14-Jul-12

International Marketing
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham

Global Marketing Management:

Planning and Organization

McGraw-Hill/Irwin
International Marketing 14/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Global Perspective
Global Gateways
• Multinational companies
– Confronted with increasing global competition for expanding
markets
– Changing their marketing strategies and altering their
organizational structure
– Nearly 75% of North American and European corporations
are revamping their business processes
• Smaller companies
– More flexible
– May enable them to reflect the demands of global markets and
redefine programs more quickly

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Global Marketing Management

• 1970s – “standardization versus adaptation”
• 1980s – “global integration versus local
responsiveness”
• 1990s – “global integration versus local
responsiveness”

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Global Marketing Management

• The trend back toward localization
– Caused by the new efficiencies of customization
– Made possible by the Internet
– Increasingly flexible manufacturing processes
• From the marketing perspective customization
is always best
• Global markets continue to homogenize and
diversify simultaneously
– Best companies will avoid trap of focusing on country as the
primary segmentation variable

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The Nestle Way –

Evolution Not Revolution
• Nestle – world’s biggest marketer of infant
formula, powdered milk, instant coffee, chocolate,
soups, and mineral water
• Nestle strategy
– Think and plan long term
– Decentralize
– Stick to what you know
– Adapt to local tastes
• Long-term strategy works for Nestle
– Because the company relies on local ingredients
– Markets products that consumers can afford

Benefits of Global Marketing

• When large market segments can be identified
– Economies of scale in production and marketing
– Important competitive advantages for global companies
• Transfer of experience and know-how
– Across countries through improved coordination and
integration of marketing activities
• Marketing globally
– Ensures that marketers have access to the toughest customers
– Market diversity carries with it additional financial benefits
– Firms are able to take advantage of changing financial
circumstances

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Planning for Global Markets

• Planning is the job of making things happen that
might not otherwise occur
• Planning allows for:
– Rapid growth of the international function
– Changing markets
– Increasing competition, and the
– Turbulent challenges of different national markets

Planning for Global Markets

• Planning is both a process and philosophy
– Relates to the formulation of goals and methods of accomplishing
them
► Corporate planning
► Strategic planning
► Tactical planning

• Company objectives and resources

– Each new market requires
► A complete evaluation, including existing commitments, relative to the parent
company’s objectives and resources
– Defining objectives clarifies the orientation of the domestic and
international divisions, permitting consistent policies

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Planning for Global Markets

• International commitment
– Commitment in terms of
► Dollars to be invested
► Personnel for managing the international organization
► Determination to stay in the market long enough to realize a return in investments.
– The degree of commitment to an international marketing cause
reflects the extend to a company’s involvement

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International Planning Process

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The Planning Process

• Phase 1 – Preliminary analysis and screening
– Matching Company and Country Needs.
• Phase 2 – Adapting marketing mix to target
markets
• Phase 3 – Developing the marketing plan
• Phase 4 – Implementation and control

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The Planning Process

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Alternative Market-Entry Strategies

• An entry strategy into international market should
reflect on analysis
– Market characteristics
► Potential sales
► Strategic importance
► Strengths of local resources
► Cultural differences
► Country restrictions

– Company capabilities and characteristics

► Degree of near-market knowledge
► Marketing involvement
► Management commitment

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Alternative Market-Entry Strategies

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Alternative Market-Entry Strategies

• Companies most often begin with modest export
involvement
• A company has four different modes of foreign
market entry
– Exporting
– Contractual agreements
– Strategic alliances
– Direct foreign investments

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Exporting
• Exporting accounts for some 10% of global
activity
• Direct exporting – the company sells to a
customer in another country
• Indirect exporting – the company sells to a buyer
(importer or distribution) in the home country, who
in turn exports the product

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Exporting
• The Internet
– Initially, Internet marketing focused on domestic sales
– A surprisingly large number of companies started receiving orders
from customers in other countries,
► Resulting in the concept of international Internet marketing (IIM)

• Direct sales
– Particularly for high technology and big ticket industrial products

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Contractual Agreement
• Contractual agreements
– Long-term,
– Nonequity association between a company and another in a
foreign market
• Licensing
– A means of establishing a foothold in foreign markets without large
capital outlays
– A favorite strategy for small and medium-sized companies
– Legitimate means of capitalizing on intellectual property in a
foreign market

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Contractual Agreement
• Franchising
– Franchiser provides a standard package of products, systems, and
management services
– Franchise provides market knowledge, capital, and personal
involvement in management
– Expected to be the fastest-growing market-entry strategy
• Two types of franchise agreements
– Master franchise
► Gives the franchisee the rights to a specific area with the authority to sell or
establish subfranchises
– Licensing

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Strategic International Alliances

• A strategic international alliance (SIA)
– A business relationship established by two or more companies to cooperate
out of mutual need
– To share risk in achieving a common objective
• SIAs are sought as a way to shore up weaknesses and
increase competitive strengths
• Firms enter SIAs for several reasons
– Opportunities for rapid expansion into new markets
– Access to new technology
– More efficient production and innovation
– Reduced marketing costs
– Strategic competitive moves
– Access to additional sources of products and capital

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Building Strategic Alliances

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Strategic International Alliances

• Many companies entering SIAs
– To be in strategic position to be competitive
– To benefit from the expected growth in the single European market
• International joint ventures (IJVs)
– A partnership of two or more participating companies that have joined
forces to create a separate legal entity
– Four characteristics define joint ventures
► JVs are established, separate, legal entities
► The acknowledged intent by the partners to share in the management
of the JV
► There are partnerships between legally incorporated entities such as companies, chartered
organizations, or governments, and not between individuals
► Equity positions are held by each of the partners

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Strategic International Alliances

• Consortia
– Similar to joint ventures and could be classified as such except for
two unique characteristics
► Typically involve a large number of participants
► Frequently operate in a country or market in which none of the participants
is currently active
– Consortia are developed to pool financial and managerial
resources and to lessen risks

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Direct Foreign Investment

• Factors that influence the structure and
performance of direct investments
– Timing
– The growing complexity and contingencies of contracts
– Transaction cost structures
– Technology transfer
– Degree of product differentiation
– The previous experiences and cultural diversity of acquired firms
– Advertising and reputation barriers

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Organizing for Global Competition

• Devising a standard organizational structure is difficult
– Because organizations need to reflect a wide range of company-specific
characteristics
• Companies are usually structured around one of three
alternatives
– Global product divisions responsible for product sales throughout world
– Geographical divisions responsible for all products and functions within a
given geographical area
– A matrix organization consisting of either of these arrangements
► With centralized sales and marketing run by a centralized functional staff, or a
combination of area operations and global product management

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Schematic Marketing Organization Plan Combining

Product, Geographic,
and Functional Approaches

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Locus of decision
• Considerations of where decisions will be made,
by whom, and by which method constitute a
major element of organizational strategy
– Corporate headquarters
– International headquarters
– Regional levels
– National levels
– Local levels
• Tactical decisions normally should be made at
lowest possible level

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Centralized Versus
Decentralized Organizations
• Most organizational patterns of multinational firms
fit into one of three categories
– Centralized
– Regionalized
– Decentralized
• No single traditional organizational plan is
adequate for today’s global enterprise
– Seeking to combine the economies of scale of a global company
with the flexibility and marketing knowledge of a local company

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Thank You
@RamyKhodeir

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