The roe of Global marketing in companies

UNDERSTANDING AND REACHING GLOBAL CONSUMERS AND MARKET

INTRODUCTION

Global marketing has been defined as marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities, and opportunitiesto meet global objectives. (Doyle, 2011). In a different light, global consumers consist of customer groups living in different countries or regions of the world that have similar needs or seek similar features and benefits from commodities. They have also been defined as consumers who share global consumption behaviors. (Bruce Keillor, 2001). For example, there is existing evidence that supports this theory with the identification of a global middle-income class, youth markets, and elite segments of different societies that consume a common assortment of products and services, regardless of geographical location. All these have been made possible by globalization, which is the process of interaction and integration among people, companies, and governments across the world. Economically, the involvement of goods, services, economic resources, technology, and data are key players in the development of global markets. (Martin Albrow, 1990).

MARKET ENTRY STRATEGIES

Global companies and enterprises have been investing in expanding their reach to different customers to gain more revenue. While some of these are mostly identified with their key characteristics such as their huge capital resources, massive bargaining power and foreign collaborations with prospective host companies and technological superiorities as well as product innovation and specialization through highly sophisticated research and development ideas, many different corporations make use of different market entry strategies to enter different countries, which are ultimately dependent on the financial resources of the company, the product life cycle and the product itself. (Lymbersky, 2008).

Some of the various strategies that global companies use are as follows:

  1. Exporting:

This is the process of selling goods and services produced in one country to other countries. (Yadong, 1999). There are two types of exports, namely direct and indirect. Direct exports refer to the most basic mode of exporting that capitalizes on economies of scale in production in the home country and affording better control over distribution. There are no intermediaries in direct exportation, and it works best if the volumes are small as large volumes may trigger protectionism and other forms of restrictions. It is done best through sales representatives who represent foreign suppliers in their local markets for a commission on sales, acting through government agencies and importing distributors who purchase products in their own right and resell to local markets. (Reynolds, 2003).

Indirect export on the other hand refers to the process of exporting through domestically based export intermediaries. Here, the exporter has no control over its products in the foreign market. It is done best in various ways, for example through export trading of the entire export processes for one or more suppliers, and that is mostly preferred by suppliers who may not be familiar with exporting. Another way is through export merchants, which are wholesale companies that buy unpackaged products from suppliers for resale overseas under their brand names.

  • Licensing:

This is an agreement that allows foreign firms, either exclusively or non-exclusively to manufacture a proprietor, product for a fixed term in a specific market. This works whereby a licensor in the home country makes limited rights or resources available to the licensee in the host country that may include patents, trademarks, and managerial skills that may make it possible for the licensee to manufacture and sell in the host country a similar product to the one the licensor has already been producing in the home country without requiring the licensor to open a new operation overseas. The licensor earnings usually take forms of one-time payments, technical fees, and royalties which are calculated as a percentage of total sales.

  • Franchising:

This is a system in which semi-independent business owners, also known as franchisees, pay fees and royalties to a parent company, known as a franchiser, in return for the right to be identified with its trademark, to sell its products and services, as well as to use its business format and system. It usually offers a broader package of rights and resources compared to licensing, and it is largely preferred to allow simultaneous expansion of different regions at once. (Norman Scarborough, 2015)

  • Joint Ventures:

A joint venture is referred to as a temporary business arrangement in which two or more parties agree to pool their resources for profit without forming a permanent partnership, corporation, or other business entity. Joint ventures are unique in the sense that there is usually conflicting pressure to cooperate and compete, where the partners have strategic imperative, meaning that they want to maximize the advantage gained for the joint venture but still work to maximize their competitive position.

                  The joint venture also attempts to develop shared resources but each firm wants to develop shared resources but each firm wants to develop and protect its proprietary resources, and also the joint venture is controlled through negotiation and controlled processes while each firm would like to have hierarchal control. (Foley, 1999).

  • Wholly Owned Subsidiaries:

A wholly-owned subsidiary includes two types of strategies, namely greenfield investments and acquisition. Greenfield projects involve developing systems for a new business environment. It is complex and usually costly, but it is usually preferred in service industries where close contact with end customers and high levels of professional skill, specialized know-how and customization is required. (Michael A. Hitt, 2015). This method has been found to significantly bring great success in transportation, software development, and cellular network industries. Acquisition, on the other hand, refers to the process in which a firm gains control of another firm by purchasing its stock, exchanging stock, or in the case of a private firm, paying the owners a purchase price. Acquisitions are appealing because they give companies quickly and established access to a new market, and have been used in areas where it is easier and more accurate to estimate the outcomes of the acquisition, and hence lowering the possible risk of entry. (Christopher A. Bartlett, 2008).

