1. MKT 3620

2. Name: Surej P John
Office: MSM 3rd floor, Cabin# 01
Website:

4. Mark Allocations 10% 5% 30% 40% 100% Quizzes (2x5%)
Class Participation 5%
Group Project
Group project presentation
Midterm Examination
30%
Comprehensive Final Examination
40%
Total
100%
Surej P John

5. Quiz 1 Announcement Online quiz at SCIT Building 2nd Floor Date Time
Friday 6th January, 2012
Time
Sec 406–
Sec 407–
All students can choose their preferred time (1 hour ) for taking this exam

6. Online resources
Course syllabus, project outline, power points are all available in
Enrollment key: mkt 03
All students are requested to register online to make use of the online resources.
1/ 2010
Surej P John

7. Chapter 1 Introduction to Global Marketing

8. Product/market growth matrix
Introduction
Global versus “regular” marketing
Scope of activities are outside the home-country market
The matrix shows that market development is defined as taking existing products into new markets. Wal-Mart’s expansion into Guatemala and other Central American countries is an example of this strategy.
Diversification is developing new products for new markets. South Korea’s LG Electronics has created new products for the American home appliance market. Innovations such as a $3,000 refrigerator with a built-in flat panel LVD TV have been instrumental in Home Depot’s decision to carry the appliance product line.
Product/market growth matrix

9. Market Penetration Started the first shop in 2004
In 2009, the number of shops reached 41 including 8 University campuses
Surej P John
1/ 2011

10. Market Development
The matrix shows that market development is defined as taking existing products into new markets. Wal-Mart’s expansion into Guatemala and other Central American countries is an example of this strategy.
Diversification is developing new products for new markets. South Korea’s LG Electronics has created new products for the American home appliance market. Innovations such as a $3,000 refrigerator with a built-in flat panel LVD TV have been instrumental in Home Depot’s decision to carry the appliance product line.

11. Product Development
Surej P John
1/ 2011

12. Diversification
Diversification is developing new products for new markets
Surej P John
1/ 2010

13. Global Marketing Value = Benefits/Price
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
Companies that use price as a competitive weapon may use global sourcing to access cheap raw materials or low-wage labor. Companies can seek to improve process efficiencies or gain economies of scale with high production volumes.
Marketers may be able to reduce non-monetary costs by decreasing the time and effort customers expend to learn about or seek out the product.
A market is defined as people and organizations that are both able and willing to buy. A successful product or brand must be of acceptable quality and consistent with buyer behavior, expectations, and preferences. If a company is able to offer a combination of superior product, distribution, promotion benefits and lower price than competitors, it should enjoy a competitive advantage. Japanese automakers made significant gains in the American market in the 1980s by creating a superior value proposition. They offered cars with higher quality and lower prices than those made by American car companies.
Value = Benefits/Price

14. Surej P John
1/ 2010

15. Globalization
Globalization is the inexorable integration of markets, nation-states & technologies to a degree never witnessed before—
in a way that is enabling:
individuals, corporations & nation-states to reach around the world farther, faster, deeper & cheaper than ever before, &
the world to reach into individuals, corporations & nation-states farther, faster, deeper & cheaper than ever before.

16. Competitive Advantage and Global Industries
When a company succeeds in creating more value for customers than its competitors, that company is said to enjoy more competitive advantage.
Global industry
A global industry is one in which competitive advantage can be achieved by integrating and leveraging operations on a world wide OR
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

17. Degree of Industrial Globalization
Surej P John
2/ 2011

18. Competitive Advantage
Surej P John
1/ 2011

19. What it is & What it Isn’t???
Global Marketing:
What it is & What it Isn’t???
Global Marketing Strategy (GMS)
Global market participation
(companies have operations in more than one market)
Marketing mix development
4 P’s: adapt or standardize?
Concentration of marketing activities.
Coordination of marketing activities.
Integration of competitive moves. (Eg. Lenovo)
Because countries and people are different, marketing practices that work in one country will not necessarily work in another. Customer preferences, competitors, channels of distribution, and communication may differ. Global marketers must realize the extent to which plans and programs may be extended or need adaptation. The way a company addresses this task is a reflection of its global marketing strategy (GMS).
Standardization versus adaptation is the extent to which each marketing mix element can be executed in the same or different ways in various country markets.
Concentration of marketing activities is the extent to which marketing mix activities are performed in one or a few country locations.
Coordination of marketing activities refers to the extent to which marketing mix activities are planned and executed interdependently around the globe.
Integration of competitive moves is the extent to which a firm’s competitive marketing tactics are interdependent in different parts of the world.
p. 43-4

