Chapter 8 Global Marketing

Chapter 8
Global Marketing
Boone
Boone&&Kurtz,
Kurtz,Contemporary
ContemporaryMarketing,
Marketing,Nineteenth
NineteenthEdition.
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2022Cengage.
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Learning Objectives
8.1 Describe the global business landscape in terms of U.S. imports, U.S.
exports, and major industries.
8.2 Differentiate between WTO, NAFTA, and EU in terms of basic functions
and member countries.
8.3 Summarize the five major factors that influence the global marketing
environment.
8.4 Summarize the six alternative strategies for entering global markets.
8.5 Describe the five alternative marketing mix strategies used in global
marketing.
8.6 Given an example of a company’s goals for expanding globally,
determine the most appropriate market entry strategy.
Boone & Kurtz, Contemporary Marketing, Nineteenth Edition. © 2022 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Icebreaker
1. When you think of global marketing, what are some key words that come to
mind?
2. Have you ever bought anything from another country?
8-1
Global Marketing
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8-1 Global Marketing (1 of 3)
• Exporting: the marketing of domestically produced goods and services

abroad
• Importing: the purchasing of foreign goods and services
• Global trade is vital to a country because it:
• Expands markets
• Makes production and distribution economies possible
• Allows companies to explore growth opportunities in other nations
• Makes companies less dependent on economic conditions in their home nations
• The United States used to export mainly physical goods and agricultural
products; this has changed.
• In the 1800s, more than 90% of Americans worked in farming, today, less than 1.5% do.
• The share of U.S. exports from service industries continues to increase.

• The financial services industry is expanding globally via the Internet.
• The entertainment industry is another major service exporter.
• Importing goods and services from other countries provides several

benefits:
• Increased access to resources
• Lower prices
• Expanded choices for consumers
• Many U.S. firms choose to manufacture in places such as Mexico and
China because manufacturing and labor costs are lower there.
• Importing goods and services provides consumers with many choices—
clothing, computers, and fresh produce.
Exhibit 8.2 Top U.S. Trading Partners—Exports and
Imports
Discussion Activity 1
1. What are some of the challenges and opportunities that arise from global
marketing?
2. What are some advantages and disadvantages of importing from a

marketing standpoint?
Discussion Activity 1 Debrief
1. What is one main challenge and one main opportunity that your group
came up with for global marketing?
2. Did your group agree on the advantages and disadvantages of importing?
8-2
Multinational Economic Integration
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8-2 Multinational Economic Integration (1 of 4)
• A Free-trade area is where participating nations agree to the free trade of

goods among themselves, abolishing tariffs and trade restrictions.
• As operations move overseas, workers often find themselves working

longer and for less pay.
• These shifts in global production and trade have lowered consumer costs, improved
company profits, and increased product choice.
• World Trade Organization (WTO): a 164-member organization that

oversees trade agreements among its members, serves as a forum for
trade negotiations, mediates trade disputes, monitors national trade
policies, and works to reduce trade barriers throughout the world
• Despite problems (e.g., slow progress in its major policy initiatives), the
WTO provides important technical assistance and training for governments
of developing countries.
• European Union (EU): 27 countries make up the EU, which works to

remove trade restrictions, permit the free flow of goods and workers
throughout member nations, and promote human rights
• Currently, six countries are candidates for membership.
• With a population of more than 510 million people, the EU forms a huge
common market.
Exhibit 8.3 The 27 Members of the European Union
• The United States-Mexico-Canada Agreement (USMCA): an agreement

between the United States, Canada, and Mexico that removes trade
restrictions among the three nations
• The USMCA recently replaced the 25-year-old North American Free Trade
Agreement (NAFTA).
• NAFTA more than tripled the trade among three countries but caused some
discord: In the United States, workers lost jobs to cheaper labor; in Mexico,
workers felt they had no labor rights or health benefits; in Canada, some
claimed that NAFTA did not do enough to protect the environment.
• USMCA benefits: auto manufacturing receives a boost, strengthens labor
laws, and provides stricter environmental standards.
Group Activity 1
In your teams, using your phones and computers, research one free trade
agreement that the United States is currently a part of.
Answer the following questions.
1. Briefly describe the terms of the trade agreement.
2. How does this benefit the United States?
Group Activity 1 Debrief
1. What free trade agreement did your group select and why?
2. What’s the most important benefit of this free trade agreement to the
United States?
8-3
The International Marketing Environment
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8-3 The International Marketing Environment
(1 of 6)
• When they venture abroad, marketers must pay close attention to changing
demand patterns as well as economic, social-cultural, political-legal,
technological, and competitive influences.
(2 of 6)
• Infrastructure: the underlying foundation for modern life that includes

transportation, communications, banking, utilities, and public services
• Exchange rate: the price of one nation’s currency in terms of another

country’s currency
• Fluctuations in exchange rates can make a nation’s currency more or less valuable
compared with those of other nations.
(3 of 6)
• International Social-Cultural Environment: Before entering a foreign country,

