Transcript Global Marketing

Why Go International?
1. Exploiting market potential and growth
2. Gaining scale and scope returns at home
3. Learning from a leading market
4. Pressuring competitors
5. Diversifying markets
6. Learning how to do business abroad
International Business Philosophies
Multinational Mentality
– Focused on marketing to different countries with local
adaptation of products and promotions; production
localized and technology less advanced
Global Mentality
– Involves more standardization of products and
integration across countries; driven by strong foreign
competition and growing homogenization of world
markets
Rationale for “Global” Mentality
Customers &
Markets:
Common customer needs, global
customers, global channels, transferable
marketing, leading markets
Competition:
Common competitors using global strategies
Cost Savings:
Scale economies, scope economies, sourcing
advantages, avoidance of duplication
Government
Policies:
Favorable trade policies, acceptance of foreign
investment, compatible technical standards,
common marketing regulations
Multidomestic vs. Global Markets: Key Differences
Multidomestic Markets
Markets are defined within
country borders. Customers
and competitors are of local
origin.
Significant differences exist
Customers
among customers from
different countries; segments
are defined locally.
Competition takes place
Competition
among primarily local firms;
even international companies
compete on a country-bycountry basis.
Interdependence Each local market operation
in isolation from the rest.
Competitive actions in one
market have no impact
elsewhere.
Strategies are locally based.
Strategies
Little advantage exists in
coordinating activities among
markets.
Market
boundaries
Global Markets
Markets transcend country
borders. Customers and/or
competitors cross frontiers to
buy and to sell.
Significant similarities exist
among customers from different
countries; segments cut across
geographic frontiers.
Competitors are few and
present in every major market.
Rivalry takes on regional or
global scope.
Local markets operate
interdependently. Competitive
actions in one market impact
other markets.
Strategies are regional or global
in scope. Great advantage exists
in coordinating activities within
regions or worldwide.
Major Benefits from Global
Business
CAPITALIZING ON THE GROWTH
POTENTIAL OF THE FOREIGN MARKET
AND NEIGHBORING COUNTRIES.
TRANSFERRING COMPETITIVE
INFORMATION AND NEW PRODUCTS FROM
THOSE MARKETS TO OTHER MARKETS.
STRETCHING AND BUILDING UP THE
FIRM’S MARKETING CAPABILITY.
Global vs. Multinational Marketing Mentality
GLOBAL
R & D, DESIGN
MANUFACTURING
MANAGEMENT
SALES & MKTG
CUSTOMER
AFTER-SALES
SERVICE
INTERNATIONAL
MARKET ENTRY
MULTINATIONAL
CENTRALIZED AND
STANDARD
DECENTRALIZED AND
CUSTOMIZED
LIMITD LOCATAIONS
MANY LOCATIONS
CENTRALIZED AND
INTEGRATED
IN-COUNTRY OR REGION
SEGMENTS
LOCAL-SUBCONTRACTED
EXPORTING-LICENSING
INDEPENDENT LOCAL
COUNTRY MANAGERS
GLOBAL SEGMENTS
LOCAL-COMPANY
HANDLED
WHOLLY-OWNED OR J.V.
LOCAL MANUFACTURING
CONSUMER
ELECTRONCS
DETERGENTS
TELECOMM
SONY,
DAEWOO
& THE EAST
KAO
& THE
EAST
NEC
Fujitsu &
the East
P& G,
PHILIPS, RCA
UNILEVER
AND THE
& THE WEST
WEST
Not
Applicable
Not
Applicable
ITT & the
West
ERICSSON
Think
Global Act
Local
UPSTREAM
ACTIVITIES
IDEA GENERATION
R&D
DESIGN
MANUFACTURING
DOWNSTREAM
ACTIVITIES
MANAGEMENT
MARKETING & SALES
CUSTOMER
LOCAL
ACTIVITIES
AFTER SALES
CUSTOMER CARE
Global vs. Multinational Corporate Structures
Marketing Finance
USA
China
UK
Japan
Technology Operations
Ingredients for International Success
Does the Company Have what it Takes to Succeed in
International Markets: The Internal Corporate Audit

Capital To:
– Cross Subsidize International Product & Market Expansion
– Attack Competitors Profit Centers Worldwide if Needed



