CHAPTER 6

Global Marketing
Environment

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 Chapter 6: Global Marketing Environment

At the end of this chapter, you should be able to:

⮚ State the Two Striking Facts about Global Environment

⮚ Explain the present Global Economic Environment
⮚ Explain the Global Financial Crisis and Economic Slowdown
⮚ Discuss the trends in Consumer Environment
⮚ Explain the Technology Environment
⮚ Explain the Competition Environment
⮚ Discuss the New Global Business Scene
⮚ Appreciate the Import of today’s ‘Knowledge Economy’
⮚ Explain the Outsourcing Wave
⮚ Elaborate on the New Environment bristling with New Opportunities

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 Chapter 6: Global Marketing Environment

(1) Global environment is inherently a complex entity

⮚ Consisting of Global demographics, global economy, global
competition, international trade, functioning of MNCs, science
and technology issues, policies of governments, international
law, etc.
(2) In the present juncture, many drastic changes are taking place in it
⮚ Change is ubiquitous in all components of the environment.

Contemporary Global Marketing Environment

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 Chapter 6: Global Marketing Environment
The Economic
Global Environment
Marketing Environment (…contd)

■ Contemporary Global Economy

▪ Global economy is under transformation
▪ A dozen countries across the globe cross trillion-dollar GDP
▪ Good growth registered by Russia in recent years
▪ China and India continue to have high rates of growth
▪ Asia, the world’s fastest-growing consumer market
▪ World and US economies expected to slow down

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Global Economic Environment (…contd)
Chapter 6: Global Marketing Environment
Global Economic Environment (…contd)

■ A New Global Equilibrium

▪ Composition of G8 on the verge
of a change
▪ World heading tri-polar
economically, with US, China
and India.
▪ China already No. 2 and India
No. 4 among world economies
on PPP basis
▪ China’s fusion into a market
economy and emergence as an
economic power
▪ BRIC becomes the driver of
world economy
▪ Liberalisation by many
developing countries

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 Chapter 6: Global Marketing Environment
The Global Financial Crisis and Economic Slowdown
■ The Jargons – ‘Financial Tsunami’, ‘Global Meltdown’, ‘Lehman Bomb’,
‘Stock Market Crash’ and ‘Bail out Melas’
▪ Three of America’s top five investment banks disappear overnight
▪ Central banks pump massive funds to increase the liquidity to commercial
banks
▪ Stock markets across the world crash

■ Slowdown in Global Economy

▪ Global growth would decelerate to 3.9 per cent in 2008, as against the 5 per
cent growth in 2007
▪ It would further decelerate to 3 per cent in 2009
■ Adverse Impact on Employment Front
■ Shift of Economic Power from the US to China and India may
Accelerate
▪ The recent developments in the US may accelerate the shift of economic
power to high growth and densely populated economies

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 Chapter 6: Global Marketing Environment
The Global Financial Crisis (…contd)
■ Trade Environment Post WTO
▪ WTO linked 125 countries in a liberalised treaty of global trade.
■ Developing Countries Perceive a Continuing Inequity
■ All Countries Realise there is no Alternative to Globalisation
▪ Shutting doors to the global economy/markets is no longer an available
option for any nation.
■ Multinational Trade Blocks Including the EU
▪ EU (The European Union)
Economic integration of 27 European nations into a unified trading bloc.

▪ NAFTA (The North American Free Trade Agreement)

Huge unified trading bloc among the US, Canada and Mexico.

▪ ASEAN (Association of South East Asian Nations)

Singapore, Malaysia, Philippines, Thailand, South Korea and Indonesia.
constitute this multinational market group.

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 Chapter 6: Global Marketing Environment
The Consumer Environment (Global Demographics)
■ Contemporary Trends in Global Demographics
⮚ By 2050 world population will soar 40% and cross 9.2 billion
⮚ Virtually all population growth would be taking place in developing countries
⮚ India to cross China and be the world’s most populous nation.
⮚ Age mix of population.
⮚ India enjoys the most favourable age mix.
⮚ China will need to grapple with drastic greying of her population.
⮚ In several countries older population will enlarge and younger shrink.

