Uluslararası Pazarlama GLOBAL MARKETING lecture 1 GLOBAL MARKETING WARREN J. KEEGAN MARK C. GREEN Instructor: Dr. Nergis Aziz&1. Introduction to Global Marketing “ We live in the global marketplace.” “ We live in a world in which markets are local.” “ Multi-language labeling” Two decades ago, the phrase GLOBAL MARKETING did not exist. Today, savvy business people utilize global marketing for the realization of their companies ’ full commercial potential. That is why, no matter where you live in Asia, Europe or South America, you may be familiar with the brands mentioned above. However, there is another, even more critical reason why companies need to take global marketing seriously. WHY COMPANIES NEED TO PAY ATTENTION TO GLOBAL MARKETING? A company that fails to understand the importance of global marketing risks loosing its domestic business to competitors with lower costs, more experience and better products. Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organization goals. An organization that engages in global marketing focuses it resources on global market opportunities and threats. One difference between “regular marketing ” and “global marketing ” is the scope of activities. Another difference is that global marketing involves an understanding of specific concepts, considerations, and strategies that must be skillfully apllied in conjuction with universal marketing fundamentals to endure success in global markets. 1. Competitive advantage, globalization, and global industries When a company succeeds in creating more value for customers than its competitors do, that company is said to enjoy competitive advantage in an industry. This perfume priced at $3,540. This is one of the most expensive perfumes ever launched.  Harrods is the retail outlet where it can be bought from. This perfume is used by segment of ultra premium people and positioned as the best perfume to wear during Christmas time. Advertised by French model Laetitia Casta. http://www.worldinterestingfacts.com/lifestyle/top-10-most-expensive-perfumes-in-the-world.htmlHarrods is one of the world's largest and most famous department stores. With more than a million square feet (90,000 sq m) of space, Harrods sells luxury and everyday items across seven floors and 330 departments. Its motto is Omnia Omnibus Ubique – “ All Things for All People, Everywhere ” - and the store attracts 15 million customers each year. Harrods has been sold by its owner Mohammed Al Fayed to the Qatari royal family for £1.5bn. http://www.bbc.co.uk/news/10103783“ Globalization ......................... is the inexorable integration of markets, nation-states and technologies to a degree never witnessed before – in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is enabling the world to reach individuals, corporations and nation- states farther, faster, deeper and cheaper than ever before.” Thomas L.Friedman “ Global industry ............................ is one in which competitive advantage can be achieved by integrating and leveraging operations on a worldwide scale.” Michael Porter Achieving competitive advantage in a global industry requires executives and managers to maintain a well-defined strategic focus. A focus is simply the concentration of attention on a core business or competence. “ Nestle is focused: We are food and beverages. We are not running bicycle shops. Even in food we are not in all fields. There are certain areas we do not touch. For the time being we have no biscuits in Europe and the USA for competitive reasons, and no margarine. We have no soft drinks because I have said we either buy Coca Cola or we leave it alone. This is focus.” Helmut Maucher(former chairman of Nestle)http://www.nestle.com.tr/Year of Establishment : 1955 Headquarters                : İ stanbul, Turkey Core Business                : Production, marketing and after sales service of a full range of household appliances, components Products : White goods, electronics,computer products, vacuum cleaners, small home appliances http://www.arcelik.com.tr/Cultures/en-US/default.htmCompany management may choose to initiate a change in focus as part of an overall strategy shift. Even Coca-Cola has been forced to sharpen its focus on a its core beverage brands.Following sluggish sales in 2000-2001, chief executive Douglas Daft announced a new alliance with Nestle that will jointly develop and market coffees and teas. “ We are network of brands and businesses. You do not just want to be a total beverage company. Each brand has a different return on investment, is sold differently, drunk for different reasons, has different managing structures. If you mix them all together, you lose the focus.”VALUE • COMPETITIVE ADVANTAGE • THE FOCUS • SHOULD GUIDE MARKETING EFFORTS IN ANY PART OF THE WORLD2. Global marketing: what it is and what it is not. An important task in global marketing is learning to recognize the extent to which marketing plans and programs can be extended worldwide, as well as the extent to which they must be adapted. Table 1-1 Comparison of single-country marketing strategy and global marketing strategy Single-Country Marketing Global Marketing Strategy Strategy Target market strategy Global market participation Marketing mix development Marketing mix development Product Product adaption or standardization Price Price adaption or standardization Promotion Promotion adaption or standardization Place Place adaption or standardization Concentration of marketing activities Coordination of marketing activities Integration of marketing moves GLOBAL MARKET PARTICIPATION is the extent to which a company has operations in major world markets. STANDARDIZATION OR ADAPTATION is the extent to which each marketing mix element can be standardized or adapted in various country markets.CONCENTRATION OF MAREKTING ACTIVITIES is the extent to which activities related to the marketing mix are performed in one or a few country locations. COORDINATION OF MARKETING ACTIVITIES