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Unit-V
Global marketing environment and current scenario
[Marketing in Global Environment- Opportunities and Challenges- Ethics in
Marketing-Online marketing trends.]
Global Marketing
Global marketing involves the performance of activities designed to plan, price, promote and
direct to flow of an organization’s offerings in more than one country for a profit.
The global marketing environment consists of four distinct elements.
 Globalization
 National business environments
 The international business environment
 International firm management.
Key Influence in the Global Marketing Environment
 The International Trade System
 Economic Environment
 Political Environment
 Cultural Environment
Why Global?
 To Gain access to new buyers
 To spread business risk across a wider market base.
 To capitalize on an organization’s distinctive competencies and capabilities.
 To achieve lower costs and enhance an organization’s competitiveness.
Global marketing environment:
Global marketing environment can be broadly divided in two.
 Internal environment
 External environment
External environment consists of microenvironment and macroenvironment.
Internal environment refers to all the factors existing within a business firm. They are
considered controllable. For example, a company can modify or alter its organisation
structure, policies, programmes, personnel, physical facilities and marketing mix to suit the
changes in the environment. It imparts strengths or weaknesses. Strength is an inherent
capability of enterprises which can be used to gain strategic advantage over its competitors;
Weakness means an inherent limitation or constraint of an enterprise which creates a strategic
disadvantage.
The main internal factors which influence business decisions are as follows:
1. Culture: The values, beliefs and attitudes of the founders and top management of the
company exercise a strong influence on what the company stands for, how it does
things and what it considers important. The value system of Narayan Murthy and its
acceptance by those at the helm of affairs have been responsible for the high ethical
standards of Infosys Technology.
2. Missionand objectives: the business philosophy and purpose of a company guide its
priorities, business strategies, product market scope and development the private
sector promoted him to launch world scale plants in the petrochemicals and other
industries- Reliance .
3. Top management structure: The composition of the board of directors, the degree
of the professionalization of management and the organisational structure of a
company has important bearing on its business decisions. The board of directors sets
the direction and monitors the performance of the company.
4. Power structure: The internal power relationship between the board of directors and
the chief executive is an important factor. The extent of which top management
enjoys the support of shareholders and employees at different levels also has an
important bearing on decision making and working of the company.
5. Company image and brand equity: The image and brand equity of the company
play a significant role in rising finance, forming alliances, choosing dealers and
suppliers, launching new products, entering foreign markets, etc.
6. Human and other resources: the competence, morale and motivation of employees
play a vital role in the success of the firm. Financial position and capital structure,
distribution system and marketing competence, R & D and technological capability,
physical assets and facilities (production capacity, technology, etc.) are other
resources which influence the competitiveness and success of a company.
External environment consists of forces and factors outside an enterprise. They are beyond
the control of the firm and thus regarded, uncontrollable. For example, a company has no
control over national income, government policies, social forces, etc. It creates opportunities
and threats for an enterprise. An opportunity is a favourable condition whereas a threat is an
unfavourable condition in the external environment. The external environment comprises of
a) micro environment and b) macro environment.
a) Micro environment:
i) Customers- People who buy a firm’s products and services are its customers.
A business exists to create and satisfy customers. The different type of
customers could be individuals, households, Government departments,
commercial establishments, etc. The customer environment is becoming
global in the matter of shopping due to increasing globalisation and
liberalisation of the economy.
ii) Competitors- a Company may have both direct and indirect competitors.
Direct competitors are of the other firms which offer the same/similar products
and services. Eg. Sony, LG, Samsung, Videocon, etc. Indirect competition
comes from firms vying for discretionary income. Example, a cinema house
facing indirect competition from Casino, and other firms marketing
entertainment.
iii) Suppliers- Suppliers refer to the people and groups who supply raw materials
and components to the company. They influence uninterrupted operations,
minimise inventory carrying costs, quality levels and costs manufacturing.
iv) Marketing intermediaries- Agents, wholesalers, and retailers serve as a link
between the company and its customers. They help a company in promoting,
selling and distributing its products to consumers. Other examples of
intermediaries are advertising agencies, marketing research agencies and
insurance companies.
v) Financiers- The shareholder, financial institutions, debenture holders and
banks provide finance to a company. Financial capacity, policies and attitudes
of financiers are important factors for the company.
vi) Public- It includes all those groups who have an actual or potential interest in
the company, or who influence the company’s ability to achieve its objectives.
Media groups, environmentalists, NGOs and local community are few
examples.
b) Macro environment: (AKA Indirect Action Environment)
i) Political and Legal environment- elements relating to government affairs. It
serves as the regulatory framework of the business. The main constituents of a
country’s political and legal environment are as follows:
 The Constitution of the country.
 Political organisation – organisation and philosophy of political parties,
ideology of the Government, nature and extent of bureaucracy, influence
of primary groups, business donations to political parties, etc.
 Political stability- structure of military and police force, election system,
law and order situation, President’s Rule, foreign infiltrations, etc.
 Image of the country and its leaders.
 Foreign policy-alignment or non-alignment, relations with neighbouring
countries.
 Defence and military policy.
 Laws governing business, and legal system.
 Flexibility and adaptability of laws- constitutional amendments and
direction of public policies.
 The judicial system- implementation and effectiveness of laws.
ii) Social and Cultural environment- social environment refers to the
characteristics of the society in which a business firm exists. Social and
cultural environment consists of the following:
 Demographic forces- size, composition, mobility and geographical
dispersal of population.
 Social institutions and groups
 Caste structure and family organisation.
 Educational system and literacy rates.
 Customs, attitudes, beliefs, values and life styles.
 Tastes, preferences of people, and their buying behaviour.
iii) Economic and Financial environment- It comprises the nature and structure
of the economy, the stage of economic development, economic resources, the
level of income, economic policies, distribution of income, and so on.
 The nature of economic system- capitalist, socialist or mixed economy.
 Economic structure – occupational distribution of labour force, structure of
national output, capital formation, investment pattern, composition of
trade, balance/imbalance between different sectors.
 Economic policies – industrial policies, export-import policy, monetory
policy, fiscal policy, etc.
 Organisational and development of the capital market- banking system,
securities markets, etc.
