Welcome - 2003
Why Global Marketing is Imperative
“Change in the World’s 100 Largest Companies”-
what happened to U.S. leadership?
Is this good or bad or expected?
Global vs international vs multinational
What is meant by a Global firm?
What mindset do you think that U.S. firms adopt?
What mindset do we adopt in our classes?
Evolution of Global Marketing
ethnocentric - starts with home needs
sweetened cereal to CountryX??
polycentric - different cereals to each market
multidomestic marketing - different subsidiaries for each market - is it ever justified?
regiocentric - looks for some commonalities among regions - cereals in Asia?
Evolution of Global Marketing (cont)
reduction of cost inefficiencies and duplication of efforts
opportunities to transfer products, brands and ideas across subsidiaries
emergence of global customers
improved linkages … leading to global market infrastructure
Globalization of Markets and Competition
“ US Balance of Goods, Services and Income over 20 Year Period”
What’s all the fuss about? See ITC web site for product-specific information
Isn’t this natural as other nations grow and develop their own industries?
Isn’t this natural as products from other countries are desirable around the world?
What Should Be Counted?
If a product is made in US and sold overseas
If a US firm makes a product in Japan and sells it in a third country
If Honda makes a car in Marysville but sells it in Europe
If a US-owned firm licenses its technology and brands to be manufactured and sold in another country
Is the trade balance really understood?
Strategies for Global Firms
All countries are considered as part of your market
Identify globally strategic markets, understand needs, commonalities and differences
Identify whether adaptations are needed or whether a standardized product is acceptable
Can you name some global brands? Why do you think that they are global?
Standardization vs. Adaptation
How much can be kept the same?
From the customer’s point of view?
From the company’s point of view?
Coke vs. Pepsi
See page 27 - dominant design story of VHS and Betamax
Costs of redesign? Engineering time?
Sourcing? local content laws? tariffs? expense of transportation?
Local labor? qualifications? tariff reduction? less vulnerability?
Production facilities? quality of plants? technology?
Nontariff barriers? packaging? ingredients? other restrictions?
Shift costs among multiple markets?
Consumer preferences? changes in taste, size, flavor? use? ads?
Let’s Consider Honda’s 1997 Platform as an Example
Flexible platform to reduce redesign
same platform used for vastly different vehicles
One size does not fit all
Consumer preferences? too small in U.S., smaller in Japan, narrow in Europe
Theory of Comparative Advantage
The total world product is less at various levels of production mixes
than when there is a concentration of production units on the product
in which the country has the greatest comparative advantage
Principles of international trade
1. countries benefit from international trade
2. international trade increases worldwide production by specialization
3. exchange rates are primarily determined by traded goods
Where and how to locate value-added chain
Global environment - How to reduce tariffs, how to work with gov.
(countervailing duties vs. dumping)
how to predict political risk and minimize product vulnerability
What is going on in the industry? - competitive changes?
What is going on in our firm? - do we have capital to invest?
What is happening in all markets? How much time can we allow for profits to occur?
How can we optimize our choices and location of each part of the process?
Recognize interdependence of markets:
Can some markets be grouped into regions?
Will the product be considered the same way in different countries?
Can some sourcing be done for several markets?
Can manufacturing in one location serve several markets?
Can similar technologies or basic products serve several markets?
Can intellectual property rights be maintained?
You are a senior exec in the international division of a food MNC
You manufacture standardized breakfast cereals to many countries around the world
Sweetness may be modified
Highly successful in China - new in India
First year was good - then sales dropped
HH with career couples adopted it - but returned to traditional Indian breakfast
What can you do?
Look at www.toyota.com
Is it a global company?
How would you describe Toyota in terms of their approach to marketing?
How about www.kelloggs.com