Download Global marketing versus Domestic marketing

Global marketing versus Domestic marketing
Day by day, global branding is becoming a bigger challenge. Most of the organizations are facing the
challenge to enter the 21 st century is how transition global marketing from their diametrical marketing.
You might think you've created an excellent strategy for your brand in one local market, only to realize
that the rest of the world has access to that same local communication. This exposure destroys any
possibility of separating your local branding strategy from your global branding strategy.
Almost all organizations began initially as domestically oriented firms. As they grew, and as the markets
for their goods and services expanded, organizations tended to evolve from their initial structures and
operations on a explicative basis. That simply means that as organizations expanded beyond their initial
geographic base, they replicated their domestic structure in other areas. We are more concerned here
with Domestic Marketing and Global Marketing which means marketing activity carried on across the
national boundaries.
Although we don't yet know everything that will result from these developments, one thing is certain.
We live in global economy. Most nations today - regardless of their degree of economic development or
their political philosophy - recognize the importance of marketing beyond their own national borders.
Indeed, economic growth in the less developed nations of the world depends greatly on their ability to
design effective marketing systems to produce global customers for their raw materials and industrial
output.
INTRODUCTION:
A marketing restricted to the political boundaries of a country, is called "Domestic Marketing". A
company marketing only within its national boundaries only has to consider domestic competition. Even
if that competition includes companies from foreign markets, it still only has to focus on the competition
that exists in its home market. Products and services are developed for customers in the home market
without thought of how the product or service could be used in other markets. All marketing decisions
are made at headquarters.
The biggest obstacle these marketers face is being blindsided by emerging global marketers. Because
domestic marketers do not generally focus on the changes in the global marketplace, they may not be
aware of a potential competitor who is a market leader on three continents until they simultaneously
open 20 stores in the Northeastern U.S. These marketers can be considered ethnocentric as they are
most concerned with how they are perceived in their home country.
When a company becomes a global marketer, it views the world as one market and creates products
that will only require weeks to fit into any regional marketplace. Marketing decisions are made by
consulting with marketers in all the countries that will be affected. The goal is to sell the same thing the
same way everywhere.
SWOT analysis
Organizations keep a very close eye on each other by carrying out SWOT analysis which involves
assessing the internal strength of the company(S),the internal weakness of the company(W), the
external opportunities(O),the external threats(T) SWOT is very useful tool in helping the business to
archive its marketing objectives. Marketing objectives are the end purposes which the business hopes to
archive through marketing activities. Examples of marketing objectives might be to become the market
leader in the particular market, to increase market share and to become more customer focused
Currying out a SWOT analysis helps the business to focus its activities on these marketing objectives for
example, to become the market leader it helps to be able to identify strengths relative to competitors,
and build on these strengths, identify internal weakness and to seek to reduce and eliminate these
weaknesses for example, an internal weakness might be that the company is not market focused
enough, addressing this weakness might involve employing more people who understand about
marketing and market research. Identify opportunities such as new products and new markets that are
developing. Identify threats such as the new products coming into the market produced by a rival- helps
a business to respond appropriately
In February 2005, Shell and BP both announced record profits for British Companies. They operate in
same sector-oil and gas exploration, refining and scale and have similar but slightly different
approaches. BP strategy has been to invest heavily in oil and gas exploration, seeking new fields to
exploit. They have been very successful, but the problem is that oil and gas are finite resources the
discovery of new fields is limited. Increasingly, to exploit new fields exploration has had to take place in
remote areas of the globe and pipelines have to cross politically sensitive areas.
Shell has pursued a strategy of exploration but not to the same extent as BP. Instead but not to the
same extent as BP. Instead, Shell has focused a lot of investment in the development of so called ‘future
fuels' which are seen as the ones that will replace hydrocarbons. For example, future fuels include the
development of a hydrogen fuel for the hydrogen car. Other future fuels are based on bio-fuels, such as
burning plant matter and wild farming.
We can set out a simple SWOT analysis for BP to compare its position with shell in the following way
Strengths are a very profitable company with exploration taking place across the world. Oil and gas
drilling, refining and distribution taking place on a global scale. One of the best known names in oil and
gas in the world. Weaknesses are oil and gas are finite resources; The company may be over relying on
the future of hydrocarbons. Opportunities are possibilities to develop new pipelines in areas of the
world that are opening up such as china and eastern Europe. As oil and gas become increasingly scarce
their prices will rise. Threats are global warming may lead to government actions to ban hydrocarbon
fuels. Threats of wars and military action may threaten BP facilities across the globe. Competitors may
develop future fuels
We also need to look at internal strengths and weaknesses. Strengths primarily relate to having the right
type of resources to do well in the market. These resources include having managers who can make
change happen and who understand the market, having good human resources people who are flexible
and are equipped to satisfy the market, for example through interacting well with customers, having a
good financial resources base, for example, from making healthy profits, having an excellent marketing
department that understands what customer require.
There are number of external influence that affect businesses and these factors can have a real impact
on day to day business decision making. These influences related to changes in economic indicators such
as interest rates( the price of borrowing money), Changes in the comparative structure of the market
the organisation operates in, for example, the arrival of new competitors make the market more
competitive. Organisations are affected by conditions in the local and wider economy. When the
economy is booming this leads to a general increase in demand for products and also an increase in
business cost. When the economy is depressed this leads to a general slump in demand for products and
cost fall.
To stay competitive, modern businesses cannot solely focus their plans and activities on making a profit.
They have to take on board what is referred to as a triple bottom line. This term refers to the profit that
appears on the bottom of a profit and loss account. The triple bottom line refers to not only being
successful in the economic bottom line, but also in looking after society and the environment.
