Global Marketing

Global marketing is simply said marketing on a a worldwide scale by taking commercial advantage of global operational difference, similarities and opportunities in order to meet global objectives. Reasons for Global Marketing:
Proliferation of Internet and e-commerce World becoming a smaller geographical place Customer s knowledge and expectations being increased.

Stages in the Evolution of Global Marketing

Global Marketing is an evolutionary process which has happened over the years and not a revolutionary shift.
1.Domestic Marketing:

This is a type of marketing which is restricted to the geographical and political boundaries of the country. In this , the Domestic marketers mainly look at the internal competition and do not focus on the changes that are happening at the global market place. The biggest danger is being blindsided by emerging global marketers. They can be considered as ethnocentric as they are mainly concerned of how they are perceived in their country.
2.Export Marketing:

After catering to domestic markets, companies started exporting to a few nearby countries. Earlier, there was a lot of reluctance due to many documentation procedures. However, the Foreign Trade Policy(FTP) announced in 2004 boosted exports greatly. The new FTP was spelt on August 28th 09 for 2009-14 will continue the impetus on Exports.

3.International Marketing:

As the exports grew over a period of time, simultaneously cost of doing business from H.q country, time differences, language barriers and cultural ignorance hindered the company s competitiveness in the foreign market. Thus, new offices got built in the foreign countries or Companies purchased firms in foreign countries to take advantage of the local environment. These marketers can be termed as Polycentric as they acknowledged that each market or country has different needs.
4.Multinational Marketing:

In this stage, the company markets its products and services in many countries around the world and also benefits from the huge economies of scale.Consolidation of R & D, development, production and marketing is done at a regional level. Hence, this is a typical Regiocentric approach.
5.Global Marketing:

A global marketer views the world as one market and creates products that requires only a few weeks to fit into any regional market place. Marketing decisions are made by consulting all the marketers in the respective countries. The objective is to sell the same thing with the same quality everywhere.

Elements of Global Marketing

The elements of Global marketing are essentially the Four P s of marketing. All these are affected as the company moves up the evolutionary phases to become a global company. At a global level, a company trying to speak with one voice is faced with many challenges while creating a world-wide marketing plan. Unless a company is ONE-UP against its competition in all markets (market leader, low cost, etc.) it is impossible to launch identical marketing plans across the world.

Elements of Global Marketing

1.Product A global company is one that can create a single product and only have to slightly change the elements for different markets. For eg., In Coca-Cola the packaging in every country incorporates the contour bottle design and the dynamic ribbon in some way, shape, or form. However, the pack also includes the country s native language and is the same size as other beverage packs in that country. 2. Price Price always varies from market to market. Additionally, the product s position in relation to the competition influences the ultimate profit margin. Whether this product is considered the high-end, expensive choice, the economical, low-cost choice, or something in-between helps determine the price point.

Elements of Global Marketing

3. Place or Distribution The actual distribution decision varies from country to country and is also influenced by the Competitor strategy. In the U.S, beverages are sold by the pallet via warehouse stores. In India, this is not an option. The distribution also depends on the product s position in the market place. For eg., an expensive product cannot be distributed by a dollar store in U.S. Conversely, a low-cost product will have limited success in a posh boutique in France. 4. Promotion This is a major factor in a global company s marketing budget. The aim is to reduce costs, minimize redundancies in personnel and work, maximize speed and to speak with one voice. If the goal is to send a uniform message world-wide, then conveying that message most effectively at the minimal cost is the challenge. The ability to identify which elements or moments of an ad contribute to the success helps to maximize the economies of scale.

Advantages of Global Marketing

Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices Helps to establish relationships outside the "political arena" Helps to encourage ancillary industries to be set up to cater for the needs of the global player

eMarketing Advantages in GM
1.Scope of eMarketing This approach opens up new avenues for smaller businesses. With a very small budget, potential consumers across the world can be accessed. eMarketing enables the marketer to offer a wide range of products and services. It also includes information management, public relations, customer service and sales. 2. Two-way Interaction eMarekting facilitates conversations between companies and consumers. Companies can mail back the consumers responses making them more dynamic and adaptive. 3.Speed of Action With eMarketing you can simply buy a latest BMW car or a latest iPod offering with just a few clicks after reading about it in your favourite magazine, irrespective of the normal office hours. Effectively, Internet marketing makes business hours 24 hours/day X 7 days/ week X 52 weeks per year.

eMarketing Advantages in GM
4.Demographics and Targeting

Demographics of the Internet users is a very useful information. Internet users as a group have greater buying power and represent the vast group of the middle class segment. These users are also very focused in their approach. Thus marketers can easily find access to the niche markets they wish to target. Marketing message is more effective when it is directly presented to the audience which is most interested.
5.Adaptivity and Closed loop marketing

Closed loop Marketing means a constant measurement and analysis of the results of the marketing activities. With eMarketing responses can be analysed in real-time and campaigns can be modified accordingly. This results in minimal advertising money wasted on ineffective campaigns. Maximal marketing efficiency provides newer opportunities to achieve strategic competitive advantages. All these factors result in an improved ROTI., happier customers and better Profit margins for the Company.

