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Global Marketing Strategy: Perspectives and Approaches

Part 6. International Marketing

  1. Susan P. Douglas,
  2. C. Samuel Craig

Published Online: 15 DEC 2010

DOI: 10.1002/9781444316568.wiem06013

Wiley International Encyclopedia of Marketing

Wiley International Encyclopedia of Marketing

How to Cite

Douglas, S. P. and Craig, C. S. 2010. Global Marketing Strategy: Perspectives and Approaches. Wiley International Encyclopedia of Marketing. 6.

Author Information

  1. New York University, New York, NY, USA

Publication History

  1. Published Online: 15 DEC 2010

1 Introduction

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

Markets worldwide are becoming increasingly integrated across national borders at a macroeconomic, competitive, and product market level. Firms of all sizes, and in almost all industries, are increasingly conceptualizing their strategy on a global basis. As a result, increasing interest in studying this trend and in understanding its key characteristics has developed. As noted by Zou and Cavusgil 2002 a number of different approaches have been adopted, which vary in terms of their theoretical or conceptual underpinnings, and focus on different facets of marketing strategy as well as their definition of terms such as global and marketing strategy (see Global Marketing Strategy). This has resulted in the absence of a generally accepted conceptualization of global marketing strategy, and hence, an ability to generalize findings from different research studies and more broadly improve understanding with regard to the impact of globalization on the firm's competitive position.

In this article, a framework is presented that aims to provide a clear understanding of global marketing strategy and at the same time allows incorporation of other perspectives. First, the different terms that are used in the present article are explained. Next, the dominant approaches to studying international/global marketing and the theoretical perspectives that underlie these approaches are briefly reviewed and the key topics covered. The various issues confronting the firm as it develops a global marketing strategy are then discussed, starting with the initial development of the strategy, followed by the ongoing process of refining and developing that strategy and consolidating the strategy to improve efficiency and competitiveness in global markets.

1.1 Key Concepts

1.1.1 Global

The term global is used to define the geographic scope of the firm's operations and strategy development. A firm is considered to have a global marketing strategy if it is involved in marketing its products and services in most geographic regions and areas in the world, has established a clear strategy as to how these operations are managed in each of these areas, and retains control over how these operations are managed and evaluated (see global marketing strategy: perspectives and approaches). This does not necessarily imply that these operations are globally integrated or standardized on a worldwide basis. The term global will be used broadly to refer to any involvement outside the firm's home market, as global strategy must start somewhere.

1.1.2 Marketing Strategy

A marketing strategy is defined as a strategy that is based not only on identifying target customer needs and interests in a clearly defined product market in order to develop customer value creation but also in clearly identifying the firm's distinctive skills and capabilities relative to those of other competitors in the marketplace (see Competitive Advantage: Its Sources and the Search for Value). This results in the development of a marketing strategy based on the firm's competitive advantage and skills in relation not only to marketing activities such as new product development, pricing, advertising, and distribution, but also to other elements of the value chain, both upstream and downstream such as design, production, sourcing, and logistics.

2 Alternative Approaches and Perspectives to Global Marketing Strategy

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

In studying global marketing strategy, a number of different approaches have been adopted ranging from the transaction cost perspective to the evolutionary and global integration perspective. Typically, each focuses on different decisions or aspects of global marketing strategy and corresponds in many respects to differences in the experience of the firm in international markets.

2.1 The Transaction Cost Approach

One of the earliest approaches adopted in studying the development of global marketing strategy was transaction cost analysis (Anderson and Gatignon, 1986). This focused on the appropriate choice of mode of entry into international markets and viewed such decisions as a trade-off between control and the cost of resource commitments, and was grounded in Williamson's 1981 transaction cost economics. While control enables the firm to coordinate actions, execute and revise strategies, and thus obtain a higher return, it also entails commitment of resources and hence exposure to risk in an uncertain environment. This perspective has subsequently been widely used in assessing mode of entry decisions (Erramilli and Rao, 1983), notably for exporters and service firms.

2.2 The Standardization/Adaptation Perspective

The standardization/adaptation issue (see Standardization/Adaptation of International Marketing Strategy) was initially raised by Buzzell 1968, examining the potential benefits of standardizing different elements of the marketing mix as opposed to adopting localized strategies. This became a central debate characterizing the marketing literature following Levitt's controversial article “The Globalization of Markets” Levitt 1983, which argued that multinational firms would only be successful if they marketed standardized products worldwide, taking advantage of potential economies of scale in production, distribution, marketing, and management. This debate has been widely pursued not only in relation to marketing strategy in general (Douglas and Wind, 1987) but also in relation to the benefits and feasibility of standardization relative to different elements of the marketing mix, products, and target segments (Jain, 1989).

