Global Marketing

Chapter 1Introduction to Global MarketingCHAPTER OUTLINE

• The development of GM• GM: what it is and what it isn’t• Importance of GM• Reasons for GM• Key to global success• Global industries• The biggest issue in GM• Strategic orientation of GM

Global Marketing

Domestic marketing

Domestic marketing

Exportmarketing

Exportmarketing

Internationalmarketing

Internationalmarketing

Multinational marketing

Multinational marketing

GlobalMarketing

GlobalMarketing

THE DEVELOPMENT OF GM

Global Marketing

DOMESTIC MARKETING Marketing that is aimed at a single market (firm’s domestic

market). Firms face only one set of competitive, economic, and

market issues.

EXPORT MARKETING When a firm market its products outside its main base of

operation and when products are physically shipped from one market to another.

Domestic market remains of primary importance. Major challenge the selection of appropriate markets through

marketing research, determination of appropriate product modifications to meet the requirements of exporting market, and development of export channels.

Global Marketing

INTERNATIONAL MARKETING Much more directly involved in the local marketing environment Is likely to have sales subsidiaries Necessary adaptations to the firm’s domestic marketing strategy Participate in and develop entire marketing strategies for foreign

market Major challenge the need to understand the different

environments.

MULTINATIONAL MARKETING The result of development of multinational corporation. Maximum amount of localization MNCs operate in several foreign countries as if the firms were

local companies Multidomestic strategy each strategy is tailored to a particular

local market Major challenge to find the best possible adaptation of a complete

marketing strategy for an individual country.

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GLOBAL MARKETING Opportunities for economies of scale and enhanced

competitiveness will be greater if marketing strategies are integrated into a global scale

Global marketing strategy a single strategy for a product, service or company for the entire global market

Rather than tailor a strategy perfectly to an individual market, the company settles on one general strategy that can be applied throughout the world while at the same time maintaining flexibility to adapt to local market if necessary.

Major challenge design marketing strategies that work well across multiple markets

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Single country (domestic) marketing Dual country (Export) marketing

Multicountry marketingGlobal marketing

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Single Country Marketing Strategy

Target market strategy Marketing mix

Product Price Promotion Place

Global Marketing Strategy

Global market participation Marketing mix development

4 P’s: adapt or standardize?

Concentration of marketing activities

Coordination of marketing activities

Integration of competitive moves

GM : WHAT IT IS AND WHAT IT ISN’T

Global Marketing

Strategy development comes down to two main issues similar to single country marketing Target market Marketing Mix

Global marketing does not mean doing business in all of the 200-plus country markets

Global marketing does mean widening business horizons to encompass the world in scanning for opportunity and threat

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For US-based companies, 75% of sales potential is outside the US. About 90% of Coca-Cola’s operating income is generated

outside the US. For Japanese companies, 85% of potential is outside Japan. For German and EU companies, 94% of potential is outside

Germany.

IMPORTANCE OF GM

Global Marketing

Growth Access to new markets and access to resources

Survival Against competitors with lower costs (due to increased

access to resources) – e.g. India and China Or push (reactive) and pull (proactive) factors

REASONS FOR GM

Global Marketing

PROACTIVE MOTIVES

1. Profit and growth goals Firms can grow from internationalization experiences from the profitability of export affect the

company’s attitude towards growing by the means of export (especially when you start to internationalize the perceptions about profitability may be far away form reality)

2. Managerial urge the desire of management towards global marketing

activities is often simply a reflection of general entrepreneurial

motivation - desire for continuous growth managerial attitudes play a critical role in determining the

exporting activities of the firm these decisions are affected by the international background

of the managers - those who have more international experiences are more internationally minded

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3. Technology competence / unique product If a company produces goods or services which are unique,

a competence edge exists which can result in major business success abroad

one issue is how long such an advantage will continue?

4. Foreign market opportunities market opportunities act as stimuli only if the firm has or is

capable of securing resources necessary to respond to the opportunities

in general decision makers are considering only a rather limited number of foreign market opportunities in planning their foreign market entry the market opportunities of similar overseas markets are

explored first

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5. Economies of scale the benefits of decreasing production costs / unit by

increasing production has increased the interest of firms to penetrate to foreign markets to search for this advantage

6. Tax benefits

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REACTIVE MOTIVES1. competitive pressures a firm may fear losing domestic market share to competing

firms that have benefited from economies of scale gained by global marketing activities

further, it may fear losing foreign markets permanently to domestic competitors that decide to focus on these markets.

Competitors are an important external factor stimulating internationalization (Coca-Cola & Pepsi)

2.Domestic market: small and saturated A company may be pushed into exporting because of a small

home market potential. If domestic markets are unable to provide sufficient

economies of scale, export markets are automatically included in their market entry srategy.

A saturated domestic market has a similar effect (car manufacturers in USA)

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3. Overproduction / excess capacity If domestic sales are below expectations inventory can be

above desired levels with short-term price cudts export is started.

When domestic markets are normal, global marketing activities may be terminated (Canadian paper and pulp producers).

4. Unsolicited foreign orders Many small companies have become aware of export market

opportunities by accident (advertising, exhibition etc.)

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5. Extend sales of seasonal products seasonality in demand conditions may be different in

domestic market from other international markets this can act as a stimulus for example to market skiing

shoes to New Zealand during summer or harvesting machines to Argentina during winter.

6. Proximity to international customers / psychological distance

German firms established near Austrian border may not even perceive their marketing to Austria to be international

the same situation in Europe exists between Germany and parts of Switzerland, France, and parts of Belgium, Sweden and parts of Finland, Netherlands and parts of Belgium

Between USA and Canada (partly with Mexico)

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Value creation Competitive advantage Focus

KEY TO GLOBAL SUCCESS

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VALUE CREATION

Value = Benefits/Price Price is a function of money, time, and effort Benefits result from the product, promotion, and

distribution

2 methods of value creation Improved benefits Lower prices

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COMPETITIVE ADVANTAGE An advantage over competitors gained by offering consumers

greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.

occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors

These attributes can include access to natural resources, access to highly trained and skilled personnel human resources, and new technologies such as robotics and information technology

A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player

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FOCUS Concentration and attention on core business and competence

Nestle is focused: We are food and beverages. We are not running bicycle shops. Even in food we are not in all fields. There are certain areas we do not touch…..We have no soft drinks because I have said we will either buy Coca-Cola or we leave it alone. This is focus.

- Helmut Maucher

Global Marketing

STANDARDIZATION VS. ADOPTATION

Globalization (standardization) Developing standardized products marketed worldwide

with a standardized marketing mix Essence of mass marketing

Global localization (adaptation) Mixing standardization and customization in a way that

minimizes costs while maximizing satisfaction Essence of segmentation Think globally, act locally

THE BIGGEST ISSUE IN GM

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Arabic

read right to left

Chinese

“delicious/happiness”

The faces of Coca-Cola around the world

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Marketing Mix Element StandardizationLocalizedProduct

Promotion

Place

Price

Big Mac

Brand name

Advertising slogan “I’m Loving It”

Free-standing

Big Mac is $3.10 in U.S. and Turkey

McAloo Tikka potato burger (India)

Slang ’Macca’s (Australia)

MakDo (Philippines)

McJoy magazine, “Hawaii Surfing Hula” promotion (Japan)

Home delivery (India)

Swiss rail system dining cars

$5.21 (Switzerland)

$1.31(China)

McDONALD’S GLOBAL MARKETING

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FACTORS LIMITING STANDARDIZATION Market characteristics: Physical environmental condition

climate cars in Canada.

product use conditions cars in the states

population decide market size

macroeconomic income level. McDonald’s in China

cultural and social Wal-Mart and Nokia in Korea

Language Nova in Mexico, Starbucks in 인사동

Industry conditions

stages of product life cycle

the level of local competition

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Marketing infrastructure

practices in distribution systems

availability of outlets the number of malls, department stores, and supermarket

accessibility of advertising agencies and media

Regulatory environment

product standards

tariffs and taxes result in different price

specific restrictions mention of competitors’ name (Europe vs. the States)

patent law pharmaceutical drugs in Indonesia and India

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Concept EPRG Schema

STRATEGIC ORIENTATION OF GM

Domestic market extension

Ethnocentric

Multi-domestic market

polycentric

Global marketing Regio/geocentric

attitude or state of mind of management influence all decision regarding strategies

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ETHNOCENTRIC ORIENTATION Home country is superior to others Sees only similarities in other countries Assumes products and practices that succeed at home will be successful everywhere

Leads to a standardized or extension approach

POLYCENTRIC ORIENTATION Each country is unique Each subsidiary develops its own unique business and marketing strategies

Often referred to as multinational Leads to a localized or adaptation approach that assumes products must be adapted to local market conditions

