Transcript global-marketing1716

Global Marketing
By Usman Waheed
+923006641921
Chap 01
Global Marketing
GLOBAL MARKETING
• Overview
Global marketers consider the world
as their market and different country
markets as components of this world market
Defining Global Marketing
• AMA’s Definition of Marketing:
Marketing is the process of planning and
executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to create
exchanges that satisfy individual and
organizational objectives
Defining Global Marketing
•
Distinguishing Features of AMA’s Definition
1. Includes nonprofit and for profit activities
2. Includes products, ideas, and services
3. Includes activities that precede and follow the
production process
4. Includes the four P’s and regards them each as
equally important
Defining Global Marketing
•
Global Marketing Defined:
•
… the coordinated performance of
marketing activities to create
exchanges across countries that satisfy
individual, organizational , and societal
objectives
Defining Global Marketing
Global marketing is conducted across
countries (not domestic or foreign)
 Global marketing coordinates activities
across different country markets
 Global marketing should be motivated by
individual, organizational, and societal
goals

The Global Marketing Environment
• Focal Point--Consumer
• Use the Four P’s to Satisfy Consumers
• Economic, Financial, Political, and Cultural
Environmental of Each Country Affect
marketing
• Regional and Global Environments Affect
Marketing
Why Should Firms Engage in Global
Marketing?
•
To Survive and Grow
1. Learn to satisfy consumers in diverse conditions
2. Manage marketing tasks more efficiently and
effectively
3. Preempt or counter competitive attacks in more
than one market
4. Expand customer base to include developed and
developing nations
Why Should Firms Engage in Global
Marketing?
• To Diversify Product and Market Portfolios and
Improve competitiveness
1. Effects of seasonal and cyclical fluctuations in
one market offset by others
2. Diversification increases market size and
enhances economies of scale
Why Should Firms Engage in Global
Marketing?
•
To Capitalize on the Attractiveness of Additional
Country Markets
1. The U.S. is attractive-but won’t accommodate
unlimited growth
2. Expand market size by expanding into other
countries
3. Maurice G. Hardy: Why expand into other
countries? A. Keep competitors in their own countries;
b. Take advantage of growing opportunities in Europe
and the Pacific
Why Should Firms Engage in Global
Marketing?
• To Operate Within a Global Marketplace
1. Goods, services, capital, technology, and
labor are going global
2. Reduced government restrictions are affecting
global marketing
3. Bilateral and multilateral negotiations are
reducing restrictions
What is Unique about Global Marketing?
Country market environments different
• Economic Environment ( Purchasing
Power, Competitive Intensity, Economy’s
Health)
1. Fiscal policies - tax rates and spending
programs of government
2. Monetary policies - regulate money supply
What is Unique about Global Marketing?
Country market environments different
• Financial Environment
1. Exchange rate - price of one currency in
relation to another
2. Exchange rate fluctuations can adversely
or favorably affect performance of a firm
What is Unique about Global Marketing?
Country market environments different
•
Political Environment
1. Tariff barriers - taxes on imports paid to customs
officials - include
a. Specific - fixed amount per physical unit of import
b. Ad -valorem ( on the value ) - percentage of
estimated value of import
2. Nontariff barriers include
a. Import quotas
b. Exchange controls
c. Buy-domestic policies
d. administrative red tape
What is Unique about Global Marketing?
Country market environments different ?
• Cultural Environment
1. Differences encourage marketing adaptations
2. Similarities encourage standardization
3. Balancing the two is a key to success
Marketing Mix Politics - How Do
Government Influence the Four P’s ?
• Product - Local Content Law
• Price - Government Approval for Price Changes
• Promotion - Permissible Budget Determined by
Local Authorities
• Place - Mandated Distribution Channel or
Territory
Why Should We Study Global
Marketing ?
• Influences Product Choices of
Consumers
• Influences standard of living
• Influences Job Opportunities
• Influences the society
Thank You!
The Global Economic
Environment
Global Marketing
What’s happening?
•
•
•
•
Asia Pacific
Western Europe
North America
South America
Why and
what are the
implications?
THE ECONOMIC
ENVIRONMENT
• Overview
Local, regional, and global economic
environments are interactive. What happens
within and among them profoundly
influences marketing mix decisions.