 Economic indices- gross national product, per capita income, rate of
savings and investment, price level, balance of payments position, etc.
 Product markets and factor markets- degree of competition.
iv) Technological and physical environment- The elements are
 Rate of technological change.
 Approaches to production of goods and services.
 New processes and equipment.
 Research and Development systems.
v) Natural environment-
 Climatic conditions.
 Agricultural, commercial and other natural resources.
 Ecological system.
 Levels of pollution.
vi) Global environment- the main determinants of international environment are
as follows:
 The state of the world economy and distribution of world output.
 International economic cooperation.
 International market structure and competition.
 Barriers to international trade and investment.
 National economic policies of different countries.
 Role of multilateral economic institutions
 International economic laws, treaties, agreements, codes and practices.
 Political system and conditions in different countries.
 Cultural factors in different countries.
 Growth and transfer of technology.
 Growth and spread of multinationals.
Why Should Firms Engage in Global Marketing?
 To Survive and Grow
 To Diversify Product and Market Portfolios and Improve competitiveness.
 To Operate within a Global Market place.
Exporting:
 Exporting involves producing offerings in one country and selling them in another country.
 Exporting can be indirect or direct;
• Indirect exporting, a firm sells its domestically produced goods in foreign country through an
intermediary.
• Direct exporting exists when a firm sells its domestically produced goods in a foreign country
without intermediaries.
Licensing:
 With licensing; a company (licensor) offers the right to a trademark, patent, trade secret etc.
to another (licensee) for a royalty or a fee.
Joint Venture:
 When a foreign company and local firm invest together to create a local business, it’s called
Joint Venture.
 For instance; Starbucks entered India in 2007 through a joint venture with New Horizons, an
India- based company.
Direct Investment:
 The biggest commitment a company can make when entering the global market is direct
investment which entails a domestic firm actually investing in and owning a foreign subsidiary
or division.
 For instance; Reebok entered Russia by creating a subsidiary known as Reebok Russia.
 Advantages:
• Cost savings
• Better understanding of local market conditions
21st century way of global marketing
 Social Marketing
 Relationship Marketing
 Green Marketing
Social Marketing:
 Social marketing is an umbrella term that define the various activities that integrate
technology, social interaction and the construction of word and picture. For social marketing
we need to have creative idea which attract other people to the product.
Relationship Marketing:
 A long-term strategy to build a relationship with individual customers.
 Relationship Marketing is a philosophy of doing business, a strategic orientation that focuses
on keeping and improving current customers rather than on acquiring new customer.
Green Marketing:
It is the marketing of products that are presumed to be environmentally safe. Thus green
marketing incorporates a broad range of activities, including product modification, changes to
the production process, packaging changes, as well as modifying advertising. Other similar
terms used are Environmental Marketing and Ecological Marketing.
Marketing In Global Environment – Prospects and Challenges
Global marketing as ― marketing on a worldwide scale reconciling or taking commercial
advantage of global operational differences, similarities and opportunities in order to meet
global objectives.
One of the main reasons for the shift from domestic to global marketing is the World Wide
Competition.
World Wide Competition:
One of the product categories in which global competition has been easy to track in U.S.is
automotive sales. The increasing intensity of competition in global markets is a challenge
facing companies at all stages of involvement in international markets.
As markets open up, and become more integrated, the pace of change accelerates, technology
shrinks distances between markets and reduces the scale advantages of large firms, new
sources of competition emerge, and competitive pressures mount at all levels of the
organization.
Also, the threat of competition from companies in countries such as India, China, Malaysia,
and Brazil are on the rise, as their own domestic markets are opening up to foreign
competition, stimulating greater awareness of international market opportunities and of the
need to be internationally competitive. Companies which previously focused on protected
domestic markets are entering into markets in other countries, creating new sources of
competition, often targeted to price-sensitive market segments.
Not only is competition intensifying for all firms regardless of their degree of global market
involvement, but the basis for competition is changing. Competition continues to be market-
based and ultimately relies on delivering superior value to consumers. However, success in
global markets depends on knowledge accumulation and deployment.
Evolution To Global Marketing
Global marketing is not a revolutionary shift, it is an evolutionary process. While the following
does not apply to all companies, it does apply to most companies that begin as domestic-only
companies.
Domestic marketing
A marketing restricted to the political boundaries of a country, is called "Domestic
Marketing". A company marketing within its national boundaries only has to consider
domestic competition. Even if that competition includes companies from foreign markets, it
still only has to focus on the competition that exists in its home market. Products and services
are developed for customers in the home market without thought of how the product or service
could be used in other markets. All marketing decisions are made at headquarters.
International marketing
If the exporting departments are becoming successful but the costs of doing business from
headquarters plus time differences, language barriers, and cultural ignorance are hindering the
company’s competitiveness in the foreign market, then offices could be built in the foreign
countries. Sometimes companies buy firms in the foreign countries to take advantage of
relationships, storefronts, factories, and personnel already in place.
These offices still report to headquarters in the home market but most of the marketing mix
decisions are made in the individual countries since that staff is the most knowledgeable about
the target markets. Local product development is based on the needs of local customers. These
marketers are considered polycentric because they acknowledge that each market/country has
different needs.
Elements of the Global Marketing Mix
The Four Ps of marketing: product, price, placement, and promotion are all affected as a
company moves through the five evolutionary phases to become a global company.
Ultimately, at the global marketing level, a company trying to speak with one voice is faced
with many challenges when creating a worldwide marketing plan. Unless a company holds
the same position against its competition in all markets (market leader, low cost, etc.) it is
impossible to launch identical marketing plans worldwide.
Product
A global company is one that can create a single product and only have to tweak elements for
different markets. For example, Coca-Cola uses two formulas (one with sugar, one with corn
syrup) for all markets. The product packaging in every country incorporates the contour bottle
design and the dynamic ribbon in some way, shape, or form. However, the bottle or can also
include the countries native language and is the same size as other beverage bottles or cans in
that same country.
Price
Price will always vary from market to market. Price is affected by many variables: cost of
product development (produced locally or imported), cost of ingredients, cost of delivery
(transportation, tariffs, etc.), and much more. Additionally, the products position in relation to
the competition influences the ultimate profit margin. Whether this product is considered the
high-end, expensive choice, the economical, low-cost choice, or something in-between helps
determine the price point.
