Do More with Less: Navigating Customer Acquisition Challenges for Today's Ent...
Ch01
1. Global Marketing Management, 5e
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Chapter 1
Globalization
Imperative
2. Chapter Overview
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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1. Why Global Marketing is Imperative
2. Globalization of Markets: Convergence
and Divergence
3. Evolution of Global Marketing
4. Appendix: Theories of International Trade
and the Multinational Enterprise
3. Introduction
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Products have been traded across borders
throughout recorded civilization, extending back
beyond the SilkRoadthat once connected East
with West from Xian (China) to Rome (Italy).
Total world merchandise trade volume grew from
$7.6 trillion in 2000 to $16.3 trillion in 2008.
4. Introduction
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Big Emerging Markets (BEMs): In the next ten to
twenty years, BEMs such as the Chinese
Economic Area (CEA: including China, Hong Kong
Region, and Taiwan), India, South Korea, Mexico,
Brazil, Argentina, South Africa, Poland, Turkey,
and the Association of Southeast Asian Nations
(ASEAN: including Indonesia, Brunei, Malaysia,
Thailand, the Philippines, and Vietnam) will
provide many opportunities in global business.
5. 1. Why Global Marketing is Imperative
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Saturationof domestic markets: Domestic-market
saturation in the industrialized parts of the world
and marketing opportunities overseas are
evident in global marketing.
Globalcompetition: Competition around the
world and proliferation of the Internet have been
on the rise and are now intensifying.
Needforglobalcooperation: Global competition
brings global cooperation.
6. 1. Why Global Marketing is Imperative
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Internet revolution: The Internet and electronic
commerce (e-commerce) are bringing major
structural changes to the way companies
operate worldwide.
The term global epitomizes both the competitive
pressure and expanding market opportunities.
Whether a company operates domestically or
across national boundaries, it can no longer
avoid competitive pressures from around the
world.
7. Exhibit 1-1: Change in World’s 100 Largest
Companies and Their Nationalities
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8. 2. Globalization of Markets: Convergence
and Divergence
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Per capita income is an important determinant
of consumer buying behavior.
When a country’s per capita income is less than
$10,000, much of the income is spent on food
and other necessities, and very little disposable
income remains.
As a country’s per capita incomes reaches
$20,000, the disposable portion of income
increases dramatically.
This increased disposable income level results
in increased convergent pressures on consumer
buying behavior.
9. 2. Globalization of Markets: Convergence
and Divergence
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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People with higher incomes tend to enjoy similar
educational levels, desires for material
positions, ways of spending leisure time, and
aspirations for the future.
Globalization does not suffocate local cultures,
but rather liberates them from the ideological
conformity of nationalism, with consumers
becoming more receptive to new things.
Consumers also have a wider, more divergent
“choice set” of goods and services to choose
from.
In other words, the divergence of consumer
needs is taking place at the same time.
10. 2. Globalization of Markets: Convergence
and Divergence
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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International trade consists of exports and
imports.
International business includes international
trade and foreign production.
Extensive international penetration of
companies is called global reach.
International trade and foreign production
activities are managed on a global basis.
Growth of Multinational Corporations (MNCs)
and intra-firm trade is a major aspect of global
markets.
11. 2. Globalization of Markets: Convergence
and Divergence
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Whomanages internationaltrade?
Intrafirm trade: Trade between MNCs and their
foreign affiliates. Comprises 34 percent of
world trade.
An additional 33 percent of world trade was
exports between MNCs and their affiliates.
In other words, two-thirds of world trade is
managed one way or another by MNCs.
12. 3. Evolution of Global Marketing
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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What is marketing?
Marketing involves the planning and execution
of the conception, pricing, promotion, and
distribution of ideas, products, and services.
Marketing involves customer satisfaction and
their current and future needs.
Marketing is much more than selling and
involves the entire company.
Within marketing strategies, companies are
always under competitive pressure to move
forward both re active ly and pro active ly.
13. 3. Evolution of Global Marketing
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Fivestages intheevolutionof globalmarketing
(see Exhibit 1-2):
1. Domestic Marketing (domestic focus; home country
customers; ethnocentric orientation).
2. Export Marketing (indirect vs. direct exporting; country
choice, exports; ethnocentric orientation; home country
customers).
3. International Marketing (markets in many countries;
polycentric orientation; use of multidomestic marketing
when customer needs are different across national
markets).
14. 3. Evolution of Global Marketing
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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4. Multinational Marketing (many markets; consolidation on
regional basis; regiocentric orientation; standardization
within regions).
5. Global Marketing (international, multinational & geocentric
orientation; company’s willingness to adopt a global
perspective; global products with local variations).
15. Exhibit 1-2: Evolution of Global
Marketing
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16. 3. Evolution of Global Marketing
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GlobalMarketingrefers to marketing activities
that emphasize the following:
1. Standardization efforts.
2. Coordination across markets.
3. Global integration.
17. 3. Evolution of Global Marketing
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Global marketing does not necessarily mean
that products can be developed anywhere on a
global scale.
The economic geography, climate, and culture
affect how companies develop certain products.
The Internet adds a new dimension to global
marketing.
E-commerce retailers gain substantial savings
by selling online.
18. 4. Appendix: Theories of International
Trade & the Multinational Enterprise
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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ComparativeAdvantageTheory
(see Exhibit 1-3)
Absolute Advantage
Comparative Advantage
Commodity Terms of Trade
Principles of International Trade
Factor Endowment Theory
InternationalProduct CycleTheory
(see Exhibit 1-4)
Economies of Scale
21. 4. Appendix: Theories of International Trade
& the Multinational Enterprise
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Economies of Scope
Technological Gap
Preference Similarity
Stages of International Product Cycle Theory:
IntroductionStage
A U.S. company innovates on a new product in
its home country.
22. 4. Appendix: Theories of International Trade
& the Multinational Enterprise
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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GrowthStage
Product standards emerge and mass
production becomes feasible.
MaturityStage
Many U.S. and foreign companies vie for
market share in the international markets.
DeclineStage
Companies in the developing countries also
begin producing the product and marketing it
in the rest of the world.
23. 4. Appendix: Theories of International Trade
& the Multinational Enterprise
Chapter 1Copyright (c) 2009 John Wiley & Sons, Inc.
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Internalization/TransactionCost Theory
Appropriability Regime
Dominant Design
Manufacturing and Marketing Ability