The Local Economy - The Country
Where Marketing Takes Place
• The Consumers
1. Disposable income (after-tax income)
2. What, when, where, and how much
consumers buy is influenced by disposable
income
The Local Economy - The Country
Where Marketing Takes Place
• The Country
1. Healthy economies facilitate higher
purchasing power for consumers
The Local Economy - The Country
Where Marketing Takes Place
2 . Economic variables: GDP; GDP per capita; GDP
growth rates; savings and investments rates;
inflation and unemployment rates; imports and
exports; inflow and outflow of FDI; number of
global corporations in the country; structure of
industries; commercial, fiscal, and monetary
policies of the central government
3. These variables reflect the overall country, not
specific groups of consumers--don’t generalize
The Local Economy - The Country
Where Marketing Takes Place
• The Competition - Know Where You
Stand in Relation to the Competition
1. Porter’s five forces determining the state of
competition: rivalry among existing firms,
potential impact of newcomers, power of
suppliers, power of buyers, substitute goods
2. Prominence of each force varies by industry
The Regional Economy
•
Agreements Among Nations Include
1. Free-trade areas - no barriers among members, national
barriers against the rest of the would
2. Customs unions - no barriers among members, adopt
common barriers against the rest of the world
3. Common markets - form customs unions with free
movement of labor and capital
4. Economic unions - one economy, one currency, unified
fiscal and monetary policies
The Regional Economy
•
The European Economic Integration
1. 15 Western European countries moving
towards economic union
2. EU - to enhance competitive edge of EU
firms in relation to non - EU firms
The Regional economy
• The Asian Pacific Economies
1. The NICs - South Korea, Taiwan, Hong Kong,
Singapore - high-value-added competitors
2. Malaysia, Indonesia, Thailand, Philippines - entering
high-value-added marketers
3. Trade in region has been fueled by
a. Increasing domestic demand
b. Expanding business involvement overseas
c. Growing competitiveness of firms based in region
The Regional Economy
•
The north America Free Trade Agreement
(NAFTA)
1. U.S., Canada, Mexico
2. Designed to increase size of north
American market, reduce trade barriers
within, increase competitive edge of
member firms
The Global economy
•
Increasing Trade and Investment
1. Why exports increased
a . Businesses - to improve competitiveness and
performance
b. Governments - to stimulate domestic economic
growth
2. Foreign direct investment growing faster than exports
a . Role in transferring technology, managerial
expertise, financial resources
b. Five major sources: U.S., United Kingdom, Germany,
France, Japan
The Global Economy
• Increasing Interdependence - Our fate is
tied to that of others
• Increasing Competition - More players,
More intensive competition
• Increasing Complexity - Policies
designed for one country affect the
performance of others
THE GLOBALIZATION OF
THE U.S. ECONOMY
• Future Growth Cannot Rely Exclusively on
Domestic Market
• Firms with Global Operations can Better
1. Develop new products
2. Establish new markets
3. Cross-subsidize products and markets - use
financial resources from one market to fight in
another
Thank You!
Chapter 03
The Financial Environment
The Financial Environment
•
Overview
Understanding and managing the key
elements of the financial environment are
requisites for successful global marketing
Key Features of the global
Financial System
• Acceptability and Convertibility of
Currencies from Different countries
• Hard Currencies Are Freely Traded in
Foreign Exchange markets
• Soft Currencies Are Not Freely
Traded
Key Feature of the Global
Financial System
• Exchange Rates - The Price of One Currency in
Terms of Another
1. Floating exchange rates are determined by
market conditions alone
2. Managed float is determined by governmentmanaged demand and supply
Key Feature of the Global
Financial System
• Depreciation and Appreciation of One
currency in Relation to Another
–
–
–
–
Price
Demand
Profit
Market penetration
Managing exchange Risks Through Spot
Transactions and Forward Transactions
• Four Types of exchange Risks
1. Transaction exposure - when converting
currencies at a later date
2. Translation exposure - when exchange rates
upon consolidation differ from those at time of
transaction
3. Tax exposure - when changing exchange rates
result in a different tax liability
4. Economic exposure - long-term exposure and
its affect on present value of future cash flow
Managing exchange Risks Through Spot
Transactions and Forward Transactions
• Three Methods of Protecting against
Exchange Rate Losses
1. Natural hedging - buying and selling in the
same currency
2. Currency forwards - contracts guaranteeing an
exchange rate
3. Options - the rights of a contract without the
obligation to fulfill it
Financial Institutions and
Their Roles in Business
• Commercial Banks Facilitate Global Marketing by
1. Providing free consulting services
2. Providing collection, payment, and document preparation
services
3. Exchanging currencies and providing financial and
hedging facilities
4. Collecting financial documents
5. Transferring funds and providing credit information on
buyers
6. Providing letters of introduction and letters of credit
Financial Institutions and Their
Roles in Business
• Export-Import Bank ( Eximbnak ) Assists
U.S. Exporters Through
1. Direct loans
2. Guarantees
3. Engineering multiplier program
4. Operation and maintenance service program
5. Working capital guarantees
6. Export credit insurance
The Global Currency Market
and Its Major Players
• Global Wholesale and Retail Market for
Currencies
• Eurocurrency Market - Currencies traded
outside their origin
• Asian Dollar Market - Banks in Singapore
and Hong Kong Dealing in Dollars
• European Monetary System for the
European Union
Thank You!
Chapter 04
THE POLITICAL AND
LEGAL ENVIRONMENT
THE POLITICAL AND LEGAL
ENVIRONMENT
• Overview
After global marketers understand why and
how governments regulate their business
activities, they can better analyze and
respond to governmental actions
Why Do Governments
Intervene?