2.3 The Global Configuration/Coordination Perspective

This perspective emphasizes the importance of configuring and coordinating the firm's activities at different stages in the value chain across different countries so as to improve efficiency and gain the maximum competitive advantage (Craig and Douglas, 2000; Takeuchi and Porter, 1986; Roth, 1992). Activities at the upper end of the value chain such as sourcing, design, and engineering should, for example, be concentrated in countries where they can be performed most effectively and cost efficiently. At the same time, activities should be both vertically and horizontally coordinated at different stages in the value chain and across countries to optimize cost efficiency and maximize speed of response to changes in demand or competitor moves.

2.4 The Global Integration Perspective

Another perspective is the global integration approach (Yip, 1995; Zou and Cavusgil, 2002). World markets are viewed as an integrated whole, and emphasis is placed on the importance of conducting operations in all major markets worldwide, and integrating strategy development and execution across these markets (see Forces Affecting Global Integration and Global Marketing). Similarly, resources may be shifted from one market to another in order to compete more effectively. For example, competitive attacks in one market may be met by counterattacks in a competitor's home market or other key markets. In addition, emphasis is placed on developing a strategy for the standardization of product, promotion, and distribution activities across world markets.

2.5 The Evolutionary Perspective

The most comprehensive perspective is to view the firm's operations as evolving over time as the firm gains experience and expands in international markets. The “stages” theory of internationalization developed by Johansson and Vahlne 1977, based on a study of the pattern of internationalization of Swedish firms, argues that the perceived risk associated with international expansion leads firms to enter proximate, more familiar markets first, gradually expanding into more distant market as experience is gained in operating in international markets. Similarly, Douglas and Craig 1989, 1995 suggest that international market expansion can be viewed as a sequential decision-making process starting with decisions relating to entry into international markets, standardization versus adaptation of international marketing mix decisions to different environmental conditions, and subsequently focusing on coordination and integration of these decisions across national markets.

More recently, it has been pointed out that some firms are “born global” (Knight and Cavusgil, 1996, see Born Global). In essence, such firms immediately adopt a global perspective in initial market entry, and target customers worldwide. Typically, these firms target “niche” markets where customers in different countries have similar needs and interests, for example, medical equipment and computer software. The growth of the international communications infrastructure, particularly, the Internet, often facilitates identification of these opportunities and establishment of relations with customers, ensuring that customer needs are met and satisfied on an ongoing basis.

Since the evolutionary framework also provides the broadest perspective and can also incorporate the other perspectives, this article also focuses on the specific decisions that a firm needs to make as it develops experience in international markets.

3 Beginning Global Market Operations

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

While not all firms expand operations to the point where they can be considered global, all begin by entering a country or countries outside their home market. In initially entering into global markets, a firm needs to make three key decisions:

  • which countries to enter;

  • what modes of operation to adopt; and

  • the timing and sequencing of entry.

These decisions need to be considered in the light of the firm's objectives with regard to global markets, particularly with regard to the desired degree of involvement, and amount of resources (human and financial) a firm is willing to devote to developing operations in international markets, as well as the level of risk – macroeconomic, competitive, and policy – that it is willing to consider in going international.

3.1 Selecting Countries to Enter

In deciding which countries to enter (see Market Entry and Expansion), the firm needs to first evaluate opportunities on a worldwide basis, assessing in each country the macroeconomic environmental factors, such as population size and growth, the level of GNI (Gross National Income) and rate of economic growth, the degree of urbanization, the rate of inflation, the level of corruption, political risk, financial risk, trade barriers, and market regulation. In addition, opportunities and risk at the product market level need to be assessed. Here, the firm needs to consider the absolute size of the product market and its rate of growth, as well as per capita consumption and growth. If a product is not currently marketed in a country, surrogate indicators of demand need to be used. The level of competition also needs to be considered as also the presence and strength of other global, regional, and local competitors. Markets that are large may appear attractive, but if the rate of growth is low this may signal that the market is saturated. Similarly, the market may have a high rate of growth, but if there is a substantial degree of competition, the firm may prefer to focus on developing operations and stimulating primary demand in a less competitive market. In conducting this analysis, a hierarchical screening process based on secondary data can be used to assess opportunities worldwide in order to reduce and expedite the assessment of opportunities and risk.

