Transcript International Marketing Part Two Global Marketing Management

International Marketing
Global Strategic Planning
Global Marketing Evolution
Core Business Strategy
Country
A
Country
B
Country
C
Country
D
Globalization Drivers
• Market Factors
• Cost Factors
• Environmental Factors
• Competitive Factors
Global Strategy Formulation
Assessment and Adjustment of Core Strategy
Market/Competitive Analysis - Internal Analysis
Formulation of Global Strategy
Choice of Target Countries, Segments, and Competitive Strategy
Development of Global Marketing Program
Implementation
Organizational Structure - Control
Understanding and Adjusting the
Core Strategy
The SBU: Based on Product Market Similarities
• Similar needs or wants to be met
• Similar end user customers to be
targeted
• Similar products or services used
to meet needs of specific
customers
Analysis is the First Step
• Market Analysis
• Competitor Analysis
• Internal Analysis
Formulating Global Marketing Strategy
Starts With a Series of Decisions
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Country-Market Choice
Choice of Competitive Strategy
Segmentation Choices
Concentration
Diversification
Factors in Country
Selection
• The stand-alone
attractiveness of the
market
• Global strategic
importance of the
market
• Possible synergies
offered by the market
Choice of Competitive
Strategy Alternatives
• Cost leadership
• Differentiation
• Focus
Market Segment 3
Market Segment 2
Market Segment 1
Bases for Global Market Segmentation
Marketing
Management
Variables
Environmental
Variables
Geographic
Variables
Product
Variables
Political
Variables
Promotion
Variables
Economic
Variables
Price
Variables
Cultural
Variables
Distribution
Variables
Global Marketing Program
Development Decisions
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The degree of standardization in the product offering
The marketing program beyond the product variable
The location and extent of value-adding activities
Competitive moves to be made
• The Product Offering :What degree of standardization
or adaptation should be offered?
The Location of Value-Added Activities
– Pooling production ( single design center for each chip - Intel)
– Exploiting factor costs or capabilities
– Strategic alliances
– Concurrent engineering
Competitive Moves: Cross-subsidization
– “…resources accumulated in one part of the world and used
to fight a competitive battle in another…”
Implementing Global Marketing :Success will come from a
balance between local and regional / global concerns.
The Challenges of Global Marketing and the Pitfalls to be
Avoided:
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Insufficient research
The tendency to overstandardize
Inflexibility in planning and implementation
The “Not-Invented-Here” Syndrome (NIH)
Localizing Global Marketing :Achieving a balance between
country managers and global product managers at
headquarters.
The Management Process
• Enhancing the global transfer of
communications
• Personnel interchange to gain experience
abroad
• Headquarters should coordinate and leverage
resources
• Permit local managers to develop their own
programs within defined parameters
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 or global brands
• Allow local managers control over marketing budgets to
respond to local customer needs and counter global
competition
Emerging Global Organization
Structures
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Global Account Management
Changes in the Corporate Culture for Going Global:
The World is Not One Single Market.
Planning and Executing Programs on a Worldwide
Basis.
• A Global Identity that Favors No Specific Country.
• Product Choices Should Consider Individual Markets
as well as Transfer Products from One Region to
Another.
International Marketing
Global Pricing Strategies
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Transfer Pricing
The Parent Corporation
Subsidiary A
North America
Subsidiary B
Latin America
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Subsidiary C
Africa
Objectives of Transfer Pricing
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Competitiveness in the international marketplace
Reduction of taxes and tariffs
Management of cash flows
Minimization of foreign exchange risks
Avoidance of conflicts with home and host
governments
• Internal concerns - goal congruence or subsidiary
manager motivation
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Use of Transfer Prices to Achieve
Corporate Objectives
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Three Philosophies of Pricing have
Developed
• Cost-based philosophy
– Every affiliate is a profit center
• Market-based philosophy
– It takes local conditions into account
• Arm’s-length price
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Transfer Pricing Challenges
• Internal to the MNC
• External between the home and host
country tax authorities
• Performance Measurement: The effects of
manipulating intra-corporate prices will
cause major problems.
• Taxation:Section 482 of the Internal
Revenue Code (IRS has vast authority to reallocate income
between controlled foreign operations and US parents)
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Determining Arm’s Length Price
under Section 482
• The comparable uncontrolled price
method
• The resale price method
• The cost-plus method
• Any other reasonable method
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Pricing Within Individual
Markets is Determined by:
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Corporate objectives
Costs
Customer behavior and market conditions
Market structure
Environmental constraints
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Corporate Pricing Objectives
• Skimming
• Penetration Pricing
Why Prices Change?
Foreign Exchange Rates
Market Strategies
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Costs - Frequently used as the basis of
price determination.
• Labor
• Raw materials
• Supplies
• Utilities
• Shipping
• Demand and Market Factors:
– Price elasticity of consumer demand
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Market Structure and
Competition
• Competition sets the price within the
parameters of cost and demand.
– Competitors under selling your company
– Eroding Market share
– Strategic Alliances
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• Environmental Constraints: Price controls
• Governments Influence Prices and Pricing Directly
• Under Price Controls, the International Marketer
must Operate as if in a Regulated Industry
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Arguments Against
Price Controls
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the maximum price becomes the minimum price
the wage-price spiral advances
labor turns against restrictions
non-inflationary wage increases are forestalled
government controls are difficult to enforce
less tax is raised because less money is made
governments may need to bail out companies to prevent
bankruptcies and unemployment
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Parallel Imports will Surface in
Any Markets Where Price
Discrepancies
Exist
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