Global Marketing: What You Need to Know

Global marketing ( global marketing ) is the marketing of global organizations that conduct their production and sales activities, considering the whole world as one large market in which its regional and national differences do not play a decisive role.

Advantages and Disadvantages of Global Marketing

Here are the main benefits of global marketing:

Likewise, global marketing has disadvantages such as:

Today, global marketing is not a revolutionary change, it is an evolutionary process that has been going on for a long time.

Many of the sales campaigns that start out as local or regional eventually become international due to existing competition in the market, a desire to improve a product or service, or simply the economic growth of the company.

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Global marketing goals

After identifying shareholders’ expectations, conducting a detailed analysis of the situation, and evaluating the company’s capabilities, general marketing objectives can now be determined. This stage requires being realistic, as many administrative plans depend on meeting shareholders’ aspirations in the short term, regardless of the possibility of achieving them in reality.

The mechanism for setting goals in the short and long term is very important, but it varies greatly, depending on the size of the company, the nature of the market, and the capabilities of managers in different markets. As for the executive level, marketing managers in each country need a detailed and implementable plan, so that It takes into account local conditions, determines what is required of each of them, and also clarifies the criteria for measuring performance. Examples of marketing objectives in the global market include:

Motives for entering global markets

Many marketers have found it extremely difficult to deal with global markets, as a study by Baker and Kaynak4 indicated that less than 20% of companies capable of exporting in the American state of Texas have turned to global markets, and although many companies fear... Trying to enter global markets, but other companies have already taken this decision. What prompted her to do so?

One study found that the motivations for starting to market products abroad are summarized in the following factors (in order of importance):

Other empirical studies have indicated many different reasons that may push companies towards global markets, including:

Motives for avoiding global markets

Despite the attractive opportunities in global markets, most companies still avoid entering these markets, for many reasons, but the most prominent of them is the fear of these companies of not being able to market their products abroad, and being distracted by the local market. The same previous study conducted by Baker and Kaynak concluded, The most prominent obstacles that prevent companies from entering global markets are:

Taken together, the previous factors play an important role in deciding whether companies enter global markets, as well as the extent of their involvement in it.

Stages of entry into global markets

We have mentioned - previously - many definitions of global marketing, depending on the extent of the company’s involvement in global markets, and now we will discuss these concepts in more detail, but at the beginning it is necessary to point out two important points:

First: The following stages are arranged according to the size of the investment and the risk, from lowest to highest.

Secondly, these stages are not necessarily sequential, although in most cases export represents the first stage of entering global markets.

Companies usually deal with global markets with some caution, as success factors change as companies move from one stage to another. For SMEs; Exporting is preferable to engaging in large-scale global marketing efforts, as it gives these companies some control over risks, costs, and resources, and often, exporting is in response to orders from customers abroad.

Export

in general; Exporting is a simple, low-risk way to enter foreign markets, and companies may resort to exporting their products for many reasons, including:

First - Product sales reached their peak in the local market, with opportunities for growth abroad, just as the French beverage company Perrier did in the United States.

Second, some companies may find that exporting existing products is more profitable, and less risky, than developing new products.

Third - Some companies may face seasonal demand in the local market, so they resort to exporting their products to foreign markets where seasonal demand still exists.

Finally, some companies may choose to export their products abroad, because there is not much competition there.

Any company can export its products through one of these three methods:

Indirect export is common among companies starting out in the export field. In this case, all sales are treated as local sales, and the local sales department handles all sales, even if they are in the form of exports to foreign countries. This type of export is characterized by low risk, as there is no The company does not have any representatives abroad, in addition to that, brokers in global markets have good knowledge of the markets, and therefore they are less likely to make mistakes than ordinary sellers.

As for semi-direct export, the company initiates contacts with customers abroad, through agents or commercial intermediaries. In this case, export can take place in several ways:

1. Communication between the export manager and a local broker, who acts as the export department for a number of non-competing companies.

2. The export association may undertake the process of exporting products to association members, and its role may be limited to promotion only.

3. Joint export, in which a major company that owns facilities and distribution channels abroad exports the products of another company, and these products are often complementary to the products of the large company and are not competitive with them.

In the case of direct marketing, the company establishes an export department that undertakes sales to foreign companies directly. To do this, the export department conducts research to study the market, establishes distribution channels, and obtains all necessary export permits. Direct export requires a greater investment and involves more risks. But it also features greater returns, and gives the company more control over its marketing program.