Global Marketing

REGIOCENTRIC ORIENTATION A region is the relevant geographic unit

Ex: The NAFTA or European Union market Some companies serve markets throughout the world but on a

regional basis Ex: General Motors have four groups for four regions – GMAP,

GME, GMLAAM, GMNA

GEOCENTRIC ORIENTATION Entire world is a potential market Strives for integrated global strategies Also known as a global or transnational company Retains an association with the headquarters country Pursues serving world markets from a single country or sources

globally to focus on select country markets Leads to a combination of extension and adaptation elements

Global Marketing

Chapter 2Global Marketing Environment

CHAPTER OUTLINE

• Global economic factors•Cultural and social factors•Political factors

Global Marketing

Uncontrollable factors that affect global marketing:

the global economy

the cultural and social forces

Political and legal forces

GLOBAL ENVIRONMENT FACTORS

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Components of economic factors International agencies promoting international trade Trade barriers Protection from protectionism

ECONOMIC FACTORS

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ECONOMIC FACTORS

Stage of Economic Development Developed Countries: Mixed economies (Ex: U.S., Japan, Canada, & Western Europe) Developing Countries: Usually moving towards an industrialized economy (Ex: Hungary, South Africa, & Pakistan)

Economic Infrastructure Economic infrastructure is a country’s communication, transportation, financial, & distribution systems. Critical for determining how, where, & to whom to market.

Coke example in India

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Consumer Income and Purchasing Power Marketers must consider the average household

incomes of the consumers.

Currency Exchange Rates

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How purchasing power differs around the world

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TRADE BARRIERS

Tariffs Taxes on goods moving across an economic or political

boundary Can be imposed on imports, export, or goods in trasit. Import tariffs are the most common

Raise the price of imported goods and thereby protect domestic industries from foreign competition

Generate tax revenues for the government

Quotas Physical limits on the amount of goods that can be

imported into a country. Screen quotas in Korean movie industry

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Orderly marketing arrangement and voluntary export restrictions Agreement between countries to share markets by limiting

foreign export sales

Nontariff barriers Include a wide range of charges, requirements, and

restrictions such as surcharges at border crossings, licencing regulations, performance requirements, government subsidies, health and safety regulation, packaging and labeling regulations, and size and weight requirements.

French ban on the advertising bourbons and Scotch, but not on cognac

A French tax on car horsepower – target American cars or environmental issue?

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Definition of culture Components of culture Classifying the culture

CULTURAL AND SOCIAL FACTORS

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CULTURAL AND SOCIAL FACTORSDefinitions

A learned set of ideals, values, and standards that is shared by members of a society

Basic characteristics A culture is shared within a society, a defined group of

people who depend on each other for survival. Culture is learned Culture is based on symbols, the most important symbols

being language. Culture is integrated: all aspects of culture function as a

coordinated whole. Individual culture do not produce uniform behavior for all

members: there are subcultures like gender.

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COMPONENTS OF CULTURE

aesthetics

religion

educationPersonal

communication

Values andattitude

Socialstructure

Manners And

customs

culture

PhysicalAnd

Materialenvironment

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CULTURAL INFLUENCES ON MARKETING

Religions, history,Family, language, Arts/entertainment,

education

Symbols, morals,Rules of behavior,

knowledge

Selecting and Prioritizing wants

For goodsAnd services

behaviors

Cultural forces Cultural messages

Consumer Decision process

Global Marketing

PERSONAL COMMUNICATION Spoken languages Advertising slogans and company document must be

translated carefully so that messages are received precisely as intended. Language blunders: GM’s chevy Nova. SK. The feel of the sound: Pocari sweat in Japan

Body language George Bush’s V in Australia Personal space

Mexicans are closer than Anglo-Saxons.

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RELIGION Many businesspeople ignore the influence but it has

profound impact on people Christianity: world’s largest religion

Christmas in the States vs. St. Nicolas day in Holland vs. little Christmas in France

Christian group boycotting Walt Disney's film Islam: second largest religion

Islam prohibits alcohol and pork. German candy maker “haribo” produced pork-free gummi

bear

Global Marketing

EDUCATION Can have a major impact on how receptive consumers are to

foreign marketing techniques. Education shapes people’s outlook, desires, and motivation. The type of employees and executive talent

European education emphasizes the mastery of a subject through acquisition on knowledge whereas US approach emphasizes analytical ability and an understanding on concepts. This will lead to different thinking patterns and attitudes.

Literacy One out of five Americans do not understand the

directions on an aspirin bottle Affects marketing communication to consumers Influence earning potential of young people

Global Marketing

AESTHETICS What a culture considers “good tastes” in the arts, the

imaginary evoked by certain expressions, and the symbolism of certain color.

Aesthetics can decide success or failure of GM Color green is a good color in Islam where as is represent

sickness in some Asian countries. Black is color of death and mourning in the states, Europe, and Mexico, but it is white in Japan.

Imagery and symbol Nike’s Air Melt Music The architecture of buildings

Global Marketing

VALUES AND ATTITUDES Value ideas, beliefs, and customs to which people are

emotionally attached Singapore value hard work and material success whereas

Greece value leisure and a modest lifestyle. UK and USA value individual freedom and Japan and Korea value group concensus

Attitudes positive or negative evaluations, feelings, and tendencies that individuals harbor toward objects or concepts. Reflect underlying value Attitude toward time Attitude toward work Attitude toward culture change

Global Marketing

MANNERS AND CUSTOMS Manners appropriate ways of behaving, speaking, and

dressing in a cultureIn Arab culture, one does not extend a hand to greet an older person and does not use left hands. Doing business during meal is ok in the states but not in Mexico.

Customs appropriate habits or behaviors in specific situations.Gift of knives is not appropriate in Russia, France, or Germany. In Japan, one is not supposed to open in front of gift giver.

Global Marketing

SOCIAL STRUCTURE A culture’s fundamental organization, including its groups

and institutions, its system of social positions and their relationships, and the process by which its resources are distributed Social group family (nuclear vs. extended), gender Social status results in different preference for a job. Social mobility the ease with which individuals can move

up or down a culture’s social ladder. Caste systems vs. class systems.

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PHYSICAL AND MATERIAL ENVIRONMENTS

Physical environment Topography

all physical features that characterize the surface of a geographic regions.

Scooters cannot be sold in mountainous regions Korean cars do not need cruise control

Climate Siesta in southern Europe

Material culture All the technology used in a culture to manufacture goods

and provide services Used to measure technological advancement of a nation’s

market

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Hofstede’s cultural dimensions Hall’s High vs. low context culture

CLASSIFYING CULTURE

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HOFSTEDE’S CULTURAL DIMENSIONS

Individualism vs. Collectivism

Self-perception as individual or part of a group Individualism a loosely knit social framework in which

people are supposed to take care of themselves and of their immediate families only

Collectivism people distinguish in-groups and out-groups and feel absolute loyalty to in-groups.

collectivist individualist

In society, people are born into extended families or clans who protect them in exchange for loyalty.

“we” consciousness holds sway

Identity is based in the social system

There is emotional dependence of individuals on organizations and institutions

The involvement with organizations is normal

In society, everybody is supposed to take care of him/herself and his/her immediate family

“I” consciousness holds sway

Identity is based in the individual

There is emotional independence of individual form organizations or institutions

The involvement with organization is calculative

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Power distance

The extant to which a society accepts the fact that power in institutions and organizations is distributed unequally

Small power distance Large power distance

Inequality in society should be minimized

All people should be interdependent

Hierarchy means an inequality of roles, established for convenience

Superiors consider subordinates to be “people like me”

Subordinates considers superiors to be “people like me”

Superiors are accessible

The use of power should be legitimate and is subject to the judgment as to whether it is good or evil.

There should be an order of inequality in this world in which everybody has a rightful place; high and low are protected by this order

A few people should be independent; most should be dependent

Hierarchy means existential inequality

Superiors consider subordinates to be a different kind of people

Subordinates consider superiors as a different kind of people

Superiors are inaccessible

Power is a basic fact of society that antedates good or evil. Its legitimacy is irrelevant.

Global Marketing

Uncertainty avoidance

The extent to which a society feels threatened by uncertain and ambiguous situations and tries to avoid these situations by providing greater career stability, establishing more formal rules, not tolerating deviant ideas and behaviors, and believing in absolute truths and the attainment of expertise.

