Global Marketing and Its Evolution from International Marketing - Essay Example

?Topic: Global Marketing Introduction Globalization has opened a plethora of opportunities for organizations and communities to trade across nationaland supranational boundaries. International marketing is the term coined for trade between the different international entities and is set to evolve into global marketing. Global marketing is an evolving concept with some similarities to international marketing in the advantages it provides in terms of marketing strategies, cost reductions, etc. However, it is also considered to be quite unlike international marketing in terms of the need for a holistic approach towards marketing. The essay defines global marketing, explores its evolution from international marketing before differentiating between the characteristics or determinants of global and international marketing strategies. The different global marketing strategies based on the various determinants will be studied while understanding the impact of global marketing in the European Union (EU) and Asia-Pacific regions. While standardization and adaptation are the key terms with international and global marketing strategies, it will be studied if either standardization or adaptation is a useful and most implemented strategy for global marketing, and the extent of each or both strategies along with other specifically customized aspects of the marketing mix are used in leveraging the concept of global marketing. The relevance and extent of branding, marketing mix, socio-economic, cultural and national boundaries in determining the usefulness of global strategies will also be studied to understand the evolution and success of the concept of global marketing. The essay also tries to answer the question if global marketing is the strategy of large organizations or if small and medium companies or organizations too can take advantage of operating in the global arena. Global marketing While international marketing focuses on standardization of marketing practices across the various national and supranational boundaries, global marketing is an evolution of the concept of international marketing that is holistic in its approach to trade and its marketing practices and tends to leverage both standardization and adaptation as the marketing strategies based on the products and market segment (Douglas and Wind, 1987). While international marketing concerns the contextual marketing of products and services, global marketing is the standardization of international marketing (Sheth and Parvatiyar, 2001). With standardization, there are benefits like cost savings, uniform brand image and improved co-ordination, and with adaptation, organizations benefit from differences in user conditions, regulatory factors, consumer behaviours and customized marketing concepts (website 1). Global marketing concept implements more or less the same marketing theories that apply to international marketing or even traditional marketing with the difference those organizations have to almost uniformly cater to different markets and customers. Three domains of knowledge: cross-cultural, country-regional and cross-border transactional knowledge is required for organizations to operate globally within a management orientation framework called EPRG (Ethnocentric, Polycentric, Regiocentric and Geocentric) framework as shown in Figure 1 below (Keegan, 2011). Figure 1: EPRG framework for global marketing. Source: (Keegan, 2011). Several determinants or driving forces of global marketing that differentiate it from international marketing are: technology, regional economic agreements, market demand, transportation and communication infrastructure, quality, product development cost, world economic trends, organizational abilities and transnational environments. However, there other factors that restrict global marketing: inability of organizations to create a culture conducive for global marketing and cross-border barriers (Keegan, 2011). Global marketing is a mix of adaptation and customization of international marketing and is based on national barriers while attempting to bring homogeneity to the global market (Sheth and Parvatiyar, 2001). While global marketing can add value to customers, it can also create a strong and consistent brand image in the markets (Ghantous, 2008). Also, global marketing is influenced more by the exogenous factors in the dynamic and volatile global markets than the internal or endogenous factors of the organization, and approaches to global marketing has been changing dynamically as the demand side customer behaviour and national regulations have changed (Carter, 2011). Evolution While international marketing focused on a uniform strategy for the different countries, the issue of opposite forces of unification and fragmentation is a central issue for implementation. Forces for unification favour standardization while forces of fragmentation based on socio-economic, political and national factors tend to favour an international marketing strategy based on adaptation. This issue of conflict between forces of standardization and adaptation has given rise to the need for a unique strategy in terms of global marketing strategy which implements a combination of both strategies to ensure supply-demand balance (Douglas and Wind, 1987). The changing technological and political landscape across the globe has changed the face of global marketing environment and organizations that are swift and agile in their approach to global marketing are more successful than others. As per a United Nation’s (UN) report, about 60% of the world’s population lives in Asia with the most youngsters who are highly educated making the Asia Pacific region conducive for economic development favouring global market environment. Also, the EU region is another such market that continues to offer an environment