global marketing course matl

8/8/2019 Global Marketing Course Matl

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Global Marketing


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My Background

IIMA batch of 1981-83

Over 26 years of industry experience across Marketing, CRM,Credit Risk, Business Strategy and Business Intelligence.

Key Projects:

Launc e car s in In ia or American Express Launched personal loans for GE in India

Led the Analytic services business for Fair Isaac in the Asia Pacific region

Developed a strategic framework for card acquisition and customer

retention for American Express GNS partner banks in Asia Pacific region

Mobile: +91 9665098069; Email: [email protected]


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My Philosophy

I hear and I am going to forget

I do and I am sure to remember


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Course Mechanics

Class GM Course Coordinators:

Jasmine Narang

Sarvesh Sridhar

Attendance

Class

Group Assignment - Presence is mandatory to get credit

Evaluation End-of-term exam 20%

Class participation, quizzes & pstns 40%

Group Final Project 40%

Missed deadline Late Submission 10% deduction

More than 2 hrs and upto 24 hour late: 25% deduction

> 24 hour late: No marks


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Agenda for Session 1 Discuss & mark the Home Assignment

Pstn on - Introduction to Global Marketing Use Singapore Airlines case study as an example

Teams for Group assignment


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Introduction to global marketing

The process of focusing the resources(people, money, and physical assets)

and objectives of an organisation

on global market opportunities and threats

Keegan 1995


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Introduction to global marketing

International Marketing issimply an attitude of mind,

the approach of a company with truly global outlook,

seeking its profits impartially around the world,home market included,

on a planned and systematic basis.


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Whats the Difference?

International Marketing

Vs

International Trade


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1. Marketing is a Universal Discipline

2. Markets & Consumers are differentiated

3. Cannot apply experience across countries4. Customised Marketing Plan


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The Three Principles of Marketing1. Customer value and the value equation

i.e. value greater than competitors

Value equation is:

2. Competitive or differential advantage

Advantage vis--vis competition


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3. Focus

i.e. the concentration of attention

Achieved through concentrating resources

IBM was focused on customer needs and wants for data

processing IBM crisis in early 1990s - lost focus


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From Domestic to Global/Transnational

Marketing Political & Legal differences

Cultural differences Economic differences

Differences in currency unit

Language difference Difference in Marketing Infrastructure

Trade restrictions

Cost of transportation Differences in trade practices


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Driving forces Global Village Marshall Macluhan

Market needs - X-Box for leisure Technology - Third Generation phones (3G)

Cost - low cost production e.g. Gap

Quality - Is now taken for granted. Communications and Transportation


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Driving forces ...contd Leverage (i.e. advantages of operating in numerous markets

simultaneously)

Experience transfers

Systems transfers

Resource utilisation

Global strategy. Scanning the globe!


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Underlying forces Dr. Howard Perlmutter Orientation of Management and

Companies

International money framework and exposure to currencyfluctuations

post or tra ng system - Global peace - post September 11th

Arrival of global/transnational companies


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How have things changes after September 11 2001? 26/11 2008?


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Global Marketing Environment


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The Environment of Global Trade Capital movements (not trade) are driving forces of the

world economy

Production is uncoupled from employment e.g securityguards in India using webcams

industrial economy e.g steel from South America intoEurope

The world economy is in control

75-year contrast between capitalism and socialism is over


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Barriers to Trade Tariff barriers - direct taxes on imports

Bahamas has 30% on all goods

Australia and US impose on cars and agricultural goods e.g Japanesemanufacture in Australia

Average now 5% was 25% in1945

Non-tariff Barriers Increased govt. participation, US wheat subsidy

Customs entry procedures

Quotas (quantitative restriction) US textile imports from China

Global warming CO2 emissions


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Forms of Market Agreement Free Trade Area - remove all tariffs amongst members

e.g NAFTA USA/Canada Mexico

e.g EEA (European Economic Area) EU, EFTA and LAFTA

Customs Unions - as above but with common externalbarriers

e.g EC prior to 1993.


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Common Market - as above but also the free flow of all

factors of production e.g EU since 1993

Economic Union - Common market characteristics are combined with the harmonisation of

economic policy.

Supranational authority to design policy for a group of nations

Objective of Maastricht Treaty in 1991. EU was formed in 1993.onetary nion commence in . ext po itica union ore

convergence and less national autonomy?


