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global marketing strategies

The Global Economy

Increased global competition, financial flows and internet technologies are some of the driving forces behind global marketing strategies.

LEARNING OBJECTIVES

Outline the changes that are included in a shift to a global marketing perspective

KEY TAKEAWAYS

Key Points

  • Domestic marketing strategies are increasingly limited to small- and medium-sized companies in niche markets.
  • The “Four P’s” of marketing – product, price, placement, and promotion – must all be adjusted in order for the brand to be successful in markets that differ in language, customs and consumer needs.
  • While operating in a global economy allows brands to maximize economies of scale and portray a consistent brand image across many markets, it also poses challenges for addressing consumer needs and wants, and reacting effectively against competition.

Key Terms

  • socio-economic: Of or pertaining to a combination of social and economic factors.
  • multinational: Operating, or having subsidiary companies in multiple countries (especially more than two)

The Global Economy

Now that the world has entered the twenty-first century, we are seeing the emergence of an interdependent global economy. This global market is characterized by faster communication, transportation, and financial flows, all of which are creating new marketing opportunities and challenges. Companies recognize that worldwide competition, international marketing trends, and Internet technologies must be considered when launching campaigns both domestically and internationally.

Given these circumstances, it could be argued that both small and large companies face one of two options: They must either respond to the challenges posed by this new environment or recognize and accept the long-term consequences of failing to do so. With the exception of companies in local niche markets, competitive changes within various markets are increasingly forcing companies to incorporate global variables into their marketing communications strategy.

As a result of this rapid shift towards an integrated, global economy, brands must adjust all aspects of the marketing mix to fit local tastes and needs, while maintaining a consistent product and brand image. Oxford University Press defines 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. ” The global economy certainly provides advantages to companies wanting to increase revenues and expand their brand. However, brands must be cognizant of some of the major challenges that come with marketing to a global audience.

Adjusting the Marketing Mix for a Global Audience

The four “P’s” of marketing–product, price, placement, and promotion–are affected as a domestic or multinational company adjusts its strategy to become a global company. At the global marketing level, global marketing plans must be tailored so that companies speak in many voices rather than just one. Developing marketing plans for different regions gives companies flexibility when reacting against competition or defending their position (market leadership, low cost provider, etc.) in a particular market.

Product: A global company will have to tweak certain elements of its products for different markets. Even a single product will need to be modified according to the market it will be sold in. Product packaging features, including color, shape, and form, may be similar. However, messaging and language are tailored according to the country’s native language and customs.

Price: Because it is affected by several variables, price will always vary from market to market. For example, cost of product development (produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and other variables will determine product pricing. Product positioning, including whether the product is high-end, low-cost, or middle ground, compared with competing brands also influences the ultimate profit margin.

Placement: Product distribution will also be determined by local and global competition, as well as the product’s positioning in the marketplace. For example, brands would not want to place high-end products in “dollar stores” in the United States. Likewise, a low-cost product in France would find limited success in an expensive boutique.

Promotion: After product research, development and production, promotional tactics, such as advertising, are generally the largest line item in a global marketing budget. An integrated marketing communications (IMC) strategy is key to achieving marketing goals, since IMC reduces costs, minimizes organizational redundancies, maximizes speed of implementation, and unifies brand messaging.

A Coca-Cola bottle with the label in Arabic.

Adjusting for Global Marketing: A global company has to tweak certain elements of its products for different markets.

Advantages and Disadvantages of Global Marketing

The global economy provides many advantages for companies that are able to introduce their products on a global scale, while customizing their marketing strategies for different languages, cultures, and socio-economic demographics. These advantages include:

  • Economies of scale in production and distribution
  • Lower marketing costs
  • Enhanced power and scope
  • Consistency in brand image
  • Ability to leverage good ideas quickly and efficiently
  • Uniformity of marketing practices
  • The development of relationships outside of the “political arena”
  • The set-up of ancillary industries to cater to the needs of the global player
  • Efficient and effective use of online marketing over traditional marketing

Nevertheless, many companies struggle with meeting the challenge of a larger and more complex marketplace. Brands conduct extensive research and consider numerous market variables when developing global marketing plans. Some of the challenges to marketing in a global economy are:

  • 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, which may conflict with laws in 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 or distribution channels