Global Marketing
Tenth Edition, Global Edition
Chapter 1
Introduction to Global
Marketing
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Learning Objectives
1.1 Use the product/market growth matrix to explain the various ways a
company can expand globally.
1.2 Describe how companies in global industries pursue competitive
advantage.
1.3 Compare and contrast a single-country marketing strategy with a
global marketing strategy (GMS).
1.4 Identify the companies at the top of the Global 500 rankings.
1.5 Explain the stages a company goes through as its management
orientation evolves from domestic and ethnocentric to global and
geocentric.
1.6 Discuss the driving and restraining forces affecting global integration
today.
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Overview
• International trade flourished from mid-1800s until 1920s.
Great Britain dominated the world economy but that ended
with WWI,
• Four decades ago the phrase global marketing did not
exist.
• Today companies go global to survive as competitors will
enter the home market with lower costs, more experience
and better products.
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Marketing & Global Marketing Defined
• Marketing: “the activity, set of institutions, and processes
for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners,
and society at large”
• Marketing Mix: The 4 Ps
• Global Marketing: The scope of activities outside the
home market
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Give example of globalization terms that the presenter give
What is Global Marketing? Reverse globalization. West —> East. East —> West.
China: East for East. Technology such as QQ WeChat.
Sinofication of culture
• Global v s “Regular” Marketing
ersu
Chinese influence. Elements of chinese culture/tech/ppl: Brands, people, idea
– Scope of activities are outside the home-country
What has been changed with globalization over the past 7 years
market Info tech commu tech techs converging
Places no longer matters, it’s defined by technology. How globalization progress
Table 1-1 Product/Market Growth Matrix Learn about history. Globalization has happened before.
Travel. See how other people live around the world. Try to understand other
cultures.
Blank Blank Product Orientation Product Orientation
Existing Products New Products
Market Orientation Existing markets Market penetration Product development
Strategy strategy
Blank New markets Market development Diversification
strategy strategy
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Give example of globalization terms that the presenter give
Reverse globalization. West —> East. East —> West.
China: East for East. Technology such as QQ WeChat.
Sinofication of culture
Chinese influence. Elements of chinese culture/tech/ppl: Brands, people, idea Differentioate 1.0 2.0 3.0
What predictions happened
What has been changed with globalization over the past 7 years
Info tech commu tech techs converging
Places no longer matters, it’s defined by technology. How globalization progress
Learn about history. Globalization has happened before.
Travel. See how other people live around the world. Try to understand other
cultures.
Realize that globalization isn’t a zero sum game.
Challenges for Marketers
• Marketers encounter unique or unfamiliar features in
countries or regions
– counterfeiting and piracy in China
– Bribery and corruption
• Managers at global companies understand the importance
of local excellence.
“The best global brands are also the best local brands.”
John Quelch & Katherine Jocz
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Competitive Advantage
• When a company succeeds in creating more value for
customers than its competitors do it creates Competitive
Advantage.
• Measured relative to industry rivals
• “Created when a firm has value-creating strategy not
simultaneously being implemented by any current or
potential competitors.” ~ Jay Barney
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Globalization
“Economic globalization constitutes integration of national
economies into the international economy through trade,
direct foreign investment (by corporations and
multinationals), short-term capital flows, international flows
of workers and humanity generally, and flows of
technology.”
~Jagdish Bhagwati~
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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 investment to total capital investment
• Proportion of industry revenue generated by all companies
that compete in key world regions
• Ratio of cross-border trade to worldwide production
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Competitive Advantage, Globalization
& 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, former chairman of Nestlé SA~
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“Globalization is no longer an abstraction
but a stark reality…Choosing not to
participate in global markets is no longer an
option. All firms, regardless of their size, have
to craft strategies in the broader context of
world markets to anticipate, respond, and
adapt to the changing configuration of these
markets.
C. Samuel Craig and Susan P. Douglas
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Pros and Cons of Globalization
• Hundreds of million of people have been lifted from
poverty and joined the middle class
• Where globalization has raised wages, living standards
have improved
• Not all gains from globalization have been evenly
distributed
• U.S. President Trump’s “America First” agenda is one
example of nations retreating into protectionism and
isolation
• “Globalization in reverse”
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Standardization v s Adaptation ersu
• 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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Global Marketing: What It Is & What It
Isn’t
Single-Country Marketing Global Marketing Strategy
Strategy
• Target Market Strategy • Global Market Participation
• Marketing Mix • Marketing Mix Development
– Product – 4 P’ s: Adapt or
– Price Standardize?
– Promotion • Concentration of Marketing
– Place Activities
• Coordination of Marketing
Activities
• Integration of Competitive
Moves
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Additional Dimensions
• Concentration of Marketing Activities
– the extent to which activities related to the marketing mix
(e.g., promotional campaigns or pricing decisions) are
performed in one or a few country locations
• Coordination of Marketing Activities
– the extent to which marketing activities related to the
marketing mix are planned and executed interdependently
around the globe
• Integration of Competitive Moves
– the extent to which a firm’s competitive marketing tactics in
different parts of the world are interdependent
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Markets with Great Potential
• BRICS are long recognized as • MINTs are a new group with
offering significant growth great potential
opportunities
– Mexico
– Brazil
– Indonesia
– Russia
– Nigeria
– India
– Turkey
– China
– South Africa
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Global Localization
• Many companies are learning that it is equally important to
– “Think globally, act locally”
• May be a combination of standard (product) and
nonstandard approaches (distribution or packaging)
• McDonald’s in France have muted colors and golden
arches are more subtle. American franchisees saw the
success in France and implemented similar renovations.
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Table 1-5 Examples of Effective Global
Marketing: McDonald’s
Marketing Mix
Element Standardized Localized
Product Big Mac McAloo Tikka potato burger, Chicken Maharaja Mac (India); Rye
McFeast (Finland); Adagio (Italy)
Promotion Brand name Slang nicknames-for example, Mickey D’s (United States,
Canada), Macky D’s (United Kingdom, Ireland), Macca’s
(Australia), Mäkkäri (Finland), MakDo (Philippines), McDo
(France)
Advertising slogan “Venez comme vous êtes” (“Come as you are”) television ad
“i’m lovin’ it” campaign in France. Various executions show individuals
expressing different aspects of their respective personalities.
One features a young man dining with his father. The ad’s
creative strategy centers on sexual freedom and rebellion: The
father does not realize that his son is gay.
Place Freestanding McDonald’s Switzerland operates themed dining cars on the
restaurants in high- Swiss national rail system; McDonald’s is served on the Stena
traffic public areas Line ferry from Helsinki to Oslo; home delivery (India)
Price Average price of $6.79 (Norway); $2.44 (China)
Big Mac is $4.20
(United States)
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The Importance of Global Marketing
• For U.S. companies, 75% of total world market for goods
and services is outside the country
– Coca-Cola earns 75% of operating income and 2/3
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 even though it is the largest EU market
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Management Orientations (1 of 4)
• 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 (2 of 4)
• 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 (3 of 4)
• Regiocentric 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 (4 of 4)
• 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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Forces Affecting Global Integration &
Global Marketing
• Multilateral trade agreements
• Converging market needs and wants and the information
revolution
• Transportation and communication improvements
• Product development costs
• Quality
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Restraining Forces Affecting Global
Integration and Global Marketing
• Management myopia and organizational culture
• National controls
• Opposition to globalization
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Assignment
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Questions
• In your opinion, is globalization inevitable?
Are the overall benefits of globalization
positive? What are the gains and losses
from globalization?
• What the pros and cons behind the sourcing
of Nike products from developing countries?
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