Global Marketing Management

As global competition increases, international companies change their management and organizational structure accordingly. The primary goal of every multinational company is to enhance its current market position by taking advantage of opportunities existing in the global market. Hence, marketers have to understand the dynamics of the competition and the market from a global perspective. Global marketing is defined as the process of focusing on a company`s resources and goals on international market opportunities and threats. Twenty years ago, the term global marketing did not exist, but it has become a popular subject in the current business world. As the world economy continues to embrace globalization, global marketing has become an essential element for the survival of business entities. In today`s business environment, anything can be made and sold anywhere. Back in the early 1980s, few people would have predicted that the international economy would change so drastically. Since the late 1980s, the global economic structure has changed, expanded, and brought in new and different players such as the formation of the European Union and the emergence of China and India as key economies. Consequently, global marketing is vital for organizations to realize their full potential and survive in the current world. An organization that does not embrace the international market is placed at a disadvantage. Global marketing management entails examining the concept and principles of marketing, the evolution of global marketing, and the driving forces in international marketing.

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Before we discuss the theory of global marketing, it is fundamental that we understand what marketing entails. Marketing is the creative process of getting people interested in an organization`s product or service and maintaining a relationship with the customers. It involves planning and execution of pricing, promotion, and distribution of ideas (Katsikeas et. al, 2016, pg 15). Marketing seeks to satisfy the customers' needs and seek a new market. Marketing entails paying close attention to both customers and competitors.

Marketing can be categorized into three key principles; customer value, competitive advantage, and concentration of customer need. The principle of customer value is based on the fact that marketing entails creating customer value higher than the one created by competition. This is done through price reductions and or improving product or service quality. Adding customer value requires the knowledge of the customers and innovation (Beck et. al, 2015, pg 20). Competitive advantage refers to the total offer that makes a product or service more attractive to customers. Moreover, the total offer must be more attractive than that of competitors for an organization to have a competitive advantage. The principle of concentration of attention is the effort needed to successfully create customer value at a competitive advantage.

Global marketing is an expansive, extensive, and complex process as it cuts across political and cultural boundaries. Furthermore, it can be defined as an organization`s readiness to implement a global outlook instead of a domestic or regional perspective. It consists of marketing activities that focus on the reduction of cost inefficiencies, the emergence of international customers, the development of global infrastructure, and the chance to transfer resources across borders (Knight and Liesch, 2016, pg 99).

Global marketing evolved from domestic, export, and international marketing. Domestic marketing exclusively targets on the home-nation market. Marketing is limited to the national or geographical boundary and companies pay little attention to the demands of the cross-border market. Export marketing targets market our side the home nation and depend on the production from the home-country to meet the supply of these markets. This kind of marketing relies on the home-nation products and experience. International marketing occurs when organizations market outside the national boundaries of the domestic market. This goes beyond export marketing and organizations are more involved in the nations in which they conduct business. A business entity is ready to outsource a product outside the domestic market to attain a higher competitive advantage (Grewal et. al, 2018, pg 54). Moreover, global marketing entails focusing on leveraging a company`s resources and products according to the global market and adapting to unique and different markets. It requires an organization to distinguish between global and universal, and the specific needs of a country. It recognizes that global consumers differ in their consumption behavior from one culture to another. Global companies aim to use their resources across borders to maximize opportunities and exploit similarities and differences in search of competitive advantage. Additionally, global marketing does not entail setting up shop in every nation in the world but relies on an organization`s resources and opportunities. Pepsi and Barclays Bank operate in over 100 countries since they have the resources to expand.

There are various factors that contribute to the growth of global marketing. These include; market needs and effort, technology, quality, communication and transportation, and leverages. Global markets do not exist in nature and must be created by marketing effort. Human nature dictates the need to expand and serve the international market. An example is the soft drink industry. Before industrialization, there was no need for soft drinks yet today beverage companies are some of the biggest organizations in the world. In some nations, the consumption of these drinks exceeds that of water. This is an excellent illustration of how marketing has caused a shift in consumer behavior. Successful global organizations apply strategies that serve a global need by employing marketing strategies that have a global appeal that adapts to each country`s culture.

Technology is a dominant factor that makes the world uniform since it is consistent across national and cultural boundaries. It can be applied in any region in the world. Once a specific technology emerges, it is instantly adopted throughout the world, and if an organization acquires the knowledge of managing technology in one nation, it can apply the experience to other regions of the world. Moreover, when a new product requires huge capital and extended periods of development, there is an increased urgency and intensity for globalization. An example is pharmaceuticals, where developing a new drug requires millions of dollars and a long period of research. The global market offers an opportunity for these companies to recover their costs since no single domestic market is huge enough to bear such enormous investments.

