In Shanghai, a German businessperson is driving a Lexus; he’s wearing

Testoni shoes, Irish cashmere socks, Calvin Klein innerwear, an Armani

suit, with a Gucci belt. He has a Mont Blanc pen, in his Italian shirt.

He’s going to meet an American investor at a KFC restaurant, for a

Coke. After lunch, they stop for a Baskin-Robbins (actually a foreign

firm) ice cream sundae. --- OK, that’s a stretch.

When he gets home, sitting on an “Ottoman”, he has an “Absolut

Vodka” nightcap, while listening to “American country western music”.

Global Marketing

Global marketers consider the world as their market and

different country markets as components of this world

market.

Global Marketing is the coordinated performance of

marketing activities to create exchanges across

countries that satisfy individual, organizational , and

societal objectives

Global marketing is conducted across countries (not

domestic or foreign)

Global marketing coordinates activities across

different country markets

Global marketing should be motivated by

individual, organizational, and societal goals

Evolution of Global MarketingStage 1: Domestic Marketing: Companies manufacturing products and selling

those within the country itself. So, no international phenomenon at all. 

Stage 2: Export Marketing: Company starts exporting products to another

countries also. This is the very basic stage of global marketing. Approach of

marketer in this stage is said to be ‘Ethnocentric’ because although he is

selling goods to foreign countries, product development is totally based

upon the taste of local customer. So, focus is still on domestic market 

Stage 3: International Marketing: Now, company starts selling products to

various countries and the approach is ‘Polycentric’ i.e. making different

products for different countries.

Contd…

Stage 4: Multinational Marketing: Now, in this stage, the number of countries in which the

company is doing business gets bigger than that in earlier stage. And so, instead of producing

different goods for different countries, company tries to identify different regions for which it

can deliver same product. So, same product for countries lying in one region but different from

product offered in countries of another region. e.g. a company may decide to offer same product

to India, Sri lanka and Pakistan if it thinks the taste of people of these countries is same but at

the same time offering different product for American countries. This approach is called

‘Regiocentric approach’. 

Stage 5: Global Marketing: This is the final stage of evolution. In this stage company really

operates in a very large number of countries and for the purpose of achieving cost efficiencies it

analyses the requirement and taste of customers of all the countries and come out with a single

product which can satisfy the needs of all. This approach is called ‘Geocentric approach’. 

• one main difference between International and the Global marketing is the

approach of marketer.

• A truly global company instead of offering different products to different countries

(as in International Marketing), develops and offers a single product to the world.

• One more very interesting fact that in the early stage of Export marketing also, the

company was offering a single product to each of the countries as in the final stage

of Global marketing.

• But it was entirely different because in export marketing you produce according to

taste of your country and force that on other countries but in Global approach, you

take care of entire countries and develop a product which can satisfy the need of

all.

Reasons for Companies Going Global

• Domestic markets are saturated and there is pressure to raise sales and profits.

• Small size of domestic markets.

• Slow growth of domestic markets.

• In some industries like advertising, customers want their suppliers can contribute in most of

the markets where the buyer is operating.

• Some companies will have to move out their domestic markets when their competitors have

done so, if they want to maintain their market share.

• To combat with high cost structures

• Different stages of development of different countries and regions.

• To maintain market share and growth .

• The ability to compete successfully in domestic markets will depend upon their ability to

match the resources and competencies of MNCs.

Which Markets Does a Company Enter?

• Economic Factors

• Social and Cultural Factors

• Political and Legal Factors

• Market Attractiveness

• Capability of the Company

Mode of Entry in a Foreign Market

• Indirect Exporting

• Direct Exporting

• Licensing

• Franchising

• Joint Ventures

• Direct Investment

International Marketing Strategy

• Standardization or Adaptation

• Marketing Mix Decisions

Standardization or 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

Standardization Versus Adaptation

The faces of Coca-Cola around the world

All Chinese characters had more than one meaning, but K'o K'ou K'o Lê (depending on context) commonly meant what is seen here:

This combination for the Chinese trademark meant “to permit mouth to be able to rejoice” – showing the pleasure that could come from drinking Coke. That definition was a stroke of luck!

Marketing Mix Decisions

Product

A global company is one that can create a single product and only have to

tweak elements for different markets. For example, Coca-Cola uses

two formulas (one with sugar, one with corn syrup) for all markets.