Placement
How the product is distributed is also a country-by-country decision influenced by how the
competition is being offered to the target market. Using Coca-Cola as an example again, not
all cultures use vending machines. In the United States, beverages are sold by the pallet via
warehouse stores. In India, this is not an option. Placement decisions must also consider the
products position in the market place. For example, a high-end product would not want to be
distributed via a ―dollar store‖ in the United States. Conversely, a product promoted as the
low-cost option in France would find limited success in a pricey boutique.
Promotion
After product research, development and creation, promotion (specifically advertising) is
generally the largest line item in a global companies marketing budget. At this stage of a
company’s development, integrated marketing is the goal. The global corporation seeks to
reduce costs, minimize redundancies in personnel and work, maximize speed of
implementation, and to speak with one voice. If the goal of a global company is to send the
same message worldwide, then delivering that message in a relevant, engaging, and cost-
effective way is the challenge.
Effective global advertising techniques do exist. The key is testing advertising ideas using a
marketing research system proven to provide results that can be compared across countries.
The ability to identify which elements or moments of an ad are contributing to that success is
how economies of scale are maximized. Market research measures such as Flow of Attention,
Flow of Emotion and branding moments provide insights into what is working in an ad in any
country because the measures are based on visual, not verbal, elements of the ad.
Advantages
The advantages of global market we can introduce our product by using advertising
 Economies of scale in production and distribution
 Lower marketing costs
 Power and scope
 Consistency in brand image
 Ability to leverage good ideas quickly and efficiently
 Uniformity of marketing practices
 Helps to establish relationships outside of the "political arena"
 Helps to encourage ancillary industries to be set up to cater for the needs of the global
player.
Benefits of e-Marketing over traditional marketing
Reach
The nature of the internet means businesses now has a truly global reach. While traditional
media costs limit this kind of reach to huge multinationals, e-Marketing opens up new avenues
for smaller businesses, on a much smaller budget, to access potential consumers from all over
the world.
Scope
Internet marketing allows the marketer to reach consumers in a wide range of ways and
enables them to offer a wide range of products and services. E-Marketing includes among
other things, information management, public relations, customer service and sales. With the
range of new technologies becoming available all the time, this scope can only grow.
Interactivity
Whereas traditional marketing is largely about getting brands message out there, e-Marketing
facilitates conversations between companies and consumers. With a two-way communication
channel, companies can feed off of the responses of their consumers, making them more
dynamic and adaptive.
Immediacy
Internet marketing is able to, in ways never before imagined, provide an immediate impact.
Imagine you’re reading your favourite magazine. You see a double-page advert for some new
product or service, maybe BMW’s latest luxury sedan or Apples latest iPod offering. With
this kind of traditional media, it’s not that easy for the consumer, to take the step from hearing
about a product to actual acquisition. With e-Marketing, it’s easy to make that step as simple
as possible, meaning that within a few short clicks you could have booked a test drive or
ordered the iPod. And all of this can happen regardless of normal office hours. Effectively,
Internet marketing makes business hours 24 hours per day, 7 days per week for every week of
the year. By closing the gap between providing information and eliciting a consumer reaction,
the consumer’s buying cycle is speeded up and advertising spend can go much further in
creating immediate leads.
Demographics and targeting
Generally speaking, the demographics of the Internet are a marketers dream. Internet users,
considered as a group, have greater buying power and could perhaps be considered as a
population group skewed towards the middle-classes. Buying power is not all though. The
nature of the Internet is such that its users will tend to organize themselves into far more
focused groupings. Savvy marketers who know where to look can quite easily find access to
the niche markets they wish to target. Marketing messages are most effective when they are
presented directly to the audience most likely to be interested. The Internet creates the perfect
environment for niche marketing to targeted groups.
Adaptivity and closed loop marketing
Closed Loop Marketing requires the constant measurement and analysis of the results of
marketing initiatives. By continuously tracking the response and effectiveness of a campaign,
the marketer can be far more dynamic in adapting to consumers wants and needs. With e-
Marketing, responses can be analysed in real-time and campaigns can be tweaked
continuously. Combined with the immediacy of the Internet as a medium, this means that
there’s minimal advertising spend wasted on less than effective campaigns.
Maximum marketing efficiency from e-Marketing creates new opportunities to seize strategic
competitive advantages. The combination of all these factors results in an improved ROI and
ultimately, more customers, happier customers and an improved bottom line.
Disadvantages
 Differences in consumer needs, wants, and usage patterns for products.
 Differences in consumer response to marketing mix elements.
 Differences in brand and product development and the competitive environment.
 Differences in the legal environment, some of which may conflict with those of the
home market.
 Differences in the institutions available, some of which may call for the creation of
entirely new ones (e.g., infrastructure)
 Differences in administrative procedures Differences in product placement.
Online Marketing
 Online Marketing is the marketing of products or services over the Internet & it ties
together creative and technical aspects of the Internet, including design, development,
advertising and sale
 Online marketing is used by companies selling goods and services directly to
consumers as well as those who operate on a business to business model
Methods and Channels:
 Email marketing
 Blogging
 Pay per click (ppc) marketing
 Social media marketing
 Digital marketing
 Viral marketing
Email marketing
 Email marketing is promoting products through the use of email
 There are 2 main ingredients to an effective email marketing campaign
 They are to build a large list of people you can email and to write great emails
 The emails should be packed with free value and they should move people to buy what
you’re trying to sell
Blogging
 Yet another but important and crucial marketing trend that has brought a huge aberration in
our society
 Blogger was launched in 1999 by three friends. Blogging as an ardent marketing tool has
really blossomed in the last some years
 Businesses, companies and even superstar now use blogging system for huge promotion
Pay per click marketing
 You have to pay for PPC ads.
 You target certain words and then when those words are searched for on a search engine
such as Google your ad will appear.
 But you do have to pay every time your ad is clicked on.
 You need to make sure you do your homework and find out how to effectively use PPC.
 Otherwise you can easily lose a lot of money in a short amount of time.
