Global marketing
The Oxford University Press defines global marketing as “marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives.” Oxford University Press’ Glossary of Marketing Terms.
Here are three reasons for the shift from domestic to global marketing as given by the authors of the textbook, Global Marketing Management—3rd Edition by Masaaki Kotabe and Kristiaan Helsen, 2004.
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Worldwide competition
One of the product categories in which global competition has been easy to track in U.S.is automotive sales.
Evolution to global marketing
Global marketing is not a revolutionary shift, it is an evolutionary process. While the following does not apply to all companies, it does apply to most companies that begin as domestic-only companies.
Domestic marketing
A marketing restricted to the political boundaries of a country, is called "Domestic Marketing". A company marketing only within its national boundaries only has to consider domestic competition. Even if that competition includes companies from foreign markets, it still only has to focus on the competition that exists in its home market. Products and services are developed for customers in the home market without thought of how the product or service could be used in other markets. All marketing decisions are made at headquarters.
The biggest obstacle these marketers face is being blindsided by emerging global marketers. Because domestic marketers do not generally focus on the changes in the global marketplace, they may not be aware of a potential competitor who is a market leader on three continents until they simultaneously open 20 stores in the Northeastern U.S. These marketers can be considered ethnocentric as they are most concerned with how they are perceived in their home country. exporting goods to other countries.
International marketing
If the exporting departments are becoming successful but the costs of doing business from headquarters plus time differences, language barriers, and cultural ignorance are hindering the company’s competitiveness in the foreign market, then offices could be built in the foreign countries. Sometimes companies buy firms in the foreign countries to take advantage of relationships, storefronts, factories, and personnel already in place. These offices still report to headquarters in the home market but most of the marketing mix decisions are made in the individual countries since that staff is the most knowledgeable about the target markets. Local product development is based on the needs of local customers. These marketers are considered polycentric because they acknowledge that each market/country has different needs.
Multinational marketing
At the multi-national stage, the company is marketing its products and services in many countries around the world and wants to benefit from economies of scale. Consolidation of research, development, production, and marketing on a regional level is the next step. An example of a region is Western Europe with the US. But, at the multi-national stage, consolidation, and thus product planning, does not take place across regions; a regiocentric approach. It should be noted that most companies that self describe their organization as multinational really are not entirely multinational. In fact, the definition of the multinational corporation itself is somewhat suspect. Simply calling a company a multinational corporation is not enough. A company must make adjustments to the ways it perceives its role in the international market place so that it might reap the rewards the multinational environment. Essentially there are three responses or behaviors that the multinational corporation can use in the international market place. These three orientations that a multinational corporation have been described as ethnocentric, polycentric, and geocentric. In ethnocentric company the culture of the home country pervades the organization. In the polycentric organization the host country begins to play more of a role but the company still treats each individual country unit as a some what disparate group with only a very small information flow back to headquarters. In the most mature stage of multinational development, geocentric, the company has truly started to act globally. The company can now begin to reap the benefits of the multinational economy. The somewhat parasitic nature of the previous types of multinational system are now replaced with the give and take of international relationships that involve the all important two way communications flow.
Elements of the global marketing mix
The “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 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-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 or can also includes the country’s native language and is the same size as other beverage bottles or cans in that 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.
Placement
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 cost-effective way is the challenge.
Effective global advertising techniques do exist. The key is testing advertising ideas using a marketing research system proven to provide results that can be compared across countries. The ability to identify which elements or moments of an ad are contributing to that success is how economies of scale are maximized. Market research measures such as Flow of Attention, Flow of Emotion and branding moments provide insights into what is working in an ad in any country because the measures are based on visual, not verbal, elements of the ad.
Global marketing Advantages and Disadvantages
Assignment 5: Evaluation the usefulness of international market.
- 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
The benefits of eMarketing over traditional marketing
Reach
The nature of the internet means businesses now have a truly global reach. While traditional media costs limit this kind of reach to huge multinationals, eMarketing opens up new avenues for smaller businesses, on a much smaller budget, to access potential consumers from all over the world.
Scope
Internet marketing allows the marketer to reach consumers in a wide range of ways and enables them to offer a wide range of products and services. eMarketing includes, among other things, information management, public relations, customer service and sales. With the range of new technologies becoming available all the time, this scope can only grow.
Interactivity
Whereas traditional marketing is largely about getting a brand’s message out there, eMarketing facilitates conversations between companies and consumers. With a two way communication channel, companies can feed off of the responses of their consumers, making them more dynamic and adaptive.
Immediacy
Internet marketing is able to, in ways never before imagined, provide an immediate impact. Imagine you’re reading your favorite magazine. You see a double-page advert for some new product or service, maybe BMW’s latest luxury sedan or Apple’s latest iPod offering. With this kind of traditional media, it’s not that easy for you, the consumer, to take the step from hearing about a product to actual acquisition. With eMarketing, it’s easy to make that step as simple as possible, meaning that within a few short clicks you could have booked a test drive or ordered the iPod. And all of this can happen regardless of normal office hours. Effectively, Internet marketing makes business hours 24 hours per day, 7 days per week for every week of the year. By closing the gap between providing information and eliciting a consumer reaction, the consumer’s buying cycle is speeded up and advertising spend can go much further in creating immediate leads.
Demographics and targeting
Generally speaking, the demographics of the Internet are a marketer’s dream. Internet users, considered as a group, have greater buying power and could perhaps be considered as a population group skewed towards the middle-classes. Buying power is not all though. The nature of the Internet is such that its users will tend to organize themselves into far more focused groupings. Savvy marketers who know where to look can quite easily find access to the niche markets they wish to target. Marketing messages are most effective when they are presented directly to the audience most likely to be interested. The Internet creates the perfect environment for niche marketing to targeted groups.
Adaptivity and closed loop marketing
Closed Loop Marketing requires the constant measurement and analysis of the results of marketing initiatives. By continuously tracking the response and effectiveness of a campaign, the marketer can be far more dynamic in adapting to consumers’ wants and needs. With eMarketing, responses can be analyzed in real-time and campaigns can be tweaked continuously. Combined with the immediacy of the Internet as a medium, this means that there’s minimal advertising spend wasted on less than effective campaigns. Maximum marketing efficiency from eMarketing creates new opportunities to seize strategic competitive advantages. The combination of all these factors results in an improved ROI and ultimately, more customers, happier customers and an improved bottom line.
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.
See also
External links
- [1] Global Marketing Network is the worldwide membership association for marketing and business professionals. With Ashcroft International Business School at Anglia Ruskin University it offers a full validated UK Masters leading to an MSc Global Marketing Practice, designed to raise standards in marketing practice worldwide. More information at [2]
- www.wfanet.org World Federation of Advertisers
- aef.com several presentations on Global Advertising given by advertising practitioners
References
- Kotabe, Masaki and Helsen, Kristiaan, Global Marketing Management – 3rd Edition, John Wiley & Sons, Inc – Publishers, Copyright 2004, ISBN 0-471-23062-6
- Kotler & Keller, Marketing Management - 12th Edition, 2005, ISBN 81-203-2799-3
- Theodore Levitt, The Globalization of Markets, Harvard Business Review 61 (May-June 1983): 92-102
- Young, Charles E., Advertising Research Handbook, Ideas in Flight, Seattle, WA, April 2005, ISBN 0-9765574-0-1
Ryan Mills
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