marketers should study all aspects of its culture:
• Language
• Education
• Religious attitudes
• Social values
(4 of 6)
• Political risk assessment (PRA): when a company or business unit

evaluates the political risks of the marketplaces in which they operate
• Legal requirements of host nations affect foreign marketers.
• The political environment involves labor conditions in different countries.
• Different trade barriers affect global marketing:
• Tariffs (taxes levied on imported products)
• Administrative, nontariff barriers
(5 of 6)
• Internet technology has made it possible for large and small firms to
connect to the entire world.
• It transcends political, economic, and cultural barriers.
• Asia, Europe, and North America have the highest populations of Internet users, but
Africa has the fastest growing online population.
(6 of 6)
• Due to technological advancement, many shoppers are now global

consumers.
• 67% of consumers shop across borders.
• This creates more competition within a country because consumers have more choices.
• Example: restaurants like McDonald’s succeed outside the United States because they
pay attention to local tastes and modify their menu.
Review the international social-cultural environment.

1. If you were a business owner, what are some of the cultural elements that you would
consider when entering a foreign market?
2. Are there any aspects that you would not feel are important to you?
1. What were the most important cultural elements that your group
discussed?
2. Were there any aspects that your group deemed unimportant? If so, why?
8-4
Strategies for Entering Foreign Markets
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8-4 Strategies for Entering Foreign Markets (1 of 5)
• Besides generating additional revenue, firms can benefit from international

distribution for other reasons:
• New ideas for product development
• New approaches to distribution
• New promotional tactics
Exhibit 8.4 Strategies for Entering Foreign Markets
8-4 Strategies for Entering Foreign Markets
(2 of 5)
• Exporting allows companies to distribute their goods globally without setting

up formal operations in those markets.
• Many firms export their products as the first step in international business.
• Even large businesses use it for global expansion.
(3 of 5)
• A franchise is a contractual arrangement where the franchisee agrees to

meet the operating requirements of a manufacturer or a franchiser
• One advantage is risk reduction by offering a proven concept.
• Foreign licensing grants foreign marketers the right to distribute a firm’s

merchandise or to use its trademark, patent, or process in a specified
geographic area
• These arrangements usually set time limits, after which the agreements are revised or
renewed.
(4 of 5)
• Franchising and foreign licensing offer advantages over exporting:

• Access to local partners’ marketing information and distribution channels
• Protection from various legal barriers
• More control over how products are marketed and sold
(5 of 5)
• Subcontracting occurs when the production of goods or services is

assigned to local companies
• Example: Nike has long subcontracted factories in south Asian countries to
manufacture its products. Although Nike’s manufacturing costs were lower, the
company was criticized for the working conditions in its factories.
8-4 International Direct Investment (1 of 4)
• International direct investment is a financial investment in foreign firms or

facilities
• Although there are high levels of involvement and high-risk potential, firms
that choose this method often have a competitive advantage.
• International Direct Investment Forms:
• International divisions
• Acquisitions
• Joint ventures
• A company that has the resources and commitment to enter a foreign

market can invest in building or creating a wholly owned facility there.
• GE
• Microsoft
• Boeing
• Although setting up international divisions requires significant resources and

planning, once the office is up and running, the company retains complete
control of its operations.
• A company can buy an existing firm in a country where it wants to do

business.
• Example: China’s Meidu Holding Company acquired U.S.-based Woodbine Acquisition,
an oil and gas development company.
• An acquisition gives the buyer a fully functioning operation in a new country,

but this strategy usually requires a significant investment.
• A joint venture is when companies share the risks, costs, and

management of the foreign operation with one or more partners
• Example: In 2012, India’s Jaguar Land Rover (JLR) and China’s Chery Automotive
formed a joint venture, and China is now JLR’s biggest market.
• Although joint ventures offer many advantages, foreign investors may

encounter problems due to language, culture, and operational differences
between the partnering companies.
Group Activity 2
You are the owner of a furniture store and looking to expand globally.
Consider the following:
1. What target market/country would work best for your product and why?
2. What international direct investment opportunity would you select and why?
Group Activity 2 Debrief
1. How did your group select the target market or country that you were
interested in?
2. What was your investment option and why did your group select this?
8-5
Marketing Mix Strategies
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8.5 Marketing Mix Strategies (1 of 2)
• In developing a marketing mix, global marketers concentrate on two basic

decisions:
• Do we change our product for the international market?
• Do we change our promotional strategy for the international market?
8.5 Marketing Mix Strategies (2 of 2)
• The answers to those questions result in marketers pursuing one of five

