STRATEGIC MARKETING PROBLEMS BY KERIN AND PETERSON ( 12 TH ED )
LECTURE NOTES
Prof.Dr:TeomanDuman
Presented by students : AnisaTopalovicZeidHazem
Chapter 10 .Global Marketing Strategy
-This chapter focuses on ( why, where, how ) organizations compete in a global environment
- The Decision To Go Global
-The organizations necessary to identify where profitable marketing opportunities may exist outside their own country
-Four major reasons
1-To gain access to new buyers for( increased revenues , profits, long term growth )
2-To spread business risk across a wider market base (if sales in Asia turn down for a period of time the sales in Europe may offset the decline )
3-To capitalize on an organization's distinctive competencies and capabilities( Nokia propelled it to global market leadership in the wireless telecommunications business )
4-To achieve lower costs and enhance an organization's competitiveness ( the domestic sales volume not enough to fully capture operating efficiencies and improve the firm's cost competitiveness must going global ( Nestle Co –Switzerland- selling their products across the Europe then entered North America & Africa)
- Identifying Global Marketing Opportunities
-To process of identifying global marketing opportunities varies little between firm's entry into a foreign country for the first time and other firm's they already working in several countries
-T hat kind of process begins by establishing and prioritizing criteria for screening countries and the information pertaining to these criteria will influence market , sales, profit, and success or failure of the project
-Countries are subsequently classified on the basis to their marketing attractiveness based on the screening criteria compared with the marketing competences and practices of the company considering a move into a foreign country
> Country Screening Criteria
We have 2 kind of screening criteria
First : quantitative screening criteria is the most prominent used to evaluate prospective countries example ( consider the determination of market potential for coffee in China and India for Starbucks
We can see how demographic variable such as age and urbanization and usage variable such as per capita coffee consumption combine to yield one estimate of market potential
Second: qualitative variables screening criteria include 4 facts
1-Socio cultural nuances that underlie business and consumer behavior
2-Country economic and technological infrastructure differences that affect marketing practices
3-Trade regulation that govern marketing practices within countries or free zones such as ( European union )
4-The marketing prowess and strength of local and foreign competitors within countries or free zones
> Marketing Attractiveness
Depend on the characteristics of the organization itself .an organization's (strengths, weakness, offerings ,marketing policies, financial resources )
- Entering And Competing In foreign Markets
Any organization decide to market in another country must select mode of entry .
-We have 4 general options exist
1-Exporting
Means producing offerings in one country and selling in another country that allows a firm to make the least number of changes in terms of offerings .
We have 2 kind of exporting
A)Indirect exporting ( the firm sells its domestically produced goods in a foreign country through intermediarythat have 2 side effects
-positiveside (least amount of financial commitment & risk )
-negative side (least profit )
such as : wholesale supply houses , trading companies
B)direct exporting ( the firm sells its domestically produced goods in a foreign country without intermediary direct to foreign buyerthat have 2 side effects
-positive side (large volume of sales and easy to obtain& increase profit
-negative side ( big risk for the company )
such as : foreign buyer that are willing to contract for a large volume of purchases ( Boeing co largest exporter in U.S )
2-Licensing
A company ( licensor) offers the right to a trademark , patent, trade secret with that mode have 2 side effects
-Positive side ( low risk , capital free entry into a foreign country , licensor strives to stay innovative for improvements and a successful operation )
-Negative side ( licensor forgoes control of its offering and reduces the potential profit gained from it , while the relationship lasts the licensor may be creating its own competition, the licensee might modify the product and serve the market with an offering and marketing knowledge gained at the expense of the company that got them started, the licensee should prove to be a poor choice the name or reputation of the licensor may be harmed )
-3 type of licensing
A)Contract manufacturing
Company may contract with a foreign firm to manufacturing products according special specifications ( the products can sold in the foreign country or exported back to the main company (country))
B)Contract assembly
Company make contract with a foreign firm to assemble parts and components that have been shipped to that country ( such as economic boon to Taiwan majority of notebook computers are made
C)Franchising
Franchises include soft drink , motel. Fast food such as Mc Donald's premier global franchiser
3-Joint Venture
When a foreign company and a local firm invest together to create a local business .
