1. Global Marketing
Chapter 17

2. Extra credit opportunity
Presentations on
a country or
a region (even a town/city in U.S.)
some other subject in global business
An especially good chance to discuss your home or your ancestors’ home
Up to 16 points extra on class participation grade
Details available on web site

3. Nike debate A ‘Town Hall’ meeting May 6
One group of people at front are Nike executives
Second group is activists critical of Nike
The question: Should Nike change its approach to global sourcing?
Audience plays roles of stakeholders

4. Your group should pick one or two of the following roles
Nike employees
Stockholders
U.S. labor leaders (or ordinary union members)
Human rights activists (maybe rivals of the debaters)
Asian workers flown to the U.S. by human rights activists
Economic development officials of Asian countries
Ordinary concerned citizens
In this role, it’s fine to just be yourself

5. 2-4 people required for each team (executives and activists)
Preference given to people whose midterm essays showed good critical thinking
Extra credit – up to 7 extra points on final exam midterm
The rest of us will prepare questions for the debate

7. What is ‘Marketing?’
The process by which the firm’s abilities, products, and services are
brought to the attention of customers,
then sold and
delivered

8. Global marketing requires thinking through the complete process
Even people who have done well in a marketing class tend to oversimplify it
Global marketing involves complexity at each step

9. ‘4 Ps’ of Marketing Product Place (=‘Distribution Strategy’ in text)
Promotion (=‘Communication Strategy’ in text)
Price (Pricing Strategy)
Put on board

10. Choosing a Strategy
How do differences in the strength of pressures for cost reductions versus those for local responsiveness affect the firm’s choice of strategy? Firms typical choose among four main strategic postures when competing internationally. These can be characterized as a global standardization strategy, a localization strategy, a transnational strategy, and an international strategy.31 The appropriateness of each strategy varies given the extent of pressures for cost reductions and local responsiveness. Figure 12.7 illustrates the conditions under which each of these strategies is most appropriate.
p.427

11. The Globalization of Markets and Brands
Important to determine when product standardization is appropriate in an international market
Firms may need to vary marketing mix in each different country
Globalization may be the exception rather than the rule in marketing, especially in consumer goods markets

12. Product Attributes Cultural differences Levels of economic development
Product and technical standards
Mostly standards set by governments

14. Distribution (Place)
Definition – “The course that goods take between production and consumption”
physical path and
legal title – Who buys the product from the maker and sells it to others closer to the final customer?
Today we’re mostly interested in how products get to final customer once they’re in a particular country

15. Shipping is one part of distribution
But the core of the distribution challenge is identifying the people and companies you will work with and the process through which you will sell it
to retailers, and through them
to the final customer
These people, companies, and processes for distribution are called marketing “channels”
Draw on board – US
Discount store channel
Drug store channel
Specialty store channel

16. Distribution Strategy (Place)
Choice of the optimal channel for delivering a product to the consumer
Depends on differences between countries
Retail concentration – How many companies have major stores relevant to your product?
Channel length – Do you sell directly to the retailer or through intermediaries? How many intermediaries?
Channel exclusivity- Will people in the channel consider buying from you

17. Direct Selling Selling direct to foreign retailers or end users
Often difficult
But gives you control of the process
Avoids risk of a lazy distributor
17-10

18. A distributor – a firm that buys from maker or a larger distributor and sells to a retailer or a smaller distributor (or sometimes to the final customer)

19. Selling is complex everywhere – but even more so abroad
Need to provide a sales program
Promotional materials,
services,
training of sales people,
discounts for quantity,
credit
Don’t be quick to cut the base price
Sales program includes –
discounts for quantity
credit
services
promotional materials
training of sales people
rush orders Now – let’s take a nice global product like replacement heart valves. Suppose you’re in Japan or Finland and you need a replacement heart valve. What kind do you want? The best.

