global mktg chap1

GLOBAL / INTERNATIONAL MARKETING SYED UZAIR OTHMAN

[email protected]

UKM-GSBGraduate School of BusinessUniversiti Kebangsaan Malaysia

© 2015 by Pearson Education

DEFINATION OF INTERNATIONAL MARKETING

Marketing

• “An organizational function and a set of processes for creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stake-holders.”

• The American Marketing Association

International Marketing

• “The multi-national process of planning and executing the conception, prices, promotion and distribution of ideal goods and services to create exchanges that satisfy the individual and organizational objectives.”

• The American Marketing Association

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CONCEPT OF INTERNATIONAL / GLOBAL MARKETING

• International marketing is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations (Michael R. Czinkota and Ilkka A. Ronkainen)

• International Marketing is any marketing activity which supports business activity, in a country other than the one that the business is located in.

• "Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer “

• International marketing enables businesses to provide benefits (in the form of products and services) to consumers around the world. International marketing activity may be tailored specifically for each country; this is because 'needs and demands' of customers in one country may be different from 'needs and demands' of customers in another country.

© 2015 by Pearson Education 4

CONCEPT OF INTERNATIONAL / GLOBAL MARKETING

Different levels of marketing can be expressed in the following terms:

• Domestic marketing, which involves the company manipulating a series of controllable variables such as price, advertising, distribution and the product/service attributes in a largely uncontrollable external environment that is made up of different economic structures, competitors, cultural values and legal infrastructure within specific political or geographic country boundaries.

• International marketing, which involves operating across a number of foreign country markets in which not only do the uncontrollable variables differ significantly between one market and another, but the controllable factors in the form of cost and price structures, opportunities for advertising and distributive infrastructure are also likely to differ significantly. It is these sorts of differences that lead to the complexities of international marketing.

• Global marketing management, which is a larger and more complex international operation. Here a company coordinates, integrates and controls a whole series of marketing programs into a substantial global effort. Here the primary objective of the company is to achieve a degree of synergy in the overall operation so that by taking advantage of different exchange rates, tax rates, labor rates, skill levels and market opportunities, the organization as a whole will be greater than the sum of its parts.

GLOBALIZATION & GLOBAL MARKETING

Markets are becoming global

• The fact that American products can compete in local markets throughout the world and that European and Asian manufacturers can compete in America is a consequence of the globalization of markets and marketing.

• Another phenomenon of global markets is the growth of social networking websites such as Facebook and Twitter. For example, Facebook’s international audience totaled 34 million people at the beginning of 2008, and at the beginning of 2009 that number had increased to 95 million.

• Globalization, a process of interaction and integration among people, companies, and governments of many nations, is driven by international trade and investment and has resulted in what some call a global economy.

• The Internet, e-commerce, digital communication, and information transparency have led to an increasingly mobile workforce, more informative customers, and rapidly changing technologies and business models.

• Marketing is becoming more important as organizations around the world strive to develop products and services that appeal to their customers and aim to differentiate their offering in the increasingly crowded global marketplace.

GLOBALIZATION & GLOBAL MARKETING

• The growing use of e-commerce, the spread of technological drivers such as the Internet and mobile phones, improved transportation facilities, and the removal of political and economic borders in many regions of the world allows companies to focus not only on domestic markets but on diverse global markets as well.

• Globalization may be understood by different perspectives. To the economist, globalization refers to the emergence of global markets. On the other hand, sociologists see globalization as the convergence of lifestyles and social values. To the political scientist, globalization reduces national sovereignty.

• The world turns into a “global village” (first coined by Marshall McLuhan, wherein people who are physically separated by time and space are interconnected by electronic media) as national borders disappear and time and space distances contract. This contraction has come about because air, sea, and communication costs have declined significantly during the twentieth century. Communication costs declined owing to improvements in information technology.

• Globalization also has its detractors. Much of the discontent concerns the fact that the benefits of globalization have not been spread equally among peoples and countries.

• Trade liberalization means that the demand for a country’s products is not limited to the home market, while investment, technology, and know-how move more freely across borders to both developed and developing countries.

MARKETING MIX• To effectively market a product or service there are four things you need to get right: Product,

Price, Place and Promotion. These four elements are known as the marketing mix or the 4Ps. The four elements should be viewed as one unit and structured to support each other; Otherwise a firm's marketing strategy will be confusing and uncoordinated.