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Potentialentrants

Threat ofentrants

Suppliers BuyersCOMPETITIVE

Five forces analysis

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980,

Threat ofsubstitutes

Bargainingpower

Substitutes

Bargainingpower


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Competitive Rivalry

Entry is likely

Substitutes threaten

Buyers or suppliers exercise control

There is slow market growth

Global customers increase competition

There are high fixed costs in an industry

Markets are undifferentiated There are high exit barriers


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Competitive Rivalry -

motor industry


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Buyer power There is a concentration of buyers

There are many small operators in the supplyingindustry

Components or materials are a high percentage ofcost to the buyer leading to shopping around

Switching costs are low

There is a threat of backward integration


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Bargaining power of buyers - Wal-Mart


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Supplier power There is a concentration of suppliers

Switching costs are high The supplier brand is powerful

Integration forward by the supplier is possible

Customers are fragmented and bargainingpower low


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Bargaining power of suppliers - Bill

Gates - Microsoft


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Threat of substitutesSubstitutes take different forms:

Product substitution - BT for Orange

Substitution of need - international not local calls(satellites not wires)

ener c su s u on - mo es or an asetelephones

Doing without - no communication


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Threat of substitutes -

KFC China


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The threat of entryDependent on barriers to entry such as:

Economies of scale

Capital requirements of entry

Access to distribution channels

experience curve)

Expected retaliation

Legislation or government action

Differentiation


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New Entrants - Citibank


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Citibank - FirstmoverHigh brand recognition

More positive brand imageMore customer lo alt

More distributionLonger market experience


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CountryCountryCountryCountry---- Specific Advantages (CSAs)Specific Advantages (CSAs)Specific Advantages (CSAs)Specific Advantages (CSAs)

E.g low cost production of Volkswagens in Portugal Comparative advantage - e.g France apples, UK lamb

International Product Cycle (IPC) - Raymond Vernon 1966

USA production shifted over time to new locations USA begins to export goods and technology

Countries such as Korea then become low cost producers and exportback to USA


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Porters Determinants of National AdvantagePorters Determinants of National AdvantagePorters Determinants of National AdvantagePorters Determinants of National Advantage

(1990)(1990)(1990)(1990)

Firm strategy,structure,

and rivalry

Factoryconditions

Demandconditions

Related andsupporting

industries


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National Competitive AdvantagesNational Competitive AdvantagesNational Competitive AdvantagesNational Competitive Advantages Factor conditions e.g skilled labour, infrastructure

Demand conditions e.g. home demand for the product ofservice

Related and supporting industries e.g raw materials,

Firm strategy, structure and rivalry


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Competing in Global Markets


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Competing in the Global Market Global competition impacts:

industry structure

degree of competition

firms national origin and the competitive advantage of nations

costs, market share, price quality, accumulated experience

Competitive forces - Five Forces Analysis


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Fragmented Industries Populated by a large number of Small Medium Enterprises

Porter

Absence of market leaders with the power to influenceevents.

low barriers to entry

transport costs are high

local image important etc.


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A fragmented industry may become consolidated with: technological change

standard product preferred over customised one

large publishing companies with small imprints

Consolidate naturally with age

Without consolidation a firm can specialise and grow by: offerin a standard product or service

dealing with particular customers Concentrating on a particular area


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Concentrated Industries Dominated by a small number of large firms, exercising

significant influence over the market

How does this happen? Cheap to produce in bulk

Si nificant resources to sta in business

High barriers to entry etc.


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Always a main market leader influences the way business is done

strong relationship with sources of supply

control over distribution networks


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Emerging Industries New or reformed industry

e.g electronic publishing and interactive TV - FT, New York times, Digital

TV. e.g Waste recycling - BMW, Winchester City Council

e.g Internet browsers - Netscape Navigator

e.g oa pr c ng sys ems - o sys ems or r ges an mo orway


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Problems with emerging industries:

lack of faith in technology innovative product where customer needs are as yet unknown

high initial start up costs

potential customers need to be kept informed of developments

early barriers to entry e.g raw materials competition for components

customer confusion

Obsolescence

Erratic quality

Scepticism from bankers and investors


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Waste Recycling?