• To stay in power
• To achieve socioeconomic goals
• Macro-systemic concerns identified by
Boddewyn and Cracco
1. To protect the national interest
2. To maintain national sovereignty
3. To preserve the national identity
Types of Interventions
• In ownership and Control
1. Confiscation - takeover without
compensation
2. Expropriation - takeover with
compensation
3. Domestication - relinquishment of
ownership and control to locals
Types of Interventions
• Other Forms of Intervention
1. Exchange controls
2. Export requirement as percentage of local
output
3. Import restrictions
4. Taxation increases
Types of Intervention
• Some Marketing Mix Regulations
1. Local content law (product)
2. Price ceiling (price)
3. Distribution territory specifications (place)
4. Local advertising agency requirement
(promotion)
Assessing Political Risk - Estimating the
likelihood of Governmental Intervention
• Seeking Experts’ Opinions
1. Current and retired government officials familiar
with the local situation
2. Academics specializing in a region and its politics
• Conducting In-House Research to Monitor
Political developments
Assessing Political Risk - Estimating the
likelihood of Governmental Intervention
• Utilizing Secondary Sources Who Provide
Risk Indexes
1. BERI (Business Environment Risk Index)
2. Business International (BI)
3. Frost & Sullivan
4. PSSI (Political System Stability Index)
Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance
• Identify with the country - Don’t maintain a
foreign image
• Help the host country achieve its societal
goals
1. Improve local management skills
2. Increase local productivity
3. Increase local employment
Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance
• Promote Vertical Integration by Linking
Corporate Activities Across Countries
• Stay Ahead of Intervention by Upgrading
Bargaining Power
1. Keep introducing new products and technology
2. Increase exports
Managing Political Risk Through Lobbying,
Proactive Measures, and Insurance
• Insure Against Political Risk
1. Overseas Private Investment Corporation
(OPIC)
2. Foreign Credit Insurance Association
(FCIA)
Thank you!
Chapter 05
The Culture Enviroment
THE CULTURAL
ENVIRONMENT
 Overview
Developing marketing activities in
harmony with the local culture can mean the
difference between success and failure in a
market
Characteristics of Culture - What
They All Have in Common
 Culture Is Prescriptive -Defines What Is
Acceptable
 Culture Is Learned - not Genetic
 Culture is Dynamic - An Interactive
Relationship Between Behavior and Culture
 Culture Is Subjective - Meanings Vary by
Culture
Low-Context and High-Context Cultures - Verbal
And Nonverbal Messages Determine meaning
 Low-Context Cultures - What Is Said Is More
Important Than How or Where It Is Said
1. U.S.
2. Germany
 High-Context cultures - What Is Said and How or
Where It is Said Are Significant
1. Asia
2. Latin America
3. Middle East
Monochronic and Polychronc
Cultures - Hall and Hall
 Monochronic
1. Linear information processing
2. Focus on one thing at a time
3. Hold to rigid schedules
 Polychronic
1. Work on several tasks at a time
2. Human transactions are important
Culture and Verbal Communications Understanding Through language
 One Language - English -Meaning can Vary
by Country
 Using Language to Interpret the World
 What Works here May Not Work There
Culture and Nonverbal Communication Can Actions Speak Louder Than Words ?
 Perception of Time Affects the Quality of
Marketing Interactions
1. For some, time is linear and fixed
2. For others, time is on a continuum
 Perception of Space Influences Business
Decisions
1.
2.
3.
4.
Product size
Retail store layout
Office design
Feng Shui
Culture and Nonverbal Communication Can Actions Speak Louder Than Words ?
 Symbols Are Communication Shorthand
1. Colors convey symbolic meaning
2. Numbers - lucky or unlucky
3. Products - luxury or necessary
 Negotiations - Sometimes a Handshake
Seals the Deal
 Gift Giving
Self-Reference Criterion - Unconscious
Reference to One’s Own Cultural Values
 Lee’s Four-Step Process to Avoid SelfReference Mistakes
1. Define goal in terms of own cultural traits
2. Define goal in terms of foreign cultural traits
3. Isolate SRC influence and anticipate the
complications
4. Redefine problem without SRC influence and
find solution
 Multicultural Training Programs to Improve
Cross-Cultural Interactions
Understanding Cultural Universals Can Help
Marketers Develop effective Product
Strategies
Thank you!
Chap 06
Global Product Strategies
GLOBAL PRODUCT
STRATEGIES
• Overview
Although all four elements of the marketing
mix are essential for success, a product’s
performance determines whether consumers
will engage in repeat purchases
What Is a Product ?
