Principles of Marketing

Module 14: Marketing Globally

Globalization

Globalization is the growing level of interconnection between people, businesses, and countries
around the world. It refers to the increased flow of goods, services, people, technology, capital,
information, ideas around the world.
Benefits of Globalization

• Larger volumes of sales and exchange

• Larger growth rates in GDP
• More empowerment of individuals and political systems through the acquisition
of additional resources and capital
• Multinational companies can lower production costs

* Gross Domestic Product (GDP) is the market value of the goods and services produced by a
country in a year. GDP is the most widely used standardized measure of output.
Challenges of Globalization

• Ethical Business Practices

• Organizational Structure
• Public Relations
• Leadership
• Legal and Regulatory Structure
GDP Growth Rate by Country
Classifying Countries by Growth Rate

• Industrialized nations have economies characterized by a healthy climate for private

enterprise (business) and a consumer orientation
• Less-developed nations have extensive poverty, low per capita income and standards of
living, low literacy rates, and very limited technology
• Developing nations are those that are making the transition from economies based on
agricultural and raw-materials production to industrialized economies. They exhibit rising
levels of education, technology, and per capita incomes
Additional Challenges of LDCs

• Infrastructure: 
• Will roads, bridges, water supply, sewers, electrical
grids, and telecommunications support operations?
• Can the company rely on a stable government,
property rights, judicial system, banking and financial
systems, and basic social services?
• Technology:
• Will the level of technology in the country support
business operations?
Political action

• Trade sanctions: Penalties or restrictions imposed by one country over another for importing
and exporting goods, services, and investment.

• Tariff (or duty) a tax levied on a good imported into a county.

• Dumping: The practice of selling a good in a foreign market at a price that is lower than its
domestic price or cost.

• Quota: Designates the maximum quantity of a product that may be brought into a country
during a specified time period.
Political action

• Boycott : A group’s refusal to deal commercially with some organization to protest against
its policies.

• Exchange control: Refers to the regulation of a country’s currency exchange rate.

• Exchange rate: The measure of how much one currency is worth in relation to another. Ex. I
Canada dollar is worth .80 U.S. cents.

• Trade agreement: Inter government agreement designed to manage and promote trade
activities for specific regions. Example: USMCA.
Global Entry Strategies

• Export
• Licensing and franchising
• Joint ventures
• Direct investment
• US commercial centers
• Trade intermediaries
Global entry strategies

• Exporting: Producing goods in one country and selling them in another.

• Franchising: Contractual arrangement in which a parent company (the franchisor) allows an

individual or firm (the franchisee ) to operate a certain type of business under an established
name and according to specific rules set by the franchiser.

• Joint venture: Formed when a firm entering a new market pools its resources with those of a
local firm to form a new company in which ownership, control, and profits are shared.
Global entry strategies

• Direct investment : When a firm maintains 100% ownership of its plants, operation facilities,
and offices in a foreign country, often through the formation of wholly owned subsidiaries.
Global marketing mix

• Sell the same product or service in both the home country market (standardization).

• Sell a product or service similar to that sold in the home country but include minor
adaptations (localization).

• Selling totally new products or services (localization).

Standardization

• Offer the optimal combination of price, quality, and reliability with products that are
identical in design and function throughout the world
• Standardization can translate into lower operating costs and economies of scale in product
development and marketing
• The ability to develop and invest in a unified brand and/or company identity throughout the
world
• Companies manage a smaller total number of brands
Localization

• Localization may involve:

• altering existing products to fit the needs of the local target market
• creating completely new products to fit the needs of the local target market
• Increases the cost and complexity but results in products and marketing strategy that are a
better fit for local market needs and ultimately a greater sales success
Additional Elements of
Global Segmentation
• Culture: The interplay between language, religion, education, values, identity, history,
and traditions. (In France, IKEA is closed on Sunday).

• Economic status: Stage of economic development, wealthy vs. poor nations, employment,

GDP  (We are concerned about buying power.)

• Social environment: Conditions and operational stability for business, government, politics,

the legal system, health care, education, and other societal support structures 
Culture differs on 6 dimensions

• Power distance: Willingness to accept social inequality as natural

• Uncertainty avoidance: The extent to which society relies on orderliness, consistency,
structure, and formalized procedures to address situations that arise in everyday life.
• Individualism: Perceived obligations and dependence on groups.
• Masculinity: The extent to which dominant values are male oriented.
• Time orientation: Short versus long term orientation.
• Indulgence: The extent to which society allows for the gratification of fun & enjoyment
needs or else suppressses and regulate such pursuits.
Global Targeting Decisions
Should Consider
• Market size and growth potential
• Competition
• Compatibility
Language in Global Promotions

• There are nearly 3,000 languages in the world

• Even countries that use the same language have
words with different meanings
• May be even more significant if a country’s
population speaks several languages
• Consider literacy rates
Global Considerations in Promotions

• Colors: Colors may have different meanings in different cultures

• Values: An individual’s values arise from his or her education, moral or religious beliefs and
are learned through experiences
• Business norms
• Religious beliefs and holidays
Global Pricing Considerations

• Pricing needs to account for risk associated with fluctuations in the relative value of different
currencies in the markets where businesses operate
• Cultural expectations may dictate what consumers are willing to pay 
Global Considerations for Distribution

• A country’s transportation and economic infrastructure, customs, marketplace conditions,

and the competitive landscape 
• Product’s positioning in the marketplace
• How products will be distributed across the different shopping venues unique to a particular
country or market
Demographics

• Age
• Social class
• Gender
• Religious affiliations
• Income brackets
• Education
• Geography
Demographic Analysis
Cautions about Using Demographics

• Demographic profiling is essentially an exercise in making generalizations about groups of

people
• Marketers must also be careful to avoid interpreting demographic information using the
mindset of their own “home” cultures
Cultural Factors in Global Marketing

• Language
• Customs and taboos
• Values
• Time and punctuality
• Business norms
• Religious beliefs and celebrations
Regional Trade Block
World Trade Organization
Fair Trade

• The fair trade movement promotes the use of

labor, environmental, and social standards for
the production of commodities, particularly
those exported from developing countries to
industrialized nations
Quick Review

• What is globalization? What major benefits and challenges does it pose for multinational
organizations penetrating global markets?
• What are common approaches used by organizations to compete successfully on a global
scale?
• Why is it important to understand how demographic, cultural and institutional factors shape
the global marketing environment?