21. 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

22. Change in the Slogan of Nike in European market
Surej P John
1/ 2011

23. Standardization versus Adaptation
Arabic
read right to left
The design is basically the same but the name is frequently transliterated into local languages. The Arabic label is read right to left; the Chinese label translates “delicious/happiness.”
Chinese
“delicious/happiness”
The faces of Coca-Cola around the world

24. McDonald’s Global Marketing
Marketing Mix Element Standardization Localized
McAloo Tikka potato burger (India)
Slang ’Macca’s (Australia)
MakDo (Philippines)
McJoy magazine, “Hawaii Surfing Hula” promotion (Japan)
Home delivery (India)
Swiss rail system dining cars
$5.21 (Switzerland)
$1.31(China)
Big Mac
Brand name
Advertising slogan “I’m Loving It”
Free-standing
Big Mac is $3.10 in U.S. and Turkey
Product
Promotion
Place
Price

25. In India, there are no Big Macs because the Hindu people don't eat beef.
However, they have the Maharaja Mac, which is a Big Mac made of lamb or chicken meat. There is also a vegetarian burger, the McAloo Tikki.

26. MANAGEMENT ORIENTATIONS
Management emphasis
Stage one Domestic
Stage two International
Stage three Multinational
Stage four Global
Focus
Domestic
Ethnocentric
Polycentric
Geocentric
Marketing strategy
Extension
Adaption
Structure
International
Worldwide area
Adaption creation matrix/mixed
Management style
Centralized top down
Decentralized bottom up
Integrated
Manufacturing stance
Mainly domestic
Host country
Lowest cost worldwide
Investment policy
Domestic used worldwide
Mainly in each host country
Cross subsidization
Performance evaluation
Domestic market share
Against home country market share
Each host country market share
Worldwide
2/ 2011

27. MANAGEMENT ORIENTATIONS Ethnocentric orientation/ INTERNATIONAL
EPRG FRAMEWORK
Ethnocentric orientation/ INTERNATIONAL
Home country is superior to others
Sees only similarities in other
countries.
Assumes products & practices that
succeed at home will be successful
everywhere .
Leads to a standardized or
extension approach.
Ethnocentric orientation leads to a standardized or extension approach. Foreign operations are typically viewed as being secondary or subordinate to the country in which the company is headquartered. Sometimes valuable managerial knowledge and experience in local markets may go unnoticed. Manufacturing firms may view foreign markets as dumping grounds with little or no marketing research conducted, manufacturing modifications made or attention paid to customer needs and wants.
Example: In Nissan’s early days of exporting to the United States, the company shipped cars for the mild Japanese winters. Executives assumed that when the weather turned cold, Americans would put a blanket over their cars just like Japanese would. Nissan’s spokesperson said, “We tried for a long time to design cars in Japan and shove them down the American consumer’s throat. That didn’t work very well.”
Michael Mondavi, former CEO of the wine company said, “Robert Mondavi was a local winery that thought locally, grew locally, produced locally, and sold globally To be a truly global company, I believe it’s imperative to grow and produce great wines in the world in the best wine-growing regions, regardless of the country or the borders.”
Home country
DO NOT adjust
To Host country!!
p. 52

28. Domestic going International
New true coffee shops at Vientiane, Laos & Shanghai, China

29. MANAGEMENT ORIENTATIONS 2. Polycentric Orientations/
EPRG FRAMEWORK
2. Polycentric Orientations/
MULTINATIONAL
Each country is unique.
Each subsidiary develops its own
unique business & marketing strategies.
Leads to a localized or adaptation approach.
Focus is HOST country
For example, Citicorp used this approach until the mid-1990s when John Reed instilled a geocentric approach. He sought to instill a higher degree of integration among operating units.
James Bailey, Citicorp executive, said, “We were like a medieval state. There was the king and his court and they were in charge, right? No. It was the land barons who were in charge. The king and his court might declare this or that, but the land barons went and did their thing.”
Jack Welch at GE also sought to instill a geocentric approach.
p. 53

30. Multi-National Approach
In Polycentric stage, subsidiaries are formed in each market and each subsidiaries operates independent of each other and formulates its own marketing strategies
Separate product lines are formed in each country and these products are modified to meet local needs ( Adaptation)
Sales force in each country is local nationals
Channels of distribution are those traditionally used by each country.

