Transcript Document

3-1
Chapter Twelve
Global Products
MKT568
Global Marketing Management
Dr. Fred Miller
Sample Essay Question
HerbalGlow is Korean producer of natural skin care products.
The firm wishes to build upon its success in Asian markets by
expanding to Europe, North and South America.
1. Identify and describe the three general international marketing
strategies. (6 points)
2. For each element of the marketing mix (product, price, promotion
and distribution), identify and describe one benefit of a global
strategy and one constraint to implementing such a strategy. (12
points)
3. Which of the three general marketing strategies do you
recommend to HerbalGlow? Explain why. (2 points)
Marketing Strategy Options
Multidomestic
strong cultural influences, localize and adapt
Global
similar buyer preferences, global customers/competitors
Globalized localization
integrate sourcing, production and marketing
seek balanced growth
coordination of marketing across countries
globalize as much as possible, localize when necessary
Multidomestic versus Global Markets:
Key Differences
Multidomestic Markets
Market boundaries Markets are defined within
country borders. Customers and
competitors are of local origin.
Customers
Competition
Interdependence
Strategies
Exhibit 11.1
Global Markets
Markets transcend country
borders. Customers and/or
competitors cross frontiers to buy
and to sell.
Significant differences exist
Significant similarities exist
among customers from different among customers from different
countries; segments are defined countries; segments cut across
locally.
geographic frontiers.
Competition takes place among Competitors are few and present
primarily local firms; even
in every major market. Rivalry
international companies
takes on regional or global scope.
compete on a country-bycountry basis.
Each local market operation in
Local markets operate
isolation from the rest.
interdependently. Competitive
Competitive actions in one
actions in one market impact other
market have no impact
markets.
elsewhere.
Strategies are locally based.
Strategies are regional or global in
Little advantage exists in
scope. Great advantage exists in
coordinating activities among
coordinating activities within
markets.
regions or worldwide.
A Multidomestic Industry
Local
Candy
Brands
The Value of Global Brands
Take the
Ten
Second
Brand Test
The Value of Global Brands
1.
What brands do you remember?
2.
What brands do you recognize?
American Express
Wall Street Journal
McDonalds
Nike
Coke
Perrier
Mobil
Phillips
Haagen Das
3M
Daily Telegraph
Honda
Motorola
Johnson and Johnson
Hertz
Levi’s
Mars
Seven Up
Campbell’s
Sony
Rover
Kellogg’s
British Airways
Apple
IBM
Michelin
Dell
Club Med
Globalized Localization: Coca Cola
Globalized Localization: McDonald’s
Germany
Japan
But NOT in
Oaxaca’s Zocalo!
India
"Real food is not frozen
meat," said Jacqueline
García, 24, who runs
Toñita's, a food stand in
Oaxaca's old market. "It's
fresh cheese and crickets.
Fast food's unnatural. The
people who make it are
incompetent. And
McDonald's belongs in the
United States, not our
zócalo.“
NY Times, Aug 24, 2002
Standardization and its Problems
Standardization
advantages: cost, customer preference, quality,
global customer/segments
disadvantages: off-target, lack of uniqueness,
protectionism, local competitors
Globalization limits and pitfalls
limits:industry, resource, marketing mixes
pitfalls: research, over-standardization, poor
follow-up, narrow vision, rigid implementation
Localization vs Adaptation
12-2
The Tradeoff Between Standardization
and Adaptation
Incremental
manufacturing cost
Combined costs
Cost of lost sales
Fully adapted
Exhibit
12.1
Fully standardized
Strong Local Brands
Dragon’s
Blood
Beer from
Furth im
Wald
Global Brand Management
Developing new global products
idea generation
preliminary screening
concept research – focus groups, concept testing, target research
sales forecast
test marketing
Globalizing successful brands
diffusion factors – advantage, compatability,
perceived complexity, trialability, observability
globalization potential-sensible, favorable, available,
complement, regional
changeover tactics - fade, axing, forewarning
Low Globalization Potential
The “Zoo” of Product Branding
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
RCA
Jordache
Merrill Lynch
Mercury
Kangaroo Shoes
Schlitz
Camel
Trix
Exxon
Greyhound
MGM
John Deere
Kiwi
Mustang
Playboy
Kellog;s FF
Hartford
VW Rabbit
Kellog’s CF
Borden’s Milk
Global Brand Management
Brand Management, Top 100 Global Brands
Brand equity, global brands, brand portfolio/mix
Counterfeit products
Counterfeit vs gray trade
Actions against counterfeit goods
Global Value of the Nescafe Brand
$US
$5 billion
Global sales of Nescafe
$700 mil
Nescafe’s global promotion
$25 billion Value of Nescafe brand
$90 billion Value of Nestle’s brands
$113 billion – Market capitalization
$23 billion – Book value of assets
Localizing the Nescafe Brand
Cup Coffee in Japan
Single
Bean
in Japan
“Mellow taste
of milk will soothe
China
your mind. Type of cup coffee that
one would like to drink when feeling
relieved, or relaxing.”
