Chapter 1 Introduction to Global Marketing - PowerPoint

							  Introduction to
Global Marketing




               1
     Marketing: A Universal Discipline

• Marketing (1): the process of focusing the
  resources & objectives of an organization on
  environmental opportunities & needs

• Marketing (2): a set of concepts, tools,
  theories, practices, procedures, & experiences

  – Although marketing is a universal discipline,
    marketing practice varies from country to country
       The Marketing Concept

• Concept has chanced dramatically
• 1950’s:
  – Focus on products
• 1960’s:
  – Focus on customer orientation
  – Development of marketing mix: product, price,
    place, promotion (4Ps)
            The Marketing Concept

• 1990’s:
  – Focus on customer in the context of the broader
    external environment
     • Competition, government policy & regulation

  – Focus on stakeholder value
     • employees, customers, shareholders, society
        The Marketing Concept

• Today:
  – Two key tasks of marketing
     • Focus on customer & his/her environment
     • Create value for consumers & stakeholders
  – Shift towards :
     • Focus on managing strategic partnerships
     • Positioning of firm in value chain to optimize value
       creation
  – Profit as a measure of success, not an end in itself
Good Marketing is No Accident
• What is Global
  Marketing?
• How is it different
  from regular
  marketing?
• Marketing                   • Global Marketing
  – Process of planning         – Focuses resources on
    and executing the             global market
    conception pricing,           opportunities and threats
    promotion and
    distribution of ideas,      – The main difference is
    goods and services            the scope of activities 
    to create exchanges           global marketing occurs
    that satisfy individual       in markets outside the
    and organization              organization’s home
    goals                         country
• Global vs. ―Regular‖ Marketing
  – Scope of activities are outside the home-
    country market
                Key Elements

• Create value for customers by
  improving benefits or reducing price
  – Improve the product
  – Find new distribution channels
  – Create better communications
  – Cut monetary and non-monetary costs and
    prices

             Value=Benefits/Price
                   Key Elements

•   Goal: create competitive advantage through
    differentiation
    – Advantage can exist in any element of a
      company’s offer
    – It can be a real, tangible difference or a perceived
      difference
    – One way to penetrate a new national market is to
      offer a superior product at a lower price
              Competitive Advantage

• Competitive advantage is created through
  differentiation
• Success over competition in industry at value creation
• Achieved by integrating and leveraging operations on
  a worldwide scale

• Competitive advantage is measured relative to rivals
  in a given industry
   – National or global competition
   – Transformation of formerly local or national
     industries into global ones  is part of a broader
     process of ―globalization‖
                     Globalization

“Globalization is the inexorable integration of
  markets, nation-states and technologies to a
  degree never witnessed before—
  in a way that is enabling individuals,
  corporations and nation-states to reach around
  the world farther, faster, deeper and cheaper
  than every before,
  and in a way that is enabling the world to reach
  into individuals, corporations and nation-states
  farther, faster, deeper and cheaper than ever
  before.”
                                                   1-13
                                Thomas Friedman
                  Global Industries

• An industry is global to the extent that a company’s
  industry position in one country is interdependent
  with its industry position in another country
• Indicators of globalization:
   – Ratio of cross-border trade to total worldwide
     production
   – Ratio of cross-border investment to total capital
     investment
   – Proportion of industry revenue generated by
     companies that compete in key world regions
The Fortune Global 500
  Consumer/Industrial Markets
Product/Service   Market Size (Billions)
Cigarettes               $295
Luxury Goods              230
Cosmetics                 200
Personal Computers        175
Bottled Water             100
Container Shipping        150
Construction Equip.        90
Crop Seeds                 30
CRM Services                6
            Key Elements – Focus


•   Goal: a concentration of attention on core
    business and competence
•   Requirement to create customer value at a
    competitive advantage
•   A viable way for small & medium sized
    companies to achieve dominant position in
    world market
•   A clear focus on customer needs & wants
       Competitive Advantage,
  Globalization, and Global Industries

 ―Nestle is focused: We are food and
beverages. We are not running bicycle shops.
Even in food we are not in all fields. There are
certain areas we do not touch…We have no
soft drinks because I have said we will either
buy Coca-Cola or we leave it alone. This is
focus.”

                                   Helmut Maucher,
                        former chairman of Nestlé SA
     Global Marketing: What It Is
          and What It Isn’t
• The discipline of marketing  universal
• Marketing practices  vary from country to
  country
• An important task in global marketing:
  – learning to recognize the extent to which
    marketing plans and programs can be extended
    worldwide,
  – the extent to which they must be adapted
    (global localization)
      Global Marketing: What It Is
           and What It Isn’t

• The way a company deals with this task 
  reflection of its global marketing strategy
  (GMS)