For business models that are just on the verge of joining the global market, they must employ an EPRG model that better pinpoints and develops their strategic profiles in terms of their proposed international business strategy. This model was introduced by Howard Perlmutter in 1969 to improve a firm’s awareness of its specific focus (Perlmutter, 1969), and was improved later to add another dimension of international marketing. (Wind, 1973). This model focuses on four main management approaches that an organization can take to get more involved in an international business substantially. These methods are highlighted as follows:

  1. Ethnocentric Approach

This method focuses on market research in the local country of the business, where the company seeks for markets abroad that share the same characteristics as the local market so that the marketing strategy does not have to be adapted. More specifically, the ethnocentric approach uses the same marketing strategies that are created by local personnel and further utilized in multiple countries. Most companies taking this approach believe that local products should not be adapted to the local need of countries abroad because the products are already of high quality. This approach usually bears the message, “This works at home, and therefore it should work in your country.” (Christopher A. Bartlett, 2008). This approach may also appear to save a lot of operational costs to be invested elsewhere, but it also keeps the company in the dark on potential market value in other markets abroad.

  • Polycentric Approach:

This is the opposite of the ethnocentric approach, where a company that utilizes this method carefully considers different markets abroad to identify host countries that could potentially offer the most benefits. This means that if a company has a local headquarter and a separate office overseas in a host country that manages the operations in that country, the marketing strategies are locally created and implemented based on the local needs. (Calof, 1994) This approach believes that different markets have different needs and thus demand that different marketing strategies be implemented for each market. It is therefore easier to make such strategic decisions based on issues such as cultural and political differences, which make some of these companies easily adaptable to market changes because of decentralized authorities. However, this may mean that the headquarter may have less control over its operations abroad. Other drawbacks are that the benefits of global coordination between subsidiaries such as developing economies of scale cannot be realized, and that learning across geographic regions is not applied to one another, meaning that substantial market knowledge could be lost and that treating each market as unique may lead to the duplication of facilities. (Wind, 1973).

  • Regiocentric Approach:

This approach is used by corporations that many times believe that the markets in the region share the same characteristics of the market in the home country. This approach also works best in places with free trade agreements, and is also dependent on the type of industry and product and service. Every organization has its way of internalization.

  • Geocentric Approach:

This approach means that a business strongly believes that it is possible to utilize one type of strategy for all countries, regardless of the cultural differences. However, such companies often attempt to create products or offer services in a way that best suit national and international customers. This means that instead of believing that their product or service is excellent and that it will sell in other markets like in the ethnocentric approach, these organizations proactively adapt their products and services that best meet global needs. This framework does not involve many adoptions, thus minimizing operational costs, and it means the company could use one strategy to sell a commodity, and for this reason achieve economies of scale. It also means that because most geocentric companies often utilize a combination of polycentric and ethnocentric approaches, such organizations can identify similar cultural characteristics, and can convert the different cultural characteristics into mutual characteristics.

TRENDS IN GLOBAL MARKETING

With the evolution and rapid growth of global markets, there have been various methods through which global consumers and markets have turned the tide to redefine global marketing as it is currently. Some of the trends can be described as follows:

  1. The emergence of a networked global marketplace:

A networked global market space enables the exchange of goods, services, and information from sellersto buyers at any time anda lower cost. Marketers recognize that this space offers unprecedented access to buyers on every continent. Technological advancements and globally heightened Internet use and connectivity have also enabled companies to customize and access websites in different languages, personalized dynamic landing pages, social media e-commerce, virtual influencer popularity increases, more video content, and user-generated content and personalized customer service. (McDonald, 2020)

b) The decline of economic protectionism by individual countries:

Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs and quotas. A tariff is a method of restricting imports by increasing the price of goods and services purchased from another country with the hope of making them less attractive to domestic consumers, while a quota is a government-imposed trade restriction that limits the number of monetary value or goods that a country can import or export in a particular period, to encourage local production and discouraging imports. (Krugman, 1994). Even though protectionism is practiced in different forms, the increase of trade and trading opportunities in the global markets has seen this practice decline over time, in large part through the General Agreement on Tariffs and Trade (GATT), which was an international treaty that intended to limit trade barriers through the reduction of tariffsbut did not successfully address non-tariff barriers like quotas (Chad P. Brown, 2015). This later on led to the commencement of the World Trade Organization (WTO) in 1995 under the Marrakesh Agreement signed by 123 nations in 1994, and which has grown into the largest international economic organization in the world, and dealing with regulation of trade in goods, services, and intellectual property between participating countries. (Malanczuk, 1999).

c) Growing economic integration and free trade among nations:

In recent years, several countries with similar economic goals have formed transnational trade groups or signed trade agreements to promote free trade among member nations, as well as enhance theireconomies. A good example is the European Union (EU), that consists of 27 member states that have eliminated most barriers to the free flow of goods, services, labor, and capital across their borders (Paul Craig, 2011).