Weak uncertainty avoidance Strong uncertainty avoidance

The uncertainty inherent in life is more easily accepted and each day is taken as it comes

Ease and lower stress are experienced

Time is free

Hard work, as such, is not a virtue

Aggressive behavior is frowned upon

Less showing of emotions is preferred

Conflict and competition can be contained on the level f fair play and used constructively

The uncertainty inherent in life is felt as a continuous threat that must be fought

Higher anxiety and stress and experienced

Time is money

There is an inner urge to work hard

Aggressive behavior of self and others is accepted

More showing of emotions is preferred

Conflict and competition can unleash aggression and should therefore be avoided

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Masculinity vs. femininity Masculinity value assertiveness, the acquisition of money

and things Femininity value caring for others, the quality of life, or

people.

feminine masculine

Men needn’t be assertive, but can also assume nurturing roles

Sex roles in society are more fluid

There should e equality between the sexes

Quality of life is important

You work in order to live

People and environment are important

Interdependence is ideal

Service provides the motivation

One sympathizes with the unfortunate

Small and slow are beautiful

Men should be assertive. Women should be nurturing

Sex roles in society are clearly differentiated

Men should dominate in society

Performance is what counts

You live in order to work

Money and things are important

Independence is the ideal

Ambition provides the drive

One admires the successful achiever

Big and fast are beautiful.

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Global Marketing

Low-Context High-Context

Information and meaning are explicitly stated in the message

Individual “internalizes” meaning and information, so that less is explicitly stated

Values Individualism Values Group Sense

Values direct verbal interaction and is less able to read nonverbal expressions

Values indirect verbal interaction and is more able to read nonverbal expressions

Tends to use “logic” to present ideas

Tends to use more “feeling” in expressions

Tends to emphasize highly structured messages, give details, and place great stress on words

Tends to give simple, ambiguous, non-contexting messages

Emphasizes linear logic Emphasizes spiral logic

Hall’S CONTEXT FRAMEWORK

Global Marketing

What you say is what you think - “No, I really mean it…”

Silent language’s role is LOW.

What you say is not really what you think. “As I am sure you understand,…” Read between the lines.

A b c d e f g h i j k l m n o p

A b c d e f g h i j k l m n o p

A b c d e f g h i j k l m n o p

W b x d y e

Silent language’s role is HIGH.

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ZER DEFECTS

CONFORMS TO STANDARDS & SPECIFICATIONS

Luxury

GERMANY :

FRANCE :

USA :It

works.

JAPAN :

Rapaille: What is “Quality”?

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Political factors Dealing with host government Host government actions Political risk assessment Risk reduction strategies

Legal factors Patents, trademarks, and copyrights Regulatory trends affecting global marketing

POLITICAL AND LEGAL FACTORS

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DEALING WITH HOST GOVERNMENTPolitical climate stability influences business

ex> freedom party in Austria in 2000

Governments Government actions are governed by a lot of reasons from

political philosophy, pressure from interest group to self-interest.

Should understand the rationale behind the actions The major goals of government actions

Self-preservation Security Prosperity Prestige Ideology Cultural identity

POLITICAL FACTORS

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Self-preservation Effort to keep sovereignty, which gives a nation complete

control within a given geographic area. Branch office of global companies can be a threat because

they are controlled or influenced by headquarters Many countries limit foreign ownership of newspaper,

television stations, and radio stations.

The need for national security To the extent possible, each entity seeks to maximize the

opportunity for continued existence and to minimize threats from the outside

infrastructure and essential resources, utilities, the supply of crucial raw materials are usually protected.

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Fostering national prosperity A key goal of government is to ensure the material prosperity

of its citizens. Host country can favor local industry of foreign competitors for

this goal by imposing tariffs or customs duties.

Enhancing prestige Government can enhance prestige with many ways; supporting

team sports or individual athlete, having a national airlines, or having a leading company.

They can encourage local companies at the expense of a foreign company.

Protecting cultural identity Governments often intervene to protect their country’s cultural

identity Entertainment industry is the typical example

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HOST GOVERNMENT ACTIONS

Jawboning Informal intervention of governments Use this form to prevent an act that, though legal, is

perceived to be contradictory to their self interest.

“buy local” restrictions Public sector and government prefer local companies as a

supplier

Nontariff barriers Used by government mostly to keep imports from freely

entering the home market Quotas and import restriction is the most common.

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Subsidies Gifts that host governments dispense with the intention the

overall benefits to the economy by far exceed such grants Used to encourage exports and to attract global companies

to a certain country.

Operating conditions Host government can have a direct influence on the

operations of a foreign subsidiary by imposing specific conditions on the company's operations

Local content Local content restrictions means that some part of the

manufacturing must be done in the host country.

Ownership conditions Some governments require local nationals become part

owners of the foreign company.

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Boycotts Politically motivated boycotts tend to be directed at

companies of certain origin or companies that engaged in transactions with political enemies

Takeovers Any host government –initiated actions that result in a loss of

ownership or a loss of direct control by the foreign company.Expropriation a formal or legal taking over of an operation with the payment of compensation.Confiscation expropriation without any compensation. Domestication the limiting of certain economic activities to local citizens.

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Host government goals and policy actions

actions

goal

Self-preservati

onsecurity prosperity prestige Ideology

Cultural identity

Jawboning X X X X X X

“buy local” restrictions

X X X

Nontariff barriers

X X

Subsidies X X

Operating restrictions

X X X X

Local content

X

Ownership conditions

X X

Boycotts X

takerover X X X X

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POLITICAL RISK ASSESSMENT Some companies develop risk assessment systems Public or semipublic sources regularly monitor political risk

The Economist Intelligence Unit (EIU) The International Country Risk Guide

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RISK REDUCTION STRATEGIESLocal partners This strategy can include placing local nationals on the

boards of foreign subsidiaries or accepting a substantial capital participation form local investors.

Invaluable status Achieving a status of indispensability Firms with high technology or specific product can use this

strategy

Vertical integration It is better to have several specialized, interdependent plants

than have one fully integrated, independent plant.

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Minimizing fixed investments Can lease the facilities or rely more on outside suppliers.

Political risk insurance Both government and private offers the insurance

Local borrowing Financing local operations from indigenous banks and

maintaining high level of local accounts payable can help firms to be safe

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PATENTS, TRADEMARKS, AND COPYRIGHTS Patents and trademarks are used to protect products, process, and

symbols. They are issued by each individual country so marketers must

register every product in every country in which they intend to trade. Counterfeit and piracy of software, entertainment, and fashion is

increasing and Strategies firms can use include (1) do nothing if the effect is

minimal, (2) co-opt the distributors through acquisition or licensing, (3) educate customers about the value of the original product through advertising, (4) investigate and bring legal actions, (5) join coalitions like the International Ani-counterfeiting Coalition, which brings pressure on governments, (6) use advanced technology that are difficult to copy, and (7) continue to enhance the brand with new products, making it difficult for pirates to keep up.

LEGAL FACTORS

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REGULATORY TRENDS AFFECTING GM

Trade liberalization more and more countries reduce local manufacturing

requirements and tariffs.

Deregulation Many countries began to open up industries such as

telecommunications, transportations, airlines, and banking.

Privatization Countries are selling government-owned agencies,

organization, and companies to private stockholders or firms.

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SWOT ANALYSIS It is an easy-to-use tool for developing an overview of a company’s

strategic situation It forms a basis for matching your company’s strategy to its

situation Process of examining the organization’s environment to determine

Strengths – identifying existing organisational strengths Weaknesses – identifying existing organisational weaknesses Opportunities – what market opportunities might there be for

the organisation to exploit? Threats – where might the threats to the future success come

from?

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EXTERNAL FACTORS

Opportunity a chance for firm growth or progress due to a favorable juncture of

circumstances in the business environment. Possible Opportunities:

Emerging customer needs Quality Improvements Expanding global markets

Threat a factor in your company’s external environment that poses a

danger to its well-being. Possible Threats:

New entry by competitors Changing demographics/shifting demand Emergence of cheaper technologies Regulatory requirements

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INTERNAL FACTORS

Strengths Positive tangible and intangible attributes, internal to an

organization. They are within the organization’s control.

Weakness Factors that are within an organization’s control that detract

from its ability to attain the core goal. Which areas might the organization improve?