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 Chapter 6: Global Marketing Environment
Global Demographics (…contd)

■ Geographic Shifts/Immigration of Populations

■ Spread of Consumer Democracy in All Markets
⮚ Adoption of value co-creation with customers

The Technology Environment

■ Rapid changes in Technology Impact businesses and lives of people
( See Slide 7 & 8 in Chapter 5 for details)

The Competition Environment

■ The Very Meaning of Competition Undergoes a Change
■ Competition from ‘Technology Breakthroughs’ and ‘Blurring of Product
Boundaries’
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 Chapter 6: Global Marketing Environment
Competition Environment (…contd)
⮚ Boundaries getting blurred between the PC and consumer electronics devices

Exhibit 6.5 PC Faces New Competition from Mobile Phone (Pg 76)

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 Chapter 6: Global Marketing Environment
Competition Environment (…contd)
■ The Market Arena and Competition Go Global and Borderless
⮚ Competition has become an undisputed reality and the way of life for all
nations, industries, firms, and marketers
■ Becoming Globally Competitive has Become a Must for All
⮚ Competition in any country is now shaped more by global developments
⮚ All business firms are required to continuously renew their strategies
■ Cheap Labour No Longer Enough for Competitiveness; Technology
and Innovation a Must
⮚ Sufficient skill at differentiation and specialisation contributes to
sustainable value addition to the product offerings
■ Even to Tap Global Resources, Firms have to have Global Scale and
Competitiveness in Their Fields
⮚ Tata’s acquisition of Corus, Mittal Steel’s takeover of Arcelor, Vodafone’s
buyout of Hutch etc are attempts to gain global scale
■ Global Brands Take Local Forms – The ‘Glocal’ Reality
⮚ ‘Value balance’ needs customisation to local settings
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The New Global Business Scene Chapter 6: Global Marketing Environment

■ The Rise of China and India

⮚ China and India set to alter the balance of global business power
(Exhibit 6.10 China and India to alter the balance of Global Business Power, Pg 80)
■ China’s Ascendancy
⮚ China builds mega brands like Haier and Lenovo
⮚ Acquiring oil and gas assets across the globe Ex 6.12 China
Acquires Oil
Companies
Abroad (Pg 82)

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 Chapter 6: Global Marketing Environment
NewGlobal
New GlobalBusiness
BusinessScene
Scene (…contd)
(…contd)

■ American MNC Brands Get Negative Publicity

▪ NOP study and O&M observations

■ The IT Sweep and the Spread of e-Commerce/Online Marketing

⮚ Around one billion PCs are now in use across the world; every
year 200 million more are being added.
⮚ The PC has, in the past decade, turned into a commmunication /
connectivity device, thanks to the rise of the Internet.

March of the ‘Knowledge Economy’

■ Now knowledge is recognised as Value in all industries

■ Knowledge now offers huge scope for making new profits
■ The individual acquires importance in the knowledge economy
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 Chapter 6: Global Marketing Environment

The Outsourcing Wave

⮚ A mammoth phenomenon of the times.
⮚ Permeates practically all industries/sectors

■ BPO and KPO

■ Relocation of manufacturing

■ A variety of drivers have been fuelling the outsourcing explosion

⮚ Cost advantage
⮚ Non-availability of relevant man power resources

■ Global Sourcing
⮚ Production, transportation, distribution and consumption, as well as
the acquisition of resources are being organised on a global scale
and through global networks
⮚ Implies the formation of new economic relationships
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 Chapter 6: Global Marketing Environment
A New Environment Bristling with New Opportunities

■ Change is the order of the day, whether it is:

● Macro economy

● Technology

● Demography

● Competition, or

● The Overall Business Scene

▪ This enormous change carries a huge bundle of opportunities for

business firms all over the world
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