Most businesses operate in a situation where their products and services compete with those provided
by other organisations to meet the customer's need. Competitor firms can be aggressive and act in a
purposeful way to win the firm's customers. All business have to make a decision concerning the basis
upon which they compete. If it is assumed that the firm's competitors have been careful in choosing a
strategy that reflects their distinctive strengths and abilities then it may be unwise to simply respond to
competition by copying the competitors' strategy. The result would be head-on having an outstanding
strength, the ability to operate on a low cost basis, or the competition. An organisation must compute
on the basis of a strategy that, as far as possible, is unique. A strategy that reflects the firm's own
particular strengths and abilities.
Another type of analysis that most businesses carry out in order to analyse their market position is the
PEST or SLEPT analysis.
These analyses are used to examine the environment in which the business operates. They are
employed because modern businesses operate in very turbulent environments in which it is essential to
understand the changes that are taking place
PEST ANALYSIS
Political factors include such things as a change in government. For example the election of a
conservative government might lead to the lowering of some business taxes.
Economic factors are changes in the wider economy such as changes in general economic activity. For
example, is the economy growing leading to lots of spending in the shops which would encourage
businesses to invest more? Other important economic factors include changes in the interest rates( the
price of borrowing money),the price of the £ in exchange with other currencies, the level of
unemployment etc
Changes in social trends are very important for business. They include such things as changes in the age
structure of the population, for example, there are more elderly people than in the past. Other factors
include changes in tastes and buying patterns for example, as people live busier lives they purchase
more ready- made meals rather than cooking their own.
New technologies regularly come on stream, making old ways of doing things old-fashioned. Successful
businesses are once that adapt and apply new technologies.
One important factor in the firm's environment is competition the amount and nature of which is likely
to be related to the number of other firms in a market, which we can divide into broad categories or
market structure.
PORTER'S FIVE-FORCES APPROACH
Since Porter to envisage the environment as acting upon firms rather than the reverse , these linkages
can be understand as representing five forces acting upon firms
Suppler power :
Supplies include raw materials and semi-finished goods that our firm uses as well as inputs of finical
capital, land, labour and knowledge.
Buyer power:
Here we are concerned with the demand for our firms' products, so now we are the suppliers'. This
means that some of the arguments are repeats of those presented above except that now the boots is
on the other foot. In this case, if we are powerful relative to our customers we can push revenue up. The
constraints on us doing this are as follows. This depends of Number of buyers, Collaboration by our
customer, Ease of Switching, Differentiation
Threat of entry
If firms can enter our market, profits for incumbent firms will generally fall. To determine the size of this
threat the firm must answer the following question Do other firms want to enter our market? This
depends on whether newcomers think that they can do what we do, It will be worth doing.
Threat of substitutes
Treating substitutes as separate force may seen odd since its mentioned when discussing all the other
forces; however, it is important to do this since rivals in the same industry do not supply all of the
alternatives for our firm's product. It is important, therefore, to treat substitutes as a separate factor
rather than count it purely as a function of competition within the industry. The degree of
substitutability of a firm's products is important insofar as having many substitutes increases elasticity of
demand and there by reduces the product's profit potential. Substitutes can be divided into three types
products that meet the same need, Products that eliminate the need for our product and Not bothering
Competition within the industry
Although this has been mentioned in reference to the other four forces they are market structure,
Product differentiation, switching costs, Leadership, Industry growth rates likelihood of price
competition
Conclusion:
The dynamic environments of today require a more dynamic approach to strategy development.
Research into strategy development has come a long way since the early work in the 1960s.
Nevertheless, many of the earlier concepts are still valid today or are reflected in the basic assumptions
employed by recent research. While earlier research work into strategy formulation and implementation
was directed at identifying reasons for superior performance, the focus later shifted towards the study
of strategic processes and the search for sources of competitive advantage. With the increasing level of
dynamics in competitive environments, researchers have realized the need for a dynamic approach to
strategy development. Such a dynamic approach implies that an organization's success cannot be
explained through the application of specific strategic processes or techniques. High performance in
dynamic environments is a characteristic that must be constantly pursued through an ongoing process
of change which is in line with
Changes in the competitive environment, the values of the organization and its capabilities. Under fast
changing conditions it is not possible to employ generic strategies or follow a structured process of
strategic analysis. Successful strategies are crafted and realized through a process of creativity and
innovation involving all the skills, expertise and genius that are available throughout the organization.
Successful strategies are driven by a sense of purpose and commitment which cannot be imposed or
communicated but which must originate from inside the organization and become a vision that is clearly
visible within and outside the organization. Successful strategies are therefore driven by the possibilities
of the future rather than the restrictions of the past. This cannot be achieved by sequential
inductive/deductive approaches to strategy formulation and implementation. A sequential
inductive/deductive approach usually results in already known solutions which do not necessarily
differentiate the organization from its competitors. What is required is a process of visioning which
lends itself to creative solutions thus forming the basis of differentiation. This process requires he close
co-operation of people throughout the organization and a communication structure which is open and
flexible. The findings of this work have major implications on researching strategy development.
Traditional research approaches have failed to develop knowledge which can be effectively and
efficiently applied in highly dynamic environments. This is because research objectives and user needs
are often misaligned and user needs change rapidly over time. As a result, the knowledge generated
often lacks relevance and general applicability while there remains a large number of issues that need to
be addressed. Researchers should therefore continuously adjust their objectives and processes to new
emerging issues that are relevant to the real business needs of organizations and the pace of change in
the environment rather than defining and testing a limited number of hypotheses.
References:
Sak Onkvist & John J.Show : Third Edition - Inetrnational Marketing Analysis and Strategy
Michael J.Ehael, Bruce J .Walker, William S.Stanton & Ajay Pandit: Thirteenth Edition -Marketing
Concepts and cases
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