Product Core Competency: Important & Different Attribute
Risk Taking & First Mover Advantage
International Market Knowledge and Ethnocentrism
– Cross-Culturally Competent Management and Human Resources


International Distribution Network
Corporate Structure & International Marketing Mentality
– Long-Term vs.. Short Term Orientation, Human Resources
– Global vs.. Multinational Mentality
MACROECONOMIC
ENVIRONMENT
Size
– GDP, GNP, Trade
– Population
– Growth Rates
Corporate Capabilities &
Objectives
– Develop The List Of Most
Economically Optimum
Countries & Regions
Affordability
– Per Capita GDP or GNP
– Personal Income
– PPP-measures
Need
–
–
–
–
Economic Need
social Need
Maslow’s Concept
Engel’s Law
Cultural Need Satisfaction Priority
Percentage of Income Left for
Higher Levels of Needs in USA:
Super
Needs
Esteem:
Ownership:
Safety Needs:
Basic Needs:
MICROECONOMIC
ENVIRONMENT
Product
– New
– Differentiated
– Existing
Corporate Capabilities &
Objectives
– Determine The Actual &
Desired Product Positioning
In Foreign Markets
Demand
– Exists & Is Satisfied
– Exists & Is Unsatisfied
– Is Expected To Emerge
Competition
– Highly Competitive
– Niche Competition
– Non-Existent
Microeconomic Environment
Satisfied
Needs
New To Them
or New To All
Unsatisfied
Needs
Emerging
Needs
CDMA-Wireless Vaccine for
Telephones in
Common Cold
Chine
Innovative Companies
Modified for
ThemDifferentiated
Common or
“Me Too”
Chinese
Shoes
In USA
Chinese
High-Tech
In Vietnam
Types of Political & Financial Risks
Multinational Corporations
Global Companies
Emerging Economies
Mature Markets
Government Intervention
Citizens Actions
Economic Rationale
Political Reasons
Do Not
Long-Term
Domestication
Nationalization/ Confiscation or
Expropriation
Seizure of Assets
+
NOW WORRY!!!
+
Regulation of MNC
Worry!
Corporate Safety Factors
Low
High
Low
Natural Time
Trend
R&D
High
Political, Economics & the Time Factors
Democracy
Sweden
Russia89
Time 0
USA
Capitalism
Time 0
Socialism
Russia89
Peru
Cuba
Non-Democracy
RISK-RETURN TRADE OFF
DIRECT/INDIRECT
EXPORTING
LICENSING
JOINT VENTURE
LOW
FDI
LET ME KNOW WHEN
YOU FIND THEM!!!
LOW
Attributes of High vs. Low Context Cultures
High
Verbal Behavior Words chosen have
Nonverbal
Behavior
Societal Makeup
Ability to
communicate
relies heavily on
similarity in
communicants'
backgrounds
numerous possible
interpretations;
meaning is derived
from matching
words with nonverbal cues and the
specific situation
High reliance on
nonverbal behavior
to convey meaning
Homogeneous
yes
Low
High reliance on
verbal
communication to
convey meaning;
words are carefully
selected to convey
precise, specific
meanings.
Nonverbal aspects
play secondary or
confirming role
Diverse
no
Hofstede’s Dimensions
 INDIVIDUALISM VS
COLLECTIVISM
 HIGH/LOW POWER DISTANCE
 MASCULINE VS FEMININE
 WEAK/STRONG UNCERTAINTY
AVOIDANCE
 CONFUCIANIST DYNAMICS
 (LONG RUN ORIENTATION)
Power Distance and Individualism Scales
Small
Power Distance
Large
Collectivist
12
•COL
•TAI •PER
•THA
30
•SIN
•CHL
•POR
•GRE
•HOK
•YUG
•MEX •PHI
•TUR
Individualism
50
•VEN
•PAK
•IRA
•ARG
•BRA
•JAP
•IND
+11
+28
