Transcript GROUP # 06 - All about Afghanistan

Today’s Lecture
Chapter 3 Global marketing
Global/International Marketing
We would not be surprised to hear
about a German Business man
wearing an Italian suit meeting an
English friend at a Japanese
restaurant who later return home
to drink Swiss coffee and watch
American TV...
U.S. Globalization
Many U.S.
companies
have made
the world
their market.
Global Marketing
• The Oxford University Press defines global
marketing as “marketing on a worldwide scale
taking commercial advantage of global
operational differences, similarities and
opportunities in order to meet global
objectives
Reasons for going International
1-Access to products otherwise
unavailable
Access to products which are not available
in the domestic market.
For example: Fuel Oil
2-Comparative Advantage
Competitive human/natural resources
In some countries there might have been economical
(cheap) labour or resources which are not available in
the home country
For Example: Chinese labour, Indian Labour
Attraction of
International marketing.
i.
To seek revenue growth opportunities
a)
ii.
To earn more money due to difference in cost of production or
seeking new markets
To compete against global competitors
a)
In order to compete against the rivals
iii. To support global customers
a)
In order to supply your products to your customers abroad
iv. To access global knowledge
i.
v.
To understands the like/and dislikes of people in other countries
To achieve efficiency in value chain
i.
To get more efficient that is to access cheaper/economical labour
or economical resources
An example of
Afghanistan’s
Carpets...
Uniqueness of Afghan Carpets:
 Globally known as one of Afghanistan’s most
viable and visible products.
Large supply of skilled labour in parts of the
country where carpet weaving has been
traditionally important.
 Hand-made process makes Afghan carpets oneof-a-kind and souvenir (gift)
Analysing the exportation
Demand:
Due to the uniqueness of Afghanistan’s Carpet there is a
high demand in foreign markets
Saturation (local demands are fulfilled):
The local market is saturated therefore the makers needs
expansion
Customer Expectation:
Global Afghans: Afghans are scattered around the world
and could make a good market for exportation, being
Global customers
Global Strategy
Definition:
Global strategy consist of a dispersed location
(another country) of each or some part of a
value-chain (production process) that are
performed
OR
An efficient approach that involve a company
launching production on global basis
Regional Strategy
Instead of having similarities among human
beings, there are some differences which changes
from people to people and culture to culture.
Therefore the local culture needs understanding.
Definition:
The global organisation which changes their
global strategy due to difference in local customs,
climate or taste is called regional strategy
Two points to remember before going
Global
1- Understanding business environment in the
HOST (foreign) country.
Local tastes, like & Dislikes, religion, economic
condition, political stability etc
2- Making necessary changes in the marketing
strategy necessary for the HOST country.
In order to make attachment in the foreign culture we
need to make some changes in our own strategy
Sociocultural
Sellers must examine the ways consumers in
different countries think about and use
products before planning a marketing program
Companies that understand cultural can use
them to advantage when positioning products
internationally.
Cultural Differences
When Nike learned
that this stylized “Air”
logo resembled
“Allah” in Arabic
script, it apologized
and pulled the shoes
from distribution.
SOCIOCULTURAL FACTORS:
Family:
International Marketing requires understanding of the family
system.
There are two kinds of family system presently i.e.
Individual:
The family system in which individuals are free to act. Most European and
modern cultures are individualist.
Collective
The system in which people live in collective form as families. Most Asian
cultures are collectivist.
It is likely to see that the buying behaviour is influenced by
the family system a consumer is living in. It is believed that
in the individual societies the buying decision is in the
hand of individual himself while in the collectivist society
the buying decision is within hand of the family elders.
Education:
Education define the literacy rate of a country’s
population. It play an important role in terms of Advertising,
Branding and Labels.
More education mean more appealing use of words and
languages and less education means more pictures in the
advertisements and promotions.
Economic condition
It is important to examine the economic condition in foreign market
Infrastructure:
Communication: Communication play an important role in transferring of
information and goods such as telephony, media, internet etc
Transportation: In order to move around the borders of the country the
organisation needs to confirm the existence of transportation such as Rail, Road, Air,
Water
Energy: The availability of Fuel, Gas, Electricity etc would give a company
easy access to energy resources so as make new products and services.
Economic Development:
Distribution of Income: It would determine the buying power of the people.
Equal distribution of wealth mean good economic conditions while unequal
distribution means the opposite
Rate of growth of buying power: An economically stable country would
have a reasonable rate of growth in buying power and therefore a good opportunity
for a marketer and vice versa.
