Ch 1: Introduction to Global Marketing Introduction and Overview

Thirty years ago, the phrase global marketing did not exist. Today, practically knowledgeable [savvy] businesspeople utilize global marketing for the realization of their companies full commercial potential. That is why, no matter whether you live in sia, !urope, "orth merica, or #outh merica, you may be familiar with the brands. $owever, there is another critical reason why companies need to take global marketing seriously% that is survival.
[ management team that fails to understand the importance of global marketing risks can lose its domestic business to competitors with lower costs, more experience and better products.]

Marketing:
&arketing is the process of focusing the resources and ob'ectives of an organization on environmental opportunities and needs. &arketing is an organizational function and a set of processes for creating, communicating, and delivering following% ()* +alue to customers and (,* -or managing customer relationships . . . . . . /n ways that benefit the organization and its stakeholders
[&arketing activities center on an organizations efforts to satisfy customer wants and needs with products and services that offer competitive value. The marketing mix (product, price, place, and promotion* comprises a contemporary marketers primary tools.]
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Domestic Marketing:
marketing restricted to the political boundaries of a country is called 'Domestic Marketing'.
[ company marketing only within its national boundaries only has to consider domestic competition. !ven if that competition includes companies from foreign markets, it still only has to focus on the competition that exists in its home market.]

International Marketing:
/nternational marketing is the export, franchising, 'oint venture or full direct entry of a marketing organization into another country.
[This can be achieved by exporting a company2s product into another location, entry through a 'oint venture with another firm in the target country, or foreign direct investment into the target country. [3ikipedia.org]]

Global Marketing:
4lobal marketing is an ability of an organization to market to almost all countries on the planet or around the globe. The global firm retains the capability, reach, knowledge, staff, skills, insights, and expertise to deliver value to its customers worldwide.

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n organization that engages in global marketing focuses its resources and competencies on global markets opportunities and threats. 4lobal marketing is a field of study in general business management to provide valuable products, solutions and services to customers locally, nationally, internationally and worldwide. 4lobal marketing may also take the form of a diversification strategy in which a company creates new products or services and introduces them into new geographical markets.

trategy o! outh "orea:

This is the strategy that #outh 5oreas 64 !lectronics has used to target the merican home appliance market. 64s product offerings include a stylish, high. tech refrigerator priced at 78,999: the unit features a built.in flat.panel 6;< television. 64s commitment to innovative products prompted $ome <epot to start carrying the 64 appliance line.

#dvantages o! Global Marketing:

3hen successfully formulated and implemented, a globally oriented growth strategy can result in increased revenues for a company. company can introduce our product by using advertising% !conomies of scale in production and distribution 6ower marketing costs 0ower and scope ;onsistency in brand image bility to leverage good ideas =uickly and efficiently >niformity of marketing practices $elps to establish relationships outside of the ?political arena? @enefits of e&arketing over traditional marketing

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Issues in Global Marketing:

;ompanies that engage in global marketing, fre=uently encounter uni=ue or unfamiliar features in specific countries or regions of the world. <ifferences in consumer needs, wants, and usage patterns for products <ifferences in consumer response to marketing mix elements <ifferences in brand and product development and the competitive environment <ifferences in the legal environment, which may conflict with those of the home market <ifferences in the institutions (e.g. infrastructure* available <ifferences in administrative procedures <ifferences in product placement. <ifferences in the administrative procedures and product placement can occur

Di!!erence between $egular Marketing and Global Marketing:

fundamental difference between regular marketing and global marketing is the sco%e o! activities. company that engages in global marketing conducts important business activities outside the home.country market.

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). ,. 8. A. B. 1. E.

&anaging% >niversal <iscipline The Three 0rinciples of &arketing 4lobal &arketing% 3hat it is and what it is not The /mportance of 4lobal &arketing &anagement Crientations <riving and Destraining -orces ffecting 4lobal /ntegration and 4lobal &arketing #ummary

1& Marketing: # 'niversal Disci%line:

The fundamental fact about marketing is that it is a universal discipline. &arketing is a set of concepts, tools, theories, practices and procedures and experience. lthough marketing is universal, marketing practices, of course, varies from country to country. !ach person is uni=ue and each country is uni=ue. This reality of differences means that we cannot always directly apply experience from one country to another country.

