Introduction to

Global Marketing

Global Marketing
Chapter 1

1
 Marketing: A Universal
Discipline
• Marketing (1): the process of focusing the resources &
objectives of an organization on environmental
opportunities & needs

• Marketing (2): a set of concepts, tools, theories,

practices, procedures, & experiences

• Although marketing is a universal discipline,

marketing practice varies from country to country

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 The Marketing Concept (1)

• Concept has chanced dramatically

• 1950’s: Focus on products
• 1960’s:
– Focus on customer orientation
– Development of marketing mix: product, price, place,
promotion (4P’s)

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 The Marketing Concept (2)

• 1990’s:
– Focus on customer in the context of the broader external
environment
• Competition, government policy & regulation

– Focus on stakeholder value

• employees, customers, shareholders, society

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 The Marketing Concept (3)

• Today:
– Two key tasks of marketing
• Focus on customer & his/her environment
• Create value for consumers & stakeholder
– Shift towards
• Focus on managing strategic partnerships
• Positioning of firm in value chain to optimize value
creation
– Profit as a measure of success, not an end in itself

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 The Three Principles of
Marketing

CUSTOMER VALUE

DIFFERENTIATION FOCUS

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 Key Elements of Marketing –
1. Customer Value
• Goal: create customer value that is greater than the
value created by competitors
• Strategy:
– Expand or improve product and/ or service benefits
– Reduce the price
– Combine these two elements

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 Elements of Marketing –
Customer Value

V=B/P

V = Value
B = Perceived Benefits – Perceived Costs
P = Price

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 Key Elements of Marketing –
2. Differentiation
• Goal: create competitive advantage through
differentiation
• Advantage can exist in any element of a company’s
offer
• One way to penetrate a new national market is to
offer a superior product at a lower price.

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 Key Elements of Marketing –
3. Focus
• Goal: a concentration of attention & resources
• Requirement to create customer value at a
competitive advantage
• A viable way for small & medium sized companies
to achieve dominant position in world market
• A clear focus on customer needs & wants

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 Global Marketing
• Marketing discipline is universal but markets &
customers are quite different
• 3 domains of knowledge
– Cross-Cultural Knowledge
– Country/ Regional Knowledge
– Cross-Border Transactions Knowledge
• Need for “Global Localization”: Adjustment of
global marketing strategies to local requirements

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 Examples of Global Marketing

Product Canon/photocopier/McDonalds/Toyota/Ford
Design
Brand Name Marlboro/Coke/Pepsi/Mercedes/Caterpillar
Product Colgate toothpaste/Unilever fabric softener
Positioning
Packaging Gillette razors
Advertising Coca-cola/British Airways/Benetton
Strategy
Sales IBM
Promotion
Distribution Benetton/United Distillers
Customer American Express/Hertz
Service

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 Importance of Global
Marketing
• International arena is of great importance to
companies maximizing growth potential
• 75% of market potential is outside the US
• 94% of market potential for German companies is
outside of Germany
• A large number of industries will be dominated by a
handful of global companies

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 Management Orientation and
Global Marketing (1)
• Different Management Orientations in the Global
Arena – EPRG Framework

Polycentric

Ethnocentric

Regiocentric Geocentric

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 Management Orientation &
Global Marketing (2)
• Ethnocentric Orientation:
– Characteristic of domestic & international companies
– Opportunities outside the home market are pursued by
extending various elements of the marketing mix

• Polycentric Orientation
– Characteristic of multinational companies
– Marketing mix is adapted by autonomous country
managers

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 Management Orientation &
Global Marketing (3)
• Regiocentric or Geocentric Orientation:
– Characteristic of global & transnational companies
– Marketing opportunities are pursued by both extension &
adaptation strategies in global markets

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 Driving Forces Affecting Global
Marketing
– Technology
– Regional Economic Agreements
– Market Needs & Wants
– Transportation & Communication Improvements
– Product Development Costs
– Quality
– World Economic Trends
– Leverage
– The Global/ Transnational Corporation

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 Restraining Forces Affecting Global
Marketing
– Management Myopia & Organizational Culture

– National Controls & Barriers

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 Summary

Global marketing is the process of focusing

resources on global marketing opportunities
Goal, to create customer value & competitive
advantage by maintaining focus
Three classifications of management orientation:
ethnocentric, polycentric, regiocentric, geocentric
Global marketing importance is shaped by a variety
of driving & restraining forces

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 Introduction

• Global vs. “Regular” Marketing

– Scope of activities are outside the home-
country market

1-20
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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
1-21
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 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 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
1-22
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 Global Industries

• An industry is global to the extent that a company’s

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
– Proportion of industry revenue generated by
companies that compete in key world regions
1-23
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 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, former chairman of Nestlé SA

1-24
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 Global Marketing: What It Is
and What It Isn’t
Single Country Global Marketing
Marketing Strategy Strategy
• Target Market Strategy • Global Market Participation
• Marketing Mix Development
• Marketing Mix
– 4 P’s: Adapt or
– Product Standardize?
– Price • Concentration of Marketing
– Promotion Activities
– Place • Coordination of Marketing
Activities
• Integration of Competitive
Moves
1-25
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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

1-26
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 Standarization versus Adaptation

Arabic
Read right to left

Chinese
“delicious/happiness
”

1-27
©2011 Pearson Education, Inc. publishing as Prentice Hall The Faces of Coca-Cola Around the World
 McDonald’s Global
Marketing
Marketing Mix Element Standardization Localized
Product Big Mac McAloo Tikka potato burger
(India)
Promotion Brand name Slang Macca’s (Australia)
MakDo (Philippines)

Advertising Slogan McJoy magazine, “Hawaii

“I’m Loving It” Surfing Hula” promotion
(Japan)
Place Home delivery (India)
Free-standing
Swiss rail system dining cars
Price $5.21 (Switzerland)
Big Mac is $3.10 in
U.S. and Turkey $1.31(China)
1-28
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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
1-29
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 The Fortune Global 500

1-30
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 Consumer/Industrial Markets
Product/Service Market Size (Billions)
Cigarettes $295
Luxury Goods 230
Cosmetics 200
Personal Computers 175
Bottled Water 100
Container Shipping 150
Construction Equip. 90
Crop Seeds 30
CRM Services 6 1-31
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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
1-32
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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
1-33
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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

1-34
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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
– 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
1-35
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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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1-36
 Driving Forces Affecting Global
Integration and Global Marketing
• Quality
– R&D as a percent of sales
• World economic trends
– 2008 global crisis
– Growing middle class in
China, India, Brazil, etc.
– Rapid growth in China pre-
2008
– Movement to free markets
worldwide
1-37
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 Driving Forces Affecting Global
Integration and Global Marketing

• Leverage
– Experience transfers
– Scale economies
– Resource utilization
– Global strategy

1-38
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 Restraining Forces Affecting Global
Integration and Global Marketing

• Management myopia
• Organizational culture
• National controls
• Opposition to globalization

1-39
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 Overview of Book

• Part I: Overview of Global Marketing

• Part II: Environments of Global
Marketing
• Part III: Global Strategy
• Part IV: Global Considerations of the
Marketing Mix
• Part V: Integrating the Dimensions of
Global Marketing
1-40
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 Looking Ahead to Chapter 2

• The Global Economic Environment

1-41
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©2011 Pearson Education, Inc. publishing as Prentice Hall
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Copyright © 2011 Pearson Education, Inc.

Publishing as Prentice Hall

©2011 Pearson Education, Inc. publishing as Prentice Hall