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Chapter 8 Global Marketing

Chapter 8 Global Marketing. The marketing mix in a global context. Specifications Size / Packaging Product launch. Standardization/Adaptation. PRODUCT. Waterfall/Sprinkle. High End/Low end Same across the world/Country segment specific. Target segments Value proposition.

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Chapter 8 Global Marketing

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  1. Chapter 8 Global Marketing

  2. The marketing mix in a global context • Specifications • Size / Packaging • Product launch • Standardization/Adaptation PRODUCT • Waterfall/Sprinkle • High End/Low end • Same across the world/Country segment specific • Target segments • Value proposition POSITIONING • Global brands/Local Brands • Communication messages • Single/multiple agencies • Name • Image • Advertising BRAND PRICE • Global Pricing/multiple • Mass vs Specialized • Logistics • Single Channels/Multiple Channels • Centralized/ Decentralised DISTRIBUTION • Call centres • After sales SERVICES • Centralized/ Decentralised

  3. Marketing Pure Global Adaptive Usage Adaptive Product Fully Adaptive Same Different Different Product Same Same Different Same Different Message Customer Group Same Same Different Different Usage Same Different Same Different Same Different Distribution Different Same Same Different Different Brand Same Different Different Different Price Same Apple Swatch Volvo Mc Donald’s Unilever 3

  4. What determines the choice? Supply Demand • Costs (economies of scale) • Competition • Company’s capabilities • Company’s identity and brand integrity • Market segmentation across countries Existence of a significant global segment across countries • Market segmentation within countries Existence of a significant differentiated segment within countries

  5. Market segmentation across countries • Large global • accounts for: • Finances • Insurances • Telecom • IT, consulting • Sourcing, logistics • Commodities • Capital equipment GLOBAL Cosmopolitan elites • Most consumers • for durable goods: • Cars • Washers, • Cookers REGIONAL • Nearly all companies for: • -Travel services and logistics • (unless global firms) • Some intermediate products • The vast majority of the population • for most of: • Food • Basic Services (Banks, Telecom,..) • News, entertainment • Nearly all companies for: • - Ancillary supplies • Specific localised services: • taxation, etc.. • The majority ofSMEs LOCAL Business-to-Business Segments Consumers Segments

  6. Global Segment Existence of a significant global segment across countries Homogeneous needs and behaviour

  7. Multiple types of global segmentation CITIBANK CONSUMER BANKING SWATCH USA Everywhere UK Hong Kong VOLVO HEINEKEN Scandinavia Everywhere Elsewhere

  8. Top End • High End: • Differentiated products • Functionalities and Performances • Less Price sensitive Lower High End Higher Low End • Low End: • Undifferentiated Products • Mass Production and distribution • Price sensitive Lower End Top End Top End Lower Top End Higher End Higher Low End Miiddle Class Lower High End Higher Low End Lower End Lower End Developing World Segmentation Industrialized Countries Segmentation • Lower End dominates • Rising middle class but still relatively small • Tiny highly wealthy segment • Diverse segmentation • Middle Class Markets dominates Segments within countries Generic Segmentation

  9. Top End • High End: • Differentiated products • Functionalities and performances • Less price sensitive Lower High End Higher Low End • Low End: • Undifferentiated products • Mass production and distribution • Price sensitive Lower End Positioning and segments choice within countries • Disadvantages • Lower volume • Advantages • Higher margin • Higher switching costs • Advantages • High volume • Cost based advantages • Disadvantages • Lower margin • Price rivalry

  10. COCA COLA & PEPSI BOTTLED WATER PEANUT BUTTER ICE CREAM COFFEE BUTTER YOGURT BEER CANNED MEAT CHOCOLATE COOKIES DESSERT CHEESE BREAD FROZEN DINNERS SAUSAGES 0 1 2 3 4 5 6 7 8 9 10 Unilever Survey The physical product could be sold successfully in each European country without modification The physical product would have to be completely different to be sold in each European country

  11. Launch in country of origin Launch in countries , Region A Launch in countries , Region B Launch in countries , Region C Time Product Launch Sprinkle Waterfall Launch in country of origin Launch in countries , Region B Launch in countries , Region C Launch in countries , Region A iPad 3: Sales, Launch in 25 Countries

  12. Common features of global brands (John Quelch*) Most of the time • Consistent positioning • Address similar customer needs worldwide • Easy to prononce • Be present geographically in a balanced way Sony Intel Swatch Nike Sometimes • Product category focus (Mc Donald, Coke, Imac) • Strong in home market (Budweiser, Malboro ) • Value of country of origin ( McDonald’s, Coke) • Corporate name (Disney, Sony, Gillette) *John Quelch, « Global Brands:Taking Stock, Business Strategy Review,1, 1999

