A company that engages in global marketing focuses resources on global market opportunities and threats. Successful global marketers such as Nestle, Coca-Cola, and Honda use familiar marketing mix elements – the four Ps – to create global marketing programs. Marketing, R&D, manufacturing, and other activities comprise a firm’s value chain; firms configure activities to create superior customer value on a global basis.
Global companies also maintain strategic focus while pursuing competitive advantage. The marketing mix, value chain, competitive advantage, and focus are universal in their applicability, irrespective of whether a company does business only in the home country or has a presence in many markets around the world. However, in a global industry, companies that fail to pursue global opportunities risk being pushed aside by competitors. A firm’s global marketing strategy (GMS) can enhance its worldwide performance. The GMS addresses several issues.
First is nature of the marketing program in terms of the balance between a standardization (extension) approach to the marketing mix and a localization (adaptation) approach that is responsive to country or regional differences.
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Second is the concentration of marketing activities in a few countries or the dispersal of such activities across many countries. Companies that engage in global marketing can also engage in coordination of marketing activities. Finally, a firm’s GMS will address the issue of global market participation.
The importance of global marketing today can be seen in the company rankings compiled by the Wall Street Journal, Fortune magazine, Financial Times, and other publications. Whether ranked by revenues, market capitalization, or some other measure, most of the world’s major corporations are active regionally or globally. The size of global markets for individual industries or product categories helps explain why companies go global. Global markets for some product categories represent hundreds of billions of dollars in annual sales; other markets are much smaller.
Whatever the size of the opportunity, successful industry competitors find that increasing revenues and profits means seeking markets outside the home country. Company management can be classified in terms of its orientation toward the world: ethnocentric, polycentric, regiocentric, or geocentric. An ethnocentric orientation characterizes domestic and international companies; international companies pursue marketing opportunities outside the home market by extending various elements of the marketing mix.
A polycentric worldview predominates at a multinational company, where the marketing mix is adapted by country managers operating autonomously. Managers at global and transnational companies are regiocentric or geocentric in their orientation and pursue both extension and adaptation strategies in global markets. Global marketing’s importance today is shaped by the interplay of several driving and restraining forces. The former include market needs and wants, technology, transportation and communication improvements, product costs, quality, world economic trends, and recognition of opportunities to develop leverage by operating globally.
Restraining forces include market differences, management myopia, organizational culture, and national controls. PP1 OVERVIEW Following World War II, a new global era began. Unparalleled expansion into global markets by companies that previously served only customers located in their home country characterizes this new global era. Three decades ago, the phrase global marketing did not even exist. Today savvy business people utilize global marketing for the realization of their companies’ full commercial potential.
A management team that fails to understand the importance of global marketing runs the risk of losing its domestic business to competitors with lower costs, more experience, and better products. • What is marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. One difference between “regular” marketing and “global” marketing is the scope of activities.
Marketing activities center on an organization’s efforts to satisfy customer wants and needs with products and services that offer competitive value. The marketing mix (product, price, place, and promotion) comprises a contemporary marketer’s primary tools. Marketing is a universal discipline – as applicable in Argentina as it is in Zimbabwe. • What is global marketing? • How does it differ from “regular” marketing? PP2 An organization that engages in global marketing focuses it resources and competencies on global market opportunities and threats.
Nonmonetary costs may be lowered by decreasing the time and effort customers must expend to learn about or acquire a product. If a company is able to offer a combination of superior product, distribution, and promotion of the benefits AND offer lower prices than its competition, it should enjoy an advantageous position. Discussion Question #1: What are the basic goals of marketing? Are these goals relevant to global marketing? Competitive Advantage, Globalization, and Global Industries Competitive Advantage occurs when a company succeeds in creating more value for customers than its competitors.
Competitive advantage is measured relative to rivals with whom you compete in the industry – whether that is on a local, national, or global level. Global marketing is essential if a company competes in a global industry or one that is globalizing. • What is “globalization? ” PP4 The process of globalization is the transformation of formerly local or national industries into global ones. PP5 A global industry, as noted by Michael Porter, is one in which competitive advantage can be achieved by integrating and leveraging operations on a worldwide scale.
An industry is global to the extent that a company’s position in the industry is interdependent with its industry position in other countries. Achieving competitive advantage in a global industry requires executive to maintain focus. Focus is the concentration of attention on the core business or competence (e. g. Nestle). However, focus can change as a part of an overall strategy shift (Coca-Cola, Volvo, and Electrolux are examples). Value, competitive advantage, and focus are universal in their relevance and they should guide marketing efforts in any part of the world.
Fundamental Premise: Companies that understand and engage in global marketing can offer more overall value to customers than companies that do not. PP6 Lessons from the Global Marketplace The beginning of the 21st century has challenged deal-making top executives at several global companies. In 2000, Edgar Bronfman, Jr. , the CEO of Seagram, agreed to a $32 billion takeover by France’s Vivendi. The resulting company was tightly focused on two industry sectors, environmental services and communications. Vivendi took on too much debt, and chairman Messier was forced to resign in 2002.
The next year, the theme park, movie, and television businesses were sold off to GE. ABB Inc, the Swiss/Swedish electrical and engineering that was once composed of 1,300 companies in 140 countries, is another global firm that has fallen on hard times. Q: What is the result of a lack of focus? A: When companies do not pay attention there is the tendency for everything to go wrong. Competitors begin to make inroads, quality may fall, image may become muddled, and losses will mount. PP7 Global Marketing: What it is and what it isn’t While the concept of marketing is universal, the practice of marketing varies from country to country.