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GLOBAL MARKETING:

GLOBAL MARKETING

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4/20/2012 6:21 AM 2 “……globalization must be taken for granted. There will be only one standard for corporate success: international market share. The winning corporations will win by finding markets all over the world.” Jack Welch, CEO- GE “There is no longer any such thing as a purely national economy. The rest of the world is just too big to ignore, either as a market or as a competitor. If business schools do nothing other than to train their students to think internationally, they would have accomplished an important task.” John Young, CEO, Hewlett-Packard

Background:

4/20/2012 6:21 AM 3 Background Selling goods to international markets is not new to India or other Asian countries. Merchants were sending their representatives abroad to sell their goods The breakthroughs in information and communication technology and means of transportation have contributed to the convergence in tastes and preferences of the consumers around the world Competition has forced companies to experiment and adopt different marketing strategies in various markets. Income growth has triggered the consumers’ desire for more and newer varieties of the goods and services thereby creating newer markets Lower trade barriers have triggered new global organization to take advantage of comparative advantage across the world

Globalization:

4/20/2012 6:21 AM 4 Globalization Globalization is defined as a process of economic integration of the entire world through removal of barriers to free trade and capital mobility as well as through the diffusion of knowledge and information Globalization refers to the shift toward a more integrated and interdependent world economy. Globalization of production: The firms evaluate various locations worldwide for manufacturing activities so as to take advantage of local resources and optimize their manufacturing competitiveness Globalization of markets: the concept of borderless world and need for universal products for global markets Globalization market refers to the merging of historically distinct and separate national markets into one huge global marketplace.

Drivers of Globalization:

4/20/2012 6:21 AM 5 Drivers of Globalization Declining trade and investment barriers International trade occurs when a firm exports goods or services to consumers in another country Foreign Direct Investment occurs when a firm invests resources in business activities outside its home country. Technological change Microprocessors and Telecommunications Satellite, optical fibre, and wireless technologies The Internet and World Wide Web Transportation technology Jet aircraft and containerization

Fundamentals…:

4/20/2012 6:21 AM 6 Fundamentals… The foundation for a successful global marketing program is a sound understanding of the marketing discipline. Marketing is the process of focusing the resources and objectives of an organization on environmental opportunities and needs. During the past decades, the concept of marketing was focused on the product with an objective of profit. Since 1960, the “new” concept of marketing shifted its focus from the product to customer, but the objective was still profit. The concept not only covered product, but other three p’s as well namely price, place and promotion. By 1990s, the strategic concept of marketing emerged. Focus is not only the customer but the customer in the context of its broader external environment. Marketers must know in a context including the competition, government policy and regulation, etc. Objective shifted from profit to stakeholder benefits.

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4/20/2012 6:21 AM 7 In other words, marketing must focus on the customer in context and deliver value by creating stakeholder benefits for both customers and employees. Finally, the strategic concept of marketing has shifted the focus of marketing from a microeconomics 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. The three principles of marketing: the first identifying the purpose and task of marketing, the second the reality of marketing, and the third the principal means for achieving the first two. Customer Value and the value equation Competitive or differential advantage Focus

The Principles:

4/20/2012 6:21 AM 8 The Principles Customer value The task of marketing is to create the value that is greater than the value created by competitors. V=B/P where B=perceived benefits-perceived costs and p stands for price Competitive or differential advantage The advantage is more attractive to customers and can exist in any element of the company’s offer: the product, price, advertising or distribution of the product. Focus Focus is required to succeed in the task of creating customer value at a competitive advantage.

Global marketing: what it is and what it is not:

4/20/2012 6:21 AM 9 Global marketing: what it is and what it is not The marketing principles are same however the markets and customers are quite differentiated. Global localization: the ability to be as much of an insider as a local company but still reap the benefits that result from world scale operations. A central issue in global marketing is how to tailor the global marketing concepts to fit a particular product or business. Finally, global marketing does not mean entering every country in the world. Since any national market represents a small percentage of total world market, there are greater opportunities beyond their own borders.

The driving forces affecting international marketing:

4/20/2012 6:21 AM 10 The driving forces affecting international marketing Driving forces Technology: “stateless” e.g. Satellite dishes, internet etc. Regional economic agreements: multilateral trade agreements NAFTA, GATT Market Needs and wants Transportation and communication improvements Product development costs Quality World economic trends Leverage: experience transfers, scale economies, resource utilization, and global strategy. The global/transnational corporation

Restraining forces affecting global marketing:

11 Restraining forces affecting global marketing Management myopia and organizational culture National Controls and barriers Costs Nationalism War Domestic focus

Framework of global Marketing:

12 Framework of global Marketing GM is the performance of business activities designed to plan, price, promote, direct the flow of company’s goods and services to consumers or users in more than one nation for a profit. -Cateora Global marketing is the process of focusing the resources and objectives of an organization on global marketing opportunities and needs.-Keegan GM is all about identifying and satisfying global customers’ needs better than the competitors, both domestic and international, and coordinating marketing activities within the constraints of the global environment. -Terpstra GM is marketing carried on across national boundaries.