SERVICE MARKETING MIX (Extended Marketing Mix)

• A service is intangible thus, the marketing mix for a service has three additional elements: People, Process and Physical Evidence.

© 2015 by Pearson Education 9

The 4 C's versus the 4 P's of Marketing• Consumer wants and needs (vs. Products)You can't develop products and then try to sell them to a mass market. You have to study consumer wants and needs and then attract consumers one by one with something each one wants.

• Cost to satisfy (vs. Price)You have to realize that price - measured in dollars - is one part of the cost to satisfy. If you sell hamburgers, for example, you have to consider the cost of driving to your restaurant, the cost of conscience of eating meat, etc. One of the most difficult places to be in the business world is the retailer selling at the lowest price. If you rely strictly on price to compete you are vulnerable to competition - in the long term.

• Convenience to buy (vs. Place)You must think of convenience to buy instead of place. You have to know how each subset of the market prefers to buy - on the Internet, from a catalogue, on the phone, using credit cards, etc. Lands End clothing, Amazon Books and Dell Computers are just a few businesses who do very well over the Internet.

• Communication (vs. Promotion)You have to consider the communication instead of promotion. Promotion is manipulative - it's from the seller. Communication requires a give and take between the buyer and seller .


Global Marketing

Introduction to Global MarketingChapter 1

Warren J. Keegan Mark C. Green

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INTRODUCTION

• Global vs. “Regular” Marketing- Scope of activities are outside the home-country market

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Marketing and Global Marketing Defined

• Marketing: “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”

• Global Marketing: The scope of activities outside the home market

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Value Chain and Value Proposition

• Value Chain: Marketing, along with

all other functional business areas, create value for the customer

• Value Proposition– Perceived value to the

customer– The firm’s promise to the

customer

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Customer Perceived Value

• 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

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Globalization“Economic globalization constitutes integration of national economies into the international economy through trade, direct foreign investment (by corporations and multinationals), short-term capital flows, international flows of workers and humanity generally, and flows of technology.”

~Jagdish Bhagwati~1-15


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 investment to total capital investment

• Proportion of industry revenue generated by all companies that compete in key world regions

• Ratio of cross-border trade to worldwide production

Coca Cola spent $5 billion worldwide on promotions and marketing in 2010

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Competitive Advantage, Globalization & 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~

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GLOBAL MARKETING: What It Is & What It Isn’t

Single Country Marketing Strategy

• Target Market Strategy• Marketing Mix

– Product– Price– Promotion– Place

Global Marketing Strategy

• Global Market Participation• Marketing Mix Development

– 4 P’s: Adapt or Standardize?• Concentration of Marketing

Activities• Coordination of Marketing

Activities• Integration of Competitive Moves

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The Beatles: Global Marketing Strategy• U.K. vs. U.S. Markets

– EMI U.K label Parlophone– EMI U.S. label Capitol

• U.K albums had different names , number and order of tracks

• U.S. singles had Side B songs not available in the U.K.

• Songs remixed for U.S. market with different studio effects (reverb and compression)

The British Invasion of the music world was led by the Beatles who first toured the U.S. in 1964.

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Standardization Vs. 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 Vs. AdaptationThe Faces of Coca-Cola

Around the WorldArabic

Read right to left

Chinese

“delicious/happiness”

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McDonald’s Global Marketing

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Burberry’s GMS

• Expand in BRIC, US• Marketing Mix

– Product: emphasize handbags, belts, accessories– Price: Affordable luxury– Place: Key major cities including Hong Kong, NYC– Promotion: New logo, use social media, Burberry

Acoustic for emerging musicians

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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, 90% of world market is outside the country

• 94% of market potential is outside of Germany for its companies even though it is the largest EU market

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How Big Is The Global Market?

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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

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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

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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

European Union

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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

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Forces Affecting Global Integration & 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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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

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Driving Forces Affecting Global Integration and Global Marketing

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

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Restraining Forces Affecting Global Integration and Global Marketing

• Management myopia

• Organizational culture

• National controls

• Opposition to globalization

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Book Overview• 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

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global mktg chap1

Business

domestic marketing

global marketing management

series of marketing

business activity

substantial global effort

geographic country boundaries

changing needs

different economic structures