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Slide 1: International Marketing Concept Slide 2: Globalization Globalization is defined as a process of economic integration of the entire world through the removal of barriers to free trade and capital mobility as well as through the diffusion of knowledge and information It is a historical process of moving at different speeds in different countries and in different sectors One of the results is that firms, whose output was previously significantly more limited by the size of their domestic market, now have the chance to reap greater advantages from economies of scale by ‘being global’ Slide 3: The revolution in information and communication technology (ICT) in the last 10-15 years has also made communication much cheaper and faster The transaction costs of transferring ideas and information have decreased enormously and the arrival of the Internet has accelerated this trend This implies that countries with advanced technologies are best placed to innovate further Moreover, unlike in the past when inventions and innovations were considered breakthroughs, today they are a regular occurrence This implies that the transformation process is continuous and has far-reaching consequences both for the overall organization of firms and for policy making Slide 4: Global firms rely on technological innovation to enhance their capabilities In this sense, technology is both driven by and is a driver of globalization and makes it possible to speak of the new ‘technologically-driven character’ of the global economy. Slide 5: Globalization Index Ireland is the most global country followed by Singapore, Switzerland, Netherlands, and Finland For arriving at a globalization index, the following key components of global integration have been assessed • Economic Integration: Trade, portfolio, foreign direct investment , and investment income • Personal Integration: Telephone, travel, remittances, and personal transfers • Technology Integration: Internet users, Internet hosts, and secure Internet services Slide 6: • Political Integration: International organizations, UN peacekeeping, treaties, and government transfers. India ranks as the 61 st global integrated country out of the 62 countries. Slide 7: Globalization of Production The firms evaluate various locations worldwide for manufacturing activities so as to take advantage of local resources and optimize their manufacturing competitiveness The firms from the USA, the EU, and Japan manufacture at overseas locations more than three times of their exports output produced in their home country The intra-firm export-import transactions constitute about one-third of their international trade Toyota, one of the world’s leading automakers, has a total of 51 overseas manufacturing companies
Colgate. Slide 9: Globalization of Markets Marketing gurus in the last two decades have extensively argued over the benefits of globalization of markets over customized marketing strategies Prof. promotion. and markets cars worldwide through its overseas network consisting of more than 160 importers/distributors and numerous dealers. under the selling concept.Slide 8: in 26 countries and markets. and finally consuming it The marketing guru Phillip Kotler defines marketing as ‘the human activity directed at satisfying needs and wants through exchange processes’ Achieving customer satisfaction is given the utmost importance in the marketing concept as getting a new Slide 13: customer costs much more (estimated to be five times) than retaining an existing one It is likely to cost 16 times as much to bring the new customer to the same level of profitability as the lost customer Emphasizing exchange processes. under the marketing concept. Slide 11: The Concept of International Marketing In the mid-fifties. and travel have created a new consumer segment in the isolated places of the world Slide 10: Prof. which in turn was expected to maximize a firm’s profit earnings On the other hand. a respective Slide 14: finds a stated need and fulfils it A step further is the anticipative marketer who looks ahead at the customer’s needs in the near future However. CDs. the target market is the starting point and the focus is on customers’ needs The profit maximization under the marketing concept is achieved through customer satisfaction by way of integrated marketing efforts Slide 12: Prof. VCRs. Theodore Levitt explains this distinction by stating that selling focuses on the needs of the sellers while marketing focuses on the needs of the buyers Selling is preoccupied with the seller’s need to convert his product into cash. the focus was on selling products through aggressive selling and sales promotion programmes leading to sales maximization. ATMs. Sony. and cellular phones are a few of the illustrations of creative marketing The fundamental principles of marketing. the focus is shifting fast to market orientation Under the traditional concept. and services to create exchanges that satisfy individual and organizational goals With manifold increase in competitive intensity in the present marketing era. transport. the orientation of markets shifted from selling to marketing Earlier. pricing. Benetton are few of the several brands preferred and bought by the consumers around the world Such globalization of the world market has increased the scope for marketing activities internationally and has also increased the competitive intensity of the global brands in the market. especially related to its technical aspects in domestic and international markets. Kenichi Ohmae also advocates the concept of a borderless world and need for universal products for global markets Standardized products are increasingly finding markets across the globe The products from global brands such as General Electric. a creative marketer discovers and produces solutions that a customer did not ask for but would enthusiastically respond to The development of products like walkman. Theodore Levitt in his path-breaking paper ‘Globalization of Markets’ strongly argued in favour of the emergence of global markets at a previously unimagined magnitude Technology as the most powerful force has driven the world towards converging commonality Technological strides in telecommunication. marketing involves the idea of satisfying the needs of the customers by means of the product and the whole cluster of things associated with creating. Kodak. goods. remain more or less the same Slide 15: . the American Marketing Association defines marketing as the process of planning and executing the conception. delivering. and distribution of ideas.
