overview of change

8/7/2019 OVERVIEW OF CHANGE

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INTERNATIONALINTERNATIONAL

MARKETINGMARKETINGP.K. TALAPATRAP.K. TALAPATRA

WLC WLC



TOPICS TOPICS From an International mark et to a Global Mark etFrom an International mark et to a Global Mark et

The scope of International and Global Mark eting The scope of International and Global Mark eting

Localization v/s StandardizationLocalization v/s Standardization

Why are companies Why are companies g oing globalg oing global

P.K. TALAPATRA - WLC - INTL MKTNG 3




Marketing: A UniversalMarketing: A Universal

DisciplineDiscipline Mark eting Mark eting (1)(1): The process of focusing resources and: The process of focusing resources and

objectives of an organization on environmentalobjectives of an organization on environmental

opportunities and needsopportunities and needs Mark eting Mark eting (2)(2): A set of concepts, tools, theories,: A set of concepts, tools, theories,

practices, procedures, and experiencespractices, procedures, and experiences

Although it is a universal discipline, mark eting practice Although it is a universal discipline, mark eting practice varies from country to country varies from country to country




The Marketing Concept The Marketing Concept (1)(1)

Concept has changed dramatically Concept has changed dramatically

1950·s:1950·s:

² ² Focus on productsFocus on products

1960·s:1960·s:

² ² Focus on customer orientationFocus on customer orientation

² ² Development of mark eting mix: product, price, promotion,Development of mark eting mix: product, price, promotion,

placeplace (4P·s)(4P·s)




The Marketing Concept The Marketing Concept (3)(3)

Contemporary:Contemporary: ² ² Tw o k ey task s of mark eting Tw o k ey task s of mark eting

Focus on customer and his/her environmentFocus on customer and his/her environment

Create value for consumers and stak eholderCreate value for consumers and stak eholder

² ² Shif t to wa

rdsShi

f t to wa

rds

Focus on managing strategic partnershipsFocus on managing strategic partnerships

Positioning of f irm in value chain to optimize valuePositioning of f irm in value chain to optimize valuecreationcreation

² ² Prof it as a measure of success, not an end in itself Prof it as a measure of success, not an end in itself

Jack Welch, former GE, Chairman termed this Jack Welch, former GE, Chairman termed thisstrategic concept as ´Boundary less Mark etingµstrategic concept as ´Boundary less Mark etingµ




KEYS TO GLOBAL SUCCESSKEYS TO GLOBAL SUCCESS

i)i) Value creation Value creationii)ii) Competitive edgeCompetitive edge

iii)iii) FocusFocus

Value Creation Value Creation Create customer value that is g reater than theCreate customer value that is g reater than the

value created by competitors value created by competitors




Value equation is: Value equation is:

Value = Perceived benef its /price Value = Perceived benef its /price V = V = BB

PP

B = Perceived benef itsB = Perceived benef its ² ² Perceived costsPerceived costsBenef it results from product, distributionBenef it results from product, distribution

P = Price is a f unction of money, time, effortP = Price is a f unction of money, time, effort

Value can be created by impro ved benef its and Value can be created by impro ved benef its and

lo wer pricelo wer price




Competitive AdvantageCompetitive Advantage

Competitive advantage is a total off er visCompetitive advantage is a total off er vis--àà--vis vis

the relevant competition, which should be morethe relevant competition, which should be moreattractive to the customerattractive to the customer

Advantages can be leveraged by integ rating the Advantages can be leveraged by integ rating theelements of mark eting mix.elements of mark eting mix.

FocusFocus

It is the concentration of attention on coreIt is the concentration of attention on corebusiness and competencebusiness and competence

The focus should be on customer needs and The focus should be on customer needs and wants and efforts required to deliver a product wants and efforts required to deliver a productthat meets the need.that meets the need.




