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“I woke up this morning and fixed myself a cup of coffee made by a Swiss company taking milk from a Korean fridge. I watched the news briefly on a British channel on a Japanese TV set. I shaved with an American shaving gel and splashed on an after shave made in France, distributed by an American company under the license of another Swiss company. I also shampooed my hair using a shampoo made in Thailand. I then checked for messages on my phone made in China. Before leaving for work, I quickly paid my satellite TV subscription (of partly Australian origin) with a credit card of a German bank on an American laptop made in Taiwan. I drove to work in a car made in Korea listening to music from a Jamaican band. ”
Welcome to Global Marketing
Two centuries of sweeping changes
In the 1800s, all products used were manufactured within a few miles
Great Britain actively involved in international trade in the mid 19th century
Since WWII rapid expansion into global markets
Why Global? Realize your company’s commercial potential
Why Global? Survival…..
Global Marketing
It is different from “regular” marketing?
Marketing : Series of Activities leading to an exchange
Organization’s efforts to satisfy customer wants and needs with products and services with competitive value
Marketing Mix: Marketer’s primary tools
Marketing is a universal discipline
Global Marketing
Focuses on Global markets and opportunities
Scope of activities is different
Universal marketing guidelines should be combined with specific concepts, considerations and strategies to ensure success
Marketing…An Universal Discipline
Marketing: Focusing on resources and objectives of an organization on environmental opportunities and threats
Set of concepts, tools, theories, practices and procedures, and experiences
Teachable and learnable body of knowledge
Marketing practice varies from country to country
The Marketing Concept
Shift of focus from the product to the consumer in the 60s
The strategic Concept of Marketing evolved in the 1990s
Knowing the customer in a context
From profits to stakeholders benefits
From profit maximization to managing strategic relationships
Positioning the firm in the value chain
Boundary-less Marketing
Marketing
Customer Needs & Wants R & D Engineering MFG CV
Three Principles of Marketing
Customer Value
Competitive or Differential Advantage
Focus
Customer Value
Value(V)= B(Benefits)/P(Price)
Task is to create better customer value than competitors
Companies with cost advantage: Price competitive weapon
Knowledge of Customer+ Innovation & Creativity can lead to offerings of superior customer value
CRM empowers & delivers superior CV
Example: SAP Business All-in-One Solution adds new CRM functionality
Delivers key CRM capabilities to marketing sales and services with ability to analyze results
Enables companies to generate more sales leads, close more deals and provide better service and support
Competitive or Differential Advantage
CA: Total offer that is more attractive to customers vis-à-vis competitors
Could come from any element of the offer
Product
Price
Promotion
Distribution
Design…a competitive advantage Unicorn Industrial Sewing Machines Company in
China
Makes Sewing Machines for Consumers and Industrial Users
Industrial sewing machines can have over 1000 precision parts and assemblies
Uses Autodesk Invention software to make product design more efficient and reduce design cycle time and potential errors
Makes it possible even for new engineers to design in a third of the time
Global Marketing: What it is and what it is not?
Markets and customers are different from country to country
Marketing practices must vary
Experiences not directly applicable from country to country
Example: Kellogg Breakfast cereals
Coca Cola….A major global Marketing Success
Success not based on standardization of marketing mix elements
“Global Localization”
Think Global, Act Local
Combination of standard (actual product itself) and nonstandard (distribution or packaging)
Group Danone……A truly Global company
World’s No. 1 in Fresh Dairy Products
World’s No. 2 in Bottled Water
World’s No. 2 in Biscuits
Group Danone
Presence in 120 countries
40% Revenues from outside Europe
Key to Danone’s success: extensive knowledge of local market
Focus: Innovation and local market autonomy
Group’s Identity “Worldwide business with local presence”
Group Danone
Priority: Develop a strong brand that reflect consumer needs in that market as closely as possible
Danone: seen as French in France
Spanish in Spain
Mexican in Mexico
Dannon in America
In Argentina, fresh dairy brand Le Serenissiree 65% market share
Group Danone
Most new product ideas come from specific needs in a country
Usually tested in the country
Drinking yoghurt Actimel first tested in Belgium
Juice brand Dano first tested in France
If product works, local office takes and adapts it
Role of HQ: For each product, the pureness of the concept
Group Danone
Local office: can adapt to individual markets, encouraged to
Some change advertising, some change name
Some opt for sweeter tasting yoghurt, some will have simpler packaging
Global Marketing
No imposition of a standardized approach
Does not mean entering every market in the world
Means widening business horizons to encompass the world when scanning for opportunities and threats
Decision to enter markets will depend on several factors like resources, managerial mind-set and nature of opportunities and threats
The Importance of Global Markets Largest Market in the world: USA: 25%
Second largest market: China: 23%
Third largest Market: Japan: 15%
Largest European Market: Germany: 8%
Rise of the global corporation is happening faster
Inefficient companies will disappear
Management Orientations
Co’s responses depends on management’s assumption or beliefs
Ethnocentric
Polycentric
Regiocentric
Geocentric
Ethnocentric Orientation
Home country is superior
Sees similarities in foreign countries
Assumption is: successful products in home countries can be sold anywhere without adaptation
Foreign operations viewed as secondary or subordinate
Assumption is HQ knowledge and capabilities applicable anywhere
For MFG co’s, foreign markets means of disposal of surplus
Ethnocentric Orientation
No systematic marketing research outside home country
No major modification in product
Differences in consumer needs ignored