(he marketing Conce%t: )be!ore 1**+s,

<uring the past 89 years, the concept of marketing has been changed dramatically. /t has evolved from a focus on the product to better product where better product was based on internal standards and values. The ob'ective was profit, and means to achieving the ob'ective was selling.

(he -ew Conce%ts o! the .s o! Marketing: )a%%eared in 1**+s,

The new concept of marketing shifted the focus of marketing from the product to the customer. The ob'ective was still profit, but the means of achieving the ob'ective expanded to include the entire marketing mix or the /!our .s0 as they became known% ). ,. 8. A. 0roduct 0rice 0lace (channels of distribution* 0romotion

This has now been expanded to seven 0s to include% ). ,. 8. A. B. 1. E. 0roduct 0rice 0lace (channels of distribution* 0romotion 0ackagingF0hysical evidence 0ositioning 0eople
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(he trategic Conce%t o! Marketing: )by the 1**+s,

/n the )GG9s, the concept of the 0s was outdated and it was a shifted to the focus on customer. nd that the times demanded a strategic concept.

The strategic concept of marketing is ma'or evolution in the history of marketing thought, shifted the focus of marketing from the product or customer to the customer in the context of the broader external environmental. "nowing everything H to know about the customer is not enough. To succeed, marketers must know the customer in a context including the competition, government policy I regulation, and the broader economic, social, and political forces that shape the evolution of markets.
/n 4lobal marketing this may mean working closely with home country government trade negotiators and other officials and industry competitors to gain access to a target country market.

.ro!itability:
0rofitability is not forgotten in the strategic concept. The means of the strategic marketing concept is strategic management, which integrates marketing with the other management functions. One o! the tasks o! strategic management is to make a %ro!it, which can be a source of funds for investing in the business and for rewarding shareholder and management. (hus %ro!it is still a critical ob1ective and measure o! marketing success, but it is not an end. The aim of marketing is to create value for stakeholders and the key stakeholder is the customer.
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2oundary less Marketing:

-inally the strategic concept of marketing has shifted the focus of marketing from microeconomics to the focus of managing strategic partnerships, positioning with the aim and purpose of creating value for customers. This expanded concept of marketing was termed boundary.less marketing by Jack 3elch, ;!C of 4!.

3& (he (hree .rinci%les o! Marketing:

The essence of &arketing can be summarized in 8 0rinciples /dentify the purpose and task of marketing The competitive reality of the &arketing -ocus is needed for concentrating the attention to achieving the first two principles.

i& Customer 4alue and 4alue 56uation:

The task of marketing is to create customer value that is greater than the value created by competitors. @enefits 0erceived +alue K 0rice (&oney, time, effort, etc.

ii& Com%etitive or Di!!erential #dvantage:

The ,nd &arketing 0rinciple is ;ompetitive dvantage. The competitive advantage is a total offer that is more attractive to customers. The advantage can exist in any element of the companys offer% the product, the price, the advertisement and the point of sale promotion or the distribution of the product.

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iii& 7ocus:
The 8rd &arketing 0rinciple is -ocus, or ;oncentration of attention. -ocus is re=uired to succeed in the task of creating customer value at a competitive advantage.
[ clear focus on customer needs and wants and on the competitive offer is re=uired to mobilize the effort needed to maintain deferential advantages. This can be achieved only be focusing or concentrating resources and efforts on customer needs and wants and how to deliver a product.]

8& Global Marketing: 9hat It Is and 9hat It Is -ot:

9hat is Global Marketing:

4lobal &arketing is the process of focusing the resources and ob'ectives of a company on global marketing opportunities. The discipline of marketing is universal. /t 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. ;ustomer preferences, competitors, channels of distribution, and communication media may differ.