Evolution of Global Marketing:

13 Evolution of Global Marketing Stage 1 : Domestic Marketing : Companies manufacturing products and selling those within the country itself. So, no international phenomenon at all. Stage 2 : Export Marketing : Company starts exporting products to another countries also. This is the very basic stage of global marketing. Approach of marketer in this stage is said to be ‘ethnocentric’ because although he is selling goods to foreign countries, product development is totally based upon the taste of local customer. So, focus is still on domestic market

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Stage 3 : International Marketing : Now, company starts selling products to various countries and the approach is ‘Polycentric’ i.e. making different products for different countries. 4/20/2012 6:21 AM 14

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Stage 4 : Multinational Marketing : Now, in this stage, the number of countries in which the company is doing business gets bigger than that in earlier stage. And so, instead of producing different goods for different countries, company tries to identify different regions for which it can deliver same product. So, same product for countries lying in one region but different from product offered in countries of another region. e.g. a company may decide to offer same product to India, Sri lanka and Pakistan if it thinks the taste of people of these countries is same but at the same time offering different product for American countries. “REGIOCENTRIC” 4/20/2012 6:21 AM 15

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Stage 5 : Global Marketing : This is the final stage of evolution. In this stage company really operates in a very large number of countries and for the purpose of achieving cost efficiencies it analyses the requirement and taste of customers of all the countries and come out with a single product which can satisfy the needs of all. “GEOCENTRIC” 4/20/2012 6:21 AM 16

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17 Controllable factors in GM The company is in position to control and design marketing mix elements e.g. product, price, place, and promotion but the environment is beyond the control of the company. Uncontrollable factors Social factors: Legal setup, political situations, financial system, culture etc. Economic factors: commercial policy variables e.g. tariffs, quotas, licensing Competition: with producers, exporters Logistics: costs of transportation, availability of transportation Risks: acts of enemies, pirates etc.

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4/20/2012 6:21 AM 18 The existence of more than one market implies Legal restrictions ..barriers to free trade Logistics Forex regulations

Scope of Global Marketing:

4/20/2012 6:21 AM 19 Scope of Global Marketing Entry into GM by Direct investment by opening subsidiary abroad Licensing/franchising wherein foreign enterprises are granted the right to use the exporting company’s know-how, viz. patents, trade marks with or without financial investment Establishing joint ventures for manufacturing or marketing Offering consultancy services abroad Sub-contracting and counter-trade and Importing (for export production)

International trade, business and marketing:

4/20/2012 6:21 AM 20 International trade, business and marketing International trade arises due to divergent scarcities of resources between nations, points out the possibilities and advantages of trade International Marketing is the process through which international trade takes place International business includes any type of business activity that crosses international borders. It includes besides International Marketing investments abroad such as joint ventures etc.

The similarities…?:

4/20/2012 6:21 AM 21 The similarities…? In both success depends upon the satisfying the basic needs of the consumers It is necessary to build goodwill Research and development for product improvement and adaptation is necessary

Transition from Domestic to International business:

4/20/2012 6:21 AM 22 Transition from Domestic to International business The factors which influence the firm’s decision to export can be classified in following categories Firm Characteristics Product Characteristics Size and growth of domestic market Optimal scale of production and Potential export markets Perceived external export stimuli Fortuitous order Market opportunity Govt’s stimulation/assistance

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4/20/2012 6:21 AM 23 Perceived internal export stimuli Level of capacity utilization The higher level of profits The growth objectives of the firm Level of organizational commitment Motivation to export Bulk sales Relative profitability Insufficiency of domestic demand Reducing business risk Legal restrictions Obtaining imported inputs (Nations have to export to pay for the imports of materials, technology thereby may impose exports on firms) Social responsibility Increased productivity due to R&D.. Find markets…export Technological improvement The product can be near the end of its life cycle in domestic market

Five basic reasons for going global :

Five basic reasons for going global Small local area market Access to additional markets Financial factor Universal nature of product and services Others 4/20/2012 6:21 AM 24

Other Reasons:

Other Reasons To use its resources at finest level. To promote/make the Company in the global market. To acquire duty free import of raw materials. To gain more & more poise of Local Governments and domestic customers. To earn additional profit as the global market is an extremely huge market. 4/20/2012 6:21 AM 25

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THANK YOU!  4/20/2012 6:21 AM 26

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