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Internal

Factors

External

Factors

Strengths

(list key strengths)

Weaknesses

(list key weaknesses)

Opportunities

(list key opportunities)

SO Strategies: strategies that

use strengths to take advantage of opportunities

WO Strategies: strategies that

alleviate weaknesses and take advantage of opportunities

Threats

(list key threats)

ST Strategies: strategies that

use strengths to overcome

threats

WT Strategies: strategies that

alleviate weaknesses and

overcome threats

SWOT MATRIX

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Chapter 3Understanding Local CustomersCHAPTER OUTLINE

• local buyer behaviors•The consumers’ decision process• New brands at a local market

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The Buyer Decision Process

Problem/need recognitionProblem/need recognition

information searchinformation search

alternative evaluationalternative evaluation

purchasepurchase

post-purchase behaviorpost-purchase behavior

Seeking Customers

Seeking Customers

Meeting CustomersMeeting Customers

Keeping CustomersKeeping Customers

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Problem/Need Recognition A problem/Need is when an individual perceives a

difference between an ideal and an actual state of affairs New products often lead to tension and a recognized

“problem” Types of Needs

Functional needs needs for convenience and quality Social needs need related to social status Experiential needs related sensory desires and

experience

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Search A consumer’s search for alternative ways to solve the

problem is closely related to his or her level of involvement with the product category

For product with which involvement is high, search tends to be more comprehensive and time consuming

For convenience and habit purchases, the decision process is shorter, with little need for extensive searches or alternative evaluations

Search intensity is dependent on the perceived availability of the alternative One advantage for product with high global brand

awareness is that initial distrust is easier to overcome

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External Information Sources

person

publicity

AdvertisingS/P

Sales representative

Word-of-MouthCommunication

Mass media

others

firm

media

source

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Evaluation of Alternatives When a new product or service is in the “consideration set”

A highly involved individual will process the available information matching the pros and cons of the alternatives against preferences

Consumers can deal with multi-attribute evaluations in several ways: They can use gradually less-important features to

successively screen out alternatives A “hierarchical” decision rule ex> Lexicographic model

They can consider all features simultaneously: A “compensatory” rule – hard to do.

ex> Fishbein’s Mutli-attribute model

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What is a Consideration set (or Evoked set)?

The set of choices that are salient or kept in mind for purchase.

consumers are aware of a lot of brands in any given product

category. However, not all brands are seriously considered for

purchase. The consideration set is made up of the brands that are

taken seriously by the consumer in his or her purchase decision.

How many?

Magic number 7 +/- 2(Miller 1956)

Marketers’ objective is to put their products into a consumer’s consideration set and then be a strong option in the set

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STRATEGIES TO MANAGE CONSUMERS’ CONSIDERATION SET

Using a part-list cuing effect

When a part-list is given, consumers actually remember less.

ex> Avis “We are # 2. we work harder” campaign

Give consumers a part-list of

competitors including you so

to reduce the number of

options in the consideration set

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Using an Attraction Effect

Inferior brand’s ability to increase the attractiveness of

another alternatives

Bread maker $275 Bread maker $350

add a decoy brand to make the existing

brand more attractive to consumers

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Using a Compromise Effect

Consumers tend to choose intermediate brands to reduce

risks (expensive brands have high financial risk and cheap

brands have high performance risk).

\ 165,620

\278,000

\ 829,000

Make your brand as a compromise brand

so to increase the chance of being chosen.

Global Marketing

Using a Framing Effect presenting the same option in different formats can alter

people's decisions.

“75% lean meat”

“25% fat”

Frame your message with a positive

expression (emphasize what consumers gain

from the purchase).

Global Marketing

Fishbein’s Multi-Attribute Model Consumers choose the brand on the base of the importance

of attributes and the evaluation of each attribute for specific brand.

Score = Sum (importance X evaluation)

Lexicographic model The most common form that customers use Consumers consider the most important attributes first and

choose the best evaluated brand on that attribute.

Global Marketing

Cosmetic

Lacvert Cathy cat Laneige 식물나라

Brand image (9) 8 9 8 8

Bottle Design (6) 7 8 6 7

Cheap price (5) 6 7 9 8

Moisturizing (8) 9 6 7 7

216 212 209 210

Global Marketing

Choice The final choice of which alternative to select or try is

typically influenced by social norms and by situational factors

Social Norms Where group pressures to comply are strong social

norms influence is expected to override multiattributed evaluation

The social norms can be usefully analyzed by the extended Fishbein model

The social norms involve two aspects Social forces Motivation to comply

Global Marketing

OUTCOMES OF BUYER’S DECISION PROCESSThe main question about the outcomes revolves around the

degree of customer satisfaction.Customer satisfaction is particularly important in mature

markets where choices are many and the needs are already well met.

Satisfaction engenders loyalty to the brand and to the company.

Because buying is typically a risky choice between different brands, the marketer has to make sure that the customer does not encounter cognitive dissonance, a sense of possibly making the wrong choice.

Global Marketing

Expectation disconfirmation theory Customers satisfaction/dissatisfaction comes from the

comparison between expectancy consumers have before purchase and the evaluation from the actual experience.

Expectation

Actual performance

Gap

• Ex = PF : confirmation

• Ex>PF : negative disconfirmation

•Ex<PF: positive disconfirmation

Global Marketing

A strong brand simplifies the process Reduce information search Reduces perceived risk Places a brand in the evoked consideration set more easily Brand loyalty means decisions go fast

Global Marketing

Chapter 4Global Marketing StrategiesCHAPTER OUTLINE

• Segmentation• Targeting • Positioning

Global Marketing

Segmentation criteria

Segmentation and analysis on each segment

Target market and marketing goals

Competitiveness analysis and Positioning

Positioning evaluation and repositioning

Segmentation

Targeting

Positioning

STP STRATEGY

Global Marketing

The typical way of approaching global marketing strategy is similar to the so-called S-T-P framework:

Market segmentation Dividing a market into smaller groups of buyers with

distinct needs, characteristics, or behaviors requiring separate products or marketing mixes.

Target marketing Evaluating each segment’s attractiveness and selecting

one or more to enter.

Market positioning Setting the competitive positioning for the product and

creating a detailed marketing mix.

Global Marketing

SEGMENTATION It is impossible that one product satisfy every customer’s

every need! Therefore, it is more efficient to provide a product which satisfies one need to a group of people with similar need

Understandmarket

Choose segmentationMethod and criteria

identify the Characteristics of

Each segment

Global Marketing

No Market Segmentation

Global Marketing

Segmentation by Sex

Global Marketing

Segmentation by Age

Global Marketing

Two stages of global segmentation It is common to distinguish two stages of global

segmentation Macro-segmentation the division of a number of countries

into subgroups of more similar clusters Micro-segmentation the identification of local segments

which are similar across the countries in a cluster. The micro-segmentation techniques used in local marketing

are also useful in global segmentation

Global Marketing

MACRO SEGMENTATION clustering of countries on the basis of common

characteristics deemed to be important for marketing purposes, e.g. data on: Population size Population character Disposable income levels Educational background Primary languages Level of development Rate of growth in GNP Infrastructure Political affiliation

Global Marketing

0

.9

.8

,7

.6

.5

.4

.3

.2

.1

0

-.1

-.2 -.1 0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1.0

•SOT

• UKINOR •

• SWE• DEN

FIN•

• SWI

• AUS

•NET

•GER

•NEZ

• BEL• AUT

• COL

• CHI• VEN• SPA

• BRA• PER •

MEX

PUE • •FRA

ITA• • ARG

PHI •

• THI

• ISR

• JAP

• MAC

• IND •PAK

Factor VI Religion

TUR •

Protestant

Catholic

Factor III

Standard of Living

Macro-Segmentation on Standard of Living and Religion

Global Marketing

Macro-Segmentation on “Think” and “Feel” Dimensions

Global Marketing

TRADITIONALIST 18%

HOMEBODY 14%

RATIONALIST 23%

PLEASURIST 17%

STRIVER 15%

TRENDSETTER 13%

6 PAN-EUROPEAN LIFESTYLE SEGMENTS

Relative size of segments in percent, of the European Market, as developed by the RISC research agency

Macro-Segmentation Based on Lifestyle

Global Marketing

MICRO SEGMENTATION Major segmentation variables

Geographic: Region of country City or metro size Density or climate

Demographic: Age, gender, family size, family life cycle, income,

occupation, education, race, religion, etc. The most common and easiest way of segmentation

Global Marketing

Mattel’s Barbie Hasbro’s G. I. Joe

Global Marketing

Psychographic: Social class, Lifestyle (VALS, LOV, AIO), Personality

Behavioral: Occasion: Benefits Sought User Status : non-users, light users, heavy users

No single way to segment a market. May combine more than one variable to better define

segments.

Global Marketing

AIO

활동 activity 관심 interest 의견 opinion

일취미

사회활동휴가오락

클럽회원활동지역사회활동

쇼핑스포츠

가족가정직업

지역사회여가활동

유행음식

대중매체업적

자기자신에 대한 의견사회적 이슈

정치사업경제교육상품미래문화

Global Marketing

VALS 질문항목 예제1. I am often interested in theories.