+44
Small power distance
collectivist
+64
+77
Large power distance
collectivist
+94
ARG Argentina
BRA Brazil
CHL Chile
COL Columbia
GRE Greece
HOK Hong Kong
IND India
IRA Iran
JAP Japan
MEX Mexico
PAK Pakistan
PER Peru
PHI Philippines
POR Portugal
SIN Singapore
TAI Taiwan
THA Thailand
TUR Turkey
VEN Venezuela
YUG Yugoslavia
Power Distance and Individualism
Scales
Power Distance
Small
Individualist
53
Individualism
71
•AUT
•ISR
AUL
AUT
BEL
CAN
DEN
FIN
FRA
GER
GBR
IRE
ISR
ITA
NET
NZL
NOR
SAF
SPA
SWE
SWI
USA
Large
•SPA
•FIN
•SAF
•NOR•GER
•SWI
•IRE •SWE
•DEN
•NZL
•CAN
•NET
•FRA
•ITA
•BEL
•GBR
AUL USA
+28
+64
+77
•+44
•
91 +11
Small power distance Large power distance
individualist
individualist
+94
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Great Britain
Ireland
Israel
Italy
Netherlands
New Zealand
Norway
South Africa
Spain
Sweden
Switzerland
United States
Uncertainty Avoidance and Masculinity
Scales
Masculinity
Uncertainty Avoidance
Weak
Feminine
8
AUL Australia
CAN Canada
DEN Denmark
FIN Finland
GBR Great Britain
HOK Hong Kong
IND India
IRE Ireland
NET Netherlands
NZL New Zealand
NOR Norway
PHI Philippines
SIN Singapore
SAF South Africa
SWE Sweden
SWI Switzerland
USA United States
•SIN
•HOK
•DEN
GBR•
32 •SWE
•IRE
•IND
•NOR
Strong
Masculine
•NET
FIN
56 +23 +44 •
Weak uncertainty
avoidance/feminine
•CAN
USA• •PHI
•NZL •SAF
•AUL
+59
+77
Weak uncertainty
avoidance /masculine
+95
Uncertainty Avoidance and Masculinity Scale
Masculinity
Weak
Feminine
59
•FIN
Uncertainty Avoidance
SWI•
•IRA
THA•
•GER
TAI• •PAK
•AUT
BRA•
ISR•
•SPA
84
FRA•
TUR•
CHL•
YUG•
•PER
Masculine
ITA•
COL•
•ARG
•VEN
•MEX
•BEL
Strong
JAP•
•POR
112 +23 +44
Strong uncertainty
avoidance/feminine
•GRE
+59
+77
Strong uncertainty
avoidance/masculine
+95
ARG
AUT
BEL
BRA
CHL
COL
FRA
GER
GRE
IRA
ISR
ITA
JAP
MEX
PAK
PER
POR
SPA
SWI
TAI
THA
TUR
VEN
YUG
Argentina
Austria
Belgium
Brazil
Chile
Columbia
France
Germany
Greece
Iran
Israel
Italy
Japan
Mexico
Pakistan
Peru
Portugal
Spain
Switzerland
Taiwan
Thailand
Turkey
Venezuela
Yugoslavia
Market Attractiveness
C
o
m
p
e
t
i
t
i
o
n
Low
Medium
High
Luxembourg
Denmark, Sweden , Finland
United Kingdom, Netherlands
Belgium
Austria
Germany
Portugal, Greece
Ireland
High
Med.
Low Risk
Low
Low
Med.
Italy
France
High
High Risk
International Brand Strategy
Global Brand Manager’s Objective: Global Brand Dominance
Kleenex, Coke, Hoover, Band Aid, Lee, Jeep, Evian)
Branding
Standard brand name (imac, Tabasco) or use of company
name (IBM, Honda)
Brand Name Adaptation (Tide vs.. Ariel)
Different Names (Lexus vs.. Toyota)
Private Branding
Walmart (worldwide)
Sears (in NAFTA)
GLOBAL PRODUCT POSITIONING
THERE ARE THREE PSYCHOLOGICALLY DIFFERENT EFFECTS ON
BUYERS WHEN A GLOBALLY STANDARDIZED PRODUCT OR
SERVICE IS INTRODUCED ON A LOCAL MARKET:
1. CUSTOMERS’ EXISTING PERCEPTUAL MAPS OF THE PRODUCT
CATEGORY REMAIN INTACT BUT THE NEW BRAND TARGETS ONE
UNTAPPED SEGMENT.
2. THE PRODUCT SPACE IS ALTERED, BY ADDING DIMENSIONS OR
EXTENDING END-POINTS.
3. BUYER PREFERENCES ARE CHANGED.
IN PRACTICE, ALL THREE PROCESSES ARE OFTEN AT WORK
SIMULTANEOUSLY.
BRAND IMAGE

