unit 1 global marketing
TRANSCRIPT
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Unit 1
Global Marketing
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2005 Prentice Hall
Introduction
What is Global
Marketing?
How is it different
from regular
marketing?
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Introduction
Marketing
Process of planningand executing the
conception pricing,promotion anddistribution of ideas,goods and services tocreate exchanges that
satisfy individual andorganization goals
Global Marketing
Focuses resources onglobal market
opportunities andthreats; the maindifference is the scopeof activities becauseglobal marketing
occurs in marketsoutside theorganizations homecountry
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Reasons for Global Marketing
Growth
Access to new markets
Access to resourcesSurvival
Against competitors with lower costs (due to
increased access to resources)
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Competitive Advantage
Success over competition in industry at
value creation
Achieved by integrating and leveragingoperations on a worldwide scale
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Globalization
Globalization is the inexorable integration ofmarkets, nation-states, and technologies to adegree 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 waythat is enabling the world to reach into individuals,
corporations, and nation-states farther, faster,deeper, and cheaper than ever before. Thomas Friedman
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Competitive Advantage,
Globalization and Global Industries
Focus
Concentration and attention on core businessand competence
Nestle is focused: We are food and beverages.We are not running bicycle shops. Even in foodwe are not in all fields. There are certain areaswe 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
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Global Marketing: What it is and
What it isnt
Global marketing does not mean doing
business in all of the 200-plus country
marketsGlobal marketing does mean widening
business horizons to encompass the world
in scanning for opportunity and threat
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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
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The Importance of Global Marketing
For US-based companies, 75% of salespotential is outside the US.
About 90% of Coca-Colas operating income is
generated outside the US.
For Japanese companies, 85% of potential isoutside Japan.
For German and EU companies, 94% ofpotential is outside Germany.
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Forces Affecting Global Integration
and Global Marketing
Driving Forces
Regional economic
agreements
Market needs and wants
Technology
Transportation and
communication
improvements
Product development costs Quality
World economic trends
Leverage
Restraining Forces
Management myopia
Organizational culture
National controls
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Forces Affecting Global Integration
and Global Marketing
GlobalIntegration
and
Global
Marketing
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Country Risk Analysis
Country risk represents the potentiallyadverse impact of a countrys environmenton the MNCs cash flows.
It may represnt the country risk exposure toloss in cross boarder lending caused by theevent in a particular country. These eventsmust be atleast to some extent under the
control of the government of that countryand not in private hands
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Country Risk Analysis
Country risk can be used:
to monitor countries where the MNC is
presently doing business;
as a screening device to avoid conducting
business in countries with excessive risk; and
to improve the analysis used in making long-
term investment or financing decisions.
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Political Risk Factors
Attitude of Consumers in the Host Country
Some consumers may be very loyal to
homemade products.
Attitude of Host Government
The host government may impose special
requirements or taxes, restrict fund transfers,
subsidize local firms, or fail to enforce
copyright laws.
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Political Risk Factors
Blockage of Fund Transfers
Funds that are blocked may not be optimally
used.
Currency Inconvertibility
The MNC parent may need to exchange
earnings for goods.
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War
Internal and external battles, or even the threat
of war, can have devastating effects.
Bureaucracy
Bureaucracy can complicate businesses.
CorruptionCorruption can increase the cost of conducting
business or reduce revenue.
Political Risk Factors
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Financial Risk Factors
Current and Potential State of the Countrys
Economy
A recession can severely reduce demand.Financial distress can also cause the
government to restrict MNC operations.
Indicators of Economic Growth
A countrys economic growth is dependent on
several financial factors - interest rates,
exchange rates, inflation, etc.
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Note that the opinions of different risk
assessors often differ due to subjectivities
in:identifying the relevant political and financial
factors,
determining the relative importance of each
factor, and
predicting the values of factors that cannot be
measured objectively.
Types of Country Risk Assessment
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Techniques ofAssessing Country Risk
Quantitative analysistechniques like
regression analysis can be applied to
historical data to assess the sensitivity of abusiness to various risk factors.
Inspection visitsinvolve traveling to a
country and meeting with government
officials, firm executives, and/or consumers
to clarify uncertainties.
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Market Entry
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Which strategy should be used?
It depends on:
Vision
Attitude toward riskHow much investment capital is available
How much control is desired
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Licensing
A contractual agreement whereby one company
(the licensor) makes an asset available to another
company (the licensee) in exchange for royalties,
license fees, or some other form of compensation Patent
Trade secret
Brand name
Product formulations
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Advantages to Licensing
Provides additional profitability with little
initial investment
Provides method of circumventing tariffs,quotas, and other export barriers
Attractive ROI
Low costs to implement
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Disadvantages to Licensing
Limited participation
Returns may be lost
Lack of controlLicensee may become competitor
Licensee may exploit company resources
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Special Licensing Arrangements
Contract manufacturing Company provides technical specifications to a subcontractor or
local manufacturer
Allows company to specialize in product design while contractors
accept responsibility for manufacturing facilities
Franchising Contract between a parent company-franchisor and a franchisee
that allows the franchisee to operate a business developed by the
franchisor in return for a fee and adherence to franchise-widepolicies
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Franchising Questions
Will local consumers buy your product?
How tough is the local competition?
Does the government respect trademark and
franchiser rights?Can your profits be easily repatriated?
Can you buy all the supplies you need locally?
Is commercial space available and are rents
affordable?Are your local partners financially sound and dothey understand the basics of franchising?
