chapter 6 - serving global markets.docx

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Grant B Mc Clelland

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Chapter 6 - Serving Global Markets Building a Global Brand 1. Maintain a consistent brand identity 2. Progress at the right pace for each market 3. Network with local distributors and though leaders 4. Trademark your product idea, name, and packaging before you launch 5. Look beyond expected sales channels Importance of Global Trade  Global trade can be divided into two categories:  Exporting refers to the marketing of domestically produced goods and services abroad.  Importing refers to the purchasing of foreign goods and services.  Why is global trade important to a nation?  expands markets and builds employment.  makes production and distribution economies possible.  allows companies to explore growth opportunities in other nations.  lessens their dependence on domestic economic conditions at home.  can help them meet customer demand, reduce costs, and get information on potential markets worldwide.  For North American firms, it’s especially critical since Canada and the U.S. offer mature markets for many goods.  Outside North America, it allows many economies to grow rapidly, opening up new markets for Canadian products. Service Exports  A large part of service exports come from travel and tourism.  Information technology has allowed services that once were considered nontransferable or storable to travel long distances from where they are produced quickly and easily through sophisticated telecommunications networks.  Foreign visitors purchasing Canadian produced goods and services are tourism exports. Benefits of Going Global  Additional revenues  New insights into consumer behaviour  Alternative distribution strategies  Advance notice of new products  Exposure to new products, approaches, promotions, or marketing techniques  Global marketers are typically well-positioned to compete effectively with foreign competitors.  key to success is a firm’s ability to adapt its products to local preferences and cultures.  need to understand both similarities and differences in strategies for global and domestic marketing The international Marketing Environment  Environmental factors, including demand patterns, have a powerful influence on a firm’s global marketing strategy.  Marketers also need to be aware of competitive, economic, social-cultural, political-legal, and technological influences. International Economic Environment  Nation factors  A nation’s size, per-capita income, and stage of economic development determine its prospects as a host for international business expansion.  Nations with low per-capita income may be poor markets for expensive machinery but good ones for agricultural tools.  Infrastructure  important when looking at a foreign market, is a nation’s underlying foundation for modern life (transportation, communications, banking, utilities, and public services).  Exchange rates can complicate international marketing.  Exchange rate  price of one nation’s currency in terms of another nation’s currency.  Fluctuations in rates make a nation’s currency more or less valuable, compared to that of other nations.  Most European nations have switched to the euro with the idea that a single currency would strengthen Europe’s competitiveness overall.  Some less developed nations have “soft” currencies, meaning they cannot be readily converted into “hard” currencies such as the euro, British pound, Japanese yen, or Swiss franc. International Social-Cultural Environment  Before entering a market, firms need to study all aspects of a nation’s culture, including language, education, religious attitudes, and social values.  Language plays an important role in international marketing.  Marketers must use the right language but also make sure the message is translated and conveys the intended meaning.  Firms relying on call centers in India have found occasional language gaps International Technological Environement  Internet technologies connect large and small firms to world markets.  Technology presents some challenges for global marketers  a huge gap still exists between regions with the greatest Internet use and those with the least.  Technology presents challenges for international marketers that include cultural responses to certain new technologies International Political-Legal Environment  Laws  Global marketers keep up with laws, trade regulations, political conditions, and unrest, all of which affect international markets.  Political risk assessment  units to evaluate the political risks of the marketplaces in which they operate as well as proposed new marketplaces (foreign markets and labour conditions)  Trade barriers  Tariffs  Other trade barriers  Dumping Laws  International law  involves treaties, agreements, and certification standards  Agreements involve worldwide standards for products, patents, trademarks, taxes, export control, air travel, and communications  ISO (international organization for standardization)  ensures that a firms goods, services and operations meet the established standards o 9000 series sets standards for goods and services o 14000 series sets standards for operations to minimize harm to the environment.  International Monetary Fund (IMF)  lends foreign exchange to nations that require it, in agreements that facilitate the entire process of world marketing  Canadian law  environment includes trade regulations, tax laws, and import/export requirements  legal requirements of host nations can affect foreign trade, so firms follow local laws in certain nations while upholding principles found in Canadian law Trade Barriers  Tariffs  refer to taxes levied on imported products—Some impose taxes per pound, litre, or unit; others are calculated based on value of the imported item  Administrative (or nontariff) barriers are subtle forms of trade restrictions, taking the form of customs barriers, import quotas, import restrictions, or export subsidiaries  Revenue tariffs  are designed to raise funds for the importing government.  Protective tariffs  are usually higher, designed to raise the retail price of an imported product to match that of a similar domestic product.  Other trade barriers  Import quotas  limit the number of units of products in certain categories that cross a national border for resale  The ultimate quota is an embargo—A complete ban on the import of a product (examples: U.S. embargo on Cuban products since the 1960s)  subsidy  is a type of trade barrier in which governments financially back a certain domestic product.  exchange control  regulates foreign trade through a central bank  Dumping  means selling a product in a foreign market for less than what it commands in the domestic market. Multinational Economic Integration  Free-trade area  Allows participating nations to agree to the free trade of goods among themselves, abolishing tariffs and trade restrictions.  Customs union  Establishes a free-trade area plus a uniform tariff with non-member nations.  Common market  Extends a customs union by seeking to reconcile all government regulations affecting trade.  two sides to the trade issue:  Not everyone is happy about free trade, especially those who are concerned about jobs being outsourced to low-wage nations, factories being relocated overseas, and resulting pay cuts or potential job losses.  But innovation and productivity tend to grow quickly with free trade, and many firms view outsourcing as a collaboration and a way to offer superior service. GATT and the World Trade Organization  General Agreement on Tariffs and Trade (GATT)  International trade accord that has helped reduce world tariffs.  Other results of this latest GATT conference  Reduced farm subsidies  Increased protection for patents, copyrights, and trademarks.  Included professional services under international trading rules  Phased-out import quotas on textiles and clothing  World Trade Organization (WTO)  replaced GATT. It oversees GATT agreements, mediates disputes, and works to further reduce trade barriers  WTO decisions are binding, and nations go through rounds of negotiations to become members. NAFTA  North American Free Trade Agreement  Accord removing trade barriers between Canada, Mexico, and the United States  A
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