Transcript Chapter 1 Introduction to Global Marketing

Chapter 1
Introduction to
Global Marketing
© 2005 Prentice Hall
1-1
Global marketplace/Local markets
Brands from one country are available in other
countries
– E.g. McDonalds, Sony, Nokia, Levis, etc. are available
world over
Local 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
© 2005 Prentice Hall
1-2
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
© 2005 Prentice Hall
1-3
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)
© 2005 Prentice Hall
1-4
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)
© 2005 Prentice Hall
1-5
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
© 2005 Prentice Hall
1-6
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.)
© 2005 Prentice Hall
1-7
Value Chain and Boundaryless
Marketing
© 2005 Prentice Hall
1-8
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 scale
E.g. I-Pod and its components
© 2005 Prentice Hall
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
© 2005 Prentice Hall
1-10
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
© 2005 Prentice Hall
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 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)
© 2005 Prentice Hall
1-12
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
© 2005 Prentice Hall
1-13
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
© 2005 Prentice Hall
1-14
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.
© 2005 Prentice Hall
1-15
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
© 2005 Prentice Hall
Polycentric:
Each host country Is
Unique, sees differences
In foreign countries
Geocentric:
World view, sees
Similarities and
Differences in home
And host countries
1-16
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
© 2005 Prentice Hall
1-17
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.
© 2005 Prentice Hall
1-18
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 world
Geocentrism
– World view – focused on standardizing programs but
will adapt if indicated by research
– Global / transnational company / a blurring of national
identity
– E.g. Toyota
© 2005 Prentice Hall
1-19
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
© 2005 Prentice Hall
Restraining Forces
–
–
–
–
Management myopia
Organizational culture
National controls
Nationalism – antiglobalization protests
1-20
Leverage
An advantage by virtue of the company’s
experience in several countries
–
–
–
–
Experience transfers
Scale economies
Resource utilization
Global strategy
© 2005 Prentice Hall
1-21