• Strategy development comes down to 2 main
  issues similar to single country marketing
  – Choosing a target market
  – Developing a marketing mix
         Global Marketing: What It Is
              and What It Isn’t
    Single Country             Global Marketing
   Marketing Strategy               Strategy
• Target Market Strategy   • Global Market Participation
                           • Marketing Mix Development
• Marketing Mix
                              – 4 P’s: Adapt or Standardize?
   –   Product
                           • Concentration of Marketing
   –   Price                 Activities
   –   Promotion           • Coordination of Marketing
   –   Place                 Activities
                           • Integration of Competitive
                             Moves
           Standardization versus
                Adaptation
• Globalization (Standardization)
  – Developing standardized products marketed
    worldwide with a standardized marketing mix
  – Essence of mass marketing
• Global localization (Adaptation)
  – Mixing standardization and customization in a way
    that minimizes costs while maximizing satisfaction
  – Essence of segmentation
  – Think globally, act locally
Standardization versus Adaptation



  Arabic
  Read right to left




Chinese
―delicious/happiness‖




                       The Faces of Coca-Cola Around the World
             McDonald’s Global Marketing Strategy

Marketing Mix Element   Standardization         Localized
   Product              Big Mac               McAloo Tikka potato burger
                                              (India)
   Promotion            Brand name            Slang Macca’s (Australia)
                                              MakDo (Philippines)
                        Advertising Slogan    McJoy magazine, “Hawaii
                        “I’m Loving It”       Surfing Hula” promotion
                                              (Japan)
   Place
                        Free-standing         Home delivery (India)
                                              Swiss rail system dining cars
   Price
                        Big Mac is $3.10 in   $5.21 (Switzerland)
                        U.S. and Turkey
                                              $1.31(China)
              The Importance of
                Going Global
• For U.S. companies, 75% of total world
  market for goods and services is outside the
  country
  – Coca-Cola earns 75% of operating income and 2/3
    of profit outside of North America
• For Japanese companies, 85% of world
  market is outside the country
• 94% of market potential is outside of
  Germany for its companies
     Management Orientations


                                   Polycentric:
   Ethnocentric:              Each host country is
  Home country is            unique, sees differences
    superior, sees             in foreign countries
similarities in foreign
      countries

      Regiocentric:
                                   Geocentric:
  Sees similarities and
                                 World view, sees
  differences in a world
                                 similarities and
region; is ethnocentric or
                               differences in home
polycentric in its view of
                                and host countries
   the rest of the world
          Management Orientations

• Ethnocentric Orientation
  – Home country is superior to others; sees only
    similarities in other countries
  – Assumes products and practices that succeed
    at home will be successful everywhere
  – Opportunities outside the home market are
    pursued by extending various elements of the
    marketing mix
  – Leads to a standardized or extension approach
  – Characteristic of domestic & international
    companies
               Strategic Orientation


Ethnocentric or Domestic Marketing Extension
Concept:
Home country marketing practices will succeed elsewhere
without adaptation; however, international marketing is
viewed as secondary to domestic operations
         Management Orientations

• Polycentric Orientation
  – Each country is unique
  – Each subsidiary develops its own unique
    business and marketing strategies
  – Often referred to as characteristic of
    multinational companies
  – Leads to a localized or adaptation approach
    that assumes products must be adapted to
    local market conditions
               Strategic Orientation


Polycentric or Multi-Domestic Marketing Concept:
Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally
            Management Orientations

• Regiocentric Orientation
  – A region is the relevant geographic unit
     • Ex: The NAFTA or European Union market
  – Some companies serve markets throughout
    the world but on a regional basis
     • Ex: General Motors had
      four regions for decades



                                                  1-31
                                 European Union
         Management Orientations

• Geocentric Orientation
  – Entire world is a potential market
  – Strives for integrated global strategies
  – Also known as a global or transnational company
  – Retains an association with the headquarters
    country
  – Pursues serving world markets from a single
    country or sources globally to focus on select
    country markets
  – Leads to a combination of extension and
      adaptation elements
                 Strategic Orientation

Regiocentric:
Sees the world as one market and develops a standardized
marketing strategy for the entire region in the world

Geocentric:
Regiocentric and Geocentric are synonymous with a Global
Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world
         The Key is to Develop a Global Awareness

To be globally aware is to have:

1. Tolerance of Cultural Differences, and




2. Knowledge of:
   (a) Culture, (b) History, (c) World Market Potential,
   (d) Global Economic, Social and Political Trends
         Driving Forces Affecting Global
        Integration and Global Marketing


• Multilateral trade
  agreements
• Converging market needs
  and wants and the information
  revolution
• Transportation and communication
  improvements
• Product development costs
 Driving Forces Affecting Global
Integration and Global Marketing

        • Quality
          – R&D as a percent of sales
        • World economic trends
          – 2008 global crisis
          – Growing middle class in
            China, India, Brazil, etc.
          – Rapid growth in China pre-
            2008
          – Movement to free markets
            worldwide
       Driving Forces Affecting Global
      Integration and Global Marketing

• Leverage
  – Experience transfers
  – Scale economies
  – Resource utilization
  – Global strategy
      Restraining Forces Affecting Global
       Integration and Global Marketing

•   Management myopia
•   Organizational culture
•   National controls
•   Opposition to globalization