Global Marketing

1. Global Marketing Chapter 17

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 12 points extra on class participation grade Details available on web site Extra credit opportunity

3. A ‘Town Hall’ meeting May 3 One group of people at front are Nike executives Second group is activists critical of Nike The question: Should Nike change its approach to global sourcing? Audience plays roles of stakeholders Nike debate

4. 3-4 people required for each team Preference given to people whose midterm essays showed good critical thinking Extra credit – up to 8 extra points on second midterm The rest of us will prepare questions for the debate in groups April 26

6. The process by which the firm’s abilities, products, and services are brought to the attention of customers, then sold and delivered Much more than just advertising and selling What is ‘Marketing?’

7. Choosing a Strategy

8. Important to determine when product standardization is appropriate in an international market Firms mayneed to vary marketing mix in each different country Globalization may be the exception rather than the rule, especially in consumer goods markets and also, often, in industrial markets The Globalization of Markets and Brands

11. Kodak entered Russia in the early 1990’s Russian consumers had little knowledge Market for photography undeveloped No infrastructure for selling or processing Consumers were poor Kodak’s succeeds - growth rate 26% Sell lower-end film and cameras Built a distribution channel through franchising A clear, consistent marketing message Corporate image as firm that opposes corruption Low prices Kodak in Russia

12. Great franchise Lots of interest in U.S. What happened? AstroBoy

13. Refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways Segments can based on: Geography Demography Socio-cultural factors Psychological factors Market Segmentation

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

16. Cultural differences Levels of economic development Product and technical standards Mostly standards set by governments Product Attributes

18. 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 interested in how products get to final customer once they’re in a particular country Distribution

19. Shippingis part of distribution But more important is the companies and the process through which the product is sold to retailers to the final customer These companies and processes for distribution are called marketing “channels”

20. Choice of the optimal channel for delivering a product to the consumer Depends on differences between countries Retail concentration Channel length Channel exclusivity Distribution Strategy (Place)

21. 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

22. 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)

23. 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

25. 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

26. U.S., Canada, much or Europe have concentrated system It is impossible 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’

27. 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

28. 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

30. 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

31. 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

32. 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

33. Pull strategy Consumer goods Large market segment Long distribution channels Mass communication has cost advantages Push strategy Industrial products or complex new products Direct selling allows firms to educate users Short distribution channels Used in poorer nations for consumer goods where direct selling only way to reach consumers Product Type and Consumer Sophistication

34. Pull strategy Needed for long or exclusive distribution channels e.g. Japan Mass advertising to generate demand to pull product through various layers Push Strategy In countries with low literacy levels to educate consumers Channel Length

35. Pull strategy Relies on access to advertising media Common in developed nations Push strategy Media availability limited by law All electronic media state owned with ‘no commercials’ policy Media Availability

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

37. 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

38. 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

39. 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

40. 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