FocusFocus

Concentration and attention on coreConcentration and attention on core

business and competencebusiness and competence

² ² Nestle is focused: We are food and beverages. We are Nestle is focused: We are food and beverages. We are

not running bicycle shops. Even in food we are not in not running bicycle shops. Even in food we are not in

all fields. There are certain areas we do not all fields. There are certain areas we do not

touch«..We have no soft drinks because I have said touch«..We have no soft drinks because I have said

we will either buy Coca we will either buy Coca- -Cola or we leave it alone. This Cola or we leave it alone. This

is focus.is focus. Helmut MaucherHelmut Maucher




Scope and Boundaries of GlobalScope and Boundaries of Global

MarketingMarketing Mark eting discipline is universal but mark ets andMark eting discipline is universal but mark ets and

customers are quite diff erentcustomers are quite diff erent

Three domains of k no wledge relevant to international Three domains of k no wledge relevant to internationalmanagersmanagers

² ² CrossCross--Cultural Kno wledgeCultural Kno wledge

² ² Country/ Regional Kno wledgeCountry/ Regional Kno wledge

² ² CrossCross--Border Transactions Kno wledgeBorder Transactions Kno wledge

Need for ´Global Localizationµ: Adjustment of globalNeed for ´Global Localizationµ: Adjustment of globalmark eting strategies to local requirementsmark eting strategies to local requirements




Global IndustriesGlobal Industries An industry is global to the extent that a company·s industry position An industry is global to the extent that a company·s industry position

in one country is interdependent with its industry position in another in one country is interdependent with its industry position in another country country

Indicators of globalizationIndicators of globalization

² ² Ratio of crossRatio of cross--border trade to total w orldwide productionborder trade to total w orldwide production

² ² Ratio of crossRatio of cross--border investment to total capital investmentborder investment to total capital investment ² ² Proportion of industry revenue generated by companies thatProportion of industry revenue generated by companies that

compete in k ey w orld regionscompete in k ey w orld regions




Why Go Global? Why Go Global?

For USFor US--based companies, 75% of salesbased companies, 75% of sales

potential is outside the US.potential is outside the US.

² ² About 90% of Coca About 90% of Coca--Cola·s operating incomeCola·s operating income

is generated outside the US.is generated outside the US.

For Japanese companies, 85% of potentialFor Japanese companies, 85% of potential

is outside Japan.is outside Japan.

For German and EU companies,For German and EU companies,94% of potential is outside Germany.94% of potential is outside Germany.




GLOBAL MARKETGLOBAL MARKET ´The global corporation sells the same thing in the´The global corporation sells the same thing in the

same way everywhereµsame way everywhereµ

Seg mentation is not cost eff ectiveSeg mentation is not cost eff ective

Global corporationGlobal corporation-- k no ws everything about onek no ws everything about one

g reat thing g reat thing³ ³the need to be competitive w orldwidethe need to be competitive w orldwide

and k eep prices do wn by standardizationand k eep prices do wn by standardization




Examples of Global MarketersExamples of Global Marketers

CocaCoca--ColaCola

Philip MorrisPhilip Morris

DaimlerDaimler--ChryslerChrysler

McDonald·sMcDonald·s

Toy ota Toy ota

FordFord

UnileverUnilever

GilletteGillette

IBMIBM

USAUSA

USAUSA

Germany Germany

USAUSA

Japan Japan

USAUSA

UK/ NetherlandsUK/ Netherlands

USAUSA

USAUSA




From Domestic to Global/TransnationalFrom Domestic to Global/Transnational

MarketingMarketing

Domestic Mark eting Domestic Mark eting

Export Mark eting Export Mark eting

International Mark eting International Mark eting Multinational Mark eting Multinational Mark eting

Transnational Mark eting Transnational Mark eting

Global Mark eting Global Mark eting




When is each strategy appropriate? When is each strategy appropriate?