MISPOSITIONED PRODUCTS CAN BE ATTRACTIVE TO
POTENTIAL CUSTOMERS BECAUSE OF BRAND IMAGE AND
STATUS. GLOBAL BRANDS OFTEN DO BETTER THAN
LOCAL BRANDS THAT MAY BE BETTER SUITED TO
CUSTOMER NEEDS FOR THAT AND OTHER REASONS:

CONSPICUOUS CONSUMPTION -- LET EVERYONE SEE
WHAT YOU BUY AND HOW MUCH YOU BUY.

LOWER PERCEIVED RISK.
COUNTRY OF ORIGIN
WHERE A PRODUCT OR BRAND COMES FROM OFTEN
COUNTS A GREAT DEAL WITH CONSUMERS.

COUNTRY-OF-ORIGIN EFFECT DEALS WITH QUALITY
PERCEPTIONS OF PRODUCTS. THIS EFFECT DIFFERS
BY PRODUCT CATEGORY. ALSO, THE QUALITY LEVEL
AT WHICH A COUNTRY PRODUCES IS FACTORED IN.

COUNTRY-OF-ORIGIN BIAS CUSTOMERS TEND TO
OVERSTATE THE POSITIVE AND NEGATIVES OF
PRODUCT ATTRIBUTES ANDTHIS CAN CAUSE A BIAS
TOWARDS PRODUCTS FROM A GIVEN COUNTRY.
LOWER PRICE

THROUGH A REDUCED PRICE, A CUSTOMER
CAN BE INDUCED TO BUY A MISPOSITIONED
BRAND BECAUSE THEY FEEL THAT THEY ARE
GETTING A “GOOD DEAL.”