• Anything with exchange Value (Objects,
Ideas, Organizations, People)
• The Total Product
1. Tangible attributes: raw materials, size,
weight, features, design, packaging
2. Intangibles: brand image, styling, other
benefits (installation, delivery, credit,
warranty, after-sale service, return policy)
The Product Development
Process
• Generating Ideas
1. To tap new or existing markets, complement
product lines, improve products
2. From consumers, competitors, employees,
inventors, research organizations, universities
3. Global firms’ advantage - exposure to
numerous country markets
The Product Development
Process
• Screening Ideas
1. Acceptable versus unacceptable
2. Criteria: compatibility, production fit,
philosophical fit, competitive fit, potential
3. Misclassifying or ignoring ideas can be costly
• Business Evaluation
1. Cost-benefit analysis
2. Commercial viability-existing and prospective
markets
The Product Development
Process
• Product Development
1. Determine tangible and intangible attributes
2. Consider marketing components that enhance
appeal
• Test market - Select Representative Markets
to test Consumer's Response
1. Adapted products - within each country market
2. Standardized products - representative markets
The Product Development
Process
• Product Introduction
1. Standardization- marketing unmodified
products in multiple countries
a . Premise consumes share some common
values, beliefs, and consumption patterns: a
standardized product will satisfy them
b. Advantages: economies of scale, price
competitiveness, uniform image
The Product Development
Process
2. Adaptation - modifying product to reflect
characteristics of a market
a. premise consumers are not the same;
adapted products are needed
b. Advantages: fit between product and
consumer, expanded penetration
The Product Development
Process
3. Mandatory product adaptations due to
a. Governmental regulations
b. Technological considerations (e.g.,
voltage, infrastructure)
c. Cultural imperatives - is it acceptable to
consumers
d. measurement standards: volume, length,
weight, quantity
Product Adoption
• Relative Advantage - To satisfy Needs Better
Than the Competition
• Compatibility - The Fit of Product to Norms,
Values, and Tastes of Market
• Trialability - Ease of Sampling a New Product
• Complexity - Easier to Use, More Likely to Be
Adopted
• Observability - To What Extent Benefits Can
Be Observed and Understood
Product management (ProductMarket Portfolio Matrix)
• Competitive Strength: Market Share,
Product’s Fit to Customer Expectations,
Marketing Ability, Product Positioning,
Channel Cooperation, Profit Potential
• Country Attractiveness: Market Size,
Growth Rate, Competitive Environment,
Governmental Regulations, Political
Stability
The U.S. Economy and the
Product Composition of Its
exports ( Largely High-ValueAdded Products )
Competitive Product
Developments
Chap 07
Global Pricing Decision
Global Pricing Decisions
• Overview
Of the four P’s, price alone generates
revenue. Competitive pricing enhances
market position and earnings
Pricing Methods
• Cost-Oriented Methods - Focus on Cost,
Not Market Conditions
1. Markup pricing - adding markup to unit
cost of product
a. Information needed: fixed cost, variable
cost, expected sales, markup
b. Appeal is simplicity
c. Risks: overpricing and underpricing
Pricing Methods
2. Standard pricing - charging the same price
in all countries
a. Drawbacks: lacks marketing orientation,
difficult to implement
b. Advantage: firm won’t be blamed for
price discrimination
Pricing Methods
3. Target return pricing - setting a target rate
or return
a. Information needed: total investment,
desired target return, unit cost, expected
sales
b. Drawbacks: lacks marketing orientation,
sales and cost estimates must be accurate
Pricing Methods
• Market-Oriented Methods - Focus on Both
Market Conditions and Cost
1. Market-based pricing - may attract
accusations of unfair pricing and encourage
the practice of gray marketing
2. Strategic pricing-setting minimum
standard price while giving local managers
freedom to charge more
Strategic Issues in Global
Pricing
• Managing Price Escalation - Increased Cost
Due to international Product transfers
1. Ship components, assemble locally
2. Downsize
3. Shorten distribution channel
4. Increase overall productivity
Strategic Issues in Global
Pricing
• Transfer Pricing - Price Charged for Goods
Transferred Intraorganizationally
• Exchange Rate Fluctuations - Must Be
managed to Control Gray Marketing and
Accusations of Dumping
Strategic Issues in Global
Pricing
• Gray marketing or Parallel Imports - Buying in
Low-Price Countries, Selling in High-Price
Countries
1. Causes: market-based pricing and exchange
rate fluctuations
2. Remedial measures: narrow price differential,
differentiate product
Strategic Issues in Global
Pricing
• Dumping - Selling at Price Below Normal
Value in Export Market
1. Sporadic - to reduce surplus inventory
2. Predatory - to drive out competitors, to
gain market control
3. Persistent - high prices in protected
markets,low in competitive markets
Terms of Payment
• EXW (Ex Works) - For Goods at Point of
Origin
• FAS (Free Alongside Ship) - For Goods
Delivered Alongside Vessel
• FOB (Free on Board) - For Goods Aboard
Vessel
• C&F (Cost and Freight) - For Goods at
Overseas Port
Terms of Payment
• CIF (Cost, Insurance, Freight) - For Goods
at Point of Debarkation
• CPT (Carriage Paid To) - same as C&F for
Nonwater Transportation
• CIP (Carriage and Insurance Paid To) Same as CIF for nonwater Modes
Modes of Payment
• Cash in Advance
• Open Account - Payment for Goods at
Future Date
Modes of Payment
• Letter of Credit - Issued by a Bank
1. Revocable - can be altered by buyer after
issuance
2. Irrevocable - cannot be altered without an
agreement between the buyer and the seller
3. Confirmed -seller assured of payment by
seller’s bank
4. Confirmed Irrevocable
Modes of Payment
• Draft or Bill of Exchange - Negotiable
Instrument
1. Sight ---payable upon presentation
