Chapter 1

Introduction to
Global Marketing
http://www.youtube.com/watch?v=Fucq5BoEfEI
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The 787 Dreamliner
Parts Supplier
Airframe sections Kawasaki, Fuji, Mitsubishi, Japan
Horizontal stabilizer Alenia, Italy
Aft Cargo door Saab, Sweden
Landing gear Messier-Dowty, France (built in Gloucester, UK)
Nose & cockpit sections Spirit Aerosystems, Canada
Wing body fairing Boeing, Canada
Trailing edge and flaps Hawker de Havilland, Boeing Australia
Fairing panels, rudder, Hafei, Chengdu, Shenyang, China
leading edge
Airplane design Boeing Design Center, Moscow
Tail cone South Korea
US suppliers Puget Sound, WA; Charleston, SC; Wichita, KS, Tulsa, OK
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The Blackberry Storm
http://www.sou
rcemap.org/obj
ect/blackberry-
storm
UK, Singapore, South Korea,
China, Japan, Malaysia,
Scotland,
The Netherlands, Taiwan, US
(NJ, MA, CA, AZ, TX, ME)

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Globalization – Thomas L. Friedman
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 every before…

The degree of inter-dependence between nation

states

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What is a Globally Integrated
Enterprise?
A collection of various incorporated business units in
different countries
Bound together by a common, shared objective
Part of the business value chain that extends from
product inception to final consumption
Activities in the value chain are performed by
business units most skilled (in that activity) and at
the lowest relative cost (on a global basis)

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Sam Palmisano (Chairman and
CEO of IBM)
What is a globally integrated enterprise
Global Integration allows companies to
take advantage of talent and resources
regardless of time zones and delivers value
to customers regardless of geography

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Globalized Industries
An industry is global to the extent that a company’s
industry position in one country is interdependent
with its industry position in another country
The number of times business supply chains cross national
borders
Indicators of globalized industries
Ratio of cross-border trade to total worldwide
production (in an industry)
Ratio of cross-border investment to total capital
investment (in an industry)
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Global Marketing: What It Is and
What It Isn’t
Single Country Global Marketing
Marketing Strategy Strategy
Target market strategy Major world market
participation thru’ sale of its
Marketing mix products
Product Marketing mix development
Price 4 P’s: adapt or standardize?
Promotion Concentration of marketing
activities
Place
Coordination of marketing
activities
Integration of competitive
moves
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Why is Global Marketing
important?
High-growth and Low-growth countries
Relative costs
Risk of losing domestic business to
foreign country competitors
Segment simultaneity

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The Importance of Going Global
For U.S. companies, 70% of total world
market for goods and services is outside the
country
Coca-Cola earns 75% of operating income and
two-thirds of profit outside of North America
For Japanese companies, 90% of world
market is outside the country
94% of market potential is outside of
Germany for its companies
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Product/Market Matrix
Global versus “regular” marketing
Scope of activities are outside the home-
country market

Product/market growth matrix

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Competitive Advantage, Globalization,
and Global Industries
Focus
Concentration and attention on core business
and 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. . . . We have no soft drinks because I have
said we will either buy Coca-Cola or we leave it
alone. This is focus.
Helmut Maucher, former chairman of Nestlé SA

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Standarization versus 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

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Quick example on glocalization
Pepsi in India in 1990
Entered through a JV with Voltas & Punjab Agro-Industries
Corp to develop vegetable and fruit farming techniques
Introduced Pepsi under the name ‘Lehar Pepsi’
Advertising used local Bollywood and cricket celebrities.
• http://www.youtube.com/watch?v=fgKgEucccUc
• http://www.youtube.com/watch?v=is4X_Tw6nPQ
• http://www.youtube.com/watch?v=rfiF6VSFoGc

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Standarization
versus
Adaptation
Arabic
read right to left

Chinese
“delicious/happiness”

The faces of Coca-Cola around the world 1-16

McDonald’s Global Marketing
Marketing Mix Element Standardization Localized
Big Mac McAloo Tikka potato burger
Product
(India)

Promotion Brand name Slang ’Macca’s (Australia)

MakDo (Philippines)

Advertising slogan McJoy magazine, “Hawaii

“I’m Loving It” Surfing Hula” promotion
(Japan)
Place Free-standing Home delivery (India)
Swiss rail system dining cars
Price Big Mac is $3.10 in $5.21 (Switzerland)
U.S. and Turkey $1.31(China)
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Global Marketplace – Local
Markets
Brands sold globally – McDonalds, Sony,
Lego, Swatch, Burberry, etc.
Local brands – Yum Brands’ East Dawning
fast Food chain in China; Kiki competes with
Vogue and Cosmo in Japan; Ford competes
with Maruti in India
Global brands and local brands
Brands’ sense of identity with a country is
blurring
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In what country is the parent
corporation located?
Firestone Tire & Rubber Miller Beer

Ray Ban Rollerblade

Rolls Royce Weed Eater

RCA Televisions Holiday Inn

Jaguar Wild Turkey Bourbon

Dr. Pepper ThinkPad

Ben & Jerry’s Wilson Sporting Goods

Homemade
Budweiser Right Guard

Gerber Hummer

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In what country is the parent
corporation located?
Firestone Tire & Rubber Japan (Bridgestone) Miller Beer GB (SABMiller)

Ray Ban Italy (Luxottica) Rollerblade Italy (Benetton)

Rolls Royce Germany (Volkswagen) Weed Eater Sweden (Electrolux)

RCA Televisions China (TTE) Holiday Inn GB (Intercontinental)

Jaguar India (Tata Motors) Wild Turkey Bourbon France (Groupe Pernod
Ricard)
Corona Mexico ThinkPad China (Lenovo)

Ben & Jerry’s GB / Netherlands Wilson Sporting Goods Finland (Amer)

Homemade (Unilever)
Budweiser Belgium (InBev) Right Guard Germany (Henkel)

Gerber Switzerland (Nestle) Land Rover India (Tata Motors)

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Management Orientations
Ethnocentric orientation
Home country is superior to others
Sees only similarities in other countries
Assumes products and practices that
succeed at home will be successful
everywhere
Leads to a standardized or extension
approach
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Management Orientations
Polycentric orientation
Each country is unique
Each subsidiary develops its own unique
business and marketing strategies
Often referred to as multinational
Leads to a localized or adaptation
approach that assumes products must be
adapted to local market conditions
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Management Orientations
Regiocentric orientation
A region is the relevant geographic unit
• Ex: The NAFTA or European Union market
Some companies serve markets throughout
the world but on a regional basis
• Ex: General Motors had four regions for
decades

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Management Orientations
Geocentric orientation
Entire world is a potential market
Strives for integrated global strategies
Also known as a global or transnational company
Retains an association with the headquarters
country
Pursues serving world markets from a single
country or sources globally to focus on select
country markets
Leads to a combination of extension and
adaptation elements
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own  control  decentralized 

polycentric

geocentric

regiocentric

ethnocentric

Similarities  perceptions  differences  1-25

Driving Forces Affecting Global
Integration and Global Marketing
Regional economic agreements
Converging market needs and wants
and the information revolution
Transportation and communication
improvements
Product development costs

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Driving Forces Affecting Global
Integration and Global Marketing
Quality
World economic trends
Leverage

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Restraining Forces Affecting Global
Integration and Global Marketing
Management myopia
Organizational culture
National controls
Opposition to globalization

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