Dr.

Karim Kobeissi
Islamic University of
Lebanon - 2014

Chapter 7: Global Marketing

Globalization - Definition
Globalization is the unstoppable integration of markets
(e.g., EU), nation-states, and technologies (e.g., Microchips) to a degree never witnessed before - in a way
that is enabling corporations and individuals 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 corporations, and individuals
farther, faster, deeper, and cheaper than ever before.

Global versus Regular Marketing

Scope of activities are outside the home-country market

Product/Market Growth Matrix

The matrix shows that Market Development is

defined as taking existing products into new markets.
Wal-Mart's expansion into Guatemala and other Central
American countries is an example of this strategy.

Diversification is developing new products for new

markets. South Koreas LG Electronics has created new
products for the American home appliance market.
Innovations such as a $3,000 refrigerator with a built-in
flat panel LVD TV have been instrumental in Home

Walmart in Guatemala - Central American

Country

Global Marketing Definition

Global Marketing is the process of

conceptualizing and then conveying

a final good or service worldwide
with

the

hopes

international markets.

of

reaching

Reasons for Global Marketing

Growth
Access to new markets

Survival
Against competitors with lower costs (due to
increased access to resources).

Create

competitive

advantage

by

integrating and controlling operations on

a worldwide scale.

Reasons for Global Marketing

Create

value

for

customers

by

improving

benefits or reducing
Value price:
=

Benefits/Price
Improve the
product (e.g., global research)
Find new distribution channels
Create better communications
Cut monetary and non-monetary costs (e.g.,
by decreasing the time and effort customers
expend to learn about or seek out the
product).

Gillette Blades and Razors Factory in Poland

Global Industries
An industry (e.g., food, aviation, car, energy) is global to the
extent that a companys (e.g., Nestle, Airbus, BMW) industry
position in one country (e.g., China) is interdependent with its
industry position in another country (e.g., USA).
Indicators of globalization:
Ratio of cross-border trade to total worldwide production
Ratio of cross-border investment to total national investment
Proportion of industry revenue generated by companies that
compete in key world regions.

Based in Atlanta, Georgia,

Southern Company is the
largest

producer

of

electricity in the United

States. In response to the
globalization of the power
industry,
Energy
actively

its

Southern

subsidiary
acquiring

is

power

companies in both Asia

and Europe.

Competitive Advantage, Globalization and Global

Industries

Focus
Achieving competitive advantage in a
global industry requires executives and
managers to maintain a well-defined
strategic focus.
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
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or we leave it alone. This is focus.

Global Marketing: What it is and What it isnt

The discipline of marketing is universal (Marketing Plan
Target Market, Marketing Mix ).

It is natural, however, that marketing practices will

vary from country to country, for the simple reason
that the countries and peoples of the world are
different. These differences mean that a marketing
approach that has proven successful in one country
will not necessarily succeed in another country.
Customer preferences, competitors, channels of
distribution, and communication media may differ.
An important task in global marketing is
learning to recognize the extent to which
marketing plans and programs can be
extended worldwide, as well as the extent to
which they must be adapted.
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Global Marketing: What it is and What it

isnt

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

Product Standardization

Product Adaptation

The Importance of Global

Marketing
For US-based companies, 75% of
sales potential is outside the US.
About 90% of Coca-Colas 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.
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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 (new flavors, forms, colors,
added
ingredients,
package
sizes,
versions).

Extension Approach

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
different designs for the same car model.

Management Orientations
Geocentric orientation

Entire world is a potential market

Strives for integrated global strategies
Also known as a global or transnational company
Retains an association with the headquarters country
Pursues serving world markets from a single country
or sources globally to focus on select country
markets
Leads to a combination of extension and adaptation
elements

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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

Forces Affecting Global Integration

and Global Marketing

Restraining Forces

Driving Forces

Global
Integration
and
Global
Marketing