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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 Read more: http://www.powerfulwords.co.uk/sample-assignments/marketing/global-marketing-versusdomestic-marketing.php#ixzz2Bi4FAZtS