  13. Nestlé Branding Tree 7,500 Local brands Responsibility of local markets Texicana Brigadeiro Rocky Solis Mackintosh Vittel Contadina Stouffer’s Herta Alpo Findus 140 Regional strategic brands Responsibility of strategic business unit and regional management KitKat Polo Cerelac Baci Mighty Dog Smarties After Eight Coffee-Mate 45 Worldwide strategic brands Responsibility of general management at strategic business unit level Nestle Carnation Buitoni Maggi Perrier 10 Worldwide corporate brands Source: Nestlé:Andrew Parsons, « The Vision of Local Managers », The McKinsey Quarterly,2, 1996

  14. Coke’s 232 Brands • Brazil • Argentina • Japan • Chile • Ecuador • India • China • El Salvador • Mexico • Taiwan • Philippines • South • Africa • Germany • Japan

  15. Global Brands Disadvantages Avantages • Concentration of resources • Targetted impact • Cross border learning • Motivation for recruitment • Quality management • Over standardization • Ignorance of level of • market development • Skimming the surface • Rigid implementation

  16. Country B Country A Profit Functions Demand Functions Global Pricing Disadvantages Advantages • Avoid arbitrage • Protect brand integrity • Facilitate the servicing of global customers Sub-optimization

  17. Channels GLOBAL SALES FORCE LOCAL AGENT Civil aircraft Large projects GLOBAL/ REGIONAL SALES FORCE LOCAL DISTRIBUTOR Machinery Computers LOCAL SALES FORCES & DISTRIBUTION CHANNELS Fast moving Consumer goods Sales Distribution Many customers (High Dispersion) Few customers (High Concentration) Many customers (High Dispersion) Customer base Few customers (High Concentration) Frequency of purchase Low (Once in a while) High (Often) Low (Once in a while) High (Often)

  18. Global solution selling The capability for a company to deliver to a customer a customised product and services integrating capabilities spread across different subsidiaries worldwide. Financial engineering • BANKS Solution to strategic, managerial, technical problems • CONSULTING • INFORMATION TECHNOLOGY Customised applications of EDP, communication problems Turn key projects • ENGINEERING

  19. Corporate Legal and IT: Dusseldorf Subsidiary generator: Manchester Subsidiary turbine: Pittsburg Customer: Tianjin Project leader: Hong Kong Subsidiary regulation: Sydney Global solution selling: a power plant project in China

  20. Conclusions (1) • Trends towards global marketing • However need to facilitate regional/local adaptation of certaincomponents of the mix (communication, pricing, channels ) • Global marketing management requires: • - Sharing of knowledge across borders • - Institutionalization through: • Global Brand Team ( Co-ordination of brand managers) • or Global Brand Manager ( e.g. IBM’s “brand stewards”) • or Global Management Team ( e.g. P&G’s categories team) • or Brand Champion ( Nestlé) • - Common information and planning tools David Aaker and Erich Joachimsthaler, The Lure of Global Branding » Harvard Buisness Review, Nov-Dec 1999

  21. Conclusions (2) Marketing at the bottom of the pyramid 4 billion people live with less than $4 per day 1 billion people live with less than $1 per day. Source: Prahalad, C. K. and Stuart Hart (2002), "The Fortune at the Bottom of the Pyramid," Strategy+Business, 26.

  22. Differences between Traditional Middle Class strategies and Bottom of the Pyramid strategies Traditional Middle Class Bottom of the Pyramid • Value pricing based on differentiation and segmentation • Products obsolescence and renewal • Products, services functionalities and packaging are adaptation of industrialized markets • Advertising on mass TV and media supports • Products designed on ‘regular” environments • Urban areas focus • Transfer of technology • Use of skilled resources • Build supplies chains similar to industrialized world • Find new price-performances relationships leading to quality at low prices • Products built to last • Products, services functionalities packaging are “reinvented”to fit local conditions • Communication and advertising rely less on mass advertising and more on educational campaigns using government programs and non government organizations. • Products designed on “hostile environments. • Rural focus • Hybrid technology: combination of advanced and adaptation • Deskill the work process • Adapt supplies chains to local conditions 23

  23. Conclusions (2) Marketing at the Bottom of the Pyramid Share of purchases by low-income and middle consumers in clothing and grocery de Abreu Filho, Gilberto Duarte, Nicola Calicchio, and Fernando Lunardini (2003), "Brand Building in Emerging Markets," McKinsey Quarterly (2), 6.

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