Chapter 16: Global Marketing and Supply Chain Chapter 16 Global Marketing and Supply Chain International Business Oded Shenkar and Yadong Luo

Chapter 16: Global Marketing and Supply Chain

Chapter 16

Global Marketing and

Supply Chain

International Business

Oded Shenkar and Yadong Luo


Do You Know?

• How to determine market potential of a foreign country?

• What adaptations are necessary for a product to sell in another country?

• That there can be domestic manufacturing influence, translating to product demand?

• That channel decisions are very important in international marketing?


Marketing Domino’s Internationally

• Domino’s opened its first foreign store (Winnipeg) in 1983. Japan was in 1984; United Kingdom was in 1985, Mexico was in 1989. It hit Taiwan in 1987, and Hong Kong in 1984.

• Per store sales volume in Asia is more than twice the United States. Their secret: product adaptation (corn and squid on pizza??), pricing determination, national promotion and advertising, and customized transportation (the scooter in Asia).


The International Marketing Challenge

• International markets offer vast opportunities for firms with a product or service in high demand.

• Newness, cultural adaptation, attractiveness, and appropriate marketing strategies can help tremendously.


Assessing Market Potential

• To assess market potential, firms seek to identify the aggregate demand for a product and estimate the costs associated with product introduction and distribution.

• Population growth provides a coarse estimate of future market potential. So do consumption patterns.


Assessing Market Potential


Globalization and Localization in International Markets

• Striking a balance between globalization and localization is a key challenge.

• Generally, the more closely defines the market segment, the less important are national stereotypes (Germans and ecology, Italians on performance).

• Across national markets, there is a trend toward greater similarity on product specifications, price, and packaging. On the other hand, cultural and national differences exist and require flexibility in communication with customers.


Globalization Forces

• Global Brands (Kellogg’s, McDonalds, Budweiser, Coke) are products that enjoy worldwide recognition and are relatively unaltered in terms of brand and appearance when sold abroad.



Exhibit 16-6: International decision making: more vs. less successful companies



Exhibit 16-7: Shared vision about global marketing activities between country managers and global

marketing groups



Exhibit 16-8: Use of globally uniform marketing practices



Exhibit 16-9: Strength of (selected) individual globalization drivers




Localization Forces

• Localization forces represent pressures towards adjustment in product marketing or distribution to make it more appealing or to meet requirements particular to a foreign market.


Product Adaptation

• Faced with a foreign market with different characteristics, a firm may choose not to offer a product or a service in that market, to offer the same product it offers in other markets, or to adapt it to regional or country requirements.

• The Benefit/Cost approach and the User/Needs approach help determine whether adaptation is necessary.


Product Adaptation

• McDonald’s Product Adjustments: The Veggie Mac (Switzerland), Chicken Rice (Singapore), no pork (Saudi), McMacos and McFiesta (Paraguay), McKroket (Netherlands), Teriyaki McBurger (Japan), Curry Pie (Hong Kong), McRoyal (Germany), McCafe (Argentina), McCafe (Australia), McPalta (Chile). Hey, you deserve a break today!!


Country-of-Origin Effect

• This is the influence of the country of manufacturing image on the buying decision.

• The effect consists of innovativeness; design; and workmanship.

• There is strong evidence that country of origin influences buyer’s decisions.


Branding

Branding is the process of creating and supporting positive perceptions associated with a product or service. Branding is especially complex in the international market. Some issues:

• Selecting the right name• Understand the local market• Fine tune the size, price, value construct• Quality/reliability at competitive price • Holistic marketing using multiple channels

…/…


Branding

• Turning trademarks into “trustmarks”

• Establishing leadership brands, and changing social habits

• Selecting allies and partners


Channel Decisions

• Export Intermediary choice is very important

• Direct Marketing is a potential channel

• Niche marketing is also very viable


Promotion

• It is important to choose the right mix marketing communications like advertising and direct marketing.


Marketing Alliances

• Marketing Alliances are frequently very important because they serve as partners in the marketing communications effort.

Documents

Chapter 16: Global Marketing and Supply Chain Chapter 16 Global Marketing and Supply Chain International Business Oded Shenkar and Yadong Luo