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Global Marketing Management Concepts and Main Issues of Global Business

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Global Marketing Management Concepts and Main Issues of Global Business UNIT I OBJECTIVES To give a broader understanding of the Global marketing management concepts and main issues of Global business. This unit gives students an understanding of the factors that how the international trade system and the economic, political, legal and cultural environments affect a company‘s international marketing decisions. The main objectives of the chapter are: to provide an overview of strategic concept of marketing with the major principles of global market to analyse the driving forces and various complexities of international marketing to evaluate the various entry strategies to international market to identify the essentials of international market in the context of economic development of less developed countries STRUCTURE 1. Introduction 1.1 Meaning of Marketing 1.2 Meaning of Global Marketing 1.3 The Strategic Concept of Marketing 1.4 The Three Principles of Marketing 1.5 Transition from Domestic to International Marketing 1.6 Driving Forces for International Market 1.7 Complexities in International Marketing 1.8 Significance of International Marketing and Economic Development 1.9 The Global Marketing Environment 1.10 Fundamental Different between International Trade and Interregional Trade 1.11 Why Global Market is Imperative 1.12 A Successful Global Marketing Plan 1.13 International Market Orientation – FPRG 1.14 International Market Entry Strategies 1.15 Summary 1.16 Self-Assessment Questions 1. INTRODUCTION This unit is about ―GLOBAL MARKETING‖ which we define as the process of focusing the resources (i.e. people, money, and physical assets) and objectives of an organization on global market opportunities and threats. Two decades ago, the term global marketing did not even exist. Today, global marketing is essential not only for the realization of the full success potential of a business, but even more critically for the survival of a business. A company which fails to go global is in longer of losing it‘s domestic business to competitors with lower costs, greater experience, better products and in a nutshell, more value for the customer. The importance of going global to ensure company survival is a more powerful motive for many companies than the attraction of opportunity abroad. Industries that were entirely national in scope only a few years ago are dominated today by a handful of global companies. This unit concentrate on the major dimensions of global marketing namely meaning and the strategic concept of marketing, the principles of marketing, transition from the domestic to transactional marketing, driving forces and complexities in International Marketing, Global Marketing Imperative, Global Marketing plan, International market orientation (EPRA) and International Market Entry Strategies. 1.1. MEANING OF MARKETING Marketing is essentially a creative corporate activity involving the planning and execution of the conception, pricing, promotion, and distribution of ideas, products, and services in an exchange that not only satisfies customers‘ current needs but also anticipates and creates their future needs at a profit. Marketing is not only much broader than selling, it also encompasses the entire company‘s market orientation toward customer satisfaction in a competitive environment. In other words, marketing strategy requires close attention to both customers and competitors. 1.2. MEANING OF GLOBAL MARKETING Global marketing refers to marketing activities by companies that emphasize the following: 1. Reduction of cost inefficiencies and duplication of efforts among their national and regional subsidiaries 2. Opportunities for the transfer of products, brands, and other ideas across subsidiaries 3. Emergence of global customers 4. Improved linkages among national marketing infrastructures leading to the development of a global marketing infrastructure. Although Levitt‘s view that global marketing does not necessarily mean standardization of products, promotion, pricing, and distribution worldwide, but rather, it is a company‘s proactive willingness to adopt a global perspective instead of a country-by-country or region-by- region perspective in developing a marketing strategy. 1.3 The Strategic Concept of Marketing During the past three decades the concept of marketing has changed dramatically. The marketing concept has evolved from the original concept, which focused marketing on the product. The objective was profit, and the means to achieving the objective was selling, or persuading the potential customer to exchange his or her money for the company‘s product. (refer Table 1.1) Table 1-1 Changing Concept of Marketing Old New Strategic Era Pre-1960 1960-1990 1990 Focus Product Customer Way of Doing Business Means Telling and Integrated Knowledge and Selling Marketing Mix Experience End Profit Value Mutually Beneficial Relationship Marketing is.. Selling A Function Everything The ―new‖ concept of marketing, which appeared about 1960, shifted the focus of marketing from the product to the customer. The objective was still profit, but the means of achieving the objective expanded to include the entire marketing mix, or the ―four Ps‖ as they became known: product, price, promotion, and place (channels of distribution). By 1990 it was clear that the consumer concept of marketing was updated and that the times demanded a strategic concept. The strategic concept of marketing, a major evolution in the history of marketing thought, shifted the focus of marketing from the customer or the product to the customer in the context of the broader external environment. Knowing everything there is to know about the customer is not enough. To succeed, marketers must know the customer in a context including the competition, government policy and regulation, and broader economic, social, and political macro forces that shape the evolution of markets. In global marketing this may mean working closely with home-country government trade negotiators and other officials and industry competitors to gain access to a target country market. Another revolutionary change in the shift to the strategic concept of marketing is in the marketing objective-from profit to stakeholder benefits. Stakeholders are individuals or groups who have an interest in the activity of a company. They include the employees and management, customers, society, and government, to mention only the most prominent. There is a growing recognition that profits are a reward for performance (defined as satisfying customers in a socially responsible or acceptable way). To compete in today‘s market, it is necessary to have an employee team committed to continuing innovation and to producing quality products. In other words, marketing must focus on the customer in context and deliver value by creating stakeholder benefits for both customers and employees. Profitability is not forgotten in the strategic concept. Indeed, it is a critical means to the end of creating stakeholder benefits. The means of the strategic marketing concept is strategic management, which integrates marketing with the other management functions. One of the tasks of strategic management is to make a profit, which can be a source of funds for investing in the business and for rewarding shareholders and management. Thus, profit is still a critical objective and measure of marketing success, but it is not an end in itself. The aim of marketing is to create value for stakeholders, and the key stakeholder is the customer. Finally, the strategic concept of marketing has shifted the focus of Marketing Customer Needs and R&D Engineering Manufacturing Customer Value Wants marketing from a microeconomic maximization paradigm to a focus of managing strategic partnerships and positioning the firm between vendors and customers in the value chain with the aim and purpose of creating value for customers. This expanded concept of marketing was termed boundaryless marketing. The notion of boundaryless marketing is shown in Figure 1-1. 1.4 THE THREE PRINCIPLES OF MARKETING The essence of marketing can be summarized in three great principles. The first is customer value, the second is competitive advantage and the third principle is concentration of customer need. 1. The Principle of Customer Value The essence of marketing is creating customer value that is greater than the value created by competitors. Value for the customer can be increased by expanding or improving product and or service benefits, by reducing the price, or by a combination of these elements. Companies that use price as a competitive weapon must have a strategic cost advantage in order to create a sustainable competitive advantage. This might come from cheap labor or access to cheap raw materials, or it might come from manufacturing scale or efficiency or more efficient management. Knowledge of the customer combined with innovation and creativity can lead to product improvements and service that matter to customers. If the benefits are strong enough and valued enough by customers, a company does not need to be the low-price competitor in order to win customers. 2. The Principle of Competitive advantage The second great principle of marketing is competitive advantage. A competitive advantage is a total offer, vis-z-vis relevant competition, that is more attractive to customers. The advantage could exist in any element of the company‘s offer: the product, the price, the advertising and point-of-sale promotion, and the distribution of the products. The total offer must be more attractive than that of the competition in order
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