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					Global Marketing
    Spring 2003
    Some Abouts
                 About   me
                 About   this course
                 About   the project
                 About   the examination
                 About   grading



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    Text Structure
           Introduction to global marketing
           The global marketing environment
           Global market opportunities
           Global marketing strategy
           Global marketing program
           Global marketing management


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      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?
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           Global Marketing

             -- Introduction


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    What is Global Marketing?




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    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.



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    The Three Principles of Marketing

         Customer Value
             Value Equation: V=B/P
         Differential Advantage
         Focus




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    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




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    Globalization
           An open economic system

           Non-discrimination

           Global brands

           Global structures

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    Exports % share of world production
           25

           20

           15

           10

            5

            0
                1913      1950        2000


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      Annual % Growth of trade and GDP
                 1959 – 96
 12

 10            Trade

  8

  6                                    Trade
         GDP                   GDP
  4
         GDP                   GDP
  2

  0
            World                     USA

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          Effects of globalization on
                   business
        Cheap offshore production
        Reduced transport costs
        Virtual communication
        Standardization of logistics
        Global marketing


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     Export & Import By Regions
             2002/01-10

国家(地区                                            累计比上年同期增减%
  )     进出口额           出口额          进口额         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

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          Corporate Globalization
              -China’s Case
         Walmart
         World Women Basket Ball Games
         Haier in USA
         Tsingdao Beer




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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.
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     Should we go global?
    Internal analysis
        Resources, managerial mindset, strengths,
         weaknesses,etc.
    External analysis
        Competition, opportunities, threats, benefits,
         risks, etc.
    Cost VS Income

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    Management Orientation
       Management’s assumptions or
        beliefs-both conscious and
        unconscious-about the nature of the
        world
       Ethnocentric
       Polycentric
       Regiocentric
       Geocentric

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      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
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    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
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     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.

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    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



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  Driving and Restraining Forces
   Affecting Global Integration
       and Global Marketing


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    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

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     Driving Forces Cont.
    Product development costs
    Quality
    World Economic Trends
        More opportunities
        Less resistance
        World-wide deregulation and privatization



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    Driving Forces Cont.
       Leverage
           Experience transfers
           Scale economies
           Resource utilization
           Global strategy
       The Global/Transnational Corporation


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     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


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The Global Economic Environment




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  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



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    Changes in The World Economy
       Productivity VS. Employment
           Application of new technologies
           Increase in production efficiency
           Plant emigration
           Internal reforms




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    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



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    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?

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      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
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            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

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    Lower-Middle-Income Countries
       Less developed countries (LDC)
       Early stage of industrialization
       Consumer markets expanding
       Low labor cost
       Labor-intensive products manufacturing



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    Upper-Middle-Income Countries
       Industrializing countries
       Percentage of people in agriculture
        dropping sharply
       Degree of urbanization increasing
       High literacy
       Relatively low wage costs


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    High-Income Countries
       Industrialized Countries
       Sustained economic growth
       Knowledge-based
       Service sector
       New products and innovations



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      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
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    Implication for Marketers

           Profitability
           Chances and challenges
           Marketing’s Role
           Market potential evaluation


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    Emerging Markets Evaluation
             Size     Growth Intensity Infrastructure Freedom Risk    Overall
Countries      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
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    Social and Cultural Environments
       Differences
       Similarities
       Marketers’ two-folded task.
           Recognize difference
           Find similarities




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     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.

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        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!
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     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.”


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    High and Low Context Cultures
Factor    High Context           Low Context
Lawyer    Less important         Very important
Space     People breath on       Bubble of private
          each other             space, no intrusion
Time      Polychronic, things    Monochronic, linear
          dealt simultaneously
Negotiati Lengthy, get to        Quick, get things
ons       know each other        done
Countries Japan, Middle East,    US, Northern Europe
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    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
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      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”

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          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.


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    Maslow’s Hierarchy of Needs


                 Self-actualization
                     Esteem
                      Social
                       Safety
                    Physiological


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    Hofstede’s Cultural Typology
       Power distance
       Individualism or Collectivism
       Masculinity or Femininity
       Uncertainty avoidance




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     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



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    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

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    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


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    Uncertainty Avoidance
      The extent to which the members of a
       society are uncomfortable with unclear,
       ambiguous, or unstructured situations.