2. I like outrageous people and things.

3. I like a lot of variety in my life.

4. I love to make things I can use everyday.

5. I follow the latest trends and fashions.

6. Just as the Bible says, the world literally was created in six days

7. I like being in charge of a group.

8. I like to learn about art, culture, and history.

9. I often crave excitement.

10. I am really interested only in a few things.

11. I would rather make something than buy it.

12. I dress more fashionably than most people.

Global Marketing

Global Marketing

Benefit Segmentation of the Snack Food MarketNutrition

al snakers

Weight watchers

Guilty snacker

s

Party snackers

Indiscriminate snackers

Economical snackers

% 22 14 9 15 15 18

Benefit sought

Nutritious

No artificial

Low calorieQuick

energy

Good tasting

Low calorie

Good to serve Goes

well with beverage

Good tasting

Satisfies hunger

Low priceBest value

Demographics

Have young

children

Youngersingle

females nonurban teens Larger families

Psychographics

controlled

Outdoor High anxiety

sociable hedonistic Price-oriented

Consumption

light light heavy average heavy Average

Types of snack

Fruitsvegetabl

e

Yogurtvegetabl

es

YogurtCookiescandy

NutsChips

pretzels

CandyIce creamcookies

No specific

Global Marketing

Type of drinker

Personality type Drinking patterns

Reparative drinker

Sensitive and responsive to needs of others, adapts to these needs by sacrificing own aspirations, well adjusted to this situation

Drinks at end of day, usually with a few close friends, controlled drinker, seldom drunk, drinking is self reward for sacrifices made to others.

Social drinker Driven by own ambitions, attempts to manipulate others to get what he wants, not yet attained level of aspirations, but expects to.

Drinks heaviest on weekends, in larger groups in social settings, drinks as menas of acceptance of and by others, controlled drinker

Indulgent drinker

Considers self a failure, bales environment and others

Heavy drinker, drinks in isolation as a form of escape

Oceanic drinker

Considers self a failure but blames own shortcomings

Also heavy drinker and drink to escape recognition of shortcoming, doesn’t drink alone

Segmentation by Personality Factors

Global Marketing

Requisites for segmentation Measurable & Accessible Actionable & Relevant Homogeneous within a segment Heterogeneous between segments

Global Marketing

TARGETING Targeting a market or country should be done strategically. The factors to consider include market, competition, and

interfirm factors. The choice of target countries should also consider the

tradeoff between focus and diversification.

market competition interfirm

market sizepotential

product life cycle

present competitorsFuture competitors

Objectiveresources

Competency

Global Marketing

Fit to the firm

Market size Competition

Day time user직장인의 휴식 Low Small High

couple Low Big Extremely High

Stay over

Foreign tourist High Big Medium

Local tourist High Small Medium

사교모임 , 유흥 , 취객 대상 High Small Medium

Coffee shopSocial purpose Low Big Extremely high

Business purpose Low Medium Extremely High

Sauna High Big High

clubregular Low Big Medium high

Group users Low Big Medium high

restaurantregular Low Big Extremely high

Group users Low Big Extremely high

Special occasion service

결혼식 , 가족 모임 , 사은회 , 세미나 , 연말 모임 등 Low Big Extremely high

Global Marketing

규모규모

Group TourGroup Tour

28% of foreign tourists28% of foreign tourists

Budget backpakersBudget backpakers

26% of foreign tourists26% of foreign tourists

Business travlesBusiness travles

43% of foreign tourists43% of foreign tourists

특성특성 • mostly Asians• older people

• mostly Asians• older people

• price sensitive• younger people• stay for a long time

• price sensitive• younger people• stay for a long time

• price insensitive• mostly use business hotels

• price insensitive• mostly use business hotels

자사와의Fit

자사와의Fit highhigh highhigh

경쟁강도경쟁강도 MediumMedium lowlow

예상 비용예상 비용 lowlow lowlow

lowlow

highhigh

highhigh

Global Marketing

Diversification Strategy In developing a global strategy, some companies make a

conscious effort to be a player in different countries and different market segments. Difficulties in one market segment or country can be offset by gains elsewhere.

Focus Strategy Markets and segments can be given more attention and

markets positions fortified. This is particularly advantageous when the country or segment competitive rivalry is intense.

Global Marketing

Factors Diversity if: Focus if:

Growth rate Low High

Demand stability Low High

Competitive lag Short Long

Spillover High Low

Need to adapt product Low High

Need to adapt promo Low High

Marginal sales Diminishing Increasing

Need for control Low High

Entry barriers Low High

Diversification vs Focus

Global Marketing

Integrated global business strategies

Global Marketing

POSITIONING Product’s position is the way the product is defined by

consumers on important attributes, or as the place the product occupies in consumers’ minds relative to competing products.

Perceptual position maps can help define a brand’s position relative to competitors.

Unique positioning is achieved through differentiation Types of positioning

Positioning by attributes: Reebok Image positioning Positioning by occasions: Kisses, Conditions Positioning by users: Nike, Johnson’s baby lotion Positioning by competition: Hazzys, Bean Pole Repositioning: Johnson’s baby lotion, Arm & Hammer baking

soda

Global Marketing

Full positioning of the brand is called the brand’s value proposition.

Potential value propositions include: More for More

providing the most upscale product or service and charge a higher price Ex> Ritz Carlton, Mont Blanc

More for the Same Can attack competitors’ “more for more” strategies

ex> Lexus vs. Mercedes Benz The Same for Less

Sell the same product with less price Ex> amazon.com, Dell, Walmart

Less for Much Less Meeting customers’ lower performance requirements at a

much lower price ex> Southwest Airlines, Daiso More for Less

The winning proposition but hard to achieve and sustain

Global Marketing

Hypothetical Competitive Positioning Map for Selected Retailers

Global Marketing

Healthy drinkIonic drink

Female drink

Sports drinkThirst quencher

masculine

Product Space Map(Positioning Map)

A

B

I1 C

I2

D

sporty

masculine

Size of a circle =market size

healty

feminine

Global Marketing

American Soap Market

scentweak

moisturizingstrong

moisturizingweak

scentstrong

1

2

7

4

5

3

6

8

ToneZest

Dove

Lux

Dial

LifebuoyLava

Coast

Phase 3

Safeguard

Global Marketing

Korean Car Market

보수적중장년층에

소구

고급 /품위

실용적

현대적스포티청년층에 소구

EF 소나타EF 소나타

에쿠스에쿠스

체어맨체어맨

오피러스오피러스 그랜져 XG 그랜져 XG

아토스아토스

비스토비스토

마티즈마티즈

라노스라노스리오리오

티뷰론티뷰론

SM3SM3

엑센트엑센트

BMWBMW

매그너스매그너스

아반떼 XD아반떼 XD

SM5SM5

라세티라세티

Global Marketing

Position Map - Korean Actor

Global Marketing

Chapter 5Global Products and ServicesCHAPTER OUTLINE

• product life cycle •product standardization• localization vs. adaptation• strategic choices for new markets• global service marketing• global brand strategy

Global Marketing

Place Mix

Product Mix Price Mix

Promotion Mix

Providing the best price

Providing the bestproduct

Providing accessibility to target customers

Provide product information and persuade customers

Global Marketing

Augmented product concept

Corebenefit

Formal product

augmentation

- package- brand- style

- installation- delivery- payment methods- warranty

Global Marketing

Product Life Cycle Model (PLC)

130

Global Marketing

salessales

costcost

profitprofit

MKT objectivesMKT objectives

productproduct

priceprice

low low

High cost per customerHigh cost per customer

NegativeNegative

Awareness and trialAwareness and trial

basic productbasic product

cost-plus cost-plus

distributiondistribution selective distributionselective distribution

communicationcommunication Increase awareness for early adopters and dealersIncrease awareness for early adopters and dealers

Introduction stage

Global Marketing

Rapid growthRapid growth

Cost per customers gets lowerCost per customers gets lower

Profit increasesProfit increases

Maximize market shareMaximize market share

product extensions, service, warrantyproduct extensions, service, warranty

Market penetrationMarket penetration

intensive distributionintensive distribution

Increase awareness of mass marketIncrease awareness of mass market

Growth stage

salessales

costcost

profitprofit

MKT objectivesMKT objectives

productproduct

priceprice

distributiondistribution

communicationcommunication132

Global Marketing

The biggestThe biggest

lowestlowest

High profitsHigh profits

Keep market share and maximize profitKeep market share and maximize profit

Diversify Brands and modelsDiversify Brands and models

competitivecompetitive

more intensive distributionmore intensive distribution

Emphasize difference from your competitorsEmphasize difference from your competitors

Mature stage

salessales

costcost

profitprofit

MKT objectivesMKT objectives

productproduct

priceprice

distributiondistribution

communicationcommunication133

Global Marketing

decreasesdecreases

lowestlowest

decreasesdecreases

milk the brandmilk the brand

Remove weak itemsRemove weak items

Keep or reduce priceKeep or reduce price

Select a few channelsSelect a few channels

Keep hard-core loyal customers Keep hard-core loyal customers

Decline stage

salessales

costcost

profitprofit

MKT objectivesMKT objectives

productproduct

priceprice

distributiondistribution

communicationcommunication134

Global Marketing

Diffusion of New Products

135

Global Marketing

PRODUCT STANDARDIZATION Although there is increasing demand for local variety as

economic growth takes place and as anti-globalization sentiment spreads, global products and brands are usually standardized in some ways.

