Global Marketing By Usman Waheed +923006641921 Chap 01 Global Marketing.

Global MarketingGlobal Marketing

By Usman Waheed

+923006641921

Chap 01Chap 01

Global Marketing

GLOBAL MARKETINGGLOBAL MARKETING

• Overview

Global marketers consider the world as their market and different country markets as components of this world market

Defining Global MarketingDefining Global Marketing

• AMA’s Definition of Marketing:

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives


• Distinguishing Features of AMA’s Definition

1. Includes nonprofit and for profit activities

2. Includes products, ideas, and services

3. Includes activities that precede and follow the production process

4. Includes the four P’s and regards them each as equally important


• Global Marketing Defined:

• … the coordinated performance of marketing activities to create exchanges across countries that satisfy individual, organizational , and societal objectives


Global marketing is conducted across countries (not domestic or foreign)

Global marketing coordinates activities across different country markets

Global marketing should be motivated by individual, organizational, and societal goals

The Global Marketing EnvironmentThe Global Marketing Environment

• Focal Point--Consumer

• Use the Four P’s to Satisfy Consumers

• Economic, Financial, Political, and Cultural Environmental of Each Country Affect marketing

• Regional and Global Environments Affect Marketing

Why Should Firms Engage in Global Why Should Firms Engage in Global Marketing?Marketing?

• To Survive and Grow

1. Learn to satisfy consumers in diverse conditions

2. Manage marketing tasks more efficiently and effectively

3. Preempt or counter competitive attacks in more than one market

4. Expand customer base to include developed and developing nations


• To Diversify Product and Market Portfolios and Improve competitiveness

1. Effects of seasonal and cyclical fluctuations in one market offset by others

2. Diversification increases market size and enhances economies of scale


• To Capitalize on the Attractiveness of Additional Country Markets

1. The U.S. is attractive-but won’t accommodate unlimited growth

2. Expand market size by expanding into other countries

3. Maurice G. Hardy: Why expand into other countries? A. Keep competitors in their own countries; b. Take advantage of growing opportunities in Europe and the Pacific


• To Operate Within a Global Marketplace

1. Goods, services, capital, technology, and labor are going global

2. Reduced government restrictions are affecting global marketing

3. Bilateral and multilateral negotiations are reducing restrictions

What is Unique about Global Marketing? What is Unique about Global Marketing? Country market environments different Country market environments different

• Economic Environment ( Purchasing Power, Competitive Intensity, Economy’s Health)

1. Fiscal policies - tax rates and spending programs of government

2. Monetary policies - regulate money supply


• Financial Environment

1. Exchange rate - price of one currency in relation to another

2. Exchange rate fluctuations can adversely or favorably affect performance of a firm


• Political Environment

1. Tariff barriers - taxes on imports paid to customs officials - include

a. Specific - fixed amount per physical unit of import

b. Ad -valorem ( on the value ) - percentage of estimated value of import

2. Nontariff barriers include

a. Import quotas b. Exchange controls

c. Buy-domestic policies

d. administrative red tape

What is Unique about Global Marketing?What is Unique about Global Marketing?Country market environments different ?Country market environments different ?

• Cultural Environment 1. Differences encourage marketing adaptations

2. Similarities encourage standardization

3. Balancing the two is a key to success

Marketing Mix Politics - How Do Marketing Mix Politics - How Do Government Influence the Four P’s ?Government Influence the Four P’s ?

• Product - Local Content Law• Price - Government Approval for Price Changes• Promotion - Permissible Budget Determined by

Local Authorities• Place - Mandated Distribution Channel or

Territory

Why Should We Study Global Why Should We Study Global Marketing ?Marketing ?

• Influences Product Choices of Consumers

• Influences standard of living

• Influences Job Opportunities

• Influences the society

Thank You!Thank You!

The Global Economic The Global Economic EnvironmentEnvironment

Global Marketing

What’s happening?What’s happening?

• Asia Pacific

• Western Europe

• North America

• South America

Why and what are the implications?

THE ECONOMIC THE ECONOMIC ENVIRONMENTENVIRONMENT

• Overview

Local, regional, and global economic environments are interactive. What happens within and among them profoundly influences marketing mix decisions.

The Local Economy - The Country The Local Economy - The Country Where Marketing Takes PlaceWhere Marketing Takes Place

• The Consumers

1. Disposable income (after-tax income)

2. What, when, where, and how much consumers buy is influenced by disposable income


• The Country 1. Healthy economies facilitate higher

purchasing power for consumers

The Local Economy - The Country The Local Economy - The Country Where Marketing Takes PlaceWhere Marketing Takes Place2 . Economic variables: GDP; GDP per capita; GDP

growth rates; savings and investments rates; inflation and unemployment rates; imports and exports; inflow and outflow of FDI; number of global corporations in the country; structure of industries; commercial, fiscal, and monetary policies of the central government

3. These variables reflect the overall country, not specific groups of consumers--don’t generalize


• The Competition - Know Where You Stand in Relation to the Competition

1. Porter’s five forces determining the state of competition: rivalry among existing firms, potential impact of newcomers, power of suppliers, power of buyers, substitute goods