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     Environmental Sensitivity
            The extent to which products must be
             adapted to the culture-specific needs of
             different national markets.
                              High
         Product Adaptation




                                                             Food



                                                  Computer


                                     Integrated
                              Low    Circuit
                                    Low                       High
                      Environmental Sensitivity
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    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


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    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”

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    The Political, Legal, and
   Regulatory Environments of
        Global Marketing



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    The Political Environment
          Sovereignty
          Political risk
          Taxes
          Dilution of Equity Control
          Expropriation


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    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.
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    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,




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    Taxes
       Diverse geographic activities of MNC
       Host country tax avoidance
       Bilateral tax treaties




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    Dilution of Equity Control
       Control ownership of foreign-owned
        companies.
       Equity percentage in local projects or
        joint ventures
       Become an insider



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    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

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    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


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    International Law
       Rules and principles that nation-states
        consider binding upon themselves.
       Public law, international commercial law
       Common law VS code law




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    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

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    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.

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    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

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    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

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     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.
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    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.


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     Bribery and Corruption

     - A World-wide problem



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    Conflict resolution
       Litigation
       Differences in language, legal systems,
        currencies, traditional business customs
        and patterns, discovery procedure, and
        enforcement.
       Complex, time consuming, costly


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    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


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    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.

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    Regional Economic Organizations
       WTO
       EU
       NAFTA
       ……




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   Global Markets and Buyers



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     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.

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     The Boom
Countries                    1974-1993   1994-2003
Developed 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%
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                                           3.8%
    Economic Cooperation &
    Preferential Trade Arrangements
       International economic cooperation
       Free Trade Area (FTA)
       Customs Union
       Common Market
       Economic Union
       WTO and GATT


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    Regional Trade Areas
      Chart 1: RTAs in force and under negotiation as of
                   July 2000, by type of RTA


                    1
              67                               FTAs in force
                                               CUs in force
                                               FTAs under negotiation
                          148
              24                               CUs under negotiation




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                         Chart 2: Geographical Distribution of RTAs, both in force and
                                             under negotiation

                   120

                   100
  Number of RTAs




                    80
                                                                                                                  FTAs under negotiation
                                                                                                                  CUs under negotiation
                    60
                                                                                                                  FTAs in force
                    40                                                                                            CUs in force


                    20

                     0
                         Americas   Asia Pacif ic   Eastern Europe    Euro-        Sub-Saharan   Cross Regional
                                                    & Central Asia Mediterranean

                                                              Region



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    Free Trade Area (FTA)
       A group of countries that have
        agreed to abolish all internal
        barriers to trade among themselves.
       Certificates of origin




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    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


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    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.


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    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;

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    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.

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     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
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    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
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    Global Marketing Information
       Systems and Research



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    Acquire Global Information
       Superabundance in developed countries
       Scarcity in LDC and underdeveloped
        countries
       Where and how to get the right
        information
       Scanning


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    Global Marketing Information System
       MIS defined
       Gathering, analyzing, classifying, storing,
        retrieving, and reporting
       EDI: Electronic Data Interchange
       Beneton’s MIS
       Timely, cost-efficiently, actionable


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    Subject Agenda for a Global MIS
       Markets
       Competition
       Foreign exchange
       Prescriptive information
       Resource information
       General conditions


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    Markets
       Demand estimates
       Consumer behavior
       Products
       Channels
       Communication media availability and
        cost
       Market responsiveness
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    Competition
       Corporate strategies
       Business strategies
       Functional strategies




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    Foreign Exchange
       Balance of payments
       Interest rates
       Attractiveness of country currency
       Expectations of analysts




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    Prescriptive Information
       Laws, regulations, rulings concerning
        taxes, earnings, dividends in both hose
        countries and home country




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    Resource Information
       Availability of human, financial,
        information, and physical resources




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    General Conditions
       Overall review of sociocultural, political,
        technological environments




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    Scanning Modes
       Surveillance
           Informal information gathering
           Viewing and monitoring
       Search
           Formal information gathering
           Investigation and Research



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    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


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    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
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    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
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    Step 1: Problem Definition
       A problem well defined is half solved.
       Assess the nature of the market
        opportunity.
       Existing
       Potential



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    Existing Market
       Market size, level of demand, rate of
        product consumption
       Self-evaluation: competitiveness,
        product appeal, price, distribution,
        promotional coverage and effectiveness




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    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.
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    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.