HOWEVER, THIS CAN BACKFIRE ON THE
MARKETER, SINCE THE PRICE PAID
GRADUALLY LOSES SALIENCE, WHILE THE
PRODUCT STAYS. MARKETER BECOMES
VULNERABLE TO LOWER-COST
MANUFACTURERES ENTERING THE MARKET
(Japanese products vs. Koreans).
International Price Escalation Effects (in $U.S.)
International marketing channel elements
and cost factors
Manufacturer’s net price
+ insurance and shipping costs(c.i.f)
=Landed cost (c.i.f.value)
+tariff (20% on c.i.f.value)
=Importer’s cost (c.i.f.value + tariff)
+Importer’s margin (25% on cost)
+V.A.T. (16% on full cost plus margin)
=Wholesaler’s cost (=Importer’s price)
+ wholesaler’s margin (33 1/3% on cost)
+V.A.T. (16% on margin)
=Local foreign jobber’s cost (=wholesale prices)
+jobber’s margin (33 1/3% on cost)
+V.A.T. (16% on margin)
=Retailer’s cost (=Wholesale or jobber price)
+retailer’s margin (50% on cost)
+V.A.T. (16% on margin)
=Retail price (what consumer pays)
Percent price escalation over: Domestic
No VAT, Foreign Jobber, Foreign Importer
Domestic
Export Prices Based on a
wholesaletypical distribution Channel
retail channel
$ 6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
2.00
2.00
2.00
2.00
2.00
8.00
4.00
4.00
$12.00
$14.40
$ 6.00
2.50
8.50
1.70
10.20
2.55
2.40
14.79
4.93
.79
20.51
6.84
1.09
28.44
14.22
2.28
$44.94
275%
120%
Export Pricing Issues
Price quotes (Ex-Factory or Ex-Work)
Exchange rates
Method of payment (Cash, LOC, Countertrade…)
Government regulations (Walmart-Germany)
To whom you sell (Government vs. Private Sector).
Consumer affordability (per capita income).
Competition (domestic or global).
Country of origin and local consumer perception.
Transfer Pricing
GM USA
(Producing
cars)
Opel division
European Union
A C Delco
USA
(Battery, stereo,
auto parts)
Vietnam
(export)
Export pricing
Transfer
Pricing
GM-JV in
Shenyang, China
The Hamburger Standard
Big Mac
prices
Prices in
local
currency*
USA
$2.28
Argentina
Peso3.60
Australia
A$2.45
Belgium
BFr109
Brazil
Cr77,000
Britain
£1.79
Canada
C$2.76
Denmark
Dkr25.75
France
Ffr18.50
Germany
DM4.60
Holland
F15.45
Hong Kong HK$9.00
Hungary
Forint157
Ireland
I£1.48
Italy
Lira4,500
Japan
¥391
H
Prices in Actual
Implied
Currency under (-)/
dollars
exchange
purchasing power
over (+)
rate April-93
parity† of $US
valuation**,%
$2.28
3.60
1.00
1.58
+58
1.76
1.39
1.07
-23
3.36
32.45
47.81
+47
2.80
27,521
33,772
+23
2.79
1.56‡
1.27‡
+23
2.19
1.26
1.21
-4
4.25
6.06
11.29
+86
3.46
5.34
8.11
+52
2.91
1.58
2.02
+28
3.07
1.77
2.39
+35
1.16
7.73
3.95
-49
1.78
88.18
68.86
-22
2.29
1.54‡
1.54‡
0
2.95
1,523
1.974
+30
3.45
113
171
+51
Big Mac prices
H
Malaysia
Mexico
Russia
S. Korea
Spain
Sweden
Switzerland
Thailand
Prices
in local
currency*
Ringgit3.35
Peso3.60
Rouble780
Won2,300
Ptas325
SKr25.50
SwFr5.70
Baht48
Prices in
dollars
1.30
2.29
1.14
2.89
2.85
3.43
3.94
1.91
Actual
exchange
rate
13/4/93
2.58
3.10
686§
796
114
7.43
1.45
25.16
Implied
purchasing
power
parity† of
the dollar
1.47
3.11
342
1,009
143
11.18
2.50
21.05
*Prices may vary locally
†Purchasing power parity; local price divided by price in the United States
**Against dollar
‡Average of New York, Chicago, San Francisco and Atlanta
‡‡Dollars per pound
§Market rate
Local
currency
under (-)/
over (+)
valuation**,%
-43
0
-50
+27
+25
+50
+72
-16
East-West Distribution Mentality
Manufacturer
Large
Wholesaler
Medium
Wholesaler
Small
Wholesaler
Retailer
End Buyer
Import House
Cost 25%-50% higher for consumers in Japan
East: Japan- Basic Marketing Objective: Relationship-permanency-pay per existence
Manufacturer
Wholesaler
Retailer
West: USA- Basic Marketing Objective: Efficiency-Pay Per Performance
End Buyer
Japanese Import Distribution Alternatives Distribution Route of Italian Spaghetti
Producer
Import
agent
Japanese Conventional Route
Processing
and
packing
plant
Primary
wholesaler
Small
wholesaler
Intermediary
wholesaler
Retail price: 170yen/300g package
Retailer
US-Style Restructured Route
Producer
Importing
company
A/C
Processing
and
packing
plant
Depots
Distribution
Wholesalers
Distribution
centers
Retailer
Retail price: 128yen/300g package
Savings: 25%
Size and Number of Retail Outlets
in Selected Countries
Belgium
Denmark
Greece
France
Ireland
Italy
Luxembourg
Netherlands
Portugal
United Kingdom
United States
Japan
Number of enterprises
(thousands)
Persons employed
(thousands)
Turnover
(billions ECU)
127.8
48.1
175.0
461.8
29.3
929.7
3.5
95.0
173.3
348.2
1,503.6
