Chapter - 26

Global Marketing
BT’s Most valuable Companies - How Much Global ?

Name Sector Rank

Wipro Information Technology I
Hindustan Lever Consumer / Diversified II
Infosys Technology Information Technology III
Reliance Industries Diversified IV
Reliance Petroleum Oil V
ITC Diversified VI
HCL Technologies Information Technology VII
Zee Telefilms Information & Entertainment VIII
Satyam Computers Information Technology IX
HFCL Telecom X
Ranbaxy Laboratories Pharmaceuticals XI
NIIT Information Technology XII
L&T Engineering XIII
Nestle Consumer XIV

Among the top 20 companies, 70 percent have global operations

 Rationale for Globalization
Political Changes:
•Unipolar World
•Increasing Regionalization-Breakdown of Country borders in a region
•Objective of Regionalization-Increase in bargaining power
•Liberalization and Deregulation in India

Economic Changes:
•Emergence of WTO
•Regionalization of Trade
•Objectives of regional trade-
a) Free flow of goods and services among the countries of the region and
hence the expansion of the total market
b) Increased bargaining power of the member countries with exporters
from outside the region
•Lowering if entry barriers in India
Technological Changes:

•Satellite Communication
•Internet Technologies
•Voice and data interface technologies

Social Changes:
New customer-
•More aware
•Literate
•Price sensitive
•High concern for value for money
 Implications for Globalization

•Economies of scale
•Improved quality
•Availability of new products to Indian consumer
and the world consumer simultaneously
•Increasing concern among the firms and
consumers of maintaining the ecological balance
 Firm Orientation

Ethnocentric Orientation (E)-Home country orientation

Polycentric (P)-Exports not to just one market but to several markets

Regiocentricism (R)-Focused on specific region

Geocentric (G)-Consider the world as their home market

Principal Driving Force in Global Marketing

World brand dominance is what the global (marketing) war is all about
 Key Decisions in Global Marketing

Parameters:
Corporate Functioning-
•Corporate functions that can be globalized, or where
standardization is easier.
•Marketing is the most complex and difficult area of
standardization

Products-
•Ones that enjoy high economies of scale and are not culture bound
•Marketers can rank markets from low to high depending after
examining cultural and scale barriers
•Brand and headquarter country’s image in different markets
Marketing Communication:

Highly culture specific

Task of identifying a universally acceptable brand ambassador is difficult

Identify the common values that will impact consumption in all regions

In marketing communication the theme can be standardized for the world

market

Implementation in creative execution and media will have to be localized.

Distribution:

Differs across countries both in terms of availability of channels and

infrastructure like transportation, warehousing and telecommunications
Firms must consider opportunities created by the internet.
Direct marketing and e-commerce are some of the most probable
distribution routes available to any marketer in the global market

Countries:
A global firm is more likely to decentralize decision making to markets
where its affiliates are effective.
Large markets with strong local management are less likely to accept
global programmes
These markets represent the highest corporate investments. A global
strategy will have to consider the needs of a larger market rather than
smaller markets
 Decision Making for Global Marketing

Entry strategies in different markets-ranging from exporting to setting

up a 100 percent ownership company in different parts of the world

Brand acquisition and mergers and company acquisitions are becoming

the order of the day

Standardization as opposed to differentiation and localization of the

marketing mix
Standardization:

•Involves developing a standard product and marketing it across the national

border with the same communication, pricing, and distribution strategy

•Advent and standardization of technology and communications, customer

needs are globally getting homogenized

•Raised customers’ expectations and demands for better living standards,

work life and entertainment. This cuts across cultures and religion

•Helps the firm not only reduce its costs but also to ensure superior quality
and consistent brand image across the world market

•Helps firms achieve economies of scale which is not possible in any other
approach
Pitfalls in this decision:

Success of a global firm is based on how global decisions

are conceptualized, refined, internally communicated and

implemented across the world market.

Differentiation:

•Involves responding to differences in customer preferences,

arising out of cultural, social, and religious barriers that divide
nations.