Need for

Global

Integration

Low

High

Need for Local Market Responsiveness

Low High




Focus on competition in each market

Prominent strategy among European firms due to

broad variety of cultures & markets in Europe

Assumes markets differ by country or regions

Business units in each country are independent of

each other

Products & services are tailored to local markets

Strategy & operating decisions are decentralized to

strategic business units (SBU) in each country

MultiMulti ² ² Domestic StrategyDomestic Strategy




Firm often lacks responsiveness to local markets

Requires resource sharing & coordination across

borders (which also makes it difficult to manage)

Emphasizes economies of scale

trategic business units ( s) are assumed to be

interdependent

Decisions regarding business-level strategies are

centralized in the home office

Products are standardized across national

markets




Seeks to achieve both global efficiency and

local responsiveness

Difficult to achieve because of simultaneous need: for strong central control and

coordination to achieve efficiency as well as

local flexibility & decentralization to achieve local

market responsiveness

Must pursue organizational learning to achieve

competitive advantage




Global Marketing Vs. MarketingGlobal Marketing Vs. Marketing

The diff erence lies in the scope and nature of The diff erence lies in the scope and nature of

activitiesactivities Global mark eting focuses its resources onGlobal mark eting focuses its resources on

global opportunities and threats and conductsglobal opportunities and threats and conductsimportant business activities outside the homeimportant business activities outside the homemark et.mark et.

Global mark eting inv olves an understanding of Global mark eting inv olves an understanding of strategies that must be used in conjunction withstrategies that must be used in conjunction with

universal mark eting concepts to gain success inuniversal mark eting concepts to gain success inglobal mark ets.global mark ets.




The experience of home country cannot be The experience of home country cannot be

directly applied to another country and it may directly applied to another country and it may

be necessary to change the mark eting plan andbe necessary to change the mark eting plan andthe 4 Psthe 4 Ps




Global Business TrendsGlobal Business Trends

1. The rapid growth of the

World Trade Organization

and regional free trade

areas, e.g., NAFTA and the

European Union

2. General acceptance of the

free market system among

developing countries in Latin

America, Asia, and Eastern

Europe

3. Impact of the Internet and

other global media on the

dissolution of national

borders, and

4. Managing global

environmental resources




Developing a Global AwarenessDeveloping a Global Awareness To be globally aware is to have:

1. Tolerance of Cultural Differences, and

2. Knowledge of:(a) Culture, (b) History, (c) World Market Potential,

(d) Global Economic, Social and Political Trends




InternationalInternational

MarketingMarketing

International marketing is defined as the

performance of business activities designed to plan,

price, promote, and direct the flow of a company¶s

goods and services to consumers or users in more

than one nation for a profit

Marketing concepts, processes, and principles are universallyapplicable all over the world




Internationalization of Internationalization of BusinessBusiness

Increasing globalization of markets

Firms face competition onall fronts

Many companies arenow foreign controlled:Carnation (Swiss),

Daimler-Chrysler (German)

Firms seeking foreign

markets to increase profits




InternationalInternational Marketing EnvironmentMarketing Environment

7

3. Economy

Environmental uncontrollablescountry market A

Environmental uncontrollablescountry market B

Environmental uncontrollablescountry market C

1. Competition

1. Competition

2. Technology Price Product

Promotion Place or

Distribution

6. Geography and Infrastructure

Foreign Environment (Uncontrollables )

7. Structure of Distribution

3. Economy

5. Political-Legal

Domestic environment (Uncontrollables)

(Controllables)

2 .Technology

4.Culture

5. Political-Legal

4. Culture

Target

Market




WHY GO INTERNATIONAL WHY GO INTERNATIONAL

Reasons and Rationale:Reasons and Rationale:

² ² Saturation of home mark etsSaturation of home mark ets

² ² Seaso

nality in hom

em

ark

etSeaso

nality in hom

em

ark

et

² ² Fierce foreign competitionFierce foreign competition

² ² Emergence of new mark ets (Vietnam, Laos, SA)Emergence of new mark ets (Vietnam, Laos, SA)

² ² Large mark ets for economies of scale (India, China,Large mark ets for economies of scale (India, China,

Brazil)Brazil)

cont«.cont«.