31. MANAGEMENT ORIENTATIONS EPRG FRAMEWORK
3. Regiocentric orientation
A region is the relevant geographic unit.
Ex: NAFTA (North American Free Trade
Agreement between: Canada, Mexico & U.S.)
Regional airline serving Malaysia and south-east Asian destinations
p. 53

32. MANAGEMENT ORIENTATIONS GLOBAL OR TRANSNATIONAL
EPRG FRAMEWORK
4. GEOCENTRIC ORIENTATIONS/
GLOBAL OR TRANSNATIONAL
Entire world is a potential market.
Strives for integrated global strategies.
Retains an association with 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 &
adaptation elements.
HD serves world
Markets from U.S.
EX: GM now assigns engineering jobs worldwide. A Detroit global council determines $7 billion annual budget allocation for new product development. One goal is to save 40 percent on the cost of radios by using only 50 instead of 270 different ones. Basil Drossos, president of GM Argentina, said, “We are talking about becoming a global corporation as opposed to a multinational company; that implies that the centers of expertise may reside anywhere that best reside.”
Other examples: Harley-Davidson (U.S.), Waterford (Ireland), Gap (U.S.)
p. 53

33. DRIVING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING
Multilateral economic agreements
Converging market needs & the information revolution
Transportation & communication improvements
DRIVING FORCES
Regional agreements: NAFTA, EU expansion and single currency. WTO (1994)
Market needs and wants and IT: There are cultural universals as well as differences. Common elements in human nature provide the opportunity to create and serve global markets. For example, soft drinks companies must recognize that product adaptation is not always necessary and that competitors may be serving global customers. The information revolution that Thomas Friedman calls the democratization of information is one reason for the trend to convergence. CNN and MTV allow people in remote areas to compare their lifestyles to others. Advertising overlapping national boundaries such as in Asia or Europe and the mobility of consumers in these markets has allowed for pan-regional positioning. The Internet is perhaps the strongest force that allows people everywhere to buy and sell.
Transportation and communication: Jets allow around the world travel in less than 48 hours. 1970: 75 million international passengers. 2003: 540 million. Airlines sell one another’s seats thanks to modern technology. International phone calls are inexpensive and there are many other ways to communicate including fax, , video conferencing, wi-fi, and broadband Internet. Transportation costs have fallen. Due to specially designed ships, the cost of shipping autos from Japan to the United States is less than the cost to ship from Detroit to either U.S. coast. Intermodal transportation uses 20- to 40-foot containers that may be transferred from trucks to railroad cars to ships.
Product Development Costs: New pharmaceutical cost in 1976 = $ 76 million; today = $400 million and up to 14 years to get a drug approved. Pharmaceutical companies go global to spread the costs. However, only 7 countries account for 75 percent of sales.
Product development costs
p. 56

34. DRIVING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING
Quality
World economic trends
DRIVING FORCES
Regional agreements: NAFTA, EU expansion and single currency. WTO (1994)
Market needs and wants and IT: There are cultural universals as well as differences. Common elements in human nature provide the opportunity to create and serve global markets. For example, soft drinks companies must recognize that product adaptation is not always necessary and that competitors may be serving global customers. The information revolution that Thomas Friedman calls the democratization of information is one reason for the trend to convergence. CNN and MTV allow people in remote areas to compare their lifestyles to others. Advertising overlapping national boundaries such as in Asia or Europe and the mobility of consumers in these markets has allowed for pan-regional positioning. The Internet is perhaps the strongest force that allows people everywhere to buy and sell.
Transportation and communication: Jets allow around the world travel in less than 48 hours. 1970: 75 million international passengers. 2003: 540 million. Airlines sell one another’s seats thanks to modern technology. International phone calls are inexpensive and there are many other ways to communicate including fax, , video conferencing, wi-fi, and broadband Internet. Transportation costs have fallen. Due to specially designed ships, the cost of shipping autos from Japan to the United States is less than the cost to ship from Detroit to either U.S. coast. Intermodal transportation uses 20- to 40-foot containers that may be transferred from trucks to railroad cars to ships.
Product Development Costs: New pharmaceutical cost in 1976 = $ 76 million; today = $400 million and up to 14 years to get a drug approved. Pharmaceutical companies go global to spread the costs. However, only 7 countries account for 75 percent of sales.
Leverage
p. 59