2. Time ---payable within specified period
3. Date - payable on specific future date
Modes of Payment
• Forfating - seller Paid by Bank, Not Buyer
• Countertrade - Payment in Whole or in Part by
Goods or Services
1. Barter - no money changes hands
2. Counterpurchse - goods purchased from each
other with cash
3. Compensation deals - payment in both cash
and goods
4. Buyback arrangements
Chap 08
Global Logistics Channels
GLOBAL LOGISTICS
CHANNELS
• Overview
• Moving raw materials and finished
products from one country to another
creates challenges unique to global
distribution
Features of Global Logistics
• Global Flow of Materials - Components
Moved Elsewhere for Assembly
• Global Distribution of Products - Finished
Products Moved to Final Markets
Features of Global Logistics
• Functions of the Global Distribution
Channels Can Include
1. Collect, analyze, and transmit information
2. Initiate and maintain contacts with buyers
3. Receive, process, and execute orders
4. Arrange shipping, insurance, and delivery
5. Take title to goods
6. Make the sale
Features of Global Logistics
• Channel Intermediaries Include
1. Merchant middlemen - take title and assume
risks
2. Agent middlemen - do not take title
• Goals of Channel Management
1. Efficiently move products from home country to
host country
2. Deliver satisfaction t final customers
competitively
The Direct Channel of Global Distribution Dealing directly with Overseas Middlemen or
Consumers
• Host Country Distributors Are Merchant
Middlemen
1. Buy from firm, sell to retailers or final consumes
2. Often enjoy exclusive rights for product or
region
3. It is a long-term commitment - choose carefully
4. Robinson listed provisions of what to include in
the contract
The Direct Channel of Global Distribution Dealing directly with Overseas Middlemen or
Consumers
• Host Country Retailers Are Merchant
Middlemen
1. Buy from firm, sell to final consumes
2. Japanese retailers - greater in number,
serve fewer customers than U.S.
counterparts
3. International retail outlets in the rise
The Direct Channel of Global Distribution Dealing directly with Overseas Middlemen or
Consumers
• Import Jobbers Are Merchant Middlemen
in Host Country
1. Buy from firm, sell to intermediaries or
final consumers
2. Do not have exclusive territories
3. Firm may employ several in one country
The Direct Channel of Global Distribution Dealing directly with Overseas Middlemen or
Consumers
• Manufacturer’s representatives are Agent
Middlemen
1. Do not take title but represent firm
2. Choose carefully - often difficult to
terminate relationships
• Consumers - No Intermediaries
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Export Drop Shippers
1. Take orders from buyer and tell seller to
ship to buyer
2. Buyer pays drop shipper who pays firm
3. Do not hold inventories, offer minimal
promotional help
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Export Merchants
1. Buy from firm, sell abroad
2. Assume risk
3. Advantage to firm: easy to establish
marketing presence
• Export Trading Companies (ETCs) Can Act
as Export Department for Firm or Take
Title to Products
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Manufacturer’s Export Agents (MEAs) Are
Agent Middlemen
1. Represent firm and provide selling
services
2. Use own name, not the firm’s
3. Services are specified in contract
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Export Management Companies (EMCs)
Are Agent Middlemen
1. Provide extensive marketing services
2. Earn commission, or salary, or work on retainer
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
3. Advantages
a. Are helpful in markets where firm has
little experience
b. Require less investment (financial and
personnel) in market
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
4. Disadvantages
a. May not make necessary investments
b. May demand startup costs
c. May underrepresent firm
d. reduce gross margins, impede customer
communications, hinder market assessment
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Export Brokers Are Agent Middlemen
1. Work for fee or commission
2. Relationship is sporadic
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Webb-Pomerence Association
1. U.S. firms can legally combine resources
to expand exports
2. Cannot reduce U.S. competition by doing
so
3. Association performs functions for
members
Designing a Distribution Channel
Within a Host Country - Important
Factors
• Consumer Characteristics - Know Where ,
When, What, How and Why They Buy
• Product Characteristics Influence Channel
Decisions
• Market Characteristics
1. Assess strengths of existing distribution structure
2. Adapt to local conditions as needed
The Indirect Channel of Global
Distribution -Relying on Home-Country
Intermediaries
• Channel Costs
1. Development costs - initial outlay
2. Maintenance costs - operation expenses
3. Level of customer service directly related to
cost
• Coverage - Concentrated Within Major
Cities or Spanning the Whole Country
Managing Channel Alliances Relationships Evolve
• Communicating with Channel Members
1. Communicate goals to them
2. Receive feedback from them
3. Employ telecommunications technology
to achieve goals
Managing Channel Alliances Relationships Evolve
• Motivating Channel Members
1. Offer training
2. Provide promotional displays
3. Participate in cooperative advertising
Managing Channel Alliances Relationships Evolve
• Controlling Channel Members
1. Develop performance criteria
2. Evaluate performance against criteria
3. Take corrective actions if needed
4. Design system for timely attention to
channel performance
Managing Channel Alliances Relationships Evolve
5. Challenges for effective control
a. Reliable performance data may be
lacking
b. cost of gaining data may exceed benefit
c. Changes in environment may outdate
criteria
Evaluating Channel Performance
- Measurement Criteria
• Sales Analysis - Actual Versus Expected
• Level of Service - Does It meet Consumer
Needs?