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Link in with . . . Kenichi Ohmae - Globalisation means businesses do not have

a nationality, but shared values

Levitt Globalisation of Markets

Competitive Advantage of Nations

ot er - ere o we go rom ere


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Culture in a Global Marketplace


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Social and Cultural Environments

Basic aspects of culture

It is not innate, but learned

The various facets of culture are interrelated - touch aculture in one place and everything is affected

It is shared by group members, and defines boundariesbetween different groups

Edward T. Hall, Beyond Culture (1977)


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General Motors

Ad should readBody by Fischer

ac ua y reaCorpse by Fischer


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Hertz strap-line

Let Hertz put you in thedriving seat(liberationand action)

Let Hertz make you achauffeur (change youroccupation or status)


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Cultures across countriesHigh context culture

The meaning of individual behaviour and speech changes

depending on the situation Nonverbal messages are full of important meaning (Read

between the lines

e.g. Saudi Arabia and Japan, written contracts are not alwaysenforceable as new people move into executive positions (Chile,Mexico)


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Low context culture Intentions are expressed verbally

The situation does not change the meaning of words

e.g. India, China, Australia, New Zealand

Social and cultural influences on the


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Social and cultural influences on the

international buyer Cultural differences

Language, spoken and silent

Mental processes and learning Values and norms

Type of buyer behaviour Consumer

Business

Government


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The influence of others in the buying process Decision-making unit

Family

Peers Specific cultural influences

Reli ion

Education Family

Reference groups


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The influence of the market

Distribution channels

Manufacturer

Service providerPhillips, Doole and Lowe (1994)


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Self-Reference Criteria1. Define problem or goals in terms of home-country

cultural traits, habits and norms

2.Define problem or goals in terms of foreign culturaltraits, habits and norms

.

carefully to see how it complicates the problem4. Redefine the problem without the SRC influence and

solve for the foreign market

James Lee (1966)

Written English: but what does it


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g

mean?

Japanese hotel notice to guests:

You are invited to take advantage of the chambermaidBangkok dry cleaner to potential customers

Dro ou trousers here or best results

A Roman laundry innocently suggests: Ladies, leave your clothes here and spend the afternoon having a good time

A Copenhagen Airline promises to

Take your bags and send them in all directionsA Hong Kong dentist claims to extract teeth

By the latest Methodists

An outline of cross-cultural analysis of


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consumer behaviour

Determine the relevant motivations of the culture

Determine the characteristic behaviour patterns

Determine what broad cultural patterns are relevant tothis product

Determine the characteristic forms of decisions making

Evaluate promotion methods appropriate to the culture

Determine appropriate institutions for this product inthe mind of the consumer


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Market information Market potential

Consumer / customer attitudes and behaviour

Channels of distribution

Communications and media

Market sources

New products


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Competitive information Competitive business strategy and goals (mission and

rationale of the company)

Competitive functional strategies and programmes (targetmarkets, marketing mix, etc)

, , . .

detail)


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Foreign exchange Balance of payments, interest rates, etc

Prescriptive information e.g incentives, controls, regulations.

Country monetary and fiscal policy

Ex ectations of bankers, traders, anal sts, etc

Government policy in relation to its own competitiveness e.gChina, USA


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Resource information

Human resources Money

Raw materia s

Acquisitions and mergers, joint ventures


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General conditions Economic factors - e.g. growth

Social factors e.g. customs, attitudes

Political factors e.g investment climate

Scientific and technological factors - major developments andtren s

Management and administrative factors e.g. report procedure


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Sources of information Human sources e.g company executives

Documentary sources e.g central bank report

Perception sources e.g. what we see and hear

Information and media

face-to-face conversation

telex/fax/e-mail

sight, smell, taste


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Five rules for international research One:

What information do I need?

Where can I get this information? Why do I need this information?

What is this information worth in $ ? What is the cost of not obtaining this information?


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Two: Start with desk research Three: Identify the type of information that is

available from overseas sources Four: Know where to look (or find somebody

Five: Do not assume that the information that yougain is comparable or complete.

Keegan 1995


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Entry evaluation procedure

Stage 1 - Country identification

Stage 2 - Preliminary screening

Sta e 3 - In-De th screenin

Stage 4 - Final selection


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Stage 1 - Country identification

Candidate countries are identified and listed

Broadly based on general statistical information

Conduct population comparisons to predict market potential Indonesia 18 million, Malaysia 17 million

Brazil 50 million, Chile 13 million


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Stage 2 - Preliminary screening

Rating the identified countries

Macro level - political stability, geographical distance,economic development

Weed out countries from consideration

Anticipated cost of entry are calculated e.g. warehousing,product support, distribution


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Stage 3 - In-Depth screening

Core of attractiveness evaluation Data specific to industry/market

Market size

Market growth - business cycle, computing rates of growth Competitive intensity - e.g. US Dept of Commerce Market

Shares Report

Trade barriers


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Stage 4 - Final selection Objectives brought to bear for a match

Revenues and costs are compared for leverage Weights can be added to criteria based on objectives

Personal visits are made. Direct experience leads tofinal decision

Johansson (1999)

Phase one

Preliminary analysisPhase two Phase three Phase four

Information derived from each phase, market research and performance.


