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7/31/2019 7.Global Marketing
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Global Marketing
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Nokia N series Sold Globally
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What is a Global Firm?
A global firm is one that operates inmore than one country and capturesR&D, production, logistical, marketing,and financial advantages in its costs and
reputation that are not available to purelydomestic competitors.
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GLOBAL MARKETING
Most countries are in open economy India, China,Companies need to seek new markets
1. More & more costs in Research & Design; to recover,
companies need huge market
2. For reducing costs, companies need to procure materialfrom cheapest source, and also technology. WithInternet, the world is just a click away
3.For technology based companies globalization is easy,since technology products not affected bycultural/national boundaries : Cell phones/TV &
electronics, cars
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Major Decisions in International Marketing
Deciding whether to go
Deciding which markets to enter
Deciding how to enter
Deciding on themarketing program
Deciding on the
marketing organization
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HOW TO SELECT GLOBAL MARKET
Regional Free Trade Zone; Companies can enter a group ofcountries rather than one.Eg. ASEAN, European Union, SAARC
-economic growth
-increased trade relations
-increased foreign capital inflows
-economic & diplomatic trade bloc
- integrate economic policies
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Select a few promising countries & use secondary data.
-analyze on political, legal, geographic, economic ----environment (macro)
-market size, product acceptability & customerperceptions
-barriers to entry/exit, costs, raw material, unutilized
capacity, number of competitors etc.
- ranking on profit potential, market share, margins,sales
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Political Environment
Needs to be carefully analyzed; political stability,
treatment of foreign firms, bureaucracyeg. Coke in 70s, FERA, Middle East today, ENRON
Political system influences economic environment so
trade barriers, rules regarding M & A, Red Tape needscrutinyeg. India, no FDI in retail
IMPACT OF ENVIRONMENT
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IMPACT OF ENVIRONMENT
Economic Environment Most important GDP & GNP, disposable income, inflation,
costs of energy etc.India is attractive because of high returns : FII 3 Categories of economics : Inf luenced by
Capitalist SocialistMixed
Market Allocation Command Allocation Combination
Customer main focus Government decides
goods & services forcustomer
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Social & Cultural Environment
Caused by differences in demographics, languages,education, values & beliefs etc.
Have major effect in personal items
Promotion/distribution strategies have to be located
because language/communications is different.Parker
Cultural changes Amex Credit Cards
IMPACT OF ENVIRONMENT
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Legal and Regulatory Environment
Sovereignty of nation, contractual agreements, disputesettlement procedures, arbitration laws, trademarks &patents laws, tax structures, licensing, labour lawshave to be studied
Requirement for universalisation of trade laws GATT(1979)
Required not just for increasing business in multiplecountries, but also to protect companies and industries
IMPACT OF ENVIRONMENT
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Technological Environment
Companies look out for better & cost effectivetechnologies all the time. The technically enhanced
infrastructure in telecom, transportation, storage &warehousing are important for business
IMPACT OF ENVIRONMENT
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Four Stages of Internationalization
No regular export activities
Export via independent agents
Establish sales subsidiaries
Establish productionfacilities abroad
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Fiat Markets Palio in Latin American Markets
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Top Global Firms Based
in Developing Markets
Cemex
China Mobile Haier
Aditya Birla Group
Infosys Technologies
Lenovo Group MMC Norilsk Nickel
Mahindra & Mahindra
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Regional Free Trade Zones
European Union
NAFTA MERCOSUL
APEC
ASEAN SAFTA
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Key Developing MarketsBrazil
Russia
India
China
South Africa
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Desired Country Characteristics for Market Entry
Rank high on marketattractiveness
Rank low in market risk
Possess a competitiveadvantage
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Five Modes of Entry into Foreign Markets
Indirect
exporting
Direct
exporting LicensingJoint
ventures
Direct
investment
Commitment, Risk, Control, Profit Potential
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Direct Exporting Methods
Domestic-based export department
Overseas sales branch or subsidiary
Traveling export sales representatives Foreign-based distributors or agents
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The Reva Electric Car Company has actively pursued
opportunities in export markets.
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HOW TO ENTER A NEW MARKET
Indirect Exports :
Exporting goods to a new country with a domestic intermediary.Helps if exporter has little knowledge of new country
Licensing
Providing access to a patent/trademark by charging fee/royalty.
Popular way of marketing strong brands w/o investment.
Popular in Pharma, also in consumer goods, Arrow shirts, Walt Disneyproducts
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Joint Ventures1. For company and local partner become equity partners,
majority or minority2. For sharing risk and having access to knowledge of local
partner, sometimes to leverage technology of one partner, ifforeign company is not allowed to set upon its own
3. Sharing of responsibilities becomes a major issue : 53% fail,local partner should be given responsibility forimplementation
4. Strategic intents should be aligned; at negotiation phase there
should be full understanding of each others position.5. Decision making & administrative authorities should be
properly delineated6. Parent organization usually provides resources; Transfer
pricing becomes an issue
HOW TO ENTER A NEW MARKET
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Internationalization Process
1. Process started 20 years back has spread very fast2. IP refers to companys entry modes & tuning : M &A, Strategic
Alliances, Exports, Licensing & Franchising etc.
3. i) When a product is in maturity company thinks of exportsii) No knowledge of foreign markets so exporting is firststep
iii) When product goes to new country, that country tries todevelop the product
iv) When product reaches standardization a company thinks of
licensing, or FDI or setting up wholly owned subsidiaryv) Companies get into joint ventures if market in new countryneeds local know-how, they gain experience and then theyterminate Joint Venture and starts 100% subsudiary
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Global MarketingAdvantages
Economies of scale
Lower marketing costs
Power and scope
Consistency in brandimage
Ability to leverage
Uniformity of marketing
practices
Disadvantages
Differences in consumerneeds, wants, usagepatterns
Differences in consumerresponse to marketingmix
Differences in branddevelopment process
Differences inenvironment
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Red Bull Has 70% of Worldwide Energy Drink Market
http://www.redbull.com/7/31/2019 7.Global Marketing
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What Marketing Aspects Might Be Adapted
for International Marketing?
Product features Labeling
Colors
Materials
Sales promotion
Advertising media
Brand name Packaging
Advertising execution
Prices
Advertising themes
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Commandments of Global Branding
Understand similarities and differences in theglobal branding landscape
Do not take shortcuts in brand building Establish a marketing infrastructure
Embrace integrated marketing
communications Establish brand partnerships
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Commandments of Global Branding (cont.)
Balance standardization and customization
Balance global and local control
Establish operable guidelines
Implement a global brand-equity measurement
system
Leverage brand elements
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Levels of Product Adaptation
Production of regional product versions
Production of country versions Production of city versions
Production of retailer versions
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Communications
Communications adaptation
Dual adaptation
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Price Choices
Set a uniform priceeverywhere
Set a market-basedprice in each country
Set a cost-based price in
each country
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What is a Gray Market?A gray market consists of branded productsdiverted from normal or authorized distributionschannels in the country of product origin or crossinternational borders; dealers in lower pricedcountries sell products in higher priced countries.
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Whole-Channel Concept for International
MarketingSeller
International headquartersChannels between nations
Channels within nationsFinal buyers
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Global Organization Strategies
World as Single Market
Multinational
Glocal
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