21 tapping into global markets
TRANSCRIPT
CHAPTER 21: TAPPING INTO GLOBAL MARKETS
Marketing Management (13th Edition)Philip Kotler . Kevin Lane Keller
Ice Breaker 1:
• In your post-it notes, please write at least five brands or company that you wear or you have in your bag right now.
• Then, please also write down the country-of-origin of that brand or company.
We will discuss the following:1. Factors to be reviewed
before deciding to go abroad
2. Evaluation & selection of foreign markets to enter
3. Major ways of entering foreign market
We will address the following questions:1. To what extent must
the company adapt its products and marketing programs to each foreign country
2. How should the company manage and organize its international activities
TAPPING INTO GLOBAL MARKETS
Competing in Global Basis
Source: Fortune 500
Global firm operates in more than one country and captures R&D, production, logistical, marketing and financial advantages not available purely from domestic competitors.
In a global industry, competitor’s strategic positions in major geographic or national markets are affected by their overall global positions.
Top 10 countries with the most Global 500 companies
Competing in Global Basis
Companies cannot simplyStay domestic and expect
to maintain markets.
MAJOR DECISIONS IN INTERNATIONAL MARKETING
Deciding whether to go abroad
Deciding which markets to enter
Deciding how to enter the market
Deciding on the marketing program
Deciding on the marketing organization
Source: www.american.com
(1) Deciding whether to go abroad
Factors that draw companies to enter international market:
Some international markets present higher profit opportunities than domestic market.
The company needs larger customer base to achieve economies of scale.
The company wants to reduce its dependence on any one market.
The company decides to counterattack global competitors in the home market.
Customers are going abroad and require international service.
(1) Deciding whether to go abroadRisks to consider
The company might… Not understand foreign preferences and could fail to offer a
competitively attractive product Not understand the foreign country’s business culture. Underestimate foreign regulations and incur unexpected
costs. Lack managers with international experience. The foreign country change its commercial laws, devalue its
currency or undergo political revolution and expropriate foreign property.
(2) Deciding which markets to enterDeveloped vs Developing Markets
DEVELOPED MARKETS A group of industrialized nations including Australia, Austria, Canada, France, Germany, Italy, Japan, the UK, and the United States. In some contexts such countries are collectively called the North. 20% of the world’s population.
DEVELOPING MARKETSSome of the world poorest countries (48 in 1995) designated by the UN as 'least developed' on the basis of health care, literacy, and per capita income. Most of them are in Africa, few in Asia and Pacific, and one (Haiti) in the Caribbean.
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How many markets to enter?
WATERFALL APPROACHGradually entering countries in sequence
SPRINKLER APPROACHEntering many countries simultaneuously
(2) Deciding which markets to enter
WATERFALL APPROACH
WATERFALL APPROACH
WATERFALL APPROACH
WATERFALL APPROACHSPRINKLE R APPROACH
SPRINKLE R APPROACH
Evaluating Potential Markets
In general, candidate countries should be rated on three criteria:
1. Market attractiveness2. Market risk3. Competitive Advantage
(3) Deciding which markets to enter
Indirect-Direct Export
Using Global Web Strategy
Licensing
Joint Ventures
Direct Investment
(3) Deciding how to enter the market
(4) Deciding on the marketing program
Standardized marketing mixStandardization of the product, communication and distribution channels promises the lowest cost.
Adapted marketing mixThe producer, consistent with the marketing concept, holds the consumer needs vary and tailors marketing program to each target group.
• Economies of scale in production and distribution
• Lower marketing costs• Power and scope• Consistency in brand
image• Ability to leverage good
ideas quickly and efficiently
• Uniformity of marketing practices
PROS
Ignore differences in… • Consumer needs,
wants and usage patterns for products
• Consumer response to marketing-mix elements
• Brand and product development & the competitive environment
• The legal environment
• Marketing institutions
• Administrative procedures
CONS
Table 21.2 Global Marketing Pros and Cons
(4) Deciding on the marketing program
Company should review the following elements and determine which add more revenue than cost:
Product features Labeling Colors Materials Sales Promotion Advertising Media Brand Name Packaging Advertising execution Prices Advertising themes
PRODUCT
STRAIGHT EXTENSION Introduces the product in the foreign
market without any change. (ie. cameras, consumer
electronics, machine tools)
PRODUCT ADAPTATION
Alters the product to meet local conditions or
preferences.> Regional version> Country version
> City Version> Retailer version
PRODUCT INVENTIONCreating something new.BACKWARD INVENTION
Reintroducing earlier product forms that are well
adapted to a foreign country’s need.
FORWARD INVENTIONCreating new product to
meet a need in other country
(4) Deciding on the marketing program
COMMUNICATION (4) Deciding on the marketing program
COMMUNICATION ADAPTATIONA process when companies can run the same marketing communications programs they use in the home market or change them for each local market.
DUAL ADAPTATIONIf it adapts both the product and the communications
De Beers
DIAMOND IS FOREVER
TRULY ASIA
ALWAYS
CONNECTING PEOPLE
I WANT MY….
Blunders in International Marketing Communication
• Scandinavian vacuum manufacturer Electrolux used this campaign in America: “Nothing Sucks like an Electrolux.”
• Coors put its slogan, “Turn It Loose,” into Spanish, where it was read as “Suffer From Diarrhea.”
• Pepsi’s “Come Alive With the Pepsi Generation” translated into “Pepsi Brings Your Ancestors Back From the Grave” in Chinese.
• Colgate introduced a toothpaste in France called Cue, the name of a notorious porno magazine.
• When American Airlines wanted to advertise its new leather first class seats in the Mexican market, it translated its “Fly In Leather” campaign literally, which meant “Fly Naked” (vuela en cuero) in Spanish.
• The Coca-Cola name in China was first read as “Kekoukela”, meaning “Bite the Wax Tadpole” or “Female Horse Stuffed with Wax”, depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent “kokoukole”, translating into “Happiness in the Mouth.”
• The Dairy Association’s huge success with the campaign “Got Milk?” prompted them to expand advertising to Mexico. It was soon brought to their attention the Spanish translation read “Are You Lactating?”
PRICE
PRICE ESCALATION
• Changes in the cost or price of specific goods or services in a given economy over a period of time
TRANSFER PRICE
• Refers to the setting, analysis, documentation and adjustment of charges between related parties for goods, services or use of properties.
DUMPING
• Charging either less than its cost or less than it charges at home in order to enter or win a market
GRAY MARKET
• Consist of branded products diverted from normal or authorized distribution channels in the country of product origin or across international borders
Pricing challenges when selling abroad:
DISTRIBUTION Seller
Seller’s International marketing headquarters
Channels between nations
Channels within foreign nations
Final buyers
Country of Origin Effects
Country-of-origin perceptions are the mental associations and beliefs triggered by a country.
Can affect consumer decision directly and indirectly.
Managing perceptions in the most advantageous way possible is an important marketing priority.
Deciding on the Marketing Organozation
EXPORT DEPARTMENTConsists of Sales Manager and a few assistants
INTERNATIONAL DIVISIONHeaded by a division president who sets goals and budgets and is responsible for the company’s international growth
GLOBAL ORGANIZATIONGlobal operating units report directlt to the chief executive or executive committee, not to the head of international division.