2. Prominence of each force varies by industry

The Regional EconomyThe Regional Economy

• Agreements Among Nations Include

1. Free-trade areas - no barriers among members, national barriers against the rest of the would

2. Customs unions - no barriers among members, adopt common barriers against the rest of the world

3. Common markets - form customs unions with free movement of labor and capital

4. Economic unions - one economy, one currency, unified fiscal and monetary policies


• The European Economic Integration

1. 15 Western European countries moving towards economic union

2. EU - to enhance competitive edge of EU firms in relation to non - EU firms

The Regional economyThe Regional economy

• The Asian Pacific Economies

1. The NICs - South Korea, Taiwan, Hong Kong, Singapore - high-value-added competitors

2. Malaysia, Indonesia, Thailand, Philippines - entering high-value-added marketers

3. Trade in region has been fueled by

a. Increasing domestic demand

b. Expanding business involvement overseas

c. Growing competitiveness of firms based in region


• The north America Free Trade Agreement (NAFTA)

1. U.S., Canada, Mexico

2. Designed to increase size of north American market, reduce trade barriers within, increase competitive edge of member firms

The Global economyThe Global economy• Increasing Trade and Investment

1. Why exports increased

a . Businesses - to improve competitiveness and performance

b. Governments - to stimulate domestic economic growth

2. Foreign direct investment growing faster than exports

a . Role in transferring technology, managerial expertise, financial resources

b. Five major sources: U.S., United Kingdom, Germany, France, Japan

The Global EconomyThe Global Economy

• Increasing Interdependence - Our fate is tied to that of others

• Increasing Competition - More players, More intensive competition

• Increasing Complexity - Policies designed for one country affect the performance of others

THE GLOBALIZATION OF THE GLOBALIZATION OF THE U.S. ECONOMYTHE U.S. ECONOMY

• Future Growth Cannot Rely Exclusively on Domestic Market

• Firms with Global Operations can Better

1. Develop new products

2. Establish new markets

3. Cross-subsidize products and markets - use financial resources from one market to fight in another

Chapter 03Chapter 03

The Financial Environment

The Financial EnvironmentThe Financial Environment

• Overview

Understanding and managing the key elements of the financial environment are requisites for successful global marketing

Key Features of the global Key Features of the global Financial SystemFinancial System

• Acceptability and Convertibility of Currencies from Different countries

• Hard Currencies Are Freely Traded in Foreign Exchange markets

• Soft Currencies Are Not Freely Traded

Key Feature of the Global Key Feature of the Global Financial SystemFinancial System

• Exchange Rates - The Price of One Currency in Terms of Another

1. Floating exchange rates are determined by market conditions alone

2. Managed float is determined by government-managed demand and supply

Key Feature of the Global Key Feature of the Global Financial SystemFinancial System

• Depreciation and Appreciation of One currency in Relation to Another– Price

– Demand

– Profit

– Market penetration

Managing exchange Risks Through Spot Managing exchange Risks Through Spot Transactions and Forward TransactionsTransactions and Forward Transactions

• Four Types of exchange Risks

1. Transaction exposure - when converting currencies at a later date

2. Translation exposure - when exchange rates upon consolidation differ from those at time of transaction

3. Tax exposure - when changing exchange rates result in a different tax liability

4. Economic exposure - long-term exposure and its affect on present value of future cash flow

Managing exchange Risks Through Spot Managing exchange Risks Through Spot Transactions and Forward TransactionsTransactions and Forward Transactions

• Three Methods of Protecting against Exchange Rate Losses

1. Natural hedging - buying and selling in the same currency

2. Currency forwards - contracts guaranteeing an exchange rate

3. Options - the rights of a contract without the obligation to fulfill it

Financial Institutions and Financial Institutions and Their Roles in BusinessTheir Roles in Business• Commercial Banks Facilitate Global Marketing by

1. Providing free consulting services

2. Providing collection, payment, and document preparation services

3. Exchanging currencies and providing financial and hedging facilities

4. Collecting financial documents

5. Transferring funds and providing credit information on buyers

6. Providing letters of introduction and letters of credit

Financial Institutions and Their Financial Institutions and Their Roles in BusinessRoles in Business• Export-Import Bank ( Eximbnak ) Assists

U.S. Exporters Through1. Direct loans

2. Guarantees

3. Engineering multiplier program

4. Operation and maintenance service program

5. Working capital guarantees

6. Export credit insurance

The Global Currency Market The Global Currency Market and Its Major Playersand Its Major Players

• Global Wholesale and Retail Market for Currencies

• Eurocurrency Market - Currencies traded outside their origin

• Asian Dollar Market - Banks in Singapore and Hong Kong Dealing in Dollars

• European Monetary System for the European Union


THE POLITICAL AND LEGAL ENVIRONMENT

THE POLITICAL AND LEGAL THE POLITICAL AND LEGAL ENVIRONMENTENVIRONMENT

• Overview After global marketers understand why and

how governments regulate their business activities, they can better analyze and respond to governmental actions

Why Do Governments Why Do Governments Intervene?Intervene?

