Transcript BUSI 617 Global Marketing Issues in the Global

BUSI 617 Global Marketing
Issues in the Global Economy
Professor Nicholas Didow
Kenan Institute Faculty Fellow
Kenan-Flagler Business School
University of North Carolina
Chapel Hill, NC 27599-3490
[email protected] 919.962.3189
Primary Texts:
Warren J. Keegan, Global Marketing Management, (2014) 8th Edition,
Pearson
Thomas L. Friedman, The World is Flat, (2007) 3rd Edition, Picador
Chapter 1. Introduction to Global Marketing
We live in a global marketplace. We live in a world in which markets are local.
Marketing strategy planning emerges as the universal marketing management model
Everyone “does marketing”
Principles of Marketing
• Customer value and the value equation
• Finding competitive or differential advantage
• Focus using marketing strategy planning marketing management model
What is Global Marketing?
• Adaptation versus standardization
Importance of Global Marketing
Management Orientations
• Ethnocentric
• Polycentric
• Regiocentric
• Geocentric
Marketing Strategy Planning
Understand the landscape for marketing management in each nation, or
political economy – the defining history, major demographic and economic
trends, social and political (legal) environment, and religious and cultural
influences that establish and influence market opportunities.
Understand the company, customers, and competition
(SWOT, 3C’s).
Segmentation, target marketing and positioning with 4P’s.
•Product
•Price
•Place
•Promotion
•Entry strategy, implementation, evaluation, revision
•Pro forma budget of anticipated expenses against anticipated
revenues
Forces Affecting Global Integration and Global Marketing
•Driving forces
•Technology
•Regional economic and political agreements
•Market needs and wants
•Transportation and communication improvements
•Product development costs
•Quality
•World economic trends
•New market opportunities
•Reduced resistance to foreign firms and foreign products
•Worldwide trend toward privatization and deregulation
•Leverage
•Experience transfer
•Scale economies
•Resource utilization
•Global strategy
•Emergence of the global or transnational corporation
•Restraining forces
•Management myopia and organizational culture
•National controls and barriers
•Opposition to globalization
The Cuban Brothers
Fidel Castro 8/13/1926 – Present
Raul Castro 6/3/1931 - Present
Fidel Castro
• Fidel came to power as a result of
the Cuban revolution
• The Communist Party of Cuba
transformed into a one-party
socialist republic under Fidel’s rule
• Castro tried to denounce the ideas
of dictatorship, stating that “we are
fighting to do away with
dictatorship in Cuba, to establish
the foundations of a genuine
representative government”
• He later declared Cuba a socialist
state, abolishing multiparty
elections
• Fidel is known for his fiery
speeches, usually lasting for hours
Raul Castro
• Raul became President of Cuba in
2008 when Fidel resigned and
underwent intestinal surgery
• He was known to be a political
hardliner who would maintain the
Communist Party of Cuba’s
political power at all costs (said
before he took power)
• Some question future leadership
ability because of health concerns
(alcoholism main factor)
• Known for his businesslike,
unanimated delivery of prepared
speeches
• He removed restrictions against
purchasing products (DVD
players, computers, microwaves,
etc) forbidden under Fidel rule
Interesting Facts about
the Brothers…
• Raul was ranked 13th on
Parade Magazine’s 2009
World’s Worst Dictator list
• Raul is rumored to be fathered
by Felipe Miraval, different
from Fidel’s own father
• Public rumors about Fidel’s
health ranged from having
reoccurring heart attacks, to a
neurological problem, or even
Parkinson’s disease
• Rumors state that Castro was
scouted for various US baseball
teams after graduating from his
Catholic high school
Marketing Strategy Planning
Understand the landscape for marketing management in each nation, or
political economy – the defining history, major demographic and economic
trends, social and political (legal) environment, and religious and cultural
influences that establish and influence market opportunities.
Understand the company, customers, and competition
(SWOT, 3C’s).
Segmentation, target marketing and positioning with 4P’s.
•Product
•Price
•Place
•Promotion
•Entry strategy, implementation, evaluation, revision
•Pro forma budget of anticipated expenses against anticipated
revenues
Chapter 2. The Global Economic Environment
New realities of the world economic environment:
• World economy dominates, individual economies subordinate
• Commerce ignores national boundaries
• “Struggle between capitalism and socialism is largely over…”
–
–
Really?
