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Chapter 1 Introduction to
Global Marketing
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Global marketplace/Local markets
Brands from one country are available in other countries– E.g. McDonalds, Sony, Nokia, Levis, etc. are available
world overLocal brands compete with global brands– E.g. McDonalds & Jollibee in Philippines; Sony and
Kenstar in India; Swatch and Titan in India; Kiki and Vogue Girl in Japan, etc.
Products are results of a value chain that encompasses several countries.– E.g. automobiles, A-380
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Global marketing vs. traditional marketing
Mind-set – evaluates global opportunities and threats on a continuous basis
Scope of activities – important activities conducted outside the home country
Seek markets in other countries
Standardization vs. adaptation decisions
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Reasons for Global Marketing
Growth Imperatives– Home market growth rates are relatively flat– Access to new markets – Access to resources
Survival– Against competitors from abroad with lower
costs (due to access to cheaper resources)
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Overview of Marketing
A distinct functional area
The 4 P’s: product, price, place, and promotion
An activity in the firm’s value chain
Boundaryless marketing– Market orientation (customer orientation,
competitor orientation & inter-functional coordination)
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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/Costs (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– No longer can this be achieved at a local,
regional or national scale
Achieved by integrating and leveraging operations on a worldwide scaleE.g. I-Pod and its components
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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
A global organization – Position in one country is interdependent with industry positions in other countries
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
– Change in focus may be required as the business environment changes (e.g. IBM)
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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
Global Marketing Strategy
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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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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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The EPRG framework
Ethnocentrism– Associated with national arrogance & home country
superiority
– Assumes what succeeds in the home country will also succeed in other countries
– Domestic and international companies
– Standardized approach to marketing
– Foreign markets are secondary to the domestic market
– E.g. Nissan in 60s, Coke in the late 80s/early 90s
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The EPRG framework
Polycentrism– Opposite of ethnocentrism – each country
market is unique– Highly localized / adapted approach to
marketing– Multinational companies – Local “kingdoms”– E.g. Citicorp in the 90s.
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The EPRG framework
Regiocentrism– Treat a world region as one homogeneous market (e.g.
NAFTA region; the EU, etc.)– Localization / adaptation for the region; ethnocentric or
polycentric view of the rest of the worldGeocentrism– World view – focused on standardizing programs but
will adapt if indicated by research– Global / transnational company / a blurring of national
identity– E.g. Toyota
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Forces Affecting Global Integration and Global Marketing
Driving Forces– Regional economic
agreements
– Converging market needs and wants
– Media & Internet
– Transportation and communication improvements
– Product development costs
– World economic trends
– Leverage
Restraining Forces– Management myopia
– Organizational culture
– National controls
– Nationalism – anti-globalization protests
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Leverage
An advantage by virtue of the company’s experience in several countries– Experience transfers– Scale economies– Resource utilization– Global strategy