20. St. Jude Medical – replacement heart valves etc.

22. Communication Strategy (Promotion)
Defines the process the firm will use in communicating the attributes of its product to prospective customers
Cultural barriers
Source effects
Noise levels

23. Push Versus Pull Strategy
Push strategy emphasizes personal selling
Requires intense use of a sales force
Relatively costly
Pull strategy depends on mass media advertising
Can be cheaper for a large market segment
Determining factors of type of strategy
Product type and consumer sophistication
Channel length
Media availability

24. Product Type and Consumer Sophistication – in U.S.
Pull strategy
Consumer goods
Large market segment
Long distribution channels
Mass communication has cost advantages
Push strategy
Industrial products or complex new products
Direct selling allows firms to educate users
Short distribution channels

25. Channel Length Pull strategy Combination of pull and push
Common in U.S. consumer goods
Combination of pull and push
Needed for long or exclusive distribution channels
e.g. Japan
Mass advertising to generate demand to pull product through various layers
Push Strategy
In countries with low literacy levels to educate consumers

26. Media Availability Pull strategy Push strategy
Relies on access to advertising media
Common in developed nations
Push strategy
Media availability limited by law
All electronic media state owned with ‘no commercials’ policy

27. Pricing is much more complex in international business
Changing values of currency
Diversity of markets
Costs of transportation, warehousing
Tariffs, quotas
Government regulations
Distribution methods have to differ from one country to the next
How many have ever discussed pricing in any other course?
Values of currency – you can’t adjust every time currencies change. You have to guess what you think the level will be in the long run, keep it there.
Diversity – If you’re selling sneakers there may be lots of competition in Japan but you may be the only strong competitor in Portugal.

28. Distribution systems result in ‘price escalation’
U.S., Canada, much of Europe have concentrated system
It is impossible to build huge stores in many countries
So many buyers must be reached through long, complex channels – a ‘fragmented’ system
They typically buy at small stores within walking or public transit distance from home
Small distributors serve the small stores
If you’re selling sneakers or oranges or cranberries, you really can’t send a truck to every little store that carries your product in Japan or India or even Italy.

29. Price escalation Sell to retailer for $1.50 US production cost = $1
U.S. retailer sells for $2.25
Ship & sell to retailer in Canada
for $1.60
Ship & sell to distributor in Japan
Canada retailer sells for $2.40
Tariff = .05 Shipping = .20 Your cost=$1.25
Draw US, Japan maps on white board
Store in Japan has high costs, adds 60%, sells for $4.32
Big distributor buys for $1.875, takes 20% markup, sells for $2.25
Small distributor adds 20%, sells for $2.70

30. Government involvement – no consistency
Some laws set minimum prices – to prevent ‘monopoly,’ Japan, Germany protect small stores
Many prohibit selling below ‘cost’
Others set maximum prices

34. Material below here is not required unless specifically mentioned in study guide

35. Choosing a Distribution Strategy
Benefits of a longer distribution channel
Cuts selling costs when the retail sector is fragmented
Longer channels can provide increased market access
If channel quality is poor, a firm should consider what steps it could take to upgrade the quality of the channel
This may include establishing its own distribution channel

36. Pricing Strategy Three aspects of international pricing strategy
Price discrimination
Strategic pricing
Regulatory influence on prices

37. Strategic Pricing Multipoint pricing strategy
Two or more international firms compete against each other in two or more national markets
A firm’s pricing strategy in one market may impact a rival in another market
Kodak and Fuji

38. Strategic Pricing Experience curve pricing
Firms price low worldwide to build market share
Incurred losses are made up as company moves down experience curve, making substantial profits
Cost advantage over its less-aggressive competitors

39. Regulatory Influences on Prices
Antidumping regulations
Selling a product for a price that is less than the cost of producing it
Antidumping rules vague, but place a floor
Competition policy
Regulations designed to promote competition and restrict monopoly practices

40. Configuring the Marketing Mix
Standards
Differences Here
Competition
Distribution
Economy
Culture
Gov’t Regs
Product Attributes
Pricing Strategy
Requires Variation Here
Communications Strategy
Distribution Strategy