•Helps in building up sales volume

•The cost is prohibitive, when done at global level

•Global firms will not be able to ensure identical brand image

across the world market-goes against the thesis of globalization

•More acceptable route is one of localizing the marketing mix

Global marketing can be localized through:
1. Encourage affiliate managers to generate ideas.

2. Involve affiliate managers in the development of marketing strategies

and programmes for global brands.

3. Maintain a product portfolio that includes, wherever scale economies

permit, local, regional and global brands.

4. Letting local affiliate managers control their marketing budgets so that

they can effectively respond to local customer preferences and competition.

5. Consider giving profit center responsibilities to local affiliate managers.

 Product Strategy for Global Markets

Product Development: Global Marketing rests on the concept of a

universal product idea.
Lead market model involves the following steps:

a) Identify the major markets where the firm wishes to compete

b) Research customer preferences, local laws and other environmental

conditions that are going to affect product diffusion in these markets

c) Carefully analyze competitor products and particularly that of the

market leader in these markets

d) Incorporate these local market conditions in the product design

e) Allow for customer choices in terms of colors and other aesthetic

preferences
Route through insiderization

Process demands playing a series of “domestic games” against well-defined

global and local competitors in different markets. It calls on firms to outbeat
the competition by using “local cues” in distribution, promotion and even pricing.
This strategy involves having a “local mask” to disguise the “global face”.

Niche products, e.g., fashion products (designer ware), can be marketed

in a standardized manner across the world market. These products satisfy the
need for status of a small but core elite customer group across different markets

Branding is critical.
Brand vs. Generic Strategy
Strategy of generic products is based on the following competencies
of the firm:

a) adherence to buyers time schedule

b) ability to be in the market when the buyer wants the product

c) conformance to quality and other product specifications laid down by the

buyer

d) inter-relationships between producing firms and international trading

houses or buyer organizations

Succeeds only when the firm and the country have been able to create a
credible image in the customer’s mind
Global Competitive Strategy

a) Building a global presence

b) Defending a domestic position

c) Overcoming national fragmentation

Organizing for Global Marketing:

Striking a balance between central control and the local
affiliate’s autonomy is important to succeed in a highly
competitive world market
• Rise of Global Giants from Emerging
Economies
• Understanding the growth of emerging
markets’ global firms
• Overcoming intensive competition in home
market
Emerging market economies saw their
competitive structure getting altered as
they opened their economies to foreign
direct investment in late 1980s and 1990s.
A large number of firms from Triad
economies entered these markets and
local firms found their competitive
advantage getting eroded. Customer was
now showing a marked preference for
foreign products.
Chinese firms realized that their cost
advantage was lost as soon as European
or US firm located its manufacturing facility
in China.
Blunting the competitive advantage
of western multinationals
Done through their in managing
institutional voids that exist in the
emerging economies.
Voids are absence of specialized
intermediaries, regulatory systems and
contract
Understanding local product markets
Adapted to the special needs of
customers and business ecosystem.

Firms from emerging markets exploited

similarities in geographies proximate to
their home economy.
 Institutional Gaps as opportunities
Firms from emerging economies consider
institutional voids not as limitations but as
opportunities for filling in gaps left by
government.
Example: Growth of NDTV filled the gap of
good quality independent news coverage.
Strategies of the global giant from
emerging economies
A study of these firms reveal that they
have pursued one of the following or a
combination of them to win in the world
market:
* Customer Acquisition
* Brand Acquistion
* Efficiency seeking strategies
* Product Leadership strategies
Global markets today dominated by firms
from emerging economies, many of whom
have become leaders in their respective
product markets.
They have aggressively pursued the
strategy of customer acquisition, brand
acquisition, efficiency seeking through
scale economies or product leadership.
The Role and Impact of ICT on Global Marketing

Being used for distributing the products, customizing

the product to suit the lifestyle of consumers across the
world, inviting tenders and price bids.

Any company, small or big, with a website can market

globally