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Global Marketing Strategy

Global Marketing Strategy. Chapter. 10. Announcement. The cancelled class will be held during week 15 New date is June 6 th Same times as the other Thursdays.   The 8:00 will be in room 2-201 The 10:10 will also be in 2-201. The 2:00 will be in 5-201. Outline. The Global Marketer’s Mindset

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Global Marketing Strategy

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  1. Global Marketing Strategy Chapter 10

  2. Announcement • The cancelled class will be held during week 15 • New date is June 6th • Same times as the other Thursdays.  The 8:00 will be in room 2-201The 10:10 will also be in 2-201.The 2:00 will be in 5-201.

  3. Outline The Global Marketer’s Mindset Global Market Planning Global Market Segmentation Targeting Segments Global Product Positioning Global Segmentation-targeting-positioning (STP) Strategies 11-3

  4. The Global Marketer’s Mindset The typical context for globalized marketing is not the usual “close to customer” mindset. Rather, the point is usually to coordinate marketing activities across a wide variety of markets where the firm does business. A top-down approach easily leads to insensitivity towards local customers and local requirements, and conflicts with local subsidiaries. 11-4

  5. The Global Marketer Selling orientation: Typically, the global marketer sells what it makes (the product line is given), not makes what it can sell as the ideal marketer supposedly does. Standardization: global markets are becoming homogenized because of technology and communication advances. Standardization makes people’s behavior, habits and tastes more similar. 11-5

  6. The Global Marketer Coordination: Global marketing effort is by definition a coordinated effort across countries. Coordination means that what happens in one country market is made to depend on actions in other countries. Centralization: global marketing almost always involves centralization of decision making, which means the marketing is directed from the company’s home country and less autonomy for local subsidiaries. 11-6

  7. The Global Marketer’s Mindset Because of the natural inclination to ignore local variations in customer preferences and local requirements, global marketing can easily lead to mis-positioned products and inappropriate promotional appeals. It can also, of course, lead to local resistance and animosity, not good considering anti-globalization sentiments. The key is to strike the optimal balance between local adaptation and global efficiency. 11-7

  8. Global Market Planning The basic task: Allocate the marketing resources efficiently across products and markets Rule: The optimal allocation is where the marginal payoff is the same across products and markets. Needed: Data on sales, costs, and projected profitability. For each product and country. 11-8

  9. The BCG Portfolio Matrix BCG portfolio matrix was used to allocate resources between products, and extended to markets as well. (P. 278) The matrix subdivided a company’s products into four categories -- Stars, Cash Cows, Dogs, Question Marks based on market growth and market share Rule: Allocate funds from Cash Cows to Stars because the market is growing and further investments can yield good returns. Get rid of Dogs! Question marks?? Context = multiple products, one country market 11-9

  10. 11-10

  11. The GE/McKinsey Matrix Extends the BCG: Market Attractiveness is not only growth, but size, entry barriers, etc. Competitive Strength is not simply large market share, but brand strength, etc. Rule: Allocate funds to products in attractive markets where the firm’s competitive strength is high. Still: Multiple products, One country. 11-11

  12. Ford’s Country Matrix(Extending to multiple countries) For any one product, the portfolio matrix generalizes directly to several countries. Instead of “Star products,” you get “Star countries,” “Cash Cow country markets”, etc. Ex: Matrix of Ford tractors in European countries. Star countries: UK, Ireland, possibly Greece Cash cow countries: Belgium, Denmark Question mark country: Germany (average attractiveness and relatively weak competitive strength) Dog country: Sweden (low attractiveness and weak competitiveness) Then the portfolio can be extended by analyzing each product separately, for all country markets. 11-12

  13. 11-13

  14. Assessing country attractiveness and competitive strength Country attractiveness: For each product marketed in the country, forecast total market sales of the product category by trend analysis, analogy, or other established method. Assess role of country regulations, tariffs, and other entry barriers, political stability, etc. Competitive strength is a function of market share and relative strength of domestic and foreign competition. 11-14

  15. Global resource allocation Rule: Allocate funds to a given product-market combination, not just to one product everywhere, or one country market in all products. For example, product 1 might be supported in country A but not in country B. And country A might not get much support for Product 2. 11-15

  16. Conclusion of Global resource allocation To reap the benefits of global marketing the firm has to coordinate and control its marketing across the globe. Resources have to be directed toward the most promising products and markets. Quantitative data on products and markets can be used to determine how marketing resources should be allocated. The basic data involve measures of country-market attractiveness and competitive strength, for each product in the company product line and for each market covered. The implementation of global marketing requires considerable people skills and managerial flexibility to accommodate local variations that require adaptation. The numerical allocations provide the starting point for the necessary adaptations. 11-16