• To stay in power

• To achieve socioeconomic goals

• Macro-systemic concerns identified by Boddewyn and Cracco

1. To protect the national interest

2. To maintain national sovereignty

3. To preserve the national identity

Types of InterventionsTypes of Interventions

• In ownership and Control

1. Confiscation - takeover without compensation

2. Expropriation - takeover with compensation

3. Domestication - relinquishment of ownership and control to locals

Types of InterventionsTypes of Interventions

• Other Forms of Intervention

1. Exchange controls

2. Export requirement as percentage of local output

3. Import restrictions

4. Taxation increases

Types of InterventionTypes of Intervention

• Some Marketing Mix Regulations

1. Local content law (product)

2. Price ceiling (price)

3. Distribution territory specifications (place)

4. Local advertising agency requirement

(promotion)

Assessing Political Risk - Estimating the Assessing Political Risk - Estimating the likelihood of Governmental Interventionlikelihood of Governmental Intervention

• Seeking Experts’ Opinions 1. Current and retired government officials familiar

with the local situation

2. Academics specializing in a region and its politics

• Conducting In-House Research to Monitor Political developments

Assessing Political Risk - Estimating the Assessing Political Risk - Estimating the likelihood of Governmental Interventionlikelihood of Governmental Intervention

• Utilizing Secondary Sources Who Provide Risk Indexes

1. BERI (Business Environment Risk Index)

2. Business International (BI)

3. Frost & Sullivan

4. PSSI (Political System Stability Index)

Managing Political Risk Through Lobbying, Managing Political Risk Through Lobbying, Proactive Measures, and InsuranceProactive Measures, and Insurance

• Identify with the country - Don’t maintain a foreign image

• Help the host country achieve its societal goals

1. Improve local management skills

2. Increase local productivity

3. Increase local employment


• Promote Vertical Integration by Linking Corporate Activities Across Countries

• Stay Ahead of Intervention by Upgrading Bargaining Power

1. Keep introducing new products and technology

2. Increase exports


• Insure Against Political Risk

1. Overseas Private Investment Corporation (OPIC)

2. Foreign Credit Insurance Association (FCIA)

Thank you!Thank you!


The Culture Enviroment

THE CULTURAL THE CULTURAL ENVIRONMENTENVIRONMENT

Overview

Developing marketing activities in harmony with the local culture can mean the difference between success and failure in a market

Characteristics of Culture - What Characteristics of Culture - What They All Have in CommonThey All Have in Common

Culture Is Prescriptive -Defines What Is Acceptable

Culture Is Learned - not Genetic Culture is Dynamic - An Interactive

Relationship Between Behavior and Culture Culture Is Subjective - Meanings Vary by

Culture

Low-Context and High-Context Cultures - Verbal Low-Context and High-Context Cultures - Verbal And Nonverbal Messages Determine meaningAnd Nonverbal Messages Determine meaning

Low-Context Cultures - What Is Said Is More Important Than How or Where It Is Said

1. U.S.

2. Germany High-Context cultures - What Is Said and How or

Where It is Said Are Significant

1. Asia

2. Latin America

3. Middle East

Monochronic and Polychronc Monochronic and Polychronc Cultures - Hall and HallCultures - Hall and Hall

Monochronic

1. Linear information processing

2. Focus on one thing at a time

3. Hold to rigid schedules Polychronic

1. Work on several tasks at a time

2. Human transactions are important

Culture and Verbal Communications - Culture and Verbal Communications - Understanding Through languageUnderstanding Through language

One Language - English -Meaning can Vary by Country

Using Language to Interpret the World What Works here May Not Work There

Culture and Nonverbal Communication - Culture and Nonverbal Communication - Can Actions Speak Louder Than Words ?Can Actions Speak Louder Than Words ?

Perception of Time Affects the Quality of Marketing Interactions

1. For some, time is linear and fixed

2. For others, time is on a continuum Perception of Space Influences Business Decisions1. Product size

2. Retail store layout

3. Office design

4. Feng Shui

Culture and Nonverbal Communication - Culture and Nonverbal Communication - Can Actions Speak Louder Than Words ?Can Actions Speak Louder Than Words ?

Symbols Are Communication Shorthand

1. Colors convey symbolic meaning

2. Numbers - lucky or unlucky

3. Products - luxury or necessary Negotiations - Sometimes a Handshake

Seals the Deal Gift Giving

Self-Reference Criterion - Unconscious Self-Reference Criterion - Unconscious Reference to One’s Own Cultural ValuesReference to One’s Own Cultural Values Lee’s Four-Step Process to Avoid Self-

Reference Mistakes1. Define goal in terms of own cultural traits

2. Define goal in terms of foreign cultural traits

3. Isolate SRC influence and anticipate the complications

4. Redefine problem without SRC influence and find solution

Multicultural Training Programs to Improve Cross-Cultural Interactions

Understanding Cultural Universals Can Help Understanding Cultural Universals Can Help Marketers Develop effective Product Marketers Develop effective Product StrategiesStrategies

Thank you!Thank you!

Chap 06Chap 06

Global Product Strategies

GLOBAL PRODUCT GLOBAL PRODUCT STRATEGIESSTRATEGIES

• Overview

Although all four elements of the marketing mix are essential for success, a product’s performance determines whether consumers will engage in repeat purchases

What Is a Product ?What Is a Product ?

