CH1 introduction to global marketing – Flashcards

can be defined as the activity set of institutions and process for creating communicating, delivering and exchanging offerings that have value for customers clients partners and society at large marketing activities center on an organizations efforts to satisfy customer wants and needs with products and services that offer competitive value IN CALSS: marketing is about creating mutually beneficial exchange -exchange money for value

the four Ps - product price place promotion IN CLASS: new p's value, awareness, offering, access, clients and partners

focuses its resources and competencies on global market opportunities and threats a fundamental difference between regular marketing and global marketing is the scope of activities outside the home country market. the scope issue can be conceptualized in terms of the familiar product/ market matrix for growth strategies some companies pursue a market development strategy

seeking new customers by introducing existing products or services to a new market segment or to a new geographical market

a company creates a new product or service offering targeting a new segment, a new country or a new region

Market penetration strategy

Product development strategy

Market Development strategy

Diversification strategy

understands specific concepts and has a broad and deep understanding of the worlds varies business environments must understand the strategies that when skillfully implemented in conjunction with universal marketing fundamentals increase the likelihood of market success understand the importance of global excellence

marketing is one of the functional areas of a business, distinct from finance and operations can also be thought of as a set of activities and processes that along with product design, manufacturing and transportation logistics, comprise a firms value chain decisions from ever stage from idea conception to support after the sale, should be assessed in terms of their ability to create value for customers

surpass the competition and the task of creating perceived value= superior value proposition for customers

value = benefits/ price (money time effort etc..) THE MARKETING MIX IS INTEGRAL TO THE EQUATION BECAUSE BENEFITS ARE A COMBINATION OF THE PRODUCT, THE PROMOTION AND THE DISTRIBUTION, value as the customer perceives it can be increased in these ways - markets can offer customers an improved bundle of benefits or lower prices or both =markets may strive to improve the product itself, to design new channels of distribution, to create better communications strategies or a combination of all three -seek to increase value by finding ways to cut cost and prices non monetary cost are also a factor and marketers may be able to decrease the time and effort that customers must expend to learn about or seek out the product companies that use price as a competitive weapon may scour the globe to ensure an ample supply of low wage labor or access to cheap raw materials companies can reduce prices if costs are low because of process efficiencies in manufacturing or because of economies of scale associated with high production volumes IN CALSS: value calculation = $/value desired

people or organizations that are both willing and able to buy in order to achieve market success a product or brand must measure up to the threshold of acceptable quality and be consistent with buyer behavior, expectations and preferences if a company is able to offer a combination of superior product distribution or promotion benefits and lower process than the competitions it should enjoy an extremely advantageous position achieving success in global markets needs persistence and patience IN CLASS: 3 things that drive a market - offering gratefying -healthy(financial, physical) -convenient

when a company succeeds in creating more value for customers than its competitors do

the transformation of formerly local or national industries into global ones is a part of a broader economic process of globalization Jagdish bhagwati: economic globalization constitutes integration of national economies into the international economy through trade, direct foreign investment (by corporations and multinationals) short term capital glows, international flows of workers and humanity generally, and flows of technology globalization presents companies with tantalizing opportunities- and challenges- as executives decide whether to offer their products and services everywhere

is one in which competitive advantage can be achieved by integrating and leveraging operation on a worldwide scale put another way, an industry is global to the extent that a company's industry position in one country is interdependent with its industry position in other countries indicators of globalization include the ratio of cross border trade to total worldwide production of industry revenue generated by companies that compete in all key world regions a way to determine the degree of globalization in an industry sector is to calculate the ratio on annual value of global trade in the sector- including the value of components shipped to various countries during the production process- to the annual value of industry sales

achieving competitive advantage in a global industry requires executives and managers to maintain a well defined strategic focus focus is simply the concentration of attention on a core business or competence value, competitive advantage and the focus required to achieve them are universal in their relevance and they should guide marketing efforts in any part of the world

may include a combination of standard and not standard companies that understand and engage in global marketing can offer more overall value to customers than companies that do not have that understanding differences from countries to country mean that a marketing approach that has proven successful in one country will not necessarily succeed in another country customer preferences, competitors, channels of distribution and communication media may differ important managerial task is learning to recognize the extent to which it is possible to extend marketing plans and programs worldwide as well as the extent to which adaptation is required GMS addresses this