Who won? see Michael Mandelbaum “The Triumph of the Market” in The Ideas That Conquered
the World – Peace, Democracy, and Free Markets in the Twenty-First Century (2003) and “The
Visible Hand,” The Economist, January 21, 2012.
RESOURCE ALLOCATION
MARKET
RESOURCE
OWNERSHIP
COMMAND
PRIVATE
Market
capitalism
Centrally
planned
capitalism
STATE
Market
socialism
Centrally
planned
socialism
RESOURCE ALLOCATION
MARKET
RESOURCE
OWNERSHIP
COMMAND
PRIVATE
Market
capitalism
Centrally
planned
capitalism
STATE
Market
socialism
Centrally
planned
socialism
Von Hayek et al versus John Maynard Keynes et al (Chicago School versus Harvard)
Do Karl Marx and Adam Smith end up at the same place with respect to market
capitalism?
Socialism is an economic system in which more people (everyone?) have a say in how the
economy works and more people benefit. Ideally, socialism and “free market”
capitalism would be the same as everyone would produce exactly what is needed for
whoever needs it. Realistically they both fail due to corruption and greed. Both
systems work only when everyone plays fair and follows the same rules.
Communism is a political system in which only the party leaders determine how the
economy works and who is to benefit.
TWO GENERAL SOURCES FOR COUNTRY INFORMATION:
CIA Factbook:
https://www.cia.gov/library/publications/the-world-factbook/index.html
BBC Country Profiles:
http://news.bbc.co.uk/2/hi/country_profiles/default.stm
From CIA World Factbook:
GDP Growth Rate
https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2003rank.html
GDP (Purchasing Power Parity) est.
https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2001rank.html
GDP per Capita (Purchasing Power Parity) est.
https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2004rank.html
From The Economist, The Big Mac Index
(PPP):
www.economist.com/content/big-mac-index
Human Freedom Index (1991)
http://alumni.media.mit.edu/~kris/FreedomIndex.html
Heritage Foundation, Index of Economic Freedom
http://www.heritage.org/index
World’s Happiest Countries
http://thehappinessshow.com/HappiestCountries.htm (2004)
http://abcnews.go.com/2020/story?id=4086092&page=1 (2007)
HBO series The Newsroom (2012):
Do not watch if you are offended by profanity!
http://www.youtube.com/watch?v=zEyUWKJFER8
Ch. 3. The Global Trade Environment
Global Trade Authority: The World Trade Organization and GATT www.wto.org
The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by:
•
Administering trade agreements
•
Acting as a forum for trade negotiations
•
Settling trade disputes
•
Reviewing national trade policies
•
Assisting developing countries in trade policy issues
•
Cooperating with other international organizations
“The price to participate in the global economy is increasingly a portion of
your national sovereignty.” Didow
Preferential trade agreements benefit industries in a limited number of
nations
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•
•
•
Free trade area
Customs union
Common market
Economic union
Are free trade areas really discriminatory trade agreements?
If so, is that good or bad?
Issues in trade agreements from the US perspective:
• Political process in US –”Fast track authority”
• Evaluating the impact of trade agreements
• “Free trade” or “Fair and free trade”
• FTAA? – Free Trade Area of the Americas
• TPP? – Trans Pacific Partnership – two different views:
http://www.cnbc.com/id/101074874#.
https://www.uschamber.com/issue-brief/trans-pacific-partnership
http://www.msnbc.com/the-ed-show/watch/highlighting-the-dangers-ofthe-back-door-tpp-257931843746
https://www.youtube.com/watch?v=WviiQzdCB50
Chapel Hill’s own Raging Grannies:
https://www.youtube.com/watch?v=ybOhszqc23U
Emergence of major bilateral agreements initiated by PRC:
• Venezuela
• Chile
• Cuba
North America
• CFTA 1988
• NAFTA 1994
• CATFA 2005
• FTAA under negotiation
Latin America
• SICA 1991
• Andean Community 1969
• MERCOSUR 1991
• CARICOM 1973
Asia-Pacific
• ASEAN 1967
Western, Central, Eastern Europe
• EU 1958
• EFTA, EEA 1990+
• CEFTA 1992
Middle East
• GCC 1981
• AMU 1989
• ACC 1989
Africa
• ECOWAS 1975
• East African Cooperation 1996
• SADC 1992
Ch. 4. Social and Cultural Environments
Social and cultural forces impact individual and corporate behavior in the
marketplace.