3.2 Mode of Operation

Once having assessed opportunities and determined which countries to enter or consider entering, the firm needs to consider the mode of operation, that is, whether to enter via exporting (see Export Performance), a contractual agreement with another firm such as licensing or franchising, contract manufacturing, or joint venture, or alternatively, to set up a wholly owned subsidiary either on a greenfield basis or via acquisition. Here, a key factor is the degree of control a firm wishes to exercise over operations in international markets as well as the importance of local input and experience in managing and developing operations, and the resources a firm is willing to devote to international expansion. Some firms, for example, wine or agricultural producers, have no choice but to export if they wish to enter international markets. Similarly, service operations, for example, fast food, hotel chains, and car hire typically expand via franchising to avoid the cost of acquiring local facilities and to ensure input of local management capabilities and experience (see International Franchising). This, however, typically requires extensive systems of control and training on a global or regional basis to ensure that franchisees in all markets provide a consistent service experience and reinforce the firm's brand image internationally.

3.3 Timing and Sequencing of Global Market Entry

The firm also needs to decide the timing of its entry into different international markets, that is, whether to be a first mover and enter a country ahead of competition, or alternatively be a fast follower (see International Product Diffusion). Being a first mover enables the firm to establish its brands and develop customer and distributor loyalty ahead of competition as well as to monopolize key resources such as strategic locations, key distribution channels, thus erecting entry barriers for competition. On the other hand, being a first mover also entails substantial risks as the firm needs to expend resources to stimulate primary demand and in some cases, develop the market infrastructure besides convincing distributors to stock the product. Similarly, there is substantial uncertainty as to whether potential demand will develop or whether environmental conditions will change, for example, the imposition of product regulations. Similarly, competitors can learn from the firm's mistakes and “leapfrog” the learning curve, entering later with a more desirable product or effective marketing strategy.

Another aspect is the sequencing of market entry. A firm may decide to enter international markets sequentially, adopting, for example, a “rehearsal” strategy, entering one country in a region first to gain experience in that market, then rolling out into other countries. For example, a US firm entering the European market might decide to enter the Netherlands first, and use that experience to develop strategies for entering other large markets in Europe, for example, France, Germany, and the United Kingdom. A variant of this strategy is to enter a single country in each region first and use this as a base for developing operations and strategy in other markets in the region. For example, McDonalds first entered into the United Kingdom, and then expanded into the rest of Europe, and used Australia as a basis for developing operations in Southeast Asia.

A key factor driving strategy in initial entry is the desire to achieve economies of scale. Typically, a firm will use the same marketing strategy, particularly in terms of products, product positioning, and branding in international markets as in domestic markets so as to achieve tangible and intangible economies of scale. Tangible economies typically arise from production economies of scale or spreading R&D and other investment costs, for example, in developing advertising themes and copy, over a larger volume of sales. Intangible economies may be less apparent, arising from use of the brand or corporate image on an international basis, thus enhancing its visibility and value to customers. Other intangible economies may include specialized management skills and know-how, for example, in the management of franchise operations or the development of creative product and marketing ideas as in Apple's product design capabilities, or Bic's skill in developing disposable products.

While many firms, both large and small, have already entered international markets, typical firms that are still in the early stages of entering international markets are

  • entrepreneurial firms (see International Entrepreneurship), often targeting niche markets worldwide, for example, firms selling specialized medical equipment, export services, or new product variants such as soft serve ice cream;

  • large emerging market multinationals that often enter markets in developed countries with a low cost positioning based on resource cost in their home market, for example, Haier, a Chinese consumer electronics firm; or Embraer, a Brazilian manufacturer of small jet aircraft; or Mahindra and Mahindra, an Indian manufacturer of agricultural equipment.

4 Refining and Developing Global Marketing Strategy

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

Typically, once firms have entered a number of countries, they begin to expand within these markets. This is stimulated in part by concern with meeting local competition and meeting specific local needs and interests. This is further reinforced by local management attitudes and initiatives that typically reflect a belief that local market characteristics and demand conditions are different and require adaptation of products and marketing strategy. An important concern is also more effective utilization of local knowledge and assets resulting in product line extension or development of new products that can make use of existing channels of distribution. Constraints imposed by national market barriers, for example, tariff barriers, quotas, import duties, and local product regulation, may also encourage local production.

