Chapter 1
Introduction to
Global Marketing
http://www.youtube.com/watch?v=Fucq5BoEfEI
1-2
The 787 Dreamliner
Parts
Supplier
Airframe sections
Kawasaki, Fuji, Mitsubishi, Japan
Horizontal stabilizer
Alenia, Italy
Aft Cargo door
Saab, Sweden
Landing gear
Messier-Dowty, France (built in Gloucester, UK)
Nose & cockpit sections
Spirit Aerosystems, Canada
Wing body fairing
Boeing, Canada
Trailing edge and flaps
Hawker de Havilland, Boeing Australia
Fairing panels, rudder,
leading edge
Hafei, Chengdu, Shenyang, China
Airplane design
Boeing Design Center, Moscow
Tail cone
South Korea
US suppliers
Puget Sound, WA; Charleston, SC; Wichita, KS, Tulsa, OK
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The Blackberry Storm
http://www.sou
rcemap.org/obj
ect/blackberrystorm
UK, Singapore, South Korea,
China, Japan, Malaysia,
Scotland,
The Netherlands, Taiwan, US
(NJ, MA, CA, AZ, TX, ME)
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Globalization – Thomas L. Friedman
Globalization is the inexorable integration of
markets, nation-states and technologies to a
degree never witnessed before—in a way that is
enabling individuals, corporations and nationstates to reach around the world farther, faster,
deeper and cheaper than every before…
The degree of inter-dependence between nation
states
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What is a Globally Integrated
Enterprise?
A collection of various incorporated business units in
different countries
Bound together by a common, shared objective
Part of the business value chain that extends from
product inception to final consumption
Activities in the value chain are performed by
business units most skilled (in that activity) and at
the lowest relative cost (on a global basis)
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Sam Palmisano (Chairman and
CEO of IBM)
What is a globally integrated enterprise
Global Integration allows companies to
take advantage of talent and resources
regardless of time zones and delivers value
to customers regardless of geography
1-7
Globalized Industries
An industry is global to the extent that a company’s
industry position in one country is interdependent
with its industry position in another country
The number of times business supply chains cross national
borders
Indicators of globalized industries
Ratio of cross-border trade to total worldwide
production (in an industry)
Ratio of cross-border investment to total capital
investment (in an industry)
1-8
Global Marketing: What It Is and
What It Isn’t
Single Country
Marketing Strategy
Target market strategy
Marketing mix
Product
Price
Promotion
Place
Global Marketing
Strategy
Major world market
participation thru’ sale of its
products
Marketing mix development
4 P’s: adapt or standardize?
Concentration of marketing
activities
Coordination of marketing
activities
Integration of competitive
moves
1-9
Why is Global Marketing
important?
High-growth and Low-growth countries
Relative costs
Risk of losing domestic business to
foreign country competitors
Segment simultaneity
1-10
The Importance of Going Global
For U.S. companies, 70% of total world
market for goods and services is outside the
country
Coca-Cola earns 75% of operating income and
two-thirds of profit outside of North America
For Japanese companies, 90% of world
market is outside the country
94% of market potential is outside of
Germany for its companies
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Product/Market Matrix
Global versus “regular” marketing
Scope of activities are outside the homecountry market
Product/market growth matrix
1-12
Competitive Advantage, Globalization,
and Global Industries
Focus
Concentration and attention on core business
and competence
Nestle is focused: We are food and beverages. We
are not running bicycle shops. Even in food we are
not in all fields. There are certain areas we do not
touch. . . . We have no soft drinks because I have
said we will either buy Coca-Cola or we leave it
alone. This is focus.
Helmut Maucher, former chairman of Nestlé SA
1-13
Standarization versus Adaptation
Globalization (standardization)
Developing standardized products marketed worldwide with
a standardized marketing mix
Essence of mass marketing
Global localization (adaptation)
Mixing standardization and customization in a way that
minimizes costs while maximizing satisfaction
Essence of segmentation
Think globally, act locally
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Quick example on glocalization
Pepsi in India in 1990
Entered through a JV with Voltas & Punjab Agro-Industries
Corp to develop vegetable and fruit farming techniques
Introduced Pepsi under the name ‘Lehar Pepsi’
Advertising used local Bollywood and cricket celebrities.
