competing in a global market(4210)
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Transcript of competing in a global market(4210)
MARK4210, 2014 Spring, L1/L2
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2
[Class #23]
Competing in a Global
Market
Agenda
Global Marketing Strategic Approaches
Global Marketing Mix
Price
Product
Place
Promotion
2
Global Marketing Strategic
Approaches
Three main international strategies:
Multi-domestic
Global
Transnational
Each strategy involves a different approach to
build efficiency across nations and
responsiveness to variation in customer
preferences and market conditions across
nations
3
4
Glo
ba
l in
teg
rati
on
We
ak
Str
on
g
Local responsiveness Weak Strong
Source: Cavusgil et al. 2012
Coordinate marketing
activities across
countries to maximize
efficiency and
effectiveness
Adapt to the local
environment, meet
the specific needs
of buyers in
individual countries
Global Marketing: Integration-
Responsiveness Framework
Multi-domestic Strategy
HQ delegates autonomy to each country
manager, allowing him/her to operate
independently and pursue local responsiveness
Sacrifices efficiency in favor of emphasizing
responsiveness to local market requirements
MTV customizes the programming that is shown on its
channels within dozens of countries, including New
Zealand, Portugal, Pakistan, and India
Source: Strategic Management: Evaluation and Execution, D. Ketchen, J. Short, Flat World Knowledge, Inc., 2012 5
Global Strategy
HQ emphasizes centralized coordination of
country operations to minimize duplication, and
maximize efficiency; minor product modifications
in various markets, but essentially offering same
products
Sacrifices responsiveness to local market
requirements in favor of emphasizing efficiency
Microsoft offers the same software around the world
but adjusts the programs to match local languages
Very effective for firms whose product is largely hidden
from the customer’s view -- silicon chip maker Intel
Source: Strategic Management: Evaluation and Execution, D. Ketchen, J. Short, Flat World Knowledge, Inc., 2012 6
Transnational Strategy
Involves balancing the desire for efficiency with
the need to varying preferences across countries;
seeks middle ground between multi-domestic
strategy and global strategy
Standardize whenever possible; adapt when
necessary
McDonald’s relies on the same brand names and the
same core menu items around the world, but make
some concessions to local tastes too
Source: Strategic Management: Evaluation and Execution, D. Ketchen, J. Short, Flat World Knowledge, Inc., 2012 7
8
Glo
ba
l in
teg
rati
on
We
ak
Str
on
g
Local responsiveness Weak Strong
Global Strategy Transnational
Strategy
Export
Strategy
Multi-domestic
Strategy
Source: Cavusgil et al. 2012
Global Marketing Strategies
9
2013 Top Global Brands
4P’s: Approaches to Global
Pricing
Ethnocentric Pricing
Polycentric Pricing
Geocentric Pricing
10
Ethnocentric Pricing
Per-unit price of an item is the same no matter
where in the world the buyer is located
Importer must absorb freight and import duties
Potential problems?
11
Price Escalation
Price escalation is a common result of
ethnocentric pricing
The increase in the final foreign selling price of
goods traded across borders
12
Price Escalation – How to
lessen the Problem?