That occur for 2 reasons
First: one company may not have the necessary financial , managerial , marketing resources to enter a foreign country alone
Second : a government may strongly encourage a joint venture before it allows a foreign company to enter the country .
That kind of modes have big challenge that is difficult manage and some other factors contribute to the success or failure as well ( how control is shared ,relations with partners , legal environments ,….)
4-Direct Investment
Have biggest financial commitment and risks involved but the companies who deal with find this is big advantageoutweigh all commitments & risks.
That kind of modes entails a domestic firm investing in and owning a foreign subsidiary or division such as ( Reebok entered Russia by creating a subsidiary known as Reebok Russia )
- Crafting A Global Marketing Strategy
The art of global marketing is standardize marketing strategies whenever possible and customize them wherever necessary .
Global Market segmentation and Targeting
Involves dividing the globe or large areas of the world into distinct subsets of customers that behave in the same way or have similar needs and preferences as ( common assortment of products or services or geographic location ) such as ( IKEA ).
-We have 2 types of variables are commonly used for market segmentation
1-Socioeconomic characteristic of consumers as ( gender age , income)
2-Consists of behavioral variables as ( life style , attitudes )
The appropriateness of any one of segmentation variables in a specific situation will depend on whether or not a variable relates to consumer purchasing, use, or consumption behavior and responsiveness to marketing programs as Automobile Manufactures such as ( Chevrolet Europe ) use 2 variables
1-Car owner social status
2- Value orientation
(Will explaining in the case )
offering and Communication Strategies
Organizations effort to global market should have 5 strategies for matching offerings and communication
An offering be sold globally three ways:
1-The same as in home country market
2-With some adaptations
3-Totally new offering
- Offering extension strategy
Selling virtually the same offering in other countries is such as ( coca-cola)that strategy work best when the consumers share the same desires , needs and uses for the offering
- Offering adaptation strategy
to make the offering more appropriate for a country climate or consumer preferences such as ( frito –lay produces and markets its potato chips in Russia but the flavors are unlike the chips eaten in north America cause Russians prefer meat ,seafood flavored
- Offering invention strategy
Organizations can invent totally new offering designed to satisfy common needs across countries such as ( whirlpool developed a compact , automatic clothes washer specifically for households in developing countries with annual household incomes of 2000$ the washer features bright colors because are placed in home living areas not hidden in laundry rooms
-Some organizations use global communication message around the world such as ( Gillette , the Best a Man Can Get)
-Other organizations adapt their communication message for the same product sold in many countries such as ( L'Oreal for health and beauty products ) introduce golden beauty brand of sun care products in western Europe and golden beauty advertising featured dark tanning in Northern Europeand skin protection to avoid Wrinkles in Latin Europeans
> Marketing channel and Pricing Strategies
- Standardization presents a unique challenge for marketing channel and pricing strategies due to country trade regulations and consumer buying preferences and practices
- competitive ,political ,tax and exchange rates and legal constraints affect the pricing latitude and strategy of global marketers
global Brands and Positioning
There are six factors underlie successful global brands:
1-High technology products with strong functional images as ( watches Rolex, Sony TV) such products tend to be universal
2-High image products with strong associations to fissionability , sensuality , wealth as ( Armani , Tiffany ) such products appeal to the same type of market worldwide
3-Services and business to business products that emphasize corporate images in their global marketing campaigns as ( airlines and financial service )such as American express
4-Retailers that sell to upper class individuals or that specialize in a salient but unfulfilled need as ( IKEA with 315 location in 36 countries )
5-Brands positioned primarily on the basis of their country of origin as ( Australia's foster's beer )
6-Products that do not need customization or other special products to be able to function properly as ( heavy equipment sold by caterpillar )
( adaptation is only used when necessary to better connect the brand to consumers in different markets consider McDonald's this global marketer has adapted its proven formula of "food fun and families across 119 countries )
Thanks For Listening and Good Luck