• http://www.youtube.com/watch?v=fgKgEucccUc
• http://www.youtube.com/watch?v=is4X_Tw6nPQ
• http://www.youtube.com/watch?v=rfiF6VSFoGc
1-15
Standarization
versus
Adaptation
Arabic
read right to left
Chinese
“delicious/happiness”
The faces of Coca-Cola around the world
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McDonald’s Global Marketing
Marketing Mix Element
Standardization
Product
Big Mac
Localized
McAloo Tikka potato burger
(India)
Promotion
Brand name
Slang ’Macca’s (Australia)
MakDo (Philippines)
Place
Advertising slogan
“I’m Loving It”
McJoy magazine, “Hawaii
Surfing Hula” promotion
(Japan)
Free-standing
Home delivery (India)
Swiss rail system dining cars
Price
Big Mac is $3.10 in
U.S. and Turkey
$5.21 (Switzerland)
$1.31(China)
1-17
Global Marketplace – Local
Markets
Brands sold globally – McDonalds, Sony,
Lego, Swatch, Burberry, etc.
Local brands – Yum Brands’ East Dawning
fast Food chain in China; Kiki competes with
Vogue and Cosmo in Japan; Ford competes
with Maruti in India
Global brands and local brands
Brands’ sense of identity with a country is
blurring
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In what country is the parent
corporation located?
Firestone Tire & Rubber
Miller Beer
Ray Ban
Rollerblade
Rolls Royce
Weed Eater
RCA Televisions
Holiday Inn
Jaguar
Wild Turkey Bourbon
Dr. Pepper
ThinkPad
Ben & Jerry’s
Homemade
Wilson Sporting Goods
Budweiser
Right Guard
Gerber
Hummer
1-19
In what country is the parent
corporation located?
Firestone Tire & Rubber
Japan (Bridgestone)
Miller Beer
GB (SABMiller)
Ray Ban
Italy (Luxottica)
Rollerblade
Italy (Benetton)
Rolls Royce
Germany (Volkswagen)
Weed Eater
Sweden (Electrolux)
RCA Televisions
China (TTE)
Holiday Inn
GB (Intercontinental)
Jaguar
India (Tata Motors)
Wild Turkey Bourbon
France (Groupe Pernod
Ricard)
Corona
Mexico
ThinkPad
China (Lenovo)
Ben & Jerry’s
Homemade
GB / Netherlands
(Unilever)
Wilson Sporting Goods
Finland (Amer)
Budweiser
Belgium (InBev)
Right Guard
Germany (Henkel)
Gerber
Switzerland (Nestle)
Land Rover
India (Tata Motors)
1-20
Management Orientations
Ethnocentric orientation
Home country is superior to others
Sees only similarities in other countries
Assumes products and practices that
succeed at home will be successful
everywhere
Leads to a standardized or extension
approach
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Management Orientations
Polycentric orientation
Each country is unique
Each subsidiary develops its own unique
business and marketing strategies
Often referred to as multinational
Leads to a localized or adaptation
approach that assumes products must be
adapted to local market conditions
1-22
Management Orientations
Regiocentric orientation
A region is the relevant geographic unit
• Ex: The NAFTA or European Union market
Some companies serve markets throughout
the world but on a regional basis
• Ex: General Motors had four regions for
decades
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Management Orientations
Geocentric orientation
Entire world is a potential market
Strives for integrated global strategies
Also known as a global or transnational company
Retains an association with the headquarters
country
Pursues serving world markets from a single
country or sources globally to focus on select
country markets
Leads to a combination of extension and
adaptation elements
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own  control  decentralized 
polycentric
geocentric
regiocentric
ethnocentric
Similarities  perceptions  differences 
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Driving Forces Affecting Global
Integration and Global Marketing
Regional economic agreements
Converging market needs and wants
and the information revolution
Transportation and communication
improvements
Product development costs
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Driving Forces Affecting Global
Integration and Global Marketing
Quality
World economic trends
Leverage
1-27
Restraining Forces Affecting Global
Integration and Global Marketing
Management myopia
Organizational culture
National controls
Opposition to globalization
1-28
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