The product packaging in every country incorporates the contour

bottle design and the dynamic ribbon in some way, shape, or form.

However, the bottle can also include the country’s native language and

is the same size as other beverage bottles or cans in that same

country................................

Price

Price will always vary from market to market. Price is affected by many

variables: cost of product development (produced locally or imported),

cost of ingredients, cost of delivery (transportation, tariffs, etc.), and

much more. Additionally, the product’s position in relation to the

competition influences the ultimate profit margin. Whether this

product is considered the high-end, expensive choice, the economical,

low-cost choice, or something in-between helps determine the price

point.

Place

How the product is distributed is also a country-by-country decision influenced by

how the competition is being offered to the target market. Using Coca-Cola as

an example again, not all cultures use vending machines. In the United States,

beverages are sold by the pallet via warehouse stores. In India, this is not an

option. Placement decisions must also consider the product’s position in the

market place. For example, a high-end product would not want to be

distributed via a “dollar store” in the United States. Conversely, a product

promoted as the low-cost option in France would find limited success in a

pricey boutique.

Promotion

After product research, development and creation, promotion (specifically

advertising) is generally the largest line item in a global company’s

marketing budget. At this stage of a company’s development, integrated

marketing is the goal. The global corporation seeks to reduce costs,

minimize redundancies in personnel and work, maximize speed of

implementation, and to speak with one voice. If the goal of a global

company is to send the same message worldwide, then delivering that

message in a relevant, engaging, and cost-effective way is the challenge.

1-21

McDonald’s Global Marketing

Marketing Mix Element Standardization Localized

Product

Promotion

Place

Price

Big Mac

Brand name

Advertising slogan “I’m Loving It”

Free-standing

Big Mac is $3.10 in U.S. and Turkey

McAloo Tikka potato burger (India)

Slang ’Macca’s (Australia)

MakDo (Philippines)

McJoy magazine, “Hawaii Surfing Hula” promotion (Japan)

Home delivery (India)

Swiss rail system dining cars

$5.21 (Switzerland)

$1.31(China)

Advantages

• Economies of scale in production and distribution

• Lower marketing costs

• Power and scope

• Consistency in brand image

• Ability to leverage good ideas quickly and efficiently

• Uniformity of marketing practices

• Helps to establish relationships outside of the "political arena"

• Helps to encourage ancillary industries to be set up to cater for the needs of the global

player

• Benefits of eMarketing over traditional marketing

Disadvantages

• Differences in consumer needs, wants, and usage patterns for products

• Differences in consumer response to marketing mix elements

• Differences in brand and product development and the competitive environment

• Differences in the legal environment, some of which may conflict with those of the home

market

• Differences in the institutions available, some of which may call for the creation of

entirely new ones (e.g. infrastructure)

• Differences in administrative procedures

• Differences in product placement.

• Differences in the administrative procedures and product placement can occur

Summary • Every company operates in an international market today. Companies having only domestic

operations face competition form global players in their home turf, while MNCs compete in global

environment.

• Market Saturation, Slow Growth, Intense Competition, Desire for Scale of Operations,

Proximity to the Global Customer and Diversification of Risks are some reasons that have

prompted companies to go global.

• Political, Economic, Legal, Social, Technological, and Cultural forces differ across markets, and

companies must be vigilant of the varying market environments to succeed globally.

• Depending on the amount of investment and the ability to take risks, companies can plan their entry

routes into international markets.

• The most crucial decision in international marketing is the extent of standardization versus adaptation in

a company’s marketing mix. The decision does not involve what to adapt versus what to standardize, but

how much to standardize and how much to adapt.

• The closer is the motivation to buy a product associated with culture, the greater will be the need to adapt

the product.

• Pricing issues in the international markets must account for additional costs of developing distribution

channels, transportation expenditure, taxation issues, and additional risk related to exchange rate

fluctuations. Other issues such as gray market, dumping and transfer pricing are also peculiar to

international markets.

• In order to determine channel requirements in international markets, it is important to determine the

location of potential customers, their information and service requirements while buying the product, and

price sensitivity and preferences of customers in the market.

Harry Potter: Global Marketing Strategies (MM0048)