• Social and cultural environments around the world have some
similarities across the globe.
• Social and cultural environments around the world have some
differences across the globe.
Elements of society, culture and global consumer culture
• Attitudes, beliefs and values
– Hofstede’s National Culture Dimensions www.geerthofstede.com http://geerthofstede.com/countries.html
– Inglehart’s World Values Survey www.worldvaluessurvey.org
– Schwartz’s Cultural Value Orientation
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•
•
•
Religion
Aesthetics
Dietary preferences
Language and communication patterns
www.kwintessential.co.uk/map/world-languages.html
Shared global preferences?
• Convenience foods
• Disposable products
• Popular music
• Movies
www.mla.org/map_single
Case for Chapter 4. Barbie: Growing Pains as the American Girl
Goes Global
Summary of the case.
www.barbie.com
Describe and assess Mattel’s global marketing strategy for Barbie.
Is there a moral, ethical, and economic opportunity at the bottom of the
pyramid for Mattel to grow their Barbie business?
What is Mattel’s way forward for Barbie within the US?
Other issues and opportunities?
Ch. 5. The Political, Legal, and Regulatory Environments
Political Environment
• Nation-States and Sovereignty
“The price to participate in the global economy is increasingly a portion of
your national sovereignty.” Didow
• Political Risk
– Taxes
– Dilution of equity
– Seizure of Assets
•
•
Nationalization
Confiscation – Oil industry in Venezuela under Hugo Chavis
International Law
• Common Law v Civil Code Law
• Islamic Law
Major Business Legal Issues in the Global Economy
• Jurisdiction, Regulatory Environment
• `local, state, national, regional, global -- WTO
• Intellectual Property (IP) and Innovation – Western vs Eastern Views
(see also Didow doc China IP talk Jan 2012)
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–
–
–
Patents
Trademarks
Copyrights
http://www.weforum.org/issues/global-competitiveness
• Antitrust – EU and European Commission decisions
• Licensing and Trade Secrets
• Bribery and Corruption: Legal and Ethical Issues
– http://www.transparency.org/research/cpi/overview
• Conflict Resolution, Dispute Settlement, Litigation
Ch. 6. Global Information Systems and Market
Research
Information technology and marketing information systems as
strategic assets
Framework for information scanning and threat/opportunity
identification
General understanding of the formal marketing research
process
Managing the marketing information system and marketing
research
Linking marketing research to the decision making process
Current issues in global marketing research
Integrated approach to information collection
Information technology and marketing information systems as
strategic assets
Intranets
EDI – electronic data interchange
fully integrated supply chain
logistics and distribution innovations
POS scanner based
RFID – radio frequency identification tags
CRM– customer response management
tracking bundled sales, forecasting churn
electronic CRM – individualized value-added products and
services
www.amazon.com
privacy issues and regional differences in privacy rights
www.export.gov/safeharbor
Framework for information scanning and threat/opportunity
identification
• Markets
– Demand estimates and forecasts
– Consumer behavior
– Market structure
• Products, channels, promotion
• Competition
– Corporate, SBU, product line, brand
– Capabilities and plans
• Foreign exchange
– Country balance of payments, interest rates, analysts forecasts
• Prescriptive information
– Legal and regulatory environment, tax laws, earnings and dividends
• Resource information
– Human, financial, raw materials or components, information
• General conditions
– Social, cultural, political, technology environments
General understanding of the formal marketing research process
Leading general global market research companies
• www.nielsen.com
• www.dentsu.com
• www.imshealth.com
• www.research-int.com
• www.kantar.com
• www.kmr-group.com (see BRIC report)
• www.marketresearch.com
• www.qrca.org
General sources
• CIA The World Factbook www.cia.gov/cia/publications/factbook
• BBC News – Country Profiles
http://news.bbc.co.uk/1/hi/country_profiles/default.stm
• World Bank www.worldbank.com
International Business Etiquette
The classic:
“Kiss, Bow or Shake Hands: How to do business in 60 countries” Morrison
et al, 2006
Example of Internet sources:
www.cyborlink.com
Current issues in global marketing research…
• Understanding and modeling differences between nations
• Limited data
• Small potential markets limit justifiable ROI from investing in
mkt res
• Data validity and reliability problems
– Inflated?
