Global Marketing

Marketing Strategies
Overall international marketing strategies and marketing mix
depend on the company’s:
– Marketing orientation
– Target market

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 Market Orientation
• Production Orientation: Focus on production- efficiency or
high quality and no emphasis on marketing
• Sales Orientation: company tries to sell abroad what it can
sell domestically, assuming that consumers all similar globally
– It actively promotes sales (differs from production orientation)
• Customer Orientation: company figures out what and how
to sell to a country- by varying the product and the marketing
method
• Strategic Marketing Orientation: The strategy combines
production, sales, and customer orientations
• Social Marketing Orientation: consider potential political and
safety dimensions of its producers (e.g., environmental, health, social
and work-related problems that may arise when selling or making their
products abroad (social responsibility)
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 Segmenting and Targeting Markets
Based on the marketing orientation, companies segment
markets for their products and services and then decide
which segment(s) to target and how
– Target single or multiple segments
– Use the same marketing mix to sell to all
segments
– Tailor the products separately to each
segment
– Vary the promotion and distribution separately
for the segments

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 Segmenting Markets
• Three Approaches
– By Country (e.g., population size and purchasing power)
• When segmenting by country, the business may
overlook similarities between different countries
– By Global Segment (e.g, segments based on income)
• when segments transcend national borders, a global
strategy is possible
– By Multiple Criteria
• First look at countries as segments, identify segments
within each country, compare within-country segments
with other -may have to develop a unique marketing
mix to appeal to a certain segment in a given country

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 Marketing Mix
• The marketing mix (the choices the firm
offers to its targeted market) is comprised of
1. Product attributes
2. Distribution strategy (Place)
3. Communication strategy (Promotion)
4. Pricing strategy

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 Product Attributes
• A product is like a bundle of attributes
• Products sell well when their attributes
match consumer needs
– if consumer needs were the same everywhere, a
firm could sell the same product worldwide
• But, consumer needs depend on
1. Culture
• tradition, social structure, language, religion,
education

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 Product Attributes
2. Level of economic development
– consumers in highly developed countries tend to
demand a lot of extra performance attributes
– consumers in less developed nations tend to prefer more
basic products
3. Local product and technical standards & Legal
Requirements
– Environmental laws
– Packaging Requirements

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 Product Attributes
• International product standards eliminate some wasteful
product requirements for alterations among countries.
• A global standard has usually resulted from companies’
wanting to copy a dominant producer
• Advantages of globally standardized prorgams:
– Cost savings
– Improvement of local-level quality
– Faster entry into different markets

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 Product Attributes

• Some product alteration are cheap to make yet have an

important influence on demand (e.g., packaging because
of legal and climatic requirement)
• Must compare the cost of an alteration
with the cost of lost sales from no
alterations.
– Cost saving strategy: standardize a great deal
while altering some end characteristics.

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 Pricing in Global markets
• Government intervention
• Market diversity
• Pricing Tactics
• Export price escalation
• Fluctuations in currency value

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 Pricing in Global markets
• Price discrimination - occurs when firms
charge consumers in different countries
different prices for the same product
• For price discrimination to work
– must be able to keep national markets separate
– countries must have different price elasticity of
demand

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 Pricing in Global markets
• Price elasticity of demand – a measure of the
responsiveness of demand for a product to
changes in price
• demand is elastic when a small change in price
produces a large change in demand
• demand is inelastic when a large change in price
produces only a small change in demand
– Typically, price elasticity is greater in countries
with lower income levels and larger numbers of
competitors

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 Pricing in Global markets
1. Pricing Approach-
Predatory Pricing-Penetration Strategy -use profit gained
in one market to support aggressive pricing designed to
drive competitors out in another market after competitors
have left, the firm will raise prices and earn higher profits
Skimming Strategy: charging a high price for a new
product first aiming at consumers willing to pay the price,
and then progressively lowering the price
Cost-plus strategy: pricing at a desired margin over cost

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 Pricing in Global markets
Strategic Pricing
2. Multi-point pricing - a firm’s pricing strategy
in one market may have an impact on a
rival’s pricing strategy in another market
– managers should centrally monitor pricing
decisions

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 Pricing in Global markets
• A firm’s ability to set prices may be limited
by
1. Antidumping regulations –
– dumping occurs when a firm sells a product for a
price that is less than the cost of producing it
• antidumping rules set a floor under export prices and
limit a firm’s ability to pursue strategic pricing
2. Competition policy –
– most industrialized nations have regulations
designed to promote competition and restrict
monopoly practices
– can limit the prices that a firm can charge

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Distribution in Global Markets
• Distribution strategy - the means the firm
chooses for delivering the product to the
consumer
• How a product is delivered depends on the
firm’s market entry strategy
– firms that produce locally can sell directly to the
consumer, to the retailer, or to the wholesaler
– firms that produce outside the country have the
same options plus the option of selling to an
import agent
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Distribution in Global Markets
A Typical Distribution Strategy

