Global Marketing

• Global marketing is more than simply selling a product internationally. Rather, it

includes the whole process of planning, producing, placing, and promoting a
company’s products in a worldwide market.

• Large businesses often have offices in the foreign countries they market to; but
with the expansion of the Internet, even small companies can reach customers
throughout the world.
• Coca-Cola started selling internationally back in 1919, and is now present in more than 200
countries. In order to keep a consistent brand, Coke tastes the same in every region (although
outside of the United States, the recipe uses sugar instead of high-fructose corn syrup), but the
size, shape, and labeling of the bottle are changed to match the norms in each country. While the
company formerly used a standardized advertising approach, it has changed to adapt advertising
messages to local culture. Additionally, it adjusts its product line-up to fit local tastes; including
a number of additional beverage brands.

• McDonald’s makes certain that a Big Mac tastes the same in every country; but it also varies
items on its menu according to local tastes. Customers in Mexico can order a green chili
cheeseburger, customers in Korea get to eat bulgogi burgers; and customers in many Arab
countries can enjoy the McArabia, a grilled kofta sandwich on pita bread.

• Starbucks also adjusts their menu to fit local tastes. In Hong Kong, for example, they sell
Dragon Dumplings. And as a global buyer of coffee, the company has long had a reputation for
engaging local cultures according to their needs.
Major Decisions in International Marketing
Deciding whether to go abroad

Deciding which markets to enter

Deciding how to enter the market

Deciding on the marketing program

Deciding on the marketing organization

 Deciding Whether to Go Abroad
E.g. U.S retailers such as The Limited, Walmart, Gap earn almost 2/3 rd and three
quarter of their sales, respectively in nondomestic market.

Several factors draw companies into international arena:

1. Certain international markets might present better profits opportunities than the
domestic market.
2. A company might need a larger customer base to achieve economies of scale.
3. A company might also decide to go abroad to reduce its dependence on any one
market.
4. A company’s desire to counterattack global competitors in their home markets.
5. A company’s desire to serve its global customers who require international
service.
 Going abroad involves two major types of risks

General risks associated with entering a new market:

1. Managers need not to learn other languages
2. Redesign their product to suit different customers needs and expectations
3. Variations in customers shopping habits

Specific risks associated with entering a new market

1. Deal with volatile currencies
2. Face political and legal uncertainties
3. Need to gain social acceptance
 Deciding Which Markets to Enter
• Determine How Many Markets to Enter and Evaluating Potential Markets
 Deciding How to Enter the Market

Indirect Direct
Direct Exporting Licensing Joint Venture
Exporting Investment

• A company should consider entering the global marketplace only after its management has a
solid grasp of the global environment.

--- Indirect exporting include using an export management company, which acts as an
intermediary between the manufacturer and foreign buyers, or using a trading company, which
purchases the goods from the manufacturer and resells them in foreign markets.

--- Direct Exporting means direct sales to a customer abroad. You send your invoice directly to
the customer.
--- Licensing: the legal process whereby a licensor allows another firms to use its manufacturing
process, trademarks, patents, trade secrets, or other proprietary knowledge. The licensee, in turn,
pays the licensor a royalty or fee agreed on by both parties.
Contract Manufacturing: the firm hires local manufacturer to produce the product. E.g.
Volkswagen has a contract agreement with Russian automotive conglomerate GAZ group, whereby
GAZ will build the Volkswagen Jetta, Skoda Octavia for the Russian market.
Franchising: The franchisor offers a complete brand concept and operating system. In return, the
franchisee pays certain fees to the franchisor. QSR like McD, Subway and BK have all franchised all
over the world.

--- Joint Venture: when a domestic firm buys part of a foreign company or joins with a foreign
company to create a new entity. E.g. Walmart entered into a joint venture with the Indian group
Bharti Enterprises called Bharti Walmart Pvt. Ltd.

--- Direct Investment: Foreign direct investment (FDI) is an investment made by a firm or
individual in one country into business interests located in another country. Generally, FDI
takes place when an investor establishes foreign business operations or acquires foreign business
 Deciding on the Global Marketing Program
• Global companies must decide how extensively to adapt their marketing strategy to local
conditions. At one extreme is a standardized marketing program worldwide, which promises the
greatest consistency across individual countries. At the other extreme is an localized marketing
program.
• Global Product Strategies: Three types of global product strategies are:

--- Straight extension: introduces the product in the foreign market without any change. The
strategy doesn’t require any additional R&D expense, manufacturing retooling, or promotional
modification. E.g. camera manufacturing, consumer electronics companies.

--- Product adaptation: is the process of changing a product to meet the needs of customers in a
market other than the one in which it is made. This can be an important part of a company's
strategy for selling in a foreign country.

--- A company can produce a regional version of its product.

--- Product invention: Rather than using or adopting its current products, a company might
choose to develop new products for its global markets.
E.g. McDonald in Portugal offers a soup alternative to burgers, including bean and spinach soup.

--- Dealing with the counterfeit products:

--- LVMH estimated that 90 percent of LV and Christian Dior pieces listed on eBay were fakes,
prompting the firm to take action.
--- Microsoft estimated that about 90 percent of its window software in China is pirated.
• Global Brand Strategies
--- Brand adaptation: refers to modifying or adjusting a brand's identity, messaging, or visual
elements to better align with a specific market or audience.
--- Some East Asian buildings skip not only the fourth floor but often every floor that has a four in
it (14,24,34,40….)
--- Nokia never releases phone models containing the number 4 in Asia.

Country-of-origin effects: The country or geographic location from which it originates may also
become linked to the brand and generate secondary association.
--- Many countries have become known for expertise in certain product categories or for
conveying a particular type of image.
• Global Pricing Strategies:
--- The same Gucci handbag may sell for $200 in Italy, $300 in US, and $400 in China. Why?
--- Gucci must add the cost of transportation, tariffs, importer margin, retailer margin etc.
--- Price escalation from these added costs and currency fluctuation risk might require the price to
be 2-4 times as high for manufacturer to earn the same profit.

Companies have two basic choices for setting prices in different countries:
a) Set a uniform price everywhere:
b) Set a market based price in each country

• Global Communication Strategies:

• Global Distribution Strategies: