Chapter 1Introduction to

Global Marketing

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Introduction

Global versus “regular” marketingScope of activities are outside the home-country market

Product/market growth matrix

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Global Marketing

Create value for customers by improving benefits or reducing price

Improve the productFind new distribution channelsCreate better communicationsCut monetary and non-monetary costs and pricesValue =

Benefits/Price

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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 father, faster, deeper and cheaper than ever before.

Thomas L. Friedman

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Global IndustriesAn industry is global to the extent that a company’s industry position in one country is interdependent with its industry position in another countryIndicators of globalization

Ratio of cross-border trade to total worldwide productionRatio of cross-border investment to total capital investmentProportion of industry revenue generated by companies that compete in key world regions

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Competitive Advantage, Globalization, and Global Industries

FocusConcentration 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

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Global Marketing: What It Is and What It Isn’t

Single Country Marketing Strategy

Target market strategyMarketing mix

ProductPricePromotionPlace

Global Marketing Strategy

Global market participationMarketing mix development

4 P’s: adapt or standardize?

Concentration of marketing activitiesCoordination of marketing activitiesIntegration of competitive moves

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Standarization versus Adaptation

Globalization (standardization)Developing standardized products marketed worldwide with a standardized marketing mixEssence of mass marketing

Global localization (adaptation)Mixing standardization and customization in a way that minimizes costs while maximizing satisfactionEssence of segmentationThink globally, act locally

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Standarization versus Adaptation

Arabic

read right to left

Chinese

“delicious/happiness”

The faces of Coca-Cola around the world

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McDonald’s Global MarketingMarketing Mix Element Standardization Localized

Product

Promotion

Place

Price

Big Mac

Brand name

Advertising slogan “I’m Loving It”

Free-standing

Big Mac is $3.10 in U.S. and Turkey

McAloo Tikka potato burger (India)

Slang ’Macca’s (Australia)

MakDo (Philippines)

McJoy magazine, “Hawaii Surfing Hula” promotion (Japan)

Home delivery (India)

Swiss rail system dining cars

$5.21 (Switzerland)

$1.31(China)

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The Importance of Going Global

For U.S. companies, 70% of total world market for goods and services is outside the country

Coca-Cola earns 75% of operating income and two-thirds of profit outside of North America

For Japanese companies, 90% of world market is outside the country94% of market potential is outside of Germany for its companies

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Global Auto Industry

Thousands of auto companies globally in the early twentieth centuryMore than 500 of those producers were in the United StatesToday there are fewer than 20 in the worldToyota is the world’s most valuable car company and is eighth largest in revenue globally

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Management Orientations

Ethnocentric orientationHome country is superior to othersSees only similarities in other countriesAssumes 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 orientationEach country is uniqueEach subsidiary develops its own unique business and marketing strategiesOften referred to as multinationalLeads to a localized or adaptation approach that assumes products must be adapted to local market conditions

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Management Orientations

Regiocentric orientationA 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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Management OrientationsGeocentric orientation

Entire world is a potential marketStrives for integrated global strategiesAlso known as a global or transnational companyRetains an association with the headquarters countryPursues serving world markets from a single country or sources globally to focus on select country marketsLeads to a combination of extension and adaptation elements

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Driving Forces Affecting Global Integration and Global Marketing

Regional economic agreementsConverging market needs and wants and the information revolutionTransportation and communication improvementsProduct development costs

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Driving Forces Affecting Global Integration and Global Marketing

QualityWorld economic trendsLeverage

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Restraining Forces Affecting Global Integration and Global Marketing

Management myopiaOrganizational cultureNational controlsOpposition to globalization

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Overview of Book

Part I: Overview of global marketingPart II: Environments of global marketingPart III: Global strategyPart IV: Global considerations of the marketing mixPart V: Integrating the dimensions of global marketing

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Looking Ahead to Chapter 2

The global economic environment