Licensing

In a licensing agreement, a company (leased) grants some of its technology to a foreign company (leased). Under this agreement, the renting company obtains permission from the leasing company to use its manufacturing mechanisms, trademarks, patents, and sales know-how, in exchange for a specific physical offering. This agreement allows the leasing company to obtain a competitive advantage, while giving the leasing company the ability to enter the foreign market in an inexpensive way.

The licensing agreement entails some risks, as the leasing company’s profits are limited to what is stipulated in the agreement, regardless of the size of the profits achieved by the leasing company, in addition to the fact that the leasing company makes a long-term commitment to another company, but this company may be less efficient. On the other hand, the leasing company may not be willing to invest the resources necessary to achieve success, and licensing may be the least profitable means of entering the market. However, this may be the only option to enter another country in light of the scarcity of capital. Import restrictions and other government restrictions.

Agency is a very popular form of licensing agreement, and many consumer companies, such as McDonald's, have successfully expanded into foreign markets through agency.

Mutual Projects

A joint project is a partnership agreement between a local company and a foreign company. Both parties invest and share ownership and control of the project. Joint ventures require greater commitment than licensing agreements and other export methods, and they also involve greater risk and less flexibility.

There are many motives that may prompt a local company to partner with a foreign company. For example: the American company General Motors agreed with the Japanese company Toyota to manufacture a small-sized car at the General Motors factory in California, and sell it throughout the United States via Distributors of General Motors. Toyota's motive in this agreement was to avoid US taxes on imported cars that do not contain any parts manufactured in the United States.

Direct investment

Some multinational companies may choose to launch production lines and integrated marketing efforts abroad, or in other words, invest in wholly owned branches. This method requires investing directly in one or more foreign countries, but in the case of licensing agreements and joint projects, The company does not own any production or marketing facilities abroad.

By establishing branches abroad, a multinational company can compete more strongly, because they represent a part of the market. However, branches require a greater amount of investment, because they are responsible for all marketing activities in the foreign market, and although direct investment It gives the company control over its marketing activities, but it also involves a great deal of risk, as it requires an understanding of all the factors affecting the foreign market, including the business environment, customs, markets, labor, and more.

American malls are a model

American malls are another way to do business abroad. The trade center provides all the necessary resources to promote American products and services abroad, and also informs American exporters of the nature of the markets in the countries targeted for export. Ultimately, the center helps companies enter foreign markets through the means we discussed above.

American commercial centers provide exhibitions, conference rooms, offices, and commercial libraries, in addition to translation services and other office services. These centers provide all the necessary legal information and facilitate communication between sellers, buyers, banks, distributors, agents, and government officials. They also coordinate Between economic missions, assist in drafting contracts, and arranging import and export procedures.

Commercial brokers

Small companies wishing to export their products abroad turn to commercial intermediaries to help them sell and promote their products. These intermediaries usually buy American products at a price 15% lower than their original price, then sell them in global markets abroad. These intermediaries represent about 10% of total US exports. Thanks to the excellent relationships that brokers enjoy with foreign countries, they provide a great service to small companies that do not have the resources or sufficient experience to market their products abroad.

Alliances

An alliance is an agreement between two companies to share resources; In order to implement a specific, win-win project. Although an alliance between companies is less common than a joint venture, it helps a company maintain its independence while exploring new opportunities. The alliance can help the company develop more effective work mechanisms, move towards new markets, or gain a competitive advantage. For example: a clothing store may alliance with one clothing factory, in order to ensure obtaining the same quality and standards. A website may also alliance A large electronic company, with a data analysis company, in order to improve its marketing efforts.

Global marketing plan

It has now become clear that companies that plan to compete in global markets need a clear, focused marketing plan based on an accurate understanding of the markets that the company plans to enter. Therefore, the challenge lies in conducting comprehensive research and careful evaluation of all requirements necessary to achieve advantage. Competitiveness, and therefore, the decision sequence in global marketing is longer and more complex than in local marketing, as shown in Figure 15 shown below.

Administrative level

Making the decision to enter global markets, and determining the size of the necessary resources, begins with the administrative level in the company. This stage focuses mainly on analyzing global markets, while the final decision depends on the compatibility between the results of the market analysis and the company’s objectives. The administrative level is also determined at this stage. The amount of resources the company may wish to invest; To achieve the set goals.

Commercial level

Business trends begin with studying all the company's shareholders, understanding their expectations, and estimating the amount of influence they have, because shareholders set the general guidelines that any company follows, and in the case of global marketing, identifying and addressing the concerns of the host company's shareholders is very important.

