© 2005 prentice hall1-1 chapter 1 introduction to global marketing

© 2005 Prentice Hall 1-1

Chapter 1 Introduction to

Global Marketing


Global marketplace/Local markets

Brands from one country are available in other countries– E.g. McDonalds, Sony, Nokia, Levis, etc. are available

world overLocal 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


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


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)


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)


Boundaryless Marketing

Goal is to eliminate communication barriers between marketing and other business functional areasProperly implemented it ensures that a market orientation permeates all value creating activities


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.)


Value Chain and Boundaryless Marketing


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 scaleE.g. I-Pod and its components


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

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


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)


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

Global Marketing Strategy


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, seesSimilarities 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, seesSimilarities and

Differences in homeAnd host countries

Polycentric: Each host country Is

Unique, sees differencesIn foreign countries


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


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.


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 worldGeocentrism– World view – focused on standardizing programs but

will adapt if indicated by research– Global / transnational company / a blurring of national

identity– E.g. Toyota


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


Leverage

An advantage by virtue of the company’s experience in several countries– Experience transfers– Scale economies– Resource utilization– Global strategy

© 2005 prentice hall1-1 chapter 1 introduction to global marketing

Documents

value equation value

perceived value

value creationno

global brandse

global opportunities

new markets access

industry positions

core business