CHAPTER 13: Global Marketing

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CHAPTER 13 Global Marketing

• SCOPE AND CHALLENGE OF GLOBAL MARKETING

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Overview

• Business activities are global. No business can
  escape the effect of globalization.
• View three major global trends
• 1) Growth of free trade areas (EC, NAFTA, AFTA)
• 2) Growth of the Free Market System
• 3) Emergence and evolution of large markets
  (Brazil, China, India).

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Overview

• All aspects of international business are global
  - financing, marketing, technological,
  production, pricing, accounting, communication.
• All firms are affected by international events.
  Therefore business people need to be globally
  aware.

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Internationalization of US Business

• Many US firms and some well-known brands are
  foreign controlled.
• Some firms enter the US market via exporting and
  then built plants.
• US firms also invest in foreign countries
  foreign earnings contribute substantially to the
  overall profit position.

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Internationalization of US Business

• US firms involved in international business out
  performed those not involved. They grow twice as
  fast and have significantly higher returns on
  assets and equity.
• In many cases foreign sales prove to be more
  profitable than domestic sales and some firms
  earn a large share of their profits from foreign
  operations.

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Profits from Global Operations

• Firm Foreign Profits as of Total
• Du Pont 28.9
• Procter Gamble 36.9
• Coca-Cola 67.8
• McDonalds 49.6
• Avon 58.9
• Motorola 92.4

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Global Marketing Task

• International marketing tasks more difficult than
  domestic marketing tasks because of the degree of
  environmental uncertainty.
• International marketers face home and also
  foreign country environmental factors and this
  makes for greater uncertainty (controllable
  elements and TWO uncontrollable environments).

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The Marketing Concept

• Whether we focus on the domestic or the global
  market, the firm makes use of the marketing mix
  (4 Ps) Product, Price, Place, Promotion.
• Marketers use the 4 Ps to
• (1) create greater customer value than
  competitors.
• (2) establish a sustainable competitive
  advantage.
• (3) Focus on defined customer needs and wants.

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Environmental Factors

• All environments contain SEVEN (7) social
  institutions. These can be identified by the
  acronym PELFREC. These seven social institutions
  are present in ALL societies regardless of how
  advanced or underdeveloped the society.
• If you eliminate any of the institutions the
  society as you know it dies.

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The Seven Social Institutions

• Political - system of transferring power
• Economic - method of wealth distribution
• Legal - means of deciding right wrong
• Family - unit of procreation
• Religious - - belief system
• Education - means of passing on information for
  preserving the society
• Culture - way of life of a people

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Effect of Environmental Factors

• Marketers must interpret the effect of
  environmental factors and adapt marketing
  strategy.
• Marketers must be aware of the frame of reference
  that they use when making decisions. Differences
  in environments are known to cause embarrassing
  and costly misunderstandings.

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Avoiding Environmental Misunderstandings

• Be aware of the principle of marketing relativism
  - people make judgements based upon their culture
  and experiences. Since international marketers
  may use their home country culture to judge
  things inappropriate strategies may be adopted.

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Self-Reference Criterion - An Obstacle

• Successful in international marketing call for
  adapting to environmental differences across
  markets. This takes effort.
• The main obstacle to success is a persons
  self-reference criterion SRC in making
  decisions.
• SRC is a persons unconscious references to their
  own cultural values, experiences, and knowledge
  in making a decision.

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Overcoming Self-Reference Criterion

• The first step in overcoming Self Reliance
  Criterion (SRC) is to recognize the need to be
  sensitive to differences across cultures
• Second, ask questions of people in the foreign
  culture.

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Isolating SRC Influences

• Make a cross-cultural analysis to isolate SRC
  influences.
• Define problem/goal in terms of home country
  cultural norms.
• Define problem/goal in terms of foreign country
  cultural norms.
• Isolate SRC influences
• Redefine problem without SRC

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Developing Global Awareness

• To be globally aware is to have
• Objectivity
• Tolerance of cultural differences
• Knowledge of history and PELFREC on a global
  scale.

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International Involvement

• From a marketing perspective a firm may adopt one
  of FIVE involvement stance
• No Direct Foreign Marketing
• Infrequent Foreign Marketing
• Regular Foreign Marketing
• International Marketing
• Global marketing

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Marketing Orientations

• Our view of the world shapes how we consciously
  and unconsciously respond to events. People
  adopt one of four main views of the world
• (1) Ethnocentric home country superior to the
  rest of the world. Therefore, home country view
  as most important and others seen as secondary
  and existing mostly to serve needs of home
  country.

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Marketing Orientations (contd)

• (2) Polycentric belief that each country is
  uniquely different and requires specialized
  business practices.
• (3) Regiocentric world viewed as regions with
  countries in a region having similarities and
  differences and requiring a regional approach to
  developing marketing strategy.
• (4) Geocentric entire world seen as a potential
  market with similar needs or segments evident
  across cultures.

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Global Marketing Concepts

• Domestic Marketing Extension
• Multi-domestic Marketing
• Global Marketing

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Globalization of Markets

• Questions
• Is the world becoming a single market?
• Can we sell the same product the same way every
  where?
• Should marketers customize (adapt) or standardize
  marketing effort (4 Ps)?