• Anything with exchange Value (Objects, Ideas, Organizations, People)

• The Total Product

1. Tangible attributes: raw materials, size, weight, features, design, packaging

2. Intangibles: brand image, styling, other benefits (installation, delivery, credit, warranty, after-sale service, return policy)

The Product Development The Product Development ProcessProcess

• Generating Ideas

1. To tap new or existing markets, complement product lines, improve products

2. From consumers, competitors, employees, inventors, research organizations, universities

3. Global firms’ advantage - exposure to numerous country markets


• Screening Ideas

1. Acceptable versus unacceptable

2. Criteria: compatibility, production fit, philosophical fit, competitive fit, potential

3. Misclassifying or ignoring ideas can be costly

• Business Evaluation

1. Cost-benefit analysis

2. Commercial viability-existing and prospective markets


• Product Development

1. Determine tangible and intangible attributes

2. Consider marketing components that enhance appeal

• Test market - Select Representative Markets to test Consumer's Response

1. Adapted products - within each country market

2. Standardized products - representative markets


• Product Introduction

1. Standardization- marketing unmodified products in multiple countries

a . Premise consumes share some common values, beliefs, and consumption patterns: a standardized product will satisfy them

b. Advantages: economies of scale, price competitiveness, uniform image


2. Adaptation - modifying product to reflect characteristics of a market

a. premise consumers are not the same; adapted products are needed

b. Advantages: fit between product and consumer, expanded penetration


3. Mandatory product adaptations due to

a. Governmental regulations

b. Technological considerations (e.g., voltage, infrastructure)

c. Cultural imperatives - is it acceptable to consumers

d. measurement standards: volume, length, weight, quantity

Product AdoptionProduct Adoption

• Relative Advantage - To satisfy Needs Better Than the Competition

• Compatibility - The Fit of Product to Norms, Values, and Tastes of Market

• Trialability - Ease of Sampling a New Product

• Complexity - Easier to Use, More Likely to Be Adopted

• Observability - To What Extent Benefits Can Be Observed and Understood

Product management (Product-Product management (Product-Market Portfolio Matrix)Market Portfolio Matrix)

• Competitive Strength: Market Share, Product’s Fit to Customer Expectations, Marketing Ability, Product Positioning, Channel Cooperation, Profit Potential

• Country Attractiveness: Market Size, Growth Rate, Competitive Environment, Governmental Regulations, Political Stability

The U.S. Economy and the The U.S. Economy and the Product Composition of Its Product Composition of Its exports ( Largely High-Value-exports ( Largely High-Value-Added Products )Added Products )

Competitive Product Competitive Product DevelopmentsDevelopments

Chap 07Chap 07

Global Pricing Decision

Global Pricing DecisionsGlobal Pricing Decisions

• Overview

Of the four P’s, price alone generates revenue. Competitive pricing enhances market position and earnings

Pricing MethodsPricing Methods

• Cost-Oriented Methods - Focus on Cost, Not Market Conditions

1. Markup pricing - adding markup to unit cost of product

a. Information needed: fixed cost, variable cost, expected sales, markup

b. Appeal is simplicity

c. Risks: overpricing and underpricing


2. Standard pricing - charging the same price in all countries

a. Drawbacks: lacks marketing orientation, difficult to implement

b. Advantage: firm won’t be blamed for price discrimination


3. Target return pricing - setting a target rate or return

a. Information needed: total investment, desired target return, unit cost, expected sales

b. Drawbacks: lacks marketing orientation, sales and cost estimates must be accurate


• Market-Oriented Methods - Focus on Both Market Conditions and Cost

1. Market-based pricing - may attract accusations of unfair pricing and encourage the practice of gray marketing

2. Strategic pricing-setting minimum standard price while giving local managers freedom to charge more

Strategic Issues in Global Strategic Issues in Global PricingPricing

• Managing Price Escalation - Increased Cost Due to international Product transfers

1. Ship components, assemble locally

2. Downsize

3. Shorten distribution channel

4. Increase overall productivity


• Transfer Pricing - Price Charged for Goods Transferred Intraorganizationally

• Exchange Rate Fluctuations - Must Be managed to Control Gray Marketing and Accusations of Dumping


• Gray marketing or Parallel Imports - Buying in Low-Price Countries, Selling in High-Price Countries