Language Differences:
Language may cause sometimes ambiguity
(confusing) especially when making translation
of the marketing brands
Competitor
Local brand may have been strongly bonded
due to nationalism.
People may not encourage foreign
products due to strong attachment with the
products produced in the local country.
• Such as Arabian Zam Zam Cola
• Indian Tata
Deciding Whether to go Global
• Operating domestically is easier and safer, otherwise a
company needs to learn foreign laws and languages, dealing
fluctuation in foreign currencies, face political and legal
problems. Yet several factors are drawing more and more
companies into the international arena:
• Global firms offering better product or lower prices can attack
the company’s domestic market.
• The company wants to reduce its dependence on any one
market.
• The company customers are going abroad and require
international servicing.
Deciding Whether to go Global
• Before going global a company shall answer the following
questions:
–
–
–
–
Can company understand behaviours of consumer in foreign country?
Can a company offer competitive products/services
Can a company adopt other country business culture?
Has the company calculated the impact of other country political and
legal environment on businesses?
Deciding which market to enter
• The possible global markets shall be decided
on the following bases:
– Market size i.e. the size of population and the
growth factor in relation to the products being
launched
– The cost of doing business in the international
markets
– The competitive advantage
– The risk of investement
Deciding how to enter
International Market
• Marketing of products on international basis.
• International marketing is carried out in the
following means:
– Exporting
– Joint Venture
– Licensing
– Joint Ownership
– Direct Investment
Exportation
• When goods are produced in the home
country but exported to a foreign market
with some modifications
– Afghanistan dealt $50 million dollars exports
in 2007
– Exports have gone up by 13%
– Handcrafts, fresh and dry fruit, minerals,
leather products, cotton and precious
stones
Joint Venturing
• When a company in home country joins a company
in foreign country to produce product and services is
called joint venture
– Afghan Wireless Communications Company (AWCC), a joint venture
between Telephone Systems International, Inc. in New York and the
Ministry of Communications of the Afghan government
– Sony Ericsson is a joint venture established on October 1, 2001 by the
Japanese consumer electronics company Sony Corporation and the
Swedish telecommunications company Ericsson to make mobile
phones. The stated reason for this venture is to combine Sony's
consumer electronics expertise with Ericsson's technological
leadership in the communications sector. Both companies have
stopped making their own mobile phones.
Joint Ownership
KFC entered Japan through a joint ownership venture
with Japanese conglomerate Mitsubishi.
Licensing
– A method in which a company provide licence to a foreign
company for manufacturing/service while the licence offer
Royalty (fee) and home company share manufacturing
process, trade mark, patents and trade secrets
• Patent: Government licence to an individual or body giving a right or title for a set
period
• Trademarks or marks are words, symbols, designs, combinations of letters or
numbers, that identify and distinguish products and services in the marketplace.
When trademarks are presented to the public via advertising, marketing, trade
shows, or other means, they become one of a company's most valuable assets—
potential customers identify a company by its trademark
• Toyota (Pakistan)
.
Direct Investment
• Entering a foreign market developing foreign
based assembly or manufacturing facilities
Deciding on the Global Marketing
Program
• Standardized Marketing Mix:
– Selling largely the same products and using the
same marketing approaches worldwide.
• Adapted Marketing Mix:
– Producer adjusts the marketing mix elements to
each target market, bearing more costs but hoping
for a larger market share and return.
Global Product Strategies
• Straight Product Extension:
– Marketing a product in a foreign market without
any change.
• Product Adaptation:
– Adapting a product to meet local conditions or
wants in foreign markets.
• Product Invention:
– Creating new products or services for foreign
markets.
Global Promotion Strategies
• Can use a standardized theme globally, but
may have to make adjustments for language
or cultural differences.
• Communication Adaptation:
– Fully adapting an advertising message for local
markets.
• Changes may have to be made due to media
availability.
Global Pricing Strategies
• Companies face many problems in setting their
international prices.
• Possible approaches include:
– Charge a uniform price all around the world.
– Charge what consumers in each country will pay.
– Use a standard markup of costs everywhere.
• International prices tend to be higher than domestic
prices because of price escalation.
• Companies may become guilty of dumping –a foreign
subsidiary charges less than its costs or less than it
charges in its home market.
International Pricing
Thirteen European Union countries have adopted the euro as a common
currency, creating “pricing transparency” and forcing companies to harmonize
their prices throughout Europe.