– Deflated?
•
•
•
•
•
Comparability of secondary data across multiple countries
Inconsistent definitions between countries
Mismatch of classification cohorts and segment definitions
Different technology platforms
Varying response bias
Global Customers
The following slides draw from various sources of
demographic data, including slides from Dr. John D.
Kasarda’s Business Demographics series and Professor
Nicholas Didow’s Consumer Behavior series
Sources are cited for most slides on the individual
PowerPoint slides.
US Census Bureau
www.census.gov/popclock/?intcmp=home_pop
US Fertility Rate
Actual Fertility Rate
Replacement Rate
3.5
3.0
2.5
2.0
Total Fertility: Average number of births per woman over her lifetime
Source: U.S. National Center for Health Statistics. National Vital Statistics Report, annual data World Population Data Sheet, 2009
2005-09
2000-04
1995-99
1990-94
1985-89
1980-84
1975-79
1970-74
1965-69
1960-64
1955-59
1950-54
1945-49
1.5
1940-44
Births per Woman
4.0
33
•
•
•
•
•
Factors Depressing Fertility
Urbanization
More Education
Income
More Working Women
Career Pressures
• Better Contraceptive Techniques
• More Abortions Due to Legalization
• Perceived High Costs of Children
• More “Living Together” and DINKs
• More Divorce
• More Open Gay & Lesbian Lifestyles
• Delayed Marriage
• Delay of Birth of First Child
• 34Increased Infertility
Live Births, U.S.
Generation Z
61 million
(0-16)
Baby Boomlet
Gen Y
76 million
(16-33)
1994
Baby
Boom
78 million
(46-64)
Baby Bust
Gen X
41 million
(34-45)
1976
1946
1926
WWII
Generation
56 million
(64-84)
1964
Boomer
Grandparents
44 million
(84+)
35
Source: U.S. Bureau of the Census. Historical Statistics of the United States, Colonial Times to 1970. U.S. National Center for Vital Statistics, National Vital Statistics Reports.
Working Life
36
Ratio of people ages 20-64
to people ages 65+
shrinks in coming decades!
37
Maintaining Vitality and Appearance
Sam
Gadless
Harry
Scott
(Great
Scott!)
Ran the NYC
Marathon at
age 90
At Age 65
174 pounds
(8% fat)
30in waist
44in chest
17in biceps
“Banana” George Blair
Living life with intensity at 80
Cher
age: 64 at 2010 MTV
Music Video Awards
Tina Turner
age: 71
On tour in 2008!
38
Aging: Quest for Youth
39
BIRTH DEARTH:
THE GRAYING OF
THE INDUSTRIAL WORLD
40
Fertility Trends in Four Industrialized
Countries: 1950-2009
4.0
Japan
3.5
3.0
Sweden
2.5
U.S.
2.0
Germany
1.5
1.0
Replacement
Rate
0.5
0.0
1950
1960
1970
1980
1990
2000 2009
41
Source: World Bank. World Population Projections: 1994-95; 2002 World Development Indicators; Population Reference Bureau; 2009 World Population Data Sheet
2010 World Fertility Rates
Total Worldwide = 2.5
Russia 1.5
Canada 1.7
Germany 1.3
Poland 1.4
France 2.0
U.S. 2.0
Italy 1.4
Afghanistan 5.7
Niger 7.4
Guinea-Bissau 5.8
Liberia 5.9
India 2.6
Somalia 6.5
Uganda 6.5
Angola 5.8
Fertility Rate
Lower
Upper
42
Source: Population Reference Bureau, 2010 World Population Data Sheet, http://www.prb.org/Datafinder/Topic/Map.aspx?variable=93
China 1.5
Fertility Worldwide: 2030
43
Source: Hayutin, Adele M. (2007). How Population Aging Differs Across Countries: A Briefing on Global Demographics.