1. Causes: market-based pricing and exchange rate fluctuations

2. Remedial measures: narrow price differential, differentiate product


• Dumping - Selling at Price Below Normal Value in Export Market

1. Sporadic - to reduce surplus inventory

2. Predatory - to drive out competitors, to gain market control

3. Persistent - high prices in protected markets,low in competitive markets

Terms of PaymentTerms of Payment

• EXW (Ex Works) - For Goods at Point of Origin

• FAS (Free Alongside Ship) - For Goods Delivered Alongside Vessel

• FOB (Free on Board) - For Goods Aboard Vessel

• C&F (Cost and Freight) - For Goods at Overseas Port

Terms of PaymentTerms of Payment

• CIF (Cost, Insurance, Freight) - For Goods at Point of Debarkation

• CPT (Carriage Paid To) - same as C&F for Nonwater Transportation

• CIP (Carriage and Insurance Paid To) - Same as CIF for nonwater Modes

Modes of PaymentModes of Payment

• Cash in Advance

• Open Account - Payment for Goods at Future Date

Modes of PaymentModes of Payment• Letter of Credit - Issued by a Bank

1. Revocable - can be altered by buyer after issuance

2. Irrevocable - cannot be altered without an agreement between the buyer and the seller

3. Confirmed -seller assured of payment by seller’s bank

4. Confirmed Irrevocable

Modes of PaymentModes of Payment

• Draft or Bill of Exchange - Negotiable Instrument

1. Sight ---payable upon presentation

2. Time ---payable within specified period

3. Date - payable on specific future date

Modes of PaymentModes of Payment• Forfating - seller Paid by Bank, Not Buyer

• Countertrade - Payment in Whole or in Part by Goods or Services

1. Barter - no money changes hands

2. Counterpurchse - goods purchased from each other with cash

3. Compensation deals - payment in both cash and goods

4. Buyback arrangements

Chap 08Chap 08

Global Logistics Channels

GLOBAL LOGISTICS GLOBAL LOGISTICS CHANNELSCHANNELS

• Overview

• Moving raw materials and finished products from one country to another creates challenges unique to global distribution

Features of Global LogisticsFeatures of Global Logistics

• Global Flow of Materials - Components Moved Elsewhere for Assembly

• Global Distribution of Products - Finished Products Moved to Final Markets


• Functions of the Global Distribution Channels Can Include

1. Collect, analyze, and transmit information

2. Initiate and maintain contacts with buyers

3. Receive, process, and execute orders

4. Arrange shipping, insurance, and delivery

5. Take title to goods

6. Make the sale


• Channel Intermediaries Include 1. Merchant middlemen - take title and assume risks

2. Agent middlemen - do not take title• Goals of Channel Management

1. Efficiently move products from home country to host country

2. Deliver satisfaction t final customers competitively

The Direct Channel of Global Distribution - The Direct Channel of Global Distribution - Dealing directly with Overseas Middlemen or Dealing directly with Overseas Middlemen or ConsumersConsumers

• Host Country Distributors Are Merchant Middlemen

1. Buy from firm, sell to retailers or final consumes

2. Often enjoy exclusive rights for product or region

3. It is a long-term commitment - choose carefully

4. Robinson listed provisions of what to include in the contract


• Host Country Retailers Are Merchant Middlemen

1. Buy from firm, sell to final consumes

2. Japanese retailers - greater in number, serve fewer customers than U.S. counterparts

3. International retail outlets in the rise


• Import Jobbers Are Merchant Middlemen in Host Country

1. Buy from firm, sell to intermediaries or final consumers

2. Do not have exclusive territories

3. Firm may employ several in one country


• Manufacturer’s representatives are Agent Middlemen

1. Do not take title but represent firm

2. Choose carefully - often difficult to terminate relationships

• Consumers - No Intermediaries

The Indirect Channel of Global The Indirect Channel of Global Distribution -Relying on Home-Country Distribution -Relying on Home-Country IntermediariesIntermediaries

• Export Drop Shippers

1. Take orders from buyer and tell seller to ship to buyer

2. Buyer pays drop shipper who pays firm

3. Do not hold inventories, offer minimal promotional help


• Export Merchants

1. Buy from firm, sell abroad

2. Assume risk

3. Advantage to firm: easy to establish marketing presence

• Export Trading Companies (ETCs) Can Act as Export Department for Firm or Take Title to Products


• Manufacturer’s Export Agents (MEAs) Are Agent Middlemen

1. Represent firm and provide selling services

2. Use own name, not the firm’s

3. Services are specified in contract


• Export Management Companies (EMCs) Are Agent Middlemen

1. Provide extensive marketing services

2. Earn commission, or salary, or work on retainer


3. Advantages

a. Are helpful in markets where firm has little experience

b. Require less investment (financial and personnel) in market


4. Disadvantages

a. May not make necessary investments

b. May demand startup costs

c. May underrepresent firm

d. reduce gross margins, impede customer communications, hinder market assessment


• Export Brokers Are Agent Middlemen

1. Work for fee or commission

2. Relationship is sporadic


• Webb-Pomerence Association

1. U.S. firms can legally combine resources to expand exports

2. Cannot reduce U.S. competition by doing so

3. Association performs functions for members

Designing a Distribution Channel Designing a Distribution Channel Within a Host Country - Important Within a Host Country - Important FactorsFactors• Consumer Characteristics - Know Where ,

When, What, How and Why They Buy

• Product Characteristics Influence Channel Decisions

• Market Characteristics

1. Assess strengths of existing distribution structure

2. Adapt to local conditions as needed


• Channel Costs 1. Development costs - initial outlay

2. Maintenance costs - operation expenses

3. Level of customer service directly related to cost

• Coverage - Concentrated Within Major Cities or Spanning the Whole Country

Managing Channel Alliances - Managing Channel Alliances - Relationships EvolveRelationships Evolve

• Communicating with Channel Members

1. Communicate goals to them

2. Receive feedback from them

3. Employ telecommunications technology to achieve goals


• Motivating Channel Members

1. Offer training

2. Provide promotional displays

3. Participate in cooperative advertising


• Controlling Channel Members

1. Develop performance criteria

2. Evaluate performance against criteria

3. Take corrective actions if needed

4. Design system for timely attention to channel performance


5. Challenges for effective control

a. Reliable performance data may be lacking

b. cost of gaining data may exceed benefit

c. Changes in environment may outdate criteria

Evaluating Channel Performance Evaluating Channel Performance - Measurement Criteria- Measurement Criteria

• Sales Analysis - Actual Versus Expected

• Level of Service - Does It meet Consumer Needs?

