Global Marketing Management Chapter 1 Introduction to Global Marketing Warren J. Keegan

Overview Marketing: A Universal Discipline The Three Principles of Marketing Global Marketing:What It Is & What It Is Not Importance of Global Marketing Management Orientation & Global Marketing Driving and Restraining Forces Affecting Global Integration & Global Marketing Summary

Learning Objectives Understand how the world economy developed over the past decades Know the impact of globalization on the marketing discipline Learn about the interdependencies between management orientation & marketing performance Understand the factors supporting or inhibiting international marketing activities

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

The Marketing Concept (2) 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 (3) Today: Two key tasks of marketing Focus on customer & his/her environment Create value for consumers & 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 Principles of Marketing CUSTOMER VALUE DIFFERENTIATION FOCUS

Key Elements of Marketing – 1. Customer Value Goal: create customer 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

Elements of Marketing – Customer Value V = B / P V = Value B = Perceived Benefits – Perceived Costs P = Price

Key Elements of Marketing – 2. Differentiation Goal: create competitive advantage through differentiation Advantage can exist in any element of a company’s offer One way to penetrate a new national market is to offer a superior product at a lower price.

Key Elements of Marketing – 3. Focus Goal: a concentration of attention & resources 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

Global Marketing Marketing discipline is universal but markets & customers are quite different 3 domains of knowledge Cross-Cultural Knowledge Country/ Regional Knowledge Cross-Border Transactions Knowledge Need for “Global Localization”: Adjustment of global marketing strategies to local requirements

Examples of Global Marketing Product Design Canon/photocopier/McDonalds/Toyota/Ford Brand Name Marlboro/Coke/Pepsi/Mercedes/Caterpillar Product Positioning Colgate toothpaste/Unilever fabric softener Packaging Gillette razors Advertising Strategy Coca-cola/British Airways/Benetton Sales Promotion IBM Distribution Benetton/United Distillers Customer Service American Express/Hertz

Importance of Global Marketing International arena is of great importance to companies maximizing growth potential 75% of market potential is outside the US 94% of market potential for German companies is outside of Germany 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 & Global Marketing (2) Ethnocentric Orientation: Characteristic of domestic & international companies Opportunities outside the home market are pursued by extending various elements of the marketing mix Polycentric Orientation Characteristic of multinational companies Marketing mix is adapted by autonomous country managers

Management Orientation & Global Marketing (3) Regiocentric or Geocentric Orientation: Characteristic of global & transnational companies Marketing opportunities are pursued by both extension & adaptation strategies in global markets

Driving Forces Affecting Global Marketing Technology Regional Economic Agreements Market Needs & Wants Transportation & Communication Improvements Product Development Costs Quality World Economic Trends Leverage The Global/ Transnational Corporation

Restraining Forces Affecting Global Marketing Management Myopia & Organizational Culture National Controls & Barriers

Summary Global marketing is the process of focusing resources on global marketing opportunities Goal, to create customer value & competitive advantage by maintaining focus Three classifications of management orientation: ethnocentric, polycentric, regiocentric, geocentric Global marketing importance is shaped by a variety of driving & restraining forces