1. © 2005 Prentice Hall1-1 Chapter 1 Introduction to Global Marketing

2. © 2005 Prentice Hall1-2 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. © 2005 Prentice Hall1-3 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. © 2005 Prentice Hall1-4 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. © 2005 Prentice Hall1-5 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. © 2005 Prentice Hall1-6 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. © 2005 Prentice Hall1-7 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. © 2005 Prentice Hall1-8 Value Chain and Boundaryless Marketing

9. © 2005 Prentice Hall1-9 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. © 2005 Prentice Hall1-10 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. © 2005 Prentice Hall1-11 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. © 2005 Prentice Hall1-12 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. © 2005 Prentice Hall1-13 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. © 2005 Prentice Hall1-14 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. © 2005 Prentice Hall1-15 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. © 2005 Prentice Hall1-16 Management Orientations Ethnocentric: Home country is Superior, sees Similarities 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 Polycentric: Each host country Is Unique, sees differences In foreign countries

17. © 2005 Prentice Hall1-17 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. © 2005 Prentice Hall1-18 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. © 2005 Prentice Hall1-19 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. © 2005 Prentice Hall1-20 Forces Affecting Global Integration and Global Marketing 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

21. © 2005 Prentice Hall1-21 Leverage An advantage by virtue of the company’s experience in several countries –Experience transfers –Scale economies –Resource utilization –Global strategy