Global Marketing Overview

Global Marketing Explained

• International marketing involves planning and conducting transactions across borders to satisfy individual and organizational objectives.
• Key aspects include cross-border transactions, fulfilling consumer needs, and exchange between parties.
• Historically, companies often extended domestic strategies to foreign markets with minimal adaptation.
• Multi-domestic marketing involved separate strategies for each country, lacking coordination.
• Global marketing is characterized by coordinated and integrated activities across multiple countries.
• Standardization of products, branding, packaging, and advertising is a key element of global marketing.

Challenges in Global Marketing

• Global marketers face complex environments due to differences in consumers and competition.
• Operating in foreign markets presents new risks and complexities (Liability of Foreignness).
• Liability of foreignness describes the disadvantages multinational corporations face when entering new markets. The costs of adaptation and understanding local culture.
• This adds to the existing costs and makes it difficult to compete with local businesses.

Economies of Scale and Scope

• Economies of scale reduce per-unit production costs as output expands.
• Larger production runs lead to cost reductions per unit.
• Firms leveraging economies of scale are more price-competitive in global markets.
• Economies of scope decrease per-unit costs by spreading total costs over more product lines or market segments.

Similarities Between Global and Domestic Marketing

• Both aim for value exchange and consumer satisfaction.

The Notion of Global Marketing

• The concept of global marketing suggests that consumers worldwide can be grouped into homogeneous segments.
  • This idea can be challenged by the difficulties in identifying genuinely global homogeneous segments
  • Also highlights the question of whether the marketing concept's relevance at a global is limited since there are global consumers.

Glocal Marketing

• Glocal marketing balances standardization with adaptation to local needs; think global, act local.
• This approach acknowledges local preferences and tastes.
• Examples include McDonald's serving beer in Germany, Coca-Cola's Qoo in Japan, and McDonald's removing beef from menus in India.

Evolution of Global Marketing

• Initial phase: Extending domestic strategies to international markets.
• Next phase: Separate multidomestic strategies per country.
• Current phase: Coordinated global strategies adapted to local markets.

Globalization Trends

• Globalization is the increasing interdependence of national institutions and economies.
• Key events include oil price shocks, Asian financial crises, 9/11, the subprime financial crisis, and the COVID-19 pandemic.

Globalization Components

• Globalization of Markets: Convergence of buyer preferences across countries.
• Globalization of Production: Shifting production to locations with lower costs or high quality. (Example Nike, Vietnam)
  • companies can move their manufacturing operations to different countries based on fluctuating wage rates or government incentives.

Drivers of Globalization

• Market Factors: Similar consumer demand, global distribution channels, transferrable marketing ideas.
• Cost Factors: Economies of scale, scope, and outsourcing reduction of inefficiencies.
• Environmental Factors: Reduced trade barriers, technological advancements, and shifts in government policies.
• Competitive Factors Necessity to match competitors, follow customers and reduce impact of foreign competition on domestic market
• Technological Factors: Advancement of technology facilitates global operations and communication with consumers worldwide

KOF Index

• The KOF index measures globalization across economic, political, and social dimensions, using values ranging from 1 to 100.
  • Higher values indicate greater globalization.

De-Globalization

• Contemporary trends suggest a shift towards "de-globalization."
• This is partly fueled by the rising trend towards economic nationalism, a need for national supply chains, and less reliance on certain international suppliers.