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    Step 3: Data Collection
            Primary data
                Observation
                Survey research
                Experiment
            Secondary data
                Internal, external



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    Observation Method
              Counting
              Watching
              People meter
              Videotaping
              Virtual reality



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    Survey Method
       Interviews and Questionnaires
           Telephone Interviews
           Focus Groups
           Mail Surveys
           Fax Surveys
           Online Surveys



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    Telephone Interviews
       Spoken instead of visual
       Quick, inexpensive
       Results could be biased
       Random dialing
       Answering machines and caller ID



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    Personal Interviews
       Face to face interaction
       Detailed information
       Sensitive question
       Slow
       Expensive
       Mall intercepts


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    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

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    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


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    Fax Surveys
       Similar to mail surveys




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    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
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    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

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    Sampling
       Probability sample
       Nonprobability sample
       Sample size
       Standard statistical test




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    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
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    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.
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      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.

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    Step 5: Interpreting and Reporting
       Clear
       Concise
       Actionable
       Management oriented, no technical
        jargons



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    Current Issues in Global MR
       Data availability
       Data deflation or inflation
       Comparability
       Response rate




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    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?




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    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?

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    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

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      Segmentation, Targeting,
          and Positioning



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    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.

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    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.

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    Types of Segmentation
       Geographical
       Demographical
       Psychographical
       Behavioral characteristics
       Product benefits



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    Geographical Segmentation
       Dividing an overall market into homogeneous
        groups on the basis of population locations.
       Population distribution
       Wealth distribution
       Urbanization
       Climate
       Food preference
       Terrain
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    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

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    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



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    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

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    Global Targeting
       Evaluating, comparing, and select
       Criteria for Targeting
           Current segment size and anticipated
            growth potential
           Competition
           Compatibility and feasibility



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        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.

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    Global Product Positioning
       The location of your product in the
        mind of your customer.
       Global positioning
           Pierre Cardin
           Audi
           Ikea



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    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
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    High Tech Positioning
       Based on technological features
       Computers, video and stereo
        equipments, automobiles
       Technical products
       Special-interest products
       Products that demonstrate well


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    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

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              Sourcing:
       Exporting and Importing



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        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.


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    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


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    Buy Chinese
       Nationalism
       Customer value
       Harley Davidson




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    Roles of Global Marketing Strategy
       Configuration of marketing
       Coordination of marketing activities
        across countries
       Tapping opportunities in product
        development and R & D



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    Sourcing Decision Criteria
       Factor costs and conditions
       Logistics
       Country infrastructure
       Political risk
       Market access
       Exchange rate, availability, and
        convertibility of local money
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    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
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    Logistics
       Transportation cost
       RTAs cut down cost
       Value chain management
       Video




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    Country Infrastructure
       Power, transportation, communication,
        service and component suppliers, labor
        pool, civil order, effective governance,
        foreign exchange




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    Political Risk
       Changes in government policy




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    Market Access
       Limited market access
       Buy local, product local, sell local




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    Foreign Exchange
       Importance of exchange rate
       Volatility of exchange rate
       Alternative country options for
        supplying markets
       Video



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    Export-Related Problems
       Logistics
           Arranging transportation
           Transport rate determination
           Handling documentation
           Obtaining financial information
           Distribution coordination
           Packaging
           Obtaining insurance

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    Servicing Exports
       Providing   parts availability
       Providing   repair service
       Providing   technical advice
       Providing   warehousing




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    Legal Procedure
       Government policy
       Product liability
       Licensing
       Customers/Duty




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    Sales Promotion
       Advertising
       Sales effort
       Marketing information




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    Foreign Market Intelligence
       Locating markets
       Trade restrictions
       Competition overseas




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             National Policies Governing
                Exports and Imports
    Schizophrenic
        Encouraging export
        Restricting imports
    Government programs supporting exports
    Tariffs
    Nontariff barriers


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                 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

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     Tariffs
   Customs duties levied on imported goods
   Brussels Tariff Nomenclature (BTN), 1959
   The Harmonized Tariff System (HTS), 1989
   Export and import classification number




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     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
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    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




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    Discriminatory Procurement Policies
       Government rules and administrative
        regulations, company policies that
        discriminate against foreign suppliers
       Buy American Act




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    Restrictive Customs Procedures
       Classifying and valuing commodities as
        a basis for levying import duties