GMS in single country marketing, strategy development addresses two fundamental issues: 1- choosing a target market and 2-developing a marketing mix the same two issues are at the heart of a firms GMS although they are viewed from a somewhat different perspective global market participation -the extent to which a company has operations in major world markets standardization vs adaptation -the extent to which each marketing mix element is standardized or adapted (ex executed in different ways) in various country markets GMS has additional dimensions 1- concentration on marketing activities -the extent to which activities related to the marketing mix (ex promotional campaigns or pricing decisions) are performed in one or a few country locations 2- coordination of marketing activities - refers to the extent to which marketing activities related to the marketing mix are planned and executed interdependently around the globe 3- integration of competitive moves - the extent to which a firms competitive marketing tactics in different parts of the world are interdependent GMS can enhance the firms performance on a worldwide basis the decision to enter one or more particular markets outside the home country depends on a companies resources, its managerial mind set, and the nature of opportunities and threats Brazil, russia, india, china and south Africa - five emerging markets BRICS represent significant growth opportunities Mexico indonesia, nigeria and turkey- MINTs also hold great potential the issue of standardization vs adaptation in global marketing has been at the center of a long standing controversy among both academicians and business practitioners

Levitt argued that marketers were confronted with a homogeneous global village the advised organizations to develop standardized high quality world products and market them around the globe by using standardized advertising, pricing and distribution

successful global marketer must have the ability to think globally and act locally a two way street. think globally and act locally any companies are learning that it is important to think locally and act globally ( far away from headquartering and transporting then back home)

being a global company is to maintain a kind of tension within the organization without being undone by it. some say that new world one size fits all. others say that the world requires endless customization - special products for every region. best global companies understand that it is neither and it is both. they keep both in mind global marketing is standard and nonstandard. a global product may be the same product everywhere and different global marketing requires marketers to think and act in a way that is both global and local

how to tailor the global marketing concept to fit particular products, businesses and markets the particular approach to global marketing that a company adopts will depend on industry conditions and its source or sources of competitive advantage

form and substance of a companies response to global market opportunities depend greatly on managements assumptions or beliefs ethnocentric orientation polycentric regiocentric geocentric EPRG framework management with ethnocentric orientation may consciously make a decision to move in the direction of geocentric orientation

his or her country is superior to the rest of the world associated with attitudes of national arrogance or assumptions of national superiority; manifest itself to indifference to marketing opportunities outside the home country see only similarities in markets and assume that products and practices that succeed in the home country will succeed anywhere opportunities out of the home country are largely ignored (domestic companies) ethnocentric companies that operate outside of the home country (international companies); products that succeed to the home countries are superior this point of view leads to a standardized or extension approach to marketing based on the premise that products can be sold everywhere without adaption ethnocentric international company: foreign operates or markets are typically viewed as being secondary or subordinate to domestic ones ethnocentric company operates under the assumption that headquarters "tried and true" knowledge and organizational capabilities can be applied in other parts of the world IN CLASS: standardized, less willing to change

the opposite of ethnocentrism the term polycentric describes managements belief or assumption that each country in which a company does business is unique each subsidiary to develop its own unique business and marketing strategies in order to succeed ; multinational company - this point of view leads to localized or adaptation approach that assumes that products must be adapted in response to different market conditions

a region becomes the relevant geographic unit managements goal is to develop an integrated regional strategy NA free Trade agreement (NAFTA) US, CANADA, MEXICO has a regiocentric orientation

views the entire world as a potential market and strives to develop integrated global strategies a company whose management has adopted a geocentric orientation is sometimes known as global or transnational company a global company can be further describes as one that either pursues a strategy of serving world markets from a single country or sources globally for the purposes of focusing on select world markets from a single country or sources globally for the purposes of focusing on select country markets global companies tend to retain their association with a particular headquarters country transnational companies serve global markets and use global supply chains which often results in a blurring of national identity -a true transnational would be characterized as stateless a key factor that distinguishes global and transnational companies from international or multinational companies is mind set -at a global and transnational companies decisions regarding extension and adaptation are not based on assumptions. decisions are made on the basis of ongoing research into market needs and wants

the geocentric orientation represents a synthesis of ethnocentrism and polycentism it is a worldwide view that sees similarities and differences in markets and countries and seeks to create a global strategy that is fully responsive to local needs and wants a regionacentric manager is said to have a worldview of a region scale; the world outside the region o interest will be viewed with an ethnocentric or a polycentric orientation or a combination of the two ethnocentric company is centralized in its marketing management; the polycenric company is decentralized;; the regiocentric and geocentric companies are integrated on a regional and global scale ethnocentric orientation is based on a belief in home country superiority polycenytic approach is that there are so many differences in cultural, economic, and marketing conditions in the world that it is futile to attempt to transfer experienced across national boundaries key challenge for organizational leaders today is managing a company evolution beyond an ethnocentric, polycentric, or regiocentric orientation to a geocentric one

regional econommic ageements, converging market needs and wants, technology advances, pressure to cut costsm pressure to improve quality, improvements in communiation and transportation technology, global economic growth and opportunities for leverage all represent important driving forces; any industry subject to these forces is a candidate for globalization