 But if you do learn how to use PPC effectively then you can make a lot of money just as fast
Social media marketing
 Social media is very popular right now and it’s only getting more popular
 You can tap into that popularity by using social media to sell your products
 Just make sure you don’t SPAM people. In fact, you shouldn’t use any social media to
directly sell anything
 Just use social media to direct people to other sites where you can then hit them with a sales
pitch
Digital marketing
 With regards to the Internet, this is the promoting of brands using all forms of online digital
advertising channels to reach consumers
 This includes video channels, Internet Radio, mobile phones, display or banner ads, digital
outdoors, and any other form of digital media.
Viral marketing
 Marketing techniques that use social networks to produce an increase in brand awareness or
achieve other marketing objectives (such as product sales) through self-replicating viral
processes.
 It can be word-of-mouth delivered or enhanced by the network effects of the Internet. Viral
promotions may take the form of video clips, interactive Flash games, eBooks, images, or even
text messages.
AIDA Model
 A – Awareness 
Initial point where your brand and/or business is recognised and acknowledged.
 I – Interest 
Generating thoughts and discussion about your brand.
 D – Desire 
Communicate your messages through the use of social media and email marketing.
 A – Action 
The stage where the conversion is complete and back to the interest stage to retain them. Your
website is responsible for this stage.
Marketing Strategies:
Pull marketing:
 Websites and blogs are pull strategies
 Build websites & Blogs
 Company’s social media profiles
 Long-term success
 The company tries to draw in customers through different kinds of advertising,
such as TV ads, online banner ads and social media
 Online banner ads, and radio and TV ads are other forms of pull marketing.
Push Marketing:
 Email Campaign
 Certain offers through your social media profiles
 Companies may push information and promotional material directly to end users
through email or fliers to generate demand
 Create an email database of potential customers and send them product announcements
and promotions directly
Advantage of online marketing
 One to one approach
 Cater to specific interests
 Different content by choice
 Geo- marketing
 Relatively inexpensive
 Global business
 Measuring statistics is easy
 Accountability
Disadvantage
 Illegal or unethical practice
 Physical demonstration and needs to be tangible
 Transparency
 Cost of Hardware
Internet Marketing in India – challenges
 Governance, laws and regulations
 Cultural issues
 Lack of technical infrastructure
 Marketing philosophies & channels
 Online shopping worries
 Fear factor
 Unreliable delivery mechanisms
 Credit card fraud and usage
Marketing future:
 Clearly, the strengths of the Internet as a marketing medium far outweigh the
negatives
 Companies grappling with the issue of whether to market via the Internet are already
behind
 Companies attempting to build a coherent Internet marketing strategy must begin to
believe that the Web is likely to be the centre of their marketing future, not simply an
adjunct to traditional marketing methods
Ethics in Marketing
What is ethics?
Ethics is the art and science of determining good and bad or right and wrong moral behaviour
of a single or group of people.
What is MARKETING?
Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs
of a target market at a profit. - Philip Kotler
Marketing Ethics:
Marketing ethics is an area that deals with the moral principles behind marketing. Ethics in
marketing applies to different spheres such as in product, pricing, Placing (Distribution),
promotion & advertising etc.
Why we need Ethics in Marketing?
There are many reasons but will notify some:
• When an organization behaves ethically, customers develop more positive attitudes about the
firm, its products, and its services.
• To create Values or trust with key stakeholders
• To build good image about the organization in the minds of customer, employees,
shareholders and the society.
Ethical Issues in Marketing:
We discuss Marketing issues by using 4P’S OF MARKETING:
• PRODUCT & PACKAGING
• PRICE
• PLACING (DISTRIBUTION)
• PROMOTION (ADVERTISING & BRANDING)
Product
• Consumer safety
• Product liability and reliability
• Designing for special needs
Packaging
 Label information
 Packaging graphics
 Packaging safety
 Environmental implication of packaging
Price: Second P of Marketing
• Bid rigging
• Supra competitive pricing
• Price fixing
• Price skimming
PLACING (DISTRIBUTION)
 Product distribution (or place) is one of the four elements of the Marketing MIX.
 Distribution of product or service is transporting them from manufacture to stockiest,
wholesalers, retailer and then to consumers.
Unethical Practices
 Many retailers sell products that have crossed expiry date is unethical.
 Exerting influence to cause vendors to reduce display space for competitors' products
is unethical.
 Promising shipment when knowing delivery is not possible by the promised date is also
unethical.
 Paying vendors to carry a firm's product rather than one of its competitors are also
unethical.
 Most drug stores would give too many drugs without prescription from a qualified
doctor are also unethical.
 Products are moved in unsafe vehicles ,are also unethical.
PROMOTION (ADVERTISING &BRANDING)
• Promotion is one of the four elements of marketing mix (product, price, promotion, place). It
is the communication link between sellers and buyers for the purpose of influencing, informing,
or persuading a potential buyer's purchasing decision.
• To present information to consumers as well as others
• To increase demand
• To differentiate a product
Ethical Issues in Advertising
• Puffery (Nothing to support the fact. )
• Advertising to Children
• Promoting Unhealthy Products
• Subliminal Advertising
• Deceptive Advertising
Ethics in Consumer Protection
What is Consumer Protection?
 Consumer: refers to any individuals or households that use goods and services
generated with in the economy.
 Consumer Protection: a concept that are designed to ensure fair competition and the
free flow of truthful information in the marketplace.
 Consumer Protection laws: laws designed to prevent businesses that engage in fraud or
specified unfair practices from gaining and advantage over competitors and provide
additional protection for the weak for those unable to take care of themselves.
Ethics in Marketing in Consumer Protection
Market is flooded with duplicate goods having fake labels for selling drugs, food stuff,
consumables like suparis etc. followed by misleading advertisements. This result in disrepute
for the products of good companies even though such fake goods are small in quantities.
Who is responsible for consumer protection?
• Responsibility of Business
• Responsibility of Consumer
• Responsibility of Government
Responsibility of Business
The business including producers and traders have to due regard to consumer rights as it is their
social responsibility. They have to come out with quality goods at reasonable prices.
Responsibility of Consumer
All efforts regarding consumer protection will not produce desired results if consumerism is
not accepted as a means of asserting and enjoying their rights.