Global ;ocali<ation:
4lobal localization means a successful global marketer must have the ability to Lthink globally and act locally.M 4lobal marketing may include an combination of standard (the actual product itself* and nonstandard (distribution or packaging* approaches.
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-inally, it is necessary to understand that global marketing does not mean entering every country in the word. =& (he Im%ortance O! Global Marketing:
The largest single market in the world in terms of national income is the >nited #tates, representing roughly ,B percent of the total world market for all products and services. >.#. companies that wish to achieve maximum growth potential must Lgo globalM because EB percent of world market potential is outside their home country. Management at Coca>Cola clearly understands this? about @A %ercent o! the com%anyBs o%erating income and two>thirds o! its o%erating revenue are generated outside -orth #merica. "on.>.#. companies have an even greater motivation to seek market opportunities beyond their own borders: their opportunities include the 899 million people in the >nited #tates. -or example, even though the dollar value of the home market for Japanese companies is the second largest in the world (after the >nited #tates*, the market outside Ca%an is DA %ercent o! the world %otential !or Ca%anese com%anies. -or !uropean countries, the picture is even more dramatic. !ven though Germany is the largest single country market in 5uro%e, *= %ercent of the world market potential for 4erman companies is outside 4ermany. &any companies have recognized the importance of conducting business activities outside their home country. /ndustries that were essentially national in scope only a few years ago are dominated today by a handful of global companies. /n most industries, the companies that will survive and prosper in the twenty.first century will be global enterprises. #ome companies that fail to formulate ade=uate responses to the challenges and opportunities of globalization will be absorbed by more dynamic, visionary enterprises. Cthers will undergo wrenching transformations and, if the effort succeeds, will emerge from the process greatly transformed. #ome companies will simply disappear. Table ).A lists the top ,B of Fortune magazines ,99N ranking of the B99 largest service and manufacturing companies by revenues.

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A& Management Orientations:

The form and substance of a companys response to global market opportunities depend greatly on managements assumptions or beliefs Oboth conscious and unconsciousOabout the nature of the world.

The world view of a companys personnel can be described as: i. !thnocentric ii. 0olycentric iii. Degiocentric iv. 4eocentric 5.$G !ramework:

5thnocentric Orientation
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person who assumes that his or her home country is superior to the rest of the world is said to have an ethnocentric orientation. t some companies, the ethnocentric orientation means that opportunities outside the home country are largely ignored. #uch companies are sometimes called domestic companies. !thnocentric companies that conduct business outside the home country can be described as international companies; they adhere to the notion that the products that succeed in the home country are superior. This point of view leads to a standardized or extension approach to marketing based on the premise that products can be sold everywhere without adaptation.

.olycentric Orientation
The polycentric orientation is the opposite of ethnocentrism. The term polycentric describes managements belief or assumption that each country in which a company does business is uni=ue. This assumption lays the groundwork for each subsidiary to develop its own uni=ue business and marketing strategies in order to succeed: the term multinational company is often used to describe such a structure.

$egiocentric Orientation
/n a company with a regiocentric orientation, a region becomes the relevant geographic unit: managements goal is to develop an integrated regional strategy. 3hat does LregionalM mean in this contextP >.#. company that focuses on the countries included in the "orth merican -ree Trade greement (" -T * Onamely, the >nited #tates, ;anada, and &exico Ohas a regiocentric orientation. #imilarly, a !uropean company that focuses its attention on !urope is regiocentric.

Geocentric Orientation
company with a geocentric orientation views the entire world as a potential market and strives to develop integrated global strategies. company whose management has adopted a geocentric orientation is sometimes known as a global or transnational company.

E& Driving and $estraining 7orces #!!ecting Global Integration and global marketing
The remarkable growth of the global economy over the past 1B years has been shaped by the dynamic interplay of various driving and restraining forces. <uring most of those decades, companies from different parts of the world in different industries achieved great success by pursuing international, multinational, or global strategies. <uring the )GG9s, changes in the business environment presented a number of challenges to established ways of 0age )) of )1

doing business. Today, despite calls for protectionism as a response to the economic crisis, global marketing continues to grow in importance. This is due to the fact that, even today, driving forces have more momentum than restraining forces.