Disadvantages of Global Marketing

Differences in Consumer needs, Wants and Usage patterns for products. Differences in Consumer responses to the Marketing mix elements. Differences in Brand and Product development and the Competitive environment. Differences in the legal environment, some of which may conflict with those of the home market. Differences in the Institutions available, some of which may require a totally new creation. (eg. Infrastructure) Differences in the administrative procedures, some of which may be stringent and time-consuming. Differences in the product Distribution networks etc.

Global Marketing
A successful Global marketing program needs a sound understanding of the Marketing discipline. Though, Marketing is a universal discipline the marketing practice varies from country to country. The importance of Global marketing stems from the fact that the driving forces affecting global integration have more momentum than the restraining forces.

Forces affecting Global Integration

Driving Forces
Technology Culture Mkt needs Controls Free Markets Economic Integrn Peace M/gment Vision Strategic Intent Global strategy & action

Restraining Forces Culture

Mkt differences Costs National Controls Nationalism Domestic Focus Organization History War

Marketing Concept
Earlier the focus was on product and making a better product based on internal standards and values. New concept (around 1960) shifted the focus from product to Customer. Means of achieving profits included the four Ps of marketing. i.e. Product, Price, Place and Promotion. By 90 s, shift took place to Strategic Marketing. This shifted the focus to the customer in the context of a broader external environment.

Marketing

Customer Wants & Needs

R &D

Engineering

Manufacturing

Customer Value

In the Strategic concept, the aim of Marketing is to create greater value for the Customer. This expanded concept of Marketing was termed as Boundaryless Marketing by Jack Welch, C.E.O of General Electric Co.

Global Marketing:What It Is ?
An important task is to understand the extent to which marketing plans & programs can be extended worldwide, and the extent to which they can be adapted.
This thinking resulted in the concept of Global Localization .
A successful global marketer needs to Think globally and act locally.

Coke s success in Japan is a classic example of Global Localization. By adapting sales promotion, distribution and customer service to the local needs, the company achieved a 78% share of the soft-drinks market. The company built a complete local infrastructure with its sales force, vending machines etc .Coke s success was due to its ability to be as much of an insider as a local company but still reap the benefits resulting from world-scale operations

Global marketing essentially means widening business horizons to encompass the world while scanning for opportunity and threat.

Importance of Global Marketing ?

The largest national market in the world of the United States represents only 25% of the total world market for all products and services. Thus, U.S companies wishing to achieve maximum growth must go global because approx. 75% of world market potential is outside their own country.
68% of Coca-Cola s 1999 operating income and 62% of revenues were generated outside North America.

Non-U.S companies have a bigger reason to seek global opportunities as they also have the 305 million U.S population.(Feb 09)

Global Marketing:
What It Is Not ? Global marketing does not mean to develop standardized, high-quality world products and market them using standardized advertising, pricing and distribution.
Parker Pen s failure in the world market is one such example.

Global marketing does not mean entering every country in the world. The decision to enter outside markets depends on the company s resources, managerial mind-set and the nature of opportunity and threat.

Global Market Segmentation It is the process of dividing the world market into distinct subsets of customers that behave in the same way or have similar needs or Process of identifying specific segments like country groups or individual consumer groups of potential customers with homogenous attributes who are likely to exhibit similar buying behavior.

Global Market Segmentation

Global companies may segment the markets as per one or more criteria: 1. Geography 2. Demographics (national income and size of population) 3. Psychographics (values, attitudes and lifestyles) 4. Behavioral characteristics and 5. Benefits sought Another method of global segmentation is: 1. Vertical segmentation and 2. Horizontal segmentation

Geographic Segmentation
It is dividing the world into geographic segments. Advantages: Proximity and easier to visit on the same trip. Limitations: Despite being in the same region, markets need not be similar.
eg. Japan and Vietnam are both in East Asia but Japan is a highincome, postindustrial society and the other is an emerging, less developed preindustrial society.

Hermann Simon ranked geography as the lowest in market segmentation, after Application, Customer group, Product/Technology, Price level and Quality.

Demographic Segmentation
This is based on characteristics like: Age, Gender, Income, Education & Occupation. New demographic factors like: Aging population, fewer children, working women, higher incomes and living standards suggest the emergence of global segments. National income is the major indicator of market potential for most consumer & industrial products. Annual per capita income varies widely from a low 81$ in Congo 38587 $ in Luxembourg.
For low price products like cigarettes, soft drinks etc, population is more important than income. China & India with a population of 1.3 & 1.0 billion are attractive target markets.

