Globalization marketing

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Globalization:

Tarun Rochwani, MIM Ujjain 1 Globalization By Tarun Rochwani

Index:

Tarun Rochwani, MIM Ujjain 2 Index Meaning Of Globalization Reasons For Globalization Globalization Risks Major Decisions

Meaning:

Tarun Rochwani, MIM Ujjain 3 Meaning Globalization – the process of removal of restrictions on foreign trade, investment. Globalization of the economy - integrating the economy with the rest of the world.

Global Industry :

Tarun Rochwani, MIM Ujjain 4 Global Industry A global industry is an industry in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions. (Auto manufacturers like Suzuki, Honda, Ford, etc.)

Global Firm:

Tarun Rochwani, MIM Ujjain 5 Global Firm A global firm is a firm that operates in more than one country and captures R & D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors. Global firms plan, operate, and coordinate their activities on a worldwide basis.

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Tarun Rochwani, MIM Ujjain 6 Global firms offering better products or lower prices can attack the company's domestic market. The company discovers that some foreign markets present higher profit opportunities than the domestic market. The company needs a larger customer base to achieve economies of scale. The company wants to reduce its dependence on any one market. Reason For Globalization

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Tarun Rochwani, MIM Ujjain 7 The company's customers are going abroad and require international servicing. Continues

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Tarun Rochwani, MIM Ujjain 8 The company might not understand the foreign customer preferences and fail to offer a competitively attractive product. The company might not understand the foreign country's business culture or know how to deal effectively with foreign nationals. The company might underestimate foreign regulations and incur unexpected costs. Risks

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Tarun Rochwani, MIM Ujjain 9 The company might realize that it lacks managers with international experience. The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution. Continues

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Tarun Rochwani, MIM Ujjain 10 Huge Foreign Indebtedness. Unstable government/ Political instability. Foreign exchange problems. Foreign government entry requirements. Tariffs and other trade barriers. To go abroad or not?

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Tarun Rochwani, MIM Ujjain 11 Corruption. Technological pirating. High cost of product & communication adaptation. Shifting borders. Continues

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Tarun Rochwani, MIM Ujjain 12 Define Objectives and Policies. Few countries or many?  Expansion? Type of country to enter. Regional Free Trade Zones – European Union, common currency. Evaluating Potential Markets – Neighboring countries, language, laws, and culture. Which markets to enter?

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Tarun Rochwani, MIM Ujjain 13 Influencing factors include : Product Geography Income Population Political climate Which type of countries to enter?

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Tarun Rochwani, MIM Ujjain 14 Companies work through independent intermediaries.   TYPES OF INTERMEDIARIES:   Domestic-based export merchants. Domestic-based export agents. Cooperative organizations. Export-management companies. Indirect Exporting

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Tarun Rochwani, MIM Ujjain 15 Advantages of Indirect Exporting: Involves less investment - no need to develop export dept., overseas sales force, or set of foreign contacts. Involves less risk - international marketing intermediaries bring the know-how and services to the relationship. Continues

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Tarun Rochwani, MIM Ujjain 16 Domestic-Based Export Department or Division. Overseas Sales Branch or Subsidiary. Traveling Export Sales Representatives. Foreign-Based Distributors or Agents. Exhibiting at Overseas Trade Shows. Electronic Communication via the Internet.   Direct Exporting

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Tarun Rochwani, MIM Ujjain 17 PROCESS: The licenser licenses a foreign company to use a manufacturing process, trademark, patent, trade secret or other item of value for a fee or royalty. The licenser gains entry at little risk. PREVENTED BY: Supply of ingredients or components needed to make the product. Innovation of the product. Licensing

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Tarun Rochwani, MIM Ujjain 18 LICENSEE LICENSER Advantages: Gains production expertise of a well-known product or brand name. E.g. Pharmaceuticals. Manufacturing process, trademark, patent, trade secret or other item of value for a fee or royalty, entry at little risk Disadvantages: Very successful, company might end up creating a new competitor Less control over licensee. Continues

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Tarun Rochwani, MIM Ujjain 19 REASONS: Economic or political reasons. The foreign firm might lack the financial, physical, or managerial resources to take the venture alone. Foreign government might require joint ownership as a condition of entry. E.g. Maruti Suzuki. DRAWBACKS: Disagreement between partners over investment, marketing or other policies (reinvest or declare dividends). Specific manufacturing and marketing policies on a worldwide basis might not be possible for an MNC. Join ventures

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Tarun Rochwani, MIM Ujjain 20 Direct ownership of foreign-based assembly/mfg. facility: ADVANTAGES: Cheap labor/raw materials, govt. incentives, freight savings. Jobs created - image strengthened. Deeper relationship developed with govt., customers, local suppliers, and distributors – adoption of products and communication is better with the local environment. Firm retains full control over the investment – can develop mfg. and mktg. Policies that serve its long-term international objectives. Firm has assured market share if local govt. insists upon use of domestic content in locally manufactured products. E.g. Saint Gobain Glass India, Hutch. Direct Investment

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Tarun Rochwani, MIM Ujjain 21 Standardized – marketing mix elements are std., so costs kept low. Adapted – marketing mix elements adjusted as per the target market. E.g. Nike, Pizza Hut/Macdonald. Marketing Program

MARKETING TOOLS – 4 P’s:

Tarun Rochwani, MIM Ujjain 22 MARKETING TOOLS – 4 P’s Product : Straight extension – product is introduced as it is. E.g. Consumer electronics, machine tools, cameras, etc. Product adaptation – alter the product to meet customer preference/local conditions -regional/country/city/retailer version + local beliefs/superstitions, E.g. Feng Shui. Product invention – Backward invention - reintroduce earlier product forms. Forward invention – Create new products. Services. E.g. Insurance, credit cards, consultancy firms.

Continues:

Tarun Rochwani, MIM Ujjain 23 Continues Promotion: Communication adaptation – Ads & promotion campaigns for home market + local market. Dual adaptation – both product & communication adaptation. One message - language, colors, name, headlines can differ. Global theme, adapt copy - local. Global ad pool, select country-appropriate ad. Sales promotion technique - local mgmt.

Continues:

Tarun Rochwani, MIM Ujjain 24 Continues Price Strategies: Uniform price. Market-based price. Cost-based price. Transfer price- Price charged to subsidiary unit in the company. High price - to pay low income tax abroad. Low price – dumping. Gray markets- Same product sells at different prices geographically.

Continues:

Tarun Rochwani, MIM Ujjain 25 Continues Place Track movement of product SELLER - Seller's International Marketing headquarters - Channels Between Nations (agents, transport, financing and risk) - Channels Within Foreign Nation (entry into the nation to ultimate buyer) - BUYER.

MARKETING ORGANIZATION :

Tarun Rochwani, MIM Ujjain 26 MARKETING ORGANIZATION EXPORT DEPARTMENT. INTERNATIONAL DIVISION. GLOBAL ORGANIZATION.

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Tarun Rochwani, MIM Ujjain 27 THANK YOU

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