Responsibility of Government
Innocent and helpless consumers should be protected by the Government through enacting
legislations. Government will have to set its own priorities for the protection consumer’s right.
Consumer Protection Act,1986
 Better protection of interests of consumer.
 Protection of rights of consumers.
 To prevent practices having adverse effect on competition.
 To promote and sustain competition on market.
 To protect the interests of consumers.
Scope of Consumer Protection
• Applies to whole India.
• Applies to all type of goods and services, public utilities and public sector undertakings.
• All types of complaints relating to goods, unfair trade pictures.
Who can file complaint?
• The consumer to whom the goods are sold or delivered or agreed to be sold are delivered or
the service has been provided or agreed to be provided.
But how to file a complain?
* One can go to Consumer courts and can file complaint.
* One can file consumer complaints online.

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Global Marketing.docx

  • 1. Unit-V Global marketing environment and current scenario [Marketing in Global Environment- Opportunities and Challenges- Ethics in Marketing-Online marketing trends.] Global Marketing Global marketing involves the performance of activities designed to plan, price, promote and direct to flow of an organization’s offerings in more than one country for a profit. The global marketing environment consists of four distinct elements.  Globalization  National business environments  The international business environment  International firm management. Key Influence in the Global Marketing Environment  The International Trade System  Economic Environment  Political Environment  Cultural Environment Why Global?  To Gain access to new buyers  To spread business risk across a wider market base.  To capitalize on an organization’s distinctive competencies and capabilities.  To achieve lower costs and enhance an organization’s competitiveness. Global marketing environment: Global marketing environment can be broadly divided in two.  Internal environment  External environment External environment consists of microenvironment and macroenvironment. Internal environment refers to all the factors existing within a business firm. They are considered controllable. For example, a company can modify or alter its organisation structure, policies, programmes, personnel, physical facilities and marketing mix to suit the changes in the environment. It imparts strengths or weaknesses. Strength is an inherent capability of enterprises which can be used to gain strategic advantage over its competitors; Weakness means an inherent limitation or constraint of an enterprise which creates a strategic disadvantage. The main internal factors which influence business decisions are as follows: 1. Culture: The values, beliefs and attitudes of the founders and top management of the company exercise a strong influence on what the company stands for, how it does
  • 2. things and what it considers important. The value system of Narayan Murthy and its acceptance by those at the helm of affairs have been responsible for the high ethical standards of Infosys Technology. 2. Missionand objectives: the business philosophy and purpose of a company guide its priorities, business strategies, product market scope and development the private sector promoted him to launch world scale plants in the petrochemicals and other industries- Reliance . 3. Top management structure: The composition of the board of directors, the degree of the professionalization of management and the organisational structure of a company has important bearing on its business decisions. The board of directors sets the direction and monitors the performance of the company. 4. Power structure: The internal power relationship between the board of directors and the chief executive is an important factor. The extent of which top management enjoys the support of shareholders and employees at different levels also has an important bearing on decision making and working of the company. 5. Company image and brand equity: The image and brand equity of the company play a significant role in rising finance, forming alliances, choosing dealers and suppliers, launching new products, entering foreign markets, etc. 6. Human and other resources: the competence, morale and motivation of employees play a vital role in the success of the firm. Financial position and capital structure, distribution system and marketing competence, R & D and technological capability, physical assets and facilities (production capacity, technology, etc.) are other resources which influence the competitiveness and success of a company. External environment consists of forces and factors outside an enterprise. They are beyond the control of the firm and thus regarded, uncontrollable. For example, a company has no control over national income, government policies, social forces, etc. It creates opportunities and threats for an enterprise. An opportunity is a favourable condition whereas a threat is an unfavourable condition in the external environment. The external environment comprises of a) micro environment and b) macro environment.
  • 3. a) Micro environment: i) Customers- People who buy a firm’s products and services are its customers. A business exists to create and satisfy customers. The different type of customers could be individuals, households, Government departments, commercial establishments, etc. The customer environment is becoming global in the matter of shopping due to increasing globalisation and liberalisation of the economy. ii) Competitors- a Company may have both direct and indirect competitors. Direct competitors are of the other firms which offer the same/similar products and services. Eg. Sony, LG, Samsung, Videocon, etc. Indirect competition comes from firms vying for discretionary income. Example, a cinema house facing indirect competition from Casino, and other firms marketing entertainment. iii) Suppliers- Suppliers refer to the people and groups who supply raw materials and components to the company. They influence uninterrupted operations, minimise inventory carrying costs, quality levels and costs manufacturing. iv) Marketing intermediaries- Agents, wholesalers, and retailers serve as a link between the company and its customers. They help a company in promoting, selling and distributing its products to consumers. Other examples of intermediaries are advertising agencies, marketing research agencies and insurance companies.
  • 4. v) Financiers- The shareholder, financial institutions, debenture holders and banks provide finance to a company. Financial capacity, policies and attitudes of financiers are important factors for the company. vi) Public- It includes all those groups who have an actual or potential interest in the company, or who influence the company’s ability to achieve its objectives. Media groups, environmentalists, NGOs and local community are few examples. b) Macro environment: (AKA Indirect Action Environment) i) Political and Legal environment- elements relating to government affairs. It serves as the regulatory framework of the business. The main constituents of a country’s political and legal environment are as follows:  The Constitution of the country.  Political organisation – organisation and philosophy of political parties, ideology of the Government, nature and extent of bureaucracy, influence of primary groups, business donations to political parties, etc.  Political stability- structure of military and police force, election system, law and order situation, President’s Rule, foreign infiltrations, etc.  Image of the country and its leaders.  Foreign policy-alignment or non-alignment, relations with neighbouring countries.  Defence and military policy.  Laws governing business, and legal system.  Flexibility and adaptability of laws- constitutional amendments and direction of public policies.  The judicial system- implementation and effectiveness of laws.