• Level of Inventory - Is it Adequate t Meet Demand?

Chap 09Chap 09

Global Promotion Strategies

GLOBAL PROMOTION GLOBAL PROMOTION STRATEGIESSTRATEGIES

• Overview

• Marketing communications include advertising, sales promotion, personal selling, and public relations. When communicating with publics in more than one country, firms must work within the limitations of each market to maximize their promotional objectives.

Elements of the Communication Elements of the Communication ProcessProcess• Sender

• Encoding

• Message

• Medium of Transmission

• Receiver

• Decoding

• Response

• Feedback

• Noise

Global Advertising - Any Paid Form of Global Advertising - Any Paid Form of Nonpersonal communication Where the Nonpersonal communication Where the Sponsor Is IdentifiedSponsor Is Identified

• Often Controversial

• Benefits Derived from Advertising

1. Economic

a. Sales increase

b. Production increases

c. Per-unit cost of product goes down - economies of scale

Global Advertising - Any Paid Form of Global Advertising - Any Paid Form of Nonpersonal communication Where the Nonpersonal communication Where the Sponsor Is IdentifiedSponsor Is Identified

d. Price decreases

e. Sales increase further

f. Competition increases - yielding higher productivity and better product quality

2. Social

a. Employment is generated

b. Higher standard of living

Planning an Advertising Campaign - Planning an Advertising Campaign - Specify Objectives; Then Decide OnSpecify Objectives; Then Decide On

• Advertising Message

1. Standardize when country markets are similar

2. Adapt when they are different

3. Avoid taboos of target market - don’t offend


• Budget and Allocation Based on Internal and External Conditions

1. Internal conditions

a. management orientation

b. Advertising objectives

c. Resources available


2. External conditions

a. Governmental regulations

b. Competitors’ advertising strategies

c. Market attractiveness

d. Media restrictions


• Media Options and Country Characteristics - Effectiveness Versus Economy

1. Television

a. Developed countries (DCs) - countrywide availability

b. LDCs - concentrated in major cities, per capita ownership of TVs is lower

c. Limitations: ads may be bunched, broadcasting times vary, ads regulated


2. Radio

a. DCs - popularity on the rise, many program options available

b. LDCs - good medium to reach uneducated urban and rural customers

3. Magazines


4. Newspapers

a. Advantages: fast and economical

b. Disadvantages: some LDCs don’t compile demographic data; they have space limitations and content specifications


5. Direct mail

a. DCs - more common

b. LDCs - limited opportunities, lack of reliable lists, undependable delivery, low literacy rates

6. Catalogs - limited to DCs for same reasons as for direct mail


7. Facsimile - controversial

8. Videos

a. Time not limited to 30- or 60- second slots

b. DCs - whole video can be an ad

c. LDCs - movie d\videos contain ads

9. Cinema - these ads more common in LDCs

10. Billboards - all countries


• Advertising Regulations - Know Them and Adapt Message Accordingly

• Agency Selection

1. Global agency

2. Local agency

3. Combination of both

Global Sales Promotions - Short-Global Sales Promotions - Short-Term Efforts to Increase SalesTerm Efforts to Increase Sales

• Consumer Sales Promotion Techniques - Can Foster Long- Term Objectives

1. Coupons - maintain current customers, attract new ones

2. Rebates - maintain current customers, attract new ones

3. Free samples - encourage new users by eliminating cost

4. Mail-in premiums


5. In-pack premiums - promotional benefit packaged with the product

6. Bonus packs - more product for the same price

7. Trading stamps - increase store patronage

8. Contests and sweepstakes - enhance name recognition and stimulate sales


• Trade Sales Promotion Techniques - Persuade Channel Members to Carry Products or to Increase Sales

1. Sales contests - increase sales

2. Price-off offers - push new products or move large quantities

3. Advertising allowances


4. Display allowances

5. Free goods

6. Push money - money to carry and to push products

Global Personal Selling - Global Personal Selling - Keeping Buyers Happy, the Firm Keeping Buyers Happy, the Firm Informed Informed • The Personal Selling Process

1. Panning: what, how, when

2. Prospecting: who

3. Preparing: what buyers need, competitors offer


4. Selling

a. Approaching customer

b. Making presentation

c. Answering questions

d. Closing sale

5. Following up - establishing solid link


• Managing the Global Sales Force

• Sales Force Compensation

1. Straight salary

a. Advantages: sales force security, easy to administer

b. Disadvantage: lower sales if unmotivated sales force


2. Straight commission - fixed percentage or varying percentage

a. Advantage: encourages performance

b. Disadvantage: salespeople may stop with quotas

3. Combination salary and commission

Global Public Relations - Tools Global Public Relations - Tools for Building a Favorable Imagefor Building a Favorable Image

