CHAPTER 1 INTRODUCTION TO GLOBAL MARKETING SUMMARY A. Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. A company that engages in global marketing focuses resources on global market opportunities and threats. Successful global marketers such as Nestlé, Coca-Cola, and Honda use familiar marketing mix elements – the four Ps – to create global marketing programs. B. Marketing, R&D, manufacturing, and other activities comprise a firm’s value chain the value equation (V =B/P) expresses the relationship between values and the marketing mix. C. Global companies also maintain strategic focus while pursuing competitive advantage. The marketing mix, value chain, competitive advantage, and focus are universal in their applicability, irrespective of whether a company does business only in the home country or has a presence in many markets around the world. However, in a global industry, companies that fail to pursue global opportunities risk being pushed aside by stronger global competitors. D. A firm’s global marketing strategy (GMS) can enhance its worldwide performance. The GMS addresses several issues. First is the nature of the marketing program in terms of the balance between a standardization (extension) approach to the marketing mix and a localization (adaptation) approach that is responsive to country or regional differences. Second is the concentration of marketing activities in a few countries or the dispersal of such activities across many countries. Companies that engage in global marketing can also engage in coordination of marketing activities. Finally, a firm’s GMS will address the issue of global market participation. E. The importance of global marketing today can be seen in the company rankings compiled by the Wall Street Journal, Fortune, Financial Times, and other publications. Whether ranked by revenues, market capitalization, or some other measure, most of the world’s major corporations are active regionally or globally. The size of global markets for individual industries or product categories helps explain why companies “go global”. Global markets for some product categories represent hundreds of billions of dollars in annual sales; other markets are much smaller. Whatever the size of the opportunity, successful industry competitors find that increasing revenues and profits means seeking markets outside the home country. F. Company management can be classified in terms of its orientation toward the world: ethnocentric, polycentric, regiocentric, or geocentric. The terms reflect progressive levels of development or evolution. An ethnocentric orientation characterizes domestic and international companies; international companies pursue marketing opportunities outside the home market by extending various elements of the marketing mix. A polycentric worldview predominates at a multinational company, where the marketing mix is adapted by country managers operating autonomously. Managers at global and transnational companies are regiocentric or geocentric in their orientation and pursue both extension and adaptation strategies in global markets. G. The dynamic interplay of several driving and restraining forces shapes the importance of global marketing. Driving forces include market needs and wants, technology, transportation and communication improvements, product costs, quality, world economic trends, and recognition of opportunities to develop leverage by operating globally. Restraining forces include market differences, management myopia, organizational culture, and national controls such as nontariff barriers (NTBs). OUTLINE OF THE BOOK The book is divided into five parts. Part 1: An overview of global marketing and the basic theory of global marketing. Part 2: The environments of global marketing. Part 3: Approaching global markets (global strategy) Part 4: The marketing mix in global marketing. Part 5: Corporate strategy, leadership, and the impact of the digital revolution on global marketing. LEARNING OBJECTIVES 1 Use the product/market growth matrix to explain the various ways a company can expand globally 2 Describe how companies in global industries pursue competitive advantage 3 Compare and contrast single-country marketing strategy with global marketing strategy (GMS) 4 Identify the companies at the top of the Global 500 rankings 5 Explain the stages a company goes through as its management orientation evolves from domestic and ethnocentric to global and geocentric. 6 Discuss the driving and restraining forces affecting global integration today. DISCUSSION QUESTIONS 1-4. What are the basic goals of marketing? Are these goals relevant to global marketing? Marketing activities represent an organization’s efforts to satisfy customer wants and needs by offering products and services that create value. These goals are relevant in virtually every part of the world; however, when an organization pursues market opportunities outside of its home country (domestic) market, managers need an understanding of additional conceptual tools and guidelines in order to do business in these other countries – in other words, to create value and satisfy consumer needs and wants. 1-5. What is meant by “global localization?” Is Coca-Cola a global product? Explain. The phrase “global localization” represents an attempt to capture the spirit of the rallying cry for organizations in the 21st century, namely, “think globally, act locally, and manage regionally.” Most students will agree that Coca-Cola is a global product by virtue of the fact that it is available in more than 195 countries in red cans bearing the distinctive signature style. It must be noted, however, that customer service efforts are adapted to the needs of particular markets (for example, vending machines in Japan). Thus, Coca-Cola is both global and local.