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GLOBAL MARKETING

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Definition

 “Marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives.”

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Global Marketing in the 21st Century

The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows.

International trade is booming.

Global competition is intensifying.

Higher risks with globalization.

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Evolution to global marketing

Global marketing is not a revolutionary shift, it is an evolutionary process.

While the following does not apply to all companies, it does apply to most companies that begin as domestic-only companies.

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Evolution to global marketing (contd.)

•Domestic marketing

•International marketing

•Global marketing

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Domestic marketing

Marketing restricted to the political boundaries of a country.

Considers and focuses only on domestic competition.

Products and services are developed for customers in the home market without thought of how the product or service could be used in other markets.

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International marketing

It is the export, franchising, joint venture or full direct entry of a marketing organization into another country.

International marketing meets the needs of selected foreign country or countries where a company's value can be exported.

A firm does not need to export or enter all world markets to be considered an international marketer.

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Global Marketing

Global marketing is a firm's ability to market to almost all countries on the planet.

 With extensive reach, the need for a firm's product or services is established. 

A global marketing system delivers an integrated, comprehensive and focused communication, access and value to the customers, that can be tracked to build loyalty, and further establish the company's global marketing and brand footprint.

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U.S. Globalization

Many American companies have made the world their market.

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Major International Marketing Decisions

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Global marketing environment

Before deciding to operate internationally, a company must understand the international marketing environment since it offers both new opportunities and new problems.

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International trade system When selling to another country, a firm may face

restrictions on trade between nations.

Types of restrictions:-

Tariffs Quotas Embargos Exchange controls Non-tariff trade barriers

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The World Trade Org. & GATT

GATT- The General Agreement on Tariffs and Trade is a 61 years old treaty designed to promote world trade by reducing tariffs and other international trade barriers.

WTO enforces GATT rules

WTO acts as an umbrella organization to - Oversee GATT - Mediate global disputes -Impose trade sanctions

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Regional Free Trade Zones Groups of nations organized to work

toward common goals in the regulation of international trade.

Ex. – European Union NAFTA APEC ASEAN SAARC

European Union

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Environmental factors

A nation’s readiness for different product and services and it’s attractiveness as a market to foreign firms depend upon:-

Economic environment

Political-Legal

environment

Cultural environment

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Economic environment

Two economic factors affect country’s attractiveness as a market :- Industrial structure and it’s Income Distribution

Industrial structure :- It shapes a country’s product and service needs, income levels and employment levels

Four types are:-Subsistence Economies

Raw Material Exporting Economies

Industrializing Economies

Industrial Economies

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Income distribution:- Industrialized nations may have low, medium, high income households. In contrast countries with subsistence economies may have very low income families. Still other countries may have only low or high income families. However even poor or developing economies may be attractive markets for all kinds of goods including luxury goods.

Example:- China

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Political-Legal Environment

Attitude towards international buying

Government Bureaucracy

Government Bureaucracy

Monetary Regulations

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Cultural Environment

Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program.

Business norms vary from country to country.

Companies that understand cultural nuances can use them to advantage when positioning products internationally.

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Cultural Differences

When Nike learned that this stylized “Air” logo resembled “Allah” in Arabic script, it apologized and pulled the shoes from distribution.

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Fast food giant Burger King released this ad with goddess Lakshmi sitting on top on their non veg burger with the tag line “La Merienda Es Sagrada” translating to snack is sacred.  It was a clear denigration showing a Hindu goddess patronizing a meat sandwich.

Burger king apologized and quickly removed the posters from all it’s restaurants.

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Deciding Whether to Go Global

Reasons to consider going global: Foreign attacks on domestic markets Foreign markets with higher profit

opportunities Stagnant or shrinking domestic markets Need larger customer base to achieve

economies of scale Reduce dependency on single market Follow customers who are expanding

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Deciding Which Markets to Enter

Before going abroad, the company should try to define its international marketing objectives and policies.

What Volume of Foreign Sales is Desired? How Many Countries to Market In? What Types of Countries to Enter?

Choose Possible Countries and rank them based on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage, and Risk Level

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P&G’s entry into China

P&G decided to launch it’s Crest toothpaste in China where only 20% of rural dwellers brushed. They saw it as a huge potential market and launched it’s product for 50 cents. Within 10 years it now leads all the competitors with 25% market share.

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Deciding how to enter the market

EXPORT

• Indirect• Direct

Joint venturing

• Licensing• Contract

manufacturing

• Management contracting

• Joint ownership

Direct investment

• Assembly facilities

• Manufacturing facilities

Amount of commitment risk control and profit potential

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Market Entry Strategies

Exporting: Indirect: working through independent

international marketing intermediaries. Direct: company handles its own

exports.

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Market Entry Strategies

Joint Venturing: Joining with foreign companies to

produce or market products or services. Approaches:

Licensing Contract manufacturing Management contracting Joint ownership

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Joint Ownership

Hershey’s, an American firm recently formed a joint venture with India-based Godrej beverages and foods to make and distribute chocolates in India.

KFC entered Japan through a joint ownership venture with Japanese conglomerate Mitsubishi

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Market Entry Strategies

Direct Investment: The development of foreign-based

assembly or manufacturing facilities. This approach has both advantages and

disadvantages.

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Deciding on the Global Marketing Program

Standardized Marketing Mix: Selling largely the same products and

using the same marketing approaches worldwide.

Adapted Marketing Mix: Producer adjusts the marketing mix

elements to each target market, bearing more costs but hoping for a larger market share and return.

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Marketing Mix Adaptation

In India, McDonald’s serves chicken, fish, and vegetable burgers, and the Maharaja Mac—two all chicken patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun. In the predominantly vegetarian state of Gujarat, it even declares its outlets as “pure vegetarian”, not selling any non-veg items in these outlets.

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Five Global Product and Promotion Strategies

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Global Product StrategiesStraight Product Extension:

Marketing a product in a foreign market without any change.

Product Adaptation: Adapting a product to meet local

conditions or wants in foreign markets.Product Invention:

Creating new products or services for foreign markets.

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Global Promotion Strategies Can use a standardized theme

globally, but may have to make adjustments for language or cultural differences.

Communication Adaptation: Fully adapting an advertising message

for local markets. Changes may have to be made due

to media availability.

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Global Pricing Strategies

Companies face many problems in setting their international prices.

Possible approaches include: Charge a uniform price all around the world. Charge what consumers in each country will

pay. Use a standard markup of costs everywhere.

International prices tend to be higher than domestic prices because of price escalation.

Companies may become guilty of dumping –a foreign subsidiary charges less than its costs or less than it charges in its home market.

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International Pricing

Twelve European Union countries have adopted the euro as a common currency, creating “pricing transparency” and forcing companies to harmonize their prices throughout Europe.

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Distribution channels

Whole-channel view

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Deciding on the Global Marketing Organization

Organize an export department Create international divisions

Geographical organizations World product groups International subsidiaries

Become a global organization

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Thank you

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