  • 5. ii) Social and Cultural environment- social environment refers to the characteristics of the society in which a business firm exists. Social and cultural environment consists of the following:  Demographic forces- size, composition, mobility and geographical dispersal of population.  Social institutions and groups  Caste structure and family organisation.  Educational system and literacy rates.  Customs, attitudes, beliefs, values and life styles.  Tastes, preferences of people, and their buying behaviour. iii) Economic and Financial environment- It comprises the nature and structure of the economy, the stage of economic development, economic resources, the level of income, economic policies, distribution of income, and so on.  The nature of economic system- capitalist, socialist or mixed economy.  Economic structure – occupational distribution of labour force, structure of national output, capital formation, investment pattern, composition of trade, balance/imbalance between different sectors.  Economic policies – industrial policies, export-import policy, monetory policy, fiscal policy, etc.  Organisational and development of the capital market- banking system, securities markets, etc.  Economic indices- gross national product, per capita income, rate of savings and investment, price level, balance of payments position, etc.  Product markets and factor markets- degree of competition. iv) Technological and physical environment- The elements are  Rate of technological change.  Approaches to production of goods and services.  New processes and equipment.  Research and Development systems. v) Natural environment-  Climatic conditions.  Agricultural, commercial and other natural resources.  Ecological system.  Levels of pollution. vi) Global environment- the main determinants of international environment are as follows:  The state of the world economy and distribution of world output.  International economic cooperation.  International market structure and competition.  Barriers to international trade and investment.
  • 6.  National economic policies of different countries.  Role of multilateral economic institutions  International economic laws, treaties, agreements, codes and practices.  Political system and conditions in different countries.  Cultural factors in different countries.  Growth and transfer of technology.  Growth and spread of multinationals. Why Should Firms Engage in Global Marketing?  To Survive and Grow  To Diversify Product and Market Portfolios and Improve competitiveness.  To Operate within a Global Market place. Exporting:  Exporting involves producing offerings in one country and selling them in another country.  Exporting can be indirect or direct; • Indirect exporting, a firm sells its domestically produced goods in foreign country through an intermediary. • Direct exporting exists when a firm sells its domestically produced goods in a foreign country without intermediaries. Licensing:  With licensing; a company (licensor) offers the right to a trademark, patent, trade secret etc. to another (licensee) for a royalty or a fee. Joint Venture:  When a foreign company and local firm invest together to create a local business, it’s called Joint Venture.  For instance; Starbucks entered India in 2007 through a joint venture with New Horizons, an India- based company. Direct Investment:  The biggest commitment a company can make when entering the global market is direct investment which entails a domestic firm actually investing in and owning a foreign subsidiary or division.  For instance; Reebok entered Russia by creating a subsidiary known as Reebok Russia.  Advantages: • Cost savings • Better understanding of local market conditions 21st century way of global marketing  Social Marketing  Relationship Marketing  Green Marketing
  • 7. Social Marketing:  Social marketing is an umbrella term that define the various activities that integrate technology, social interaction and the construction of word and picture. For social marketing we need to have creative idea which attract other people to the product. Relationship Marketing:  A long-term strategy to build a relationship with individual customers.  Relationship Marketing is a philosophy of doing business, a strategic orientation that focuses on keeping and improving current customers rather than on acquiring new customer. Green Marketing: It is the marketing of products that are presumed to be environmentally safe. Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Other similar terms used are Environmental Marketing and Ecological Marketing. Marketing In Global Environment – Prospects and Challenges Global marketing as ― marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives. One of the main reasons for the shift from domestic to global marketing is the World Wide Competition. World Wide Competition: One of the product categories in which global competition has been easy to track in U.S.is automotive sales. The increasing intensity of competition in global markets is a challenge facing companies at all stages of involvement in international markets. As markets open up, and become more integrated, the pace of change accelerates, technology shrinks distances between markets and reduces the scale advantages of large firms, new sources of competition emerge, and competitive pressures mount at all levels of the organization. Also, the threat of competition from companies in countries such as India, China, Malaysia, and Brazil are on the rise, as their own domestic markets are opening up to foreign competition, stimulating greater awareness of international market opportunities and of the need to be internationally competitive. Companies which previously focused on protected domestic markets are entering into markets in other countries, creating new sources of competition, often targeted to price-sensitive market segments. Not only is competition intensifying for all firms regardless of their degree of global market involvement, but the basis for competition is changing. Competition continues to be market- based and ultimately relies on delivering superior value to consumers. However, success in global markets depends on knowledge accumulation and deployment.
  • 8. Evolution To Global Marketing Global marketing is not a revolutionary shift, it is an evolutionary process. While the following does not apply to all companies, it does apply to most companies that begin as domestic-only companies. Domestic marketing A marketing restricted to the political boundaries of a country, is called "Domestic Marketing". A company marketing within its national boundaries only has to consider domestic competition. Even if that competition includes companies from foreign markets, it still only has to focus on the competition that exists in its home market. Products and services are developed for customers in the home market without thought of how the product or service could be used in other markets. All marketing decisions are made at headquarters. International marketing If the exporting departments are becoming successful but the costs of doing business from headquarters plus time differences, language barriers, and cultural ignorance are hindering the company’s competitiveness in the foreign market, then offices could be built in the foreign countries. Sometimes companies buy firms in the foreign countries to take advantage of relationships, storefronts, factories, and personnel already in place. These offices still report to headquarters in the home market but most of the marketing mix decisions are made in the individual countries since that staff is the most knowledgeable about the target markets. Local product development is based on the needs of local customers. These marketers are considered polycentric because they acknowledge that each market/country has different needs. Elements of the Global Marketing Mix The Four Ps of marketing: product, price, placement, and promotion are all affected as a company moves through the five evolutionary phases to become a global company. Ultimately, at the global marketing level, a company trying to speak with one voice is faced with many challenges when creating a worldwide marketing plan. Unless a company holds the same position against its competition in all markets (market leader, low cost, etc.) it is impossible to launch identical marketing plans worldwide. Product A global company is one that can create a single product and only have to tweak elements for different markets. For example, Coca-Cola uses two formulas (one with sugar, one with corn syrup) for all markets. The product packaging in every country incorporates the contour bottle design and the dynamic ribbon in some way, shape, or form. However, the bottle or can also include the countries native language and is the same size as other beverage bottles or cans in that same country.