In entering and expanding within countries that the firm has decided to enter, the following three decisions are of paramount importance:

In considering whether or not to standardize or adapt different elements of the marketing mix, the firm needs to consider a number of different factors. While there are a number of benefits from standardization, there are also barriers to standardization and advantages to adapting, and these need to be weighed relative to each element of the marketing mix. Some mix elements such as product and how it is positioned may be more readily standardized than other elements such as pricing (see International Pricing Objectives and Strategies) or distribution (see Designing a Global Supply Chain: Opportunities and Challenges). Similarly, the degree of modification may vary ranging from minor modifications such as adjusting to voltage, size or color preferences, to major differences such as taste and technological complexity.

One of the primary benefits of standardization is that firms are able to achieve economies of scale in R&D and production. Product standardization in international markets enables a firm to reduce the number of models worldwide and hence reduce development costs in addition to enabling them to afford a higher level of design expertise. Similarly, pharmaceutical companies are able to spread the high cost of developing new drugs, and consumer goods companies the costs of advertising (see International Advertising – is there Still a Standardization Versus Local Adaptation Debate?) development across a higher sales volume. Standardization also enables firms to transfer ideas, experience, and knowledge developed in one market to other markets, for example, the concept of disposable products, or experience in developing environmentally friendly products and packaging (see Global Consumerism and Consumption). Standardized products also facilitate the development of a uniform image of quality and service and the ability to develop a strong corporate or brand image worldwide. Standardization also facilitates coordination and control of operations in different country markets as uniform performance standards can be established and performance more readily compared across countries.

On the other hand, there are a number of barriers to standardization. Differences in customer characteristics and response patterns caused by different sociocultural values and lifestyles, climatic or usage conditions, or perceptions and associations with different images, may generate need for different products, or promotional and distribution strategies. Similarly, government regulations and restrictions relating particularly to product and promotional decisions, or campaigns to buy local products, may result in the need to adapt product positioning and promotional strategy. Likewise, differences in the marketing infrastructure, for example, the availability, cost, and effectiveness of different media such as TV, radio, and print as well as nontraditional media, such as the Internet or viral marketing have to be accounted for. Similarly, the organization of the distribution infrastructure and the importance of large-scale distribution organizations versus small Mom and Pop stores may vary considerably from one country to another, or the presence of international or regional retailers may vary considerably, facilitating or hindering local brands and products. Similarly, the extent of and strength of local or regional competitors may vary. Typically, the presence of strong local competition will create pressures to adapt either in terms or product, promotion, or pricing strategy. In addition, local managers are typically opposed to standardized products as these reduce their control over marketing strategy, as marketing policy and guidelines are likely to be established at regional or corporate headquarters.

Such differences in market and demand conditions in different countries and regions, typically lead the firm to extend the product line adding new product variants that are adapted to specific needs and tastes (see Managing the Global Product Portfolio). This may include adding product versions with new flavors or scents, or different types of soft drinks, or bottled waters. This typically helps to generate additional sales, fills out the firm's product line, and enables the firm to tap a broader range of customers as well as compete more effectively in the local marketplace.

At the same time, the firm may also develop new products tailored to specific local market needs (see International Product Innovation and Development). For example, in emerging markets the firm may develop simple functional products, for example, mobile phones targeted to low-income consumers who are unable to afford more complex high-end products marketed in developed countries. Similarly, computers that uses icons may be designed for illiterate consumers, and solar-powered equipment created for consumers with no or unreliable access to electricity. Again, this will help the firm's sales growth in a given market and tap a broader base of customers.

In extending the product line and developing new products within a given country, a key priority is to leverage economies of scope, adding products and product variants that can be distributed through existing channels of distribution or produced at existing production facilities. This enables the firm to spread overhead costs over a higher volume of products. At the same time, it utilizes experience and knowledge of market conditions in a given country, and investment in research to identify and understand customer needs. Similarly, where the same channels of distribution are used, relations developed with distributors or sources of supply may be further reinforced. In essence therefore, a key aim is building the firm's operations in a given market, and particularly in building the scale and scope of operations so as to compete more effectively in local markets.

