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STRATEGIC MARKETING PROBLEMS BY KERIN AND PETERSON ( 12 TH ED )
LECTURE NOTES
Prof.Dr:Teoman Duman
Presented by students : Anisa Topalovic & Zeid Hazem
Chapter 10 .Global Marketing Strategy
- This chapter focuses on ( why, where, how ) organizations compete in a
global environment
 The Decision To Go Global
- The organizations necessary to identify where profitable marketing
opportunities may exist outside their own country
- Four major reasons
1- To gain access to new buyers for( increased revenues , profits,
long term growth )
2- To spread business risk across a wider market base (if sales in Asia
turn down for a period of time the sales in Europe may offset the
decline )
3- To capitalize on an organization's distinctive competencies and
capabilities( Nokia propelled it to global market leadership in the
wireless telecommunications business )
4- To achieve lower costs and enhance an organization's
competitiveness ( the domestic sales volume not enough to fully
capture operating efficiencies and improve the firm's cost
competitiveness must going global ( Nestle Co –Switzerlandselling their products across the Europe then entered North
America & Africa)
 Identifying Global Marketing Opportunities
- To process of identifying global marketing opportunities varies little
between firm's entry into a foreign country for the first time and other
firm's they already working in several countries
- T hat kind of process begins by establishing and prioritizing criteria for
screening countries and the information pertaining to these criteria will
influence market , sales, profit, and success or failure of the project
- Countries are subsequently classified on the basis to their marketing
attractiveness based on the screening criteria compared with the
marketing competences and practices of the company considering a
move into a foreign country
>>> Country Screening Criteria
We have 2 kind of screening criteria
First : quantitative screening criteria is the most prominent used to evaluate
prospective countries example ( consider the determination of market potential
for coffee in China and India for Starbucks
We can see how demographic variable such as age and urbanization and usage
variable such as per capita coffee consumption combine to yield one estimate of
market potential
Second: qualitative variables screening criteria include 4 facts
1- Socio cultural nuances that underlie business and consumer behavior
2- Country economic and technological infrastructure differences that affect
marketing practices
3- Trade regulation that govern marketing practices within countries or free
zones such as ( European union )
4- The marketing prowess and strength of local and foreign competitors
within countries or free zones
>>> Marketing Attractiveness
Depend on the characteristics of the organization itself . an organization's
(strengths, weakness, offerings , marketing policies, financial resources )
 Entering And Competing In foreign Markets
Any organization decide to market in another country must select mode of
entry .
- We have 4 general options exist
-
-
1- Exporting
Means producing offerings in one country and selling in another
country that allows a firm to make the least number of changes in
terms of offerings .
We have 2 kind of exporting
A) Indirect exporting ( the firm sells its domestically produced goods
in a foreign country through intermediary that have 2 side effects
positive side (least amount of financial commitment & risk )
negative side (least profit )
such as : wholesale supply houses , trading companies
B) direct exporting ( the firm sells its domestically produced goods
in a foreign country without intermediary direct to foreign buyer
that have 2 side effects
positive side (large volume of sales and easy to obtain& increase profit
negative side ( big risk for the company )
such as : foreign buyer that are willing to contract for a large volume of
purchases ( Boeing co largest exporter in U.S )
2- Licensing
A company ( licensor) offers the right to a trademark , patent, trade
secret with that mode have 2 side effects
- Positive side ( low risk , capital free entry into a foreign country ,
licensor strives to stay innovative for improvements and a successful
operation )
- Negative side ( licensor forgoes control of its offering and reduces the
potential profit gained from it , while the relationship lasts the licensor
may be creating its own competition, the licensee might modify the
product and serve the market with an offering and marketing
knowledge gained at the expense of the company that got them
started, the licensee should prove to be a poor choice the name or
reputation of the licensor may be harmed )
- 3 type of licensing
A) Contract manufacturing
Company may contract with a foreign firm to manufacturing
products according special specifications ( the products can sold in
the foreign country or exported back to the main company (country))
B) Contract assembly
Company make contract with a foreign firm to assemble parts and
components that have been shipped to that country ( such as
economic boon to Taiwan majority of notebook computers are made
C) Franchising
Franchises include soft drink , motel. Fast food such as Mc Donald's
premier global franchiser
3- Joint Venture
When a foreign company and a local firm invest together to create a
local business .