  • 9. Price Price will always vary from market to market. Price is affected by many variables: cost of product development (produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and much more. Additionally, the products position in relation to the competition influences the ultimate profit margin. Whether this product is considered the high-end, expensive choice, the economical, low-cost choice, or something in-between helps determine the price point. Placement How the product is distributed is also a country-by-country decision influenced by how the competition is being offered to the target market. Using Coca-Cola as an example again, not all cultures use vending machines. In the United States, beverages are sold by the pallet via warehouse stores. In India, this is not an option. Placement decisions must also consider the products position in the market place. For example, a high-end product would not want to be distributed via a ―dollar store‖ in the United States. Conversely, a product promoted as the low-cost option in France would find limited success in a pricey boutique. Promotion After product research, development and creation, promotion (specifically advertising) is generally the largest line item in a global companies marketing budget. At this stage of a company’s development, integrated marketing is the goal. The global corporation seeks to reduce costs, minimize redundancies in personnel and work, maximize speed of implementation, and to speak with one voice. If the goal of a global company is to send the same message worldwide, then delivering that message in a relevant, engaging, and cost- effective way is the challenge. Effective global advertising techniques do exist. The key is testing advertising ideas using a marketing research system proven to provide results that can be compared across countries. The ability to identify which elements or moments of an ad are contributing to that success is how economies of scale are maximized. Market research measures such as Flow of Attention, Flow of Emotion and branding moments provide insights into what is working in an ad in any country because the measures are based on visual, not verbal, elements of the ad. Advantages The advantages of global market we can introduce our product by using advertising  Economies of scale in production and distribution  Lower marketing costs  Power and scope  Consistency in brand image  Ability to leverage good ideas quickly and efficiently  Uniformity of marketing practices  Helps to establish relationships outside of the "political arena"  Helps to encourage ancillary industries to be set up to cater for the needs of the global player.
  • 10. Benefits of e-Marketing over traditional marketing Reach The nature of the internet means businesses now has a truly global reach. While traditional media costs limit this kind of reach to huge multinationals, e-Marketing opens up new avenues for smaller businesses, on a much smaller budget, to access potential consumers from all over the world. Scope Internet marketing allows the marketer to reach consumers in a wide range of ways and enables them to offer a wide range of products and services. E-Marketing includes among other things, information management, public relations, customer service and sales. With the range of new technologies becoming available all the time, this scope can only grow. Interactivity Whereas traditional marketing is largely about getting brands message out there, e-Marketing facilitates conversations between companies and consumers. With a two-way communication channel, companies can feed off of the responses of their consumers, making them more dynamic and adaptive. Immediacy Internet marketing is able to, in ways never before imagined, provide an immediate impact. Imagine you’re reading your favourite magazine. You see a double-page advert for some new product or service, maybe BMW’s latest luxury sedan or Apples latest iPod offering. With this kind of traditional media, it’s not that easy for the consumer, to take the step from hearing about a product to actual acquisition. With e-Marketing, it’s easy to make that step as simple as possible, meaning that within a few short clicks you could have booked a test drive or ordered the iPod. And all of this can happen regardless of normal office hours. Effectively, Internet marketing makes business hours 24 hours per day, 7 days per week for every week of the year. By closing the gap between providing information and eliciting a consumer reaction, the consumer’s buying cycle is speeded up and advertising spend can go much further in creating immediate leads. Demographics and targeting Generally speaking, the demographics of the Internet are a marketers dream. Internet users, considered as a group, have greater buying power and could perhaps be considered as a population group skewed towards the middle-classes. Buying power is not all though. The nature of the Internet is such that its users will tend to organize themselves into far more focused groupings. Savvy marketers who know where to look can quite easily find access to the niche markets they wish to target. Marketing messages are most effective when they are presented directly to the audience most likely to be interested. The Internet creates the perfect environment for niche marketing to targeted groups.
  • 11. Adaptivity and closed loop marketing Closed Loop Marketing requires the constant measurement and analysis of the results of marketing initiatives. By continuously tracking the response and effectiveness of a campaign, the marketer can be far more dynamic in adapting to consumers wants and needs. With e- Marketing, responses can be analysed in real-time and campaigns can be tweaked continuously. Combined with the immediacy of the Internet as a medium, this means that there’s minimal advertising spend wasted on less than effective campaigns. Maximum marketing efficiency from e-Marketing creates new opportunities to seize strategic competitive advantages. The combination of all these factors results in an improved ROI and ultimately, more customers, happier customers and an improved bottom line. Disadvantages  Differences in consumer needs, wants, and usage patterns for products.  Differences in consumer response to marketing mix elements.  Differences in brand and product development and the competitive environment.  Differences in the legal environment, some of which may conflict with those of the home market.  Differences in the institutions available, some of which may call for the creation of entirely new ones (e.g., infrastructure)  Differences in administrative procedures Differences in product placement. Online Marketing  Online Marketing is the marketing of products or services over the Internet & it ties together creative and technical aspects of the Internet, including design, development, advertising and sale  Online marketing is used by companies selling goods and services directly to consumers as well as those who operate on a business to business model Methods and Channels:  Email marketing  Blogging  Pay per click (ppc) marketing  Social media marketing  Digital marketing  Viral marketing Email marketing  Email marketing is promoting products through the use of email  There are 2 main ingredients to an effective email marketing campaign  They are to build a large list of people you can email and to write great emails  The emails should be packed with free value and they should move people to buy what you’re trying to sell