• Employee Relations - Create Favorable Ambassadors to the Community

• Customer Relations - Show Firm Cares About Customers

• Press Relations - Keep Shapers of Public Opinion on Firm’s Side

• Government Relations - Be a Good Citizen

Chap 10Chap 10

Global Business Involvement

GLOBAL BUSINESS GLOBAL BUSINESS INVOLVEMENT: MARKET INVOLVEMENT: MARKET ENTRY STRATEGIESENTRY STRATEGIES

• Overview

Entry strategies vary in terms of their advantages, disadvantages, and levels of involvement. The marketing options open to firms are in part determined by mode f entry.

Entry StrategiesEntry Strategies

• Exporting --Historically Most Popular

1. Types

a. Direct - firm handles all tasks to sell within host country

b. Indirect - firm delegates the tasks to an intermediary


2. Advantages

a. Minimizes political risk

b. Useful when market potential is hard to assess

c. Offers channel flexibility

d. Prepares firm for greater involvement

e. Offers ease in market withdrawal


3. Disadvantages

a. Exchange rate fluctuations and governmental intervention can affect earnings

b. Lack of market presence can affect response time

c. Loss of marketing control can affect corporate image


• Licensing - Payment of Fee or Royalty for Use of Anything of Value

1. Advantages

a. To firm, cost effective

b. To importing country, brings technology and managerial expertise


2. Disadvantages

a. Can restrict firm’s full realization of market potential

b. Can create third market competitors

c. Can result in loss of control over technology and product quality

d. Can result in conflicts between parties


• Franchising - Payment of Fee and Royalty in Exchange for Anything of Value Plus Operational and Managerial Help

1. Advantages: same as for licensing

2. Disadvantages: same as for licensing


• Contract Manufacturing - Contractual Partner manufactures Parts or Product for Firm

1. Advantages

a. Firm can focus exclusively on marketing

b. Economical means of expansion


2. Disadvantages

a. Partner may turn competitor

b. Loss of control over manufacturing

c. Products may not always be available on time


• Management Contracting - Selling Managerial or Technical Expertise

1. Advantages

a. Utilizes excess managerial talent

b. Establishes contacts in host country

c. Offers ease of remitting consulting fees

d. Provides resources t its nearby operations

2. Disadvantages: limited duration may necessitate withdrawal from country


• Turnkey Operations - Complete the Project Before Turning It Over to Owner

1. Advantages: projects are large, long-term, an profitable

2. Disadvantage: outcome is more uncertain over longer period of time


• Foreign Direct Investment

1. Joint ventures (JVs) - partners share ownership, risk, profit, and control

a. Between foreign-owned firm and privately owned local firm

b. Between foreign-owned firm and local state firm or government

c. Between several foreign-owned firms with no local participation


2. Wholly-owned subsidiaries (WOSs)

3. Advantages of both JVs and WOSs

a. Greater control

b. Entry into closed markets

c. Potential for vertical integration

d. Access to supplies

e. Ability to respond to competitive challenges


4. Disadvantage of JVs: potential for disagreements among partners

5. Disadvantage of WOSs: greater risk


• Strategic Alliances - Cooperation Between Firms Without creating a New Entry

1. Advantages

a. market access

b. Shared R&D expenses, resources, and risks


2. Disadvantages

a. Potential to lose competitive edge

b. Possible ineffectual communications among partners from different cultures

Factors Influencing Entry Factors Influencing Entry StrategiesStrategies

• Internal Conditions - Specific to the Firm

1. Objectives - what firm wants to achieve in relation to the product

2. Management orientation - biases affect entry strategy decisions

3. Resources - impose constraints that affect entry strategies

4. Type of product - what strategy best fits the characteristics of the product


• External conditions

1. Market potential - which strategy will maximize market potential

2. Competitive environment - existing and expected


3. Home country regulations - affect how and where firm can sell

4. Host country regulations - affect entry options

5. Political risk - high risk favors less involvement; low risk favors more

Stages of Business InvolvementStages of Business Involvement

• The International Product Life-Cycle Hypothesis

1. New-predate stage: manufactured at home, some exports to developed countries (DCs), domestic sales dominate, no competition, high price, patent protection

Stages of Business InvolvementStages of Business Involvement

2. Maturing-product stage: DC demand rises, increasing exports yield to production in DCs, domestic exports decline, competition increases, prices fall, DCs produce for selves and export

3. Standardized-product stage: fierce price competition, production shifts to developing countries, they start exporting to DCs who become net importers

Chap 11Chap 11

Strategic Global

STRATEGIC GLOBAL MARKET STRATEGIC GLOBAL MARKET MANAGEMENTMANAGEMENT

• Overview

The nuts and bolts of strategies deal with when, where, how, why, and by whom the necessary actions are performed to achieve a firm’s objectives