Psychographic Segmentation
This involves grouping people in terms of their attitudes, values & lifestyles. Data obtained from Questionnaires require respondents to indicate the extent to which they agree or disagree with a series of statements.
Psychographic profiles of Porsche s American customers

Category
Porsche AG, the German sports-car maker turned to Psychographics after sales declined from 50,000 in 86 to 14,000 in 93. Data was used to develop advertising tailored to each type. Porsche s U.S sales improved by nearly 50% in 94
Top Guns Elitists

% of all owners
27% 24%

Description
Driven & ambitious, Power minded Old money, Personality not asscd even with an expensive car Proud to own the car as a reward Jet setters and thrill seekers Car is a form of escape, don t care about impressing others

Proud patrons Bon Vivants Fantasists

23% 17% 9%

Behavior Segmentation
Focuses on whether people buy and use a product as well as how often and how much they use it. Users can be categorized in terms of usage rates: Heavy, Medium, Light and Non-user Consumers can also be segmented as per user status: Potential, nonusers, ex-users, regulars, first-timers & users of competitor brands. Financial institutions has also to consider Consumer behavior towards saving and spending money.
Japan has the highest number of cash dispensers, followed by Switzerland, Canada and the United States.

Benefit Segmentation
This focuses on B, the numerator in the Value equation, V = B/P
V= value B= perceived benefits - perceived costs P= price

This approach can achieve excellent results by virtue of marketers superior understanding of the problem a product solves or the benefit it offers irrespective of geography.
eg. Nestle found that cat owners attitudes towards feeding their pets are the same everywhere. A campaign was created for Friskies cat food based on the appeal that dry cat food better suits a cat s universally recognised independent nature.

Vertical vs. Horizontal Segmentation

Vertical Segmentation
This is based on product category and price points.
In medical imaging market X-ray, C T scan, MRI etc. are segmented based on price.

Horizontal Segmentation
For the same product, market can also be segmented by the health care system that is regional, national & global.
This approach worked well in domestic as well as outside markets.

Global Targeting
Targeting- It is the act of evaluating and comparing the identified groups and then selecting one or more prospect/s with the highest potential. A Marketing Mix is then devised which creates the maximum value to the customers, while providing the best return on sales to the organization. 3 basic criteria for Targeting are: 1. Current Segment Size & Growth Potential 2. Potential Competition 3. Compatibility & Feasibility

Current Segment Size & Growth Potential

Is it large enough for the Company to make a profit ? Does the segment has a high growth potential for being attractive in terms of the Company s long term strategy ? Is the global segment attractive enough for a standardized product to be marketed in several countries.
eg. Billion plus members of the global MTV-generation is a huge market in terms of size. China alone offers attractive opportunities to many industries. eg. Financial services, personal computers, passenger cars etc.

Potential competition
Is the segment characterized by strong competition ? Is the local brand offering a tough fight to the new Company ? Inspite of an established, can a new Company make inroads ?
eg. Fuji launched despite Kodak being already present as the brand leader in the 2.4 billion $ U.S color film market. Now, after two decades Fuji s U.S mkt. share is in the 10 to 16 % range. Fuji currently enjoys a 25% mkt. share in Europe whereas Kodak has only 40% of the color film market.

Compatibility & Feasibility

To reach global markets, does the Company has adequate resources and money to spend on distribution, travelling etc. ? Whether the segment targeted is compatible with the company s overall goals and established sources of competitive advantage. ?
Coke waited for 15 years to make its entry in Russia, while Pepsi already had a 100% Russian cola market. After entering in 1987, Coke has achieved a 50% mkt. share by 96.

Global Target Market Strategy

Standardized Global Marketing Similar to mass marketing in a single country. Involves creating the same marketing mix for the potential buyers. Uses extensive distribution in the maximum number of retail outlets. Objective : greater sales volume, lower production costs & greater profitability.
Coca-Cola uses the appeal of youthful fun in its global advertising. Sponsorship is global and is adapted to events that are popular in specific countries.

Concentrated Global Marketing

In this type, marketing mix is devised to reach a single segment of the global market. Such companies define their markets narrowly. They go for a global depth rather than a national breadth.
In Cosmetics, this approach has been used successfully to target the upscale, prestigious segment. eg. Oriflame, Lo real etc. Winterhalter ( a German company) is a silent leader in the dishwasher market. It focuses exclusively on hotel chains, restaurants etc. This narrowing of market has been one of their most important strategic decision as well as the foundation of their success.