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Preliminary analysis

and screening:matching

company/countryneeds

Adapting themarketing mix totarget markets

Developing the plan Implementation andcontrol

Environmental

Matching mix

requirements Marketing plan Implementation,

evaluation, control,

company character,

and screening.

Host country (s)

constraints

Company

character

Product

Price

Promotion

Distribution/pla

ce

Physical

Evidence

People Process

Situation analysis

Objectives

Strategic options

Tactics

Budget

Action

programmes

Objectives and

standards

Assign

responsibilities

Measure

performance

Corrective action

The International Marketing Planning Process


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Planning for Overseas Marketing


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Global Marketing Management

Stages of development of the transnational corporation

Stage one - Domestic

Sta e two - International

Stage three - Multinational Stage four - Global

Stage five -Transnational

The International Marketing Planning Process


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Stage one - Domestic Domestic in focus, visions and operations

Focus on domestic markets

Environment scanning is local If its not happening in the home country, its not happening

Often conscious decision

Can develop to be stage two company


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Stage two - International Extends marketing, manufacturing and other activities

outside the main country

Remains ethnocentric (home country orientated) Groups people together in an international division

trategy o extens on


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Global development always begins in stage two

It would be a mistake to simultaneously jump into newcustomer and new product/technology markets


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Stage three - Multinational Discover that different markets need some degree of

adaptation

e.g Toyota first entered US in 1957 as Toyopet Overpriced, underpowered, built like tanks

o suc t ng as a ure, on y earn ng

Multi-domestic focus

Discover that different markets need some


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degree of adaptation -Toyopet

Polycentric orientation


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Adapts domestic marketing mix to suit the differinginternational markets


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Stage four - Global Major strategic departure

Global marketing and/or sourcing strategy

Focus globally and supply from domestic market e.gHarley Davidson

Supply domestic market from global sources e.g. Gap

Must understand the limitations of competitiveadvantage (not too ambitious!)


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Harley Davidson


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Stage five - Transnational Sales, investments and operations in many countries

Integrated world enterprise that links global markets and

global supplies Geocentric - recognises similarities and differences and

Adaptation adds value Key assets are dispersed, interdependent and specialised

e.g. R&D

E.g. Caterpillar - manufactures and assembles in many


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countries components are shipped-in from many countries

they are assembled

then despatched to different countries Experience and knowledge are shared globally

Grow or die - aspirations are global Global bias for key functions e.g. finance, NPD, supply

chain management

Caterpillar - manufactures and


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assembles in many countries

Strengths at each level


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International exploits the parent companys knowledge and capabilities through

worlwide diffusion of products

Multinational flexible ability to respond to national differences

o a

cost advantage through centralised operations Transnational

combines above in an integrated network, which leverages worldwidelearning and experience


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Global Market Entry Strategies

Operational reasons for setting up overseas manufacture

Strategic reasons for investing in local operations

Methods of overseas production

Exporting options

Joint Ventures and Strategic Alliances

Operational reasons for setting-up

f t


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overseas manufacture Reduced costs of transportation

Reduced barriers/ quota handicap e.g. Nissan Some governments demand investment with market entry

e. . China

Customers sometimes prefer local manufacture e.g. HeinzBritish?

Government contracts prefer firms contributing to the local

economy


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Improved local market information

Local manufacture ensures greater commitment tointernational markets

- -

Strategic reasons for investing in local

operations


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operations

Gain new business demonstrates strong commitment

persuades customers to change suppliers

provi es etter service an more re ia i ity

Defend existing business avoid market restrictions as sales increase, particularly in single market

Move with established customer component suppliers follow customers to compete with local component


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component suppliers follow customers to compete with local componentsuppliers

Save costs

labour, raw materials and transport Avoid government restrictions to import certain goods

Exporting


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Exporting Indirect

export houses

buying offices of foreign stores or governments complementary exporting

sales to final user

overseas agencies

distributors and stockists

company branch offices abroad

Degree of involvement vs control?