Global markets generate higher revenue and sustainable design and manufacturing quality. Global organizations are in a position to spend more on research and development, unlike local companies which are constrained by revenue. Communication and transportation are essential to the creation of global markets. Most people want the best and last model of a product. Furthermore, global organizations have the opportunity to develop leverages as they operate in different domestic markets. Such companies can use the experience acquired in one market to other markers in the world. A global business entity can also take advantage of the economies of scale to increase efficiency.

There are various factors that make international marketing a complicated subject. Market differences across political and cultural borders are significant enough that it requires at least aspects of the marketing mix. Hence, effective global marketing must have a strong local team who can adjust the product or service to fit the local needs. Brand history plays an essential role in global marketing since a product has to create identity in domestic markets. In most scenarios, products and services can compete in the global market. However, the management does not take the chance to expand beyond the national level. Such organizations do not expand geographically. Organizational culture is a major factor in global marketing. Most of the large multinational companies employ marketing strategies that integrate global vision and the perspective of the domestic market. Every nation controls the market conditions to protect local businesses and interests. There are significant barriers placed in by governments that make it hard for foreign organizations to enter local markets. Moreover, most domestic economies have embraced deregulation and privatization, opening up previously closed markets.

The 21st century is characterized by profound changes in the global market environment in terms of demography, economic integration, and technological advances. In recent years, there has been a drastic change in consumer attitudes and behaviors. Consequently, companies must have the capacity to effectively track global developments can give it a greater competitive advantage by anticipating future customers’ needs. Hence, marketers must comprehend vital global events and how they impact people`s daily lives. One of the key interests of global marketing is the demographic environment. The world`s population is increasing at a volatile rate which now stands at close to 6 billion. This is expected to increase to 8 million by 2050 which signifies more marker opportunities. The huge and diverse population is an opportunity and a challenge to business entities. In the last two decades, the global market has seen a change in consumer demographics and expectations. People are less likely to be loyal and predictable. The aging population is expected to triple by 2050 to 2 billion. Changes in life expectancy, declining fertility, and increased income impacts consumer demands and expectations.

The economic environment is a crucial consideration for international marketers. Economic conditions impact the costumers' purchasing power and spending habit. Every country has different economic conditions and some have subsistence economies that satisfy the needs of the people. In such nations, there are few opportunities to enter the market. However, in industrial economies, the markets are rich enough to accommodate different types of products. The distribution of income is crucial for marketers since it determines the purchasing patterns of consumers. Those who earn the most are not affected by economic scenarios and often deal with luxury products. In the last four decades, the rich have grown richer; the percentage of the middle-class has declined significantly, while the poor have increased. In the last two decades, new economic powerhouses have emerged to compete with the United States and European nations. The rise of Brazil, Russia, India, and China (BRIC) has been a significant engine for global economic growth. India and China offer significant global marketing opportunities because of their large population and the growing number of middle-class population which has a high purchasing power. Additionally, less developed nations in Africa have witnessed strong economic growth in the last decade due to increased exports, vigorous domestic demand, and growing foreign direct investment (Legrosen, 2015, pg 22).

Another important consideration for global marketers is the natural environment. This includes the natural resources required as inputs by companies. There is a growing shortage of raw materials such as inadequate water and pollution. Additionally, renewable resources have to be used effectively. As a result, government intervention in natural resource management has increased all over the world.

The technological environment has shaped the contemporary business world. Technology has played an integral part in creating incredible things such as the internet, computers, and many more (Mathew’s et. al, 2016, pg 822). However, it has also introduced harmful inventions such as chemical weapons. Nonetheless, new technologies create new markets and chances. Furthermore, new technology emerges to replace older technology and organization should keep up with technological changes to avoid creating outdated products. Technology has facilitated the emergence of the global service economy since the service industry is rapidly substituting the manufacturing sector as the primary source of GDP.

The political environment greatly influences marketing decisions. The political climate includes laws, government agencies, and pressure groups. Every economy needs some regulation to ensure things follow smoothly. Marketing activities fall under various laws and regulations which are developed by governments to restrict business for the benefit of the entire society. In recent years, business legislations have increased to cover a wide range of issues such as competition, product safety, advertising, and ethical business practices. Finally, the cultural environment is a crucial consideration for marketers. These are institutions and forces that impact the community`s values, preferences, and perceptions. These beliefs and values shape our attitudes and behavior.

Market standardization is utilized by many global companies as a strategy to ensure that product quality is maintained. Standardization entails applying the domestic target-market approach on product standards that are applied to foreign markets. The drivers of standardization consist of consistent branding and cultural variation. International organizations adopt the strategy to lower costs and improve productivity through economies of scale.

Most of the global companies prefer standardization because of various benefits. It allows for economies of scale, transfer of experience, a standard international image, and easier control, monitoring, and coordination. However, the strategy has many drawbacks which include governmental and trade restrictions, some of the products are over-designed for some nations, and it diminishes entrepreneurial and innovative spirit in the company. Alternatively, in recent years, the adaptation strategy has become popular in global business. The benefits include responding to local needs, it increases domestic market share and income, and it also boots the development of local businesses. Nonetheless, adaptation has some drawbacks which include the lack of transfer of experience, absence of economies of scale, limited control, and global image challenges.

