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global marketing explained, globalization
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Required Reading● Farrell, C. (2015). Global Marketing. Sage Publications. Chapter 1
● Levitt, T. (1983). The globalization of markets. Harvard Business Review, (May-June), 92-102.
● The Borderless World: Power and Strategy by Kenichi Ohmae (New York: Harper Perennial,
1991).
Chapter 1: Global Marketing Explained
Learning Objectives
1. Define the term “global marketing” and explain how it differs from other terms such as
“international marketing,” “multi-domestic marketing,” and “global marketing.”
2. Discuss the similarities and differences between global and domestic marketing.
3. Discuss globalization and its consequences.
4. Discuss the anti-globalization movement.
Introduction
● Foreign direct investment and strategic Alliance are institutional arrangements firms use to
penetrate foreign markets.
● When a firm engages in FDI, it invests long-term capital in a new or existing foreign business.
● Strategic alliances involve two or more companies collaborating over the short to medium term
to achieve some mutually beneficial corporate objective.
Global Marketing Defined
● Global Marketing is the systematic planning, coordination and implementation of the firm's
marketing activities across national borders.
● Global Marketing involves the implementation of marketing activities across national borders, for
example, outside the firm's home country.
● What this means is that the firm is no longer dealing with the familiar environment of its home
country but is now confronted with environments with significant differences in terms of culture
and level of Economic development and perhaps major differences in political structure and
approaches to government regulations.
● The firms may also face unfamiliar competitors and marketing channels as well as consumers
with decidedly different needs and purchasing behaviour.
● Global marketers are generally concerned with several issues that are of little relevance to the
purely domestic firm. for example, the global marketing firm has to consider issues such as:
➔ The selection of foreign countries that offered the best prospects for the products
marketed by The Firm
➔ the choice of strategies and approaches, EG foreign direct investment, exporting or a
more Loosely structured strategic alliance, which The Firm May employ to penetrate
International markets
➔ the need for changes to the firm's products so that they fit more closely with the needs
of consumers in the foreign countries selected
➔ the need for the firm's advertising strategies to be adjusted to better communicate with
consumers who are actually culturally dissimilar to those in its Home Market
, ➔ the need to contact and work with foreign intermediaries to get the firm's products into
the hands of customers in the various host countries
➔ the need to adjust the firm's pricing strategies in response to differences in the structure
of marketing channels in foreign countries and differences in the purchasing behaviour of
consumers in those markets
➔ the need to identify countries in which to locate the firm's value-added activities, EG
research and development
➔ the need to evaluate and mitigate the political risks inherent in doing business in foreign
countries
➔ the need to consider opportunities for the firm to coordinate its Market activities across
the various countries in which it plans to conduct a business
● Domestic marketing is not concerned with the issues I listed above. The liability and foreignness
affirm faces when operating outside its Home Market at an additional layer of complexity and
risks to its marketing decisions (Zaheer, 1995)
➔ The term liability of foreignness generally refers to inherent disadvantages the
multinational firm faces when operating in a new host country. It encapsulates all the
additional costs multinationals must bear to compete with local firms in the new host
country.
● Firms need to engage in systematic planning and coordination, which is the sale of a
standardized product in all International markets, the use of a consistent brand name and
advertising message across all foreign markets, or a coherent pricing strategy that must be
followed by all the firms subsidiary managers, regardless of geographic location
● Systematic planning and coordination may also be demonstrated by the firms adopting an
integrated approach to foreign market entry and the utilization of resources, such as
manufacturing facilities and sales personnel, in ways which maximize efficiency and overall
corporate profitability
● There are similarities between domestic and Global Marketing:
➔ Both share a focus on the satisfaction of customer needs and the exchange of something
of value
➔ These basic principles, which are Central to the discipline of marketing, apply equally
whether marketing activities take place in a domestic or Global context.
➔ And the decrease in global marketing, transactions occur between entities and different
countries, making applying these Basic Marketing principles significantly more difficult.
➔ The cross-border nature of Global Marketing transactions adds an additional layer of
complexity to the process of exchange and the satisfaction of customer needs.
● Economies of Scale: refers to the reduction in per unit cost of production as the firm expands its
level of output.
➔ Longer production runs and increased output translates into a lower cost per unit.
➔ The Firm which can exploit these scale economies may be more price competitive in
global markets as it faces a lower per unit cost structure than competing firms.
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