Methods of overseas production


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Methods of overseas production Licensing

Companies with strong brand or know-how

e.g. Coca-Cola, Disney Franchising

more of a whole acka e

e.g.Body Shop, KFC

Contract manufacture bulk items e.g. Nike

components

Joint ventures - e.g. Burmah Castrol in S.Korea


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e.g. Burmah Castrol in S.Korea

Wholly owned overseas subsidiaries

Organic growth

Strategic Alliances

St t i lli f l t ki l ti hi


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Strategic alliances can range from loose networking relationshipsto very tight contractual relationships such as joint ventures.

e.g. code share where airlines of a similar type sell each others

tickets. There is no co-ownership. Types

Technolo swa s

R&D exchanges

Distribution relationships Driving forces

Insufficient resources

High R&D costs

Concentration of firms in mature markets Market access

Joint ventures e g European Airbus


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Joint ventures e.g European Airbus. Orgs can remain separate, but have a tight legal relationship. Reasons for setting up

overcome foreign ownership restrictions

increase speed of entry exploit new opportunities, complementary technologies and management skills achieve worldwide presence at lower cost

isa vantages differences in partner aims and objectives equal ownership and different options can slow decision making dominance by one partner can lead to resentment in the other Large time commitment for education, negotiation and agreement with partner

Mergers


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The identity of each of the merging companies issubordinated into the identity of the newly merged

organisation, or disappears. Benefits include:

utting cost

Eliminate competition

Synergy augments mutual strengths

International Distribution &


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International Distribution &Logistics

International Distribution and Logistics


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Swatchs channel design

Todays system of exchange

Rationalising local channels

Wholesaling

Nikes Do it yourself

Retailing

Creating new channels

Kodaks own airfreight hub

Global logistics

Global Channel Design


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Global Channel Design

Chosen intermediaries must

meet criteria Work closely with distributors

u sus a n ran

Avoid discounting Shops in shops approach e.g

department stores

Promotion

Contact

Todays system of exchange


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Negotiation

Contact

Transporting and storing

ers U

sFinancing

Packaging

Money

Goods

Pro

du

er

s

Rationalising Local Channels Ch i di t ib t h j b i b i d


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Changing distributors - where a poor job is being done e.g.Nike took on distributors

Dual distribution - multiple channels may emerge e.gGoldstar in USA (OEM deal with Sears, later under own

Wholesaling


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Vertical integration power and competition 80/20 rule e.g. Malaysia a dozen European

import houses handle half of the trade, whilst hundreds of smallercompanies handle the remainder

Efficienc trend towards integration by technology e.g. Wal-Mart

Types of wholesaler fit all bills e.g. full-service wholesalers

Nikes Do it yourself


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Nike s Do it yourself 1970s independent

distributors

successful brand at home

1980s established ownsubsidiaries overseas

Now controls mostsubsidiaries

even bought some distributors

Retailing

M ddl h ll d l h


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Middlemen who sell directly to the consumer

Retailing and lifestyles many in developed world retailers are globalising

ro ems or mar eter

Gillette blades through drugstores in USA, tobacco shops in Italy,department stores in Germany, street in Moscow, counters in Thailand,travelling vans in India

Creating New Channels

R ili i d i


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Retailing is dynamic

Innovative over recent years self-service discounting

mail-order houses

fast-food globally diffused

Global retailing success for Carrefour in Brazil and Argentina

Marks and Spencer had problems in Canada and pulled-out

Kodaks own airfreight hub


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oda s o a e g t ub Minimise shipping errors and

product handling Loaded onto trucks at

All paperwork is alreadycompleted

Flight approval is obtainedbefore truck arrives at airport

(JFK)

Global Logistics

h l h


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Focus on channels within a country the transportation and storage activities necessary to transfer the physical

product from manufacturing plants and and warehouses in differentcountries to the various local market countries Johansson (1999)

Su l chain mana ement e.g. Nissan trucks sold in France come from their Tennessee plant, Micras

from Sunderland, Maximas from Japan via Amsterdam.

Competition and technology

Air Express e.g. FedEX, DHL, UPS and Airborne

Ocean carriers Global carrier alliances e.g. Sea-Land Service of Seattle and Maersk of

Denmark have a global partnership


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Denmark have a global partnership.

Overland transportation

roll-on-roll-off (RORO) containers are moved from ships directly ontorail (USA)

Warehousin and inventor mana ement e.g. SKF bearings new distribution centre in Belgium reduced distribution

points from 24 to 5

O i i f O M k


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Organizing for Overseas Markets

Organising for international marketing


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Factors affecting organisational design

Organisation by product or brand/Matrix organisations Guidelines for the organisation

ac ors n uenc ng e n erna ona organ sa on

Centralisation vs decentralisation The impact of business culture

Human resource implications

Expatriate managers

Corporate goals

Mission

ObjectivesStrategies

Factors affectingorganisational

design

Jeannet andHennessey (1994)


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Organisation

External

forcesGeographicdistance

Internal

influences

Percentagees gn

Types of

customer

Govt. regulations

of sales

Diversity ofmarkets

Human resources

Flexibility

Management styleStructural basis

Focus on decision

E.g. Organisation by product or brand


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Product Divisionalisation

Board of

CentralDepartments

DivisionalManager

Product group A

Area 1 Area 2 Area 3 Area 4

DivisionalManager

Product group B

DivisionalManager

Product group C

FinanceDepartment

Directors

Area 1 Area 2 Area 3


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Product Manager A

Product Manager C

Matrix Organisation

Unity of command is sacrificed to co-ordination across business functions.E.g. people reporting to both product managers and area bosses.