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  Selective Monetary Controls and
  Discriminatory Exchange Rate Policies
       Discriminatory exchange rate policy
       Export deposit




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    Restrictive Administrative &
    Technical Regulations
      Anti-dumping regulations, size
       regulations, and safety and health
       regulations
      Japanese restrictive technical regulations
      Double standards



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    Choosing Export Markets
       Create a product-market profile
       Potential market size
       Competitor activities
       Overall marketing mix
       Target one or more export markets



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    Market Selection Criteria
       Market potential
       Market access
       Shipping cost
       Potential competition
       Product fit
       Service requirements


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      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



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    Market Access Considerations
       Tariff systems
       Preferential tariffs
       Duties




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     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

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    Types of Duties
       Ad Valorem Duties
       Specific Duties
       Alternative Duties
       Compound or Mixed Duties
       Antidumping Duties
       Countervailing Duties


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    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




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    Specific Duties
       Duties expressed as a specific amount
        of currency per unit of weight, volume,
        length, or number of other units of
        measurement.




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    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




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    Compound or Mixed Duties
       Duties provided for specific, plus ad
        valorem, rates to be levied on the same
        articles.




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     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


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    Countervailing Duties
       Additional duties levied to offset
        subsidies granted in the exporting
        country.




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    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


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    Organizing For Exporting
       Organizing in the home country
       Organizing in the target market country




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    Organizing in the Home Country
       In-house export organization
       External independent export
        organizations




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    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




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    External Independent
    Export Organizations
       Export trading companies
       Market information gathering
       Communication with markets
       Setting prices
       Ensuring parts availability



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    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.

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     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



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    Letter of Credit
       Assurance of being paid
       Payment obligation: buyer’s bank
        instead of the buyer
       The documents instead of the goods




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    Documentary Collections
       Bill of exchange (draft)
       A negotiable instrument which is easily
        transferable from one party to another




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      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

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    Simple Barter
       Direct exchange of goods and services
        between two parties
       Exchange fluctuation, shadow price




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    Counterpurchase
       Each delivery in an exchange is paid for
        in cash
       Two separate contracts




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    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


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      Entry & Expansion




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    Entry Decision Process
       Sourcing
       Marketing organization
       Distribution
       Marketing strategy
       Strategy implementation



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    Ownership & Control


              Licensing
              Joint ventures
              Investment/Ownership




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    Licensing
       Contract
       Patent, trade secret, brand, trademark,
        company name, technical know-how
       Pros and cons
       Cross-technology exchange



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    Joint Ventures
       Ownership partition
       Sharing of risk and competitive
        advantage
       Pros and cons




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    Ownership/Investment
       Foreign direct investment
       100% ownership; WFOE (wholly foreign
        owned enterprise)
       Acquisition VS. direct expansion




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    Expansion Strategies
                                 Market
                     Concentration    Diversification

                          1                  2
 Concentration       Narrow Focus      Country Focus
           Country




                           3                 4
 Diversification
                        Country            Global
                     Diversification   Diversification

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    Alternative Strategies
       Stages of development
           Domestic
           International
           Multinational
           Global
           Transnational



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 Competitive Analysis & Strategy




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      Forces Influencing Competition
                      Threats of
                     New Entrants



Bargaining Power      Rivalry Among       Bargaining Power
  Of Suppliers     Existing Competitors      Of Buyers




                   Threat of Substitute
                   Products or Services


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    Threat of New Entrants
       Economies of scale
       Product differentiation
       Capital requirement
       Switching costs
       Access to distribution channels
       Government policy
       Cost advantages
       Expected competitor response
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    Threat of Substitute Products
       Availability of substitute products
       Price




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    Bargaining Power of Suppliers
       Size and number
       Input importance, differentiation,
        switching costs
       Availability of alternative products
       Supplier product or brandname



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    Bargaining Power of Buyers
       Bulk purchase
       Undifferentiated supplier’s products
       Portion of cost
       Backward vertical integration




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    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



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    National Competitive Advantage
       Factor conditions
       Demand conditions
       Related and supporting industry
       Firm structure and rivalry




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    Factor Conditions
       Human
       Physical
       Knowledge
       Capital
       Infrastructure



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      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


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    Related & Supporting Industries
          Value chain
          Proximity




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    Firm Strategy, Structure, and Rivalry

