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Chapter 1 Introduction to

Global Marketing

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Introduction

What is Global Marketing?

How is it different from regular marketing?

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Introduction

Marketing– Process of planning

and executing the conception pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organization goals

Global Marketing– Focuses resources on

global market opportunities and threats; the main difference is the scope of activities because global marketing occurs in markets outside the organization’s home country

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Reasons for Global Marketing

Growth – Access to new markets – Access to resources

Survival– Against competitors with lower costs (due to

increased access to resources)

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Overview of Marketing

One of the functional areas of a business that is distinct from finance and operationsPrimary tools in marketing are product, price, place, and promotionMarketing is an activity that comprises the firm’s value chainCurrent trend is to involve marketers in all value-related decisions – called boundaryless marketing

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Boundaryless Marketing

Goal is to eliminate communication barriers between marketing and other business functional areasProperly implemented it ensures that a market orientation permeates all value creating activities

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Goal of Marketing

Surpass the competition at the task of creating perceived value for customers

The Guide line is the value equation –

Value = Benefits/Price (Money, Time, Effort, Etc.)

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Value Chain and Boundaryless Marketing

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Competitive Advantage

Success over competition in industry at value creation

Achieved by integrating and leveraging operations on a worldwide scale

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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 ever 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 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

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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

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Global Marketing: What it is and What it isn’t

Strategy development comes down to two main issues similar to single country marketing– Target market– Marketing Mix

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Global Marketing: What it is and What it isn’t

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Global Marketing: What it is and What it isn’t

Global marketing does not mean doing business in all of the 200-plus country markets

Global 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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Standardization versus Adaptation

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The Importance of Global Marketing

For US-based companies, 75% of sales potential is outside the US.– About 90% of Coca-Cola’s 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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Foreign Acquisitions of U.S. Companies

U.S. Companies Foreign OwnerBestfoods (foods) U.K.

Ben & Jerry’s (ice cream) U.K.

Alpo (pet food) Swiss

Pillsbury (food) U.K.

Burger King (fast food) U.K.

Random House (publishing) Germany

Chrysler (autos) Germany

TV Guide (magazine) Australia

New York Post (newspaper) Australia

LA Dodgers (sports) Australia

Arco (gasoline) U.K.

CompUSA (retailing) Mexico

Seagram (alcoholic beverages) France

Irwin/McGraw-Hill

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4

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Invented Here, Made Elsewhere

U.S. Invented Technology

Phonographs

Color TVs

Audiotape Recorders

Videotape Recorders

Machine Tools

Telephones

Semiconductors

Computers7 4%

9 8%6 4%

8 9%2 5%

9 9%3 5%

9 9%1%

1 0%0%

4 0%1 0%

9 0%1%

9 0%

0 20 40 60 80 100

1 9 7 0

N O W

Irwin/McGraw-Hill

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Top 10 U.S. Players in the Global Game

CompanyForeign

Revenues($ Mil)

Foreign Revenues

(% of Total)

Foreign Profits

(% of Total)

SOURCE: Adapted from Brian Zajac, “Global Giants”. Forbes, July 24, 2000Irwin/McGraw-Hill

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Foreign Assets

(% of Total)

ExxonMobil

IBM

Ford Motor

General Motors

General Electric

Texaco

Citigroup

Hewlett-Packard

Wal-Mart Stores

Compaq Computer

115,464

50,377

50,138

46,485

35,350

32,700

28,749

23,398

22,728

21,174

71.8

57.5

30.8

26.3

31.7

77.1

35.1

55.2

13.8

55.0

62.7

49.6

N/A

55.3

22.8

54.1

N/A

58.0

8.2

101.4

63.9

43.7

44.2

38.0

47.4

45.2

41.0

51.5

36.0

28.2

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Management Orientations

Ethnocentric:Home country is

Superior, seesSimilarities in foreign

Countries

Regiocentric:Sees similarities and differences in a world

Region; is ethnocentric or polycentric in its view of

the rest of the world

Geocentric:World view, seesSimilarities and

Differences in homeAnd host countries

Polycentric: Each host country Is

Unique, sees differencesIn foreign countries

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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

andGlobal

Marketing

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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

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Looking Ahead to Chapter 2

The Global Economic Environment