Transcript Principles of Marketing - Lecture 11

Lecture 11
Principles of Marketing
Theocharis Katranis
Spring Semester 2013
Principles of Marketing
1
Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Today’s Lecture
1. We will discuss the need to understand competitors as well as
customers through competitor analysis.
2. We will explain the fundamentals of competitive marketing strategies
based on creating value for customers
3. We will illustrate the need for balancing customer and competitor
orientations in becoming a truly market-centered organization.
4. We will discuss how the international trade system and the economic,
political-legal, and cultural environments affect a company’s international
marketing decisions.
5. We will describe three key approaches to entering international Markets
6. We will explain how companies adapt their marketing mixes for
international markets.
7. We will identify the three major forms of international marketing
organization.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Competitors Analysis
Definition:
Competitor Analysis is the process of
identifying key competitors; assessing their
objectives,
strategies,
strengths
and
weaknesses, and reaction patterns; and
selecting which competitors to attack or avoid.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Competitive Advantage
Definition:
Competitive advantage is an advantage over
competitors gained by offering consumers
greater value than competitors do.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Competitive Marketing
Strategies
Definition:
Competitive Marketing Strategies are strategies
that strongly position the company against
competitors and that give the company the
strongest possible strategic advantage.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Competitor Analysis
1. Identifying Competitors
2.
Assessing Competitors i.e. Competitor
objectives, Strategies, Strengths, Weaknesses,
Reactions
3. Selecting Competitors to Attack or Avoid I.e.
Strong or Weak competitors, close or distant,
Good or Bad (follow rules),
4. Designing a Competitive intelligence system
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Competitive Strategies
1. Overall cost leadership – The company works hard to
achieve the lowest production and distribution costs.
2. Differentiation – The company concentrates on creating
a highly differentiated product line and marketing program.
3. Focus – The company focuses its efforts on serving a
few market segments well rather than going after the whole
market.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Competitive Positions
1. Market Leader – The firm in an industry with the largest
market share
2. Market Challenger – A runner-up firm that is fighting
hard to increase its market share in an industry
3. Market follower – A runner-up firm that wants to hold its
share in an industry without rocking the boat
4. Market nicher – A firm that serves small segments that
the other firms in an industry overlook or ignore.
Principles of Marketing
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Principles of Marketing
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 11
Balancing Customer and
Competitor Orientations
Whether a company is a market leader,
challenger, follower, or nicher, it must watch
its competitors closely and find the
competitive marketing strategy that positions
it most effectively.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Balancing Customer and
Competitor Orientations
Company Orientations
1. Competitor-centered company
2. Customer-centered company
3. Market-centered company
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Balancing Customer and
Competitor Orientations
Company Orientations
1. Competitor-centered company
Competitor-centered company is a company whose
moves are mainly based on competitors’ actions
and reactions.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Balancing Customer and
Competitor Orientations
Company Orientations
2. Customer-centered company
Customer-centered company is a company that
focuses on customer developments in designing its
marketing strategies and on delivering superior
value to its target customers.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Balancing Customer and
Competitor Orientations
Company Orientations
3. Market-centered company
Market-centered company is a company that pays
balanced attention to both customers and
competitors in designing its marketing strategies.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Principles of Marketing
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Porter’s Strategies
Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
The Global Marketplace
Companies that go global may face highly unstable
government and currencies, restrictive government
policies and relations, and high trade barriers.
Corruption is also an increasing problem – officials
in several countries often award business not to the
best bidder but to the highest briber.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
The Global Marketplace
Global firm – Definition:
Global firm is a firm that by operating in more
than one country, gains R&D, production,
marketing, and financial advantages in its costs
and reputation that are not available to purely
domestic competitors.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Looking at the Global
Marketing Environment
Before deciding whether to operate internationally, a
company must consider the following:
1. The International Trade System
2. Economic Environment
3. Political-Legal Environment
4. Cultural Environment
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Looking at the Global
Marketing Environment
1. The International Trade System
1.1 Trade Restrictions
1.2 Government Quotas – Limits in imported quantities
1.3 Government Tariffs on certain imported products
1.4 Exchange Controls – Exchange rates against other
currencies
1.5 Nontariff Trade Barriers – Restrictive Product
Standards – China’s Banking Services
1.6 The World Trade Organization and GATT – (General
Agreement on Tariffs and Trade)
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Looking at the Global
Marketing Environment
2. The Economic Environment
Industrial/Agricultural Country - High/Low
Income Country – Manufacturing Country –
Exporting Country (Manufactured goods and
services)
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Looking at the Global
Marketing Environment
3. The Political-Legal Environment
A company should consider factors such as
the country’s attitudes towards international
buying, governmental bureaucracy, political
stability and monetary regulations.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Looking at the Global
Marketing Environment
4. Cultural Environment
A company should understand country’s norms
and taboos, country’s cultural traditions and
business behavior.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding whether to go global
Major questions to be considered:
1. Can the company learn to understand the preferences
and buyer behavior of consumers in other countries?