Driving 7orces:
Technology ;ulture &arket "eeds ;ost -ree &arkets !conomic /ntegration 0eace &anagement +ision #trategic /ntent 4lobal #trategy and ction

$estraining 7orces:
;ulture &arket <ifferences ;osts "ational ;ontrol "ationalism 3ar &anagement &yopia Crganization $istory <omestic -ocus

Driving 7orces:
;onverging market needs and wants, technology advances, pressure to cut costs, pressure to improve =uality, improvements in communication and transportation technology, global economic growth, and opportunities for leverage all represent important driving forces: any industry sub'ect to these forces is a candidate for globalization

1& (echnology:
Technology is a universal factor that crosses national and cultural boundaries. Technology is truly LstatelessM: there are no cultural boundaries limiting its application. Cnce a technology is developed, it soon becomes available virtually everywhere in the world. This phenomenon supports 0rofessor 6evitts prediction concerning the emergence of global markets for standardized products. /n his $arvard @usiness Deview article, 6evitt anticipated the communication revolution that has, in fact, become a driving force behind global marketing.

3& $egional economic agreements:

Degional economic agreements, converging market needs and wants, technology advances, pressure to cut costs, pressure to improve =uality, improvements in communication and transportation technology, global economic growth, and opportunities for leverage all represent important driving forces: any industry sub'ect to these forces is a candidate for globalization.

8& Multilateral (rade #greements

number of multilateral trade agreements have accelerated the pace of global integration. " -T is already expanding trade among the >nited #tates, ;anada, and &exico. The 4eneral greement on Tariffs and Trade (4 TT*, which was ratified by more than ),9 nations in )GGA, has created the 3orld Trade Crganization (3TC* to promote and protect free trade. /n !urope, the expanding membership of the !uropean >nion is lowering boundaries to trade within the region. The creation of a single currency zone and the introduction of the euro are also expected to expand !uropean trade in the twenty.first century.

=& Market -eeds and 9ants:

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person studying markets around the world will discover cultural universals as well as differences. The common elements in human nature provide an underlying basis for the opportunity to create and serve global markets. The word create is deliberate. &ost global markets do not exist in nature: marketing efforts must create them. -or example, no one needs soft drinks, and yet today in some countries per capita soft drink consumption exceeds the consumption of water.

A& (rans%ortation and Communication Im%rovements

The time and cost barriers associated with distance have fallen tremendously over the past )99 years. The 'et airplane revolutionized communication by making it possible for people to travel around the world in less than AN hours. Tourism enables people from many countries to see and experience the newest products sold abroad.

E& .roduct Develo%ment Costs

"ew products re=uire ma'or investments and long periods of development time. The pharmaceuticals industry provides a striking illustration of this driving force. Today, the process of developing a new drug and securing regulatory approval to market it can take )A years: the average total cost of bringing a new drug to market is estimated to exceed 7A99 million. #uch costs must be recovered in the global marketplace because no single national market is likely to be large enough to support investments of this size.

@& Fuality
4lobal marketing strategies can generate greater revenue and greater operating margins, which, in turn, support design and manufacturing =uality. global and a domestic company may each spend B percent of sales on DI<, but the global company may have many times the total revenue of the domestic because it serves the world market.

D& 9orld 5conomic (rends

0rior to the global economic crisis that began in ,99N, economic growth had been a driving force in the expansion of the international economy and the growth of global marketing for three reasons. -irst, economic growth in key developing countries creates market opportunities that provide a ma'or incentive for companies to expand globally. Thanks to rising per capita incomes in /ndia, ;hina, and elsewhere, the growing ranks of middle.class consumers have more money to spend than in the past.

