Global Marketing

Foreign Entry
Local Marketing
Global Management

Why go Global?
Emergence of WTO
Creation of Free Trade Areas
Benefits of Foreign Trade
Revolution in Global Communications
Fast and Efficient Transportation
Opening of Previously Closed Markets

Means to go Global
Exports to foreign Countries
Strategic Alliances
Licensing
Franchising
Contract Manufacturing
Joint Ventures
Wholly Owned Subsidiaries

Multinational Phase
After WW-II, MNCs from US & Europe

expanded into Asia, Europe and Latin

America.
Parent company maintained nominal control
over subsidiaries
Manufacturing & marketing of products
were localized to meet local demands
Foreign markets needs are subordinate to
the home markets

Global Phase
Theodore Levitts Globalization of

markets highlighted the merits of

standardization Noted the convergence of
world markets
Selling standardized products in
standardized methods all over the world
Centralized core competence activities
R&D, Manufacturing, Management, etc
E.g.: Semiconductors, Software, Boeing etc.

Transnational Phase
Sumantra Ghoshal, Christopher Bartlett etc

developed a Transnational business idea

Decentralized but Coordinated operations
Products are tailored to suit local needs
Central marketing plan but Local execution
Subsidiaries network with each other and
share knowledge.
Head Quarters manages and coordinates
activities

Global Products
People all over have similar needs
This implies that some products have

Global demand
E.g. Industrial products Steel, Chemicals etc.
Semiconductors, Internet services, Software

Global products are usually impersonal

products.
People have no personal preference and
decision is made on price or technical merits.

Global Local Products

People in different cultures have different

styles and different tastes

E.g: Food, Clothes, Housing etc.

Cell Phones, Software Different languages

Government Regulations force Local

Modifications

Electrical Appliances, Cars, Automobiles etc.

Regional Economic Differences

Purchasing power, economic development etc.

Global Marketing Defined

Marketing activities that are coordinated

and integrated across multiple markets

Integration can involve Standardized products,
Identical Brand names, Uniform packaging,
Synchronized product introductions, Similar
advertising messages etc.
Coordination can involve competitive pricing,
sales campaigns, market promotions etc.

Other Terms Used

International Marketing or Foreign

Marketing
Primarily for exports to selective countries

Multi-domestic marketing
Different Products sold in different countries.
Driven to localize and adapt to local markets
E.g: HLL and Unilever

Global Markets
Increasingly Common Consumer

requirements and preferences as lifestyles,

tastes and behavior narrow.
Disappearing National trade boundaries
with new Free Trade Agreements
Global Brand Recognition
E.g: Nike, Reebok, Coke, Nikon, Honda, Sony

Global Communication Revolution

Global Competition
Competitors are expanding globally
Home market is challenged by a Global

competitor
Global Raw Material procurement will
drive down costs
Can also be Man power, finished products etc.

Saturated home market is slowing down

growth

Global Channels
Global Distribution, Transportation,

Marketing Channels

Walmart, Metro, Costco Global retailers

Global Channels
CNN, Star TV, Zee etc.
Transferable Marketing
I.e.: Similar marketing strategies all over
Leading markets
Need to learn from the leading markets. E.g.
Scooters in Italy, Cars in Germany

Cost Drivers
Economies of Scale
E.g. Reliance Petroleum
Economies of Scope
E.g. Infosys, Wipro, TCS
Global Sourcing Advantages
E.g TELCO in Italy, Cisco in Bangalore
Avoid Duplication Capitalize on spillover

effects
E.g P&G with Pantene Shampoo

Government Drivers
Favorable Trade policies
Export promotion, Foreign Investments
Common Technical Standards
ISO 9000
Free Trade Agreements
NAFTA, ASEAN, EU etc.
Active Government Promotion
E.g Halliburton

Limits to Globalization
Internal Resources
Capital, Labor, Experience etc.
Industry Factors Not All industries can go

global e.g Medical services, Defense etc.

Global Turmoil
Recession, Political coup, war etc.