is the extent to which marketing activities related to the marketing mix are planned and executed interdependently around the globe. INTEGRATION OF COMPETITIVE MOVES is the extent to which a firm ’ s competitive marketing tactics in different parts of the world are interdependent. GMS SHOULD BE DESIGNED TO ENHANCE THE FIRM ’ S PERFORMANCE ON A WORLDWIDE BASIS. The decision to enter one or more particular markets outside the home country depends on a company ’ s resources, its managerial mind-set, and the nature of opportunity and threats. Standardize or Adapt? Professor T. Levitt argued that marketers were confronted with a “homogeneous global village” in his article “The Globalization of Markets” (Harward Business Review, 1983). He advised organizations to develop standardized, high quality world products and market them around the globe by using standardized advertising, pricing and distribution. The success of was not based on a total standardization of marketing mix elements. Coca-Cola achieved success in Japan by spending a great deal of time and money to become an insider; that is, the company built a complete local infrustructure and vending machine opretaions. The particular approach to global marketing that a company adopts will depend on industry conditions and its sources of competitive advantage. Should Harley-Davidson start manufacturing motorcycles in a low-wage country such as Mexico? About %85 of Gap ’ s 3.000 stores are located in the USA, and its design group is based in New York. However, the company relies on apparel factories in Honduras, the Philippines, India, and other low-wage countries to supply most of its clothing. Should Gap open more stores in Japan? 3. Management orientations The form and substance of a company ’ s response to global market opportunities depend greatly on management ’ s assumptions or beliefs. The world view of a company ’ s personnel can be described as ethnocentric, polycentric, regiocentric, or geocentric. Figure 1-1 Management orientations“ ethnocentric orientation” A person who assumes that his or her country is superior to the rest of the world is said to have an ethnocentric orientation. Company personnel with an ethnocentric orientation see only similarities in markets, and assume that products and practices that succeed in the home country will be successful everywhere. “ ethnocentric orientation” Ethnocentric companies that conduct business outside the home country can be described as international companies; they edhere to the notion that the products that succeed in the home country are superior. This point of view leads to a standardized approach to marketing based on the premise that products can be sold everywhere without adaptation. “ ethnocentric orientation” ...........foreign operations or markets are typically viewed as being secondary or subordinate to domestic ones; ........... organizational capabilities can be applied in other part of the world; ...........little or no systematic marketing research is conducted outside the home country, and major modifications are made to products; “ ethnocentric orientation” Ethnocentrism is one of the major internal weaknesses that must be overcome if a company is to transform itself into an effective global competitor. “ polycentric orientation ” The polycentric orientation describes management ’ s belief or assumption that each country in which a company does business is unique. The term multinational company is used to describe such a structure. This point of view leads to a localized or adaptation approach that assumes products must be adapted in response to different market conditions. “ regiocentric and geocentric orientation ” In a company with regioncentric orientation, a region becomes the relevant geographic unit; management ’ s goal is to develop an integrated regional strategy. For example, a European country that focuses its attention on Europe is regiocentric. “ regiocentric and geocentric orientation ” A company with a geocentric orientation views the entire world as a potential market and strives to develop integrated world market strategies. A company whose management has a regiocentric or geocentric orientation is sometimes known as global or transnational company. 5. Forces affecting global integration and global marketing Figure 1.2 Driving and Restraining Forces Affecting Global Integration Driving forces Restraining forces Global integration and global marketing driving forces Regional economic agreements (NAFTA, • GATT) Converging market needs and wants and the • information revolutiondriving forces Transportation and communication • improvements Product development costs • Quality • World economic trends •restraining forces Management myopia and ogranizational • culture National controls • Opposition to globalization •Globaphobia is sometimes used to describe an attitude of hostility toward trade agreements, global brands, and or company policies that appear to result in hardship for some individuals or countries while benefiting others. Indonesians filled the streets of several cities on Monday to protest at the US-led invasion of Iraq, with some denouncing President George Bush as a "terrorist" and a "vampire."“ build your global marketing skills ” The following is a list of countries from various regions of the world. What category of the goods do you think is the number one export from each? Possible answers are shown in the right-hand column. Write the letter corresponding to the product or product category of your choise in the space provided; each product answer can be used more than once. _____ 1. Brazil a. Cocoa _____ 2. Finland b. Gold _____ 3. Ghana c.Telecommunications /technology products _____ 4. Saudi Arabia d. Aircraft equipments and parts _____ 5. Nigeria e. Pertoleum _____ 6. Australia f. Metal ores and extractive commodities _____ 7. Russia g. Electronics _____ 8. Singapore h. Motor vehicles _____ 9. Germany i. Coffee beans _____ 10. Peru