MODULE [PRINCIPLES OF MARKETING]

Chapter 10: Global Marketing

OBJECTIVES:
1. To bring countries closer for trading purpose
and to encourage large scale free trade among
the countries of the world.
2. To bring integration of economies of different
countries and there by to facilitate the process of
globalization of trade.

Global marketing is defined as the process of adjusting the marketing strategies

Big businesses usually have offices abroad for countries they market to.
Currently, with the proliferation of the internet, even small businesses can reach
consumers anywhere in the world. If a business chooses not to extend internationally, it
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can face domestic competition from international companies that are extending their
international presence. The presence of this competition almost makes it a requirement
for many businesses to have an international presence.
A global corporation, also known as a global company, is coined from the base
term 'global', which means all around the world. ... Really, a global company is any
company that operates in at least a country other than the country where it originated.
Identifying the global marketing environment
A tariff is a tax on imports or exports between sovereign states. It is a form of
regulation of foreign trade and a policy that taxes foreign products to encourage or
safeguard domestic industry. Traditionally, states have used them as a source of
income.
A quota is a quantity limit. It restricts imports of commodities physically. It
specifies the maximum amount that can be imported during a given time period.
The embargo or boycott, which ban some kinds of imports.
Certain forces may also help global marketing like the General Agreement on
Tariffs and Trade (GATT) and the Free Trade Zone Agreements. The GATT is a legal
agreement between many countries, whose overall purpose was to promote
international trade by reducing or eliminating trade barriers such as tariffs or quotas. A
free-trade area is the region encompassing a trade bloc whose member countries have
signed a free trade agreement (FTA). Such agreements involve cooperation between at
least two countries to reduce trade barriers, import quotas and tariffs, and to increase
trade of goods and services with each other.
Determining whether to go international
The marketing organization must learn to understand the preferences and buyer
behavior of consumers in the foreign country. Can the global company offer products
that are competitive? Do manager have adequate international marketing experience?
Determining which markets to enter
When the marketing organization decides to go international, the company must
first identify marketing goals, the desired volume of foreign sales. It must also decide on
the number of countries it wants to target or the types of countries to enter.
Determining how to enter the market
There are a variety of ways in which a company can enter a foreign market. No
one market entry strategy works for all international markets. Direct exporting may be
the most appropriate strategy in one market while in another you may need to set up a
joint venture and in another you may well license your manufacturing. There will be a
number of factors that will influence your choice of strategy, including, but not limited to,
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tariff rates, the degree of adaptation of your product required, marketing and
transportation costs. While these factors may well increase your costs it is expected the
increase in sales will offset these costs. The following strategies are the main entry
options open to you.
1. Direct Exporting
Direct exporting is selling directly into the market you have chosen using in the
first instance you own resources. Many companies, once they have established a sales
program turn to agents and/or distributors to represent them further in that market.
Agents and distributors work closely with you in representing your interests. They
become the face of your company and thus it is important that your choice of agents
and distributors is handled in much the same way you would hire a key staff person.
2. Licensing
Licensing is a relatively sophisticated arrangement where a firm transfers the
rights to the use of a product or service to another firm. It is a particularly useful strategy
if the purchaser of the license has a relatively large market share in the market you want
to enter. Licenses can be for marketing or production. licensing).
3. Franchising
Franchising is a typical North American process for rapid market expansion but it is
gaining traction in other parts of the world. Franchising works well for firms that have a
repeatable business model (eg. food outlets) that can be easily transferred into other
markets. Two caveats are required when considering using the franchise model. The
first is that your business model should either be very unique or have strong brand
recognition that can be utilized internationally and secondly you may be creating your
future competition in your franchisee.
4. Partnering
Partnering is almost a necessity when entering foreign markets and in some parts of
the world (e.g. Asia) it may be required. Partnering can take a variety of forms from a