Global product examples Gillette razor blades Sony television sets Benetton sweaters

Regional products and brands are unique to a particular trading region Honda’s European car model “Concerto” Mcdonalds’

Global Marketing

Advantages of standardization Cost Reduction Improved Quality Enhanced Customer Preference Global Customers Global Segments

Disadvantages of standardization Off-Target Lack of Uniqueness Vulnerability to Trade Barriers Strong Local Competitors

Global Marketing

LOCALIZATION

Refers to the changes required for a product or service to function in a new country (ex: fax machines fitted with new types of telephone jacks for use in a foreign country). Localization avoids having potential customers reject a product outright.

A standardized product still needs to be localized to function properly.

ADAPTATION

When products are changed to match customer tastes or preferences.

Adaptation gives customers a positive reason for choosing a given product.

Global Marketing

PREFER

REJECT

Line shows likelihood of

Purchase

Uniform Localized Adapted

+

-

Uniform vs Adapted Product

Global Marketing

Fully standardizedFully adapted

Incremental manufacturing cost

Combined costs Cost of

lost sales

Optimal Level of Standardization

Global Marketing

What to standardize? 100% standardization is rare Usually starts with a core product as the foundation Various features are added, these may differ according to

the country market Can also involve modular design, where various features are

packaged as modules, different assembly combinations in different markets

Pitfalls of standardization Overstandardization: Standardization compromises the

positioning strategy Narrow Vision: Goals should not be narrow and inflexible Rigid Implementation: Some flexibility in implementation

needs to be retained by local units

Global Marketing

EUROPE

ASIA

LATIN AMERICA

NORTH AMERICA

Honda City

Honda Element

Honda Fit

Honda Stream

Honda’s Non-Global Car Models

Global Marketing

EUROPE

ASIA

LATIN AMERICA

NORTH AMERICA

Goodyear Eagle F1

Goodyear Eagle F1

Goodyear Eagle F1

Goodyear Eagle F1

Goodyear’s Globally Uniform Tires

Global Marketing

STRATEGIC CHOICES FOR A NEW MARKET

Strategy one: product extension-communication extension

Marketing a standardized product with the same communication strategy around the world.

The most cost effective Not feasible for all kinds of products

Strategy two: product extension-communications adaptations

Marketing a standardized product with a different communication strategy in each country

Can use when the sociocultural event surrounding the product differs by country but the use conditions are identical

Global Marketing

Strategy three: product adaptation-communication extension

Marketing an adapted product with the same communication strategy

Used when adaptation of the product is unavoidable Sometimes product formulation can be changed without the

customer knowing it.

Strategy four: product adaptation – communication adaptation

Marketing an adapted product with different communication strategy in each country

Because this strategy cost a lot, each market has to be of sufficient volume to succeed

Strategy five: product invention Usually used when consumers cannot afford the product Typically redesign original product for a lower level of

complexity to gain low price

Global Marketing

• Accounting

• Advertising

• Banking

• Broadcasting

• Computer services

• Consulting

• Data processing

• Design & engineering

• Distribution

• Education

• Entertainment

• Health care

• Insurance

• Investment banking

• Leasing

• Legal Services

• Lodging

• Media

• Reservation systems

• Restaurants

• Tourism

• Telecommunications

• Transportation

• Utilities

SERVICE INDUSTRIES

Global Marketing

Services are different from products in following characteristics

Intangibility you cannot easily touch a service

Heterogeneity the service is not exactly the same each time

Inseparability services are produced when they are consumed

Perishability you cannot store a service

Global Marketing

The Service “Product” Core service is what the customer is really buying. For

example, an oil change and tune-up for your car provides trouble-free operation

Formal service package specifics services offered to the customers including price, service features, the packaging, and guarantees

Augmented service: the totality of the benefits a customer receives or experiences they have when buying the product.

Generic benefits

Provider’s behavior

Physicalsurroundings

Provider’s appearance

Brand image

Features

Quality

Packaging

After-salessupport

Price

Warranty

Core service

Formalservice package

Augmentedservice

Global Marketing

Three factors that influence the globalization potential of services

Stage in the Life Cycle – potential is highest during the maturity stage because then the service is fully developed and can be blueprinted.

Infrastructure barriers – service applicability depends on availability of infrastructure, as when, for example, warehouse stores require customers to take home large items in their own cars.

Idiosyncratic Home Markets – special regulations induce domestic service providers to develop practices that are not applicable elsewhere, as when, for example, advertising agencies in Japan produce television programs whose sponsorship the agency controls.

Global Marketing

Service quality Desired Service highest or ideal quality Predicted or Expected Service lies somewhere between

the desired & the adequate service Adequate Service forms the lower limit below which the

service quality is unacceptable Perceived Service must lie between the desired & the

adequate service levels to make sure customer is satisfied

Global Marketing

Desired Service

Predicted/Expected Service

Adequate Service

(Perceived Service low)

Surprise

Acceptable

Dissatisfaction

Zone of tolerance

Performance Gap

Service Quality: The Gap and the Zone of Tolerance

(Perceived Service high)

Inadequate Service

Global Marketing

SERVQUAL- the dimensions of service quality Reliability ability to perform the promised service

dependably and accurately Assurance Knowledge and courtesy of employees and

their ability to convey trust and confidence (Competence, courtesy, credibility and security of the service)

Tangibles Appearance of physical facilities, equipment, personnel, and communication materials

Empathy Caring, individualized attention the firm provides its customers (Access to organization’s representatives, communication and understanding the customer)

Responsiveness Willingness to help customers and provide prompt service

Global Marketing

Culture and service quality Since services are intangible, service quality is more difficult

to quantify, allowing for a more subjective view Different cultures have different habits and preferences and

therefore different definitions of service quality So culture affects perceived service quality & customer

satisfaction strongly And what is considered high service quality in one country is

not necessarily high in another country

ex> France: quality = luxury

German: quality = conforms to the standard and specification

Japan = zero defect

USA = working well

Global Marketing

• Asking • Listening

JapaneseAmericans

• Expressing doubt • Expressing sympathy

• Explain what cannot be done

• Explain what can be done

• Defending company policy

• Apologize for company policy

• Responsibility of the buyer

• Responsibility of the seller

• “We’ll fix it, but…” • “I’m very sorry”

• Low customer satisfaction • High customer satisfaction

Personal Service Quality: Differences in Complaint Handling

Global Marketing

BRANDS are symbols associated with a product or service that identifies legally the maker of the product.

Brands are copyrighted and are then legally protected. The copyright needs to be registered in each country where

the brand is sold for the protection to hold. As a competitive advantage, a strong brand can be a

sustainable advantage – but needs forceful enforcement against piracy and imitators.

BRAND STRATEGY

Global Marketing

The concept of a “brand” has been extended beyond the domain of products and services;

Brands are now used for entertainment celebrities, sports teams and stars, art institutions and even places and nations.

The country-of-origin factor is a reflection of the nation’s brand equity.

Global Marketing

Dimensions of nations as brands Culture & Heritage, Exports Governance Immigration & Investment People and Tourism

The six dimensions together define the national brand as perceived in the world.

Global Marketing

How Americans See Brand France

Exports

Governance

Immigration & Investment

Culture & Heritage

People

Tourism

Global Marketing

How Japanese See Brand France

Exports

Governance

Investment & Immigration

Culture & Heritage

People

Tourism

Global Marketing

Why brands are important Products are increasingly standardized. “Benchmarking” means competitors monitor each others’

products. Imitative targeting of new product development makes

product differentiation difficult to sustain. Customers learn that quality and features are comparable

across competitors. End result: One of the few sustainable competitive

advantages is the brand.

Global Marketing

Branding Strategies• To brand or not to brand? - ‘generic brand’• Manufacturer brand vs. Dealer brand - ‘private brand (PB)’• Individual brand vs. Family brand - ‘brand extension’

- same brand name for different product categories

(ex) 풀무원 , 식물나라 , Arm & Hammer- advantage: minimize launching cost- disadvantage: failure affects other brands

(ex) 샘표 캔커피 , Bic stockings, Levi Tailored classic

Global Marketing

Private Brands

Global Marketing

GLOBAL BRANDS Brands associated with global products which are well known in all major

markets of the world Ex> Sony, Mercedes-Benz

REGIONAL BRANDS Brands which are uniform across a region

Ex> P&G’s Pert in N America, Vidale Sassoon in Asia, Acura is Honda Legend in Asia

LOCAL BRANDS Brands found in only one or two markets

Ex> Jever Pilsener in Germany, Fortnum & Mason in the U. K. A &W Rootbeer in the Us. And Pocari Sweat in Japan and Korea

The typical multination firm has a “portfolio” of brands, some of which are global, some are regional, and some local only.

