Global Marketing g

Global Edition
Warren J. Keegan Mark C. Green

Introduction to Global Marketing

Introduction to Global Marketing Chapter 1

Copyright 2013, Pearson Education

Global Marketing g (Global Edition) Chapter 1

Introduction
Chapter topics: The marketing concept Three principles of marketing Nontraditional marketing Global marketing Standardization vs. adaptation Management orientations (EPRG) Driving & restraining forces affecting global marketing 18 guiding principles of marketing company STV model Holistic marketing 1-3
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Introduction to Global Mktg

Global vs. Regular Marketing
Scope of activities are outside the homey market country

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The Marketing Concept

Concept has changed dramatically: 1950s: Focus on products 1960s: Focus on customer orientation Development of marketing mix: product, price, place, promotion p p (4Ps) ( ) 1990s: Focus on customer in the context of the broader external environment Competition, government policy & regulation Focus on stakeholder value Employees, customers, shareholders, society
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The Marketing Concept

Today: Two key tasks of marketing Focus on customer & his/her environment Create value for consumers & stakeholder Shift towards Focus on managing strategic partnerships Positioning of firm in value chain to optimize value creation Profit as a measure of success, not an end in itself
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The Three Principles of Marketing

Nontraditional Marketing

CUSTOMER VALUE

Person marketing Place marketing

DIFFERENTIATION

FOCUS

Cause marketing Event marketing Organization marketing

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Global Marketing
Create value for customers by improving benefits or reducing price
Improve the product Find new distribution channels Create better communications Cut monetary and non-monetary costs and prices
Value=Benefits/Price
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Globalization
markets, nation-states markets nation states and technologies to a degree never witnessed beforein a way that is enabling individuals, corporations and nation-states ti t t t to reach h around d th the world ld farther, faster, deeper and cheaper than ever before and in a way that is enabling the before, world to reach into individuals, corporations and nation-states farther, faster, deeper and cheaper h than th ever before. b f
Th Thomas Friedman Fi d
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Globalization is the inexorable integration of

Global Industries
An industry is global to the extent that a companys 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
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Comp Advantage, Globalization, and Global Industries

Focus
Concentration and attention on core business and competence

Nestl Nestl is focused: We are food and beverages. 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 touchWe we will either buy Coca-Cola or we leave it alone. This is focus.
Helmut Maucher, former Chairman of Nestl SA
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Global Marketing: What It Is and What It Isnt

Single Country M k ti Strategy Marketing St t
Target Market Strategy Marketing Mix
Product Pi Price Promotion Place

Standardization vs. Adaptation

Globalization (Standardization)
Developing standardized products marketed worldwide with a standardized marketing mix Essence E of f mass marketing k ti

Global Marketing Strategy

Global Market Participation Marketing g Mix Development p 4Ps: Adapt or Standardize? Concentration of Marketing Activities Coordination of Marketing Activities Integration of Competitive Moves
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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 vs. Adaptation

Product Promotion

McDonalds McDonald s Global Marketing

Marketing Mix Element Standardized (Extension)
Big Mac Brand name Advertising Slogan Im Loving It

Localized (Adaptation)
McAloo Tikka potato burger (India) Slang Maccas Macca s (Australia) MakDo (Philippines) McJoy magazine, Hawaii S fi H Surfing Hula l promotion ti (Japan) Home delivery (India) Swiss rail system dining cars $5.79 $5 79 (Norway) (N ) $1.83 (China)
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Arabic read right to left

Chinese d l delicious/happiness /h

Place

Free-standing Free standing

Pi Price
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A Average price i of f Big Bi Mac M is i $3.54 (US)

The Faces of Coca-Cola Around the World

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The Importance of Going Global

For US companies, 75% of total world market f goods for d and d services i is i outside t id the th country t
Coca-Cola earns 75% of operating income and 2/3 of f profit fit outside t id of fN North th A America i

