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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
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Page 1: Global marketing

“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

Page 2: 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…..

Page 3: Global marketing

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

Page 4: Global marketing

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

Page 5: Global marketing

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

Page 6: Global marketing

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

Page 7: Global marketing

Boundary-less Marketing

Marketing

Customer Needs & Wants R & D Engineering MFG CV

Page 8: Global marketing

Three Principles of Marketing

Customer Value

Competitive or Differential Advantage

Focus

Page 9: Global marketing

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

Page 10: Global marketing

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

Page 11: Global marketing

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

Page 12: Global marketing

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

Page 13: Global marketing

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

Page 14: Global marketing

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)

Page 15: Global marketing

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

Page 16: Global marketing

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”

Page 17: Global marketing

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

Page 18: Global marketing

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

Page 19: Global marketing

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

Page 20: Global marketing

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

Page 21: Global marketing

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

Page 22: Global marketing

Management Orientations

Co’s responses depends on management’s assumption or beliefs

Ethnocentric

Polycentric

Regiocentric

Geocentric

Page 23: Global marketing

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

Page 24: Global marketing

Ethnocentric Orientation

No systematic marketing research outside home country

No major modification in product

Differences in consumer needs ignored

Ethnocentrism big internal threat

Page 25: Global marketing

Polycentric Orientation

Belief that each country is unique

Each subsidiary develops its unique business and marketing strategies

Called a Multinational Company

Page 26: Global marketing

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)

Page 27: Global marketing

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

Page 28: Global marketing

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

Page 29: Global marketing

Regiocentric Orientation

Regions as Unique

Integrated Regional Strategy

US company focusing on the NAFTA countries

European company focusing on EU or Europe

Page 30: Global marketing

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

Page 31: Global marketing

Ford and the World car

Modelled after the BMW world car the 3 Series Sports Sedan

Page 32: Global marketing

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

Page 33: Global marketing

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

Page 34: Global marketing

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

Page 35: Global marketing

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

Page 36: Global marketing

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

Page 37: Global marketing

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???????

Page 38: Global marketing

Factors driving Global Integration and Marketing

Technology

Truly stateless

No cultural boundaries

Soon available everywhere in the world

Page 39: Global marketing

Regional Economic Agreements

NAFTA (North Atlantic Free Trade Agreement)

WTO (World Trade Organization)

EU (European Union)

Page 40: Global marketing

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

Page 41: Global marketing

The Top Global Brands

Page 42: Global marketing

Transportation and Communication Improvements Time and cost barriers with distance has fallen dramatically

Physical distribution costs and time has reduced

Page 43: Global marketing

Product Development costs

High Product Development costs must be recovered in global marketplace

No single national market likely to be large enough

Page 44: Global marketing

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

Page 45: Global marketing

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

Page 46: Global marketing

World Economic Trends

Reduced resistance to entry of foreign firms

Worldwide movement towards deregulation and privatization

Page 47: Global marketing

Leverages....Experience transfer

Can leverage its experience in any market in the world:

Management Practices

Strategies

Products

Advertising Appeals

Sales Ideas

Promotional Ideas

Page 48: Global marketing

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

Page 49: Global marketing

Scale Economies

Buying….Levers “Global procurement Officer”

Manufacturing

Marketing

Research & Development

Logistics

Page 50: Global marketing

Resource Utilization

Ability to scan the world to identify people, money, and raw materials that will enable it to compete efficiently in world markets

Page 51: Global marketing

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

Page 52: Global marketing

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

Page 53: Global marketing

Restraining Forces

Management Myopia and Organizational Culture

Essential to combine global vision and perspective with local market initiative and input

Page 54: Global marketing

National Controls and Barriers

Protectionist forces

Control over market access and entry

Control over advertising

Nontariff Barriers

Only solution: Become “insiders” in every country