Global Marketing

company total number brands found in brands marketedof brands 50% or more countries (%) in only one country (%)

Colgate 163 6 (4%) 59 (36%)Kraft GF 238 6 (3%) 104 (44%)Nestle 560 19 (4%) 250 (45%)P&G 217 18 (8%) 80 (37%)Quaker 143 2 (1%) 55 (38%)Unilever 471 17 (4%) 236 (50%)total 17921

Source: Journal of Consumer Marketing 12 no. 4 (1995)

Typical Global Brand Portfolios

Global Marketing

Global brand equity Customer Brand Equity is the value of the positive

associations that consumers have with a product’s brand name.

These associations often involve emotional attachments, affinity, positive brand image, and brand identity.

They also involve cognitive factors such as familiarity, knowledge and perceived quality, as well as social factors including peer group acceptance.

When these associations turn negative (as in anti-globalization sentiments against global brands) the brand equity can go down very quickly.

Global Marketing

Financial brand equity the monetary value of a brand in terms of net revenues the

brand is expected to generate over time, across all country markets.

Financial brand equity is sometimes called “hard equity” – while customer brand equity is “soft” equity.

For “hard equity” global reach of the brand matters more, since the value is computed as a sum across markets and segments.

For “soft equity”, affinity to the individual consumer matters more.

Global Marketing

Advantage of global brands Demand spillover The name is familiar because of media

spillover, satellite communications, word-of-mouth etc. Global customers People travel to many countries and

multinational customers operate in many locations, making the global brand a natural choice everywhere.

Scale economies any spending on product improvements and advertising can be leveraged across more markets.

Disadvantage of global brands Negative spillover Bad news travel faster across country

markets Product line spillover Negative spillover affects also other

products with the same brand name. Brand loyalty Local brand loyalties can be strong.

Global Marketing

Role of brands: cultural differences

JAPAN US EUROPE

IMAGE RISK REDUCTION RECOGNITION/ENVY

“FEEL GOOD” TIME SAVER ACHIEVEMENT

EMOTIONAL PEER DOMINATION HIGH ASPIRATIONS

“BELONGING” DISTINCT

PEER RECOGNITION INDIVIDUAL

_________________________ ________________________ ______________________

“VALUE ADDED” AFFECT CONVENIENT AND SURE CALCULATED SOCIAL VALUE

__________________________ ________________________ ______________________

DEFINES THE GROUP IDENTIFIES THE INDIVIDUAL HIGH-LOW STATUS

Global Marketing

Chapter 6Global Communication Strategies

CHAPTER OUTLINE

• Advertising strategies• Sales force strategies• Sales promotion strategies

Global Marketing

One of 4 “p’s”

Major objectives

to convey and persuade customers that the product’s

differentiated value compared to the competing products

Promotion Strategies

Global Marketing

Advertising

Global MarketingCommunication

Sales Promotion

Public Relations

Personal Selling

Sponsorship Marketing

Promotional Mix – Integrated Marketing Communication

Global Marketing

Message

Decisions

Target Audience

Media

Budget

Strategy

Objectives

Communication Decisions

Global Marketing

Product Characteristics

Stage in product life cycle

Target market characteristics

Type of buying decision

Available funds

Push & pull strategies

Factors influencing Promotional Mix

Global Marketing

Corporate level advertising

- Corporate Identity Program

Product level advertising

- pioneering (informative) advertising

• Telling the market about a new product / suggesting new uses

for a product/ explaining how the product works

- competitive (persuasive) advertising

• Building brand preference / encouraging switching to your brand

- reminder advertising

• Keeping the product in customers’ minds during off-seasons /

maintaining top-of-mind product awareness

Advertising

Global Marketing

Global Marketing

Ad appeals

Informational appeal

Aims at fulfilling functional needsAims at fulfilling social/experiential needs

Emotional/experiential appeal

- testimonials- comparative ads- two-sides- slice of life- price-oriented

- teasers- lifestyle- patriotic appeals- dramatic- appeal to fear, sex, or humor

Global Marketing

Teaser Campaign

Global Marketing

Image ads

178

Global Marketing

Humanity appeals

삼성 기업광고

Global Marketing

Patriotic ads

Global Marketing

Fantasy ads

Global Marketing

Dramatization

Global Marketing

Humor ads

Global Marketing

Fear appeals

Global Marketing

Sex appeals

Global Marketing

Testimonial

저도 미용실 가서 몇 시간씩 트리트먼트 받고 싶고 그렇거든요 . 시간도 만만치 않고…

몇 분만 해주어도 미용실 가서 영양팩 받은 느낌이에요 .

                                                                           

Pantene

Global Marketing

Comparative ads

http://www.dailymotion.com/video/xogii_pub-pepsi-vs-coca-cola_ads

Global Marketing

Two-sided

Global Marketing

Slice of Life

LG MaestroP&G

Fabreeze

Global Marketing

ELM: Elaboration Likelihood Model

Petty & Cacioppo 1980s

AdvertisementAdvertisement

Involved?Able?

Involved?Able?

CentralRoute

CentralRoute

PeripheralRoute

PeripheralRoute

Yes No

• Peripheral Cues: - endorsement - repetition - emotional appeals

• Central Cues: - cognitive appeals - focus on message

Global Marketing

Peripheral Route

Evaluation cues used by consumers

• extrinsic cues

– Brand name

– Country-of-origin

• situational variables

– models

– Delivery methods

Global Marketing

Model effects

Source Credibility

• Credible models are more persuasive

• credibility = expertise + trustworthiness

• How to increase credibility

Adopt expert as a model

Build intimate relationship with viewers

Argument that contradicts the firm’s immediate gains

ex> Don’t eat fast food campaign by French

McDonald’s

Breast feed campaign by Nestle

Global Marketing

Source Attractiveness

• Physical attractiveness of the model influence the

persuasion positively.

ex> Nixon vs. Kennedy

Similarity

• The similarity between a model and a viewer influence

the persuasion positively.

Global Marketing

The Effects of Delivery Methods

The number of argument

• The more argument, the more persuasive

Repetition

• Repetition increases focus, understanding, and memory

whereas decreases persuasion

• mere exposure effect vs. advertising wear-out

• Substantive variation, cosmetic variation can prevent

the wearout effects

Ex> SK Telecom 현대 생활 백서 . 삼양라면 . Empas.

Global Marketing

Medium

Newspaper

T.V.

D.M.

Radio

Magazine

Outdoor

Advantage

Flexible, Timely, Local market

Disadvantage

Short lifeFew “pass-along”

Good attentionWide reach

ExpensiveFleeting exposure

Expensive“Junk mail” image

Audio onlyFleeting exposure

Long lead time

No audience selectivityVery short exposure

Audience selectivityPersonalization

Wide reachLow cost

Audience selectivityLong life and “pass-along”

Repeat exposureLow cost

Advertising Medium

Global Marketing

Global advertising Media advertising that is more or less uniform across many

countries, often, but not necessarily, in media vehicles with global reach

Advantages• Consistency of brand communications• Media spill over• Cost savings• Improved production• Leveraging a great idea

Disadvantages• Images and symbols might not be locally acceptable• Appropriate media might not be available• Product usage is not the same• Local creativity is stifled

Global Marketing

Global Ad categories

IDENTICAL ADS

ads are identical, usually with localization only in terms of language voice-over changes & simple copy translations

PROTOTYPE ADVERTISING

the same ads, but the voice-over may be changed to avoid language & cultural problems, & the ad may be re-shot with local celebrities

PATTERN STANDARDIZATION

similar but less structured global approach, wherein the positioning theme is unified & some alternative creative concepts are planned, but execution differs between markets

Global Marketing

• Brand Name same

• Theme same

• Visual same

• Positioning same

• Actors same

• Words same

• Language (local)

• Media same

• Materials same

• Slogan same

• Brand Name same

• Theme same

• Visual same

• Positioning same

• Actors not same

• Words not same

• Language (local)

• Media not same

• Materials not all same

• Slogan same

PROTOTYPE ADVERTISING

PATTERN STANDARDIZATION

Global Marketing

VISUAL PROCESSING

Low literacy

Younger Segments

Low Involvement products

High context societies

VERBAL PROCESSING

High Literacy

Older segments

High involvement products

Low context societies

TV commercials Magazines Newspapers Radio Ads

Cultures and Visual vs Verbal Processing

Global Marketing

Personal Selling

Two-way, personal communication between salespeople and

individual customers

The most efficient but most expensive promotion method.

Common for industrial goods.