Firms focusing on refining and developing their international marketing strategy, are typically firms competing predominantly on a regional basis, for example, companies such as Henkel, the German-based manufacturer of detergents and other household products, as well as products targeted to handymen such as glue, paint, and solvents. Similarly, Kao, the Japanese detergent and personal products manufacturer, is focusing on growth in Southeast Asian markets. Other companies are transitioning from developing their strategy to consolidating their positioning and strategy across regional and global markets. McDonald's, for example, has rolled out local variants such as shrimp burgers and fried rice patties developed in Japan to other countries in Asia and McArabia flat bread in Europe. Similarly, in Europe many facilities are being upgraded so that customers come not only for fast service and inexpensive food, but also to enjoy a comfortable and clean environment. Other service ideas, such as home delivery started in Cairo, Egypt, are being added in other busy city centers.

5 Consolidating/Integrating Global Strategy

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

A number of factors act as triggers to consolidate and rationalize operations across different markets (see Forces Affecting Global Integration and Global Marketing). These include, for example, cost inefficiencies and duplication of effort across different country markets, particularly those that are similar in terms of demand characteristics or are geographically proximate. Similarly, opportunities may occur for the transfer of products and brands developed in one country market to other country markets, targeting similar market segments, for example, high-income consumers, younger consumers, in business-to-business markets, or global customers. Similarly, the emergence of competition on a global scale is facilitated by improved linkages between national market infrastructures, for example, retailing or advertising media.

Such factors lead firms to pay increased attention to consolidating operations in global markets, and improving the coordination and integration of operations at different levels of the value chain, such as promotional efforts through greater use of regional or global media and positioning strategies or the establishment of global and regional product development centers. Similarly, sourcing or production strategies may be coordinated or configured at a global level. Here, however it is important to note that global configuration of sourcing and production strategies are dependent on standardization at the product design level.

A key element of the firm's strategy at this point is therefore to establish a global portfolio of countries, products, and target segments in order to establish direction for future efforts (see Managing the Global Product Portfolio). Then, it needs to establish global strategy based on the market scope and target market of its various product business, which may be focused on a specific target segment worldwide, or alternatively be broad based, targeting the mass market in different countries, or hybrid, that is, some combination of both. Finally, the firm will need to consider improved integration and coordination of operations both upstream and downstream in the value-chain as well as horizontally across geographic regions and product businesses.

In establishing the geographic scope of the global portfolio, the firm should maintain a balance between mature markets, such as the United States, Western Europe, and Japan, while targeting emerging growth markets such as China, India, Brazil, Thailand, or Colombia. The mature markets provide low growth, but also lower risk and require little additional investment to develop and build demand. The emerging markets, on the other hand, offer high growth potential, but require greater investment to understand customer demand, evaluate the nature of local competition, and build the market infrastructure, particularly in underdeveloped regions. At the same time, the degree of integration across markets, for example, in Europe, South America, or the Indian subcontinent needs to be considered, in order to effectively allocate investment efforts within a region, as well as diversify across different regions of the world.

Once the firm has established the countries and regions to target, the next step is to establish the firm's Global Marketing Strategy. Here, an important issue is how far this is integrated across different countries and regions of the world. This is likely to depend, to a substantial degree, on the scope of the product market. Where the firms adopt a focused strategy targeting a specific market segment, such as high-income consumers, or young adults, they are likely to integrate strategy across markets, adopting the same positioning, the same or similar product line and pricing, promotional copy and media, and distribution strategy. This may result in the use of global or regional media and, similarly, global or regional retailers who are able to provide coverage matching the geographic scope of the firm's operations and hence, improve marketing efficiencies. If, on the other hand, the firm targets a broad-based mass market, considerably greater difficulties may be encountered in integrating strategy across markets. While increasingly, many firms are adopting global branding strategies, the extent of the product line may vary from one region to another or even by country. Similarly, while advertising themes may be uniform across countries and regions, their execution may vary and distribution strategies may similarly need to be adapted to differences in the structure of the distribution system and the availability and reach of organized distribution, for example, supermarkets, mass-market retailers, and department stores.

In integrating and consolidating strategy across countries and regions, a primary concern, as in initially entering international markets, is to achieve both tangible and intangible scale efficiencies, particularly with regard to the management of marketing and service operations. At the same time, synergies may arise from coordinating and integrating strategy and operations, especially across proximate markets, or in integrating communications efforts at a regional or global level. Similarly, the transfer of best practices is critical, that is, ideas for products, promotional or distribution strategies across countries and regions, as well as experience and know-how in effectively managing marketing operations in different environmental conditions.

