3.3.1 Responding to Global demand Flashcards
Glocalisation
when a business adapts its products/marketing plans to suit individual countries or market segments
ethnocentric
Look primarily from domestic culture
geocentric
World is a potential market and there are similarities and differences between domestic and foreign markets
polycentric
Sees each host country as unique and develops business strategies off of this
what is a global marketing strategy
- large scale production of standardised products
- allows for economies of scale
- reduced research development and marketing costs
- some segments may not be catered for so some sales will be lost
why is a global marketing strategy ideal
Works well when their markets have similar expectations wherever they are
- Producing on a large scale is cheaper, designs can be standardised and there may be economies of scale
- Product range can be smaller
- Same marketing campaign can be used everywhere
- Less time has to be spent on researching individual markets
- Less time is spent on developing many individual markets products
why is a global marketing strategy not ideal
- Some sales will be lost if not all segments are catered for
- Turnover and profits may then not be maximised
- Marketing tactics and/or products may cause negative reactions from soem segments of the market
- For most firms a GMS will nto be effective and some local adaptation will be needed
- Varied types of competition in markets will require a different response
glocalisation
- Market segments vary in nature, reflecting culture fashions and individuals tastes → must factor in consumer tastes etc
- Promotion must fit in with local media availability → potential consumers need ti be identified and then promotion mustr focus on the media to which those customers have access
- Global localisation: business operates globally but may adapt/change products and marketing plans to suit individual countries/market segments → solutions will vary depending on the product, market and strategty
why is glocalisation good
- Sales are likely to increase as each market is specifically targeted
- Product features are tailored to customer needs, preferences and incomes
- Promotion reflects local media facilities
- Turnover and profits are maximised
- Marketing tactics and or products are ideally suited to the local situation
- Allows businesses in market segments, cultures, fashions etc
- Sales increase as markets specifically targeted, specialised products appeal to consumers, revenue and profits increase
why is glocalisation not good
- Business cannot fully exploit economies of scale
- Researching each market and adapting/developing products takes time and is costly
- Wider product ranges and multiple marketing campaigns are harder to manage + are more expensive
- Average costs are likely to be higher
ethnocentric models
Good when in lower income countries
- Consumers are more price sensitive
- Can afford lower prices to increase market share
Success in home market will be the same abroad
- Easily recognised, strong branding, memorable so sales increase
- Higher output so marketing costs spread out, ,lower marketing cost per unit, Less money spent on marketing, average fixed costs go down
- No adaptation of product and marketing tactics to suit local preferences and tastes: uniform approach world-wide
- Works for product oriented firms, not market oriented firms (high market research and prod development costs, reduced profits)
geocentric model
Developed integrated strategies
- Some adaptations of productr and marketing tactics to suit local preferences and tastes
polycentric model
- Each country seen as unique so business develops strategies
- All products and marketing are adapted to suit local preferences and tastes
how will the marketing mix change in a new market
- Price may need to be lower if economy is lower income
- Conventional avenues may not be available for stores etc
- Product may need be adapted to local needs
- Promotion has to appeal to local tastes and culture
price and global demand
- EE: disposable income is lower than in developed E
- Econ development may be incompatible with western pricing tactics
- Luxury goods may need to keep a premium price for reputation of firm and its consumer (prestige pricing strategy)
- Some luxury prices may need to keep prices high to maintain status/reputation → reselling for cheaper makes brand be seen as non exclusive, marketing goes to waste
product and global demand
- Industries with high prod development costs and rapidly changing tech need globally standardised products and services (electronics)
- Large markets can recover developing costs
- Food and drink need to be adapted due to diff tastes (kosher, halal, lack of beef)
tech/saftey regulations may be different - Climate ge needing air conditioning in hot country
backward innovation
- Backward innovation - making cheaper, simpler products for developing markets
- Reduce luxury products to still profit in lower income countries
- Depends on whether luxury brands want to keep an exclusive reputation
- Backward innovation → cheaper simpler versions of a product that would be out of reach for those with a lower income (eg iphone SE)
promotion and global demand
- Consumer culture and background
Sense of humor/taboos - Promotion needs to fit with local media development and cultural expectations
- Accurate lang translation and appropriate images to not offend religions/cultures
- Celebrities that are local
Needs effective promotion strategy → important
place and global demand
- Traditional distribution networks may not work (remote etc)
- Sales incentives: creates distribution network of local agents develop new infrastructure
- EE: consumers are distant from shops
- Fast developing economies → luxuries sold in shopping malls
- Some countries have lower internet use and reduces scope for online retailing
- Distribution of perishable goods can be a problem in hot countries with poor infrastructure
- Poor infrastructure can mean supply chains are unreliable
branding and differentiation in global markets
- Brand recognition is key
- Will be successful if product is obviously better at quality/performance etc
- Brands add value to product → Emerging economies MNCs etc reliable features provide a quality guarantee → will not be unreliable like domestic firms
- Brands and differentiation provide buyers with visible status symbols
