Global marketing - international marketing defined

INTERNATIONAL MARKETINGINTRODUCTORY LECTURE

Why firms go global• Liberailsation, globalisation.

• Escape unfavorable domestic factors.

• Avoid tariff and trade quotas.

• Business is a profit maximizing enterprise; firms go where profits are maximized.

Why firms go global

• Higher rates of profits

• Expanding production capacity for reduced production costs

• Limited growth opportunities in domestic market

• Availability of raw materials, cheap labor, high-end technology, skilled workforce, managerial competence and favorability of climate etc.

The New Global Environment

• Anti globalization and terrorism• World Trade Organization• Anti Americanism/ Anti West Opinion• Fair Trade• Global Warming and Green Trade• The Dubai Phenomenon• Regionalization

International Marketing

• It is the performance of business activities to plan, price, promote and direct the flow of goods and services to consumers and users in more than one nation for a profit.

Global PerspectiveGlobal Commerce Causes Peace

• International marketing promotes peace and prosperity through the marketing of products and services that meet the needs and wants of customers in other lands

Why Global Marketing is Imperative

• Saturation of domestic markets: Domestic-market saturation in the industrialized parts of the world and marketing opportunities overseas are evident in global marketing.

• Global competition: Competition around the world and proliferation of the Internet are on the rise.

• Need for global cooperation: Global competition brings global cooperation.

Why Global Marketing is Imperative (contd.)

• Internet revolution: Major structural changes to the way companies operate worldwide.

• The term “global” epitomizes both the competitive pressure and expanding market opportunities.

• Companies operating both domestically and internationally can no longer avoid competitive pressures from around the world.

Events and Trends Affecting Global Business

• The rapid growth of the World Trade Organization (WTO) and NAFTA and EU

• Acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe

• The burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders

• The mandate to properly manage the resources and global environment for the generations to come

What do you see?

Globalization of Markets: Convergence and Divergence

• The United States and Japan, the two largest economies in the world are also the largest importers of goods and services. However, imports and exports put together have comprised only 20 to 30% of the GNP in recent past. Does this imply that the corporation and media may be overemphasizing globalization? Discuss why you agree/disagree.

• Big Emerging Markets (BEMs): In the next ten to twenty years, BEMs such as the Chinese Economic Area (CEA: including China, Hong Kong Region, and Taiwan), India, South Korea, Mexico, Brazil, Argentina, South Africa, Poland, Turkey, and the Association of Southeast Asian Nations (ASEAN: including Indonesia, Brunei, Malaysia, Thailand, the Philippines, and Vietnam) will be major markets

Evolution of Global Marketing

• Five stages in the evolution of global marketing (see Exhibit 1-2):

1. Domestic Marketing (domestic focus; home country customers; ethnocentric orientation).

2. Export Marketing (indirect vs. direct exporting; country choice, exports; ethnocentric orientation; home country customers).

3. International Marketing (markets in many countries; polycentric orientation; use of multidomestic marketing when customer needs are different across national markets).

Evolution of Global Marketing (contd.)

4. Multinational Marketing (many markets; consolidation on regional basis; regiocentric orientation; standardization within regions).

5. Global Marketing (international, multinational & geocentric orientation; company’s willingness to adopt a global perspective; global products with local variations).

International Marketing Involvement - Stages

No Direct Foreign Marketing

Infrequent ForeignMarketing

Regular ForeignMarketing

International Marketing

Global Marketing

1. No Direct Foreign Marketing – Reactive

• Products “indirectly” reach foreign markets

• Trading companies• Foreign customers who contact firm• Domestic wholesalers/distributors• Web orders

• Foreign orders stimulate a company’s interest to seek additional international sales

2. Infrequent Foreign Marketing – Reactive

• Caused by temporary surpluses – Sales to foreign markets are made as

goods become available

• Firm has little or no intention of maintaining continuous market representation• Foreign sales activity declines and is

withdrawn when domestic demand increases

3. Regular Foreign Marketing – Proactive

• Dedicated production capacity for foreign markets

• Strategy:– Firm employs domestic or foreign

intermediaries– Uses its own sales force or sales

subsidiaries• Products are adapted for foreign markets

as domestic demand grows• Firms depend on profits from foreign

markets

4. International Marketing – Proactive

• Fully committed and involved in foreign markets and international activities

• Production takes place on foreign soil earning firms the MNC (Multinational Corporation) title

• Fedders being “proactive:”– Looked to Asia for future growth after stymied

U.S. sales– Designed new types of air conditioner unit for

the Chinese market – Plan to introduce new product in the U.S!

5. Global Marketing – Proactive

• The firm sees the world as one market!• Market segmentation is now defined by

income levels, usage patterns, or other factors that span the globe

• More than half of its revenues come from abroad

• The firm has a global perspective

Global Market Orientation• Approaches all country markets as a

single global market and standardizes the marketing mix where culturally feasible and cost effective.

• Firms may pursue a global market strategy for one product

Global Market Orientation

• And a multidomestic strategy for another

Global Market Orientation

Strategic Orientation

Uncertainty in Marketing

• Various factors affect business in the foreign markets- Market Decision Factors

• Controllable elements. They are common to domestic and international marketers.

• Uncontrollable elements .They exist at two levels: Domestic and Foreign Marketing Environment.

Self-Reference Criterion (SRC)• Self-Reference Criterion (SRC) is an

unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions.

• Risk of SRC:– Prevents from becoming aware of

cultural differences– Influence evaluation of the

appropriateness of a domestically designed marketing mix for a foreign market

Ethnocentrism– Impedes the ability to assess a foreign

market in its true light

Overcoming Obstacles to success in International Market

• Develop global awareness– Developing world market potential.– Tolerance of cultural differences.– Knowledge of world market potential.– Knowledge of history and its impact on national and

cultural differences.– Develop understanding of key areas to target for

demand.– Develop customized strategies for diverse markets.