In most part of the 20th century, global marketers believed that consumers would increasingly resemble each other and they would seek to have the same things. However, the reality is different and global markets must overcome massive cultural and economic boundaries. Culture involves thoughts, believes, values, traditions, attitudes, language, and other aspects. Consequently, during market analysis, it is vital for organizations to learn about the cultural properties of the people, especially when it comes to market segmentation, target market, and product positioning.

Culture is an essential factor in determining consumer behavior. It affects their purchasing decision and how consumers use and dispose of a product. Furthermore, consumers behave according to their culture. An example of how culture influences consumer behavior is traditions. The Americans have a tradition of having turkey on Thanksgiving. This is a culture that allows entities to produce poultry and prepare for the increased demand during Thanksgiving. Hence marketers need to formulate strategies that cater to a customer base with a diverse series of cultural backgrounds.

Ford Motor Company

Ford Motor Company is one of the largest automobile manufacturers and provides financial services through Ford Motor Credit Company. The company is based in Dearborn, Michigan and markets vehicles under eight brands. Ford Motors is listed on the New York Stock Exchange. It has more than 190,000 employees and has 68 plants distributed all over the world. Ford Motor is a strategically revolutionary and technologically innovate automobile manufacturing company established in 1903. It was the first car manufacturing firm to use unique production techniques such as moving assembly lines and conveyor belt in manufacturing and marketing management by pricing its vehicles so that it is affordable to its workers. Since then, the company has expanded its portfolio by producing different cars at different prices.

Ford Motors uses a mix of psychographic, demographic, and geographic segmentation variables to meet the changing needs of customers in the automobile industry. It mainly uses a differentiated targeting strategy to offer specific products to certain portions of the market. Furthermore, the company uses a value-based positioning strategy to evoke an emotional and personal touch with the customers. The vision statement of the company sums up the company`s goals "People working together as a lean, global enterprise to make people`s lives better through automotive and mobility leadership" (Boudette, 2019). The mission of the company is to work as one team towards a common goal.

The competitive strategy for the company has changed considerably since it started. Ford has shifted from providing vehicles using a cost-leadership strategy to embracing smart mobility which deals with technological advancement in the automobile industry (Palmer and Flanagan, 2016, pg 35). The recent competitive strategy involves four primary components which consist of returning the company to its former position before the 2008 Recession, improving the financial capability of the company, better collaboration, and meeting the needs of the customers.

One of the areas Ford has a strong ground is intellectual properties. The company has over 38,000 active patents which help its operations and keep Ford ahead of its competitors technologically. Ford has a stronghold in developed countries as most of its vehicles are sold in these markets. Consequently, the company has deep knowledge of these markets giving it a competitive advantage. Furthermore, Ford has more than 68 manufacturing plants all over the world which help keep the prices of their products low compare to competitors in the market. The company utilizes different distribution channels such as service centers, direct selling agents, e-commerce, and authorized dealerships. This helps make Ford vehicles available to customers in all parts of the world. Moreover, Ford leases out the majority of its distribution centers and warehouse which reduces the cost for the company.

When it comes to branding, the company has a positive image in the market, especially in developed nations. However, the brand approach in developed countries has not been successful as only a small portion of the population use Ford vehicles. Ford decided to target emerging nations since they harbor a lot of potential and growth. Furthermore, the market in developed countries was already saturated with automobile companies (Lee and Tan, 2019, pg 265). Ford`s truck department has experienced steady growth in developing economies as they race to modernize their transport network.

The vehicle manufacturing industry is facing many challenges which include government regulations; high infrastructure cost, unstable fuel prices, foreign exchange fluctuations, and increased competition (Shalender and Singh, 2015, pg 25). This has made the industry to be overcrowded with many cars and no company has a dominant position in the international market. This presents Ford with an opportunity to grow. The majority of Ford`s customers are the upper and middle-class population and transportation companies. Ford should invest in technologically advance automobile products as electric and hybrids cars become popular.

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References

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  • Boudette, N.E. (2019) Ford to Invest $500 Million in Rivian, a Tesla Rival. [Online] [online]. Available from: https://www.nytimes.com/2019/04/24/business/ford-rivian-investment.html (Accessed 26 April 2019).
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  • Lee, J.W. and Tan, W.N., 2019. Global Corporate Citizenship: Cross-cultural Comparison of Best Practices in the Global Automotive Industry. The Journal of Asian Finance, Economics and Business (JAFEB), 6(1), pp.261-271.
  • Mathews, S., Bianchi, C., Perks, K.J., Healy, M. and Wickramasekera, R., 2016. Internet marketing capabilities and international market growth. International Business Review, 25(4), pp.820-830.
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