Chapter 1 Introduction to Global Marketing

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Introduction
What is Global Marketing? How is it different from regular marketing?

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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 organizations home country
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Reasons for Global Marketing

Growth
Access to new markets Access to resources Survival Against competitors with lower costs (due to increased access to resources) Pertumbuhan teknologi informasi Nilai tukar
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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 firms 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.)

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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

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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

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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 (export+import)/total production Ratio of cross-border investment to total capital investment (investasi lintas negara/total investasi) Proportion of industry revenue generated by companies that compete in key world regions

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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

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Global Marketing: What it is and What it isnt

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 isnt

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Global Marketing: What it is and What it isnt

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

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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-Colas 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
Bestfoods (foods) Ben & Jerrys (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)

Foreign Owner
U.K. U.K. Swiss U.K. U.K. Germany Germany Australia Australia Australia U.K. Mexico France

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Irwin/McGraw-Hill

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Invented Here, Made Elsewhere

U.S. Invented Technology
Phonographs
1-3 1% 9 0% 9 0%

Color TVs Audiotape Recorders Videotape Recorders

0%

1 0%
4 0% 1 0% 1%

1970 NOW 9 9%

Machine Tools
Telephones

3 5% 9 9% 2 5% 8 9% 6 4% 9 8% 7 4%

Semiconductors
Computers
0
Irwin/McGraw-Hill

20

40

60

80

100
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Top 10 U.S. Players in the Global Game

Company
Foreign Revenues ($ Mil) Foreign Foreign Foreign Revenues Profits Assets (% of Total) (% of Total) (% of Total)

ExxonMobil
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115,464 50,377 50,138 46,485 35,350 32,700 28,749

71.8 57.5 30.8 26.3 31.7 77.1 35.1

62.7 49.6 N/A 55.3 22.8 54.1 N/A

63.9 43.7 44.2 38.0 47.4 45.2 41.0

IBM Ford Motor General Motors General Electric Texaco Citigroup

Hewlett-Packard
Wal-Mart Stores Compaq Computer
Irwin/McGraw-Hill

23,398
22,728 21,174

55.2
13.8 55.0

58.0
8.2 101.4

51.5
36.0 28.2

1-22 SOURCE: Adapted from Brian Zajac, Global Giants. Forbes, July 24, 2000

Management Orientations
Polycentric: Each host country Is Unique, sees differences In foreign countries

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

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

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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

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