Global Marketing

Global Marketing

Globalization Countries are becoming interdependent thanks to: • Lower trade barriers • Regional integration • Increased international travel • Advances in technology and global communications • Higher volume of foreign investment by global corporations

Globalization and Business • Many U.S. companies are foreign controlled (e.g., 7-Eleven, Firestone Tires) • Well-known brands are no longer owned by U.S. companies (e.g., Chrysler, Carnation)

Globalization and Business • Foreign investment in the USA is more than 134 billion • Honda, Mercedes, and BMW are manufacturing in the USA • Fuji Photo Film opened a plant in the USA

Globalization and Business • Companies are investing abroad (e.g., Tata Motors bought Jaguar) In 2010: • Wal-Mart generated 25% of its revenues outside the USA • Boeing generated 26% of its revenues outside the USA • Coca-Cola generated almost 70% of its revenues outside the USA

The Global Marketing Task

The Global Marketing Environment Economic Competitive Socio-Cultural Technological Political-Legal

Economic Environment • Economic Stability • Tariffs and Quotas • Import Restrictions • Free Trade Agreements • Exchange Controls • Price Controls • Tax Controls

Competitive Environment • Competitive structure in the home and host market • Local and global competitors Porter’s Five Forces examined at a global level: • Rivalry among existing companies • Threat of new entrants • Bargaining power of buyers • Bargaining power of suppliers • Threat of new entrants

Socio-Cultural Environment • Consumers in different countries differ in terms of consumption patterns, tastes, preferences, and product usage • Business norms vary from country to country

Technological Environment • Communications network • Infrastructural development • PC ownership • Internet penetration • Electricity Supply

Political/Legal Environment • Nationalism • Government bureaucracy • Political stability • Expropriation, Confiscation, and Domestication

Deciding Whether to Go Global Reasons for going global: • Foreign attacks on the domestic market • Foreign markets with higher profit opportunities • Stagnant or shrinking domestic markets • Achieve economies of scale • Take advantage of an expanding global consumer segment (e.g., teenagers, young professionals)

Deciding Which Markets to Enter What volume of foreign sales is desired? How many countries to enter? Which countries to enter? Choose possible countries and rank them based on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage, and Risk Level

Market Entry Strategies Exporting • Indirect: working through independent international marketing intermediaries • Direct: company handles its own exports • A low-risk strategy Joint Venture • Joining with foreign companies to produce or market products or services • Helps reduce political risk in the host country

Market Entry Strategies Licensing • License technology to a foreign company for a fee • Effective when technology is unique • A lower risk strategy Contract manufacturing • Production of goods by one firm, under the label or brand of another firm • A lower risk strategy

Market Entry Strategies Franchising • The firm grants another firms the right to use its trademark or trade name as well as certain business systems and processes Direct Investment • The development of foreign-based assembly or manufacturing facilities • A high-risk strategy

Deciding on the Global Marketing Program Standardized Marketing Mix • The same marketing mix is used worldwide OR Adapted Marketing Mix • The marketing mix is tailored to each host country

Marketing Mix Adaptation In India, McDonald’s serves chicken, fish, and vegetable burgers, and the Maharaja Mac—two all-mutton patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun.

Marketing Mix Standardization Twix used the services of Grey Worldwide advertising agency to implement its global marketing campaign

Global Product Strategy • Straight Product Extension • Marketing a product in a foreign market without any change • Product Adaptation • Adapting a product to meet local conditions or wants in foreign markets • Product Invention • Creating new products or services for foreign markets

Global Promotion Strategy • Can use a standardized theme globally, but may have to make adjustments for language or cultural differences • Communication Adaptation • Fully adapting an advertising message for local markets. • Changes may have to be made due to media availability

Global Pricing Strategy • Possible international pricing approaches include: • Charge a uniform price all around the world • Charge what consumers in each country will pay • Use a standard markup of costs everywhere • International prices tend to be higher than domestic prices because of price escalation • Companies may become guilty of dumping –a foreign subsidiary charges less than its costs or less than it charges in its home market

Global Channel Strategy Is the traditional Manufacturer Wholesaler Retailer  Consumer Channel always feasible in global markets?

Global Channel Strategy • What about Japan and many developing and less developed countries? • Middlemen in different countries do not perform identical distributive tasks Case in Point: • In Kenya, Africa, Coca Cola has established manual distribution centers to distribute products to small shops and beverage kiosks • A similar strategy is employed in Thailand and Vietnam Stanford, D. D. (2010). Coke's Last Round. Bloomberg Businessweek, (11/1/10), 54-61.

Deciding on the Global Marketing Organization • Organize an export department • Create international divisions • Geographical organizations • World product groups • International subsidiaries • Become a global organization

THANK YOU!

http://adage.com/article/news/twix-bar-s-global-plunge-puts-grey-work-music/58209/http://adage.com/article/news/twix-bar-s-global-plunge-puts-grey-work-music/58209/ http://www.brandrepublic.net/news/1052287/Twix-poised-roll-global-ad-push/

Global Marketing