Transcript Global Marketing

Global Marketing Management, 5e
1
Chapter 1
Globalization
Imperative
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
Chapter Overview
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1. Why Global Marketing is Imperative
2. Globalization of Markets: Convergence
and Divergence
3. Evolution of Global Marketing
4. Appendix: Theories of International Trade and the
Multinational Enterprise
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
Introduction
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Products have been traded across borders throughout
recorded civilization, extending back beyond the Silk
Road that once connected East with West from Xian
(China) to Rome (Italy).
Total world merchandise trade volume grew from $7.6
trillion in 2000 to $16.3 trillion in 2008.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
Introduction
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Big Emerging Markets (BEMs): In the next ten to twenty
years, BEMs such as the Chinese Economic Area (CEA:
including China, Hong Kong Region, and Taiwan), India,
South Korea, Mexico, Brazil, Argentina, South Africa,
Poland, Turkey, and the Association of Southeast Asian
Nations (ASEAN: including Indonesia, Brunei, Malaysia,
Thailand, the Philippines, and Vietnam) will provide
many opportunities in global business.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
1. Why Global Marketing is Imperative
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Saturation of domestic markets: Domestic-market
saturation in the industrialized parts of the world and
marketing opportunities overseas are evident in
global marketing.
Global competition: Competition around the world and
proliferation of the Internet have been on the rise and
are now intensifying.
Need for global cooperation: Global competition
brings global cooperation.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
1. Why Global Marketing is Imperative
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Internet revolution: The Internet and electronic
commerce (e-commerce) are bringing major structural
changes to the way companies operate worldwide.
The term global epitomizes both the competitive
pressure and expanding market opportunities.
Whether a company operates domestically or across
national boundaries, it can no longer avoid
competitive pressures from around the world.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
Exhibit 1-1: Change in World’s 100 Largest
Companies and Their Nationalities
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
2. Globalization of Markets: Convergence and
Divergence
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Per capita income is an important determinant of
consumer buying behavior.
When a country’s per capita income is less than
$10,000, much of the income is spent on food and
other necessities, and very little disposable income
remains.
As a country’s per capita incomes reaches $20,000,
the disposable portion of income increases
dramatically.
This increased disposable income level results in
increased convergent pressures on consumer buying
behavior.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
2. Globalization of Markets: Convergence and
Divergence
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People with higher incomes tend to enjoy similar
educational levels, desires for material positions, ways
of spending leisure time, and aspirations for the
future.
Globalization does not suffocate local cultures, but
rather liberates them from the ideological conformity
of nationalism, with consumers becoming more
receptive to new things.
Consumers also have a wider, more divergent “choice
set” of goods and services to choose from.
In other words, the divergence of consumer needs is
taking place at the same time.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
2. Globalization of Markets: Convergence and
Divergence
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International trade consists of exports and imports.
International business includes international trade and
foreign production.
Extensive international penetration of companies is
called global reach.
International trade and foreign production activities
are managed on a global basis.
Growth of Multinational Corporations (MNCs) and
intra-firm trade is a major aspect of global markets.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
2. Globalization of Markets: Convergence and
Divergence
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Who manages international trade?
 Intrafirm
trade: Trade between MNCs and their
foreign affiliates. Comprises 34 percent of world
trade.
 An additional 33 percent of world trade was
exports between MNCs and their affiliates.
 In other words, two-thirds of world trade is managed
one way or another by MNCs.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
3. Evolution of Global Marketing
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What is marketing?
Marketing involves the planning and execution of the
conception, pricing, promotion, and distribution of
ideas, products, and services.
Marketing involves customer satisfaction and their
current and future needs.
Marketing is much more than selling and involves the
entire company.
Within marketing strategies, companies are always
under competitive pressure to move forward both
reactively and proactively.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
3. Evolution of Global Marketing
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Five stages in the evolution of global marketing (see
Exhibit 1-2):
1. Domestic Marketing (domestic focus; home country customers;
ethnocentric orientation).
2. Export Marketing (indirect vs. direct exporting; country choice,
exports; ethnocentric orientation; home country customers).
3. International Marketing (markets in many countries;
polycentric orientation; use of multidomestic marketing when
customer needs are different across national markets).
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3. Evolution of Global Marketing
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4. Multinational Marketing (many markets; consolidation on
regional basis; regiocentric orientation; standardization within
regions).
5. Global Marketing (international, multinational & geocentric
orientation; company’s willingness to adopt a global perspective;
global products with local variations).
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Chapter 1
Exhibit 1-2: Evolution of Global Marketing
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
3. Evolution of Global Marketing
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Global Marketing refers to marketing activities that
emphasize the following:
1.
2.
3.
Standardization efforts.
Coordination across markets.
Global integration.
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Chapter 1
3. Evolution of Global Marketing
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Global marketing does not necessarily mean that
products can be developed anywhere on a global
scale.
The economic geography, climate, and culture affect
how companies develop certain products.
The Internet adds a new dimension to global
marketing.
E-commerce retailers gain substantial savings by
selling online.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
4. Appendix: Theories of International Trade &
the Multinational Enterprise
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Comparative Advantage Theory
(see Exhibit 1-3)
Absolute Advantage
 Comparative Advantage
 Commodity Terms of Trade
 Principles of International Trade
 Factor Endowment Theory
International Product Cycle Theory
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(see Exhibit 1-4)

Economies of Scale
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
Exhibit 1-3:
Comparative Advantage at Work
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Chapter 1
Exhibit 1-4:
International Product Life Cycle
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
4. Appendix: Theories of International Trade &
the Multinational Enterprise
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 Economies
of Scope
 Technological Gap
 Preference Similarity
 Stages of International Product Cycle Theory:
 Introduction
Stage
 A U.S. company innovates on a new product in its
home country.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
4. Appendix: Theories of International Trade & the
Multinational Enterprise
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 Growth
Stage
 Product standards emerge and mass production
becomes feasible.
 Maturity Stage
 Many U.S. and foreign companies vie for market
share in the international markets.
 Decline Stage
 Companies in the developing countries also begin
producing the product and marketing it in the rest
of the world.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1
4. Appendix: Theories of International Trade &
the Multinational Enterprise
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Internalization/Transaction Cost Theory
 Appropriability
Regime
 Dominant Design
 Manufacturing and Marketing Ability
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 1