1-1 chapter 1 introduction to global marketing. 1-2 introduction what is global marketing? how is it...
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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 organization’s 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)
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Overview of Marketing
One of the functional areas of a business that is distinct from finance and operationsPrimary tools in marketing are product, price, place, and promotionMarketing is an activity that comprises the firm’s value chainCurrent 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 areasProperly 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 nation-states 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 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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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
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Global Marketing: What it is and What it isn’t
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 isn’t
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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
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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-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.
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Foreign Acquisitions of U.S. Companies
U.S. Companies Foreign OwnerBestfoods (foods) U.K.
Ben & Jerry’s (ice cream) U.K.
Alpo (pet food) Swiss
Pillsbury (food) U.K.
Burger King (fast food) U.K.
Random House (publishing) Germany
Chrysler (autos) Germany
TV Guide (magazine) Australia
New York Post (newspaper) Australia
LA Dodgers (sports) Australia
Arco (gasoline) U.K.
CompUSA (retailing) Mexico
Seagram (alcoholic beverages) France
Irwin/McGraw-Hill
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4
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Invented Here, Made Elsewhere
U.S. Invented Technology
Phonographs
Color TVs
Audiotape Recorders
Videotape Recorders
Machine Tools
Telephones
Semiconductors
Computers7 4%
9 8%6 4%
8 9%2 5%
9 9%3 5%
9 9%1%
1 0%0%
4 0%1 0%
9 0%1%
9 0%
0 20 40 60 80 100
1 9 7 0
N O W
Irwin/McGraw-Hill
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Top 10 U.S. Players in the Global Game
CompanyForeign
Revenues($ Mil)
Foreign Revenues
(% of Total)
Foreign Profits
(% of Total)
SOURCE: Adapted from Brian Zajac, “Global Giants”. Forbes, July 24, 2000Irwin/McGraw-Hill
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Foreign Assets
(% of Total)
ExxonMobil
IBM
Ford Motor
General Motors
General Electric
Texaco
Citigroup
Hewlett-Packard
Wal-Mart Stores
Compaq Computer
115,464
50,377
50,138
46,485
35,350
32,700
28,749
23,398
22,728
21,174
71.8
57.5
30.8
26.3
31.7
77.1
35.1
55.2
13.8
55.0
62.7
49.6
N/A
55.3
22.8
54.1
N/A
58.0
8.2
101.4
63.9
43.7
44.2
38.0
47.4
45.2
41.0
51.5
36.0
28.2
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Management Orientations
Ethnocentric:Home country is
Superior, seesSimilarities 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, seesSimilarities and
Differences in homeAnd host countries
Polycentric: Each host country Is
Unique, sees differencesIn foreign 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
GlobalIntegration
andGlobal
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