  • 12. Blogging  Yet another but important and crucial marketing trend that has brought a huge aberration in our society  Blogger was launched in 1999 by three friends. Blogging as an ardent marketing tool has really blossomed in the last some years  Businesses, companies and even superstar now use blogging system for huge promotion Pay per click marketing  You have to pay for PPC ads.  You target certain words and then when those words are searched for on a search engine such as Google your ad will appear.  But you do have to pay every time your ad is clicked on.  You need to make sure you do your homework and find out how to effectively use PPC.  Otherwise you can easily lose a lot of money in a short amount of time.  But if you do learn how to use PPC effectively then you can make a lot of money just as fast Social media marketing  Social media is very popular right now and it’s only getting more popular  You can tap into that popularity by using social media to sell your products  Just make sure you don’t SPAM people. In fact, you shouldn’t use any social media to directly sell anything  Just use social media to direct people to other sites where you can then hit them with a sales pitch Digital marketing  With regards to the Internet, this is the promoting of brands using all forms of online digital advertising channels to reach consumers  This includes video channels, Internet Radio, mobile phones, display or banner ads, digital outdoors, and any other form of digital media. Viral marketing  Marketing techniques that use social networks to produce an increase in brand awareness or achieve other marketing objectives (such as product sales) through self-replicating viral processes.  It can be word-of-mouth delivered or enhanced by the network effects of the Internet. Viral promotions may take the form of video clips, interactive Flash games, eBooks, images, or even text messages. AIDA Model  A – Awareness  Initial point where your brand and/or business is recognised and acknowledged.  I – Interest  Generating thoughts and discussion about your brand.  D – Desire  Communicate your messages through the use of social media and email marketing.  A – Action 
  • 13. The stage where the conversion is complete and back to the interest stage to retain them. Your website is responsible for this stage. Marketing Strategies: Pull marketing:  Websites and blogs are pull strategies  Build websites & Blogs  Company’s social media profiles  Long-term success  The company tries to draw in customers through different kinds of advertising, such as TV ads, online banner ads and social media  Online banner ads, and radio and TV ads are other forms of pull marketing. Push Marketing:  Email Campaign  Certain offers through your social media profiles  Companies may push information and promotional material directly to end users through email or fliers to generate demand  Create an email database of potential customers and send them product announcements and promotions directly Advantage of online marketing  One to one approach  Cater to specific interests  Different content by choice  Geo- marketing  Relatively inexpensive  Global business  Measuring statistics is easy  Accountability Disadvantage  Illegal or unethical practice  Physical demonstration and needs to be tangible  Transparency  Cost of Hardware Internet Marketing in India – challenges  Governance, laws and regulations  Cultural issues  Lack of technical infrastructure  Marketing philosophies & channels  Online shopping worries  Fear factor  Unreliable delivery mechanisms  Credit card fraud and usage
  • 14. Marketing future:  Clearly, the strengths of the Internet as a marketing medium far outweigh the negatives  Companies grappling with the issue of whether to market via the Internet are already behind  Companies attempting to build a coherent Internet marketing strategy must begin to believe that the Web is likely to be the centre of their marketing future, not simply an adjunct to traditional marketing methods Ethics in Marketing What is ethics? Ethics is the art and science of determining good and bad or right and wrong moral behaviour of a single or group of people. What is MARKETING? Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. - Philip Kotler Marketing Ethics: Marketing ethics is an area that deals with the moral principles behind marketing. Ethics in marketing applies to different spheres such as in product, pricing, Placing (Distribution), promotion & advertising etc. Why we need Ethics in Marketing? There are many reasons but will notify some: • When an organization behaves ethically, customers develop more positive attitudes about the firm, its products, and its services. • To create Values or trust with key stakeholders • To build good image about the organization in the minds of customer, employees, shareholders and the society. Ethical Issues in Marketing: We discuss Marketing issues by using 4P’S OF MARKETING: • PRODUCT & PACKAGING • PRICE • PLACING (DISTRIBUTION) • PROMOTION (ADVERTISING & BRANDING) Product • Consumer safety • Product liability and reliability • Designing for special needs Packaging  Label information  Packaging graphics  Packaging safety  Environmental implication of packaging
  • 15. Price: Second P of Marketing • Bid rigging • Supra competitive pricing • Price fixing • Price skimming PLACING (DISTRIBUTION)  Product distribution (or place) is one of the four elements of the Marketing MIX.  Distribution of product or service is transporting them from manufacture to stockiest, wholesalers, retailer and then to consumers. Unethical Practices  Many retailers sell products that have crossed expiry date is unethical.  Exerting influence to cause vendors to reduce display space for competitors' products is unethical.  Promising shipment when knowing delivery is not possible by the promised date is also unethical.  Paying vendors to carry a firm's product rather than one of its competitors are also unethical.  Most drug stores would give too many drugs without prescription from a qualified doctor are also unethical.  Products are moved in unsafe vehicles ,are also unethical. PROMOTION (ADVERTISING &BRANDING) • Promotion is one of the four elements of marketing mix (product, price, promotion, place). It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision. • To present information to consumers as well as others • To increase demand • To differentiate a product Ethical Issues in Advertising • Puffery (Nothing to support the fact. ) • Advertising to Children • Promoting Unhealthy Products • Subliminal Advertising • Deceptive Advertising Ethics in Consumer Protection What is Consumer Protection?  Consumer: refers to any individuals or households that use goods and services generated with in the economy.  Consumer Protection: a concept that are designed to ensure fair competition and the free flow of truthful information in the marketplace.  Consumer Protection laws: laws designed to prevent businesses that engage in fraud or specified unfair practices from gaining and advantage over competitors and provide additional protection for the weak for those unable to take care of themselves.
  • 16. Ethics in Marketing in Consumer Protection Market is flooded with duplicate goods having fake labels for selling drugs, food stuff, consumables like suparis etc. followed by misleading advertisements. This result in disrepute for the products of good companies even though such fake goods are small in quantities. Who is responsible for consumer protection? • Responsibility of Business • Responsibility of Consumer • Responsibility of Government Responsibility of Business The business including producers and traders have to due regard to consumer rights as it is their social responsibility. They have to come out with quality goods at reasonable prices. Responsibility of Consumer All efforts regarding consumer protection will not produce desired results if consumerism is not accepted as a means of asserting and enjoying their rights. Responsibility of Government Innocent and helpless consumers should be protected by the Government through enacting legislations. Government will have to set its own priorities for the protection consumer’s right. Consumer Protection Act,1986  Better protection of interests of consumer.  Protection of rights of consumers.  To prevent practices having adverse effect on competition.  To promote and sustain competition on market.  To protect the interests of consumers. Scope of Consumer Protection • Applies to whole India. • Applies to all type of goods and services, public utilities and public sector undertakings. • All types of complaints relating to goods, unfair trade pictures. Who can file complaint? • The consumer to whom the goods are sold or delivered or agreed to be sold are delivered or the service has been provided or agreed to be provided. But how to file a complain? * One can go to Consumer courts and can file complaint. * One can file consumer complaints online.