Salesperson- an individual acting for a company by

performing one or more of the following activities:

prospecting, communicating, servicing, and information

gathering.

Steps in the selling processProspecting and

qualifyingpreapproach approach

Presentation and

demonstration

Handling objections

closing Follow-up

Global Marketing

Global Personal Selling

Culture affects the “people skill’s of the global marketer

• Differing human relations - e.g. the role of a

salesperson is looked down on by hierarchical cultures

• Degree of market development - e.g. level of customer

sophistication

• Differing regulatory environments - e.g. salesperson

costs escalate in countries where fringe benefits are

high

• Geographic and physical dimensions - e.g. climate,

transportation conditions, population density

Good salesmanship varies across countries

Personal selling is usually the least global of all marketing

activities

Global Marketing

Sales Promotions

Short-term incentives to encourage the purchase or sale of

a product or service

Whereas advertising offers reasons to buy a product, sales

promotion offers reasons to buy now.

Types: consumer promotions, business promotions, trade

promotions, sales force promotions

Global Marketing

Types of consumer promotions

Coupon : certificate that gives buyers a saving when they purchase a specified

product

Sample: a small amount of a product offered to consumers for trial

Cash refund offer : offer to refund part of the purchase price of a product to

consumers who send a “proof of purchase” to the manufacturers

Price pack (cents-off deal): reduced price that is marked by the producer directly

on the label or package

Premium: good offered either free or at low cost as an incentive to buy a product

Point-of-purchase (POP) : display and demonstration that takes place at the point

of purchase or sale

Global Marketing

Activities related to forming and managing images. – seek for understanding and

acceptance from viewers.

Include both internal and external activities

Internal activities

Provide information through Internal publications (e.g. newsletters and

intranets)

Manage corporate culture

External activities

Manage global identity

Provide information to consumers and stakeholders.

Crisis management

Public Relations (PR)

Global Marketing

Sponsorship marketing

Event marketing : sponsors events such as sports and

culture.

ex> mecenat

Cause related marketing : sponsors a specific cause

Global Marketing

Chapter 7Global Pricing StrategiesCHAPTER OUTLINE

• Pricing processes• Types of pricing strategies

Global Marketing

1. Identify pricing objectives

2. Forecast demand

3. Forecast cost

4. Analyze competitors’ price

5. Set the pricing strategies

Process of Setting Up Pricing Strategies

Global Marketing

Survival• set the price to barely compensate the cost• Short-term strategy to avoid exit from the market

Maximize profits• Skimming pricing

Maximize sales• Usually achieved through low price• Market penetration pricing

PRICING OBJECTIVES

Global Marketing

Things to consider:

unique value

Customers' awareness of substitutes

difficult to compare alternatives

price relative to income

inventory effect

Things to consider: cost structure at different levels of productionexperience curves

FORECAST DEMAND

FORECAST COST

Global Marketing

Cost Consumer Demand Competition

Standards for pricing strategies: 3Cs

Global Marketing

Cost based pricing strategies

• Cost plus, markup pricing

• Target return investment: achieve target ROI through

breakeven analysis

Customer-based pricing strategies

• Perceived value : ex> PSM

• Yield maximization pricing: different price for different

market

Ex> online vs. offline.

Global Marketing

Skimming Pricing

- High price low price - aim to maximize short-

term profit - High-end market /Early

market - high demand, low

competition

Penetration Pricing

- low price high price - aim to maximize short-term

sales - Med/low-end market /

majority market - low demand, high competition

Competition-based pricing

Global Marketing

Unit sales

Time in local market

Profitability

Time in local market

Penetration price

Penetration price

Skimming price

Skimming price

Skimming vs. Penetration Pricing

Global Marketing

214

PSM Model Overview

A method to set the price according to what customers perceive the quality of the product.

Easy to handle. Outcome from the model

Price Indifference Point Optimal Pricing Point Range of Acceptable prices

Global Marketing

The Questions

Cheap At what price on the scale would you consider the product or service to be cheap?상품의 가격이 어느 정도면 적당히 싸다고 생각하십니까 ?

Expensive At what price on the scale would you consider the product or service to be expensive?상품의 가격이 어느 정도면 비싸지만 이용해볼 만하다고 생각하십니까 ?

Too Expensive

At what price would you consider the product or service to be so expensive that it is beyond considering buying?상품의 가격이 어느 정도면 아무리 품질이 좋아도 너무 비싸서 이용하지 않겠다고 생각하십니까 ?

Too Cheap At what price do you consider the product or service to be so cheap that you would question the quality?상품의 가격이 어느 정도면 품질이 의심스러울 만큼 싸서 이용하지 않겠다고 생각하십니까 ?

Define Product

Establish Baseline Price Range

Survey 4 Questions

Plot Cumulative Frequency

Indifference Price

Optimal Price Point

Range of Acceptable Prices

Process

216

Global Marketing

Plotting Cumulative Frequency

Cheap Descending:

Expensive Ascending

Too Expensive

Ascending

Too Cheap Descending

0

10

20

30

40

50

60

70

80

1 2 3 4 5 6 7 8 9 10 11 12

Expensive

Cheap

Indifference Point

• Price at which an equal number of respondents feel it is Cheap and Expensive.

• Reverse ‘Cheap” & “Expensive” to get “Not Cheap” & “ Not Expensive”• Because respondents can not relate to “Not Cheap”; but

can related to “Cheap” and reverse is “Not Cheap”218

219

0

10

20

30

40

50

60

70

80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Too Expensive

Too Cheap

Optimal Price

220

0%

20%

40%

60%

80%

100%

120%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

too Cheap

Too Expensive

Not Cheap

Not Expensive

Acceptable Prices Range (APR)

Point of Marginal Cheapness Point of

Marginal Expensiveness

Global Marketing

Chapter 8Global Distribution StrategiesCHAPTER OUTLINE

• Distribution objectives and functions• Distribution structure

Global Marketing

Distributive Objectives

Minimize total distribution costs for a given service output

Determine the target segments and the best channels for each

segment

Objectives may vary with product characteristics

e.g. perishables, bulky products, non-standard items,

products

requiring installation & maintenance

Global Marketing

Distribution channel functions

Information : gathering and distributing marketing research and intelligence

information

Promotion: developing and spreading persuasive communications about an offer

Contact: finding and communicating with prospective buyers

Matching: shaping and fitting the offer to the buyer’s needs

Negotiation: reaching an agreement on price and other terms of the offer so that

ownership or possession can be transferred

Physical distribution: transporting and storing goods

Financing: acquiring and using funds to cover the costs of the channel work

Risk taking: assuming the risks of carrying out the channel work

Global Marketing

Number of Channel Levels

manufacturer

consumer

manufacturer

consumer

manufacturer

consumer

manufacturer

consumer

retailer

retailer

retailer

wholesaler

wholesaler

jobber

Direct channels : has no intermediary levels

Indirect channels

channel strategies are decided by cost (efficiency) and control

(effectiveness)

Global Marketing

Vertical Marketing Systems

Conventional distribution channels : a channel of one or more

independent producers, wholesalers, and retailers, each a

separate business seeking to maximize its own profits even at

the expense of profits for the system as a whole

Vertical marketing systems: a distribution channel structure in

which producers, wholesalers, and retailers act as a unified

system. One channel member owns the others, has contracts

with them, or has so much power that they all corporate.

Global Marketing

Type

Corporate VMS

A vertical marketing system that combines successive stages of production

and distribution under single ownership-channel leadership is established

through common ownership

Contractual VMS

A vertical marketing system in which independent firms at different levels of

production and distribution join together through contracts to obtain more

economies or sale impact than they could achieve alone

Wholesaler-sponsored voluntary channels

Retailer corporatives

Franchise organizations

Global Marketing

Horizontal Marketing Systems

A channel arrangement in which two or more companies at one level

join together to follow a new marketing opportunities

E.g. Nestle jointly sells General Mills cereal brands in markets

outside North America.

Hybrid Marketing Systems

Multichannel distribution system in which a single firm sets up two or

more marketing channels to reach one or more customer segments

Global Marketing

Exclusive Distribution

Giving a limited number of dealers the exclusive rights to

distribute the company’s products in their territories

E.g. New automobiles and prestige women’s clothing

Intensive distribution

Stocking the product in as many outlets as possible

E.g. For everyday life products

Selective distribution

The use of more than one, but fewer than all, of the

intermediaries who are willing to carry the company’s products

E.g. home appliances

Numbers of marketing intermediaries

Global Marketing

Types of retailers

• Specialty Store

• Department Store

• Supermarket

• Convenient Store

• Discount Store

• MWC (Membership Warehouse Club)

• Category Killer

• Factory Outlet

• Telemarketer – Homeshopping Channel

• Internet Shop