Download International Marketing - Glendale Community College

Chapter 8
Marketing
To identify the role of marketing strategy within
corporate goals and operations
To assess appropriate market entry strategies and target markets in a
variety of organizational and environmental contexts
To appreciate the role of product markets and brands in the marketing
mix for differing markets and environments
To integrate elements of the marketing mix,
including communications, pricing and distribution
strategy, in international markets
To develop awareness of ethical issues in
marketing
Aims of the lecture
• To highlight the role of marketing strategy in the organization
• To evaluate market entry strategies in light of differing
national markets
• To identify the global and local dimensions of products and
branding
• To grasp how the elements of the marketing mix aid in
reaching consumers in diverse markets
• To critically asses the ethical dimension of marketing in the
international context
Levels of marketing
• The marketing concept – an organizational focus on
satisfying the needs of consumers.
• The firm formulates its competitive strategy in terms of
targeted customers and their needs.
• Marketing strategy enables the firm to reach consumers
with its products and messages.
• For the large MNE, competitive strategy is often determined
from the head office, but locally designed marketing strategy
is important in diverse markets.
Figure 8.1: Levels of marketing
Corporate culture
What customer
needs can we
satisfy?
What is
our mission?
Who are our
customers?
How best can we
satisfy customer
needs?
Competitive
strategy
What are our
target markets?
Products
Pricing
Marketing
culture
Marketing
mix
Promotion
Placement
Global marketing strategies
• Global strategy – a single strategy for all markets,
associated with centralized organizations; not suitable in most
consumer markets
• Multidomestic strategy – different marketing strategies
devised by managers in country subsidiaries, associated with
decentralized organizations
• Regional and multiregional strategies – groups countries
together, assuming similarity on the basis of geography; tends
to underestimate national differences
• Country strategy – Adaptation of products and branding for
national markets, often within a broad global product strategy
Figure 8.2: Generic marketing strategies
Multidomestic
strategy
Single global
strategy
Figure 8.3: Global marketing strategy
Which markets?
• Decisions on market entry depend on the company, its
products and possible markets.
• Companies often begin expansion by entering similar markets
to their home country, especially for consumer products.
• These could be in the same region (eg Europe) or same
language (eg Spanish firms expanding in Latin America).
More challenging…
• Asian markets, which are very different for Western firms
• Emerging and developing countries, which are fastgrowing but often unstable political and legal
environments
Figure 8.4: Analysis of country markets
Segmentation and targeting
• Target marketing – aimed at satisfying the needs of a
particular group of consumers
• Segmentation – division of a market into consumer groups
based on factors such as socioeconomic level or demographic
group
• Demographics: age and gender are among the most
common groupings.
• The large company targets different segments with specific
products in a product category (eg mobile phones).
• Niche market – specialist strategy for specific group of
consumers (eg organic products)
Market entry strategies
• Exporting offers several options, direct and indirect (using
intermediaries). A sales office may be set up in the market.
• Foreign production indicates greater commitment to the
location, and a platform from which to increase sales in the
new market.
• Can be production under licence or FDI.
• The joint venture is often used by retailers.
• Franchising can be an attractive option, blending local
ownership and support of the brand owner.
Figure 8.5: Market entry strategies
Market entry analysis
• Every possible market offers possible gains which must be
weighed against probable costs.
• Environmental factors, such as…
• Political uncertainty
• Strength of the legal system
• Currency risk
• Other factors
• Timescale – how long will it take to return a profit?
• Exit strategy in case conditions in the market deteriorate.
Figure 8.6: Market entry analysis
Products and branding
• The product may be goods, services or a combination.
• Recall that the marketing concept views satisfying the
customer as a service aspect of providing goods.
• Attributes of each product distinguish it from others in the
product category, and are designed for particular segments.
• The brand distinguishes the firm’s products. It has a…
• Legal dimension – trademark or logo is intellectual property
• Image-creating dimension – designed to enhance appeal in
target markets
• Global brands v local brands
Figure 8.7: Rankings of global brands for 2007
Sources: Interbrand, Interbrand Best Global Brands
2007, www.interbrand.com;
Millward Brown Optimor, Brandz Survey 2007,
www.millwardbrown.com
Product and brand strategies
• The global brand evokes images associated with the
company’s reputation, national heritage and quality.
• It also conveys an image of the consumer, such as
lifestyle, social status and level of wealth.
• Building brand loyalty is key for brand owners – brand equity
is the added value which accrues to the brand and its owner.
• Brand extension – applying a brand associated with one
product to other products.
• Sub-brands – part of a multi-brand strategy, whereby the
brand owner applies different brands to different products.
• Private or own-label brands – brands owned by retailers,
which compete against specialist brands.
Standardization versus Adaptation
in Global Marketing
Product
Communication
Extension
Adaptation
Extension
Soft drinks,
Luxury goods,
Perfumes etc.
Bicycles,
motorcycles etc.
Adaptation
Detergents,
Gasoline etc.
Apparel,
Greeting cards,
Precooked food etc.
How product differentiation works?
Start with three undifferentiated products: A, B and C,
and three market segments, I1,
I2 and I3. With a
little bit of effort,
A can be geared
I1
Towards I1, B towards I2 and C
I3
towards I3 and
it is easy to how
every one ends
A B C
up happier!
I2
Source: Financial Times, 26 January 2006
Figure 8.8: Own-label share of consumer packaged
goods spending
Marketing mix
• Set of marketing tools known as the four Ps:
• Product, Promotion, Price and Place (distribution)
• Product – totality of the offering to the consumer, including
packaging, services and support
• Promotion – all types of communication with customers
• Advertising now encompasses the traditional media, such
as TV and print media, but also internet, including the
firm’s own website.
• Advertising must be adapted to the country – for example,
low-tech advertising (eg billboards) in developing
countries.
Figure 8.9: The marketing mix
Price and distribution
• Pricing – Price must take account of costs, desired profits
and competitor pressures.
• The price varies according to
• Newness of the product
• The brand’s position in the firm’s portfolio
• The level of quality of the product
• Place – Distribution channel consists of all stages involved in
bringing the product to the consumer.
• In consumer products, a growing array of channels, largely
facilitated by new technology and logistics management
Figure 8.10: Distribution channels
Marketing and ethics
• Ethics – values and principles which people would generally
consider to be standards of right and wrong in business
behaviour.
• Ethical considerations overlap with legal requirements, but
where the law is weak (as in developing countries), firms are
still expected to behave ethically.
• Ethical marketing – issues of fairness, safety, honesty and
transparency in communication with consumers.
• Also now incorporates environmental concerns
• Consumer and other stakeholder pressure is now compelling
companies to examine marketing strategy in light of ethical
concerns.
Figure 8.11: Overlapping spheres of ethical issues
Conclusions
• Marketing strategy is linked to the firm’s culture and goals,
aiding it to reach consumers in diverse markets.
• Market entry strategies vary according to the firm’s goals and
environmental factors in potential markets.
• International marketing targets both national markets and
diverse segments within each.
• MNEs seek to design products and brands to maximize the
benefits of both global strategy and local adaptation.
• The elements of the marketing mix can vary according to
differing target markets, in which local expertise is key.
• Responding to stakeholders, MNEs must take ethical concerns
into account in marketing strategy and practices.