Download Marketing Management, 8/e

Chapter Thirteen
Global Marketing
Key Words / Outline
Cultural misunderstanding, Political uncertainty, Global
business, Import restriction, Exchange control and ownership
restrictions, Economic conditions, Market factors, Economic
factors, Environmental factors, Competitive factors,
Management process, Data content, Timeliness, Availability,
Licensing, Franchising, Joint venture, Strategic alliances, Direct
ownership, Marketing planning, Implementation and control of
the marketing plan, Cross-functional strategic plan
McGraw-Hill/Irwin
Marketing Management, 8e
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Global Marketing Goals
• Defensive goals
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To compete with foreign companies on their own turf
Have access to technical innovations in other countries
Take advantage of differences in operating costs
Preempt competitors’ global moves
Not be locked out of future markets by arriving too late
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Global Marketing Goals
• Offensive goals
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Increase long term growth and profit prospects
Maximize total sales revenue
Take advantage of economies of scale
Improve over all market position
Cultural misunderstanding
Political un-certainty
Import restrictions
Exchange controls and ownership restrictions
Economic conditions
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Global Marketing Issues:
Political Uncertainty
• Some of the most common areas of difference lie in the way
dissimilar cultures perceive time
• Another important source of misunderstanding is in the
perceptions of managers about the people with whom they
are dealing
• Other factors include
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Body language
Physical contact
Promptness
Eating and cooking
Social customs
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Global Marketing Issues:
Political Uncertainty
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Government instability
Social unrest
Armed conflict
Nations are newly emerging and anxious to seek their
independence
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Global Marketing Issues:
Import Restrictions
• Tariffs, quotas and other types of restrictions hinder global
business
• Designed to promote self-sufficiency, they can be a huge
roadblock for multinational firms
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Global Marketing Issues: Exchange Controls
and Ownership Restrictions
• Some nations restrict the amount of earned and invested
funds than can be withdrawn from it
• Some require that majority ownership lie within the
country
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Global Marketing Issues:
Economic Conditions
• Although global economies are more intertwined, political
upheavals and social unrest can do significant harm to the
economy
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Organizing The Multinational Company
• Multi-domestic company: Pursues different strategies in
each of its foreign markets
• The global company: Views the world as one market and
pits its resources against the competition in an integrated
fashion
• World wide product divisions, each responsible for selling
its own products throughout the world
• Divisions responsible for all products sold within a
geographic region
• A matrix system which combines elements of both these
arrangements
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Factors Fostering Global Strategy:
External Factors
• Market Factors – Degree of homogeneous market needs,
transferable brands, ability to globalize distribution
channels
• Economic Factors – Worldwide economies of scale, learning
curves, global resourcing
• Environmental Factors – Communications ability,
favorable governmental policies
• Competitive Factors – Global moves by competitors,
preemptive strikes
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Factors Fostering Global Strategy:
Internal Factors
• Structure – Ease of installing a centralized global authority
• Management processes – Capabilities and resources
available to perform operational functions on a global scale
• Culture – Ability to project a global identity, increased
tolerance
• People – Availability of foreign nationals, frequent travel,
commitments to multi-country careers
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Ten Commandments of Global Branding
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Understanding similarities and differences in the global
branding landscape
Do not take short cuts in global branding
Establish marketing infrastructure
Embrace integrated marketing communications
Establish brand partnerships
Balance standardization and customization
Balance global and local control
Establish operable guidelines
Implement a global brand equity measurement system
Leverage brand elements
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Global Market Research
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Population characteristics: Being one of the major
components, managers should be familiar with the total
population and with the regional, urban, rural and
interurban distribution
Ability to buy: Four broad measures to be examined
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Gross national product or per capita national income
Distribution of income
Rate of growth in buying power
Extent of available financing
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Global Market Research
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Willingness to buy: The cultural framework of consumer
motives and behavior is integral to the understanding of
the foreign customer
Factors such as the groups’ values concerning acquisition
of material goods, the role of the family, can have effect
on marketing because each can influence consumer
behavior
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Marketing Research Issues
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Language barriers—Meaning of questions and responses
lacks precision in meaning
Data content – Some nations may omit data viewed as
important by marketers
Timeliness – Census data infrequent and even abandoned
by some nations
Availability in the U.S. – Data may need to be gathered
within the nation
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Global Product Strategy
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Global marketing research can help determine whether
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There is an unsatisfied need for which a new product could be
developed to serve the foreign market
There is an unsatisfied need that could be met with an existing
domestic product either as is or adapted to the foreign market
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Global Distribution Strategy
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Global Pricing Strategy
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The pricing task is often more complicated in foreign
markets because of additional problems associated with
tariffs, laws etc.
Import duties are probably the major constraint for
global marketers and are encountered in many markets
Another pricing problem arises because of the rigidity in
price structures found in many foreign markets
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Global Advertising / Sales Promotion
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Language barriers
Often media are traditionally used
Limited media available and not able to reach out to target
audience
Decision of the type of agency used to prepare and place the
firm’s advertisement must be made
The use of sales promotion can also lead to opportunities and
problems for marketers in foreign markets
Sales promotion can also be used as a strategy for bypassing
restrictions on advertisements placed by some foreign
governments
Sales promotion can be an effective means for reaching people
who live in rural locations where media support for advertising
is virtually non existent
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Economic and Political Considerations
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What is the foreign debt service expense as a percentage of hard
currency foreign exchange earnings?
What is the inflation rate?
How substantial are raw material reserves that can be converted to
hard currency?
Are state subsidies, cheap credits and tax concessions for state
enterprises being phased out?
Does the government intend to sell stakes in state enterprises to
foreign investors?
Is there an emerging capital market based on real interest rates?
What progress is being made toward developing a code of company
law?
Is the political decision-making authority centralized or
fragmented?
How rapid and substantial is continued progress toward democracy
and a free market economy?
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Investment Considerations
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What percentage of ownership may foreign companies have in
joint ventures?
Is private ownership of property recognized?
Are intellectual property rights upheld?
Can foreign investors obtain premises easily?
Can initial capital investment be held in hard currency?
Can a foreign investor sell its stake in a joint venture?
Can hard currency be used to pay for imported raw materials?
What is the tax rate on business enterprise profits?
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Market Attractiveness
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What is the sales potential in this country?
Do the country’s geographical location and political relations permit it to
serve as a gateway to other markets?
How well developed are the necessary managerial and technical skills?
How skilled is the labor pool? What are the labor costs?
Can continued supply of the raw materials required for production be
assured?
What is the quality of transportation and telecommunications
infrastructure?
Will western executives accept being located in the country?
To what degree have government officials developed familiarity with the
Western business practices?
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Growth Strategies for Global Marketing
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Exporting
Licensing
Franchising
Joint ventures
Strategic alliances
Direct ownership
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Marketing Mix - Standardization
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This strategy is more likely to succeed under the following conditions
When the markets are economically similar
When worldwide customers, not countries are the basis for market segmentation
When the customer behavior and lifestyles are similar
- When the product is culturally compatible across the host country
When the firm’s competitive position is similar in different markets
When competing against the same competitors with similar market shares in
different countries rather than competing against purely local companies
When the product is an organizational and high-technology product rather than
a consumer product
- When there are similarities in the physical, political and legal environments of
home and host countries
When the marketing infrastructure in the home and host countries is similar
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