2. In Shanghai, a German businessperson is driving a Lexus; he’s wearing Testoni shoes, Irish cashmere socks, Calvin Klein innerwear, an Armani suit, with a Gucci belt. He has a Mont Blanc pen, in his Italian shirt. He’s going to meet an American investor at a KFC restaurant, for a Coke. After lunch, they stop for a Baskin-Robbins (actually a foreign firm) ice cream sundae. --- OK, that’s a stretch. When he gets home, sitting on an “Ottoman”, he has an “Absolut Vodka” nightcap, while listening to “American country western music”.

3. Global Marketing Global marketers consider the world as their market and different country markets as components of this world market. Global Marketing is the coordinated performance of marketing activities to create exchanges across countries that satisfy individual, organizational, and societal objectives

4. YGlobal marketing is conducted across countries (not domestic or foreign) Y Global marketing coordinates activities across different country markets Y Global marketing should be motivated by individual, organizational, and societal goals

5. Evolution of Global Marketing Stage 1: Domestic Marketing: Companies manufacturing products and selling those within the country itself. So, no international phenomenon at all. Stage 2: Export Marketing: Company starts exporting products to another countries also. This is the very basic stage of global marketing. Approach of marketer in this stage is said to be ‘Ethnocentric’ because although he is selling goods to foreign countries, product development is totally based upon the taste of local customer. So, focus is still on domestic market Stage 3: International Marketing: Now, company starts selling products to various countries and the approach is ‘Polycentric’ i.e. making different products for different countries.

6. Contd… Stage 4: Multinational Marketing: Now, in this stage, the number of countries in which the company is doing business gets bigger than that in earlier stage. And so, instead of producing different goods for different countries, company tries to identify different regions for which it can deliver same product. So, same product for countries lying in one region but different from product offered in countries of another region. e.g. a company may decide to offer same product to India, Sri lanka and Pakistan if it thinks the taste of people of these countries is same but at the same time offering different product for American countries. This approach is called ‘Regiocentric approach’. Stage 5: Global Marketing: This is the final stage of evolution. In this stage company really operates in a very large number of countries and for the purpose of achieving cost efficiencies it analyses the requirement and taste of customers of all the countries and come out with a single product which can satisfy the needs of all. This approach is called ‘Geocentric approach’.

7. one main difference between International and the Global marketing is the approach of marketer. A truly global company instead of offering different products to different countries (as in International Marketing), develops and offers a single product to the world. One more very interesting fact that in the early stage of Export marketing also, the company was offering a single product to each of the countries as in the final stage of Global marketing. But it was entirely different because in export marketing you produce according to taste of your country and force that on other countries but in Global approach, you take care of entire countries and develop a product which can satisfy the need of all.

8. Reasons for Companies Going Global Domestic markets are saturated and there is pressure to raise sales and profits. Small size of domestic markets. Slow growth of domestic markets. In some industries like advertising, customers want their suppliers can contribute in most of the markets where the buyer is operating. Some companies will have to move out their domestic markets when their competitors have done so, if they want to maintain their market share. To combat with high cost structures Different stages of development of different countries and regions. To maintain market share and growth. The ability to compete successfully in domestic markets will depend upon their ability to match the resources and competencies of MNCs.

9. Which Markets Does a Company Enter? Economic Factors Social and Cultural Factors Political and Legal Factors Market Attractiveness Capability of the Company

10. Mode of Entry in a Foreign Market Indirect Exporting Direct Exporting Licensing Franchising Joint Ventures Direct Investment

11. International Marketing Strategy Standardization or Adaptation Marketing Mix Decisions

12. Standardization or Adaptation Globalization (Standardization) – Developing standardized products marketed worldwide with a standardized marketing mix – Essence of mass marketing Global Localization (Adaptation) – Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction – Essence of segmentation – Think globally, act locally

14. Standardization Versus Adaptation The faces of Coca-Cola around the world

15. All Chinese characters had more than one meaning, but K'o K'ou K'o Lê (depending on context) commonly meant what is seen here: This combination for the Chinese trademark meant “to permit mouth to be able to rejoice” – showing the pleasure that could come from drinking Coke. That definition was a stroke of luck!

16. Marketing Mix Decisions

17. Product A global company is one that can create a single product and only have to tweak elements for different markets. For example, Coca- Cola uses two formulas (one with sugar, one with corn syrup) for all markets. The product packaging in every country incorporates the contour bottle design and the dynamic ribbon in some way, shape, or form. However, the bottle can also include the country’s native language and is the same size as other beverage bottles or cans in that same country................................

18. Price Price will always vary from market to market. Price is affected by many variables: cost of product development (produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and much more. 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.

19. Place How the product is distributed is also a country-by-country decision influenced by how the competition is being offered to the target market. Using Coca- Cola as an example again, not all cultures use vending machines. In the United States, beverages are sold by the pallet via warehouse stores. In India, this is not an option. Placement decisions must also consider the product’s position in the market place. For example, a high-end product would not want to be distributed via a “dollar store” in the United States. Conversely, a product promoted as the low-cost option in France would find limited success in a pricey boutique.

20. Promotion After product research, development and creation, promotion (specifically advertising) is generally the largest line item in a global company’s marketing budget. At this stage of a company’s development, integrated marketing is the goal. The global corporation seeks to reduce costs, minimize redundancies in personnel and work, maximize speed of implementation, and to speak with one voice. If the goal of a global company is to send the same message worldwide, then delivering that message in a relevant, engaging, and cost-effective way is the challenge.

21. 1-21 McDonald’s Global Marketing Marketing Mix Element Standardization Localized Product Promotion Place Price Big Mac Brand name Advertising slogan “I’m Loving It” Free-standing Big Mac is $3.10 in U.S. and Turkey McAloo Tikka potato burger (India) Slang ’Macca’s (Australia) MakDo (Philippines) McJoy magazine, “Hawaii Surfing Hula” promotion (Japan) Home delivery (India) Swiss rail system dining cars $5.21 (Switzerland) $1.31(China)

22. Advantages 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 of the "political arena" Helps to encourage ancillary industries to be set up to cater for the needs of the global player Benefits of eMarketing over traditional marketing

23. Disadvantages Differences in consumer needs, wants, and usage patterns for products Differences in consumer response to 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 call for the creation of entirely new ones (e.g. infrastructure) Differences in administrative procedures Differences in product placement. Differences in the administrative procedures and product placement can occur

24. Summary Every company operates in an international market today. Companies having only domestic operations face competition form global players in their home turf, while MNCs compete in global environment. Market Saturation, Slow Growth, Intense Competition, Desire for Scale of Operations, Proximity to the Global Customer and Diversification of Risks are some reasons that have prompted companies to go global. Political, Economic, Legal, Social, Technological, and Cultural forces differ across markets, and companies must be vigilant of the varying market environments to succeed globally. Depending on the amount of investment and the ability to take risks, companies can plan their entry routes into international markets.

25. The most crucial decision in international marketing is the extent of standardization versus adaptation in a company’s marketing mix. The decision does not involve what to adapt versus what to standardize, but how much to standardize and how much to adapt. The closer is the motivation to buy a product associated with culture, the greater will be the need to adapt the product. Pricing issues in the international markets must account for additional costs of developing distribution channels, transportation expenditure, taxation issues, and additional risk related to exchange rate fluctuations. Other issues such as gray market, dumping and transfer pricing are also peculiar to international markets. In order to determine channel requirements in international markets, it is important to determine the location of potential customers, their information and service requirements while buying the product, and price sensitivity and preferences of customers in the market.

26. Harry Potter: Global Marketing Strategies (MM0048)