Fundamentals of Global Marketing and International Business
Starbucks’ Global Growth Strategies
- Market Penetration: Starbucks built customer loyalty in the U.S. with its rewards program and smartphone payment app.
- Market Development: Starbucks entered the Indian market through an alliance with the Tata Group.
- Product Development: The company created VIA, a new instant coffee brand for home and office use. Following its success in the U.S., it was launched in Great Britain, Japan, South Korea, and other Asian countries.
- Product Diversification: In 2011, Starbucks dropped “coffee” from its logo and diversified by acquiring companies like Evolution Fresh (a juice company), Bay Bread, and Teavana.
Foundations of Global Marketing
What Is Global Marketing?
Global marketing encompasses the scope of business activities conducted outside a company’s home market. This represents 25 percent of the total world market for all products and services.
Standardization vs. Adaptation
- Globalization (Standardization): This approach involves offering a uniform product and marketing strategy across different markets.
- Global Localization (Adaptation): This strategy involves modifying products and marketing to meet local requirements and customs.
- The core principle is to “think globally, act locally.”
Adaptation involves modifying a product to meet local requirements and customs, which also demands different marketing and selling strategies in foreign markets. With standardization, however, the products are not modified, nor is the marketing approach changed.
The Importance of Going Global
U.S. companies that wish to achieve maximum growth potential must “go global,” because 75 percent of world market potential is outside their home country.
Chapter 2: The Global Economic Environment
Types of Economic Systems
- Market Capitalism: An economic system where individuals and firms allocate resources, and production resources are privately owned.
- Centrally Planned Socialism: An economic system where the state has broad powers to serve the public interest as it sees fit, controlling resources and production.
- Mixed Systems: In reality, pure market capitalism and centrally planned socialism do not exist. Most economies are a mix, such as centrally planned capitalism and market socialism.
Economic Freedom
Economic freedom is the ability of people in a society to take economic actions. One approach, rooted in the liberal tradition, emphasizes free markets, free trade, and private property under free enterprise. Countries are often ranked on their level of economic freedom as “free,” “mostly free,” “mostly unfree,” or “repressed.”
The Triad in Global Economics
The Triad traditionally refers to the U.S., Western Europe, and Japan, which historically represented 75% of the world’s income. The expanded Triad includes all of North America, the Pacific Rim, and most of Eastern Europe. Global companies aim to be equally strong in each part of the Triad.
Chapter 3: Global Trade
The World Trade Organization (WTO)
- The WTO replaced the General Agreement on Tariffs and Trade (GATT), a treaty established in 1947 to promote trade among members.
- GATT handled trade disputes but lacked enforcement power, earning it the nickname “General Agreement to Talk and Talk” as disputes often lasted for years.
- The World Trade Organization (WTO) was established in 1995 and is based in Geneva, Switzerland.
- With 160 members, the WTO serves as a dispute mediator through its Dispute Settlement Body (DSB) and has the enforcement power to impose sanctions.
Preferential Trade Agreements (PTAs)
Preferential trade arrangements (PTAs) in the WTO are unilateral trade preferences. They include Generalized System of Preferences (GSP) schemes, under which developed countries grant preferential tariffs to imports from developing countries, as well as other non-reciprocal preferential schemes granted a waiver by the General Council.
What Is a Common Market?
A common market is the next level of economic integration. In addition to removing internal barriers to trade and establishing common external tariffs, a common market allows for the free movement of factors of production, including labor and capital. The Andean Community, SICA, and CARICOM are examples that may evolve into common markets.
What Is an Economic Union?
An economic union builds upon the features of a common market. It seeks to coordinate and harmonize economic and social policies within the union to facilitate the free flow of capital, labor, goods, and services from country to country.
Chapter 4: Social and Cultural Environments
Defining Culture
Culture is the collection of characteristics and knowledge of a particular group of people, encompassing language, religion, cuisine, social habits, music, and arts.
The Role of Social Institutions
Social institutions are the establishments in a society that make it function. Without them, a society cannot achieve fulfillment in terms of its economy, education, or relationships.
Cultural Diffusion: Aesthetics, Music, and Food
Aesthetics define a culture’s sense of what is beautiful and what is not. Colors, for example, can have different meanings in each country. Food is also a significant part of a culture.
Verbal and Nonverbal Language
Semiotics is the study of signs and their meanings, both spoken and unspoken, which is crucial for understanding culture.
High-Context vs. Low-Context Cultures
- High-Context Cultures: These are societies where people have close connections over a long period. Many aspects of cultural behavior are not made explicit because most members understand them from years of interaction. A family is an example of a high-context environment.
- Low-Context Cultures: These are societies where people tend to have many connections of shorter duration or for specific reasons. In these societies, cultural behaviors and beliefs may need to be spelled out explicitly so that newcomers know how to behave. A large U.S. airport is an example of a low-context environment.
Hofstede’s Dimensions of National Culture
Geert Hofstede’s model identifies six key dimensions of national culture.
Self-Reference Criterion
The self-reference criterion is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for making decisions.
Chapter 6: Global Market Research
Steps in Formal Market Research
- Define the Objective & Your “Problem”
- Determine Your “Research Design”
- Design & Prepare Your “Research Instrument”
- Collect Your Data
- Analyze Your Data
- Visualize Your Data and Communicate Results
Issues in Global Data Collection
- Determining whether to standardize or extend the marketing mix.
- Assessing demand and profit potential, which may depend on whether the market is existing or potential.
- Existing Markets: Markets currently being served by one or more companies.
- Potential Markets: Markets that are not yet being served but have future potential.
Current Issues in Global Marketing Research
- Comparability: Ensuring that research can be used for valid comparisons between countries.
- Emic Analysis: Studies a single culture from within to understand its unique characteristics.
- Etic Analysis: A detached approach that studies and compares multiple cultures, often used in multi-country studies.