Global Marketing

• The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations.

• “marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives".

• The process of conceptualizing and then conveying a final product or service worldwide with the hopes of reaching the international marketing community.

• Different strategies are implemented based on the region the company is marketing to. For example, the menu at McDonald's varies based on the location of the restaurant. The company focuses on marketing popular items within the country. Global marketing is especially important to companies that provide products or services that have a universal demand such as automobiles and food.

Example:

Marketing Tea in the UK & other markets

Trade Institutions and Trade Policy

• The post-war east and west ideological split– The soviet union and the eastern bloc

• Council for mutual economic assistance (CMEA or COMECON).

– 53 western countries• The international trade organization (ITO) - 1948.

• Pax Americana– “American peace” driven by the belief that

international trade was a key to worldwide prosperity.

Global Division (1945)

• General agreement on tariffs and trade (GATT)• World trade organization (WTO)• International monetary fund (IMF)• World bank• Regional institutions

• GATT focused on reducing prevailing high tariffs• Most-favored nation (MFN) clause

– “Each member country of the GATT must grant every member country the most favorable treatment it accords to any other country with respect to imports and exports.”

• World trade organization (WTO) in 1995– General agreement on trade in services (GATS).– Trade-related aspects of intellectual property rights

(TRIPS).– Trade-related investment measures (TRIMS).

• European Coal and Steel Community• Customs Unions• European Union (EU)• North American Free Trade Agreement (NAFTA)• Mercosur - Latin America• Gulf Cooperation Council (GCC)• ASEAN (Association of S E Asian Nations)

Regional Economic Integration

• Levels of economic integration– Free Trade Area

• Least restrictive.• Goods and services are freely trades among all members. Each country

maintains its own trade barriers for nonmembers.– Customs Union

• Members establish a common trade policy with respect to nonmembers.– Common Market

• Factors of production mobility is emphasized. A common external tariff is adopted.

– Economic Union• Integration and harmonization of economic and monetary policies is

achieved leading to political union.• No trade barriers among member nations.• No restriction on the movement of labour, capital, or technology across

borders.• Member countries establish common tariff and trade barriers against

nonmember countries.

Economic Integration

The Cultural Environment

An understanding of cultural differences allows marketers to determine when adaptation may be necessary and when commonalities allow for regional or global approaches

Homogeneity of culture?

• Lifestyle • Apparel • Food • Shoes• Language• Music • Entertainment • Etc

• Lifestyle • Morals and values • Food • Family values • Adornment • Etc

Titan Adventure in European jewellery market

Embrace local culture. Build relationships. Employ locals to gain cultural

knowledge. Help employees understand

you. Adapt products and processes

to local markets. Coordinate by region.

PESTLE

Market Characteristics

• Population demographics– Age distribution, life expectancies,

household size, urbanization.• Income

– Distribution of low, medium, and high incomes.– Gross domestic product per capita.– Purchasing power parity (in USD).

• Consumption patterns– Income spent on necessities and luxuries.– Product saturation or diffusion.– Product form differences.

Market Characteristics (continued)

• Availability and quality of infrastructure– Rail traffic networks for distribution capabilities.– Communication systems for marketing.– Energy (electrical and fuel) consumption.

• Impact of the economic environment on social development– Urbanization, life expectancy, literacy rates, etc.– Physical Quality of Life Index (PQLI).

• http://en.wikipedia.org/wiki/Physical_Quality_of_Life_Index

• http://www.brown.edu/Administration/News_Bureau/Op-Eds/Morris.html

Risk

• Political risk– The risk of loss when investing in a given country

caused by changes in a country’s political structure or policies.

• Types of political risk– Ownership risk (property and life)– Operating risk (ongoing operations interference)– Transfer risk (in shifting funds between countries)

Go HomeForeigners

Forms of Host Country Controls

• Expropriation– Taking of private property with compensation.

• Confiscation– Taking of private property without compensation.

• Domestication– To gain control over foreign investment through

demanding partial transfer of ownership and imposed regulations.

– Raise tax rates.– Price controls.

International Environment

• International Politics– Political relations and conflicts between countries

can have a profound impact on firms trying to do business internationally.

– If relations between countries improve, business can benefit.

• International Law– No enforceable body of international law exists.

Firms are subject to home and host-country laws.– Areas of cooperation among nations

• bilateral treaties guaranteeing fair treatment• patent and trademark protection

Global Marketing Pitfalls to Avoid

• Insufficient local market research.• The tendency to over standardize the product.• Inflexibility in planning and implementation.• The “Not-Invented-Here” syndrome (NIH).

– How to avoid the NIH syndrome• Ensure that local managers participate in the

development of global brand marketing strategies.

• Encourage local managers to develop ideas for regional or global use.

The Need for Research

• Reasons that firms may be reluctant to view international research as important:– Lack of sensitivity to differences in consumer tastes and

preferences.– Limited appreciation for the different marketing environments

abroad.– Lack of familiarity with national and international data sources

and the inability to use them.– Actual but limited business experience in a country or with a

specific firm may be used as a substitute for organized research.

KFC & Revlon entries into India – 1990s

Why Firms Go International

PROACTIVE Motivators• Profit• Unique products• Technological advantages• Exclusive information• Managerial urge• Tax Benefit• Economies of scale

REACTIVE Motivators• Competitive pressures• Overproduction• Declining domestic sales• Excess capacity• Saturated domestic markets• Proximity to customers and

ports

Entry routes

• Agency • Strategic partnership • Control of brand without company ownership • Sharing of common customers • Joint venture• Own company • Integration into Regional or Global company

framework

Types of Ownership

• Ownership patterns may be based on past experiences with similar ownership models.

• Full ownership– Full control, full assumption of all risks.– May be desirable, but is not necessary for success

internationally.• Joint ventures

– Shared control, shared investment risks.– Reasons for joint ventures:

• governmental pressure to join with local partners.• mutually beneficial commercial considerations in sharing

markets, pooling resources, and local suppliers.