Differentiated Global Marketing

In this the marketing strategy is a variation of concentrated global mktg. It involves targeting two or more distinct mkt. segments with different mktg. mixes. This allows a wider market coverage.
In the SUV segment, Rover has Range Rover for the elite class and the Land Rover Discoverer which is lower priced. The company has a concentrated strategy for each segment. Swiss Watch Co. (SWC) offers watches ranging from 50$ worldwide to the expensive one (Blancpain) costing 1.0 lakh $.

Global Product Positioning

It is the location of the product in the minds of the customer. This depends on many factors, many of which are controlled by the marketer. It is the way to reach the target customer. Global positioning is most effective for the high-touch/ tech consumers.
Manhattan Bank launched a 75 million $ global advertising campaign with the theme profit from experience . The business and private banking clients of the bank span the globe and travel the globe. Hence, a uniform experience globally results in less confusion.

Global Product Positioning High-Tech Positioning

Personal computers, video and stereo equipment etc are examples for this type of promotion. They are frequently purchased on product features. Buyers are already have adequate technical knowledge or are keen to know more. These products can be categorised as: technical products -ex. Computers, chemicals, financial services. special-interest products -Characterized by shared experience & high involvement among users. demonstrable products- Mode of use needs to be shown at selling points ex. Microwave ovens, Food processors, Gas geysers etc.

Global Product Positioning High-Touch Positioning

Buyers in this segment are highly involved. They share a common language and set of symbols relating to themes of wealth, materialism and romance.
Products that solve a common problem- provide benefits linked to life s little moments. ex. quenching thirst with a soft drink Global village products- products have a global appeal by virtue of their country of origin. Sony is synonymous with Japanese quality, Mercedes projects German engineering. Products that use universal themes- advertising themes & product appeals are across the globe. BMW car has its own inhouse BMW magazine which reinforces the high-touch concept.

Examples of Global Marketing

Strategy
1.Brand Name 2.Product Design 3.Positioning 4.Packaging 5.Distribution 6.Customer service 7.Sourcing

Company/Country
Coca-Cola (U.S)
McDonald s(U.S), Toyota(Japan)

Unilever (Great Britain) Gillette (U.S) Benetton (Italy) Caterpillar (U.S) Toyota, Honda (Japan)

Brand Name as a Strategy

Coke from Coca-Cola is the best known strongest brand in the world.
This has been made possible only due to the Company s s willingness and ability to back its flagship brand with a strong local marketing effort.

Electral from FDC Ltd. is another Indian ORS brand sold in many countries.
This brand is a popular ORS worldwide and is approved by global NGOs for the treatment of rehydration.

Product Design as a Strategy

McDonald s has designed a restaurant system that can be set up anywhere in the world. India s own Kamat group of hotels which set up its first hotel in Hubli in 1948 have now expanded world over with restaurants in Belgium, Japan, Singapore, United Kingdom, USA and Dubai.
They also pioneered the concept of Ecotel revolution in India as ORCHID Hotel in 1997 and are now eyeing global markets like South Africa, China, Pakistan etc.

Positioning as a strategy
Unilever uses a teddy bear picture to position the benefits of softness for its fabric-softener product in various world markets across the globe.

Packaging as a strategy
Gillette uses the same packaging for its flagship brand Gillette Sensor Razor everywhere in the world. This unique and distinct packaging has made this a leading global brand in this segment.

Distribution as a strategy
Benetton uses a sophisticated distribution system to quickly deliver the latest fashions to its worldwide net-work of stores.
Benetton produces approx. 130 Million garments every year, sold in about 120 countries through about 5000 stores offering clothes that have style, quality and in relevance to the market today. Benetton s turnover is about 1.9 Billion Euros.

Customer service as a strategy

Since its inception 80 years ago, Caterpillar has grown to be the world s largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines.

It s major success is due to a network of dealers that supports a promise of 24 hour parts and service .
Caterpillar is proud to be the leader in building the World s infrastructure and in enabling progress for millions of people around the globe.

Sourcing as a strategy
Toyota and Honda s success was based on exporting cars from its factories in Japan. Now, both companies have invested in manufacturing facilities in the United States and other countries from which they export to all over the world.

Importance of Global Marketing In the first quarter of the 20th century, there were thousands of auto companies in the world and more than 500 in the United States alone. Today, fewer than 20 companies remain worldwide, and only 2 are American.
In most industries, the companies that will survive and prosper in this century will be global enterprises. Some companies that do not respond to the challenges and opportunities of globalization will be absorbed by more dynamic enterprises; others will simply disappear.

Global Marketing
Customer was the king yesterday. Customer is the King TODAY

&
CUSTOMER WILL CONTINUE TO BE THE KING FOR MANY MORE YEARS TO COME!!!