promote. including sales. economic.However. Slide 19: Terms in International Marketing The traders should develop a thorough understanding of the nuances of commonly used terms in international marketing which are sometimes used interchangeably Some of these terms are as follows: • Domestic Marketing: marketing practices within the domestic markets • Foreign Marketing: Methods and practices used in the home market and also applied in overseas markets with little adaptation For instance. the flexibility of marketing decisions is limited by a variety of uncontrollable factors. and direct the flow of company’s goods and services to consumers or users in more than one nation for a profit International marketing takes place when marketing/trade is carried out ‘across the border’ or between ‘more than one nation’ Slide 17: Global marketing is the process of focusing the resources and objectives of an organization on global marketing opportunities and needs International marketing is all about identifying and satisfying global customers’ needs better than the competitors. so as to ensure marketing success Cateora defines international marketing as the performance of business activities designed to plan. international marketing is defined as the marketing activities carried out across national boundaries Every firm has to operate in a given set of environmental factors over which it has little control Although the fundamentals of marketing remain the same and have universal applicability. political. an Indian firm using domestic marketing methods for the European market is known as foreign marketing. • International Marketing: It focuses on the firm-level marketing practices across the border including market identification and targeting. and capital across national borders It also involves analysis of commercial and monetary conditions and their effect on transfer of resources and balance of payment As international trade views international markets at the national level from a macroeconomic perspective. price. price. and coordinating marketing activities within the constraints of the global environment. investment. legal. and (iv) taking decision on view of dynamic international market environment. marketing mix. product. little attention is given to the company-level marketing methods and strategies. and transportation.e. services. pricing. (iii) penetrating into international markets using various modes of entry. distribution. and technological environment Slide 16: These environmental factors are known as uncontrollable elements on which a marketer hardly has any influence. such as social. but the marketing challenge is to adapt the controllable elements of marketing mix. Slide 20: • Comparative Marketing: Comparative study of two or more marketing systems to find out the differences and similarities • International Trade: A macroeconomic term used at national level with a focus on flow of goods. Slide 18: International marketing would involve: ( i ) identifying needs and wants of customers in international markets. and strategic decisions to compete in the international markets. may be initiated by government or private companies with an objective to make profit or not. and promotion. Slide 21: • International Business: A much wider term encompassing all commercial transactions that take place between two countries These transactions. • Global/World Marketing: Global marketing treats the whole world as a single market and standardizes the marketing mix of the companies as far as feasible Slide 22: . distribution. (ii) taking marketing mix decisions related to products. both domestic and international. the differences in marketing environment make international marketing a distinct discipline In simple terms. and communication keeping in view the diverse consumer and market behavior across different countries on one hand and firms’ goals towards globalization on the other hand. entry mode selection. i.
are taken independently by the marketing department in each country.segments on the basis of their similarity to respond to marketing mix decisions It is known as multinational marketing. and promotion. Slide 25: Export Marketing Market Focus : Overseas (Targeting and entering foreign markets) Orientation : Ethnocentric Marketing Mix : Focused mainly on Decision domestic customers. world. Slide 27: International marketing Marketing focus : Differentiation in country markets by way of developing or acquiring new brands Orientation : Polycentric Marketing Mix : Developing local products Decision depending upon country needs decision by individual subsidiaries Over a period of time. Slide 29: Multinational Marketing Marketing focus : Consolidation of operations on regional basis gains from economic of scale Orientation : Regiocentric Marketing Mix : Product standardization Decision within regions but not across them on regional basis Once a company establishes its manufacturing and marketing operations in multiple markets.A global company does not differentiate between the home country and a foreign country and considers itself as a corporate citizen of the world The differences in transnational. Decisions made at headquarters The stage models suggest that generally a firm focused on domestic markets begins to export Slide 26: unintentionally by receiving unsolicited orders from overseas markets The firm tries to fulfill such orders reluctantly with little strategic orientation Thus.generally an extension of domestic marketing. Overseas marketing. the exporting company starts catering to the specific needs of a few overseas markets and establishes noticeable share in the market Slide 28: Polycentric orientation refers to the predisposition of a firm to the existence of significant cultural variations across the markets It recognizes the differences among markets and the need to respond to the market forces with market-specific strategies The polycentric strategy has a strong orientation towards the target markets The products are manufactured in the home country with separate product adaptation for different markets However. where marketing . branding. and global marketing are subtle in nature and have little effect on their strategic implementation. it begins to consolidate its operations on regional basis so as to take advantage of economies of scale in manufacturing and marketing mix decisions Slide 30: Various markets are divided into regional sub. distribution. the initial entry of a firm in international markets may be characterized as a consequence of responding to unsolicited export enquiries However. Slide 23: Evolutionary Process of Global Marketing Domestic marketing Market Focus : Domestic Orientation : Ethnocentric Marketing Mix : Focus on domestic Decision customers The marketing mix decisions are invariably based on the needs and wants of the domestic customers These decisions are taken so as to respond competitively and effectively to the domestic environmental factors Slide 24: Ethnocentrism is defined as the predisposition of a firm to be predominantly concerned with its viability and legitimacy only in its home country Neglect of competition from low-cost Japanese manufacturers of consumer electronics by the US manufacturers in the 1960s and 1970s as a result of their ethnocentric approach was the major reason behind their inability to cope with forced competition in the US market. such as decisions about product development. multinational. the positive experience in fulfilling such overseas market requirements serves as a stimulus to look for repeat orders. the marketing decisions. pricing.