strategies:
• Straight extension
• Promotion adaptation
• Product adaptation
• Dual adaptation
• Product invention
• Once one of the strategies is chosen, marketers must implement pricing
and distribution strategies to support them.
Exhibit 8.5 International Marketing Mix Strategies
Let’s review the questions from the marketing mix strategies (slide 1).
1. Do we change our product for the international market?
2. Do we change our promotional strategy for the international market?
Select one product or service and discuss in your group.
1. Did your group decide to change the product for the international market?
Why or why not?
2. Did the group decide to keep the same promotional strategy? Why or
why not?
8-6
Determining a Market Entry Strategy
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8-6 Determining a Market Entry Strategy
• Any company choosing a global entry strategy should consider its primary
goals before choosing how to enter a new market.
• Example: When the Nederlander Group (with 26 theaters across the United
States, 3 in London, and a strategic partnership with the China Arts and
Entertainment Group) decided to expand, executives researched and
identified several markets.
• Now the company plans to open two theaters in Istanbul, Turkey.
• The level of adaptation needed for this market requires expertise and local talent.
• The company has decided to partner with a company in Istanbul to develop the performing arts
center.
Exhibit 8.6 Comparison of Market Entry Strategies
(1 of 2)
Strategy Advantages Disadvantages Appropriate For…
Exporting • Low cost • Lack of control over how • Companies looking for
• Easiest way to sell in foreign products are marketed and sold the lowest cost and
market • Company may not acquire lowest risk way to sell in
knowledge about foreign new markets
markets that would help build a
competitive advantage
Franchising • More control over how • Poor quality or service from • Companies wanting
and licensing products are marketed and international partners could increased control over
sold damage brand sales and marketing of
• Allows company to acquire their products, while
knowledge about new markets limiting capital outlays
that could be applied to
product development and
promotion strategies
Subcontracting • Lower cost alternative, allows • Lack of control over factory or • Companies looking for
company to compete with local working conditions cost advantages or local
offerings • Lack of control over lead times expertise in marketing
• Protection from import duties or quality or distribution
Exhibit 8.6 Comparison of Market Entry Strategies
(2 of 2)
Strategy Advantages Disadvantages Appropriate For…
International • Company retains complete • Requires significant • Large corporations with
divisions control over operations resources and planning significant sales or
• Allows for easy operations in foreign
customization to local markets
market preferences
Acquisitions • Fully functioning • Requires a significant • Companies looking to

organization in new country investment quickly and firmly establish a
presence in new markets
Joint • Shared risks and costs • May encounter • Companies that may lack
ventures • Access to partner’s problems due to the full resources necessary
knowledge and expertise of language, culture, or to expand globally, but who
foreign market operational efficiencies want a strong presence in
new markets
Knowledge Check
Company X is a seller of handmade furniture in the United States. They have

exceeded growth expectations in their current market and have decided to
expand globally. Since they are a smaller company still with a niche market,
they are looking for cost advantages or local expertise in marketing or
distribution. They also want protection from import duties.
What strategy should company X use?
a) International Divisions
b) Subcontracting
c) Joint Venture
d) Exporting

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Chapter 8

2. Have you ever bought anything from another country?

• Exporting: the marketing of domestically produced goods and services

• The share of U.S. exports from service industries continues to increase.

• Importing goods and services from other countries provides several

2. What are some advantages and disadvantages of importing from a

2. Did your group agree on the advantages and disadvantages of importing?

• A Free-trade area is where participating nations agree to the free trade of

• As operations move overseas, workers often find themselves working

• World Trade Organization (WTO): a 164-member organization that

• European Union (EU): 27 countries make up the EU, which works to

• Currently, six countries are candidates for membership.

• The United States-Mexico-Canada Agreement (USMCA): an agreement

Answer the following questions.

1. Briefly describe the terms of the trade agreement.

2. How does this benefit the United States?

• Infrastructure: the underlying foundation for modern life that includes

• Exchange rate: the price of one nation’s currency in terms of another

• International Social-Cultural Environment: Before entering a foreign country,

• Political risk assessment (PRA): when a company or business unit

• Administrative, nontariff barriers

• Due to technological advancement, many shoppers are now global

Review the international social-cultural environment.

• Besides generating additional revenue, firms can benefit from international

• Exporting allows companies to distribute their goods globally without setting

• A franchise is a contractual arrangement where the franchisee agrees to

• Foreign licensing grants foreign marketers the right to distribute a firm’s

• Franchising and foreign licensing offer advantages over exporting:

• Subcontracting occurs when the production of goods or services is

• International direct investment is a financial investment in foreign firms or

• A company that has the resources and commitment to enter a foreign

• Although setting up international divisions requires significant resources and

• A company can buy an existing firm in a country where it wants to do

• An acquisition gives the buyer a fully functioning operation in a new country,

• A joint venture is when companies share the risks, costs, and

• Although joint ventures offer many advantages, foreign investors may

Consider the following:

• In developing a marketing mix, global marketers concentrate on two basic

• The answers to those questions result in marketers pursuing one of five

2. Do we change our promotional strategy for the international market?

Select one product or service and discuss in your group.

Acquisitions • Fully functioning • Requires a significant • Companies looking to

Company X is a seller of handmade furniture in the United States. They have

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