• Level of Inventory - Is it Adequate t Meet
Demand?
Chap 09
Global Promotion Strategies
GLOBAL PROMOTION
STRATEGIES
• Overview
• Marketing communications include
advertising, sales promotion, personal
selling, and public relations. When
communicating with publics in more than
one country, firms must work within the
limitations of each market to maximize their
promotional objectives.
Elements of the Communication
Process
•
•
•
•
•
•
•
•
•
Sender
Encoding
Message
Medium of Transmission
Receiver
Decoding
Response
Feedback
Noise
Global Advertising - Any Paid Form of
Nonpersonal communication Where the
Sponsor Is Identified
• Often Controversial
• Benefits Derived from Advertising
1. Economic
a. Sales increase
b. Production increases
c. Per-unit cost of product goes down economies of scale
Global Advertising - Any Paid Form of
Nonpersonal communication Where the
Sponsor Is Identified
d. Price decreases
e. Sales increase further
f. Competition increases - yielding higher
productivity and better product quality
2. Social
a. Employment is generated
b. Higher standard of living
Planning an Advertising Campaign Specify Objectives; Then Decide On
• Advertising Message
1. Standardize when country markets are
similar
2. Adapt when they are different
3. Avoid taboos of target market - don’t
offend
Planning an Advertising Campaign Specify Objectives; Then Decide On
• Budget and Allocation Based on Internal
and External Conditions
1. Internal conditions
a. management orientation
b. Advertising objectives
c. Resources available
Planning an Advertising Campaign Specify Objectives; Then Decide On
2. External conditions
a. Governmental regulations
b. Competitors’ advertising strategies
c. Market attractiveness
d. Media restrictions
Planning an Advertising Campaign Specify Objectives; Then Decide On
• Media Options and Country Characteristics
- Effectiveness Versus Economy
1. Television
a. Developed countries (DCs) - countrywide
availability
b. LDCs - concentrated in major cities, per capita
ownership of TVs is lower
c. Limitations: ads may be bunched, broadcasting
times vary, ads regulated
Planning an Advertising Campaign Specify Objectives; Then Decide On
2. Radio
a. DCs - popularity on the rise, many
program options available
b. LDCs - good medium to reach
uneducated urban and rural customers
3. Magazines
Planning an Advertising Campaign Specify Objectives; Then Decide On
4. Newspapers
a. Advantages: fast and economical
b. Disadvantages: some LDCs don’t
compile demographic data; they have space
limitations and content specifications
Planning an Advertising Campaign Specify Objectives; Then Decide On
5. Direct mail
a. DCs - more common
b. LDCs - limited opportunities, lack of
reliable lists, undependable delivery, low
literacy rates
6. Catalogs - limited to DCs for same
reasons as for direct mail
Planning an Advertising Campaign Specify Objectives; Then Decide On
7. Facsimile - controversial
8. Videos
a. Time not limited to 30- or 60- second slots
b. DCs - whole video can be an ad
c. LDCs - movie d\videos contain ads
9. Cinema - these ads more common in LDCs
10. Billboards - all countries
Planning an Advertising Campaign Specify Objectives; Then Decide On
• Advertising Regulations - Know Them and
Adapt Message Accordingly
• Agency Selection
1. Global agency
2. Local agency
3. Combination of both
Global Sales Promotions - ShortTerm Efforts to Increase Sales
• Consumer Sales Promotion Techniques Can Foster Long- Term Objectives
1. Coupons - maintain current customers,
attract new ones
2. Rebates - maintain current customers, attract
new ones
3. Free samples - encourage new users by
eliminating cost
4. Mail-in premiums
Global Sales Promotions - ShortTerm Efforts to Increase Sales
5. In-pack premiums - promotional benefit
packaged with the product
6. Bonus packs - more product for the same
price
7. Trading stamps - increase store patronage
8. Contests and sweepstakes - enhance name
recognition and stimulate sales
Global Sales Promotions - ShortTerm Efforts to Increase Sales
• Trade Sales Promotion Techniques Persuade Channel Members to Carry
Products or to Increase Sales
1. Sales contests - increase sales
2. Price-off offers - push new products or
move large quantities
3. Advertising allowances
Global Sales Promotions - ShortTerm Efforts to Increase Sales
4. Display allowances
5. Free goods
6. Push money - money to carry and to push
products
Global Personal Selling Keeping Buyers Happy, the Firm
Informed
• The Personal Selling Process
1. Panning: what, how, when
2. Prospecting: who
3. Preparing: what buyers need, competitors
offer
Global Sales Promotions - ShortTerm Efforts to Increase Sales
4. Selling
a. Approaching customer
b. Making presentation
c. Answering questions
d. Closing sale
5. Following up - establishing solid link
Global Sales Promotions - ShortTerm Efforts to Increase Sales
• Managing the Global Sales Force
• Sales Force Compensation
1. Straight salary
a. Advantages: sales force security, easy
to administer
b. Disadvantage: lower sales if
unmotivated sales force
Global Sales Promotions - ShortTerm Efforts to Increase Sales
2. Straight commission - fixed percentage or
varying percentage
a. Advantage: encourages performance
b. Disadvantage: salespeople may stop
with quotas
3. Combination salary and commission
Global Public Relations - Tools
for Building a Favorable Image
• Employee Relations - Create Favorable
Ambassadors to the Community
• Customer Relations - Show Firm Cares
About Customers
• Press Relations - Keep Shapers of Public
Opinion on Firm’s Side
• Government Relations - Be a Good Citizen
Chap 10
Global Business Involvement
GLOBAL BUSINESS
INVOLVEMENT: MARKET
ENTRY STRATEGIES
• Overview
Entry strategies vary in terms of their
advantages, disadvantages, and levels of
involvement. The marketing options open to
firms are in part determined by mode f
entry.