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Investment
Partial or full ownership of operations
outside of home country
Foreign Direct InvestmentForms
Joint ventures
Minority or majority equity stakesOutright acquisition
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Joint Ventures
Entry strategy for a single target country in
which the partners share ownership of a
newly-created business entity
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Joint Ventures
Advantages
Allows for sharing of risk(both financial and
political)
Provides opportunity tolearn new environment
Provides opportunity toachieve synergy bycombining strengths of
partners
May be the only way toenter market given barriersto entry
Disadvantages
Requires more investment
than a licensing agreement
Must share rewards as well
as risks
Requires strong
coordination
Potential for conflict among
partners
Partner may become a
competitor
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Global Strategic Partnerships
Possible terms:
Collaborative agreements
Strategic alliances
Strategic international alliances
Global strategic partnerships
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The Nature of Global Strategic
Partnerships
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The Nature of Global Strategic
Partnerships
Participants remain independent followingformation of the alliance
Participants share benefits of alliance as
well as control over performance ofassigned tasks
Participants make ongoing contributions in
technology, products, and other keystrategic areas
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Alliances with Asian Competitors
Four common problem areas
Each partner had a different dream
Each must contribute to the alliance and each
must depend on the other to a degree that
justifies the alliance
Differences in management philosophy,
expectations and approachesNo corporate memory
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Cooperative Strategies in South
Korea: Chaebol
Composed of dozens of companies,
centered around a bank or holding
company, and dominated by a founding
family
Samsung
LG
Hyundai
Daewoo
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21stCentury Cooperative Strategies:
Targeting the Digital Future
Alliances between companies in several
industries that are undergoing
transformation and convergence
Computers
Communications
Consumer electronics
Entertainment
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I t d ti
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Introduction
The Internet has revolutionized the internationalbusiness arena and global marketing in particular.
Roughly speaking, the Internet is a network of
computers interconnected throughout the worldoperating on a standard protocol that allows datato be transmitted.
Until the early 1990s, the Internet was primarilythe preserve of the military and academicresearchers.
I t d ti
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Introduction
The Web clearly provides a unique distribution andcommunication channel to marketers across theglobe.
The development of new software and othertechnologies during the early 1990s turned theInternet into a commercial medium that hastransformed businesses worldwide.
This chapter looks at the impact of the World WideWeb (WWW) on global marketing activities.
1. The Internet and the Global
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1. The Internet and the GlobalMarketplace
Internet usage worldwide is growing rapidly(see Exhibit 19-1). The internet population inChina ranks second now. By 2010, analystsestimate it will equal the entire US population.
The worldwide internet population surpassed1 billionin 2005- up from only 45 million 10years ago and 420 million in 2000.
1. The Internet and the Global
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1. The Internet and the GlobalMarketplace
1. The Internet and the Global
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1. The Internet and the GlobalMarketplace
Asia-PacificAsia-Pacific region is quickly catching up. Most of the
action in the region is business-to-business.
Internet penetration in Japan and South Korea is higher
now than in the US. With high broadband penetration,online shopping is more attractive in South Korea than inthe rest of the region.
In China, web surfers apparently have a positive attitude
toward online shopping (see Global Perspective 19-1 forfurther information on Chinas internet sector).
1. The Internet and the Global
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Marketplace
Asia-Pacific (cont.)
Several obstacles hinder the spread of e-commerce in Asia which include:
prefer to do business face-to-face instead of viaanonymous channels, relationships and networking,problems of secrecy and family-owned businesses,and knowledge barriers.
2. Structural Barriers to Global
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E-Commerce
Language Barriers:
Much of the content on the Web is in theEnglish language.
A recent study found that business users on theWeb are three times more likely to purchasewhen the Web site speaks their language.
The demand for Web site localization serviceshas boosted a new Web-oriented translationindustry.
2. Structural Barriers to Global
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E-Commerce
Cultural Barriers:Cultural norms and traditions can hinder the
spread of the Internet.
In Confucian-based cultures like most EastAsian nations, business is conducted on apersonal basis.
In many countries, credit card penetration islow.
To become familiar with local markets as wellas local cultures is not possible through theInternet.
2. Structural Barriers to Global
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E-Commerce
Infrastructure:In many emerging market countries, e-
readiness rank very low. E-readiness measuresthe extent of internet connectivity and
infrastructure in the country (see Exhibit 19-2and 19-2B).
Knowledge Barriers:
Setting up an e-business requires certain
knowledge and skills.In emerging markets, scarcity of proper talent
and skills will restrain the development of adigital economy.
6. Internet Ramifications for Global
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Marketing Strategies
Globally Integrated Versus Locally ResponsiveWeb Marketing Strategies (see Exhibit 19-4):
At the core of any global Web marketingstrategy is the basic conflict between localresponsiveness and global integration.
One-to-One Marketing
Product Policy
Global brandingInternet-based new product development (see
Global Perspective 19-4)
6. Internet Ramifications for Global
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Marketing Strategies
Marketing of Services
Features of Services:
Intangibility
Simultaneity
Heterogeneity
Perishability
Global PricingCost transparency
6. Internet Ramifications for Global
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Marketing Strategies
Distribution
Role of Existing Channels
Replacement effect/complementary effect
(see Exhibit 19-5)E-Tailing Landscape
Click-and-retailing model
E-Tailing model depends on three factors:Consumer behavior, cost structure, andgovernment policies
6. Internet Ramifications for Global
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Marketing Strategies
Global Communication and the Web:
By 2009, JupiterResearch forecasts onlineadvertising spending is expected to grow to
$16.1 billionin the US and $3.9 billioninEurope.
Overall, in almost all countries internet
advertising still is a tiny slice of the globaladvertising pie, even in the developedworld (see Exhibit 19-6)
6. Internet Ramifications for Global
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Marketing Strategies
Advantages of internet advertising:
Global reach
Lower cost
Allows precision
Interactivity
Ability to customize
Ability to instantly monitor
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