You may remember what was stated in the chapter “Introduction to Marketing” that the situation analysis is a comprehensive study of all the factors that affect the company’s ability to market its products or services successfully, and that the results of this study lead to setting a set of realistic goals, but the situation analysis on The global level is characterized by being more complex, as it is not limited to the traditional analysis of external factors, or the analysis of resources and capabilities, but rather includes determining the extent of the company’s involvement in global markets and the method of entering them. It can be said that these two factors are interconnected, to the extent that the company engages in In global markets, this has a direct impact on the method of entering the market, whether through export, joint projects, or other means.

These two factors, in turn, are affected by the extent of the company’s involvement in global markets, how to enter them, and by studying external factors, the company’s resources, and its capabilities, which include both strengths and weaknesses. These factors gain special importance in global markets. For example: it may be Loyalty to a particular brand is stronger in some markets than in others, and some products may reach their end in the local market, but they may find popularity in less developed markets. It is also important to evaluate the company’s flexibility, its ability to adapt, and anticipate events, as it is considered These qualities are necessary so that the company can achieve success in this world, which is characterized by intense competition and rapid change.

In the end, we can say: External environmental factors undoubtedly receive the largest share of attention of marketers who are studying entry into global markets.

Integrated marketing

Entering global markets requires coordination of efforts

Global marketing has become a reality for many American companies, thanks to the advancement of import technology and the development of the global economy. This reality is not limited to large companies, as the US Department of Commerce indicates that 60% of American companies that export their products abroad have fewer employees. It has more than 100 employees, and American companies have many reasons to market their products in other countries. According to Deloitte Consulting, about 95% of the world’s population and two-thirds of purchasing power are outside the United States.

Promoting products in other countries not only opens new markets, but also helps the company expand its business. For example: If there is an American company that specializes in manufacturing bicycles, but it focuses on the American market - only - it will lose. Thus, it has the opportunity to increase its revenues by entering countries where bicycles are a primary means of transportation.

Global marketing can also bring a sinking product back to life and prolong its presence in the market. This is because a foreign product may be sold at a higher price, because customers around the world simply assume that foreign products are more expensive.

However, implementing a global marketing strategy requires a great deal of coordination. For example: many local American companies found; Which has succeeded in building a strong reputation in the United States, is that it is not known in global markets, and therefore its reputation does not have much influence in these markets. To remedy this problem, companies may resort to implementing advertising campaigns, or linking with other companies known in the target market, and Example: When the American company FedEx wanted to increase its fame in Europe, it established a partnership agreement with the fashion company. Benetton is very famous there, and FedEx also sponsored one of Benetton's Formula cars in Europe.

In turn, Karen Rogers said: Marketing Director for Major Customers at FedEx: Sponsoring local and international events gives the company the opportunity to meet potential customers in friendly conditions, and may open the door for the company to promote its products.

In order to distribute products globally, many American companies enter into agreements with large, multinational companies. Although these large companies may lack any competing products, they possess the resources and experience necessary to distribute and market their products, and these partnerships represent an alternative, less expensive solution. From opening branches abroad.

Finally, many small and medium-sized companies that are still unsure about their desire to operate abroad may turn to export management companies, which provide services ranging from market study to negotiation with distributors abroad.

Executive level

After the company has determined its goals at the administrative and commercial levels, the company can now build a detailed program, with the necessary executive activities to reach these goals. Based on the integrated marketing method, which I followed in this book, all operational elements must be studied - together - such as: financial, And human resources and research, as the best global marketing strategies will end in failure if human resources cannot find or qualify appropriate employees, or if research cannot adapt the product to suit customers in the target country. In the end, coordination between the company’s executive activities depends on On the market entry strategy, the company directs itself towards a product standardization strategy, or a product customization strategy, to suit each market.

After ensuring integration between all activities at the executive level, the company must work to achieve integration between all elements of the marketing mix.

Product/Promotion

According to marketing expert Warren Keegan, the global marketing strategy is, in fact, a combination of the method of standardizing products, the method of modifying products, and promotional elements in the marketing mix, appropriate to each country. He discussed five different methods of dealing with the product:

The brand is also closely linked to the product and promotion. Anthony O’Reilly, president of the famous American company Heinz, believes that the communications revolution and the intersection of cultures have helped create the atmosphere for truly global marketing. For example: Heinz sought to promote its “9 Lives” brand. Dedicated to cat food, in the Russian capital, Moscow, and despite the success recorded by this brand in the United States, the research and tests conducted by Dimitri Ebimov, the local marketing director in Moscow, led Heinz managers to make marketing changes, to ensure the success of the product in Russia, including using a picture of a fatter cat on the cover. The company also discovered that while Americans tend to feed their cats tuna-flavored food, Russian cat breeders prefer to feed their cats beef-flavored food.

