Global Marketing Strategies and Market Segmentation Techniques

Global Retail Development Index (GRDI)

China attains the highest GRDI

Strategic Alliance

Collaborative relationships between independent firms without creating an equity partnership

Standardized metrics of output

Commonly used measures to gauge the size and market potential of an economy.

Gross national income (GNI)

Consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy).

Less developed nations

Countries that are experiencing rapid population growth.

Brazil's Economy

Currently, Brazil is the world's twelfth largest economy.

Global localization

A strategy where a product or service similar to that sold in the home country is adapted slightly for the host country.

Tariff

A tax levied on goods imported into a country, intended to make imported goods more expensive and protect domestic industries from foreign competition.

Bottom of the pyramid

A term used for economic settings in which consumers earn very low wages.

Purchasing power parity (PPP)

A theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other if expressed in the same currency.

E-commerce in China

Accounts for almost 40 percent of all global online retail sales

China's Economic Growth

Achieved despite relatively low levels of economic and personal freedom

Brazil's Economic Progress

Although the Brazil economy experienced significant economic progress in the early 2000s, it suffered a recession around 2015.

Trade agreement

An intergovernmental agreement designed to manage and promote trade activities for a specific region.

Global pricing strategies

Approaches to determining selling prices in the global marketplace, influenced by local regulations, tariffs, and competitive factors.

Decline in Energy Production

As a result, Russia is producing and exporting less natural gas and crude oil.

Well-Educated Generation in India

Largely fluent in English and highly skilled, attracting firms for local talent

Quotas

Limits on the amount of a product that can be imported or exported, influencing global supply chain strategies.

Risks of Direct Investment

Loss of operating and/or initial investments due to economic downturns, natural disasters, or political instability

Staff Shortages in Russia

Many businesses are also suffering from a lack of experienced staff due to the draft.

Sanctions on Russia

Many countries imposed sanctions on Russia goods to express solidarity with Ukraine and limit Russian funding for the war.

Examples of Global Franchising

McDonald's, Pizza Hut, Starbucks, Domino's Pizza, KFC, Holiday Inn

Product adaptation

Modifying a product to meet the specific needs or preferences of a target market in a different country.

International Companies in Russia

More than 1,000 international companies also opted to shutter or scale back operations in Russia, beyond the minimum requirements of government sanctions.

Brazil's Population

Over the course of the 21st century (so far), Brazil's impressive economic growth largely can be attributed to the expansion of its literate population and the impositions of social programs that have allowed more than half of the 217 million people living in Brazil to enter the middle class (sometimes referred to as C-class).

Globalization

Refers to the process by which goods and services, capital, people, information, and ideas flow across national borders.

Exporting

Producing goods in one country and selling them in another; requires the least financial risk but allows for limited return

Low-priced consumer goods

Products that are often adjusted in price or features to meet the needs of specific markets.

Understanding of Local Market

Provided by local partners in joint ventures

Currency exchange policies

Regulations governing the conversion of one currency to another, impacting pricing and profitability in global markets.

Direct Investment

Requires 100 percent ownership of operations in a foreign country, exposing the firm to significant risks

Investment Level in Direct Investment

Requires the highest level of investment

Trade deficit

Results when a country imports more than it exports.

Military Draft Impact

Russia is experimenting with domestic economic consequences of its military draft, with more than 300,000 draftees into military service and even more fleeing the country to avoid the draft.

Russia's Middle Class

Russia's middle-class, relatively affluent ($29,000 GDP per capita, and well-educated population of 143 million demonstrated strong demand for imported products during the previous decade of Russian economic growth.

EU Sanctions

The European Union, whose member nations typically make up Russia's top consumers of energy products, imposed eight separate packages of sanctions, limiting imports and exports of goods to and from Russia.

Economic buying power

The ability of consumers in a country to purchase goods and services, influenced by income levels and market conditions.

Infrastructure

The basic facilities, services and installations needed for a community or society to function, such as transportation and communication systems, water and power lines, and public institutions such as schools, post offices and prisons.

Complexity of global supply chains

The intricacy of global supply chains involving multiple intermediaries, which can increase costs and final selling prices.

Economic development

The level of economic growth and infrastructure in a country, which influences product adaptation needs.

Real Estate Market Drop

The markets for real estate and leisure activities have steeply dropped.

Market potential

The potential a country has for global marketing, gauged by metrics such as GDP, GNI, and trade balances.

Competition from foreign producers

The potential challenge faced by domestic firms due to imports exceeding exports.

Market entry assessment

The process of evaluating the viability of entering a new market based on various criteria.

Global segmentation, targeting, and positioning (STP)

The process of identifying and targeting specific market segments in global markets, which is more complicated than domestic STP due to cultural nuances and subcultures.

Population growth rate

The rate at which the global population is increasing, which varies significantly between developed and less developed nations.

Exchange control

The regulation of a country's currency exchange rate, the measure of how much one currency is worth in relation to another.

Russia's Economic Relationship

The relationship between the United States and Russia are a little more complicated than for Brazil.

Culture

The shared meanings, beliefs, morals, values, and customs of a group of people.

Cultural nuances

The subtle differences in culture that affect consumer behavior and perceptions in different countries.

