Global Marketing

Assessing Global Market Opportunities

Presented By: Nikita, Gaurang, Mitesh, Bharat M

Global Marketing

Stevens B School Batch 2009-2011

Flow of Presentation

Marketing Information System

Global – MIS

Sources of Market Information

Market Research

Global Marketing Strategy: Entry and Expansion Strategies

Market Expansion Strategies

Stages of Development

Major Concerns with International Alliances

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Global Marketing Information Systems and Research

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Information

Data: Un-analyzed, raw facts and figures

Information: Data put in a format where it can be analyzed and

inferences can be made out of it, to aid managerial decision making

Scanning: Process of information acquisition

Major problems faced with information are abundance and scarcity.

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Marketing Information System

A continuous flow of information regarding the markets, customers,

competitors, and company operations is called Marketing Information

System.

Points of concern:

Appreciating IT and MIS as strategic assets

Need for a framework for information scanning and opportunity identification

General understanding of market research process

Management of MRIS

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Global - MIS

Types of Marketing Information to look for –

•Demand estimates, consumer behaviour, products, channels, communication media availability & cost, and market responsiveness

Markets

•Corporate, business, and functional strategies and plans

Competition

•Balance of payments, interest rates, attractiveness of country currency, expectations of analysts

Foreign Exchange

•Laws, regulations, ruling concerning taxes, earnings, dividends in both host countries & home country

Prescriptive Information

•Availability of human, financial, information, & physical resource

Resource Information

•Overall review of sociocultural, political, technological environment

General Conditions

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Scanning Modes

Surveillance

Informal information gathering

Viewing: General exposure to information

Monitoring: Particular news story, special reference to a company

Search

Formal activity

Deliberate seeking out of special information

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Sources of Market Information

Human Sources

Personal Sources:

Executives, distributors, customers, prospective

new employees, professional colleagues, consultants

Documentary Sources

Published public

informationUnpublished

private information

Internet Sources

Combines other three information

source types

Direct Perception

Sensory experience

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Marketing Research

Definition

The systematic gathering, recording and analyzing of data to provide

information useful in marketing decision making

Complications in marketing research

Information must be communicated across cultural boundaries

The environments within which the research tools are applied are often in

foreign markets

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Steps in Formal Marketing Research

Identifying the Research Problem

Analyzing Research Data

Presenting the Findings

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Identifying the Research Problem

Developing a Research Plan

Collecting Data

Secondary Data

Problems in secondary data

Availability of data

Reliability of data

Comparability of data

Validating secondary data

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Primary Data and Survey Research

Sampling Methods

Probability sampling

Random

Stratified

Systematic

Cluster

multistage

Non probability sampling

Convenience

Judgmental

Quota

snowball

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Problems in Primary data

Ability to communicate opinions

Willingness to respond

Sampling in field surveys

Language and comprehension

Multicultural research

Research on the internet

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Analyzing Research Data

Problems in analyzing and interpreting research information

A high degree of cultural understanding

A creative talent for adapting research findings is necessary

A skeptical attitude in handling both primary and secondary data is helpful

Demand Pattern Analysis

Income Elasticity Measurements

Market Estimation Analogy

Cluster Analysis

Analyzing Results

Presenting the Findings

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Current Issues in Global Marketing Research

Headquarters control of Global Marketing Research

Multinational Company

Global Company

The Marketing Information System as a Strategic Asset

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Global Marketing Strategy: Entry and Expansion Strategies

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Decision Criteria For International Business

Political Risk

Market Access

Factor Costs and Conditioning

Shipping Considerations

Country Infrastructure

Foreign Exchange

Creating a Product-Market

Profile

Market Selection Criteria

Market Potential

Market Access

Shipping Costs

Potential Competition

Service Requirements

Product Fit

Visits to the Potential Market

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International Market Entry and Expansion Decision Model

Sourcing: Home, third, or host country?•Cost, market access, country of origin factors

In-country or in-region marketing organizations?•Cost, market impact assessment

Selection, training, and motivation of local distributors

and agents

Marketing Mix Strategy•Goals of objectives in sales, earnings and share of market; positioning

Strategy Implementat

ion

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International Market Entry

1. Exporting

2. Licensing

3. Franchising

4. Joint Venture

5. FDI – Fully Owned

Manufacturing Facilities

6. M&A

7. Contract Manufacturing

8. Management Contract

9. Turnkey Contract

10. Assembly Operations

11. Counter Trade

a. Barter

b. Buy Back

c. Compensation Deal

d. Counter Purchase

12. Strategic Alliance

13. Third Country Location

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Exporting

When a firm produces its products in the domestic market and/or a

third country and then transfers either directly or indirectly to the host

market, it is called an Export transaction.

1. Indirect Export

2. Direct Export

3. Cooperative Export

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Indirect Export Modes

Using an independent export organization from the domestic country

and not having their own export department is called in-direct export.

Export Buying Agent: Buy and Sell a product

Broker: Buyer-Seller meeting

Export Management Company:

Export dept. for several unrelated companies

Performs market research, channel selection, financing & shipping arrangements, and

documentation

Trading Company – Performs marketing operations

Piggyback – Arrangement whereby one manufacturer obtains distribution

of products through another’s distribution channels

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Direct Export Modes

Manufacturer sells directly to an importer, agent or distributor located

in the foreign target market.

