Introduction What is Global Marketing? How is it different from regular marketing?

Introduction Marketing Global 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 because global marketing occurs in markets outside the organization’s home country

Reasons for Global Marketing Growth Access to new markets Access to resources Survival Against competitors with lower costs (due to increased access to resources) Other Economies of scale Transfer of experience Uniform global image

Invented Here, Made Elsewhere U.S. Invented Technology 9 0% Phonographs 1% 9 0% Color TVs 1 0% 4 0% 1 9 7 0 Audiotape Recorders 0% N O W 1 0% Videotape Recorders 1% 9 9% Machine Tools 3 5% Telephones 9 9% 2 5% Semiconductors 8 9% 6 4% Computers 9 8% 7 4% 20 40 60 80 100

Overview of Marketing One of the functional areas of a business that is distinct from finance and operations Primary tools in marketing are product, price, place, and promotion Marketing is an activity that comprises the firm’s value chain Current trend is to involve marketers in all value-related decisions – called boundaryless marketing The authors of the text expect that the student has had a principles of marketing class and is familiar with the basic concepts of marketing. In this slide we are providing a rough overview of the discipline of marketing. The value chain will be expanded in the next few slides.

The International Marketing Task 7 Foreign environment (uncontrollable) 1 Political/legal forces Economic forces Domestic environment (uncontrollable) 2 7 Competitive structure Political/ legal forces (controllable) Competitive Forces Cultural forces Price Product Environmental uncontrollables country market A 3 Channels of distribution Promotion Environmental uncontrollables country market B 6 Level of Technology Geography and Infrastructure Economic climate Environmental uncontrollables country market C 4 5 Structure of distribution

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 This shift in marketing has created organizations that are more customer focused than in past decades. This new focus could do away with a conflict that happens in corporations today which is highlighted in the picture. One department thinks it has a great idea but the marketing department knows it is a bad idea. Because the marketing department was not involved with the decision the company has invested a great deal of resources pursuing an idea that cannot be implemented.

Goal of Marketing Surpass the competition at the task of creating perceived value for customers The Guide line is the value equation – Value = Benefits/Price (Money, Time, Effort, Etc.) Companies use the marketing mix to create value for customers. As a general rule, value, as perceived by the customer, can be increased in two basic ways. Markets can offer customers an improved bundle of benefits or lower prices (or both!). Marketers may strive to improve the product itself, to design new channels of distribution, to create better communications strategies, or a combination of all three. Marketers may also seek to increase value by finding ways to cut costs and prices. Non-monetary costs are also a factor, and marketers may be able to decrease the time and effort that customers must expend to learn about or seek out the product. If a company is able to offer a combination of superior product, distribution, or promotion benefits and lower prices than the competition, it enjoys an extremely advantageous position. The next slide illustrates the value chain.

Value Chain and Boundaryless Marketing This slide illustrates how all employees, at all levels, and in all departments have the opportunity to be involved in marketing.

Competitive Advantage Success over competition in industry at value creation Achieved by integrating and leveraging operations on a worldwide scale

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 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

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 Achieving competitive advantage in a global industry requires executives and managers to maintain a well-defined strategic focus.

Global Marketing: What it is and What it isn’t Strategy development comes down to two main issues similar to single country marketing Target market Marketing Mix The discipline of marketing is universal. It is natural, however, that marketing practices will vary from country to country, for the simple reason that the countries and peoples of the world are different. These differences mean that a marketing approach that has proven successful in one country will not necessarily succeed in another country. Customer preferences, competitors, channels of distribution, and communication media may differ. An important task in global marketing is learning to recognize the extent to which marketing plans and programs can be extended worldwide, as well as the extent to which they must be adapted.

Global Marketing: What it is and What it isn’t This slide highlights the differences between marketing in a single-country and global marketing. The table and notes are from the text. Global market participation is the extent to which a company has operations in major world markets. Standardization versus adaptation is the extent to which each marketing mix element can be standardized (i.e., executed the same way) or adapted (i.e., executed in different ways) in various country markets. GMS has three additional dimensions that pertain to marketing management. First, concentration of marketing activities is the extent to which activities related to the marketing mix (e.g., promotional campaigns or pricing decisions) are performed in one or a few country locations. Coordination of marketing activities refers to the extent to which marketing activities related to the marketing mix are planned and executed interdependently around the globe. Finally, integration of competitive moves is the extent to which a firm’s competitive marketing tactics in different parts of the world are interdependent. The GMS should be designed to enhance the firm’s performance on a worldwide basis.

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

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 versus Adaptation Coca-Cola’s example of global branding.

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.

Management Orientations Ethnocentric: Home country is Superior, sees Similarities in foreign Countries Polycentric: Each host country Is Unique, sees differences In foreign countries Ethnocentrism is sometimes associated with attitudes of national arrogance or assumptions of national superiority. Company personnel with an ethnocentric orientation see only similarities in markets, and assume that products and practices that succeed in the home country will be successful anywhere. The term polycentric describes management’s belief or assumption that each country in which a company does business is unique. This assumption lays the groundwork for each subsidiary to develop its own unique business and marketing strategies in order to succeed; the term multinational company is often used to describe such a structure. In a company with a regiocentric orientation, a region becomes the relevant geographic unit; management’s goal is to develop an integrated regional strategy. A company with a geocentric orientation views the entire world as a potential market and strives to develop integrated world market strategies. 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

Globalization Drivers