Europe
“Features sound feel of coffee that
fully convinces even true coffee
lovers. Type of cup coffee one would
feel like drinking when one needs to
holdout, or when one wishes to cheer
up.”
Columbia
Evolution of a European Brand
A Tale of Two Beers
Budweiser/Budvar
remains a strong
regional beer with a
quality, hand crafted
traditional beer image
Plzensky Prazdroj is a member of the
international group, SABMiller, the
second largest brewery in the world.
Pilsner Urquell is the group’s
flagship brand.
-- Plzensky Prazdroj Website
Anheuser Busch in Europe
Czech Budvar in USA
Significance of Private Brands
Flanker Brand Example
The Current Sarotti Brand
Cola Wars Video
In which countries, with what strategy and with
what success has Mecca Cola chosen to
challenge Coca Cola?
In which countries, with what strategy and with
what success has Qibla Cola chosen to
challenge Coca Cola?
How has Coca Cola responded to these
challenges?
3-1
Chapter Twelve
Global Products
MKT568
Global Marketing Management
Dr. Fred Miller
Target Market Definition, Size and
Purchasing Power
Define your target market by age and income
classifications in the SPSS dataset.
Use this definition to analyze statistical data on this
market (review previous slides)
To calculate size of target market in number of people,
Determine the number of people in your chosen age range
(Data tables for Population Pyramids)
Multiply the result by the percentage of people in your
chosen income range (SPSS Crosstabs)
To calculate purchasing power, multiply the product
of the previous step by your country’s per capita
income (from Part 1 of your report, World Bank)
Determine target population by age
Visit the Population
Pyramid site of the US
Census Burearu and
select the current year.
Determine the number
of people in the target
market you have
defined, in this case,
5,840,087
Screen for Income
Determine percent of
population in the defined
income range, in this case
42%
Multiply target population by
this percentage to calculate
number of people in target
market, in this case,
5,840,087 * .42 = 2,452,837
Calculate Purchasing Power
Multiply TM population by Per Capita GNI from World
Bank or CIA to calculate purchasing power. In this case,
2,452,837 * $26,900 = $65,981,315,300
Pro Forma Income Statement
1. $14,832,000, using the formulae
Volume (CY+1) = CY Industry Sales * (1+Growth Rate)
1,030,000,000 = (1,000,000,000) * 1.03
Sales = Volume * Schmidt’s SoM * Price
$14,832,000 = 1,030,000,000 * .012 * $1.20
2. $23,260,284, using the formulae
Volume (CY+2) = Volume(CY+1) * (1+Growth Rate)
1,050,600,000 = 1,030,000,000 * 1.02
Price(CY+2) = Price(CY+1) + Price Increase(CY+2)
$1.23 = $1.20 + $0.03
Sales = Volume * Schmidt’s SoM * Price
$23,260,284 = 1,050,600,000 * .018 * $1.23
Pro Forma Income Statement
3. $9,888,000, using the formula
Production Costs = Volume * Schmidt’s SoM * Cost per Liter
$9,888,000 = 1,030,000,000 * .012 * $.80
4. $15,128,640, using the formula
Production Costs = Volume * Schmidt’s SoM * Cost per Liter
$15,128,640 = 1,050,600,000 * .018 * $.80
5. $4,944,000, using the formula
Gross Margin = Sales – Production Costs
$4,944,000 = $14,832,000 - $9,888,000
Pro Forma Income Statement
6. $8,131,644, using the formula
Gross Margin = Sales – Production Costs
$8,131,644 = $23,260,284 - $15,128,640
7.
$741,600, using the formula
Sales Costs = Sales * Agent’s Commission
$741,600 = $14,832,000 * .05
8. $1,163,014, using the formula
Sales Costs = Sales * Agent’s Commission
$1,163,014 = $23,260,284 * .05
Pro Forma Income Statement
9. $889,920, using the formula
Promotion Costs = Sales * Promotion as % of Sales
(CY+1)
$889,920 = $14,832,000 * .06
10. $1,163,014, using the formula
Promotion Costs = Sales * Promotion as % of Sales
(CY+2)
$1,163,014 = $23,260,284 * .05
Pro Forma Income Statement
11. $3,312,480, using the formula
Contribution Margin = Gross Margin - Sales Costs –
Promotion Costs
$3,312,480 = $4,944,000 - $741,600 - $889,920
12. $5,805,616, using the formula
Contribution Margin = Gross Margin - Sales Costs –
Promotion Costs
$5,805,616 = $8,131,644 - $1,163,014 - $1,163,014
Pro Forma Income Statement
Identify three estimates to be revised. Describe revision and
explain reasoning.
1. Increase CY+1 market growth rate to 3.2% because Brahma’s
new entry will stimulate increased sales
2. Decrease share of market estimate in CY+1 to .9% because of
greater competition from the Corona brand will lower SoM
3. Increase promotion costs as % of sales in CY +1 to 8% to provide
more funds for advertising to match Brahma’s promotion for
introduction of Corona brand