Distribution of World Births by
Country
44
Source: US Census Bureau, International Database
Other = about 220 countries
World’s 10 Most Populous Nations:
2010 & 2050
2010
Country
Rank
Population (millions)
2050
Country
Population (millions)
China
1,338
1
India
1,748
India
1,189
2
China
1,437
United States
310
3
United States
439
Indonesia
236
4
Indonesia
343
Brazil
193
5
Pakistan
335
Pakistan
185
6
Nigeria
285
Bangladesh
164
7
Bangladesh
222
Nigeria
158
8
Brazil
215
Russia
142
9
Congo, DR
189
Japan
127
10
Philippines
150
45
Source: Population Reference Bureau, 2010 World Population Data Sheet
Age Distribution of the World’s Population, by Age and Sex,
2000 (in millions)
46
Sources: United Nations Department of Economic and Social Affairs, 2007b; and U.S. Census Bureau, International Data Base, accessed on December 28, 2007.
Age Distribution of the World’s Population, by Age and Sex,
2040 (in millions)
47
Sources: United Nations Department of Economic and Social Affairs, 2007b; and U.S. Census Bureau, International Data Base, accessed on December 28, 2007.
Whose Population is Aging the Fastest?
Median Age
Country
Japan
Germany
Italy
France
United Kingdom
1970
28.9
34.3
33.1
32.5
34.2
2010
44.7
44.3
43.3
40.1
39.9
2050
55.1
51.7
50.5
44.8
42.5
Russia
United States
China
Thailand
Brazil
30.6
28.2
19.7
17.7
18.6
38.1
36.6
34.2
33.2
29.0
44.0
41.7
45.2
41.4
45.6
Indonesia
Mexico
Vietnam
India
Philippines
18.9
16.6
18.0
19.2
17.1
28.2
27.6
28.5
25.0
23.2
41.1
43.9
42.4
38.4
35.0
Source: United Nations Population Division. World Population Prospects, the 2008 Revision.
48
Japan: Face of the Future
49
Source: New York Times, September 2, 1997.
World Population Growth Through
Billions
History
12
11
2100
10
9
Old
Stone
7 Age
8
New Stone Age
Bronze
Age
Iron
Age
6
Modern
Age
Middle
Ages
2000
Future
5
4
1975
3
1950
2
1
Black Death
1+ million 7000 6000 5000
years
B.C. B.C. B.C.
4000
B.C.
— The Plague
1900
1800
3000 2000 1000 A.D. A.D. A.D. A.D. A.D. A.D.
B.C. B.C. B.C.
1 1000 2000 3000 4000 5000
Source: Population Reference Bureau; and United Nations, World Population Projections to 2100 (1998).
World Population Growth, in Billions
Number of years to add each billion (year)
All of Human History
First Billion
Second
Third
Fourth
130 (1930)
30 (1960)
15 (1975)
Fifth
12 (1987)
Sixth
12 (1999)
Seventh
14 (2013)
Eighth
14 (2027)
Ninth
(1800)
21 (2048)
Sources: First and second billion: Population Reference Bureau. Third through ninth billion: United Nations, World Population
Prospects: The 2004 Revision (medium scenario), 2005.
Search for “Life Expectancy CIA”
www.cia.gov/library/publications/the-worldfactbook/rankorder/2102rank.html
Life Expectancies in North Carolina
(At Age 65)
24
White female
22
Years
20
White male
18
16
Nonwhite
female
14
12
Nonwhite
male
Source of data: NC State Demographics Unit (2002)
Prepared by the UNC Institute on Aging; Last updated: 2005
0
2
0
3
0
2
0
2
0
2
0
1
0
2
0
0
0
1
9
9
0
1
9
8
0
1
9
7
0
6
9
1
1
9
5
0
10
More Older Women than Older Men
Percent of NC population by Gender and Age (2000)
All Ages
Female
51.0%
Male
49.0%
Age 65+
Female
59.9%
Age 85+
Male
40.1%
Source of data: U.S. Census Bureau, Census 2000 Summary File 1, P13 and PCT12
Prepared by the UNC Institute on Aging; Last updated: September 2001
Male
25.9%
Female
74.1%
Aging America: U.S. Median Age, 1820-2000
40
35
30
25
20
15
10
5
0
1820 1840 1860 1880 1900 1920 1940 1960 1980 2000
Source: U.S. Census Bureau, San Francisco Chronicle
National Population Pyramids
www.census.gov/population/international/data/idb/informationGateway.php
Regional Market Characteristics
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•
•
•
•
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European Union
Russia
North America
Asia-Pacific
Latin America and the Caribbean
Middle East and Africa
Marketing in Low-Income Countries, BOP -- Bottom of the Pyramid
• Affordability
– Smaller packages
– Disintermediation
• Access
– Intensive distribution
• Availability
– Intensive distribution
Global Buyers – value, value equation, diffusion and adoption
Ch. 7. Segmentation, Targeting, and Positioning
Global market segmentation is the process of finding segments of potential
customers with homogeneous attributes who are likely to have similar
responses to a the marketing mix.
