Global Marketing Mix

Dr.k.p.vinod

LEARNING OBJECTIVES
After todays class, you should be able to:

1. 2. 3. 4.

Articulate the four Ps of the marketing mix Understand alternative production adaptation and product line planning strategies Understand alternative global pricing strategies Understand alternative international promotion tools

MARKETING
marketing - the effort to create, develop, and defend markets that satisfy the needs and wants of individual and business customers

THE MARKETING MIX

The 4 Ps of the marketing mix:
Product Price Place (or distribution) Promotion

ADAPTATION VS. STANDARDIZATION

Elements of the marketing mix could be
Standardized across all markets Adapted to appeal to particular market segments

Standardization
Essentially the same approach to the 4 Ps in every target market

Adaptation
Marketing mix is tailored to country or to market segment within a country

PRODUCT PROFILE
Product characteristics
Inherent features of the product

Packaging and labeling characteristics

Protects the product Communicates information Promotes the product

Service characteristics
Information and advice (pre- and post-sale) Product repairs and upgrades (durable goods)

FACTORS IN PRODUCT ADAPTATION

Internal company considerations
Human and financial resource constraints Costs of developing and producing distinct products

Customer considerations
Customer preferences (example: GMOs) Economic situation of customers (example: farm machinery) The total size of the market

FACTORS IN PRODUCT ADAPTATION (continued)

Competitive considerations
Degree of competition in target market Exploiting gaps in competitors product lines

Legal and regulatory considerations

Sanitary and phytosanitary standards Tariff and nontariff barriers (example: milk components)

Bottom line: is adaptation profitable, and how long will it take for it to become profitable?

PRODUCT LINE PLANNING

Deciding on the right individual product for a market is only one part of the story Need to decide what family of products should be offered The foreign product line is often smaller than the U.S. product line because of financial and market limitations Starting out with a limited product line in a foreign market provides a way to test the market before expanding

EXAMPLE OF PRODUCT ADAPTATION

Kit-Kat roughly $1 billion in sales worldwide
In Russia, its slightly smaller and the chocolate is coarser In Japan, its strawberry flavored Each of these product variations is the result of thorough market research on local tastes. There is no global consumer for the food-and-beverage business. This is a deep belief we have, Brabeck says. (Peter Brabeck
is the Chairman and CEO of Nestle)

PACKAGING AND LABELING

Protection of the product
Climate control Transportation and handling
Packaging usually needs to be more durable for export

Shelf life

Size of the package

Pillsbury uses packages with 6-to-8 servings in developing countries, while 2-serving packages are most popular in North America 2-liter bottles of Coke were too large for the compartments in most refrigerators in Spain

PACKAGING AND LABELING (continued)

Legal Constraints
Packaging recycling requirements Consumer information requirements (food labels) Multilingual labeling requirements
Canada (French and English) Belgium (French and Flemish) Finland (Finnish and Swedish)

Promotion of the product

Brand image Distinguish product from the competition

PRICE
Pricing situations
Export pricing Foreign market pricing (production abroad)

Pricing strategies
Cost-based strategies Demand-based strategies Eclectic strategies based on short- and long-term company goals

COST-BASED STRATEGIES: EXPORTING

Standard worldwide pricing
Price is based on average fixed, variable, and export-related production costs

Dual pricing
Export price is based on marginal costs rather than average costs Constitutes dumping (an example of cost dumping)

COST-BASED STRATEGIES: PRODUCING ABROAD

Standard within-market pricing
Price in each market in based on average fixed and variable production costs in that market

With either exporting or producing abroad, cost-based strategies may be out of alignment with market conditions

DEMAND-BASED PRICING STRATEGIES

Price discrimination
Charge different prices in different markets Can do with exporting or producing abroad A type of dumping when applied to exports (price dumping)

How does it work?

Lower prices in market segments with more price-elastic demands, higher prices in segments with less price-elastic demands

If price differences are too large, run into transshipment (smuggling) problems

ECLECTIC STRATEGIES BASED ON

Short- and long-term company goals
Profitability Market share

Production costs Demand-side considerations Competitive considerations

PLACE
Distribution choices are the least flexible choices in the marketing mix International challenges
Lack of familiarity with distribution channels Use of intermediaries means relinquishing control

PROMOTION
Promotion mix includes
Advertising Personal selling Publicity Sales promotions Target audience Company objectives Product or service being marketed Resources available

Mix will depend on

INTERNATIONAL ADVERTISING
Media strategy
Which media reach your target market? May be much different from the U.S. Media regulations vary by country

Promotional message
Why would the target consumer buy the product? Emphasize those attributes How is the product positioned? Ads should be consistent with positioning Rational versus emotional appeals Be very sensitive to cultural considerations

INTERNATIONAL ADVERTISING (continued)

Ad literacy of target audience
Is audience used to connecting ad images and ad messages?

Annual per capita spending on advertising varies tremendously by country and region:
United States: $153 Canada: $64 Europe: $43 Latin America: $5 Asia and Pacific: $4 Middle East: $2 Africa: 80
Statistics: ad spending per capita by top 100 marketers in 2006 Sources: Advertising Age and Population Reference Bureau

ADDITIONAL PROMOTION TOOLS

Personal selling often used
In early stages of international expansion For high-cost products For industrial goods (example: an ingredient)

Publicity/Public Relations
To earn public understanding and acceptance Anticipate or counter criticisms Portray as good citizens of host country

SALES PROMOTIONS
Covers all promotions except for advertising, personal selling, and publicity Includes:
Coupons Free samples Consumer education Product demonstrations Point-of-purchase materials Discounts Direct mail Prizes and giveaways

IN-CLASS EXERCISE
In groups of 3-5 people, come up with a U.S. food product that, as far as you know, isnt currently sold in Mexico Outline a plan for how you would market that product in Mexico Report your findings to the class