Strategic AnalysisStrategic Analysis

• Strengths and Weaknesses

1. Identify key success factors specific to a given business

a. Technology - turning concepts into products

b. Marketing - ability in product, price, place, and promotion


c. Information management - the acquisition an use f information

d. management skill - decision making and behavior of managers

2. Rate self on key factors in relation to competitors


• Opportunities and Threats - Existing and Potential

1. First identify; then rank order

2. Key areas: customers, special-interest groups, competitors, governments, technologies, markets

StrategiesStrategies

• Product-market Growth matrix - Four Basic Growth Strategies

1. Market Penetration--use existing products to penetrate existing markets

2. Product development--sell new or adapted products in existing markets

3. Market development--sell existing products in new markets

4. Diversification--introduce new or adapted products into new markets


• Strategic Business Unit (SBU) Portfolio Strategy Using the Boston Consulting Group’s Growth-Share Matrix

1. Stars: high-growth market, high market shares

2. Problem children: high-growth market, how market shares

3. Cash cows: low-growth market, high market shares

4. Dogs: low-growth market, low market shares


• Corporate Competitive Strategy--Six Alternatives Based on Scope of Operations and Levels of Market Penetration

1. Global high-share strategy --for high market share using standardized products

2. Global niche strategies--to gain global presence with specialized products


3. Regional high-share strategies -- for high market share within a region

4. Regional niche strategies -- for specialized markets within a region

5. National high-share strategies--high market share within a country

6. National niche strategies--for specialized markets within a country

Strategic PredispositionsStrategic Predispositions

• Ethnocentrism--Basing decisions on Home Country values and Interests

• Polycentrism--Basing Decisions on the Values of Each Country Where Firm Operates

• Regiocentrism--Basing Decisions on Values of a Specific Region

• Geocentrism--Basing Decisions on Worldwide Opportunities

Some Global Strategic Some Global Strategic ConsiderationsConsiderations

• Production Location and Souring --Don’t Base Decisions in Cost alone

• The Double Squeeze--newly Industrialized countries Compete with DCs in Low- and High-Value-Added Products

Some Global Strategic Some Global Strategic ConsiderationsConsiderations

• Business and Politics--Government Influences Its Firm's Competitive Advantage

• Post-Marketing Concerns--Satisfying Consumers Within Environmental Constraints and in Harmony with Special-Interest Groups

Chap 12Chap 12

Ethics and Global Marketing

ETHICS AND GLOBL ETHICS AND GLOBL MARKETINGMARKETING

• Overview

Ethics is needed for long-term success. Internal and external forces encourage firms to become ethical global citizens. Management strategies, codes of conduct, ethical philosophies, and decision-making checklists are some of the tools firms are using to foster ethical actions

Why Ethics?Why Ethics?

• Gellerman: Manages Rationalize Unethical Actions

1. It is legal (ethical)

2. It is in our interest (mine, company’s)

3. We won’t get caught

4. The company will back me on this

Why Ethics?Why Ethics?

• Cooke: Fourteen Signs of Ethical Risk• Ethics Is Good for Long- Term Survival• Sims’s Strategies for Promotion Ethical

Behavior

1. CEO should encourage it

2. Develop formal process to reinforce it

3. Management’s philosophy should institutionalize it at all levels

Ethical PhilosophiesEthical Philosophies

• Utilitarianism

1. Focuses on consequences of action

2. Strives f r greatest good for greatest number of people

3. But what constitutes a society?


• Egoism

1. Focuses on consequences of action

2. Strives for greatest good for oneself

3. Inherent weaknesses

a. Would not take stand against blatant infractions

b. Cannot resolve conflicting interests of two or more parties


• Deontology

1. Focuses on universal principles of right and wrong

2. Motives and character of actor more important than consequences of action


• Relativism

1. Right and wrong are culture specific -- no universal rules

2. Can be used to defend actions harmful to customers in other countries

Ethical Codes for Marketing --How Some Ethical Codes for Marketing --How Some Firms Help manages Ask the Right Questions Firms Help manages Ask the Right Questions Before Making DecisionsBefore Making Decisions

• Codes of Conduct Range from General to Specific

• Seven- Step Checklist for Ethical Decision making

1. Recognize and clarify dilemma

2. Get the facts

3. List the options

Ethical Codes for Marketing --How Some Ethical Codes for Marketing --How Some Firms Help manages Ask the Right Questions Firms Help manages Ask the Right Questions Before Making DecisionsBefore Making Decisions

4. Test each: Is it legal? right? beneficial ?

5. Make decision

6. Double check: How would I feel if my family found out? What if the paper found out?

7. Take action

Some External Factors Encouraging Some External Factors Encouraging Ethical Consideration by ExecutivesEthical Consideration by Executives

• Information Technology -- Markets Are not Isolated; What Happens Here Is Reported There

• Visible Destruction of Environment Results from Unethical Practices

Some External Factors Encouraging Some External Factors Encouraging Ethical Consideration by ExecutivesEthical Consideration by Executives

• Special- Interest Groups Are Gaining Power to Promote Ethical Corporate Behavior

• Market Forces Favor Ethical Companies in the Long- Run

Global Marketing By Usman Waheed +923006641921 Chap 01 Global Marketing.

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