Chapter 1 Introduction to Global Marketing

1. Chapter 1 Introduction to Global Marketing

2. Global marketplace/Local markets • Brands from one country are available in other countries • E.g. McDonalds, Sony, Nokia, Levis, etc. are available world over • Local brands compete with global brands • E.g. McDonalds & Jollibee in Philippines; Sony and Kenstar in India; Swatch and Titan in India; Kiki and Vogue Girl in Japan, etc. • Products are results of a value chain that encompasses several countries. • E.g. automobiles, A-380

3. Global marketing vs. traditional marketing • Mind-set – evaluates global opportunities and threats on a continuous basis • Scope of activities – important activities conducted outside the home country • Seek markets in other countries • Standardization vs. adaptation decisions

4. Reasons for Global Marketing • Growth Imperatives • Home market growth rates are relatively flat • Access to new markets • Access to resources • Survival • Against competitors from abroad with lower costs (due to access to cheaper resources)

5. Overview of Marketing • A distinct functional area • The 4 P’s: product, price, place, and promotion • An activity in the firm’s value chain • Boundaryless marketing • Market orientation (customer orientation, competitor orientation & inter-functional coordination)

6. Boundaryless Marketing • Goal is to eliminate communication barriers between marketing and other business functional areas • Properly implemented it ensures that a market orientation permeates all value creating activities

7. Goal of Marketing • Surpass the competition at the task of creating perceived value for customers • The Guide line is the value equation – Value = Benefits/Costs (Money, Time, Effort, Etc.)

8. Value Chain and Boundaryless Marketing

9. Competitive Advantage • Success over competition in industry at value creation • No longer can this be achieved at a local, regional or national scale • Achieved by integrating and leveraging operations on a worldwide scale • E.g. I-Pod and its components

10. 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

11. Global Industries • A global organization – Position in one country is interdependent with industry positions in other countries • 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

12. Competitive Advantage, Globalization and Global Industries • Focus • Concentration and attention on core business and competence 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 • Change in focus may be required as the business environment changes (e.g. IBM)

13. Global Marketing: What it is and What it isn’t • Global marketing does not mean doing business in all of the 200-plus country markets • Global marketing does mean widening business horizons to encompass the world in scanning for opportunity and threat

14. 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 • Global Marketing Strategy

15. The Importance of Global Marketing • For US-based companies, 75% of sales potential is outside the US. • About 90% of Coca-Cola’s operating income is generated outside the US. • For Japanese companies, 85% of potential is outside Japan. • For German and EU companies, 94% of potential is outside Germany.

16. Management Orientations Ethnocentric: Home country is Superior, sees Similarities in foreign Countries Polycentric: Each host country Is Unique, sees differences 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, sees Similarities and Differences in home And host countries

17. The EPRG framework • Ethnocentrism • Associated with national arrogance & home country superiority • Assumes what succeeds in the home country will also succeed in other countries • Domestic and international companies • Standardized approach to marketing • Foreign markets are secondary to the domestic market • E.g. Nissan in 60s, Coke in the late 80s/early 90s

18. The EPRG framework • Polycentrism • Opposite of ethnocentrism – each country market is unique • Highly localized / adapted approach to marketing • Multinational companies – Local “kingdoms” • E.g. Citicorp in the 90s.

19. The EPRG framework • Regiocentrism • Treat a world region as one homogeneous market (e.g. NAFTA region; the EU, etc.) • Localization / adaptation for the region; ethnocentric or polycentric view of the rest of the world • Geocentrism • World view – focused on standardizing programs but will adapt if indicated by research • Global / transnational company / a blurring of national identity • E.g. Toyota

20. Driving Forces Regional economic agreements Converging market needs and wants Media & Internet Transportation and communication improvements Product development costs World economic trends Leverage Restraining Forces Management myopia Organizational culture National controls Nationalism – anti-globalization protests Forces Affecting Global Integration and Global Marketing

21. Leverage • An advantage by virtue of the company’s experience in several countries • Experience transfers • Scale economies • Resource utilization • Global strategy