Distributors

Agents

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Licensing

A contractual arrangement whereby one company (the licensor)

makes an asset (patents, inventions, formulas, process, designs,

copyrights & trade marks) available to another company (the

licensee) in exchange for royalties or license fees

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Franchising

The franchisor gives a right to the franchisee against payment, e.g. a

right to use a total business concept/system, including use of trade

marks (brands), against some agreed royalty.

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Joint Venture and Strategic Alliance

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Joint Venture: Allows company to own a stake & play a role in

operations

Eg.: ICICI bank and Prudential Insurance

Strategic Alliance: Understanding or arrangement among the players

in a market to expand to new market, gain quick access to new

technology or avoid competion

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Joint Ventures and Strategic Alliances

Y-coalitions

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SupplierManufactu

reMarketer Retailer

SupplierManufactu

reMarketer Retailer

Upstream-based collaboration

Downstream-based collaboration

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Joint Ventures and Strategic Alliances

X-coalitions

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SupplierManufactu

reMarketer Retailer

SupplierManufactu

reMarketer Retailer

Upstream/downstream-based collaboration

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Other Market Entry Strategies

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•Corporate owns 100% equity in the local subsidiary

FDI – Fully Owned Manufacturing Facilities

•Merger: Mutual Consent, Synergies•Acquisition: Can be friendly or hostileM&A•A firm contacts with foreign country’s firms to manufacture the parts while retaining the responsibility of marketing

Contract Manufacturing

•Supplier brings together a package of skills that will provide an integrated service to the client without incurring risk

Management Contract

•Cross between exporting and overseas manufacturing

Assembly Operations

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Other Market Entry Strategies

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•Agreement by seller to supply with a facility fully equipped & ready to be operated by the buyer’s personnel, who will be trained by the seller

Turnkey Contract

•Barter: Direct exchange of goods of equal amount, with no money

•Buy Back: supplier of equipment purchase goods manufactured with that equipment

•Compensation Deal: Seller receives a part of the payment in cash & the rest in products

•Counter Purchas: Seller receives full payment in cash but spends that money in that country itself within a specified time period

Counter Trade

•One Country has to operate from third country base to enter another country’s market

Third Country Location

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Market Expansion Strategies

MARKET SEGMENT

CO

UN

TRY

Concentration

Concentration

Diversification

Diversification

1. Narrow Focus

2. Country Focus

4. Global Diversification

3. Country Diversification

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Stages of Development Model

Domestic

International –

Ethnocentric

Multinational –

Polycentric

Global – Mixed

Transnational -

Geocentric

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Stages of Development: Strengths

• Ability to exploit the parent company’s knowledge & capabilities through worldwide diffusion of products

International – Ethnocentric

• Flexible ability to respond to national differences

Multinational – Polycentric

• Global Market or supplier reach, which leverages the home-country organisation, skills, & resources

Global – Mixed

• Combines the strengths of each of the preceding stages in an integrated network, which leverages worldwide learning & experience

Transnational – Geocentric

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Major Concerns with International Alliances

Objectives

Partner Mindshare

Resources Pooled

Culture

Success Rate

Regulations

Negotiations – Contract renewals

Credibility – Gain or Loss

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The Nature of the Global Strategic Partnerships

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Global strategic alliances growing at a rate of 20 to 30 % since the mid

1980s.

The upward trend for GSP ( global Strategic Partnership) comes in

part at the expense of traditional cross-border mergers and acquitions.

Why a firm would enter into GSP?

Roland Smith , Chairman of British aerospace, said “ A partnership is

one of the quickest and cheapest ways to develop a global strategy.

Like traditional joint ventures.

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Advantages and disadvantages of GSP

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Disadvantages:

Each partner must be willing to sacrifice some control,

There are potential risk associated with strengthening a competitors from another

country.

Advantages:

High product development costs may force a company to seeks partners.

The technology requirements of many contemporary products mean that an individual

company may lack the skills , capital, know- how to go it alone.

Partnership may be the best means of securing access to national and regional

markets.

It also provides learning opportunities and experts regards GSPs as a “ race to learn”.

Prof. Gary Hamel(London Business school) has observed that the partner that proves to

e the fastest learner can ultimately dominate the relationship.

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Traditional Joint venture and GSP are totally different.

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Traditional joint venture are basically alliance or focusing on a single national market or a

specific problem .

Where, GSP is distinguished by six attributes.

Two or more company develop joint long term strategy aimed at achieving world leadership by

pursuing cost leadership, differentiation, or combination of the two.

The relationship is reciprocal. Each partner possesses specific strengths that it shares with the others:

learning must take place on all sides.

The partners vision and efforts are truly global, extending beyond home countries and home regions to

the rest of the world.

If the relationship is organized along horizontal lines, transfer of laterally between partners and

technology sharing and resource pooling representing norms required.

If relationships is along vertical lines both partner must understand their core strength and be able to

defend their competitive position against the possibility of either a forward or backward integration.

When competition in market excluded from the partnership, the participant retain their national and

ideological identities.

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Success factor

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Mission

Strategy

Governance

Culture

Organization

Management

Successful collaborators will be guided by the following four principle:

Partners are pursuing mutual goal in some areas, they are competitors in others.

Harmony is not the most important measure of success, some conflict is to be

expected.

All employees understand where cooperation ends and competitive compromise

begins.

Learning from partner is critically important.

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Alliances and Partnerships

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Alliance between manufacturers and marketers

International partnership in developing countries

Cooperative strategies in Japan

Beyond strategic alliances

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Thank You

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Documents

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