Product Mixes
Culturally sensitive products cannot be
Globalized

Global Localization
Products that need large scale customization
Strategy formulation is Globalized
Execution is Localized
Examples
McDonalds, Pizza Hut
HLL soaps
Resource limitations force Local Execution
E.g MTR

Developing Knowledge Assets

Knowledge from Global operation can be a

powerful competitive advantage

E.g Fiat learnt a lot about emerging markets in
Brazil and applied the same concepts in India

Knowledge is build through exposure to

new competition, customers, government

rules, technology and business methods
Learning Organizations can apply their
newly acquired skills in other regions

Skill Benefits
Transferring competitive information and

new products to other markets (including

home market)
Capitalizing on the knowledge of foreign
markets

Offer distribution service to other companies

Stretching and Building the firms

capability

New markets need new skills. Going Global

helps

Global Marketing Objectives

Exploit Market Potential and Growth
Gain Economies of Scale and Scope
Learn from the Leading Market
Pressuring Competitors
Diversifying Markets
Learning How to do Business Abroad

Roles of a Global Manager

Select & Implement Foreign Market Entry
Select Countries, Mode of Entry etc
Perform Local Marketing Abroad
Promote Products and Services
Conduct Market Research
Manage Advertising Campaign
Manage Global Operations

Skills of Global Manager

Skills

Foreign Entry

Local marketing

Global
Management

Market
Analysis

Market Research
Barriers to Entry

Local Customer
Behavior
Local Market
Research

Global
Segmentation,
Targeting,
Positioning

Strategy

Modes of Entry
Expansion Paths

Local Marketing Global

Strategy
Marketing
Strategy

Implement
&
Execution

Finding the right

Agent

Marketing in
New Countries

Meeting Goals,
Motivating &
E-Commerce

Anti-Globalization Phase
Anti-Globalization movement started

gaining ground in year 1998

Underdeveloped countries questioned the
economic benefits
Developed Countries are afraid of losing
Jobs
Developing Countries are worried about
Financial Instability
Thailand, Mexico, Brazil, Indonesia, South
Korea

Global Competitive Analysis

The Fundamental aim of business Strategy is to
create and sustain competitive advantages
First Step is to conduct competitive analysis.
SWOT
Porters 5 Forces Model
Porters Diamond
Value Chain Analysis

Competitive Self Analysis

Analyze firms Strengths & Weakness
Clear Identification of Firm Specific

Advantages
How Mobile & Flexible are these
Advantages?
Best way to leverage these advantages in
Foreign Markets & gain advantage over
Local Firms
Dealing with Global Competitors

Porters Five Forces Model

New Entrants

Bargaining
Power
of
Customers

Firms Intense
Rivalry

Threat Of substitutes

Bargaining
Power
of
Suppliers

Strategic Groups
A Strategic Group consists of competitors

who offer similar products or service in that

Segment
E.g: IBM, Accenture, EDS for Infosys but
NOT Bian, McKinsey, BCG
Strategic Group can consist of competitors
who offer Substitute Products
E.g: Nestl's water for Pepsi and Coca Cola

Country Specific Advantages

A Firm possesses some advantages because of
the country from where it Operates.
E.g: Infosys, Wipro have a cost advantage by
operating in India
E.g: Cosco, a Chinese furniture manufacturer
has a cost advantage when competing in US
E.g: IBM has a cost advantage by operating in
India, has famous Brand Name &
Recognition

National Competitive Advantage

A country might provide an absolute

advantage by the virtue of having certain

resources
Oil in Saudi Arabia, Labor in China
High Technology in USA

Comparative Advantage : When one

country is better in producing a certain type

of product
Coffee in Brazil
Software & Garments in India

New Trade Theory

Man made Locational Advantages has a big

impact on the Trade Patterns

Certain Areas have a huge concentration of
certain Industries
Software firms in Bangalore, Silicon Valley
Garments in Delhi, Financial services in
Mumbai

Country of Origin Effects

Customers give a value for Made-in-XXX

label.
Products or services from a country with a
positive image tend to be favorably
evaluated, while products from less
positively perceived countries tend to be
downgraded

Chocolates from Belgium, Watches from

Switzerland, Computers from USA : Positively
Perceived
Cars from Kenya, Brazil : Negatively Perceived

Domestic Competitors
Domestic Competitors : They have the same

Country Specific Advantages as you.

E.g: Wipro & Infosys

Country Specific Advantages are derived

from Government Rules, Regulations, Tax

benefits, Availability of Raw materials,
Human Resources etc
A large Home Market also helps domestic
competitors. E.g: IBM, DELL & EDS
Also called Demand Conditions

Foreign Competitors
Foreign Competitors : Foreign Firms are the

most direct competitors of a Globalizing

firm.
Foreign Competitors from the same country can
be analyzed as a separate Strategic Group.
E.g: Samsung, LG, Daewoo
Firms from the same country follow similar
strategy
Regional Trade Blocs also help Foreign
Competitors E.g: Electrolux from EU

New Entrants & Substitutes

Potential New Entrants & Substitutes are

another competitive threat to a Firm

Banks face a threat of more competition with
new entrants from Japan, US, Europe
Banks face a threat from substitutes like WebBank, Investment companies like Charles
Schwab, E-Trade etc.
Banks face threat from Chit-Funds, Mutual
Funds etc.

