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CHAPTER 14: MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS Lecture 27 14.1 Advantages of Global Marketing Programs • Economies of scale in production and distribution • Lower marketing costs • Power and scope • Consistency in brand image • Ability to leverage good ideas quickly and efficiently • Uniformity of marketing practices 14.2 Disadvantages of Global Marketing Programs • Differences in consumer needs, wants, and usage patterns for products • Differences in brand and product development and the competitive environment • Differences in the legal environment • Differences in marketing institutions • Differences in administrative procedures 14.3 Determinants of firm’s choice The firm • Degree of internationalization • Size/amount of resources • Type of industry/nature of business • Internationalization goals • Existing networks of relationships The environment • International industry structure • Degree of internationalization of the market • Host country: – – – – Market potential Competition Distance Market similarity 8-4 International Market Segmentation The firm Environment Step 1: Selection of segmentation criteria Step 2: Development of segments Step 3: Screening of segments Step 4: Microsegmentation Market entry 8-5 Micromarket segmentation 8-6 The IMS screening process 8-7 Market expansion strategies: Waterfall approach Gross national product per capita High Advanced countries Developing countries Less developed countries Low Source: Source: Global Marketing Management, by Keegan, Warren J. © Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ. Time 8-8 Market expansion strategies: Shower approach Advanced countries Developing countries Less developed countries Source: Source: Global Marketing Management, by Keegan, Warren J. © Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ. 8-9 Appropriate global marketing strategies for SMEs Source: Source: Bradley, 1995. International Marketing Strategy, 2nd Edition. Reproduced by permission of Pearson Education Ltd. 8-10 The market expansion matrix Market/customer target group Concentration Diversification Concentration 1 2 Diversification 3 4 Country Source: Source: Ayal and Zif, 1979, p. 84. 8-11 Expansion alternatives • Few customer groups/segments in few countries • Many customer groups/ segments in few countries • Few customer groups/segments in many countries • Many customer groups/segments in many countries 8-12 Company factors Favouring country diversification • High management risk consciousness • Object of growth through market development • Little market knowledge Favouring country concentration • Low management risk consciousness • Objective of growth through penetration • Ability to pick ‘best’ markets Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-13 Product factors Favouring country diversification • Limited specialist uses • Low volume • Non-repeat • Early or late in product life cycle • Standard product • Radical innovation Favouring country concentration • General uses • High volume • Repeat purchase product • Middle of product life cycle • Requires adaptation to different markets • Incremental innovation Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-14 Market factors Favouring country diversification • Small markets • Unstable markets • Many similar markets • Low growth rate • Established competitors with large share • Low loyalty • High synergy between countries Favouring country concentration • Large markets • Stable markets • Limited number of markets • High growth rate • Not excessively competitive • High loyalty • Low synergy effect Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-15 Marketing factors Favouring country diversification • Low communication costs • Low order-handling costs • Low physical distribution costs • Standardized communication Favouring country concentration • High communication costs • High order-handling costs • High physical distribution costs • Communication requires adaptation Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-16