                 Strategy
                 Structure
                 Domestic rivalry




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    Other Forces
       Chance
       Government
       Non-market factors




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    Competitive Advantage
       Customer value
       Competitive advantage
       Successful strategy




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    Models of Competitive Strategy
          Generic
          Business intent




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                    Generic Strategies
Competitive Scope




                    Broad       Cost
                    Target   Leadership   Differentiation

                    Narrow                   Focused
                    Target   Cost Focus   Differentiation
                             Lower Cost     Differentiation

                                 Competitive Advantage


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    Cost-Leadership
       Low-cost producer
       Broadly-defined markets
       Experience curve and scale economy
       Low prices
       Barrier



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    Differentiation
       Unique value
       Broad market
       Premium price




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    Focused Differentiation
       Narrow target market
       Unique products
       Premium price




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    Cost Focus
       Narrow market
       Lower price




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    Strategic Position
       Variety-based positioning
       Customer-needs-based positioning
       Customer-access-based positioning




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    Strategic Intent
         Continuous improvement
         Continuous innovation
         Continuous acquisition of new
          competitive advantage




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      Cooperative Strategies




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    Cooperative or Competitive?
       Trade barriers down
       Markets globalized
       Consumer needs and wants converged
       Product life cycles shortened
       Business environment: dynamism,
        turbulence, unpredictability


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    Global Strategic Partnerships
       Participants remain independent
       Share of benefits and control
       Ongoing contribution
       Mergers, acquisitions, joint ventures




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     GSP Attributes
    Joint long-term strategy, global leadership
    Reciprocal relationship
    Global vision and efforts
    Horizontal alliance
    Vertical alliance
    Partners as well as competitors


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    GSP Success Factors
                 Mission
                 Strategy
                 Governance
                 Culture
                 Organization
                 Management

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     Keiretsu In Japan
    Cooperative strategy in Japan
    Interbusiness alliance or enterprise group
    Bank-ownership of stocks
    Cross-ownership of stocks
    The “big six”



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    Implications of Chinese Companies
       Launch GSA from home
       Developing core competitive advantage
       Know your partners
       Be long-term oriented




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          Product Decisions




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    Product Defined
       A bundle of physical, service, and
        symbolic attributes designed to enhance
        buyers’ want satisfaction
       Consumer-Business
       Durable-nondurable



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    Products Based on Global Vision
       National product
       International product
       Global product
       R & D cost incentive




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    Global Brands
       Guided by the same strategic principles
       Same name, similar image
       Similar positioning
       Marketing mix may vary




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      Building Global Brand
     Strategic branding to long-term
      profitability
     Increasing quality, low price,
      communication




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      Global Product Positioning
     Serving a specific market segment by
      achieving a certain position in buyers’ minds.
     Attribute or benefit
     Quality/Price
     Use/User



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    High-Tech VS. High-Touch
       High-Tech Positioning
           Physical product features
           Technical information
       High-Touch Positioning
           More on image
           High-involvement



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    Product Design Considerations
       Preferences
       Cost
       Laws and regulations
       Compatibility
       Country of origin



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                Geographic Expansion
        Different 2. Product Extension, 4. Dual Adaptation
                    Communications
Communication




                    Adaptation
                       1. Dual Extension   3. Product Adaptation
                                              Communication
                Same                          Extension

                         Same                       Different
                                       Product

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          Pricing Decisions




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    Price Boundary
       P=f (C, C, D)
       Price floor
       Price ceiling
       Optimum price




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    International Pricing Issues
       Discount and allowance
       Price elasticity
       Government perception
       Anti-dumping law
       Fluctuating exchange rates
       Transportation, channel cost
       Taxes
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    Global Pricing Strategies
       Market Skimming
       Penetration Pricing
       Market Holding
       Cost plus/Price escalation
       Sourcing



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     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
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    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


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     Cost Plus/Price Escalation
   Price=Unit Cost+shipping+Ancillary+Profit
   Transportation, duty, distributor margins
    and taxes
   Sourcing
   Local production and marketing



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    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)


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    Similar Products
       Product definition
       Product differentiation
       Raw material




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    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

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    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
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    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


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    Causal Effect
       Voluntary price cut by domestic
        manufacturers
       Dumping caused by other non-dumping
        imports
       Small market share
       Realistic damage VS. potential damage


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    China: The TARGET
       500 cases, 4000 products, $10 billion
       Export-oriented economy
       Competing over price
       Lack of organization
       Reluctance to respond and defend



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    India’s Case




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       India’s Case
  序      国家或地区     已经作出终   已经初裁尚未   已经立案尚   立案后被中   总计
  号                  裁       终裁      未初裁      止


   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

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    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

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    Currency Fluctuations
       A strong RMB
       Exchange rate clauses
           Exchange rate review period
           Comparison basis
           Fluctuation range




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    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

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        Global Distribution




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    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.