Consumer/Industrial Markets
Product/Service Cigarettes Luxury Goods Cosmetics P Personal l Computers C t Flat-screen TVs Bottled Water Home Appliances Cell Phones Video Games Recorded Music
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For Japanese companies, 85% of world market k is outside d the h country 94% of market potential is outside of Germany for its companies
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Mkt Size ($B) $295 230 200 175 100 100 85 60 43 32

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Management Orientations
Ethnocentric Orientation
Home country is superior to others Sees only similarities in other countries Assumes products and practices that succeed at home will be successful everywhere Leads L d to t a standardized t d di d or extension t i

Management Orientations
Polycentric Orientation
Each country is unique Each subsidiary develops its own unique business and marketing strategies Often referred to as multinational Leads to a localized or adaptation approach h that th t assumes products d t must tb be adapted to local market conditions

approach

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Management Orientations
Regiocentric g Orientation
A region is the relevant geographic unit
Ex: The NAFTA or European Union market

Management Orientations
Geocentric Orientation
Entire E ti world ld is i a potential t ti l market k t Strives for integrated global strategies Also known as a global or transnational company Retains an association with the headquarters country Pursues serving world markets from a single country or sources globally to focus on select country t markets k t Leads to a combination of extension and

Some companies serve markets throughout the world world, but on a regional basis
Ex: General Motors had four regions for decades

adaptation elements

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European Union

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Driving Forces Affecting Global Integration & Marketing

Multilateral trade agreements t Converging market needs and wants and the information revolution Transportation and communication improvements Product development costs
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Driving Forces Affecting Global Integration & Marketing

Quality
R&D as a percentage of sales

World economic trends

2008 global crisis Growing middle class in China, India, Brazil, etc. Rapid growth in China pre-2008 Movement to free markets worldwide
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Driving Forces Affecting Global Integration & Marketing

Leverage
Experience transfers Scale economies Resource utilization Global strategy

Restraining Forces Affecting Global Integration & Marketing

Management M t myopia i Organizational g culture National controls O Opposition iti to t globalization l b li ti

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Overview of Book
Part 1: Introduction Part 2: The Global Marketing Environment Part 3: Approaching Global Markets Part 4: The Global Marketing Mix Part 5: Strategy and Leadership in the Twenty-First Century
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18 Guiding Principles of the Marketing Company

Foundation 1. The Principle of the Company: Marketing is a Strategic Business Concept p 2. The Principle of the Community: Marketing is Everyones Business 3 The Principle of Competition: Marketing War is about Value 3. War Topping 4. The Principle of Retention: Concentrate on Loyalty, Not Just Satisfaction 5. The Principle of Integration: Concentrate on Differences, Not Just Averages 6. The h Principle l of f Anticipation i i i : Concentrate on Proactivity, Not Just Reactivity
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18 Guiding Principles of the Marketing Company (contd)

Value 7. The Principle of Brand: Avoid the Commodity-like Trap 8. The Principle of Service: Avoid the Business-Category Trap 9 The 9. Th Principle P i i l of f Process P : Avoid A id the th Function-Orientation F ti O i t ti Trap Strategy 10. The Principle of Segmentation: View Your Market Creatively 11 The Principle of Targeting: Allocate Your Resources Effectively 11. 12. The Principle of Positioning: Lead Your Customers Credibly

18 Guiding Principles of the Marketing Company (contd)

Tactics 13. The Principle of Differentiation: Integrate Your Content, C t t and Context dI Infrastructure f t t 14. The Principle of the Marketing Mix: Integrate Your Offer, , Logistics g and Communications Price, 15. The Principle of Selling: Integrate Your Company, Customers and Relationships Implementation 16. The Principle p of Totality y: Balance Your Strategy, gy, Tactics and Value 17. The Principle of Agility: Balance Your What, Why and How 18 The Principle of Utility: Balance Your Present 18. Present, Future and Gap
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Price

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2011 Pearson Education