35. Leverage Scale economies.
The global company can take advantage of its greater manufacturing volume to obtain traditional scale advantages within a single factory.
Also, finished products can be produced by combining components manufactured in scale-efficient plants in different countries.
The larger scale of the global company also creates opportunities to improve corporate staff competence and quality.

36. Leverage Experience transfers.
A global company can leverage its experience in any market in the world.
It can draw on management practices, strategies, products, advertising appeals, or sales or promotional ideas that have been tested in actual markets and apply them in other comparable markets.
For example, Asea Brown Boveri (ABB), a company with 1,300 operating subsidiaries in 140 countries, has considerable experience with a well-tested management model that it transfers across national boundaries. The Zurich-based company knows that a company's headquarters can be run with a lean staff. When ABB acquired a Finnish company, it reduced the headquarters staff from 880 to 25 between 1986 and Headquarters staff at a German unit was reduced from 1,600 to 100 between 1988 and After acquiring Combustion Engineering (a U.S. company producing power plant boilers), ABB knew from experience that the headquarters staff of 800 could be drastically reduced, in spite of the fact that Combustion Engineering had a justification for every one of the headquarters staff positions.
ABB subsidiaries in 140 countries.
Very famous for running the operations with the minimum number of staff
58 Million daily customers from 119 countries

37. Leverage Global strategy.
The global company's greatest single advantage can be its global strategy.

38. Leverage Resource utilization.
A major strength of the global company is its ability to scan the entire world to identify people, money, and raw materials that will enable it to compete most effectively in world markets.
For a global company, it is not problematic if the value of the "home" currency rises or falls dramatically, because for this company there really is no such thing as a home currency.

39. RESTRAINING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING
Management myopia & Organizational culture
Opposition to globalization
Management myopia and organizational culture: Ethnocentric companies will not expand geographically. Managers tend to dictate when they should create strong local teams that they can rely upon for market information. Know-it-all local teams won’t listen to management and all-knowing managers won’t listen to local experts. Successful global companies have learned to integrate global vision and perspective with local market initiative and input.
National controls: Every country tries to protect its home industries and services through tariff and non-tariff controls. Thanks to organizations like GATT, WTO, NAFTA, EU, and other economic agreements, tariffs have been largely removed in high-income countries. Non-tariff barriers to trade include “Buy Local” campaigns, food safety rules, and other bureaucratic obstacles.
Opposition to Globalization: Globophobia is the term used to describe an attitude of hostility toward trade agreements, global brands, or company policies that appear to result in hardship for some individuals or countries while benefiting others. Opponents to globalization include college or university students, NGOs, and labor unions. Some Americans believe that globalization has sent American jobs—both blue- and white-collar—overseas and also depressed wages at home. In developing countries, many believe that free trade agreements benefit the world’s most advanced countries. An unemployed miner in Bolivia said, “Globalization is just another name for submission and domination. We’ve had to live with that here for 500 years and now we want to be our own masters.”
National controls – (to protect local industries)
p. 62

40. 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

41. IT MAY BE ANY OF YOU….. GOOD LUCK 
Group Assignment No. 1
Make a detailed study on the Socio-Economic and Cultural factors of BRIC Nations and submit the assignment as a typewritten report.
All groups has to prepare a short presentation ( not more than 15 mins.) and one of the groups may be asked to do the presentation in the class!!
IT MAY BE ANY OF YOU….. GOOD LUCK 

42. Looking Ahead to Chapter 2
The global economic environment