We previously discussed that product positioning represents a key factor in success, and it reflects customers’ perception of the product or service. However, customers’ ability to purchase the product, and purchasing occasions, vary greatly from one economy to another. For example In developed countries, KFC and McDonald's aim to provide daily food services to the general public, but in less developed countries, they represent special places that customers go to on special occasions, and they are outside the purchasing power of the poor segments of these societies. Therefore, it can be said that product positioning varies in some respects from one economy to another, and requires positioning a product or service in a specific market or region. The company should establish in the minds of its customers the identity of the product, its value, and its distinction from others.

Pricing

Pricing products in foreign countries is a complex process, due to changing currency exchange rates, customs taxes, government intervention, and shipping requirements. Marketers usually try to offer low prices in foreign markets, in line with the low income levels in those countries. Low prices help companies enter the market and seize a share of it. Pricing strategies are also greatly affected by the nature and intensity of competition in the market. For these reasons, product pricing strategies in global markets proceed according to the following stages:

1. Analysis of factors influencing global pricing, such as costs, product value, market structure, competitor prices, as well as other environmental constraints.

2. Ensuring the impact of administrative strategies on pricing policy.

3. Evaluate different strategic pricing options and choose the appropriate ones.

4. Implementing the pricing strategy through a number of methods and procedures.

5. Price management and global financial transactions.

Perhaps the most important factor that must be taken into account when developing a pricing strategy in global markets: It is the interaction of both customers and competitors with price. In turn, marketing expert T. T. Nagel points out that there are nine factors that affect customers’ interaction with price, and they also affect global marketing. According to Nagel, customers’ sensitivity to price decreases as:

Finally, there are many problems that accompany pricing in global markets, as companies often face difficulty in coordinating their marketing activities and controlling prices around the world, in order to achieve the best possible economic performance. Simply put, how can a company coordinate prices in multiple markets and Achieve the desired profit margin at the same time? The answer to this question is not easy at all, as it involves two serious problems:

The first problem: is commercial dumping, when a company sells its products in a foreign country at a price lower than the local price, or even less than the actual cost. Companies resort to this method in order to seize a share of the market by offering competitive prices, or when there is a surplus. It is one of the products that the company could not sell in the local market, and represents a burden on the company.

As for the second problem: it is the gray market, or the parallel market, which arises when some companies sell their products at very high prices in some countries, and at competitive prices in other countries, which prompts some merchants to buy products from authorized distributors in the country with the lowest price, and then Shipping them to countries where the products are sold at a higher price, then selling them in the market through unapproved distributors, at a price lower than the company’s price.

Many problems also arise in foreign financial transactions, due to the need to buy and sell in different currencies, which raises important questions: What currency should the company use in pricing products? How should the company deal with changes in currency exchange rates?

In addition to all of this, there is the difficulty of collecting payment in an appropriate currency from developing countries, which also raises a number of questions: How can the company sell to countries that may default? Or countries facing a shortage of hard currency?

Distribution and logistics management

Distribution channels are the channels for transporting products from the manufacturer to the end user, while logistics management is planning, implementing and managing the flow of raw materials and finished products from the point of origin to the points of use, in a way that meets the needs of users and achieves profits for the company.

Basically, there are three channels linking the buyer and the seller:

As for the first channel: it is the headquarters of the company responsible for monitoring the other channels, but it represents a channel in itself.

As for the second channel: it is the channel that connects different countries, and it is responsible for delivering products to markets abroad and collecting payments.

The third and final channel is logistics management within the country, which includes delivering products from their entry point into the country to the end user.

Distribution strategies in foreign markets are affected by many factors outside the control of marketers. The mechanisms of wholesale and retail trade vary greatly from one country to another, as well as the quality of services, and the size and nature of retail companies. It can be said that retailers largely express the circumstances. The economy and culture of the country.

Distribution in foreign markets requires special planning and marketing, as many countries do not have enough ports, highways, railways, vehicles, and warehouses. Therefore, warehouse management requires studying the availability of appropriate warehouses, as well as the costs of shipping small quantities.

Translation - and adaptation - of parts of the chapter (Marketing in global markets) from the book Core Concepts of Marketing