DESIGNING AND MANAGING GLOBAL

MARKETING STRATEGIES

Presented by:-

Shreekanth Dangi

Global firm: Global firms plan, operate, and coordinate their activities on a worldwide basis.

Global industry: A global industry is an industry in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions

Competing on a Global Basis

Reason for globalization

1. Global firms offering better products or lower prices can attack the company's domestic market. The company might want to counterattack these competitors in their home markets.

2. The company discovers that some foreign markets present higher profit opportunities than the domestic market.

3. The company needs a larger customer base to achieve economies of scale.

4. The company wants to reduce its dependence on any one market.

5. The company's customers are going abroad and require international servicing.

Risks of globalization1. The company might not understand the foreign customer preferences and fail to offer a competitively attractive product.

2. The company might not understand the foreign country's business culture or know how to deal effectively with foreign nationals.

3. The company might underestimate foreign regulations and incur unexpected costs.

4. The company might realize that it lacks managers with international experience.

5. The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate foreign property.

Major Decisions in International Marketing

Deciding whether to go Abroad

Deciding which markets to enter

Deciding how to enter the market

Deciding on the marketing program

Deciding on the marketing organization

Deciding whether to go Abroad

1. Huge Foreign Indebtedness.

2. Unstable government/ Political instability.

3. Foreign exchange problems.

4. Foreign government entry

requirements/bureaucracy.

5. Tariffs and other trade barriers.

6. Corruption.

7. Technological pirating.

8. High cost of product and communication

adaptation.

9. Shifting borders.

Deciding which markets to enter

1.Define Objectives and Policies.

2.Few countries or many? 

3.Expansion?

4.Type of country to enter.

5.Regional Free Trade Zones- European

Union, common currency.

6.Evaluating Potential Markets –

Neighbouring countries – language,

laws, and culture.

Deciding how to enter the market

Indirect exporting

Direct exporting

Licensing

Joint ventures

Direct investment

Amount of commitment, risk, control, and profit potential

Indirect export

1. Working through independent international marketing intermediaries

2. Domestic based export merchants - buy manufacturer’s products and then sell them abroad

3. Domestic based export agents- Seek and negotiate foreign purchases for a commission

4. Advantages- Less investment and less risk

Direct export

Companies handle their own exports

Involves greater investment and risk

Higher potential return

Ways of carrying on direct export:

-Domestic based export department

- Overseas sales branch or subsidiary

- Travelling export sales representative

- Foreign based distributors or agents

Licensing

A firm (licenser) gives another firm (licensee) right to produce and market its product in specific country or region in return for royalties

Licensee produces product in its home market

So, entry barriers that licenser would have encountered are eliminated

Eg: Mitsubishi and Kawasaki heavy industries- Douglas F-15 fighter planes

Licensing(contd….)

Advantages:

Licenser gains entry at little risk

Licensee gains production expertise or a well known product or brand name

Disadvantages:

Licenser has less control over licensee

Poor job by licensee tarnishes licenser's reputation

Franchising

1.A form of licensing

2.Gives franchisee right to adapt an entire way of doing business in the host country

3.Eg: McDonald’s- a major franchiser

4.A local franchisee might buy rights to use McDonald’s logo, menu items, production process and even formula for secret Big Mac Sauce

Joint venture

1. Foreign investors joins with local investors to create Joint venture company

2. Share ownership and control. Eg: Procter and Gamble joint venture with Fater to cover babies bottoms in UK and Italy

3. Reasons for joint venture: Foreign firm lack financial, physical or managerial resources

4. Joint ownership as condition for entry 5. Drawbacks: Disagreement over investment,

marketing or other policies

Direct investment Direct ownership of foreign based assembly or manufacturing

facilities

Foreign company buy part or full interest in local company or build its own facilities

Advantages:

Cost economies

Strengthens firm’s image in host country

Deeper relationship with government, customers, local suppliers and distributors

Firm retains full control over its investment

Disadvantages:

Firm exposes large investment to risk

Expensive to reduce or close down operations

Deciding on the marketing program

Standardized – marketing mix elements are std., so costs kept low. E.g. Nike, Pizza Hut/Macdonald.

Adapted – marketing mix elements adjusted as per the target market. E.g. Pizza Hut/Macdonald.

Marketing mix

Straight extension – product is introduced as it is. E.g. Consumer electronics, machine tools, cameras, etc.

Product adaptation – alter the product to meet customer preference/local conditions - regional/country/city/retailer version + local beliefs/superstitions, e.g. Feng Shui.

Product invention – Backward invention - reintroduce earlier product forms. Forward invention – Create new products. Services E.g. Insurance, credit cards, consultancy firms.

Product

Marketing mixPromotion

Communication adaptation – Ads and promotion campaigns for home market + local market. Dual adaptation – both product and communicationadaptation.1. One message - language, colours, name,

headlines can differ.2. Global theme, adapt copy - local.3. Global ad pool, select country-

appropriate ad.4. Sales promotion technique - local mgmt.

Marketing mixPrice

Strategies:Uniform price.Market-based price.Cost-based price.Transfer price – price charged to

subsidiary unit in the company. High price - to pay low income tax abroad. Low price - dumping.

Grey markets – same product sells at different prices geographically.

Marketing mixPlace

Place (distribution channels) Seller’s international marketing

headquarters Channels between nations Channels within foreign nations

Deciding on the marketing organization

Export departmentInternational division

Geographical organizations World product groups International subsidiaries

Global organization Bartlett and Ghoshal distinguish three organizational strategies: A global strategy treats the world as a single market. A multinational strategy treats the world as a portfolio of

national opportunities. A “glocal” strategy standardizes certain core elements and

localizes other elements.

REFERENCES

Marketing management by Philip Kotler and Kevin Lane Keller- 13th edition

Wikipedia.org

Thank you