for global marketing. Latin America is another global market that is fast developing on the world scenario and as global markets provide “access to capital inflows, technology, cheaper imports and larger exports, these markets provide opportunity for truly global markets to tap into the larger markets” (Carter, 2011). Also, “changing consumer demographics in terms of increased life expectancy, declining fertility, and increased wealth” (Carter, 2011) are set to fuel the consumer demand and changing expectations in the near future. And as the consumer needs change, global marketing strategies also need to be adapted swiftly. Further, increasing competition among networks of organizations rather than singly operating organizations expanding into the various industries and markets through effective use of resources is fast changing the global market scenario on par with the changing consumer expectations and demands, which is also leading to emergence of a service-oriented knowledge economy. The developments in terms of technology and transparent corporate practices call for innovative and differentiated culture of continuous learning of customer preferences (Carter, 2011). Global marketing theory has evolved over the years and is still based on the three elements of marketing: customer value, differentiation and focus. Figure 2 represents the evolution of global marketing in table form: Figure 2: Overview of approaches in marketing theory. Source: (Carter, 2011). Advantages and disadvantages of global marketing Global marketing now increasingly focuses on cross-functional integration and similarities in the markets rather than focus on the differences among the different nations or regions to adapt its strategy. Processes like global coverage, global accounts, cross-functional consistency, trickle-up theory or technological advancements, relationship exchange, mass customization, value-based accounting and networked organizations all enable the generalization of the theory of global marketing rather than marketing based on the specific context and anecdotes (Sheth, 1995). Also, global marketing is considered as a holistic concept making global branding relevant. And global marketing theory also evolves in terms of relating the marketing mix for standardization and adaptation to marketing mix for brand adaptation offering the flexibility and advantage of homogenization of global market environments. This makes the global markets more accessible for adaptation as per the localization needs (website 2). This, assuming that customer preferences are homogenous to a large extent with customers ready to adopt features and designs of high quality marketed globally at lower prices while creating economies of scale for the global marketers. However, the success of global marketing effort depends on the realization of these assumptions as market homogeneity can be achieved to some extent due to the restriction of the products and services only to a certain segment and the existence of substantial heterogeneity within national boundaries further makes the global marketing efforts to be a disadvantage to the marketer. Also, there is a lack of evidence to suggest that customers would always prefer products of lower price and low price strategy can put the organization in a vulnerable position. Further, what may be considered lower price in one country may be overpriced or underpriced in other countries, rendering the homogeneity invaluable as a standard concept for global marketing. Also, economies of scale are more relevant to products as a variable of marketing strategies and tend to ignore the other variables of the global marketing strategy (Douglas and Wind, 1987). There are constraints to realizing standardization for global marketing in terms of governmental and trade restrictions, marketing infrastructure, restrictions due to interdependencies with resource markets, differences in nature of competitive situations in the different countries, existing international operations, internal constraints for effectiveness of standardization, and management motivation and culture (Douglas and Wind, 1987). Also, there is the issue of brand adaptation within the local market as it depends on the extent of homogeneity related to customer behaviour and preferences (website 2: 41105_1.pdf). Strategies of global marketing Standardization and adaptation are the two converging variables for global marketing strategies where a marketing mix is targeted at converging the advantages of both standardization of the market across the national boundaries, rendering a borderless market, and adaptation incorporated within the strategy to cater to the different cultural boundaries. Both homogeneity and heterogeneity of culture of the different countries are made to converge with effective global marketing strategies. Further, brand internationalization and brand adaptation need to take into consideration, the psychological, physical and marketing mix. Market knowledge is also an important factor considered for developing a global marketing strategy as is the commitment of the management to create a global culture and motivational environment (Ghantous, 2008). The standardization-differentiation strategies are aimed at standardization across countries by market segmentation. And the key to success of a global marketing strategy is a careful analysis of the driving forces and obstacles of market globalization (Douglas and Wind, 1987). A combination of an international strategy, a multi-domestic strategy, a global strategy, and a transnational strategy can also be beneficial for a global marketing strategy where national cultures, marketing ethics and brand internationalization are also taken into consideration (Yucel et al., 2009). Figure 3 shows the strategic mix for brand internationalization: Figure 3: Strategic mix for brand internationalization. Source: (Ghantous, 