1,619.8
274.7
199.7
338.2
2,090.0
131.4
2,401.0
18.1
637.5
366.3
3,030.0
19,085.0
6,851.0
35.0
24.0
20.0
260.0
11.0
230.0
3.0
45.0
20.0
280.0
1,350.0
682.0
East-West International Distribution Mentality
Efficient
Manufacturer
Large
Wholesaler
Medium
Wholesaler
Small
Wholesaler
Retailer
Inefficient Domestic Distribution Network
Efficient
Global
Distributors
(e.g. JTCs)
EAST (e. g. JAPAN)
Expensive
Global
Distributors
(e.g. EMCs)
Inefficient
Manufacturer
End Buyer
Import House
WEST (e. g. USA
Wholesaler
Retailer
Efficient Domestic Distribution Network
End Buyer
East-West Distribution Mentality
Manufacturer
Large
Wholesaler
Medium
Wholesaler
Small
Wholesaler
Commission Structure (PPP-loyalty)
JIT (small apt. small retailers)
Multiple Visits Per Day to Retailer by Small Wholesaler
Return Policy- 2-way Channel
Credit Extension- 150 days at low interest (0.06% now)
Employment Buffer-economics environment
Natural Import Barrier-trade policy
Cultural, Political-Legal
Manufacturer
Wholesaler
Retailer
End Buyer
Retailer
End Buyer
Determinants of Choice of Channel
1. Product Requirements (Perishable lettuce, sensitive apples, fine china,
scratched cars, beer without freshness, moldy cakes,...)
2. Logistic Feasibility (Equipment by DHL, autos by air, faxes of newsletters,
freezer railroad cars, shock-absorbent packaging, vacuum-packed,...)
3. Demand Factors (Importance of speed for repairs, timing of raw materials for
inventory, customers’ need for immediate gratification, quality standards of
middleman and final user,...)
4. Competitive Factors (How fast is fast? How good is good? What are the
alternatives for the buyer? Strategic importance of the market?)
5. Middlemen Resources (Storage capability? Credit or consignment or cash?
Motivating with fast delivery? Just-in-time system? Promised supplies?
Ability to support the marketing effort?)
6. Own Resources (Financial, manpower, production capacity)
Seiko’s Authorized and Unauthorized
Channels of Distribution
Europe
Hong Kong
Japan
North America
Importer
Importer
Distributors
Distributors
Distributors
Distributors
Retailers
Retailers
Retailers
Retailers
Importer
Broken arrows denote the flow of Seiko watches through unauthorized channels of distribution.
Solid arrows denote the flow of Seiko watches through authorized channels of distribution.
Advertising Intensity in Selected Countries
Country
North America
Canada
United States
Latin America
Argentina
Mexico
Asia
India
Indonesia
Japan
Malaysia
South Korea
Australia
Europe
Belgium
France
Germany
Italy
Sweden
United Kingdom
Advertising as
percent of gross domestic product
1.17%
2.49
1.08
0.16
0.28
0.39
0.82
0.85
1.21
1.20
0.54
0.65
0.82 (1990)
0.57
0.63
1.35
Media Usage in Various Countries
Nation
TV
Print
Radio
Cinema
Transit
Argentina
148
155
43
16
47
Brazil
126
77
10
—
4
France
2,712
4,717
611
57
1,108
Germany
2,826
13,423
641
157
550
133,434
12,900
1,913
—
5,231
South Korea
1,083
1,755
188
—
708
Spain
2,386
4,569
873
62
384
143
1,560
—
13
82
4,621
9,071
287
84
530
45,410
67,536
14,022
—
1,672
Japan
Sweden
United Kingdom
United States
Components of Global Advertising Strategy
1.
Message (content) and Creative (form- the way the message gets across)
2.
Media (radio, TV, outdoor, print, point of purchase, cinema. internet)
3.
Target Audience (cross-cultural, provincial, demographic)
4.
Product Nature (industrial.consumer, durable, non-durable)
5.
Corporate Mentality (global, multinational)
6.
Advertising Objective (awareness, understanding, interest, purchase)
International Communications Process
Awareness
Understanding
Producer/
marketer/
advertiser Sets
objectives and
advertising
budget(s)
worldwide
Advertising
agency
Develops the
message
(Cultural
Encoding)
and selects
the media
Marketing
coordination
and control
Generate
feedback
on effects
Revisit Ads & Objectives
Interest
Mass Media
Carries the
message
(Available &
Acceptable
Media In
Each
Country)
Results Vs. Ad Objectives
Purchase
Target Market
Receives the
message and
interprets its
content from
media/ peers
(Cultural
Decoding)
Recipients
Think & feel
(Cognition &
Emotion); act
& react to the
message
(hierarchy
of effects)
International Product Life Cycle
$ Sales
$ Trade
IPLC
Net Revenue
From Trade
For the First
Mover Nation
PLC
Individual
Monopoly
Over The
Technology
Company
Monopoly
Over The
Product
Country
Monopoly
Over the
Industry
Exports=Imports Line
Time