Ethnocentrism big internal threat
Polycentric Orientation
Belief that each country is unique
Each subsidiary develops its unique business and marketing strategies
Called a Multinational Company
GE in Korea
GE Capital, financing arm
Started with fully owned subsidiary in Korea
For six years, tried to market auto, personal loans and leasing of office equipment
Negligible market share
Folded ops of its two subsidiaries in 2004 into two subsidiaries of Hyundai Motors-Hyundai Capital(car financing arm) and Hyundai Card(credit card arm)
GE in Korea
Since 2004, invested $ 3 billion in these two subsidiaries
Owns 43% of the shares
GE’s biggest minority investments in the world
Now, among GE’s most profitable investments
Model for GE’s marketing and branding strategies worldwide
Before Hyundai, GE strongly preferred management control in JVs
GE in Korea
GE success in Korea led to similar decisions……25.4% of Bank of Ayudha in Thailand
Hyundai had 75% of the Korean auto market
Korean operations provide 5.1% of GE’s worldwide profits of the consumer financing business
GE: moving from ethnocentricity to polycentricism
Regiocentric Orientation
Regions as Unique
Integrated Regional Strategy
US company focusing on the NAFTA countries
European company focusing on EU or Europe
Geocentric Orientation
Entire world as potential market
Integrated world marketing strategy
“Worldview”: similarities and differences in markets and countries
Global strategy fully responsive to local needs and wants
Ford and the World car
Modelled after the BMW world car the 3 Series Sports Sedan
Ford and the World Car
Ford planning the “world car”
Simple premise “ Building one product for multiple markets”
Basic belief: To make money on small cars, development and other costs to be spread over one huge global market
First test: the subcompact Fiesta
Fiesta selling well in Europe and Asia, to debut in the USA early 2010
Ford and the World Car
Risky strategy, failures earlier
Potential for huge profits
Regional divisions disagreement
CEO has organized the company around the world car
Global version of other models planned
Ford and the World Car
Potential savings: up to $ 700 million per model
Plus factor: European and US tastes seem to be converging
Midsize sedans earlier much smaller in EU than USA, now almost comparable
Tastes to a degree are globalizing
The Inspiration…the BMW 3 Series Sports Sedan
Virtually the same in every market
Secret of success” Show consumers what the next big thing is,not relect what they know now”
Ubiquity engenders trust while design creates inspiration
The Research
Ford researched small car buyers…owners of VW in EU, Honda in USA and Toyota in China
Consumer: Aged 20-30 Limited funds Big appetite for fashion and design
Imaginary Global archetype customer: Isabella
Recent college graduate living near Milan
Creative, thinking about pursuing journalism
Isabella….. Modest earner, likes city living
Fashionable, very much in social media
Customer Clinics conducted all around the world
Isabell’s personality traits, aspirations and sensibilities and what she wants resonated around the world
What worked for BMW, will it work for Ford???????
Factors driving Global Integration and Marketing
Technology
Truly stateless
No cultural boundaries
Soon available everywhere in the world
Regional Economic Agreements
NAFTA (North Atlantic Free Trade Agreement)
WTO (World Trade Organization)
EU (European Union)
Market Needs and Wants
Cultural universals and differences
Common elements in human nature: Basis for creating global markets
Converging consumer needs and wants
Top global brands built on fulfilling universal needs…..basic appeals are global
The Top Global Brands
Transportation and Communication Improvements Time and cost barriers with distance has fallen dramatically
Physical distribution costs and time has reduced
Product Development costs
High Product Development costs must be recovered in global marketplace
No single national market likely to be large enough
Quality
Global Marketing Strategies generates greater revenue, greater margins and larger investments in product design and quality
Global companies “raise the bar”
Uniformity drives down research, eng, design and production cost
World Economic Trends
Economic Growth resulted in market opportunities
India: Fertile Ground for long-term sustainable growth
India: A “guaranteed- to-happen” success story: Between ’92-93 to 2005-2006, average growth rate: 6.2%
India : Young people, virgin market: 400 Million people below 21 and 20 Million new babies every year
World Economic Trends
Reduced resistance to entry of foreign firms
Worldwide movement towards deregulation and privatization
Leverages....Experience transfer
Can leverage its experience in any market in the world:
Management Practices
Strategies
Products
Advertising Appeals
Sales Ideas
Promotional Ideas
Leverages…..Scale Economies
Advantage of greater manufacturing volumes to obtain economies of scale
Finished products can be produced by combining components manufactured by scale-sufficient plants in different countries
Scale Economies
Buying….Levers “Global procurement Officer”
Manufacturing
Marketing
Research & Development
Logistics
Resource Utilization
Ability to scan the world to identify people, money, and raw materials that will enable it to compete efficiently in world markets
Global Strategy
Greatest single advantage
Based on info system that scans the whole world to identify opportunities, trends, threats and resources
Once opportunities are identified, leverages its skills and focuses its resources to create superior customer value and achieve competitive advantage
Design to create winning effort on a global scale
The Global/Transnational Corporation Any Business Enterprise that pursues global business
objectives by linking world resources to world market opportunities
Within the international financial framework
Under the umbrella of global peace
Advantage of expanding communication technologies
Serve needs and wants on global scale
Restraining Forces
Management Myopia and Organizational Culture
Essential to combine global vision and perspective with local market initiative and input
National Controls and Barriers
Protectionist forces
Control over market access and entry
Control over advertising
Nontariff Barriers
Only solution: Become “insiders” in every country
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