Global Marketing Management Planning and Organization

Global Marketing Management Coca Cola and Pepsi Compete World Round – Which Sign Can You Read?

Global Marketing Management Disney Successfully Exports its Princesses While Barbie Fails.

The Nestle Way: Evolution Not Revolution Nestle is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water. Nestle strategy can be summarized in four points: 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 and markets products that consumers can afford.

The International Marketing Task Insert Exhibit 1.3

The Self-Reference Criterion and Ethnocentrism The key to successful international marketing is adaptation to the environmental differences from one market to another. Primary obstacles to success in international marketing: SRC Associated ethnocentrism SRC is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions. Ethnocentrism is the notion that one’s own culture or company knows best how to do things.

The Self-Reference Criterion and Ethnocentrism (continued) Dangers of the SRC: Failing to recognize the need to take action Discounting the cultural differences that exist among countries Reacting to a situation in a way offensive to your hosts Ethnocentrism and the SRC can influence an evaluation of the appropriateness of a domestically designed marketing mix for a foreign market. The most effective way to control the influence of ethnocentrism and the SRC is to recognize their effects on our behavior.

Benefits of Global Marketing When large market segments can be identified, economies of scale in production and marketing can be important competitive advantages for global companies. Transfer of experience and know-how across countries through improved coordination and integration of marketing activities. Marketing globally also ensures that marketers have access to the toughest customers. Diversity of markets served carries with it additional financial benefits. Firms that market globally are able to take advantage of changing financial circumstances.

Alternative Market-Entry Strategies An entry strategy into the international market should reflect on analysis of market characteristics such as: Potential sales Strategic importance Strengths of local resources Cultural differences Country restrictions Companies most often begin with modest export involvement. A company has four different modes of foreign market entry from which to select: Exporting Contractual agreements Strategic alliances Direct foreign investments

Alternative Market-Entry Strategies Insert Exhibit 11.2

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. The Internet Initially, Internet marketing focused on domestic sales, however, 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.

Contractual Agreement Contractual agreements are 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.

Contractual Agreement (continued) Franchising Franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. 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

Strategic International Alliances A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective 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 Many companies also are entering SIAs to be in strategic position to be competitive and to benefit from the expected growth in the single European market.

Strategic International Alliances (continued) International Joint Ventures A joint venture is 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 They acknowledged intent by the partners to share in the management of the JV They 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

Strategic International Alliances (continued) Consortia Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: They typically involve a large number of participants They 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.

Direct Foreign Investment Factors that have been found to 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

The International Communications Process Insert Exhibit 16.4

Legal Constraints Laws that control comparative advertising vary from country to country in Europe. Advertising of specific products Control of advertising on television Accessibility to broadcast media Limitations on length and number of commercials Internet services Special taxes that apply to advertising

Linguistic Limitations Language is one of the major barriers to effective communication through advertising Translation challenges Low literacy in many countries Multiple languages within a country

Cultural Diversity Knowledge of cultural diversity must encompass the total advertising project Existing perceptions based on tradition and heritages are often hard to overcome Subcultures Changing traditions

Media Limitations and Production and Cost Limitations Media limitations may diminish the role of advertising in the promotional program Examples of production limitations: Poor-quality printing Lack of high-grade paper Low-cost reproduction in small markets poses a problem in many countries

Media Planning and Analysis – Tactical Considerations Local Restrictions or Lack of Availability Spawn Other Media Vehicles

Microsoft Corporate Branding/Image Campaign United States Mexico Japan

Microsoft Korea United States Product Specific Advertising France