Guidelines to the organisation


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Concerns:

The division of labour

Delegation/power/authority

There must be:

A l h i f d


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A clear chain of command

Everyone must know who to report to/who reports to

whom

Res onsibilit must be matched with authorit

Few levels of authority

The span of control should not be too great

The structure must be flexible

Factors influencing international

marketing organisation

Si f th fi


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Size of the firm

Number of foreign countries involved

Level of involvement

rm s o ec ves or s ore gn us ness

Firms experience in international business

The value and variety of its products

The nature of the marketing task

Centralisation v decentralisation

I.e. the global division of labour or specialisation by


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subsidiary?

Advantages of centralisation? better for planning

--

optimum use of resources

Disadvantages of centralisation poor motivation amongst subsidiary staff due to too much control

misunderstandings and delays in communication

The impact of business cultureInfluenced by:


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the organisations founder

the organisations history leadership and management style

original structure and systems

the industry itself e.g. Silicon Valley and software

Human resource implications -

expatriates v locals?


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Think global and act local Local managers could lead to loss of control

Is there such a thing as a global manager, if so is

he/she available?

Expatriate managers

(reverse for local managers)

Advantages


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where there are poor educational opportunities

where senior managers believe expatriates are better

where there is control at the top.

Disadvanta es they cost more! E.g. relocation

growth in dual career households culture shock

substantial training programme

Standardization Vs Adaptation


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Standardization Vs Adaptation

Product decisions - Standardisation vs

Adaptation

Three levels of product


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Global products Advantages/disadvantages of standardisation

Problems with standardisation

Brand globalisation potential

Installation

Packaging

Augmented

product

Actual



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Corebenefit

After-Deliveryand

g g

Brand

name

Features

product

or service

Warranty

servicecredit

Quality Styling

Coreproduct

Global Products

Localisation of a product or service to fit local regulation


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and usage requirements e.g. local voltages and safety laws

Adaptation fits the product to buyer preferences e.g. Air-conditioning in USA

Standardisedglobal products are not adapted to local

preferences, but must still be localised. E.g Coca-Colaobey local hygiene laws

Advantages of standardisation


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Cost reduction - e.g. economies of scale

Improved quality - resources can be focussed Enhanced customer reference - ositive ex eriences

lead to global brand loyalty

Global customers - uniform quality and services

Global segments - e.g. software, cameras.

Disadvantages of Standardisation Lack of uniqueness exclusivity may be behind purchase


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Lack of uniqueness - exclusivity may be behind purchasedecision

Off-target - miss the customer target completely

Vu nera e to tra e arriers - oca pro uction may e

necessary, so economy of scale benefits are lost Strong local competition - customisation by competitors,

lack of local knowledge

Problems with global standardisation


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Insufficient market research

Over standardisation Poor follow-u

Narrow vision

Rigid implementation

Polaroid SX-70I ffi i k h


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Insufficient market research

Used US campaign/agency inEuropean launch

es mon a s romunknown people

Hence local lack of awareness

Canon AE-1

Overstandardisation

First positioned as the


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First positioned as theexperts choice in all markets

Then endorsed by JohnNewcombe TennisChampion)

Created a much bigger marketfor single-lens reflex camerasworld-wide

Henkel Pritt P f ll


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Poor follow-up

Pritt stick launched as anumbrella brand

a e o cap a se on n amomentum

Local business units wereunder resourced

Weak results had to be turned

around

Unilever - Domestos NarrowVision


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Narrow Vision

Vision lead from HQ UK took lead in promoting

omes os

In Germany positioned as dirtremover, not germ killer

UK ignored this - consumersconfused

Lego Buckets

Rigid implementation

In US competitor Tyco


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In US, competitor Tycooffered plastic buckets

Danish HQ refused to act

market slide

Now use buckets world-wide

Brand globalisation potential

Does the brand name make sense outside of the country?Nokia from Finland is aware name sounds Japanese


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Nokia from Finland is aware name sounds Japanese

(same roots) Does the name have a positive, country specific image?