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Distribution in Global Markets
• There are four main differences in distribution
systems
1. Retail concentration – concentrated or
fragmented
– concentrated retail system, a few retailers supply
most of the market
• common in developed countries
– fragmented retail system there are many retailers,
no one of which has a major share of the market
• common in developing countries

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Distribution in Global Markets
2. Channel length - the number of
intermediaries between the producer and
the consumer
– short channel - when the producer sells directly
to the consumer
• common with concentrated systems
– long channel - when the producer sells through
an import agent, a wholesaler, and a retailer
• common with fragmented retail systems

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Distribution in Global Markets
3. Channel exclusivity – how difficult it is for
outsiders to access
– Japan's system is a very exclusive system
4. Channel quality - the expertise, competencies,
and skills of established retailers in a nation,
and their ability to sell and support the
products of international businesses
– good in most developed countries, but variable in
emerging markets and less developed countries
– firms may have to devote considerable resources to
upgrading channel quality

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Distribution in Global Markets
• The optimal strategy depends on the relative
costs and benefits of each alternative
• When price is important, a shorter channel is
better
– each intermediary in a channel adds its own markup
to the product
• When the retail sector is very fragmented, a long
channel can be beneficial
– economizes on selling costs
– can offer access to exclusive channels

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 Promotion in Global Markets
• Brand
– The importance of using a brand to convey the perception of
whether a firm will deliver what it promises is more critical in
countries with strong cultural characteristics of uncertainty
avoidance
• World Wide Brand versus Local Brand
– Problems with Uniform Brands
• Language
• Brand Acquisition
• Country-of-Origin Image
• Generic and Near Generic Names

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 Promotion in Global Markets
• Communicating product attributes to
prospective customers is a critical element in
the marketing mix
• How a firm communicates with customers
depends partly on the choice of channel
• Communication channels available to a firm
include
– direct selling
– sales promotion
– direct marketing
– advertising

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 Promotion in Global Markets
• The effectiveness of a firm's international
communication can be jeopardized by
1. Cultural barriers - it can be difficult to
communicate messages across cultures
– a message that means one thing in one country
may mean something quite different in another
– firms need to develop cross-cultural literacy, and
use local input when developing marketing
messages
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 Promotion in Global Markets
2. Source and country of origin effects –
– source effects occur when the receiver of the
message evaluates the message on the basis of
status or image of the sender
• can counter negative source effects by
deemphasizing their foreign origins
– country of origin effects - the extent to which the
place of manufacturing influences product
evaluations

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 Promotion in Global Markets
3. Noise levels - the amount of other messages
competing for a potential consumer’s
attention
– in highly developed countries, noise is very high
– in developing countries, noise levels tend to be
lower

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 Promotion in Global Markets
• Firms have to choose between two types of
communication strategies
1. A push strategy emphasizes personnel selling
2. A pull strategy emphasizes mass media
advertising

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 Promotion in Global Markets
Push Vs Pull
The choice between strategies depends on
1. Product type and consumer sophistication
– a pull strategy works well for firms in consumer
goods selling to a large market segment
– a push strategy works well for industrial products
2. Channel length
– a pull strategy works better with longer distribution
channels
3. Media availability
– a pull strategy relies on access to advertising media
– a push strategy may be better when media is not
easily available
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 Promotion in Global Markets
Push Vs Pull
• In general, a push strategy is better
– for industrial products and/or complex new products
– when distribution channels are short
– when few print or electronic media are available
• A pull strategy is better
– for consumer goods products
– when distribution channels are long
– when sufficient print and electronic media are
available to carry the marketing message

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 Promotion in Global Markets
Standardization of Advertisement
• Standardized advertising makes sense when
– it has significant economic advantages
– creative talent is scarce and one large effort to develop a
campaign will be more successful than numerous smaller
efforts
– brand names are global
• Standardized advertising does not make sense when
– cultural differences among nations are significant
– advertising regulations limit standardized advertising
• Some firms standardize parts of a campaign to capture
the benefits of global standardization, but customize
others to respond to local cultural and legal
environments
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 Marketing Mix
• Standardization versus customization is not an
all or nothing concept
– most firms standardize some things and customize
others
• Firms should consider the costs and benefits
of standardizing and customizing each
element of the marketing mix

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 Managing the Marketing Mix

• The difference between total markets

potential and companies’ sales is due to
gaps

• Gap Analysis: method to estimate a company’s

potential sales by identifying potential customers it is not
serving adequately.
– A company would most likely use gap analysis to compare
consumption potential within its own sales
• When sales are lower than the estimated market potential for
a given type of product, the company has potential for
increased sales

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 Managing the Marketing Mix
Types of Gaps
• Usage Gap: less product sold by all
competitors than potential
• Product Line Gap: company lacks some
product variation
• Distribution Gap: company misses geographic
or intensity coverage
• Competitive Gap: competitor’s sales not
explained by product line and distribution
gaps

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