Rearrange the distribution channel
Eliminate costly features or downsize the product
Production in local or a low-cost market
13
Polycentric Pricing
Permits affiliate managers or independent
distributors to establish price as they feel is most
desirable in their circumstances
14
Geocentric Pricing
Global pricing with local adjustments
Allows firms to take into account global markets
and global competitors in establishing prices, but
also local factors
Local costs
Income levels
Competition
Local marketing strategy
15
16
4P’s: Global Product
Strategies
• Firm adopts
the same
policy used in
home market
• Offering
product
virtually
unchanged in
all market
• Firm caters to
the needs and
wants of foreign
customers
• Changing
elements of
design,
function, and
packaging
• Firm designs a
product from
scratch for
foreign
customers
Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives, Journal of Marketing, 33, 1969, pp.58-62
Straight Extension
Product Adaptation
Product Innovation
Source: Kotabe and Helsen 2012
4P’s: Global Product Strategies
17
Advantages of Product
Standardization
• Scale economies
• Global image
• Easier planning and control
• Convergence in consumer tastes
• Global customers
Advantages of Product
Adaptation/Innovation
• Meet local consumer needs
• Meet local economic, climatic, technological, requirements
• Utilize local advantages
• Increase motivation for local staff
• Meet legal and technical standards
18
Global Product Planning:
Strategic Alternatives
Product Same Different
Communi-
cation
Different
Same Strategy 1:
Dual Extension
Strategy 2:
• Product Extension
• Communication
Adaptation
Strategy 4:
Dual Adaptation
Strategy 3:
• Product Adaptation
• Communication
Extension
19
Global Product Planning:
Strategic Alternatives Examples
Product Strategy Product
Example
Consumer
Need Satisfied
Product
Strategy
Communication
Strategy
Strategy 1: Product
& Communication
Extension
Gillette
Razor
Disposable,
easy to use
product
Extension Extension
Strategy 2: Product
Extension/
Communication
Adaptation
Wrigley
Chewing
Gum
USA: Substitute
for Smoking
Europe: Dental
benefits
Extension Adaptation
Strategy 3: Product
Adaptation/
Communication
Extension
McDonald Fast-Food
Adaptation:
Add local
products to
range
Extension:
Using global
campaign
Strategy 4: Product
& Communication
Adaptation
Slim Fast Identical:
Lose Weight
Adaptation:
Preferences for
different flavors
Adaptation:
Celebrity in DE,
Teacher in UK
Source: W.J. Keegan
20
PRS: Which Strategy Is It?
Product Same Different
Communi-
cation
Different
Same Strategy 1:
Dual Extension
Strategy 2:
• Product Extension
• Communication
Adaptation
Strategy 4:
Dual Adaptation
Strategy 3:
• Product Adaptation
• Communication
Extension
21
4P’s: Global Distribution
Strategy – Key Decisions
Guidelines for international
distributors
Select distributors – do not let them select you
Look for distributors capable of developing markets
Treat the local distributors as long-term partners
Support market entry by committing money, managers
and proven marketing ideas
Maintain control over marketing strategy
Make sure distributors provide you with detailed market
and financial performance data
Build links among national distributors at the earliest
opportunity
22
23 Source: adapted from Cavusgil et al. (1995)
Evaluating Foreign Distributors
24 Source: Paliwoda (1993, p. 300). Reprinted with permission from Butterworth-Heinemann Publishers, a division of Reed Educational & Professional
Publishing Ltd.
Grey Marketing (Parallel
Importing)
Strategies to Reduce
Grey Marketing
Seek legal redress
Change the marketing mix
– Product strategy
– Pricing strategy
– Warranty strategy
25
26
4P’s: Global Promotions: Elements
of International Communication
Standardization vs. Adaptation of
Advertising Strategy: Benefits
Standardization reduces costs: No duplication of
effort for each market
Individual (customized) campaigns delay product
launches
Consumers increasingly share similar frames of
references with regard to products and
consumption
27
Barriers to Standardization
Communication infrastructure
Agencies might not serve a particular market
Consumer literacy
Legal restrictions and self-regulation
Differing values and purchase motivations
Attitudes toward product country of origin
Promotional mix elements
28
Reminders: PharmaSim
PharmaSim Team Live Play Round 2
Started April 22 @ 7am
Ends May 8 @ 8pm
Periods 0-8
NO replay, NO restarts, NO consultation
PharmaSim Final Report by May 14, 9AM
Peer Evaluations (excluding self)
7 Points (%) to Final Grade
Based on contribution to team effort
Anonymous, online link (http://ipeer.ust.hk) will be
posted by May 9 29
Reminders: Finals
When: May 17, Saturday, 16:40 to 18:10
90 minutes exam time
Please arrive at venue by 16:25 (15 minutes before exam starts) to
look for your assigned seats
Where: HALL
G/F Entrance of Sports Hall Complex is blocked
Use the open staircase between the Library and Lift No.3 only
What: Lectures/discussions from Class #9 (Product
Strategies) onwards
Open notes (handwritten notes, class slides, course packet)
Bring your own calculator (no borrowing, no laptops, no
smartphones)
30