E.g GMs Opel and Chevrolet

Is the name available legally in many countries? DutchPhilips, Phillips Oil registered in USA

Does the brand complement other global brands in the

portfolio(or not)? E.g. Sony supports Aiwa at a lower price Should the growth be limited to the creation of a regional

brand? E g Strasbourg beer maker Kronenbourg in global


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brand? E.g. Strasbourg beer maker, Kronenbourg in global

markets, as 1866 in S. Europe. Local brand can be difficultto remove.

Johnny K. Johansson (1999)

Pricing Decisions


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Keegans four steps to global pricing strategyGeneral pricing strategies

Problems with pricing for multinational markets

Problems with foreign currency and economic conditionsGrey markets

Global Pricing Strategies - Four Steps

1 Determine the price elasticity of demand


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(Inflexible demand will allow for a higher price)

2 Estimate fixed and variable manufacturing costs

3 Identify all costs associated with the marketingprogramme

4 Select the price that offers the highest contribution

marginWarren J. Keegan (1995)

Pricing Strategies

M k t ki i


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Market skimming

Market penetration

ar e o ng

Cost-plus pricing

Market Skimming - Sony Betamax

Harvey Schein, President - $1,295 at launch!


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Market Penetration - Daewoo blitz the

market


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Market Holding

Maintain their share of the market


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Currency fluctuations often trigger price adjustments Price adjustments can mean lower, or no profit margin

Strong home currency could mean manufacturing/licensing

abroad

Cost-plus Adds-up all cost of production (and shipping)

Easy to make quotes


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Ignores demand and competitive pricing in target market Consumer and competitor value issues must always

cons ere n a rat ona pr c ng strategy

Problems of multinational pricing

Co-ordination across various markets?


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Do we maintain a uniform pricing policy acrossmarkets?

How to transfer price between and across markets? E.g.

Sandvik (Sweden) Parallel imports or Grey markets?

Problems with foreign currency and

economic conditions

Whi h f i i i i t ti l


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Which currency for pricing in internationalmarkets?

How to ea wit uctuating exc ange rates?

Strategies for high inflation rates?

Grey Markets Products must be available internationally (as products are

standardised in global markets)

Low trade barriers (tariffs legal restrictions transport costs)


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Low trade barriers (tariffs, legal restrictions, transport costs)

Price differentials must be great enough (so that greymarketers can make a profit)

Duhan and Sheffet (1988)

International Communications


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Four major difficultiesTypical Marcoms (Marketing Communications) tools

International communications plan

Tactical decisionsOrganising and co-ordination of advertising effort

Personal selling

Four Major Difficulties

The message may not get through to the intended recipient

The message may reach the target audience but may not be


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g y g y

understood (or may be misunderstood) The message may reach the target audience and may be

understood but may not induce the recipient to take action

desired by the sender The effectiveness of the message can be impaired by noise, or

the effect of external influences such as competitiveadvertising etc

Warren G. Keegan (1995)

Media Spending

Outdoor - important in Japan and South Korea - exposure in largecities


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Cinema - Argentina and India where films are popular pastimes Print - high literacy rates e.g France, Germany, and Sweden

Ra io - ac o opportunity in Europe wit governmentownership

Television - Strong in USA, Asia, and South America

Advertising exposure

Awareness

Knowledge


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Liking/Attitude The Hierarchyof Effects

Preference

Repeat purchase/loyalty

Trial

International communications plan How do marcoms objectives help to achieve the international

marketing objectives?

Think through various scenarios e g PR sales force


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Think through various scenarios e.g. PR, sales force

Decide upon specific objectives

ec e ow you w organ se e.g. se ect on o agenc es

How important is creativity?

How much standardisation are we seeking to achieve? What is the overall communications budget?

What is the balance of expenditure between the


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p

elements of the promotions mix?

specified

Detailed tactical plans need to be written

Timings and schedules need to be worked-out

Methods of evaluation and control need to be established

Develop contingency plans

Learning will lead to need plans for the future


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g p

Tactical decisions TV commercials are sandwiched together in a string of

10-50 commercials within one station break in Brazil

National coverage can mean using as many as 40-50


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National coverage can mean using as many as 40 50

different media

only

In Germany, TV scheduling for the entire year must bearranged by 30th August

In Germany, no guarantee that commercials intended for

summer viewing will run in that period In Vietnam, advertising in newspapers and magazines will

be limited to 10 % of space and 5 % of time, or three


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minutes and hour on radio or TV