Many large US and European multinationals are in the process of consolidating operations across world markets. Many consumer goods firms, who previously had local or regional brands are focusing on building a global branding strategy, at the corporate, product business, and product level. In some cases, this leads to the development of tiered branding strategies where the product level brand is endorsed by the corporate brand as well as a family or house brand. Attention is also paid to building a global information system, particularly at the firm level so that production and distribution logistics can be better coordinated and integrated across countries and regions as well as across product businesses. Increasing emphasis is also paid to the transfer of management across geographic regions in order to enable them to develop experience in working in different environmental contexts, and hence develop and train a multicultural global workforce of managers capable of operating in a variety of different contexts. At the same time, they are able to bring their experience working in other countries and regions to deal with similar problems and situations in a given country or context.

6 Issues in the Continuing Evolution of Global Marketing Strategy

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

The global marketing strategy of firms continues to evolve in response to a changing environment and new challenges. Three of the most pressing issues are (i) the increasing complexity of managing operations on a global scale; (ii) coping with the increasing intensity of competition not only from established multinationals but also from new competitors from emerging markets; and (iii) exploiting opportunities in emerging markets. The role of each of these in shaping the evolution of global marketing strategy is further elaborated.

6.1 Complexity of Managing International Operations

As international operations grow in importance and complexity, management has to direct, coordinate, and control operations on a much broader and more diverse scale and scope (see Marketing Strategy Implementation). This may entail decisions relating to the reconfiguration of the geographic organization of operations at different stages in the value chain, for example, developing global production platforms, or centers of product innovation, or improving vertical and horizontal coordination at different stages of the value chain as well as developing external communication linkages with customers, developing global account management systems, improved supplier linkages, and organizational restructuring to improve coordination and communication links across countries and regions. In addition, establishment of a global information system, and of a global management workforce, consisting of managers able to operate in different countries and cultural contexts are essential to operate effectively in increasingly culturally diverse and far-flung world markets.

6.2 Increasing Intensity of Competition

Firms have also to cope with the increasing intensity of competition as well as the emergence of new sources of competition. As growth slows in many markets in developed countries, such as the United States, Western Europe, and Japan, competition between established multinationals in these markets has become increasingly severe. This has been exacerbated by the entry of firms from emerging markets such as China, India, or Brazil. These firms are able not only to leverage the advantages of a low-cost resource base to build their position in global markets and enter developed markets but are also learning to adopt the technologies and management skills of firms in developed countries and in some cases surpass them in terms of innovative skills. Typically, these firms enter developed markets with a low-price positioning. However, often, as they establish a market position and effective distribution channels, they begin to move upward, adding higher-priced products and developing their brand image. This poses an increasing challenge to established multinationals in developed countries.

6.3 Exploiting Opportunities in Emerging Markets

Slower growth in developed markets has prompted firms to look to emerging markets for growth opportunities. Although current income levels in these countries are low relative to developed countries, ranging from $4460 in Russia to $730 in India, the growth rates and economic fundamentals in these countries suggest immense future market potential (see Emerging Markets). Both India and China have sizable and relatively affluent middle classes which constitute a large market for goods and service as well as vast markets of rural poor and an increasing number of highly successful entrepreneurs. Here, an important decision for developed market firms is whether to focus on the affluent urban middle class in these countries, leveraging existing products and global brands, with limited adaptation of the marketing mix, or alternatively, target lower income consumers, typically in rural areas. Targeting lower income consumers, however, typically requires the development of radically new marketing strategies, including the development of new low-cost functional products and improvement of distribution access and efficiency in rural areas. In addition, creative ways to enhance the ability of consumers to afford products need to be developed. While requiring substantial effort and ingenuity, the size and potential of the emerging markets, not only in India and China but also other continents such as South America and Africa, offers tremendous opportunities for future growth.

7 Conclusion

  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography

The crafting of global marketing strategy is a dynamic ongoing process, continually evolving as the firm expands into new countries and markets, requiring adaptation to new market conditions and demand factors, competitive forces, as well as internal pressures within the firm. Also, the fundamental nature of global marketing strategy changes as the firm's involvement in global markets increases. To succeed, the firm must become an organism that continually evolves, adapts, and responds to the changing realities of the global marketplace. Firms that are able to do so will prosper; those that do not will wither.

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  1. Top of page
  2. Introduction
  3. Alternative Approaches and Perspectives to Global Marketing Strategy
  4. Beginning Global Market Operations
  5. Refining and Developing Global Marketing Strategy
  6. Consolidating/Integrating Global Strategy
  7. Issues in the Continuing Evolution of Global Marketing Strategy
  8. Conclusion
  9. Bibliography
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