introduction to global marketing. marketing: a universal discipline marketing (1) : the process of...
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Introduction to Global Marketing
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...a new Era???
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
What is Global Marketing?
How is it different from regular marketing?
Introduction
Marketing Process of planning
and executing the conception pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organization goals
Global Marketing Focuses resources on
global market opportunities and threats
The main difference is the scope of activities ğ global marketing occurs in markets outside the organization’s home country
Reasons for Global Marketing
Survival Against competitors with lower costs
(due to increased access to resources)
Growth Access to new markets Access to resources
Global vs. “Regular” Marketingscope of activities are outside the home-country market
Key Elements: Customer Value
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: Competitive Advantage
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
Success over competition in industry at value creation Competitive advantage is created through
differentiation 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 ğ 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 ever 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.”
Thomas Friedman
Global Industries A global industry ğ is one in which competitive
advantage can be achieved by integrating and leveraging operations on a worldwide scale (M.Porter)
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
Degree of Industry Globalization
Source: Farrell (2004), “Assesing Your Company’s Global Potential”, HBR, 82, 12.
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
Nestlé 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 ğ universal Marketing practices ğ 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 ğ 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
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 vs. AdaptationThe Faces of Coca-Cola around the World
Arabic read right to left
Chinese: “delicious/ happiness”
The Importance of Going Global
For U.S. companies, 70% of world market potential for goods and services is outside the country Coca-Cola earns 75% of operating income and
two-thirds of profit outside of North America For Japanese companies, 90% of market
potential is outside the country 94% of market potential is outside of
Germany for its companies
Global Auto Industry
Thousands of auto companies scattered around the globe in the early 20th century
More than 500 of those producers were in the United States
Today fewer than 20 major companies remain worldwide
Toyota is the world’s most valuable car company and is eighth largest in revenue globally
Management Orientations
How the company will respond to global marketing opportunities ğ will depend on management’s assumptions & beliefs about the nature of the world
The world view of a company ğ by EPRG Framework Generally, 4 distinctive approaches dominating
strategic thinking in international marketing
Management Orientations -EPRG Framework-
Ethnocentric:Home country is
superior, seessimilarities in foreign
countries
Regiocentric:Sees similarities and differences in a world
region; is ethnocentric or polycentric in its view of
the rest of the world
Geocentric:World view, seessimilarities and
differences in homeand host countries
Polycentric: Each host country is
unique, sees differencesin foreign countries
Geocentric:World view, seessimilarities and
differences in homeand host countries
Management Orientations
Ethnocentric Orientation Characteristic of
domestic & international companies
Opportunities outside the home market are pursued by extending various elements of the marketing mix
Ethnocentric:Home country is
superior, seessimilarities in foreign
countries
Strategic Orientation
1. Ethnocentric or Domestic Marketing Extension Concept:
Home country marketing practices will succeed elsewherewithout adaptation; however, international marketing isviewed as secondary to domestic operations
Management Orientations
Polycentric Orientation Characteristic of
multinational companies
Marketing mix is adapted by autonomous country managers
Polycentric: Each host country is
unique, sees differences
in foreign countries
Strategic Orientation
2. Polycentric or Multi-Domestic Marketing Concept:
Opposite of ethnocentrism Management of these multinational firms place importanceon international operations as a source for profitsManagement believes that each country is unique andallows each to develop own marketing strategies locally
Management Orientations
Regiocentric or Geocentric Orientation
Marketing opportunities are pursued by both extension & adaptation strategies in global markets
Characteristic of global & transnational companies
Regiocentric:Sees similarities and differences in a world
region; is ethnocentric or polycentric in its view of
the rest of the world
Geocentric:World view, seessimilarities and
differences in homeand host countries
Strategic Orientation
3. Regiocentric:
Sees the world as one market and develops a standardizedmarketing strategy for the entire world
4. Geocentric:
Regiocentric and Geocentric are synonymous with a “GlobalMarketing Orientation” where a uniform, standardizedmarketing strategy is used for several countries, countries ina region, or the entire world
Management Orientations
In geocentric orientation:
Entire world is a potential market Strives for integrated global strategies 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
Forces Affecting Global Integration and Global Marketing
GlobalIntegration
andGlobal
Marketing
Forces Affecting Global Integration and Global Marketing
Driving Forces Regional economic
agreements Market needs and wants Technology Transportation and
communication improvements
Product development costs
Quality World economic trends Leverage
Restraining Forces Management
myopia Organizational
culture National controls
Forces Affecting Global Integration and Global Marketing
Driving Forces Regional economic
agreements Market needs and wants Technology Transportation and
communication improvements
Product development costs
Quality World economic trends Leverage
Restraining Forces Management
myopia Organizational
culture National controls Opposition to
globalization
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