Organising and co-ordination of

advertising effort

Domestic agency familiarity/trust/relationship/knowledge

no international experience


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Appointing local agency local to the market understand local cultures/relevant

contacts/experience

Centralising the effort Saatchi & Saatchi claimed to be the first global advertising agency - one

sight, one sound, one sell

Personal selling

Generally the marcom thrust where wages are low

Philip Morris in Venezuela employs 300 sales people and assistants


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Linguistic pluralism exists e.g India

lateness is inexcusable in Hong Kong but is expected in India

banquets and frequent toasts in China

Negotiation strategies where bargaining varies betweencultures

Staffing the sales force

Personal selling through intermediaries


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Government sponsored trade missions International trade fairs

Consortium selling (airports/hospitals/etc)

Marketing of Services


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ServicesThe extended marketing mix for services

Elements of service

PeopleProcesses

Physical evidence

Services are distinguished from products

mainly because they are generally produced


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y y g y p

at the same time as they are consumed,

w y .

enhanced marketing mix needs to bedeployed.

Services

Growth of service sector in advanced industrial societies Market oriented trade with service organisations e.g.

internal markets


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Marketing characteristics of services intangibility

nsepara y canno e separa e rom e prov er

heterogeneity (precise standardisation is difficult)

perishability (cannot be stored e.g. hotel rooms) ownership (does not result in a property transfer)

The extended marketing mix for

services

People - the personnel

Process e.g. airlines

Physicalevidence


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y

Personal selling

Front line workers e.g. skills, attitude


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People

Appearance

E.g. uniforms

Professionalism

E.g. doctors/police


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Attitude

Skills

.g. r en y v un e p u .g. g ass cu ng

CommitmentE.g. clergymen

NumbersE.g. enough waiters

Behaviour

E.g. MacDonalds

Discretion

E.g. lawyers


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Processes

Procedures

E.g. form filling

Information

E.g. www.bbc.co.uk


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Policies

Capacity levels

.g. rgos ays e.g. easy e o

MechanisationE.g. Package holidays

Speed/timingE.g. Trains

Queuing

E.g. one in front

Accessibility

Cashpoints


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Physical Evidence

Environment Facilities Tangible

Evidence


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Furnishings Vans/aircraft labels

Colours Uniforms Tickets

Ambience Paperwork Packaging


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International Marketing Control


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International Marketing Control

International context of control

Obtaining performance information

P l f l


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Principles of a control system. Simple process of control

Control techniques

Effective control systems Benchmarking

Balanced Scorecard

International Context of Control Each international market is different, so strategies and

controls will vary

Distance, language differences and cultural variations cause

i i bl


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communications problems

Local marketing plan will need to controls appropriate for

HQ and subsidiaries.

Obtaining Performance Information Report

Standardised to allow comparison

Use common language

As frequently as necessary

C ll HQ i f ti d


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Cover all HQ information needs

Gathering of all. Take time and resources

Information Technology Make control simpler and quicker

Principles of a control system.

Aim to translate strategic plans into actions (Drummond and Ensor 2001).

Ensure that behaviour and operations conform to corporate objectives

Organisations need to measure, compare and analyse variances so that timely

corrections can be made


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corrections can be made

Effective control involves the measurement of in uts as well as out uts.

Control is important because:

1. You cant manage what you cant measure adage2. Gaining importance to measure ROI in marketing

3. Moves afoot to include branding in financial accounts.

Simple process of control

Set targets quantified objectives and/or budgets.

Determine the method(s) of measurement

M th lt t th d f h i d


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Measure the results at the end of each period Compare results against the targets and identify

variances

Identify and implement any necessary corrective action.

Control Techniques Financial analysis e.g. ratio analysis, variance analysis, cash flow,

monitoring capital expenditure.

Market analysis I.e. market demand, market share, marketingresources.

Sales analysis e g sales targets selling costs


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Sales analysis e.g. sales targets, selling costs.

utilisation, other measures of productivity and product quality

Systems analysis consider the effectiveness of implementationand application of marketing resources.

Others. . . . . .

Benchmarking

Benchmark core operational standards against the verybest in business.

Process benchmarking compare one process from withinthe organisation to another


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the organisation to another.

Competitor benchmarking compares performance in keyareas against that of competitors.

Others?

Balanced Scorecard Assesses performance across a wider dimension other than just

financial performance. (tend to be backward looking)

Customer perspective e.g. satisfaction and retention.

Internal perspective e g employee behaviour skills quality


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Internal perspective e.g. employee behaviour, skills, quality. Innovation and learnin e. . idea eneration, roduct

development.

The financial perspective traditional financial measures. Takes ashareholders perspective.

Thanx


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global marketing course matl

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