that success was not based on a total standardization of marketing mix elements Slide 36: In his book. Slide 33: Global Marketing: What it is and What it is Not Although the marketing discipline is universal. but it Slide 32: increasingly means a strategic approach to have a global perspective to have economies of scale The objective is to find out some commonality in the customers’ needs and strive for a uniform marketing strategy as far as feasible in various country markets. The Borderless World.flavour coffee line from Europe to the United States Its U. for example. competitors were delighted: The transfer led to a decline of 1% in US market share An important task in global marketing is learning to recognize the extent to which marketing plans and programs can be extended worldwide. and distribution Some well-publicized failures by Parker Pen and other companies seeking to follow Levitt’s advice brought his proposals into question Indeed. Kenichi Ohmae explains that Coke’s success in Japan could be achieved only by spending a great deal of time and money becoming an insider That is.g. . Slide 31: Global Marketing Marketing focus : Consolidating firm’s operations on global basis Orientation : Geocentric Marketing Mix : Globalization of marketing Decision mix decisions with local variations joint decisions making across firm’s global operations The extreme view of global marketing refers to the use of a single marketing method across the international markets with little adaptation Global marketing hardly means complete standardization of the marketing mix decisions. “global” marketing may include a combination of standard (e. “The globalization of Markets” Professor argued that the marketers were confronted with a “homogeneous global village” Levitt advised organizations to develop standardized high quality world products and market them around the globe using standardized advertising. it was global marketing that made Coke a worldwide success However.S. the company built a complete local infrastructure with its sales force and vending machine operations Coke’s success in Japan.g. and available media are different. it may be necessary to change our marketing plan Slide 34: Companies who don’t appreciate this fact will soon learn about it if they transfer irrelevant experience from one country or region to another Nestle. as well as the extent to which they must be adapted Much of the controversy about global marketing dates to Professor Theodore Levitt’s 1983 seminal Slide 35: article in the Harvard Business Review. markets and customers are quite differentiated This means that marketing practice must vary from country to country Each person is unique. it means a successful global marketer must have the ability to “think globally and act locally” As we will see many times in this book. distribution or packaging) approaches A “global product” may be “the same’ product everywhere and yet “different” Global marketing requires marketers to behave in a way that is global and local at the same time by responding to similarities and differences in world markets As the Coca-Cola Company has demonstrated.mix decisions are standardized within the region but not across the region Marketing mix decisions are based on regional basis which brings economies of scale. channels of distribution. and each country is unique This reality of differences means that we cannot always directly apply experience from one country to another If the customers. pricing. sought to transfer its great success with a four. according to Ohmae .’ the ability to be as much of an insider as a local company but still reap the benefits that result from world-scale operations What does the phrase global localization really mean? Slide 37: In a nutshell. was a function of its ability to achieve “global localization. competitors. the actual product itself) and nonstandard (e.
with considerable investment of time and money. Coca-Cola managers did not understand the Japanese distribution system However. Slide 40: Towards GLocal Marketing • As achieving greater market share and improved profitability is more critical to a firm rather than achieving economies of scale. noncarbonated soft drink that promotes healthy digestion and quick refreshment expressly for the Japanese market. the Japanese unit has created products such as Georgiabrand canned Slide 39: and Lactia. the global marketing firm finds it difficult to overlook the local expectations and finer marketing nuances • Besides. and customer service efforts to local needs. a lactic. distribution. Coke established such strong brand preference that the company claims a 78% shares of the softdrink market in Japan At first.Slide 38: the ability to think globally and act locally can be a source of competitive advantage By adapting sales promotion. the growing level of expectations of the target market necessitates the global firms to give more attention to the customers in view of their local requirements • thus. but helps it to fulfill the customer expectations more competitively and secure greater market share. the term GLOCAL refers to global marketing with a local focus Slide 41: • This is turn increases the marketing complexity for a firm. they succeeded in establishing a sales force that was as effective in Japan as it was in the United States To complement Coke sales. Slide 42: Marketing Complexity International Marketing Multinational Marketing Global Marketing GLOCAL (Global Marketing With Local Focus) Exporting Domestic Process of Internationalization Time Slide 43: Reasons for Entering International Markets Why should a firm enter international markets? a) Growth b) Profitability c) Risk Spread d) Achieving Economics on Scale e) Access to Imported Inputs f) Uniqueness of Products or Service g) Marketing opportunities due to Life Cycles h) Spreading R&D Costs .
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