Supporting Industries
 firms and industries seeking leadership in global markets need clusters
of world-class suppliers that accelerate innovation.
Company Strategy, Structure and Rivalry
 the conditions governing the way a nation’s business are organized and
managed, along with the intensity of domestic competition.

6. 1
• Gradual decline of economic protectionism by individual countries
2
• Formal economic integration and free trade among nations
3
• Global competition among global companies for global customers
4
• Emergence of a networked global marketspace
Four Global Marketing Trends

7. Protectionism
 is the practice of shielding one or more industries within a country’s economy
from foreign competition through the use of tariffs and quotas.
Tariffs
 is a government tax on good or services entering a country, primarily serving to
raise prices on imports.
Quota
 is a restriction place on the amount of a product allowed to enter or leave a
country.
• General Agreement on Tariffs and Trade (GATT)
World Trade Organization (WTO)
 is a permanent institutions that sets rules governing trade between its
members through panel of trade experts who decide on trade disputes
between members and issue binding decision.
• Decline of Economic Protectionism1

8. Figure 2.
Protectionism hinders world trade through tariffs and quotas policies
of countries, raising prices and limiting supply

9. • European Union
 is a group of 28 countries that operates as a cohesive economic
and political block.
• North American Free Trade Agreement (NAFTA)
 is an agreement among the United States, Canada and Mexico
designed to remove tariff barriers between the three countries.
• Asian Free Trade Agreements
 is a trade bloc agreement by the Association of Southeast Asian
Nations supporting local manufacturing in all ASEAN countries.
• Rise of Economic Integration2

10. Figure 3.
The European Union in 2007 consists of 27 countries with more than
500 million consumers.

11. • Global Competition
 is the services or products provided by competing companies
that serve international customers.
• Strategic Alliances
 is an agreement between two or more parties to pursue a
set of agreed upon objectives needed while remaining
independent organizations.
• Global Competition, Companies & Consumers
3
Global Competition

12. Divisions VS Subsidiaries
owned by the primary business,
Parent Company
is a legal entity that is majority
owned by a parent company.

13. Global Companies

14. • International Firms
 is an organization that has business operations in several markets
across the globe.
• Multinational Firms
 it’s a company that has business activities in more than one
country.
 Multidomestic Marketing Strategy
• Transnational Firms
 A commercial enterprise that operates substantial facilities,
does business in more than one country and does not
consider any particular country its national home.
Global Marketing Strategy
Global Brand
Global Companies

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

16. Emergence of a Networked Global
Marketspace
Global Marketspace
 is a relatively new concept in marketing which is a
virtual market place
 It is an electronic information exchange environment
in which the constraints of physical boundaries are
eliminated.

17. A Global Environmental Scan
Cross Cultural Analysis
 it involves the study of similarities and differences among consumers in two
or more nations or societies.
Values
 is a society’s personally or socially preferable modes of conduct or states of
existence that tend to persist over time.
Customs
 considered normal and expected about the way people do things in a
specific country.
 Foreign Corrupt Practices Act (1977)
 International Anti-Dumping and Fair Competition Act (1998)
Cultural Diversity

18. A Global Environmental Scan
Cultural Symbol
 are things that represent ideas and concepts.
 Semiotics
 study of role of symbols and examines the correspondence between symbols and their
role in the assignment of meaning for people.
Language
 languages that are spoken in different countries
 Unintended Meanings
 Back Translations
Consumer Ethnocentricity
 the tendency for people to view their own values, customs, symbols, and
language favorably is well-known.
 Consumer Ethnocentrism
Cultural Diversity

19. A Global Environmental Scan
Global Market is affected by economic consideration. Therefore, a scan of
global marketplace should include:
Economic Consideration
Comparative analysis of the economic development
in different countries
Assessment of the economic infrastructure in these
countries
Measurement of consumer income in different
countries
Recognition of a country’s currency exchange rates

20. A Global Environmental Scan
Stage of Economic Development
 Developed Countries
 Developing Countries
 Bottom of the Pyramid
Economic Infrastructure
 A country’s communications, transportations, financial, and
distribution systems
Economic Consideration

21. A Global Environmental Scan
Consumer Income and Purchasing Power

 Microfinance
 is the practice of offering small, collateral free loans to
individuals who otherwise would not have access to the
capital necessary to begin small business or other incoming-
generating activities.
Currency Exchange Rate
 the price of one country’s currency expressed in terms of
another country’s currency.
Economic Consideration

22. A Global Environmental Scan
Political Regulatory Climate
 defined as rules and principles that states and nations
consider binding upon themselves.
Political Stability
 is the durability and integrity of a current
government regime.
Trade Regulations
 are laws enacted by both federal and state
governments to promote unrestrained competition
amongst businesses.
Political- Regulatory Climate

23. Global Market-Entry Strategies
Four General Market Entry Strategies

24. Global Market-Entry Strategies
Exporting
 is producing goods in one country and selling them in another
country.
• Indirect Exporting
 when a firm sells its domestically produced goods in a
foreign country through an intermediary.
• Direct Exporting
 when a firm sells its domestically produced goods in a
foreign country without intermediary.
Exporting

25. Licensing
 A business arrangement in which one company gives another company
permission to manufacture its product for a specified payment .
• Contract Manufacturing
 a company may contract with a foreign firm to manufacture products
according to stated specifications.
• Contract Assembly
 the company may contract with a foreign firm to assemble (not
manufacture) pats and components that have been shipped to that
country.
• Franchising
 the method of practicing and using another's perfected business concept.
Licensing

26. Global Market-Entry Strategies
Joint Venture
 when a foreign company and a local
firm invest together to create a local
business.
Direct Investments
 entails a domestic firm actually
investing in and owning a foreign
subsidiary or division.
Joint Venture & Direct Investments

27. Crafting a Worldwide Marketing Program
Product & Promotion Strategies

28. Crafting a Worldwide Marketing Program
Product Extension
 the use of an established product brand name for a new item in
the same product category.
Product Adaptation
 the process of modifying an existing product so it is suitable for
different customers or markets.
Product Invention
 any new product idea which comes to your mind and leads to a
new product.
Product Strategies

29. Crafting a Worldwide Marketing Program
Promotion Message
 A marketing strategy developed by a business to promote a
product or service.
• Communication Adaptation Strategy
 means changing the communication for a product due to
change in strategy, line extension etc.
• Dual Adaptation Strategy
 is the adaption of both the product and the communications
to a local market.
Promotion Strategies

30. Crafting a Worldwide Marketing Program
Distribution Strategy
Figure 6 .
Channels of distribution in Global Marketing

31. Crafting a Worldwide Marketing Program
Dumping
 when a firm sells a product in a foreign country below its
domestic price or below its actual price.
Gray Market (Parallel Importing)
 a situation where products are sold through unauthorized
channels of distribution.
Pricing Strategy

32. End of Slide