Transcript Chapter 1 Introduction to Global Marketing

Chapter 1
Introduction to
Global Marketing
1-1
Introduction
What is Global
Marketing?
How is it different
from regular
marketing?
1-2
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
1-3
Reasons for Global Marketing
Growth
– Access to new markets
– Access to resources
Survival
– Against competitors with lower costs (due to
increased access to resources)
1-4
Overview of Marketing
One of the functional areas of a business
that is distinct from finance and operations
Primary tools in marketing are product,
price, place, and promotion
Marketing is an activity that comprises the
firm’s value chain
Current 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
areas
Properly 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.)
1-7
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
1-9
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 nationstates 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
1-10
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
1-11
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 CocaCola or we leave it alone. This is focus.
Helmut Maucher
1-12
1-13
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
1-16
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
1-2
Bestfoods (foods)
Ben & Jerry’s (ice cream)
Alpo (pet food)
Pillsbury (food)
Burger King (fast food)
Random House (publishing)
Chrysler (autos)
TV Guide (magazine)
New York Post (newspaper)
LA Dodgers (sports)
Arco (gasoline)
CompUSA (retailing)
Seagram (alcoholic beverages)
Irwin/McGraw-Hill
Foreign Owner
U.K.
U.K.
Swiss
U.K.
U.K.
Germany
Germany
Australia
Australia
Australia
U.K.
Mexico
France
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Invented Here, Made Elsewhere
U.S. Invented Technology
Phonographs
1-3
9 0%
1%
9 0%
Color TVs
1 0%
1970
4 0%
Audiotape Recorders
0%
NOW
1 0%
Videotape Recorders
1%
9 9%
Machine Tools
3 5%
Telephones
9 9%
2 5%
8 9%
Semiconductors
6 4%
9 8%
Computers
7 4%
0
Irwin/McGraw-Hill
20
40
60
80
100
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Top 10 U.S. Players in the Global Game
Company
ExxonMobil
1-4
Foreign
Revenues
($ Mil)
Foreign
Foreign
Foreign
Revenues
Profits
Assets
(% of Total) (% of Total) (% of Total)
115,464
71.8
62.7
63.9
IBM
50,377
57.5
49.6
43.7
Ford Motor
50,138
30.8
N/A
44.2
General Motors
46,485
26.3
55.3
38.0
General Electric
35,350
31.7
22.8
47.4
Texaco
32,700
77.1
54.1
45.2
Citigroup
28,749
35.1
N/A
41.0
Hewlett-Packard
23,398
55.2
58.0
51.5
Wal-Mart Stores
22,728
13.8
8.2
36.0
Compaq Computer
21,174
55.0
101.4
28.2
Irwin/McGraw-Hill
1-22
SOURCE: Adapted from Brian Zajac, “Global Giants”. Forbes, July 24, 2000
Management Orientations
Ethnocentric:
Home country is
Superior, sees
Similarities 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
Polycentric:
Each host country Is
Unique, sees differences
In foreign countries
Geocentric:
World view, sees
Similarities and
Differences in home
And host 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
1-24
Forces Affecting Global Integration
and Global Marketing
Global
Integration
and
Global
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
1-27