First Mover Advantages

An Emerging market offers an opportunity to
be a first mover and create demand.
Emerging Market can be a Country or
Introducing a new Product/Services
Higher Brand Recognition
Positive Brand Image
More Customer Loyalty
Longer Market Experience
Wider Distribution

Pioneering Costs
Customer Tastes & Preferences are

unknown
New Distribution Channel may have to be
set up
Customers have to be educated
Advertising Expenses, Promotion expenses
will be high
Few Firms tend to be Followers Second
Mover Advantage

Porters Diamond
Firm Strategy,
Structure & Rivalry

Factor
Conditions

Demand
Conditions

Related &
Supporting
Industries

Determinants of National
Advantage
Porters Diamond highlights:
Intense Competition creates a National
Advantage
Strong Local Demand is Important
Favorable Conditions must exist
Related & Supporting Industries creates a
National Advantage
Exercise: Does India have a National

Advantage in Medical Services?

Stages in Product Lifecycle

Sales

6
Legend
1: Pioneer
2: Early Adopter
3: Early Majority
4: Late Majority
5: Late Adopter
6: Laggards

Time

Trade & Product Lifecycle

International Product Lifecycle theory is based on

past trends.
New Products will be first introduced in
developed markets & exported worldwide, As the
product matures, it will be manufactured in
developing countries at a lower cost and imported
to developed countries
E.g: It is advantageous for US to TV &
concentrate on Computers

Firm Specific Advantages

Firms develop competitive advantages which is

unique to them

E.g: Patents, Distribution Network, Manufacturing

techniques, Access to Raw materials etc

Knowledge Based FSA: Soft skills such as

marketing, brand management etc. Skills reside in

employees and experience of the Firms
Resource Based FSA: Resources such as products,
technology, know-how & Services
Firms have to build both Knowledge based &
Resource based advantages

Taking FSA Abroad

FSA cannot always be transferred abroad.

The degree of transferability depends on

FSA itself
Intangible skills are toughest to transfer
FSA tied to home country infrastructure
cannot be transferred. E.g: Distribution
Budweiser Beer, Henkel detergents etc

Externalization of FSA
There are several ways to enter a countrys

Market. The mode of entry depends on FSA

If a firm choose to License or Franchise abroad,
then it has to transfer its FSA to another partner
abroad Called Externalization of FSA
E.g: Coca-Cola, McDonalds, FedEx
Problem with licensing Unable to learn from the
new market, Loss of FSA
Outsourcing parts in Value chain is Externalization
of FSA

Internalization of FSA
If a firm chooses to maintain a tight control over

its FSA & internal advantages, it can:

Export or FDI

Both Cases, company can maintain tight control

over its FSA

Choice between Export or FDI depends on trade
barriers, market size, transaction costs, CSA etc.
Retaining the firms value chain when going
abroad is Internalization of FSA

Transaction Costs
Transaction Costs are costs incurred when

completing a transaction between a buyer and a

seller.
Includes hidden costs such as negotiation costs,
finding partners, communication overheads etc. In
addition to obvious costs such as transportation,
taxes, brokerage fees etc.
Banks & middlemen lower transaction costs by
performing Market Making functions

Hypercompetition
The intense rivalry between global firms and

domestic competitors is common in Global

business.
Competitive advantages are increasingly difficult
to sustain is face of Hypercompetition
Bench Marking reduces competitive advantages of
the competitors
Lack of sustainable competitive advantages is
forcing companies to develop intangible skills like
customer service, quality, Brand image etc

Winning in Hypercompetition
Firms can win in a hypercompetitive environment

by continuously moving to new grounds, I.e

raising standards, improving product/Service
quality etc.
Hypercompetition forces firms to concentrate on:

Cost & Quality: Lower cost, improve quality

Timing & Know-how: Market Knowledge
Defending Strongholds
Financial Resources: Financial strength is necessary to
keep competitive edge; R&D, M&A, Advertising etc.

Closing Thoughts
Going global will stretch and mold company

resources into a globally effective marketing

organization.
Global Managers will have to select the right entry
strategies, decide on trade-offs between
localization or global standardization to achieve the
optimal local responsiveness and global scale of
economies.
When Going global, it is better to take help from
experts for market entry, market research &
international Financing