2008). Knowledge sharing also is a variable in the global marketing strategy as it enables implementing a service-dominant framework that focuses on the networks of collaboration between the different globally operating organizations. Service-dominant logic in global marketing helps exchange of opportunities for value propositions; convert tangible to intangible advantages, transactional to relational contracts (Lusch, 2006). Impact of global marketing strategies in the EU region and Asia Trade between the EU countries is a good example for analyzing global marketing strategies and their success. Several countries within Europe and which are members of the EU have borderless trade among them and enable the global marketing strategy of implementing standardization-adaptation dichotomy. As the global organizations increasingly trade among themselves in a free borderless environment, the external and internal forces of these two variables of global marketing are changing rapidly to pose new threats to the market. China and India on the other hand, are striving to beat each other in drawing a share of the global market that has opened new avenues in terms of demand and supply as is evident from the consumer demographics of the two countries. Internal environments of the two countries may however slightly differ in that China is ahead of India in terms of standardization and adaptation for customer preferences while India is competing with its technologically sound infrastructure. It is also seen that India is set to take ahead of China in socio-economical factors in the new future to become a major destination for global marketing organizations. However, the entire Asia-Pacific region along with Latin America are set to dominate the global market environments while EU continues to struggle with the increasing heterogeneity majorly in terms of the different political and technological advancements and changes. Conclusion Global marketing is a complex and holistic concept of marketing theory and includes international marketing theory. The standardization-adaptation dichotomy of international marketing theory is also applicable to global marketing with the difference that global marketing theory provides a combination of both standardization and adaptation into the strategies. Global marketing is seen to have evolved from international marketing theory which operated in terms of either standardization or adaptation of its marketing strategies to cater to the specific national and transnational boundaries based on the socio-cultural, economic, technological, political and environmental factors contributing to the changing marketing strategies. A management orientation framework called EPRG (Ethnocentric, Polycentric, Regiocentric and Geocentric) framework is normally used to operate in the three domains of knowledge: cross-cultural, country-regional and cross-border transactional knowledge for effective implementation of the global marketing strategies. Various driving forces as well as restraining forces either enhance or restrict the design and implementation of the global marketing strategies for a network or a single organization. The success of global marketing depends largely on the exogenous conditions than the endogenous conditions of the market, as evident from the emerging economies like China, India, Latin America, etc. as the political and technological demographics are continuously changing. Further, change in consumer demographics in many of the regions, particularly the Asia-Pacific region, has demanded for further critical analysis of the emergent and ever changing markets to frame effective strategies that are improved on a continuous basis. Strategies for global marketing include a combination of standardization and adaptation strategies based on differentiation, focus and customer value creation. Knowledge sharing and networking for increased collaboration has also given a new direction to global marketing in this era of globalization, and the service-dominant logic is utilized to be more advantageous in the present highly competitive marketplace. The EU has been taking advantage of the concept of global marketing theory although the different national limitations in terms of the highly volatile political and technological variables have become more of restraining factors. On the other hand, Asia-Pacific region is set to take advantage of the changes in the global markets as India and China are competing with each other for the top slot, each with its unique set of variables contributing to the effectiveness of the global marketing strategies that are implemented. References 1. Carter, L. 2011. Changes and new challenges. http://www.oxfordtextbooks.co.uk/orc/lee_carter2e/ 2. Douglas, P.S. and Wind, Y. 1987. The Myth of Globalization. Columbia Journal of World Business. 3. Ghantous, N. 2011. Brand internationalization strategy beyond the standardization/adaptation dichotomy. Thought Leaders International Conference on Brand Management. 2008. 4. Keegan, J.W. 2011. Global Marketing Management. 5. Lusch, F.R. et al. 2006. Marketing as service-exchange: Taking a leadership role in global marketing management. Organizational Dynamics, Vol. 35, No. 3. Elsevier. doi:10.1016/j.orgdyn.2006.05.008. 6. Sheth, N.J and Parvatiyar, A. 2001. The antecedents and consequences of integrated global marketing. International Marketing Review: 18, 1. MCB University Press. 7. Sheth, N.J. 1995. The reincarnation of international marketing. International business: an emerging vision. USC Press. 8. Website 1: http://www.bluewaterinternational.net/bluewater/GlobalMarketingManagement.pdf 9. Website 2: http://www98.griffith.edu.au/dspace/bitstream/10072/13898/1/41105_1.pdf 10. Yucel, R. et al. 2009. Globalization and International Marketing Ethics Problems. International Research Journal of Finance and Economics. Issue 26. EuroJournals Publishing. Read More