Global Marketing Management Introduction to Global Marketing Warren J. Keegan Bodo B. Schlegelmilch

Marketing: A Universal Discipline ‘The management process responsible for identifying, anticipating and satisfying customer requirements profitably.’ (The Chartered Institute of Marketing) Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. (Kotler, Armstrong, Saunders and Wong, 2001: 5) Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. (The American Marketing Association)

Marketing: A Universal Discipline Marketing (1): the process of focusing resources and objectives of an organization on environmental opportunities and needs Marketing (2): a set of concepts, tools, theories, practices, procedures, and experiences Although a universal discipline, marketing practice varies from country to country

The Marketing Concept (1) Concept has chanced dramatically 1950’s: Focus on products 1960’s: Focus on customer orientation Development of marketing mix: product, price, promotion, place (4P’s)

The Marketing Concept (2) 1990’s: Focus on customer in the context of the broader external environment E.g. competition, government policy and regulation Focus on stakeholder value E.g. employees, customers, shareholders, society

The Marketing Concept (3) Today: Two key tasks of marketing Focus on customer and his/her environment Create value for consumers and stakeholder 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

The Three Key Elements of Marketing VALUE DIFFERENTIATION FOCUS

The Three Key Elements of Marketing - Value Goal: create value that is greater than the value created by competitors Strategy: Expand or improve product and/ or service benefits Reduce the price Combine these two elements

The Three Key Elements of Marketing - Differentiation Goal: create competitive advantage through differentiation Advantage can exist in any element of a company’s offer: e.g. product, price, advertising Competitive advantage should be sustainable over extended period of time BMW: Combination of superior production skills and marketing competencies

The Three Key Elements of Marketing - Focus Goal: a concentration of attention and resources Requirement to create customer value at a competitive advantage A viable way for small and medium sized companies to achieve dominant position in world market

Scope and Boundaries of Global Marketing Marketing discipline is universal but markets and customers are quite different Three domains of knowledge relevant to international managers Cross-Cultural Knowledge Country/ Regional Knowledge Cross-Border Transactions Knowledge Need for “Global Localization”: Adjustment of global marketing strategies to local requirements

Importance of Global Marketing Activities in the international arena are of eminent importance to companies in achieving maximum growth potential E.g.: 94% of world market potential for German companies is outside of Germany Trend: A large number of industries will be dominated by a handful of global companies

Management Orientation and Global Marketing (1) Different Management Orientations in the Global Arena – EPRG Framework Polycentric Ethnocentric Regiocentric Geocentric

Management Orientation and Global Marketing (2) Ethnocentric Orientation: Home country is superior compared to the rest of the world. Company personnel see only similarities in market Characteristic for domestic and international companies Marketing opportunities outside the home market are pursued by extending various elements of the marketing mix or ignored some time One of the internal threats to a company

Management Orientation and Global Marketing (3) Polycentric Orientation Characteristic for multinational companies Opposite of ethnocentrism Each company in which a company does business is unique Sees differences in foreign countries Marketing mix is adapted by autonomous country managers

Management Orientation and Global Marketing (4) Regiocentric or Geocentric Orientation: Characteristic for global and transnational companies Managers view regions unique and seek to develop an integrated regional strategy Geocentric – world as a potential market & strive to develop integrated world market strategies Marketing opportunities are pursued by both, extension and adaptation strategies in global markets

Factors Supporting or Inhibiting Global Integration (1) Driving Forces Technology Regional Economic Agreements Market Needs and Wants Transportation and Communication Improvements Product Development Costs Quality World Economic Trends Leverage

Factors Supporting or Inhibiting Global Integration (2) Restraining Forces Management Myopia Ethnocentric Organization Culture National Controls Cost War Market differences