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    Flows
        Physical flow
        Title flow
        Payment flow
        Information flow
        Promotion flow



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    Channel Objectives
       Creation of utilities
       Place
       Time
       Form
       Information



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     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


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    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
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     Direct Selling
    Manufacturer selling direct to the end customer
    Door-to-door sales
    Mail order
    Telemarketing
    TV selling
    Internet selling
    Manufacture-owned stores


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    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

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    Wholesaling Intermediaries
       Manufacture-owned facilities
           Sales branch
           Sales office
       Independent wholesaling intermediaries
           Merchant wholesalers
           Agents and brokers



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    Distribution Intensity
       The number of intermediaries through
        which a manufacturer distributes its goods.
       Intensive distribution
       Selective distribution
       Exclusive distribution



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    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

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    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


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    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

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    Closed Sales Territory
       An exclusive geographic selling region
        defined and enforced by a manufacturer for
        a distributor.
       Distributor competition




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    Tying Agreements
       An arrangement that requires a marketing
        intermediary to carry a manufacturer’s full
        product line in exchange for an exclusive
        dealership.




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    Channel Design Decision
          Market
          Product
          Producer
          Middlemen
          Competition



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    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

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    Product Factors
       Degree of standardization
       Business or consumer
       Perishable or durable
       Size
       Service requirements
       Technology intensive or not?
       Unit value
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    Producer Factors
       Resources
       Specialization
       Length of product line
       Channel control or channel power




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    Middleman Factors
       Cherry picking
       Demand, selling cost, profit
        margin, commission
       Direct first, then through
        middleman
       Subsidize the cost of
        distributor’s sales reps

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    Competitive Factors
       Competition intensity
           HighShort channel
           LowLong channel
       Goal
           Market shareLong channel
           Market penetrationShort channel



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      Long Channel
   Big single order size        Difficulty in market
                                  penetration
   Easy account
    collection and dispatch      Blind market spot
   Easy to maintain due         Low profit margin
    to limited number of         Less information about
    accounts                      market and customers
   Close relationship           Too many stakes on
                                  wholesalers

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        Short Channel
    Deep market penetration       Big number of orders
                                    adds to difficulty of
    More control over sales
                                    order processing and
     terminals and marketing
                                    payment collection
     programs
                                   Difficult to maintain
    High gross profit margin
                                    and help
    Fast market feedback
                                   Less distributor
    Less control by                loyalty due small
     distributors                   single order size

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     Evaluating The Alternatives
   Direct distribution             Independent intermediary
   Manufactured owned              Well trained sales force
    sales force
   Finding, hiring, training,      Big Client base
    motivating sales force          No base salary, 5%
   Rent, utility, deco              commission
   Dedication                      Product knowledge
   Product knowledge               Competing products
   Base salary plus 1%             More knowledge and
    commission                       access to the market
   Less market access
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    Criteria
       Economic criteria
       Control criteria
       Adaptability criteria




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                      Economic Criteria
                                         Independent Intermediary
Selling Costs ($)




                                                  Direct Distribution
                    $4,000




                                            A




                             $30,000   $50,000   $75,000

                                  Level of Sales ($)
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    Control Criteria
       Wholesaler
           Less control
           Less product technical knowledge
           Carrying competing brands
       Sales Office
           More control



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    Adaptive Criteria
       Adaptability of the channel
       Flexibility to respond to market changes,
        consumer purchasing pattern changes




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     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

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    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


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    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.
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    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
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    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
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    Motivating Channel Members
               Coercive power
               Reward power
               Legitimate power
               Expert power
               Referent power



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     Producer–Distributor Relationships

    Enemies                   Conflict
    Customers or clients      Competition
    Partners                  Cooperation




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     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

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         Global Promotion




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    Promotion
       Function of informing, persuading, and
        influencing the consumer’s purchase
        decision.