simple co-marketing arrangement to a sophisticated strategic alliance for manufacturing.
Partnering is a particularly useful strategy in those markets where the culture, both
business and social, is substantively different than your own as local partners bring local
market knowledge, contacts and if chosen wisely customers.
5. Joint Ventures
Joint ventures are a particular form of partnership that involves the creation of a third
independently managed company. It is the 1+1=3 process. Two companies agree to
work together in a particular market, either geographic or product, and create a third
company to undertake this. Risks and profits are normally shared equally. The best
example of a joint venture is Sony/Ericsson Cell Phone.
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6. Buying a Company
In some markets buying an existing local company may be the most appropriate
entry strategy. This may be because the company has substantial market share, are a
direct competitor to you or due to government regulations this is the only option for your
firm to enter the market. It is certainly the most costly and determining the true value of
a firm in a foreign market will require substantial due diligence. On the plus side this
entry strategy will immediately provide you the status of being a local company and you
will receive the benefits of local market knowledge, an established customer base and
be treated by the local government as a local firm.
7. Piggybacking
Piggybacking is a particularly unique way of entering the international arena. If
you have a particularly interesting and unique product or service that you sell to large
domestic firms that are currently involved in foreign markets you may want to approach
them to see if your product or service can be included in their inventory for international
markets. This reduces your risk and costs because you are essentially selling
domestically and the larger firm is marketing your product or service for you
internationally.
8. Turnkey Projects
Turnkey projects are particular to companies that provide services such as
environmental consulting, architecture, construction and engineering. A turnkey project
is where the facility is built from the ground up and turned over to the client ready to go
– turn the key and the plant is operational. This is a very good way to enter foreign
markets as the client is normally a government and often the project is being financed
by an international financial agency such as the World Bank so the risk of not being paid
is eliminated.
9. Greenfield Investments
Greenfield investments require the greatest involvement in international business.
A greenfield investment is where you buy the land, build the facility and operate the
business on an ongoing basis in a foreign market. It is certainly the most costly and
holds the highest risk but some markets may require you to undertake the cost and risk
due to government regulations, transportation costs, and the ability to access
technology or skilled labor.
Determining global marketing program
The marketing organization must decide whether to use the traditional marketing
mix program or adapt the program to foreign market needs. The traditional marketing
mix program is called Standardized Marketing Mix, a strategy employed by a
multinational company in attempting to use one marketing mix to sell its products world-
wide; the approach minimises cost but may result in a smaller market than would be
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possible with a unique marketing program for each country. The adopted marketing mix
is being flexible, wherein strategies are adjusted to each international target market
needs, expecting for more costs but larger market share in the global market.
Determining the global marketing organization
As a global company, the customer needed to optimize the marketing capabilities
of their regional subsidiaries to deliver relevant, localized campaigns. At the same time,
they also wanted to get the most out of corporate resources and build more cohesive
global programs. Any organizational change would have to balance these two equally
important and sometimes competing priorities. Consultants began by conducting a
series of workshops with key executives. These workshops helped align marketing
strategy with corporate business objectives and market opportunity. Companies
brought the sales and marketing expertise and the organizational development savvy to
craft an actionable strategy for a modern, global marketing organization.

Activity:
Make a list of 10 brands/trademarks in the category, and classify each name as being
either “Philippine made” or “foreign made”.

References:
https://www.google.com/search?q=global+marketing&rlz=1C1CHBF_enPH876PH876&sxsrf=ALeKk0063
WyqnEr_lpx4zG90D1g9m0dgfQ:1588932084015&source=lnms&tbm=isch&sa=X&ved=2ahUKEwic-
sGjgaTpAhUaK6YKHSSdDaUQ_AUoAXoECBYQAw&biw=1707&bih=838&dpr=1.13

https://www.bridge.partners/insights/modernizing-a-global-marketing-organization

https://adage.com/article/digitalnext/digital-a-modern-global-marketing-organization/141538

https://marketbusinessnews.com/financial-glossary/global-marketing/

https://www.cleverism.com/global-marketing-strategies/