Globalization

Globalization is the process of increasing social, cultural, political, and economic interdependence that has resulted in several changes in business environment.It is basically integration of national economies in to international economy with the help of following:

Trade , FDI, capital flow, spread of technology etc.

International trade system. Political legal environment. Cultural environment. Economic environment.

Factors that influence global market environment

Causes of Globalization

Improved communication. Improved transportation. Free trade agreements. The growth of multinational company

Effects of Globalization

Effects of globalization are classified into two broad Categories:

Global market opportunities . Global market threats.

Global Marketing

Selling a product internationally. It includes the whole process of planning, producing,

placing, and promoting a company’s products in a worldwide market.

Global marketing involves a variety of different products and opportunities.

Marketing activities that are coordinated and integrated across multiple markets.– Integration may includes Standardized products,

Identical Brand names, Uniform packaging and similar advertising messages etc.

When marketing products go globally, companies must recognize that a marketing mix that works in the domestic market may not have the same success in another market. Differences in local competition may require a different pricing strategy etc.

Product Price Placement Promotion

How is a global marketing campaign developed

Conti….

Basically the 4 P's of Marketing, product, price, place and promotion become greater challenges when applied to global marketing.

If company's marketing efforts are constrained or motivated by keeping domestic and international marketing messages the same, the challenge of branding, pricing in international currency, foreign distribution channels and promotional advertising may not translate well or in better way.

Before deciding on specific marketing activities, organizations must better understand their global strategy.

Better Understanding is necessary for companies in order to adopt

globalization Strategy

Conti….

In order to develop a marketing plan and engage in the International planning process, there are some conceptualizations that can be developed by marketers to see if and how global marketing efforts should be made.

1) Global Industry

In order to understand the global industry, marketers should determine the degree of globalization of their industry.  As this diagram displays the four major forces that drive globalization potential of an industry.

This conceptualization is used to understand thenature of global strategy,and explains the dimensions that make up the competitiveindustry structure.

2) Competitive Industry Structure 

3) Competitive Advantage

To better understand the business on a global scale, competitive advantage must be realized in one of two ways as

Cost leadership . Differentiation.

Different marketing constituents

There are some different marketing constituents that need to be considered if one analyzes the extent of the globalization of marketing:

The Consumer. Brands. The community of marketers.

Different Market entry Strategies

Exporting( direct and indirect) Licensing and Franchising Mergers and Acquisition Contract Manufacturing Strategic Alliance Joint venture Direct Investment

Deciding on global Marketing Program

Standardized Marketing Mix. Adapted Marketing Mix.

Market Mix Adaptation In India, McDonald’s serves chicken, fish, andveggie burgers, but no beef. Check out the Maharaja Mac!

Global Product Strategies

Global product strategies are as follows:

Straight Product Extension. Product Adaptation. Product Invention.

Conti….

Global Pricing Strategies Companies face many problems in setting their

international prices.Standard pricing methods such as uniform pricing, standard markup of costs everywhere, or charging what the market will bear ignores cost differentials and local market conditionsGlobal Pricing Challenges

Companies may become guilty of dumping. when a foreign subsidiary charges less than its costs or less than it charges in its home market.

Red Bull Nike McDonalds Coca Cola Dunkin Donuts Star bucks

Example of some companies with brilliant global marketing

Companies such as IBM, Intel, Microsoft, and Philips have started to outsource specialists from various parts of the world, causing job shifts and changes in companies’ structures.

Globalization has caused dramatic changes to business practices around

the world

For the success of every business it is necessary to know about the consumer behavior as consumers are first priority of every business.

Various factors that influence consumer behavior. Access. Buying behavior. Consumption characteristics. Disposal.

Importance of Consumer behavior

Globalization effects the buying behavior of consumers but not every country is affected the same.

Every market has relatively central or relatively peripheral consumption contexts. Because one and the same product can be in one country in the relatively central context but, because of cultural differences, in the other country in relatively peripheral consumption contexts.

Importance of Culture

Different countries have different cultures. So it stands to reason that what is acceptable in one country is not acceptable everywhere. Business norms and behavior vary from country to country.

Companies that understand cultural nuances can use them to advantage when positioning products internationally.

Detroit auto-maker, Chevrolet. They were launching the Chevy Nova in Mexico. They spent millions on marketing the car to disappointing results. The reason was simple: the name.

In Spanish, “no va” means “no go”…hardly the message you want for your car. This cautionary tale sets up the concept that you must know your audience. And this is true if you are talking about Paris, Texas, or Paris, France.

Culture and language may vary from country to country

Does global marketing work

Products that succeed in one culture may fail in another if marketers fail to understand the differences among consumers in each place.

Kellogg, for example, discovered that in Brazil people don't typically eat a big breakfast as they are more likely to eat cereal as a dry snack.

Why go global

To increase sales and raise profitability. Generate economies of scale in production. Insulate seasonal domestic sales by finding new

foreign markets. Create jobs, productivity growth and wealth. Encourage the exchange of views, ideas and

information. Economic Interdependence among different nations

can build improved political and social links.

Why go global (cont.)

Globalization will give you a larger market. Consumers also profit from globalization. Product

become cheapers and you can get new goods more quickly

Ability to leverage good ideas quickly and efficiently Helps to encourage ancillary industries to set up for

cater for the need of global player. Benefits of eMarketing over traditional marketing

Cheap imports from developing nations could lead to unemployment in developed countries where the cost of production is high.

Choosing to specialize in certain products may lead to unemployment in other sectors which are not prioritized

Increased competition for infant industry.

Some Drawbacks of globalization

‘Dumping’ of goods by certain countries at below cost price may harm industries in other countries.

Globalization may lead to more enviromental problems (a company may want to build factories in other countries because of enviromental laws are not strict, exp : China)

Some Drawbacks of globalization(cont.)