Customer loyalty

The tendency of consumers to continue buying the same brand or product due to positive experiences.

Underlying values

The thought processes, beliefs, and assumptions that are less visible but crucial for understanding a culture.

Russia's Economic Reliance

Throughout this period, Russia relied primarily on energy exports to support its economy.

Global Retail Sales Comparison

Total retail sales in China are now of the same magnitude as the United States

Cultural differences

Variations in cultural practices, such as food preferences, language, and religion, that affect marketing strategies.

Metrics for measuring economy health

Various quantitative measures used to assess the economic conditions of a country.

INDIVIDUALISM

perceived obligation to and dependence on groups.

TIME ORIENTATION

short- versus long-term orientation. A country that tends to have a long term orientation values long-term commitments and is willing to accept a longer time horizon for, say the success of a new product introduction.

MASCULINITY

the extent to which dominant values are male oriented. A lower masculinity ranking indicates that men and women are treated equally in all aspects of society; a higher masculinity ranking suggests that men dominate in positions of power.

INDULGENCE

the extent to which society allows for the gratification of fun and enjoyment needs or else suppress and regulates such pursuits.

UNCERTAINLY AVOIDANCE

the extent to which the society relies on orderlines, consistency, structure, and formalized procedures.

Brazil's Recovery

Brazil's government implemented a variety of reforms to boost its economic growth.

Gross domestic product (GDP)

Defined as the market value of the goods and services produced by a country in a year; the most widely used standardized measure of output.

Global Marketing Strategy Components

Determining target markets and developing a marketing mix for competitive advantage

Joint Venture

Formed when a firm pools resources with a local firm, sharing ownership, control, and profits

Impact of Ukraine Invasion

However, the Russian invasion of Ukraine in 2022 dramatically changed Russia's economic situation.

Median Age of India

28.7 years

Franchising

A contractual agreement allowing a franchisee to operate a business using the name and format developed by the franchisor

Geert Hofstede's cultural dimensions

A cultural classification scheme that sheds light on underlying values of cultures.

Trading bloc

A group of countries that have signed a particular trade agreement.

Quota

A maximum of a product that may be brought into a country during a specified time period.

Same Product or Service Strategy

A method of introducing a product outside the home country by selling the same product or service without customization.

Economist Big Mac Index

A novel metric that employs PPP to assess the relative economic buying power among nations, suggesting that exchange rates should adjust to equalize the costs of a basket of goods and services wherever it is bought around the world.

Sociocultural analysis

A set of criteria for assessing a country's market that evaluates cultural factors and social norms.

Infrastructure and technological analysis

A set of criteria for assessing a country's market that examines the physical and technological systems in place.

Governmental actions or inactions

A set of criteria for assessing a country's market that looks at the regulatory environment and government policies.

Target market

A specific group of consumers at which a company aims its products and services.

Visible artifacts

Easy to recognize elements of culture such as behavior, dress, symbols, physical settings, and ceremonies.

Healthy economies

Economies that provide better opportunities for global marketing expansions.

Market-Oriented Economic Development in China

Embraced after 1978, leading to rapid economic gains

Intermediaries

Entities such as wholesalers and exporters that facilitate the distribution of products from manufacturers to consumers.

Confidence in Market Entry

Firms often start with less risky strategies and progress as they gain confidence

Auto Sales Drop in Russia

For example, most leading vehicle manufacturers have left Russia, leading to a 60 percent drop in auto sales.

Russia's WTO Membership

In the 2010s, Russia began to improve trade relations with other countries, even becoming part of the World Trade Organization (WTO) in 2012.

Long-term Economic Threats

In the long term, the combination of these factors seems likely to threaten economic declines in Russia.

Short-term Economic Resilience

In the very short term, though, the Russian economy proved surprisingly resilient to the economic effects of these sanctions.

Components of a Global Marketing Strategy

Includes determining target markets and developing a sustainable marketing mix

Real income

Income adjusted for inflation, which can influence purchasing decisions in different countries.

Developed countries

Nations that are experiencing zero or negative population growth.

Trade surplus

Occurs when a country has a higher level of exports than imports.

Economic analysis

One of the four sets of criteria necessary to assess a country's market, focusing on the health of its economy.

GDP Drop in Russia

Ongoing energy exports to countries like Turkey and wartime investments in arms manufacturing and other military production meant that its GDP dropped by only 3 percent or so over the course of 2022.

Financial Burdens in Joint Ventures

Shared between the foreign entrant and local partner

Russia's Economic Changes

Since the fall of the former Soviet Union, Russia has undergone multiple upturns and downturns in its economy.

Family-owned retail outlets

Small, locally-owned stores where consumers often shop, particularly in less developed countries.

Example of Strategic Alliance

Spotify and Samsung; Samsung devices come with Spotify preinstalled

Tariffs

Taxes imposed on imported goods, which can affect pricing decisions in global markets.

Power distance

Willingness to accept social inequality as natural.

India's Population

With almost 1.4 billion people, or approximately 18 percent of the world's population, together with expanding middle and upper classes, India is one of the world's fastest-growing markets.

Urban Centers in India

Young inhabitants are adopting global attitudes while living in these centers