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    Objectives of Promotion
       Provide information to consumers and others;
       Increase demand;
          Primary demand

          Selective demand

       Differentiate a product;
       Accentuate a product’s value;
       Build up brand equity


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    The Promotional Mix
       Blend of personal selling and nonpersonal selling
        designed to achieve promotional objectives.
       Personal selling:
           Interpersonal promotional process involving a seller’s
            person-to-person presentation to a prospective buyer.
           Sales presentation, sales meeting, samples, fairs and
            tradeshows
       Nonpersonal selling:
           Advertising, sales promotion, direct marketing, and
            public relations

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                     IMC
Integrated Marketing Communication




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     Communication
    Transmission from a sender to a receiver of a
     message dealing with the buyer-seller
     relationship.
    IMC: Integrated Marketing
     Communication
        Coordination of all promotional activities-media
         advertising, direct mail, personal selling, sales
         promotion, and public relations-to produce a
         unified, customer-focused promotional message.

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    Why Integrated?
       Informational contradiction among
        different sources;
       Increase in media options creates
        information overload;
       Uncoordinated promotional efforts
        within the firm;
       In-house resources and outside vendors
       Cost
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    How to integrate?
       Global vision
       Customer oriented instead of product, brand
        or organization oriented;
       Intensive headquarter planning;
       Regular evaluation;
       Horizontal and vertical communication among
        subsidiaries, and between departments;
       Teamwork;
       Database marketing
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    The Communication Process

 Sender       Encoding       Channel   Decoding




   Feedback              Response      Receiver




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    Encoding & Decoding
       Encoding: Putting thoughts, ideas, or
        information into a symbolic form to be
        understood by the receiver;
       Decoding: Transforming the sender’s
        message back into thought;




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    Response, Feedback & Noise
       Response
           Receivers’ reaction to the message
       Feedback
           Response sent back to the sender
       Noise
           Disruptions or interference with the
            transmission of the message

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    Designing the Message
       Content (what to say)
       How to say it logically (message structure)
       How to say it symbolically (message format)
       Who should say it (message source)




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    Message Content
       Appeal (Rational, emotional, moral)
       Theme
       Idea
       USP (unique selling proposition)




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    Message Structure
       Conclusion drawing
       One-sided presentation
       Two-sided arguments
       Order of presentation




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    Message Format
               Character
               Picture
               Sound
               Packaging
               Color



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    Message Source
       Popularity
       Credibility
           Expertise
           Trustworthiness
           Likability
       Conflict between message and its
        source?

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       Global Advertising




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    Advertising
       Paid, non-personal communication through
        various media by a business firm, not-for-profit
        organization, or individual identified in the
        message with the hope of informing or persuading
        members of a particular audience.
       Informative, persuasive, reminder
       Effective, Economic, Efficiency
       Combination Consistency, Continuity,

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    Global Advertising
       Use of the same advertising appeals,
        messages, art, copy, photographs,
        stories, and video segments in multiple-
        country markets.
       A unified theme spurs short term-sales
        and long term product identity
       Product culture-global demographics
       Economies of scale in advertising

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    Extension or Adaptation?
       Standardized
           Same media, theme, message across
            countries.
           Cost effective, increased control, global
            appeal
       Localized
           Different from countries
           Tailored to the culture, focused on the
            attributes local people love
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          Advertising Planning
  Research Inputs
      Consumer
       Product
    Market Analysis
  Competitive Analysis
                           Tactical Execution
                            Advertising budget
 Strategic Decisions         Establish controls
                            Write and produce      Measuring      Evaluation &
   Setting objectives
     Target markets         Ads & commercials     Effectiveness   adjustments
Message & media strategy      Media choices
 Coordination with other    Pretest advertising
 Marketing mix elements
                                alternatives


  Constraints and
Uncontrollable factors
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    Types of Advertising
       Product advertising
       Institutional advertising
           Corporate advertising
       Celebrity testimonial
           Personality match
           Exclusive spokesperson
       Retail advertising
       Cooperative advertising
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    Advertising Agency
       In-house department or outside agency?
       Global advertising agency: Young &
        Rubicam, Omnicom, Dentsu
       Global agency or local agency?
       Brand identity, product category, area
        coverage, buy perception


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    Art Direction
       Visual presentation
       Pepsi’s theme: youth having fun
           Physical environment, key figures, music,
            different spokesperson
       Nudity