NAFTA General agreement on tariffs and trade (GATT) created the world trade organization (WTO) to promote and protect free trade European union is lowering boundaries to trade within the region -creation of single currency one and intro of the euro led to increased intra european trade

most global markets do not exist in nature; marketing efforts must create them -for example, no one needs soft drinks but today in some countries soft drinks consumption exceeds water consumption the information revolution ("democratization of information") is one reason for the trend toward convergence the communication tools mean that people in the remotest corners of the globe can compare their own lifestyles and standards of living with those of people in other countries. in regional markets such as Europe and Asia the increasing overlap of advertising across national boundaries and the mobility of consumers have created opportunities for marketers to pursue pan regional product positioning. the internet is an even stronger driving force: when a company established s site on the internet the company automatically becomes global

modern jet travel made such communication feasible the cost of international data, voice and video communication has fallen

the pressure for globalization is intense when new products require major investments and long periods of development time global marketing does not necessarily mean operating everywhere

global marketing strategies can generate greater revenue and greater operating margins that in turn support design and manufacturing quality when a global company establishes a benchmark in quality competitors must quickly make their own improvements and come up to par

prior to the global economic crisis in 2008, economic growth had been a driving force in the expansion of the international economy and in the growth of global marketing for three reasons 1- economic growth in key developing countries creates market opportunities that provide a major incentive for companies to expand globally 2- economic growth has reduced resistance that might otherwise have developed in response to the entry of foreign firms into domestic economies. when a country like china is experiencing rapid economic growth policy makers are likely to look more favorably on outsiders. a growing country means growing markets; there is often plenty of opportunity for everyone. it is then possible for a foreign company to enter a domestic economy and establish itself without threatening the existence of local firms. without economic growth, global enterprises may take business away from domestic ones. domestic businesses are more likely to seek governmental intervention to protect their local positions if markets are not growing 3- the worldwide movement toward free markets, deregulation and privatization is a third driving force. the trend toward privatization is opening up formerly closed markets; tremendous opportunities are being created as a result

leverage means some type of advantage that a company enjoys by virtue of the fact that it has experience in ore than one country leverage allows a company to conserve resources when pursuing opportunities in new geographical markets in other words leverage enables a company to expend less time, less effort and less money. - 4 important types of leverage -experience transfers -scale economies -resource utilization -global strategy 1-experience transfers -can draw upon management practices, strategies, products, advertising appeals, or sales or promotional ideas that have been market tested in one country or region and apply them in other comparable markets. 2-scale economies -the global company can take advantage of its greater manufacturing volume to obtain traditional scale advantages within a single factory -not limited to manufacturing. Just as a domestic company can achieve economies in staffing by eliminating duplicate positions after acquisition , a global company can achieve the same economies on a global scale by centralizing functional activities 3- resource utilization - major strength of a global company is its ability to scan the entire world to identify people money and raw materials that will enable it to compete most efficiently in world markets 4- Global strategy -the global companies greatest single advantage can be its global strategy. it is built on an information system that cans the world business environment to identify opportunities, trends, threats and resources -when opportunities are identified the global company adheres to the three principles - it leverages its skills and focuses its resources to create superior perceive value for its customers and achieve competitive advantage -the global strategy is a design to create a winning offering on a global scale a global strategy is no guarantee of ongoing organizational success. companies that cannot formulate of successfully implement a coherent global strategy may loose their independence

important restraining forces include - management myopia, - organizational culture, -national controls and -opposition to globalization 1-management myopia and organizational culture -myopia is also a recipe for market disaster if headquarters attempts to dictate when it should listen. global marketing does not work without a strong local team that can provide information about local marketing conditions -in companies where subsidiary management Knows it all there is no room for vision from the top. -in companies where headquarters management s all knowing there is no room for local initiative or an in depth knowledge of local needs and conditions -successful global companies have learned how to integrate global vision and perspective with local market initiative and input -initiative and input by headquarters executives and the corresponding respect for headquarters vision by local executives leads to success 2- national controls -control ranges from a monopoly controlling access - tariff barriers have been removed in high income countries thanks to WTO GATT NAFTA -non tariff barriers NTB are still in evidence -NTBs are non monetary restrictions on cross border trade ex "buy american products" -NTBs ave the potential to make it difficult for companies to gain access to some individual country regional markets 3-opposition to globalization - some people think that globalization and global marketing represent a threat -globalphobia is sometimes used to describe bad attitude towards trade agreements, global brands or company policies that appear to result in hardship for some individuals or countries while benefiting others. - opponents are labor unions, college and university students and national and international nongovernmental organizations (NGO)