7.Global Marketing

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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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



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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



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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



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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/


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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
http://www.nivea.com/

Documents

7.Global Marketing