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    Copy
       The written text of an ad.
       Language barrier, literacy rate
       Slogan or copy line translation
           Complete, partial, or none?
           KFC’s “Finger-licking good”, Pepsi’s “Come
            alive”, Citicorp’s “Citi never sleeps”
       Spokesperson

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    Cultural Considerations
       Color, gender, etiquette
       Japan
           Indirect
           Little relationship between the ad content and the
            advertised product
           Brief dialogue
           Light humor
           Celebrity appear as common people
           Brand image rather than product attributes

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     Global Media Considerations
   Media availability
   Legal restriction
       Daily time allowed for ad:Finland 12 minutes,
        Italy 80 minutes;
       France:12 minutes per hour per channel,
        Switzerland, Germany, Austria:20 minutes
       Germany: Ad time must be reserved and paid
        a year in advance

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    Legal Restriction in Saudi Arabia
       Horoscope, fortune-telling
       Use of fear
       Use of news or official statement
       Use of comparative advertising
       Appearance of women



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     Media Vehicles and Expenditures
    Per-capita advertising expenditure
    Availability of media vehicles in different
     countries
    Ownership of TV, radio, newpaper
    Target audience media preference



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    Media Strategy
       Reach, frequency, and impact
       Selecting major media types
       Selecting specific media vehicles
       Media timing
       Geographical media allocation



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    Reach, Frequency, Impact
       Reach (R)
           The number of different persons or households
            exposed to a particular media schedule at least
            once during a specified time period;
       Frequency (F)
           The number of times within the specified time
            period that an average person or household is
            exposed to the message;
       Impact (I)
           The qualitative value of an exposure through a
            given medium
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    Choosing the Right Media
       Television
           Combines sound, sight, and motion, high
            attention, high reach, high media image
           High absolute cost, high clutter, fleeting
            exposure, less audience selectivity
       Radio
           High geographic and demographic
            selectivity, low cost, flexibility, mobility
           Audio only, lower attention,
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    Choosing the Right Media
       Newspaper
           Flexibility, timeliness, local market coverage,
            broad acceptance, high believability
           Short life, poor reproduction quality, small pass-
            along audience, hasty reading
       Magazine
           High geographic and demographic selectivity,
            credibility, high quality reproduction, long life,
            good pass-along readership
           Lack of flexibility

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    Choosing the Right Media
       Direct mail
           Audience selectivity, flexibility, no competing
            message, detailed, intense coverage
           “Junk Mail” image, low reach, mailing list quality
       Outdoor advertising
           Posters, billboards, street-light poster, neon lights,
           Repetition, local coverage, low cost
           Limited audience selectivity, brevity of message,
            low attention rate

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    Choosing the Right Media
       Interactive advertising
           Flexibility, two-way communication, consumer-
            directed, high selectivity
           Difficult to measure effectiveness, limited
            coverage
       Other Advertising Media
           Transit advertising
           Movie commercial
           Directory advertising: Yellow Pages,

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    Public Relations
       Firm’s communications and relationships with its
        various publics.
           Press conference, speech, seminar, annual report,
            charitable donation, community relation, lobbying,
            publication, company magazine, home page;
       Publicity:
           Stimulation of demand for a good, service, place, idea,
            person, or organization by unpaid placement of
            commercially significant news or favorable media
            presentations.


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      Global PR
     Bruno Magli: O.J. Simpson
     IBM: Kasparov VS. Deeper Blue
     Pepsi: PR in space
     McDonald’s: Abuse of animal and workers
     Firestone: a milestone



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    Global PR
       Build media relations
       Build consensus and understanding
       Create trust and harmony
       Articulate and influence public opinion
       Anticipate conflicts and resolve disputes



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    Sales Promotion
       Marketing activities other than personal
        selling, advertising, and publicity that
        stimulate consumer purchasing and dealer
        effectiveness:
        Displays, trade shows, coupons, premiums
        & gifts, contests, product demonstrations,
        discounts, sampling, trade-ins ;

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    Regulations
       Sweep-stakes: prohibited in Denmark,
        and Luxembourg
       Money-off next purchase: prohibited in
        Denmark, Germany, Luxemburg
       Premium: prohibited in Luxemburg
       Cash-back: Prohibited in Italy,
        Luxemburg
       Coupon: Prohibited in Germany
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                  Thank you!

     And it’s your turn next week!



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