WHAT IS GLOBAL MARKETING?
CHRISTINE NYANDAT
26 Oct, 2013
Definition: Global marketing is marketing on a worldwide scale reconciling or taking
commercial advantage of global operational differences, similarities and opportunities in
order to meet global objectives.
In other words: International Marketing can be defined as exchange of goods and services
between different national markets involving buyers and sellers.
According to the American Marketing Association, “International Marketing is the multinational process of planning and executing the conception, prices, promotion and
distribution of ideal goods and services to create exchanges that satisfy the individual and
organizational objectives.”
Why is it important? International marketing involves recognizing that people all over the
world have different needs. Companies like Gillette, Coca-Cola, BIC, and Cadbury
Schweppes have brands that are recognized across the globe. While many of the products
that these businesses sell are targeted at a global audience using a consistent marketing
mix, it is also necessary to understand regional differences, hence the importance of
international marketing. Organizations must accept that differences in values, customs,
languages and currencies will mean that some products will only suit certain countries and
that as well as there being global markets e.g. for BIC and Gillette razors, and for Coca-Cola
drinks, there are important regional differences - for example advertising in China and India
need to focus on local languages.
Lecture notes
Global marketing is a firm's ability to market to almost all countries on the planet. With
extensive reach, the need for a firm's product or services is established. The global firm
retains the capability, reach, knowledge, staff, skills, insights, and expertise to deliver value
to customers worldwide. The firm understands the requirement to service customers locally
with global standard solutions or products, and localizes that product as required to
maintain an optimal balance of cost, efficiency, customization and localization in a controlcustomization continuum to best meet local, national and global requirements to position
itself against or with competitors, partners, alliances, substitutes and defend against new
global and local market entrants per country, region or city. The firm will price its products
appropriately worldwide, nationally and locally, and promote, deliver access and
information to its customers in the most cost-effective way. The firm also needs to
understand, research, measure and develop loyalty for its brand and global brand equity
(stay on brand) for the long term.
International marketing
International marketing is the export, franchising, joint venture or full direct entry of a
marketing organization into another country. This can be achieved by exporting a
company's product into another location, entry through a joint venture with another firm in
the target country, or foreign direct investment into the target country. The development of
the marketing mix for that country is then required - international marketing. It can be as
straightforward as using existing marketing strategies, mix and tools for export on the one
side, to a highly complex relationship strategy including localization, local product offerings,
pricing, production and distribution with customized promotions, offers, website, social
media and leadership. Internationalization and international marketing meets the needs of
selected foreign countries where a company's value can be exported and there is inter-firm
and firm learning, optimization and efficiency in economies of scale and scope. The firm
does not need to export or enter all world markets to be considered an international
marketer.
Elements of the global marketing
The standard “Four P’s” of marketing: product, price, placement, and promotion are all
affected as a company moves through the five evolutionary phases to become a global
company. Ultimately, at the global marketing level, a company trying to speak with one
Business Administration > Introduction to Marketing > Strategy
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WHAT IS GLOBAL MARKETING?
CHRISTINE NYANDAT
26 Oct, 2013
voice is faced with many challenges when creating a worldwide marketing plan. Unless a
company holds the same position against its competition in all markets (market leader, low
cost, etc.) it is impossible to launch identical marketing plans worldwide.
Product
A global company is one that can create a single product and only have to tweak elements
for different markets. For example, coca-colauses 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.
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.
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.
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 costeffective way is the challenge.
Deciding Whether to Go Global
Factors to consider
•
Global competition in the home market
•
Stagnant or shrinking home market
•
Foreign markets with more opportunity
•
Expansion of customers to international markets
Define international marketing objectives and policies
•
Foreign sales volume
•
How many countries to market to
•
Types of countries to market to based on:
•
Geography
•
Income and population
•
Political climate
Rank potential global markets based on:
•
Market size
•
Market growth
•
Cost of doing business
•
Competitive advantage
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WHAT IS GLOBAL MARKETING?
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CHRISTINE NYANDAT
26 Oct, 2013
Risk level
Ways to enter global markets include:
Exporting is when the company produces its goods in the home country and sells them in a
foreign market. It is the simplest means involving the least change in the company’s product
lines, organizational, investments, or mission.
•
Indirect exporting
•
Direct exporting
Exporting
Indirect exporting is when the firm works through an independent international marketing
intermediary. This requires less investment and risk since the firm does not require an
overseas organization or network.
Direct exporting is when the firm handles its own exports. This requires a greater
investment and risk.
•
Domestic export department
•
Send home-based sales people abroad
•
Use of foreign distributors
Joint venturing is when a firm joins with foreign companies to produce or market products
or services
•
Licensing
•
Contract manufacturing
•
Management contracting
•
Joint ownership
Joint venturing differs from exporting in that the company joins with a host country partner
to sell or market abroad
Licensing is when a firm enters into an agreement with a licensee in a foreign market. For a
fee or royalty, the licensee buys the right to sue the company’s process, trademark, patent,
trade secret, or other item of value
Contract manufacturing is when a firm contracts with manufacturers in the foreign
market to product its product or provides its service. Benefits include faster startup, less
risk, and the opportunity to form a partnership or to buy out the local manufacturer.
Management contracting is when the domestic firm supplies management skill to a
foreign company that supplies capital. The domestic firm is exporting management services
rather than products.
Joint ownership is when one company joins forces with foreign investors to create a local
business in which they share joint ownership and control. Joint ownership is sometimes
required for economic or political reasons.
Direct investment is the development of foreign-based assembly or manufacturing
facilities and offers a number of advantages:
Lower costs
•
Raw material
•
Labor
•
Government incentives
•
Logistics
•
Control
Deciding on the Global Marketing Program
Standardize marketing mix involves selling the same products and using the same
marketing approaches worldwide
Adapted marketing mix involves adjusting the marketing mix elements in each target
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WHAT IS GLOBAL MARKETING?
CHRISTINE NYANDAT
26 Oct, 2013
market, bearing more costs but hoping for a larger market share and ROI
Product Strategies
Straight product extension means marketing a product in a foreign market without any
change
Product adaptation involves changing the product to meet local conditions or wants
Product invention consists of creating something new for a specific country market
•
Maintain or reintroduce earlier products
•
Create new products
Promotion Strategies
Companies can either adopt the same communication strategy they use at home or change it
for each market
Price Strategies
Uniform pricing is the same price in all markets but does not consider income or wealth
where the price may be too high in some markets or not high enough in other markets
Market-based pricing is the price that markets can pay but does not consider actual costs
Standard markup pricing is a price based on a percentage of cost but can cause problems
in countries with high costs
Distribution Strategies
Whole-Channel View
Seller’s headquarters organization supervises the channel and is also a part of the
channel
Channels between nations move the products to the borders of the foreign nations
Channel within nations move the products from their foreign point of entry to the final
customers
Distribution Strategies
Differences within Countries
•
Numbers and types of intermediaries
•
Size and character of retail units
Typical management of international marketing activities includes:
•
Organize and export department with a sale manager and staff
•
Create an international division organized by geography, products, or operating units
•
Become a complete global organization
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