Requirements for effective segmentation:
• Measurable
• Accessible
• Substantial
• Differentiable
• Actionable
Bases for global segmentation
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Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavior segmentation
Benefit segmentation
Vertical versus horizontal segmentation
Assessing market potential and choosing target markets
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Current segment size and growth potential
Potential competition
Feasibility and compatibility
First mover advantages versus first mover disadvantages
Target market strategy options
– Standardized global marketing
• Undifferentiated target marketing
• Assumes global mass market
– Concentrated global marketing
• Selective niche in selective locations around the world
– Differentiated global marketing
• Pursuing multiple market segments across the globe with different marketing
mixes
Positioning
–
–
–
–
–
Attribute or benefit
Quality and price
Use or user
Relative to competitors
Global (GCCP), foreign (FCCP), or local (LCCP) consumer culture positioning
Ch. 8. Global Entry and Expansion Strategies
Export selling
• No changes to product, price, promotion vehicles to target global
markets
Export marketing
• Marketing mix determined by target markets across the globe
Developmental steps in exporting
• Don’t even think about it, refuse to do it
• Sporadic export selling
• Limited export marketing for one or two “easy” target markets
• Global export marketing
National Policies Governing Exports and Imports
(Subject to WTO)
Prevailing logic – encourage exports and FDI, restrict imports
Government tactics to support exports
• Tax exemptions and incentives
• Subsidies
• Direct governmental assistance
– Information
– Credit and financing
– Trade fairs and trade missions
http://www.nccommerce.com/en/BusinessServices/Int
ernationalBusiness
Government tactics to restrict imports
• Tariffs
– Rules
– Duties
– Regulation of import from specific countries of origin
• Non tariff barriers
– Quotas
– Discriminatory procurement policies and promotion programs
» http://www.ncagr.com/markets/gginc/
– Creative customs, exchange rate, administrative and technical
policies and regulations
Organizing to Export
• Major specialized organizations and functions in export channel of
distribution
Exporting from the home country of manufacture
Organizing in the market country that receives the exports
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•
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Export financing and methods of payment
Documentary credit
Documentary collections
Cash in advance
Sales on open account
Sales on a consignment basis
Countertrade
Sourcing decisions for goods and services – Outsourcing or
offshoring?
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•
•
•
•
•
•
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Business strategy and management vision
Land, labor, and capital availability and costs
Country infrastructure
Customer needs
Transportation and management logistics
Public opinion
Political and regulatory factors
Exchange rates and currency issues
Three Global Market Entry Strategies – Licensing,
Investment, and Strategic Alliances
Evaluative criteria
• Vision and opportunity
• Risk
• Capital implications
• Control
1. Licensing
• Licensing
• Contract manufacturing or outsourcing
• Franchising
http://www.entrepreneur.com/franchise500/index.html
2. Investment (FDI Foreign Direct Investment)
• Joint venture
• Investment by ownership or share of equity
3. Strategic partnerships (aka collaborative agreements, strategic alliances,
strategic international alliances, strategic global partnerships, global
strategic partnerships, …)
• Participants independent
• Share alliance benefits
• Contribute key resources
Special issues
• Japan – Keiretsu cartels with interlocking bds of dir organized by banks
– The Big 6: Mitsubishi, Mitsui, Sumimoto, Fuyo, Sanwa, DKB
• South Korea – Chaebol
– Organized by bank or holding company dominated by founding family
• India – Tata Group Holdings
Ch. 9. Competitive Analysis and Strategy
Porter’s model of industry analysis organized by his five forces influencing
competition:
1. Threat of new entrants, or potential barriers to entry
Economies of scale
Product differentiation
Capital requirements capex/ operating costs opex
One time switching costs
Distribution channels
Government policies
Cost advantages outside scale or scope economies
Likely competitor response
2. Threat of substitute products or services
3. Power of manufacturers and trade
The “Wal-Mart Effect”?