2. Can it offer competitively attractive products?
3. Will it be able to adapt to other countries’ business
cultures and deal effectively with foreign nationals?
4. Do the company’s managers have the necessary
international experience?
5. Has the management considered the impact of regulations
and the political environments of other countries?
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding which Markets
to Enter
A company should consider the following:
1. How many markets it wants to enter.
2. What types of markets it wants to enter.
3. Also market size, market growth, cost of doing
business, competitive advantage, risk level.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
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Deciding which Markets to Enter
Theocharis Katranis, MBA
Spring Semester 2013
Deciding How to Enter
the market
Lecture 11
1. Exporting
2. Joint Venture
2.1 Licensing
2.2 Contract Manufacturing
2.3 Management Contracting
2.4 Joint Ownership
3. Direct Investment
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
1. Exporting – Definition:
Exporting is entering a foreign market by
selling goods produced in the company’s
home country, often with little modification.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
2. Joint Venture – Definition:
Joint Venture is entering foreign markets by
joining with foreign companies to produce or
market a product or service.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
2.1 Joint Venture by Licensing – Definition:
Joint Venture by Licensing is a method of
entering a foreign market in which the
company enters into an agreement with a
licensee in the foreign market.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
2.2 Joint Venture by Contract Manufacturing
It is a joint venture in which a company
contracts with manufacturers in a foreign
market to produce the product or provide its
service.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
2.3 Joint Venture by Management Contracting
It is a joint venture in which the domestic firm
supplies the management know-how to a
foreign company that supplies the capital; the
domestic firm exports management services
rather than products.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
2.4 Joint Venture by Joint Ownership
It is a joint venture in which a company joins
investors in a foreign market to create a local
business in which the company shares joint
ownership and control.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding How to Enter
the market
3. Direct Investment
Direct Investment is entering a foreign market by
developing
foreign-based
assembly
or
manufacturing facilities i.e. HP company that
opened a second factory near Delhi to make PC
for the local market.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
Companies should consider the following:
1. Standardized Global Marketing
2. Adapted Global Marketing
3. Straight Product Extension
4. Product Adaptation
5. Product Invention
6. Communication Adaptation
7. Dual Adaptation
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
1. Standardized Global Marketing
Definition:
Standardized Global Marketing is an international
marketing strategy for using basically the same
marketing strategy and mix in all the company’s
international markets.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
2. Adapted Global Marketing
Definition:
Adapted Global Marketing is an international
marketing strategy for adjusting the marketing
strategy and mix elements to each international
target market, bearing more costs but hopping for
a larger market share and return.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
3. Straight Product Extension - Definition
Straight Product Extension is marketing a
product in a foreign market without any
change.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
4. Product Adaptation – Definition:
Product Adaptation is adapting a product to
meet local conditions or wants in foreign
markets.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
5. Product Invention – Definition:
Product Invention is creating new products or
services for foreign markets.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
6. Communication Adaptation – Definition:
Communication Adaptation is a global
communication strategy of fully adapting
advertising messages to local markets.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Principles of Marketing
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Deciding on the Global
Marketing Program
Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
Companies should consider also the following:
1. Price Issues
2. Promotion Issues
3. Distribution Channels Issues
3.1 Channels Between Nations
3.2 Channels Within Nations
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
3.1 Channels Between Nations – Definition:
Channels Between Nations moves company
products from points of production to the
borders of countries within which they are
sold.
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Deciding on the Global
Marketing Program
3.2 Channels Within Nations
Channels Within Nations moves the products
from their market entry points to the final
consumer.
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Theocharis Katranis, MBA
Spring Semester 2013
Deciding on the Global
Marketing Organization
Lecture 11
Companies can:
1. Have an Export Department
2. Have International Divisions or Subsidiaries
2.1 Be Geographical Organizations
2.2. Be International Subsidiaries
3. Be Global Organizations
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Summary – Lecture 11
1. We discussed the need to understand competitors as well as customers
through competitor analysis.
2. We explained the fundamentals of competitive marketing strategies
based on creating value for customers
3. We illustrated the need for balancing customer and competitor
orientations in becoming a truly market-centered organization.
4. We discussed how the international trade system and the economic,
political-legal, and cultural environments affect a company’s international
marketing decisions.
5. We described three key approaches to entering international Markets
6. We explained how companies adapt their marketing mixes for
international markets.
7. We identified the three major forms of international marketing
organization.
Principles of Marketing
46
Theocharis Katranis, MBA
Spring Semester 2013
Lecture 11
Chapters 18 and 19
END of Lecture 11
Thank you for your attention
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013