Global Marketing

Nokia N series Sold Globally

What is a Global Firm?

A global firm is one that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

GLOBAL MARKETING Most countries are in open economy India, China, Companies need to seek new markets 1. More & more costs in Research & Design; to recover, companies need huge market 2. For reducing costs, companies need to procure material from cheapest source, and also technology. With Internet, the world is just a click away 3.For technology based companies globalization is easy, since technology products not affected by cultural/national boundaries : Cell phones/TV & electronics, cars

Major Decisions in International Marketing

Deciding whether to go Deciding which markets to enter Deciding how to enter Deciding on the marketing program Deciding on the marketing organization

HOW TO SELECT GLOBAL MARKET Regional Free Trade Zone; Companies can enter a group of countries rather than one. Eg. ASEAN, European Union, SAARC -economic growth -increased trade relations

-increased foreign capital inflows

-economic & diplomatic trade bloc

- integrate economic policies

Select a few promising countries & use secondary data.

-analyze on political, legal, geographic, economic ---environment (macro) -market size, perceptions product acceptability & customer

-barriers to entry/exit, costs, raw material, unutilized capacity, number of competitors etc.
- ranking on profit potential, market share, margins, sales

IMPACT OF ENVIRONMENT
Political Environment Needs to be carefully analyzed; political stability, treatment of foreign firms, bureaucracy eg. Coke in 70s, FERA, Middle East today, ENRON Political system influences economic environment so trade barriers, rules regarding M & A, Red Tape need scrutiny eg. India, no FDI in retail

IMPACT OF ENVIRONMENT Economic Environment Most important GDP & GNP, disposable income, inflation, costs of energy etc. India is attractive because of high returns : FII 3 Categories of economics : Influenced by Capitalist Mixed Market Allocation Socialist Command Allocation Combination

Customer main focus Government decides goods & services for customer

IMPACT OF ENVIRONMENT
Social & Cultural Environment
Caused by differences in demographics, languages,

education, values & beliefs etc. Have major effect in personal items Promotion/distribution strategies have to be located because language/communications is different. Parker Cultural changes Amex Credit Cards

IMPACT OF ENVIRONMENT
Legal and Regulatory Environment
Sovereignty of nation, contractual agreements, dispute

settlement procedures, arbitration laws, trademarks & patents laws, tax structures, licensing, labour laws have to be studied Requirement for universalisation of trade laws GATT (1979) Required not just for increasing business in multiple countries, but also to protect companies and industries

IMPACT OF ENVIRONMENT

Technological Environment
Companies look out for better & cost effective

technologies all the time. The technically enhanced infrastructure in telecom, transportation, storage & warehousing are important for business

Four Stages of Internationalization

No regular export activities
Export via independent agents Establish sales subsidiaries Establish production facilities abroad

Fiat Markets Palio in Latin American Markets

Top Global Firms Based in Developing Markets

Cemex China Mobile Infosys Technologies Lenovo Group

Haier
Aditya Birla Group

MMC Norilsk Nickel

Mahindra & Mahindra

Regional Free Trade Zones

European Union NAFTA

MERCOSUL
APEC ASEAN

SAFTA

Key Developing Markets

Brazil Russia India

China
South Africa

Desired Country Characteristics for Market Entry

Rank high on market attractiveness Rank low in market risk Possess a competitive advantage

Five Modes of Entry into Foreign Markets

Indirect exporting

Direct exporting

Licensing

Joint ventures

Direct investment

Commitment, Risk, Control, Profit Potential

Direct Exporting Methods

Domestic-based export department Overseas sales branch or subsidiary Traveling export sales representatives

Foreign-based distributors or agents

The Reva Electric Car Company has actively pursued opportunities in export markets.

HOW TO ENTER A NEW MARKET

Indirect Exports :

Exporting goods to a new country with a domestic intermediary. Helps if exporter has little knowledge of new country
Licensing

Providing access to a patent/trademark by charging fee/royalty. Popular way of marketing strong brands w/o investment. Popular in Pharma, also in consumer goods, Arrow shirts, Walt Disney products

HOW TO ENTER A NEW MARKET

Joint Ventures
1.
2.

3.
4.

5.
6.

For company and local partner become equity partners, majority or minority For sharing risk and having access to knowledge of local partner, sometimes to leverage technology of one partner, if foreign company is not allowed to set upon its own Sharing of responsibilities becomes a major issue : 53% fail, local partner should be given responsibility for implementation Strategic intents should be aligned; at negotiation phase there should be full understanding of each others position. Decision making & administrative authorities should be properly delineated Parent organization usually provides resources; Transfer pricing becomes an issue

Internationalization Process

Process started 20 years back has spread very fast 2. IP refers to companys entry modes & tuning : M &A, Strategic Alliances, Exports, Licensing & Franchising etc. 3. i) When a product is in maturity company thinks of exports ii) No knowledge of foreign markets so exporting is first step iii) When product goes to new country, that country tries to develop the product iv) When product reaches standardization a company thinks of licensing, or FDI or setting up wholly owned subsidiary v) Companies get into joint ventures if market in new country needs local know-how, they gain experience and then they terminate Joint Venture and starts 100% subsudiary
1.

Global Marketing
Advantages Economies of scale Lower marketing costs Power and scope Consistency in brand image Ability to leverage Uniformity of marketing practices Disadvantages Differences in consumer needs, wants, usage patterns Differences in consumer response to marketing mix Differences in brand development process Differences in environment

Red Bull Has 70% of Worldwide Energy Drink Market

What Marketing Aspects Might Be Adapted for International Marketing?

Product features Brand name

Labeling
Colors Materials Sales promotion Advertising media

Packaging
Advertising execution Prices Advertising themes

Commandments of Global Branding

Understand similarities and differences in the global branding landscape
Do not take shortcuts in brand building

Establish a marketing infrastructure

Embrace integrated marketing communications

Establish brand partnerships

Commandments of Global Branding (cont.)

Balance standardization and customization Balance global and local control Establish operable guidelines Implement a global brand-equity measurement system Leverage brand elements

International Product and Communication Strategies

Levels of Product Adaptation

Production of regional product versions Production of country versions

Production of city versions

Production of retailer versions

Communications

Communications adaptation Dual adaptation

Price Choices
Set a uniform price everywhere Set a market-based price in each country Set a cost-based price in each country

What is a Gray Market?

A gray market consists of branded products diverted from normal or authorized distributions channels in the country of product origin or cross international borders; dealers in lower priced countries sell products in higher priced countries.

Whole-Channel Concept for International Marketing

Seller
International headquarters Channels between nations Channels within nations Final buyers

Global Organization Strategies

World as Single Market Multinational Glocal