Transcript Slide 1

Global marketing planning
and organization
Learning objectives
• Increased importance of international
strategic alliances
• Need for planning to achieve company
goals
• Market entry strategies
Market segmentation argument
• Country, Climate, Language, media habits, age,
income etc. - Ferrari
• Standardization, Globalization Vs Localization,
local responsiveness, customization.
• Finance managers – Standardization
• Marketing – Customization.
• Nestle – 1. Think and plan long term 2.
Decentralize 3. Stick to what you know. 4. Adapt
to local tastes.
Global Marketing Management
• The trend back toward localization
– Caused by the new efficiencies of
customization
– Made possible by the Internet
– Increasingly flexible manufacturing processes
• From the marketing perspective
customization is always best - Dell
• Global markets continue to homogenize and
diversify simultaneously - Barbie
– Best companies will avoid trap of focusing on
country as the primary segmentation variable
Glocalization
Benefits of Global Marketing
• When large market segments can be identified
– Economies of scale in production and marketing –
Black and Decker
– Important competitive advantages for global
companies
• Transfer of experience and know-how
– Across countries through improved coordination and
integration of marketing activities - Unilever
• Marketing globally
– Ensures that marketers have access to the toughest
customers - Japan
– Market diversity carries with it additional financial
benefits
– Firms are able to take advantage of changing financial
circumstances
International Planning
• Planning = making goals and how to accomplish
them.
• Planning for international markets is an attempt
to manage the effects of outside uncontrollable
factors on the firms strengths weakness
objectives and goals in order to achieve the
firms purpose.
• It commits resources to a country market to
make things happen that might not happen
otherwise.
Levels of planning
• Corporate – long term general goals
• Strategic – products, money, research,
long and medium term goals
• Tactical – specific actions and allocation
of resources to meet goals. Local level.
• Clear objectives and commitment are
needed for a plan to be successful.
International Planning Process
Exhibit 12.1
Adapting the marketing mix to
target markets
1. Are there identifiable market segments
that allow for common marketing mix
tactics across countries?
2. Which cultural/environmental adaptations
are necessary for successful acceptance
of the marketing mix?
3. Will adaptation costs allow profitable
market entry?
Alternative Market-Entry
Strategies (1 of 2)
• An entry strategy into international market should
reflect on analysis
– Market characteristics
• Potential sales
• Strategic importance
• Strengths of local resources
• Cultural differences
• Country restrictions
– Company capabilities and characteristics
• Degree of near-market knowledge
• Marketing involvement
• Management commitment
Alternative Market-Entry Strategies
(2 of 2)
• Companies most often begin with modest
export involvement
• A company has four different modes of
foreign market entry
–
–
–
–
Exporting
Contractual agreements
Strategic international alliances
Direct foreign investments
Alternative Market-Entry
Strategies
Exhibit 12.2
Exporting
• Indirect exporting: a company uses a
trading company or export agent, to
handle all the logistics of exporting its
goods overseas, e.g. customer payments
• Direct exporting: products are typically
exported to an intermediary located in the
foreign country or handled through a
domestic department or division. It also
provides greater return and participation
in marketing mix activities.
Contractual Agreement
(1 of 3)
• Contractual agreements
– Long-term,
– Nonequity association between a company and
another in a foreign market
• Licensing
– A means of establishing a foothold in foreign
markets without large capital outlays
– A favorite strategy for small and medium-sized
companies
– Legitimate means of capitalizing on intellectual
property in a foreign market
Contractual Agreement
(2 of 3)
• Franchising
– Franchiser provides a standard package of
products, systems, and management services
– Franchise provides market knowledge, capital, and
personal involvement in management
– Expected to be the fastest-growing market-entry
strategy
Contractual Agreement
(3 of 3)
• Contract manufacturing or outsourcing:
they provide the necessary technical
specifications to a local company to
manufacture or assemble products or
parts of products. Many companies now
solely focus on contract manufacturing.
Joint ventures
• Partnerships between two or more parties
in a particular market, allows companies
to share risk through joint ownership of a
newly created business entity. Partnering
with a local company not only allows for
greater participation in profits than the
modes of entry previously discussed, but
also allows the foreign company to learn
about a new market with relatively lower
financial and political risk.
Strategic International Alliances
• Four characteristics define joint ventures:
– JVs are established, separate, legal entities
– The acknowledged intent by the partners to
share in the management
of the JV
– There are partnerships between legally
incorporated entities such as companies,
chartered organizations, or governments, and
not between individuals
– Equity positions are held by each of the
partners
Strategic International Alliances
• Consortia
– Similar to joint ventures and could be
classified as such except for two unique
characteristics
• Typically involve a large number of
participants
• Frequently operate in a country or market
in which none of the participants
is currently active
– Consortia are developed to pool financial
and managerial resources and to lessen
risks
Strategic International Alliances
• With technological advances, falling trade
barriers, and a growing belief that
globalization is inevitable, companies
have developed more flexible and
innovative strategic partnerships.
• Airlines use global alliances through
which they offer frequent fliers easier
access to benefits, smoother international
flight connections, and improved customer
service.
Direct Foreign Investment
• 1. Acquisition/merger, where a company
gains instant entry into the foreign market,
with facilities, operations, relationships,
expertise, and brand names
• 2.Greenfield investment, where a
company creates a business entity from
the ground up in the foreign country. Both
are also referred to as FDI.
Direct Foreign Investment
• Factors that influence the structure and
performance of direct investments
– Timing
– The growing complexity and contingencies of
contracts
– Transaction cost structures
– Technology transfer
– Degree of product differentiation
– The previous experiences and cultural
diversity of acquired firms
– Advertising and reputation barriers
Questions
1. Give 3 benefits of global marketing?
2. Why would a marketer exclude a country
after Phase 1 or 2 of the marketing plan?
3. In what kind of situations would a joint
venture or licensing be suitable?
Internet task
• Visit the websites of Ford and Nestle.
Compare their international involvement
and strategies towards international
markets. How do they differ?