That occur for 2 reasons
First: one company may not have the necessary financial ,
managerial , marketing resources to enter a foreign country alone
Second : a government may strongly encourage a joint venture
before it allows a foreign company to enter the country .
That kind of modes have big challenge that is difficult manage and
some other factors contribute to the success or failure as well ( how
control is shared ,relations with partners , legal environments ,….)
4- Direct Investment
Have biggest financial commitment and risks involved but the
companies who deal with find this is big advantage outweigh all
commitments & risks.
That kind of modes entails a domestic firm investing in and owning a
foreign subsidiary or division such as ( Reebok entered Russia by
creating a subsidiary known as Reebok Russia )
 Crafting A Global Marketing Strategy
The art of global marketing is standardize marketing strategies whenever
possible and customize them wherever necessary .
>>>Global Market segmentation and Targeting
Involves dividing the globe or large areas of the world into distinct subsets of
customers that behave in the same way or have similar needs and preferences
as ( common assortment of products or services or geographic location ) such
as ( IKEA ).
- We have 2 types of variables are commonly used for market
segmentation
1- Socioeconomic characteristic of consumers as ( gender age , income)
2- Consists of behavioral variables as ( life style , attitudes )
The appropriateness of any one of segmentation variables in a specific situation
will depend on whether or not a variable relates to consumer purchasing, use,
or consumption behavior and responsiveness to marketing programs as
Automobile Manufactures such as ( Chevrolet Europe ) use 2 variables
1- Car owner social status
2- Value orientation
(Will explaining in the case )
>>> offering and Communication Strategies
Organizations effort to global market should have 5 strategies for matching
offerings and communication
An offering be sold globally three ways:
1- The same as in home country market
2- With some adaptations
3- Totally new offering
 Offering extension strategy
Selling virtually the same offering in other countries is such as ( coca-cola)that
strategy work best when the consumers share the same desires , needs and
uses for the offering
 Offering adaptation strategy
to make the offering more appropriate for a country climate or consumer
preferences such as ( frito –lay produces and markets its potato chips in Russia
but the flavors are unlike the chips eaten in north America cause Russians
prefer meat ,seafood flavored
 Offering invention strategy
Organizations can invent totally new offering designed to satisfy common
needs across countries such as ( whirlpool developed a compact , automatic
clothes washer specifically for households in developing countries with annual
household incomes of 2000$ the washer features bright colors because are
placed in home living areas not hidden in laundry rooms
- Some organizations use global communication message around the
world such as ( Gillette , the Best a Man Can Get)
- Other organizations adapt their communication message for the same
product sold in many countries such as ( L'Oreal for health and beauty
products ) introduce golden beauty brand of sun care products in
western Europe and golden beauty advertising featured dark tanning
in Northern Europe and skin protection to avoid Wrinkles in Latin
Europeans
>>> Marketing channel and Pricing Strategies
- Standardization presents a unique challenge for marketing channel and pricing
strategies due to country trade regulations and consumer buying preferences
and practices
- competitive ,political ,tax and exchange rates and legal constraints affect the
pricing latitude and strategy of global marketers
>>> global Brands and Positioning
There are six factors underlie successful global brands:
1- High technology products with strong functional images as ( watches
Rolex, Sony TV) such products tend to be universal
2- High image products with strong associations to fissionability , sensuality ,
wealth as ( Armani , Tiffany ) such products appeal to the same type of
market worldwide
3- Services and business to business products that emphasize corporate
images in their global marketing campaigns as ( airlines and financial
service )such as American express
4- Retailers that sell to upper class individuals or that specialize in a salient
but unfulfilled need as ( IKEA with 315 location in 36 countries )
5- Brands positioned primarily on the basis of their country of origin as (
Australia's foster's beer )
6- Products that do not need customization or other special products to be
able to function properly as ( heavy equipment sold by caterpillar )
( adaptation is only used when necessary to better connect the brand to
consumers in different markets consider McDonald's this global marketer has
adapted its proven formula of "food fun and families across 119 countries )
Thanks For Listening and Good Luck