Entry Strategies
• Exporting --Historically Most Popular
1. Types
a. Direct - firm handles all tasks to sell
within host country
b. Indirect - firm delegates the tasks to an
intermediary
Entry Strategies
2. Advantages
a. Minimizes political risk
b. Useful when market potential is hard to
assess
c. Offers channel flexibility
d. Prepares firm for greater involvement
e. Offers ease in market withdrawal
Entry Strategies
3. Disadvantages
a. Exchange rate fluctuations and
governmental intervention can affect
earnings
b. Lack of market presence can affect
response time
c. Loss of marketing control can affect
corporate image
Entry Strategies
• Licensing - Payment of Fee or Royalty for
Use of Anything of Value
1. Advantages
a. To firm, cost effective
b. To importing country, brings technology
and managerial expertise
Entry Strategies
2. Disadvantages
a. Can restrict firm’s full realization of
market potential
b. Can create third market competitors
c. Can result in loss of control over
technology and product quality
d. Can result in conflicts between parties
Entry Strategies
• Franchising - Payment of Fee and Royalty
in Exchange for Anything of Value Plus
Operational and Managerial Help
1. Advantages: same as for licensing
2. Disadvantages: same as for licensing
Entry Strategies
• Contract Manufacturing - Contractual
Partner manufactures Parts or Product for
Firm
1. Advantages
a. Firm can focus exclusively on
marketing
b. Economical means of expansion
Entry Strategies
2. Disadvantages
a. Partner may turn competitor
b. Loss of control over manufacturing
c. Products may not always be available on
time
Entry Strategies
• Management Contracting - Selling
Managerial or Technical Expertise
1. Advantages
a. Utilizes excess managerial talent
b. Establishes contacts in host country
c. Offers ease of remitting consulting fees
d. Provides resources t its nearby operations
2. Disadvantages: limited duration may
necessitate withdrawal from country
Entry Strategies
• Turnkey Operations - Complete the Project
Before Turning It Over to Owner
1. Advantages: projects are large, long-term,
an profitable
2. Disadvantage: outcome is more uncertain
over longer period of time
Entry Strategies
• Foreign Direct Investment
1. Joint ventures (JVs) - partners share ownership,
risk, profit, and control
a. Between foreign-owned firm and privately
owned local firm
b. Between foreign-owned firm and local state
firm or government
c. Between several foreign-owned firms with no
local participation
Entry Strategies
2. Wholly-owned subsidiaries (WOSs)
3. Advantages of both JVs and WOSs
a. Greater control
b. Entry into closed markets
c. Potential for vertical integration
d. Access to supplies
e. Ability to respond to competitive
challenges
Entry Strategies
4. Disadvantage of JVs: potential for
disagreements among partners
5. Disadvantage of WOSs: greater risk
Entry Strategies
• Strategic Alliances - Cooperation
Between Firms Without creating a New
Entry
1. Advantages
a. market access
b. Shared R&D expenses, resources, and
risks
Entry Strategies
2. Disadvantages
a. Potential to lose competitive edge
b. Possible ineffectual communications
among partners from different cultures
Factors Influencing Entry
Strategies
• Internal Conditions - Specific to the Firm
1. Objectives - what firm wants to achieve in
relation to the product
2. Management orientation - biases affect entry
strategy decisions
3. Resources - impose constraints that affect entry
strategies
4. Type of product - what strategy best fits the
characteristics of the product
Factors Influencing Entry
Strategies
• External conditions
1. Market potential - which strategy will
maximize market potential
2. Competitive environment - existing and
expected
Factors Influencing Entry
Strategies
3. Home country regulations - affect how
and where firm can sell
4. Host country regulations - affect entry
options
5. Political risk - high risk favors less
involvement; low risk favors more
Stages of Business Involvement
• The International Product Life-Cycle
Hypothesis
1. New-predate stage: manufactured at
home, some exports to developed countries
(DCs), domestic sales dominate, no
competition, high price, patent protection
Stages of Business Involvement
2. Maturing-product stage: DC demand rises,
increasing exports yield to production in DCs,
domestic exports decline, competition
increases, prices fall, DCs produce for selves
and export
3. Standardized-product stage: fierce price
competition, production shifts to developing
countries, they start exporting to DCs who
become net importers
Chap 11
Strategic Global
STRATEGIC GLOBAL MARKET
MANAGEMENT
• Overview
The nuts and bolts of strategies deal with
when, where, how, why, and by whom the
necessary actions are performed to achieve
a firm’s objectives
Strategic Analysis
• Strengths and Weaknesses
1. Identify key success factors specific to a
given business
a. Technology - turning concepts into
products
b. Marketing - ability in product, price,
place, and promotion