  • Global competition among global companies for global consumers:

Global competition exists when firms originate, produce, and market their products and services worldwide. Players across the automobile, pharmaceutical, aerospace, and aviation, apparel, electronics and telecommunication fields represent such firms, and this broadens the competitive landscape for marketers. This market has led to a diversification of global companies into international, multinational, and transnational firms with varying marketing strategies, to ultimately reach global consumers by targeting different social classes and structures. (Laura Portolese Dias, 2008).

FORCES THAT SHAPE GLOBAL MARKETING EFFORTS

  1. Cultural Forces:

Marketing always exists in an environment shaped by culture and the global market space in no exception. It is therefore imperative to focus on culture and its complexity in such a growing market. Some of these factors include language, which may pose challenges in translation and grammatical use when developing international marketing campaigns, and may even occur when a country has more than one officially recognized language such as in Canada, India, and China, where there is growing use of back translation as a method to bridge potential language barriers. Culture also plays a key role in identifying customs and taboos, as well as semiotics and even non-verbal communication that if otherwise unchecked, may have adverse effects on the promotion and marketing of commodities. Marketers should, therefore, seek native guidance and conduct comprehensive market research to navigate such issues, as well as identify acceptable values that have been seen to influence consumer perception and purchasing behavior.

  • Economic Forces:

Economic factors come into consideration to ascertain whether a global company is making the correct decision to venture into a specific country. A good example of such an economic aspect is demographics, which focus on statistics such as general per capita income, age, social class, gender, religious affiliations, income brackets, and geography of a country. This makes the company come up with demographic profiles that provide information for a hypothetical aggregate of their market, which they can, therefore, use for market segmentation and target strategies that influence their marketing mix. (Ritcher, 2012)

  • Political Regulatory Forces:

Businesses tend to grow and thrive in politically stable nations, because of more predictable business patterns and the presence of identifiable domestic and global legal regulations that create stable environments forglobal businesses while providing provisions to adhere to different aspects such as property rights, marketing communication practices, free trade, contract law, trademarks and patents, product safety,  responsible, safe and ethical business practices, privacy and security of global consumers and environmental protection. Global marketing considers this to allow for better tailor-made solutions to address possible market gaps.

CONCLUSION

                        The emergence of global marketing has demystified the gap between global consumers and companies. This has led to increased innovation and numerous technological and legal advances across the world, consequently bringing about a significant impact on the wellbeing of people. Further, consumers are growing in the knowledge of their rights as they engage local companies and at the same time, global markets are expanding to accommodate more growth. The evolution and growth of such cities in global marketing are continuing to grow, providing opportunities for further development in both local and global markets.

REFERENCES

Albrow, M., King, E. (1990). Globalization, Knowledge and Society. California: Sage Publications.

Ammi, C. (2007). Global Consumer Behavior, Volume 10. New Jersey: John Wiley & Sons

Bartlett, C.A., Ghoshal, S., Beamish, P.W. (2008). Transnational Management: Text, Cases and Readings in Cross-Border Management. New York: McGraw-Hill Irwin.

Brown, C.P., Irwin, D.A. The GATT’s Starting Point: Tariff Levels circa 1947. NBER Working Paper No. 21782, 2015: 1-6.

Calof, L.J., Beamish, W.P. The Right Attitude for International Success. Business Quarterly, 1994: 105-110

Craig, P., DeBurca, G. (2011). EU Law: Text, Cases and Materials. Oxford: Oxford University Press.

Dias, L.P., Shah, A. J. (2008). Introduction to Business. New York: McGraw-Hill.

Doyle, C. (2011). A Dictionary of Marketing. Oxford: Oxford University Press.

Foley, J. (1999). The Global Entrepreneur, Fourth Edition: Taking Your Business International. Dearborn: Jamric Press International.

Hitt, M., Ireland, R.D., Hoskisson, R. E. (2016). Strategic Management: Concepts and Cases: Competitiveness and Globalization. Boston: Cengage Learning.

Keillor, B., D’Amico, M., Horton, V. (2001). Global Consumer Tendencies. Psychology of Marketing, 1-19.

Krugman, P. (1994). Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations. New York: W.W Norton & Company.

Lymbersky, C. (2008). Market Entry Strategies. Hamburg: Management Laboratory Press.

Malanczuk, P. International Organizations and Space Law: World Trade Organization. Encyclopaedia Britannica: 305.

McDonald, J. (2020). Social Media Marketing Workbook: Teacher’s Edition- How to Use Social Media for Business. California:Createspace Independent Publishing.

Reynolds, F. (2003). Managing Exports: Navigating the Complex Rules, Controls, Barriers and Laws. New Jersey: John Wiley & Sons.

Ritcher, T. (2012). International Marketing Mix: Theoretical Framework, Contingency Factors and Empirical Findings from World Markets. Berlin: Logos Verlag.

Scarborough, N., Cornwall, J. (2015). Essentials of Entrepreneurship and Small Business Management. London: Pearson Education.

Yadong, L. (1999). Entry and Cooperative Strategies in International Business Expansion. California: Greenwood Publishing Group.

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