Global Marketing

1. Global Marketing Chapter 15

2. Presentations on a country or a region(even a town/city in U.S.) some other subject in global business An especially good chance to discuss your homeor your ancestors’ home Up to 16 points extra on class participation grade Details available on web site Extra credit opportunity

4. The process by which the firm’s abilities, products, and services are brought to the attention of customers, then sold and delivered What is ‘Marketing?’

5. Global marketing requires thinking through the complete process • Even people who have done well in a marketing class tend to oversimplify it • Global marketing involves complexity at each step

6. Product Place (=‘Distribution Strategy’ in texts) Promotion (=‘Communication Strategy’ in texts) Price (Pricing Strategy) ‘4 Ps’ of Marketing

7. Choosing a Strategy

8. Important to determine when product standardization is appropriate in an international market Firms mayneed to vary the marketing mix in each different country Globalization may be the exception rather than the rule in marketing, especially in consumer goods markets Firms with a global standardization strategy overall may still need to localize marketing a great deal The Globalization of Markets and Brands

9. Firms will change their product from country to country (localize) due to … Cultural differences Levels of economic development Product and technical standards Product & technical standards are mostly set by governments Sometimes even firms whose basic approach is global standardization or the international strategy must alter product for these reasons Product Attributes

11. Definition – “The course that goods take between production and consumption” physical path and legal title – Who buys the product from the maker and sells it to others closer to the final customer? Today we’re mostly considering how products get to final customer once they’re in a particular country Distribution (Place)

12. Shipping is one part of distribution But the core of the distribution challenge is identifying the people and companiesyou will work with and the processthrough which you will sell it to retailers, and through them to the final customer These people, companies, and processes for distribution are called marketing “channels”

13. If you’re selling on line, you still have to think about ‘place’ • How will people find your product in cyberspace?

14. Choice of the optimal channel for delivering a product to the consumer Depends on differences between countries Retail concentration – How many companies have major stores relevant to your product? Channel length – Do you sell directly to the retailer or through intermediaries? How many intermediaries? Channel exclusivity- Will people in the standard channels for your product consider buying from you? Distribution Strategy (Place)

15. Selling direct to foreign retailers or end users Often difficult But gives you control of the process Avoids risk of a lazydistributor Direct Selling 17-10

16. A distributor – a firm that buys from maker or a larger distributor and sells to a retailer or a smaller distributor (or sometimes to the final customer)

18. Need to provide a sales program Promotional materials, services, training of sales people, discounts for quantity, credit Don’t be quick to cut the base price Selling is complex everywhere – but even more so abroad

21. Communication Strategy (Promotion) • Defines the process the firm will use in communicating the attributes of its product to prospective customers Cultural barriers Source effects Noise levels

22. Push strategy emphasizes personal selling Requires intense use of a sales force Relatively costly Pull strategy depends on mass media advertising Can be cheaper for a large market segment Determining factors of type of strategy Product type and consumer sophistication Channel length Media availability Push Versus Pull Strategy

23. Pull strategy – typically used for Consumer goods Large market segment (e.g., personal computers) Mass communication has cost advantages Push strategy Industrial products or complex new products Direct selling allows firms to educate users Product Type and Consumer Sophistication

24. A combination of pull and push is needed for long or exclusive distribution channels common in Japan and some other countries Mass advertising is needed to generate demand to pull product through various layers Salespeople’s push working with distributors Push strategy is often especially important in countries with low literacy levels to educate consumers Channel Length

25. Pull strategy Relies on access to advertising media Common in developed nations A push strategy is necessary if.. Media availability is limited by law Most electronic media is state owned with ‘no commercials’ policy Media Availability

26. Changing values of currency Diversity of markets Costs of transportation, warehousing Tariffs, quotas Government regulations Distribution methods have to differ from one country to the next Pricing is much more complex in international business

27. U.S., Canada, much of Europe have concentrated distribution system with many big stores It is difficult to build huge stores in many countries So many buyers must be reached through long, complex channels – a ‘fragmented’system They typically buy at small stores within walking or public transit distance from home Small distributors serve the small stores Distribution systems result in ‘price escalation’

28. Price escalation Sell to retailer for $1.50 US production cost = $1 U.S. retailer sells for $2.25 Ship & sell to retailer in Canada for $1.60 Ship & sell to distributor in Japan Canada retailer sells for $2.40 Tariff = .05Shipping = .20Your cost=$1.25 Store in Japan has high costs, adds 60%, sells for $4.32 Big distributor buys for $1.875, takes 20% markup, sells for $2.25 Small distributor adds 20%, sells for $2.70

29. Government involvement – no consistency Some laws set minimum prices – to prevent ‘monopoly,’ Japan, Germany protect small stores Many prohibit selling below ‘cost’ Others set maximum prices

31. Prof. Theodore Levitt has argued that markets were becoming fully “globalized” – that is, the same everywhere He said people used to be very different from one country to the next, But they’ve become essentially the same with the spread of similar communications media similar government regulation Globalization of Markets?

33. There’s much truth in Levitt’s claim • Developed country markets have become much more similar • Proctor & Gamble no longer has to make different laundry detergents for different developed countries • People in poorer countries aspire to live like those in the rich countries, and they will often buy the same products

34. But big differences still exist in desires for most consumer goods • Products where differences are large include: • Foods • Cars • Cosmetics

35. If you can standardize, there are big advantages • You not only save money by producing in fewer, more efficient locations • You also have an organization that is easier and more efficient to run, because the rules are similar everywhere • Starbucks • Levi’s • Apple

37. Material below here is not required unless specifically mentioned in study guide

38. Benefits of a longer distribution channel Cuts selling costs when the retail sector is fragmented Longer channels can provide increased market access If channel quality is poor, a firm should consider what steps it could take to upgrade the quality of the channel This may include establishing its own distribution channel Choosing a Distribution Strategy

39. Three aspects of international pricing strategy Price discrimination Strategic pricing Regulatory influence on prices Pricing Strategy

40. Multipoint pricing strategy Two or more international firms compete against each other in two or more national markets A firm’s pricing strategy in one market may impact a rival in another market Kodak and Fuji Strategic Pricing

41. Experience curve pricing Firms price low worldwide to build market share Incurred losses are made up as company moves down experience curve, making substantial profits Cost advantage over its less-aggressive competitors Strategic Pricing

42. Antidumping regulations Selling a product for a price that is less than the cost of producing it Antidumping rules vague, but place a floor Competition policy Regulations designed to promote competition and restrict monopoly practices Regulatory Influences on Prices

43. Configuring the Marketing Mix Standards Differences Here Competition Distribution Economy Gov’t Regs Culture Product Attributes Pricing Strategy Requires Variation Here Communications Strategy Distribution Strategy