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CHAPTER 13: Global Marketing

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Title: CHAPTER 13: Global Marketing


1
CHAPTER 13 Global Marketing
  • SCOPE AND CHALLENGE OF GLOBAL MARKETING

2
Overview
  • Business activities are global. No business can
    escape the effect of globalization.
  • View three major global trends
  • 1) Growth of free trade areas (EC, NAFTA, AFTA)
  • 2) Growth of the Free Market System
  • 3) Emergence and evolution of large markets
    (Brazil, China, India).

3
Overview
  • All aspects of international business are global
    - financing, marketing, technological,
    production, pricing, accounting, communication.
  • All firms are affected by international events.
    Therefore business people need to be globally
    aware.

4
Internationalization of US Business
  • Many US firms and some well-known brands are
    foreign controlled.
  • Some firms enter the US market via exporting and
    then built plants.
  • US firms also invest in foreign countries
    foreign earnings contribute substantially to the
    overall profit position.

5
Internationalization of US Business
  • US firms involved in international business out
    performed those not involved. They grow twice as
    fast and have significantly higher returns on
    assets and equity.
  • In many cases foreign sales prove to be more
    profitable than domestic sales and some firms
    earn a large share of their profits from foreign
    operations.

6
Profits from Global Operations
  • Firm Foreign Profits as of Total
  • Du Pont 28.9
  • Procter Gamble 36.9
  • Coca-Cola 67.8
  • McDonalds 49.6
  • Avon 58.9
  • Motorola 92.4

7
Global Marketing Task
  • International marketing tasks more difficult than
    domestic marketing tasks because of the degree of
    environmental uncertainty.
  • International marketers face home and also
    foreign country environmental factors and this
    makes for greater uncertainty (controllable
    elements and TWO uncontrollable environments).

8
The Marketing Concept
  • Whether we focus on the domestic or the global
    market, the firm makes use of the marketing mix
    (4 Ps) Product, Price, Place, Promotion.
  • Marketers use the 4 Ps to
  • (1) create greater customer value than
    competitors.
  • (2) establish a sustainable competitive
    advantage.
  • (3) Focus on defined customer needs and wants.

9
Environmental Factors
  • All environments contain SEVEN (7) social
    institutions. These can be identified by the
    acronym PELFREC. These seven social institutions
    are present in ALL societies regardless of how
    advanced or underdeveloped the society.
  • If you eliminate any of the institutions the
    society as you know it dies.

10
The Seven Social Institutions
  • Political - system of transferring power
  • Economic - method of wealth distribution
  • Legal - means of deciding right wrong
  • Family - unit of procreation
  • Religious - - belief system
  • Education - means of passing on information for
    preserving the society
  • Culture - way of life of a people

11
Effect of Environmental Factors
  • Marketers must interpret the effect of
    environmental factors and adapt marketing
    strategy.
  • Marketers must be aware of the frame of reference
    that they use when making decisions. Differences
    in environments are known to cause embarrassing
    and costly misunderstandings.

12
Avoiding Environmental Misunderstandings
  • Be aware of the principle of marketing relativism
    - people make judgements based upon their culture
    and experiences. Since international marketers
    may use their home country culture to judge
    things inappropriate strategies may be adopted.

13
Self-Reference Criterion - An Obstacle
  • Successful in international marketing call for
    adapting to environmental differences across
    markets. This takes effort.
  • The main obstacle to success is a persons
    self-reference criterion SRC in making
    decisions.
  • SRC is a persons unconscious references to their
    own cultural values, experiences, and knowledge
    in making a decision.

14
Overcoming Self-Reference Criterion
  • The first step in overcoming Self Reliance
    Criterion (SRC) is to recognize the need to be
    sensitive to differences across cultures
  • Second, ask questions of people in the foreign
    culture.

15
Isolating SRC Influences
  • Make a cross-cultural analysis to isolate SRC
    influences.
  • Define problem/goal in terms of home country
    cultural norms.
  • Define problem/goal in terms of foreign country
    cultural norms.
  • Isolate SRC influences
  • Redefine problem without SRC

16
Developing Global Awareness
  • To be globally aware is to have
  • Objectivity
  • Tolerance of cultural differences
  • Knowledge of history and PELFREC on a global
    scale.

17
International Involvement
  • From a marketing perspective a firm may adopt one
    of FIVE involvement stance
  • No Direct Foreign Marketing
  • Infrequent Foreign Marketing
  • Regular Foreign Marketing
  • International Marketing
  • Global marketing

18
Marketing Orientations
  • Our view of the world shapes how we consciously
    and unconsciously respond to events. People
    adopt one of four main views of the world
  • (1) Ethnocentric home country superior to the
    rest of the world. Therefore, home country view
    as most important and others seen as secondary
    and existing mostly to serve needs of home
    country.

19
Marketing Orientations (contd)
  • (2) Polycentric belief that each country is
    uniquely different and requires specialized
    business practices.
  • (3) Regiocentric world viewed as regions with
    countries in a region having similarities and
    differences and requiring a regional approach to
    developing marketing strategy.
  • (4) Geocentric entire world seen as a potential
    market with similar needs or segments evident
    across cultures.

20
Global Marketing Concepts
  • Domestic Marketing Extension
  • Multi-domestic Marketing
  • Global Marketing

21
Globalization of Markets
  • Questions
  • Is the world becoming a single market?
  • Can we sell the same product the same way every
    where?
  • Should marketers customize (adapt) or standardize
    marketing effort (4 Ps)?
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