² ² Lo wer labor costs in o verseas mark ets enabling theLo wer labor costs in o verseas mark ets enabling the

establishment of export baseestablishment of export base

² ² Tax incentives to exporters and foreign businesses Tax incentives to exporters and foreign businesses

² ² Possibilities of lo wer competition in o verseas mark etsPossibilities of lo wer competition in o verseas mark ets

(African mark ets)(African mark ets) ² ² Access to advantages in technology, materials & capital Access to advantages in technology, materials & capital

² ² Possibilities of increased prof it in o verseas mark etsPossibilities of increased prof it in o verseas mark ets




Standardization Vs. CustomizationStandardization Vs. Customization

Sony, McDonald, Nik e, IBM, Ford, Toy otaSony, McDonald, Nik e, IBM, Ford, Toy ota, , Marlboro are global brands with a high deg reeMarlboro are global brands with a high deg reeof similarities in terms of positioning,of similarities in terms of positioning,advertising product personality, look and f eel.advertising product personality, look and f eel.

These global brands are of ten not as identical These global brands are of ten not as identical w orld wide as one might assume. w orld wide as one might assume.

McDonald has diff erent menus, advertising andMcDonald has diff erent menus, advertising andretail architectures in various countries. They retail architectures in various countries. They

customized to local culture.customized to local culture.




A global brand can gain advantages by : A global brand can gain advantages by :

Signif icant economies of scale through globalSignif icant economies of scale through global

eff iciencies ( one Ad agency in place of severaleff iciencies ( one Ad agency in place of severalin diff erent countries, IBM replaced all with onein diff erent countries, IBM replaced all with oneO & M)O & M)

Cross mark et exposureCross mark et exposure

Easier brand management, as a global brand hasEasier brand management, as a global brand hasa clear identity (ex. Visa has w orld widea clear identity (ex. Visa has w orld wideacceptance)acceptance)

Easier brand positioning (Ex. Sprite, Mont BlancEasier brand positioning (Ex. Sprite, Mont Blanc

Mercedes) because of self expressive benef itsMercedes) because of self expressive benef its




Standardization of a global brand can comeStandardization of a global brand can comefrom a centralised decision to create a globalfrom a centralised decision to create a global

product Ex.product Ex. ² ² Cannon copier, which had aCannon copier, which had acommon design throughout the w orld to common design throughout the w orld to maximize production eff icienciesmaximize production eff iciencies

The ri inherent in a truly global product is that The ri inherent in a truly global product is that

the result may be a compromise and thethe result may be a compromise and themark eting prog ram though successf ul in severalmark eting prog ram though successf ul in severalcountries may not be exactly right for somecountries may not be exactly right for someother countriesother countries




Another strategy is to identif y a lead country Another strategy is to identif y a lead country

with large or g ro wing mark et size for the brand with large or g ro wing mark et size for the brand

and then export to other countries (with minor and then export to other countries (with minor modif ications) or have several lead countries,modif ications) or have several lead countries,

each with its o wn product and create a stable of each with its o wn product and create a stable of

global brandsglobal brands Ex. Nissan follo wed this in UK for a brand of Ex. Nissan follo wed this in UK for a brand of

corporate f leet car corporate f leet car




Global Marketing: What It Is andGlobal Marketing: What It Is and

What It Isn·t What It Isn·t

S ingle Country Marketing S trategy S ingle Country Marketing S trategy

Target mark et strategy Target mark et strategy

Mark eting mixMark eting mix

² ² ProductProduct ² ² PricePrice

² ² PromotionPromotion

² ² PlacePlace

Global Marketing S trategy Global Marketing S trategy Global mark et participationGlobal mark et participation

Mark eting mix developmentMark eting mix development

² ² 4 P·s: adapt or standardize?4 P·s: adapt or standardize?

Concentration of mark eting activitiesConcentration of mark eting activities

Coordination of mark eting activitiesCoordination of mark eting activities

Integ ration of competitive mo vesInteg ration of competitive mo ves




Standarization versus AdaptationStandarization versus Adaptation Globalization (standardization)Globalization (standardization)

² ² Developing standardized products mark eted w orldwide with aDeveloping standardized products mark eted w orldwide with astandardized mark eting mixstandardized mark eting mix

² ² Essence of mass mark eting Essence of mass mark eting

Global localization (adaptation)Global localization (adaptation)

² ² Mixing standardization and customization in a way that minimizesMixing standardization and customization in a way that minimizes

costs while maximizing satisf actioncosts while maximizing satisf action

² ² Essence of seg mentationEssence of seg mentation

² ² Think globally, act locally Think globally, act locally

overview of change

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