  17. Two-Stage Global Segmentation It is common to distinguish two stages of global segmentation 1.Macro-segmentation – the division of a number of countries into subgroups of more similar clusters 2. Micro-segmentation – the identification of local segments which are similar across the countries in a cluster. The micro-segmentation techniques used in local marketing are also useful in global segmentation 11-17

  18. Macro-Segmentation MACROSEGMENTATION – grouping countries on the basis of common characteristics deemed to be important for marketing purposes, e.g. data on: • Level of development • Rate of growth in GNP • Infrastructure • Political affiliation • Population size • Population character • Disposable income levels • Educational background • Primary languages 11-18

  19. Macro-Segmentation Cluster analysis • incorporate more than two criteria at a time and do an initial factor analysis before clustering the countries • clustering maps show a picture of which countries are similar and which are far apart 11-19

  20. Macro-Segmentation on Standard of Living and Religion 0 • SWE .9 • DEN NOR • • UKI FIN• .8 • AUS • NEZ ,7 • SWI .6 Factor III Standard of Living • NET • SOT .5 • GER • ISR • AUT .4 • BEL PUE • • JAP • FRA • CHI .3 • VEN • MAC .2 • SPA • BRA .1 PHI • TUR • • IND ITA• • PER • MEX 0 • COL • PAK • ARG • THI Protestant -.1 Catholic -.2 -.1 0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1.0 Factor VI Religion 11-20

  21. Diversification versus Focus Diversification versus Focus Strategy Diversification Strategy In developing a global strategy, some companies make a conscious effort to be a player in different countries and different market segments. Difficulties in one market segment or country can be offset by gains elsewhere. Focus Strategy Markets and segments can be given more attention and markets positions fortified. This is particularly advantageous when the country or segment competitive rivalry is intense. 11-21

  22. Targeting Segments The choice of which countries and which segment(s) to target involves an analysis of competitive intensity and projected profitability. Competitive Analysis Assess domestic and global competitors in each market and targeted segments Assess the commitment and resources of the competitors to selected segments Assess which customers are loyal to home country brands Assess its own competitive advantages (include FSAs & CSAs) 11-22

  23. Targeting Segments Profitability Analysis The basic computation involves forecasting sales in a segment and the market share that the firm can expect to achieve. These techniques were covered in the forecasting chapter 4. Further involves estimating revenues and costs of achieving those revenues. 11-23

  24. Global Product Positioning Product Positioning is the location of your product in the mind of your customer. Key positioning issues The degree to which the market is global Uniform Positioning means that products, brand names, marketing communications, and distribution channels are similar across countries to provide demand spillovers and cost efficiencies. 11-24

  25. Global Product Positioning Key positioning issues The stage of the product life cycle (the PLC) Positioning is impossible in the introductory stage because customers have not yet learned enough about the product to understand the attributes and form preferences Product positioning is particularly important in the mature stages of the PLC because customers have established preferences and know product features well 11-25

  26. Segmentation-Targeting-Positioning The typical way of approaching global marketing strategy is similar to the so-called S-T-P framework: 1. Segmentation – the splitting up of the total market into segments of more homogeneous subgroups. 2. Targeting – the selection of which one(s) of these subgroups the company should market its product to. 3. Positioning – exactly how the company should present the product to the target market(s) so its perception is most advantageous relative to competition. 11-26

  27. Global S-T-P Strategies Market Segmentation Cases Similar Segment A segment is basically universal, the same across countries Different Segment The segment is unique in each country, differs across countries Product Positioning Dimensions Similar Positioning Indicates a positioning which is uniform across countries Different Positioning Indicates that the positioning theme is adapted across countries. 11-27

  28. Global S-T-P Strategies Local Micro-Segment Similar Different IKEA Nike Similar Mobile phones Positioning Volvo Levi’s Different Pampers Honda Prelude 11-28

  29. Global Marketing Planning • Involves a sequence of five steps • Step 1: the systematic evaluation to industry driving factors conducive to globalization • Step 2: to evaluate the local situations in various countries • Step 3: to formulate the proposed global strategy • Step 4: to evaluate the proposed strategy and predict the likely effects of the strategy changes • Step 5: to sum up the positive and negative benefits for each local market to arrive at a net benefit from the proposed global strategy

  30. FOREVER 21 - 480 Stores worldwide

  31. http://v.youku.com/v_show/id_XMzIzMjI3NzA0.html • http://v.youku.com/v_show/id_XMzkzMjU5NDk2.html

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