Chapter 8

1. Chapter 8 Global Marketing Strategies Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

2. Chapter Overview 1. Information Technology and Global Competition 2. Global Strategy 3. Global Marketing Strategy 4. Regionalization of Global Marketing Strategy 5. Competitive Analysis Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

3. Introduction • On a political map, country borders are clear as ever. But on a competitive map, financial, trading, and industrial activities across national boundaries have rendered those political borders increasingly irrelevant. • Not only firms that compete internationally but also those whose primary market is considered domestic will be affected by competition from around the world. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

4. Information Technology and Global Competition • Today, we are observing the emergence of a gross information product, and it dwarfs the gross domestic product. • Electronic Commerce (E-Commerce) • Real-Time Management • Online Communications • “Internet” Organization • Faster Product Diffusion • Global Citizenship Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

5. 2. Global Strategy • Global Industry: • Those industries where a firm’s competitive position in one country is affected by its position in other countries. • The first question that faces managers is the extent of globalization of their industry. • Every industry has global or potentially global aspects. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

6. 2. Global Strategy (contd.) Industry Globalization Drivers (Yip, G. S., Total Global Strategy, Prentice Hall, 1992). Market Drivers Cost Industry Government Drivers Globalization Drivers Potential Competitive Drivers Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

7. 2. Global Strategy (contd.) • Industry Globalization Drivers (see Exhibit 8-1): • Market Globalization Drivers 1. Common customer needs 2. Global customer and channels 3. Transferable marketing 4. Lead countries • Cost Globalization Drivers 1. Global economies of scale and scope 2. Steep experience curve Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

8. 2. Global Strategy (contd.) 3. Global sourcing efficiencies 4. Favorable logistics 5. Difference in country costs 6. High product development costs 7. Fast-changing technology • Government Globalization Drivers 1. Favorable trade policies Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

9. 2. Global Strategy (contd.) 2. Compatible technical standards 3. Common Market Regulations 4. Government-owned Competitors 5. Government-owned Customers • Competitive Globalization Drivers • High exports and imports • Competitors from different continents and countries • Interdependent countries • Globalized competitors Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

10. 2. Global Strategy (contd.) • Competitive Structure • Cost leadership • Product differentiation • Niche strategy • Nature of Competitive Industry Structure (see Exhibit 8-2): »Industry competitors »Potential entrants Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

11. 2. Global Strategy (contd.) »Bargaining power of suppliers »Bargaining power of buyers »Threats of substitute products or services • Hypercompetition • Creative destruction • Cost and quality • Timing and know-how • Strongholds Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

13. 2. Global Strategy (contd.) • Financial resources • Interdependency: • Interdependency of modern companies • Example: Global computer industry • Governments also play a larger role, affecting parts of the firm’s strategy. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

14. 3. Global Marketing Strategy • Benefits of Global Marketing: • Cost Reduction • Improved Products and Program Effectiveness • Enhanced Customer Preference • Increased Competitive Advantage • Limits to Global Marketing: • Standardization vs. adaptation issues • Globalization vs. localization • Global integration vs. local responsiveness • Scale vs. sensitivity Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

15. 4. Regionalization of Global Marketing Strategy • Regional strategies are the cross-subsidization of market share battles in pursuit of regional production, branding, and distribution advantages. • Issues in regionalization of global marketing strategy: • Cross-Subsidization of Markets • Identification of Weak Markets • Use of Lead Market Concept • Marketing Strategies for Emerging Markets Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

16. 5. Competitive Analysis • SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis (see Exhibit 8-6) • A SWOT analysis divides the information into two main categories: internal and external factors. • Based on SWOT analysis, marketing executives can construct alternative strategies. • The aim of any SWOT analysis should be to isolate the key issues that will be important to the future of the firm and that will be addressed by subsequent marketing strategy. Kotabe & Helsen's Global Marketing Management, Third Edition, 2004