Strategic Analysis
c. Information management - the
acquisition an use f information
d. management skill - decision making and
behavior of managers
2. Rate self on key factors in relation to
competitors
Strategic Analysis
• Opportunities and Threats - Existing and
Potential
1. First identify; then rank order
2. Key areas: customers, special-interest
groups, competitors, governments,
technologies, markets
Strategies
• Product-market Growth matrix - Four Basic
Growth Strategies
1. Market Penetration--use existing products to
penetrate existing markets
2. Product development--sell new or adapted
products in existing markets
3. Market development--sell existing products in
new markets
4. Diversification--introduce new or adapted
products into new markets
Strategies
• Strategic Business Unit (SBU) Portfolio
Strategy Using the Boston Consulting
Group’s Growth-Share Matrix
1. Stars: high-growth market, high market shares
2. Problem children: high-growth market, how
market shares
3. Cash cows: low-growth market, high market
shares
4. Dogs: low-growth market, low market shares
Strategies
• Corporate Competitive Strategy--Six
Alternatives Based on Scope of Operations
and Levels of Market Penetration
1. Global high-share strategy --for high
market share using standardized products
2. Global niche strategies--to gain global
presence with specialized products
Strategies
3. Regional high-share strategies -- for high
market share within a region
4. Regional niche strategies -- for specialized
markets within a region
5. National high-share strategies--high
market share within a country
6. National niche strategies--for specialized
markets within a country
Strategic Predispositions
• Ethnocentrism--Basing decisions on Home
Country values and Interests
• Polycentrism--Basing Decisions on the Values
of Each Country Where Firm Operates
• Regiocentrism--Basing Decisions on Values of
a Specific Region
• Geocentrism--Basing Decisions on Worldwide
Opportunities
Some Global Strategic
Considerations
• Production Location and Souring --Don’t
Base Decisions in Cost alone
• The Double Squeeze--newly Industrialized
countries Compete with DCs in Low- and
High-Value-Added Products
Some Global Strategic
Considerations
• Business and Politics--Government
Influences Its Firm's Competitive
Advantage
• Post-Marketing Concerns--Satisfying
Consumers Within Environmental
Constraints and in Harmony with SpecialInterest Groups
Chap 12
Ethics and Global Marketing
ETHICS AND GLOBL
MARKETING
• Overview
Ethics is needed for long-term success.
Internal and external forces encourage firms
to become ethical global citizens.
Management strategies, codes of conduct,
ethical philosophies, and decision-making
checklists are some of the tools firms are
using to foster ethical actions
Why Ethics?
• Gellerman: Manages Rationalize Unethical
Actions
1. It is legal (ethical)
2. It is in our interest (mine, company’s)
3. We won’t get caught
4. The company will back me on this
Why Ethics?
• Cooke: Fourteen Signs of Ethical Risk
• Ethics Is Good for Long- Term Survival
• Sims’s Strategies for Promotion Ethical
Behavior
1. CEO should encourage it
2. Develop formal process to reinforce it
3. Management’s philosophy should
institutionalize it at all levels
Ethical Philosophies
• Utilitarianism
1. Focuses on consequences of action
2. Strives f r greatest good for greatest
number of people
3. But what constitutes a society?
Ethical Philosophies
• Egoism
1. Focuses on consequences of action
2. Strives for greatest good for oneself
3. Inherent weaknesses
a. Would not take stand against blatant
infractions
b. Cannot resolve conflicting interests of two
or more parties
Ethical Philosophies
• Deontology
1. Focuses on universal principles of right
and wrong
2. Motives and character of actor more
important than consequences of action
Ethical Philosophies
• Relativism
1. Right and wrong are culture specific -- no
universal rules
2. Can be used to defend actions harmful to
customers in other countries
Ethical Codes for Marketing --How Some
Firms Help manages Ask the Right Questions
Before Making Decisions
• Codes of Conduct Range from General to
Specific
• Seven- Step Checklist for Ethical Decision
making
1. Recognize and clarify dilemma
2. Get the facts
3. List the options
Ethical Codes for Marketing --How Some
Firms Help manages Ask the Right Questions
Before Making Decisions
4. Test each: Is it legal? right? beneficial ?
5. Make decision
6. Double check: How would I feel if my
family found out? What if the paper found
out?
7. Take action
Some External Factors Encouraging
Ethical Consideration by Executives
• Information Technology -- Markets Are not
Isolated; What Happens Here Is Reported
There
• Visible Destruction of Environment Results
from Unethical Practices
Some External Factors Encouraging
Ethical Consideration by Executives
• Special- Interest Groups Are Gaining Power
to Promote Ethical Corporate Behavior
• Market Forces Favor Ethical Companies in
the Long- Run