Global Marketing

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Going Global …..

For U.S. companies, 70% of total world

market for goods and services is outside
the country
Coca-Cola earns 75% of operating income and
two-thirds of profit outside of North America
For Japanese companies, 90% of world
market is outside the country
94% of market potential is outside of
Germany for its companies
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 Drivers of Globalization
 Resource availability
• Natural: the ability to produce due to readily available
resources such as minerals and agricultural products
• Acquired: based on research and development
 Most new products originate and find their largest
markets in the wealthier countries such as the
United States, Germany, Japan, France, the United
Kingdom, and Italy
 The fastest growth area in world trade has been in
services, which has grown from less than 4% to
more than 20% of world trade between 1980 and
1999
 Manufacturing now accounts for less than 20% of
the economies of the wealthier countries
 Drivers of Globalization
 Cost
• The production of various goods and services
requires different combinations of inputs
• The cost of these inputs varies from one country to
another for a variety of complex reasons

 Comparative advantage
• When an individual, firm, or country uses its
resources to specialize in the production of those
goods and services that are most productive and
profitable, it is producing according to comparative
advantage
• Comparative advantage implies specialization
 Drivers of Globalization
 Technological developments:
• Developments in communications and
transportation
 Rising incomes and growing consumer pressure:
• Global discretionary income =>widespread
demand for products that would have been
considered luxuries in the past
 Development of supportive services- banking
 Increased global Competition
 Changing political environment
 Drivers of Globalization
 Liberalization of cross-border movements:
• Governments today impose fewer restrictions on cross-border
movements than they did a decade or two ago for three main
reasons:
• Idea of open economies
 Greater efficiency by competing against foreign companies
 Other countries will follow their example
 Cooperation among countries:
• Countries cooperate in many ways through international
organizations, treaties, and consultations
• Countries cooperate to:
 Gain reciprocal advantages
 Attack problems that cannot be solved alone
 Deal with concerns lying outside anyone’s territory
Barriers to Globalization

Management myopia
Organizational culture
National controls
Opposition to globalization –
reasons include ideology, culture,
fear of loosing social and political
identity and sovereignty.

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Advantages and Challenges of
Globalization
 Productivity: the amount of output
relative to the amount of input
• Globalization allows the benefits of productivity
developments in one nation to move more quickly to
other nations
• A downside to this transfer is that individuals and
companies must adjust to compete
 Consumers
• Consumers benefit from globalization through their ability
to choose from a greater variety of products and services
and to buy from cheaper production locations
• A potential problem is the consumers’ weaker control
over supplies from foreign countries
 Advantages and Challenges of
Globalization
Employment
• Globalization allows the benefits of productivity
developments in one nation to move more quickly
to other nations
• Critics of globalization contend that the quality, as
well as the quantity, of jobs should be considered
The Environment
• Many of the most desired resources are in the
poorest areas of the world where people can benefit
economically from exploiting these resources
• On the other hand, concern is high over the
depletion of finite resources, potential climatic
changes, and despoliation of the environment
 Advantages and Challenges of
Globalization
Monetary and fiscal conditions
• An advantage of globalization is that money, if allowed to
move freely, should go where it will be most needed and
have the highest productivity
• Monetary, fiscal, and regulatory differences remain
Sovereignty
• Globalization may undermine sovereignty in two ways:
Contact with other countries creates more cultural
borrowing
Countries are concerned that important decisions may be
made abroad that will undermine their national well-
being
Growth Matrix
Global versus “regular” marketing
Scope of activities are outside the home-
country market

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Marketing ...
Creates 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
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 nation-
states to reach around the world farther, faster,
deeper and cheaper than every before, and in a
way that is enabling the world to reach into
individuals, corporations and nation-states
father, faster, deeper and cheaper than ever
before.
Thomas L. Friedman
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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
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Global Marketing: What It Is and
What It Isn’t
Single Country Global Marketing
Marketing Strategy Strategy
Target market strategy Global market participation
Marketing mix development
Marketing mix
4 P’s: adapt or standardize?
Product
Concentration of marketing
Price activities
Promotion Coordination of marketing
Place activities
Integration of competitive
moves
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What Makes International
Business Different?
 Different National Environments:
• Most countries vary internally, causing companies to alter
their business practices from one region to another
• To conduct business successfully abroad, companies must
often adopt practices other than what they are
accustomed to domestically
 Legal-Political Environment:
• Companies that conduct business internationally are
subject to the laws of each country in which they operate
• Political relationships between countries also influence
what companies can do internationally
• There are sometimes differences in laws between
countries
What Makes International
Business Different?
Economic Environment
• In fact, the average income in most of the world’s
countries is very low
• Generally, poor countries have smaller markets on a per
capita basis, less educated populations, higher
unemployment or underemployment, poor health
conditions, greater supply problems, higher political risk,
and more foreign exchange problems
 The Cultural Environment
• Culture: refers to the specific learned norms of a society
based on attitudes, values, beliefs, and frameworks for
processing information and tasks
• These norms vary from one country to another
 Mobility
• Impediments to the movement of goods and the inputs to
produce them are more pronounced among countries than
within them
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 to a standardized or extension
approach
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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 that assumes products must be
adapted to local market conditions
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Management Orientations
Regio-centric orientation
A region is the relevant geographic unit
• Ex: The NAFTA or European Union market
Some companies serve markets throughout
the world but on a regional basis
• Ex: General Motors had four regions for
decades

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Management Orientations
Geocentric orientation
Entire world is a potential market
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
markets
Leads to a combination of extension and adaptation
elements
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Standarization 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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Standarization versus Adaptation

Arabic
read right to left

Chinese
“delicious/happiness”

The faces of Coca-Cola around the world 1-23

McDonald’s Global Marketing
Marketing Mix Element Standardization Localized
Big Mac McAloo Tikka potato burger
Product
(India)

Promotion Brand name Slang ’Macca’s (Australia)

MakDo (Philippines)

Advertising slogan McJoy magazine, “Hawaii

“I’m Loving It” Surfing Hula” promotion
(Japan)
Place Free-standing Home delivery (India)
Swiss rail system dining cars
Price Big Mac is $3.10 in $5.21 (Switzerland)
U.S. and Turkey $1.31(China)
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Global Auto Industry
Thousands of auto companies went global in
the early twentieth century
More than 500 of those producers were in the
United States
Today there are fewer than 20 in the world
Toyota is the world’s most valuable car
company and is eighth largest in revenue
globally

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 A Mix of Strategies
 Different products, capabilities, and operating
locations dictate a mix of approaches to
maximize performance
 Avon’s International Activities
 Focus versus do-it-all?
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, former chairman of Nestlé SA

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