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Principles of
International
Marketing
Chapter 6
Strategic
Planning
9th Edition
© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Global Marketing
• Globalization reflects a business orientation which
believes that:
– The world is becoming more homogeneous and
– Distinctions between national markets are not only
fading but would eventually disappear.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.1: Global Marketing Evolution
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Global Marketing
• Globalization drivers
– Market factors – Include purchasing power, developed
infrastructures, technology, globalization of distribution
channels, and cross-border retail alliances.
– Cost factors – Involve avoiding cost inefficiencies and
duplicated efforts.
– Environmental factors – Include reduced governmental
barriers and rapid technological evolution; born globals
are taking advantage of today’s more open trading
regions and newer technologies.
– Competitive factors – Include rapid product innovation,
introduction, distribution.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.3 – The Global Landscape by
Industry and Market
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Formal strategic planning contributes to both financial
performance as well as non financial objectives such
as:
–
–
–
–
Raising the efficacy of new product launches.
Reducing the operation cost.
Improving product quality.
Market share performance.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Three broad dimensions to be kept in mind while
undertaking formal strategic planning:
– The potential benefits for the company in the short and
long term.
– The costs in terms of management time and process
realignment.
– The presence of the necessary management resource
to undertake the endeavor.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.4 - Global Strategy Formulation
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Understanding and adjusting the core strategy
– Begins with a clear definition of the business for which
the strategy is to be developed.
– The strategic business unit (SBU) represents groups
organized around product market similarities based on:
• Needs or wants to be met,
• End user customers to be targeted,
• Products or services used to meet needs of specific
customers.
– Requires the participation of executives from different
functions.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Market and competitive analysis
– Help balance risks, resource requirements, competitive
economies of scale, and profitability to gain stronger
long-term positions.
– Help understand the structure of the global industry
and identify the forces that drive competition and
determine profitability.
• Internal analysis
– Examine the readiness and capability of the firm to
undertake strategic moves with its current resources.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Formulating a global marketing strategy
– Choice of competitive strategy
– Country-market choice
– Segmentation
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.5 - Competitive Strategies
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Country-market choice
– A market expansion policy will determine the allocation
of resources among various markets; basic alternatives
being concentration and diversification.
– Factors that determine country market selection:
• The stand-alone attractiveness of the market.
• Global strategic importance of the market.
• Possible synergies offered by the market.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.7 - Factors Affecting the Choice between
Concentration and Diversification Strategies
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Segmentation
– This approach looks at markets on a global or regional
basis, thereby ignoring the political boundaries that
otherwise define markets in many cases.
– Allows global marketers to take advantage of the
benefits of standardization while addressing the unique
needs and expectations of a specific target group.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.8 - Bases for Global Market
Segmentation
Bases for International
Market Segmentation
Marketing
Management
Variables
Environmental
Variables
Geographic
Variables
Product
Variables
Political
Variables
Promotion
Variables
Economic
Variables
Price
Variables
Cultural
Variables
Distribution
Variables
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Global marketing program development - Marketing
related decisions will have to be made in four areas:
– The degree of standardization in the product offering.
– Marketing approach - Uniformity is sought in elements
that are strategic in nature, while taking care to localize
necessary tactical elements; this approach is called
glocalization.
– Location and extent of value-adding activities.
– Competitive moves - Cross-subsidization may be the
competitive advantage needed for the long term.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Challenges of global marketing
– Insufficient research and the tendency to overstandardize.
– Inflexibility in planning and implementation.
– Local resistance in the form of not-invented-here
syndrome (NIH), which occurs when country
organizations are not part of the planning process, or if
adoption is forced on them by headquarters.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• How to avoid the NIH syndrome
– Ensure that local managers participate in the
development of global brand marketing strategies.
– Encourage local managers to develop ideas for
regional or global use.
– Maintain a product portfolio that includes local as well
as regional and global brands.
– Allow local managers control over their marketing
budgets so that they can respond to local customer
needs and counter global competition.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Localizing global marketing
– Management processes
• Globalization enhances the flow of information, leading to
idea exchange and strengthening of organizational
values.
• Encourage personnel interchange to gain experience
abroad.
• Coordinate and leverage resources of the corporation.
• Permit local managers to develop their own programs
within specified parameters and subject to approval.
• Minimize the influence of the NIH syndrome by using
motivational policies.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Localizing global marketing
– Organization structures
• Establish global or regional product managers and their
support groups at headquarters.
• The matrix structure is considered more effective in
today’s global marketplace.
• Execute global account management programs to build
relationships with important customers and allow
development of internal systems and interaction.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Strategic Planning Process
• Localizing global marketing
– Corporate culture
• Affects and is affected by the manner in which a
company holds its operations together and makes them a
single entity, and commitment to the global market place.
• The management development system has to be
transparent; non-national executives should have an
equal chance for the fast track to top management.
• Implement compensation and mobility policies to avail
the best talent regardless of job location.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Local Company in the Global
Environment
• The degree and strength of globalization in an
industry will determine the pressure that the local
marketer will be under.
• The extent to which the company’s assets are
transferable will determine the opportunity dimension.
• Multiple strategies are available to local marketers
when global markets and marketers challenge them.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 6.10 - Competitive Strategies for
Local Companies
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Local Company in the Global
Environment
• The following six-part strategy for success has been
proposed:
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–
–
–
–
–
Create customized products and services.
Develop approaches that overcome key obstacles.
Utilize the latest technology for advantage.
Scale up operations locally, regionally, and globally.
Exploit low-cost labor.
Invest in talent to sustain their growth and expansion.
© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.