Introduction to Global Marketing

Global Marketing Chapter 1

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Introduction
Global vs. Regular Marketing
Scope of activities are outside the homecountry market

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Global Marketing
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
Value=Benefits/Price
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Globalization
Globalization is the inexorable integration of markets, nation-states and technologies to a degree never witnessed beforein a way that is enabling individuals, corporations and nationstates to reach around the world farther, faster, deeper and cheaper than every 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
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Global Industries
An industry is global to the extent that a companys industry position in one country is interdependent with its industry position in another country Indicators of globalization: Ratio of cross-border trade to total worldwide production Ratio of cross-border investment to total capital investment http://www.youtube.com/watch?v=x9PcuZSUxn k (Lets see how Coke has achieved this) http://media.pearsoncmg.com/ph/streaming/bp/ 2013/mktg/MKTG2013_Movies_Global_Full.html
(Lets see how the movie industry has achieved this)
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Global Marketing:
What It Is and What It Isnt
Single Country Marketing Strategy
Target Market Strategy Marketing Mix
Product Price Promotion Place

Global Marketing Strategy

Global Market Participation Marketing Mix Development
4 Ps: Adapt or Standardize?

Concentration & Coordination of Marketing Activities Integration of Competitive Moves

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Standardization vs 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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Standarization versus Adaptation

Arabic Read right to left

Chinese delicious/happiness

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The Faces of Coca-Cola Around the World

McDonalds Global Marketing

Marketing Mix Element Product Promotion Standardization Big Mac Brand name Localized McAloo Tikka potato burger (India) Slang Maccas (Australia) MakDo (Philippines) Advertising Slogan Im Loving It Place Free-standing McJoy magazine, Hawaii Surfing Hula promotion (Japan) Home delivery (India)

Swiss rail system dining cars

Price Big Mac is $3+ in U.S. and Canada $5+ (Switzerland or Germany) $1+ (China)
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The Importance of Going Global

For U.S. companies, 75% of total world market for goods and services is outside the country
Coca-Cola earns 75% of operating income and 2/3 of profit outside of North America

For Japanese companies, 85% of world market is outside the country 94% of market potential is outside of Germany for its companies
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The Fortune Global 500

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Consumer/Industrial Markets
Product/Service Market (approx) ($Bs)

Cigarettes Luxury Goods Cosmetics Personal Computers Bottled Water Container Shipping Construction Equip. Crop Seeds
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295 230 200 175 100 150 90 30

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Management Orientations
Ethnocentric Orientation
Home country is superior to others Sees only similarities in other countries Assumes products and practices that succeed at home will be successful everywhere Leads to a standardized or extension

approach

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Management Orientations
Polycentric Orientation
Each country is unique Each subsidiary develops its own unique business and marketing strategies Often referred to as multinational Leads to a localized or adaptation approach that assumes products must be adapted to local market conditions
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Management Orientations
Regiocentric Orientation
A region is the relevant geographic unit
Ex: The NAFTA or European Union market

Some companies serve markets throughout the world but on a regional basis
Ex: General Motors had four regions for decades

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European Union

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Management Orientations
Geocentric Orientation
Entire world is a potential market Strives for integrated global strategies Also known as a global or transnational company

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Driving Forces Affecting Global Integration and Global Marketing

Multilateral trade agreements Converging market needs and wants and the information revolution Transportation and communication improvements Product development costs
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Driving Forces Affecting Global Integration and Global Marketing

Quality World economic & political trends
R&D as a percent of sales

2008 global crisis Growing middle class in China, India, Brazil, etc. Rapid growth in China pre-2008 Movement to free markets worldwide Continuing slow growth & financial turmoil

http://www.youtube.com/watch?v=8jI8X KJI5rU (this Globalization has witnessed new entrants not just the traditional powers)
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Driving Forces Affecting Global Integration and Global Marketing

Leverage
Experience transfers Scale economies Resource utilization Global strategy

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Restraining Forces Affecting Global Integration & Global Marketing

Management myopia Organizational culture National controls

Opposition to globalization
http://www.youtube.com/watch?v=SHyIW-vUhO8 (what are the pros and cons of Globalization)

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Lets do a review of concepts:

What are the basic goals or marketing? Are these goals relevant to global marketing? What is meant by global localization? Is Coca-Cola a global product? Explain. Identify and briefly describe some of the forces that have resulted in increased global integration and the growing importance of global marketing. Lets debate the PROS and CONS of globalization.
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Case from Chapter 1

McDonalds: (1) Identify the key elements in McDonalds global strategy (GMS). In particular, how does McDonalds approach the issue of standardization? (2) Do you think government officials in developing countries such as Russia, China and India welcome McDs? Why or why not? What about consumers? Why or why not?
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Looking Ahead to Next Class

Prepare to debate the PROS and CONS of Globalization Read Chapters 1 & 3 Overview of Group Activities for Semester discussed.

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