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