4. Bargaining power of suppliers further up the supply chain
5. Rivalry among competitors
Coke vs Pepsi
Porter’s Strategies for creating competitive advantage
• Cost leadership
• Product differentiation
• Cost focus
• Focused differentiation
Sequential, temporary competitive advantage from strategic intent
(Hamel & Prahalad)
“Transitory defensibility” (Didow & Garrison)
– change the rules
– collaboration and strategic partnerships
Market-Oriented Strategic Planning –
High Performance Businesses in the Global Economy
Lessons and general findings:
•Market and financial success are possible even in a hostile
domestic and global environment
•Market-oriented strategies leading to success evidence
common characteristics:
•Achieve low delivered cost position, or
•Achieve “meaningful” product differentiation, or
•Achieve both low cost and product differentiation
•Successful strategies come from purposeful, intentional
moves toward leadership
•Problems come from failing to capture or defend market
leadership
•Diversification is a risky growth strategy
Strategic Profile Analysis
Basic Mature Industries
High
HIGH % ROI
Relative
Product/
Average
Service
Differentiation
LOW % ROI
Low
High
Average
Relative Delivered Cost
Didow
Low
Strategic Profile Analysis
Heavy-Duty Truck Manufacturing 1980
High
•Paccar 31%
•Mack 20%
Relative
Product/
Average
Service
Differentiation
•Freightliner 13%
•GM 22%
•Ford 25%
•International 9%
•White Motor 5%
Low
High
Average
Relative Delivered Cost
% ROI
Didow
Low
Strategic Profile Analysis
Heavy-Duty Truck Industry 2006
High
•PACCAR
•Volvo
Relative
Product/
Average
Service
Differentiation
•International
•Freightliner
Low
High
Average
Relative Delivered Cost
Niche players= Freightliner, maybe also PACCAR
Didow
Low
Three winning strategies:
Overall cost leadership
Meaningful differentiation thru service, quality, style, or
technology leadership
Product-market niche focus and ownership
One losing strategy:
Being “middle-of-the-road” – not particularly excellent at
anything
(Michael Porter and others)
http://www.kodak.com
Ch. 10
Product Decisions in Global Marketing
Marketing Management
Understand the landscape for marketing management in each nation, or
political economy – the defining history, major demographic and economic
trends, social and political (legal) environment, and religious and cultural
influences that establish and influence market opportunities.
Understand the company, customers, and competition (3C’s).
Segmentation, target marketing and positioning with 4Ps.
•Product
•Price
•Place
•Promotion
•Entry strategy, implementation, evaluation, revision
•Pro forma financials
Porter’s Competitive Analysis and Strategy
Porter’s model of industry analysis organized by his five forces influencing
competition:
1. Threat of new entrants, or potential barriers to entry
2. Threat of substitute products or services
3. Power of manufacturers and trade
4. Bargaining power of suppliers further up the supply chain
5. Rivalry among competitors
Three winning strategies:
Overall cost leadership
Meaningful differentiation thru service, quality, style, or
technology leadership
Product-market niche focus and ownership
One losing strategy:
Being “middle-of-the-road” – not particularly excellent at
anything
(Michael Porter and others)
Ch. 12. Global Marketing Channels
Channels provide place, time, form, and information utility to customers.
B2B or B2C
• Hybrid, mixed channels
• Disintermediation
• Piggybacking marketing channels
Channels are often the most challenging aspects of marketing in either
emerging markets or developed markets.
Companies don’t compete with other companies -- supply chains and channels
of distribution compete with each other! Didow
Global retailing takes many different forms
• Department stores
• Specialty stores
• Supermarkets
• Convenience stores, C-stores
• Discount stores
• Warehouse club discount stores
• Hypermarkets
• Supercenters
• Category killers
• Outlet stores and outlet malls
Physical distribution, supply chains, and logistics management
• Order processing
• Warehousing
• Inventory management
• Transportation
–
–
–
–
–
–
Trucks
Rail
Water
Air
Pipeline
Internet
Intermodal transportation
Transportation and physical distribution issues post 9/11