*& ;everage
global company possesses the uni=ue opportunity to develop leverage. /n the context of global marketing, leverage means some type of advantage that a company en'oys by virtue of the fact that it has experience in more than one country. 6everage enables a company to expend less time, less effort, or less money. -our important types of leverage:

a& 5G%erience (rans!ers

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global company can leverage its experience in any market in the world. /t can draw upon management practices, strategies, products, advertising appeals, or sales or promotional ideas that have been market.tested in one country or region and apply them in other comparable markets.

b&

cale 5conomies

The global company can take advantage of its greater manufacturing volume to obtain traditional scale advantages within a single factory. The importance of manufacturing scale has diminished somewhat as companies implement flexible manufacturing techni=ues and invests in factories outside the home country. $owever, scale economies were a cornerstone of Japanese success in the )GE9s and )GN9s.

c& $esource 'tili<ation

ma'or strength of the global company is its ability to scan the entire world to identify people, money, and raw materials that will enable it to compete most effectively in world markets. -or a global company, it is not problematic if the value of the LhomeM currency rises or falls dramatically because there really is no such thing as a home currency. The world is full of currencies, and a global company seeks financial resources on the best available terms.

d& Global trategy

The global companys greatest single advantage can be its global strategy. global strategy is built on an information system that scans the world business environment to identify opportunities, trends, threats, and resources. 3hen opportunities are identified, the global company adheres to the three principles identified earlier% /t leverages its skills and focuses its resources to create superior perceived value for customers and achieve competitive advantage.

$estraining 7orces:
<espite the impact of the driving forces identified previously, several restraining forces may slow a companys efforts to engage in global marketing. /n addition to the market differences discussed earlier, important restraining forces include management myopia, organizational culture, national controls, and opposition to globalization. s we have noted, however, in todays world the driving forces predominate over the restraining forces. That is why the importance of global marketing is steadily growing.

1& Management Myo%ia and Organi<ational Culture

/n many cases, management simply ignores opportunities to pursue global marketing. company that is LnearsightedM and ethnocentric will not expand geographically. &yopia is also a recipe for market disaster if head=uarters attempts to dictate when it should listen. 4lobal marketing does not work without a strong local team that can provide information about local market conditions.

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3& -ational Controls

!very country protects the commercial interests of local enterprises by maintaining control over market access and entry in both low. and high.tech industries. #uch control ranges from a monopoly controlling access to tobacco markets to national government control of broadcast, e=uipment, and data transmission markets. Today, tariff barriers have been largely removed in the high.income countries, thanks to the 3TC, 4 TT, " -T , and other economic agreements.

8& O%%osition to Globali<ation

To many people around the world, globalization and global marketing represent a threat. The term globaphobia is sometimes used to describe an attitude of hostility toward trade agreements, global brands, or company policies that appear to result in hardship for some individuals or countries while benefiting others.

ummary:
A company that engages in global marketing focuses its resources on global market opportunities and threats. Marketing, R&D, manufacturing, and other activities comprise a firms value chain; firms configure these activities to create superior customer value on a global basis. Global companies also maintain strategic focus hile relentlessly pursuing competitive advantage. !he marketing mi", value chain, competitive advantage, and focus are universal in their applicability, irrespective of hether a company does business only in the home country or has a presence in many markets around the orld. #ompanies that fail to pursue global opportunities risk being pushed aside by stronger global competitors. Global marketing does not necessarily mean offering identical products to consumers and organi$ations in all parts of the orld Global marketing strategies can be based on a number of different elements, including brand names, product design, product positioning, advertising, packaging, distribution, customer service, and sourcing. %hatever the si$e of the opportunity, successful industry competitors find that increasing revenues and profits means seeking markets outside the home country.

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 #ompany management can be classified in terms of its orientation to ard the orld& ethnocentric, polycentric, regiocentric, or geocentric. Global marketings importance today is shaped by the dynamic interplay of several driving and restraining forces. Driving forces include market needs and ants, technology, transportation and communication improvements, product costs, 'uality, orld economic trends, and recognition of opportunities to develop leverage by operating globally. Restraining forces include market differences, management myopia, organi$ational culture, and national controls such as nontariff barriers.

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