4.3 Flashcards
Global marketing
The process of adjusting the marketing strategies of your company to adapt to the conditions of other countries.
3 marketing approaches
- Ethnocentric
- Polycentric
- Geocentric
Ethnocentric marketing
- Standardise the product for all markets to keep costs low (no adaptation)
Positives and negative of ethnocentric marketing
+ Economies of scale
+ Creates distinctive brand
+ Highlights USP
+ Enough consumers (don’t need to adapt)
- Has to be consistent
- Might not suit all tastes
- Political events may make products unpopular
- Ignoring cultural differences may mean loss of sales
Polycentric marketing
Adapt to each market to appeal to local customers to maximise revenue
Geocentric marketing
A mixture of ethnocentric and polycentric to create a global brand
Pros of polycentric marketing
- Markets are unique and need to be addressed in different ways
- There are big differences in cultural e.g. food products
Cons of polycentric marketing
- Economies of scale will be lower
- Higher prices due to investment in research for foreign markets
Pros with geocentric marketing
- ‘global consumers’ with similar tastes can be targeted
- Firm is multinational that can operate across te world
Cons of geocentric marketing
- Requires large investment
- Advertising and promotion needs to ignore differences in culture
Glocalisation
- Combo of ‘globalisation’ and ‘localisation’
- Used to describe products/services that are both developed and sold to global customers but designed so that they suit the needs of local markets
- Think global and act local to personalise marketing
Examples of cultural differences
- Time differences
- How to greet someone when meeting
- Cultural meaning of different colours
- Holidays: different time of year
- Language barriers
- Local knowledge
- Sense of humour
- Body language
What is culture?
The dominant set of behaviours, values, beliefs, and thinking patterns we learn as part of society
3 Reasons encouraging you to adapt your products
- Laws for your products (e.g. changing ingredients, label, safety features)
- The competition
- Cultural differences
Advantages of adapting marketing
- Respect local culture
- Improved local brand image
- Advertising will be more effective
- Low barriers to acceptance
Disadvantaes of adapting the marketing
- Lower economies of scale
- Higher costs
- Requires detailed market research
- Doesn’t allow a single coherent global image
Market penetration
- Targets same customer base in its current global markets
- Looks at EPG marketing approach and decide where and how to invest
Market development
- Ad markets grow & disposable incomes increase (more attractive for global businesses)
Product development
- Take into account the needs of global and international markets
- Spend billions on R&D to innovate and bring out new products (especially when old products are in decline/mature)
Diversification
- Risky strategy (often takeovers & mergers)
- New businesses with more growth potential can help the parent company continue to perform & grow
- Usually when primary business has grown as much as possible, diversification is considered
Advantages of Ansoff’s matrix
- Simplicity - gives a business 4 strategies to choose from
- Shows all possible ways to increase sales
- Analyses risk - by showing how risky each option is
Disadvantages of Ansoff’s matrix
- Competition is ignored so you don’t see the strategy other businesses are following
- Doesn’t consider the costs and benefits of each option
- Difficult to predict
Global niche market
- A very small market in each country but the combination of all the countries together make enough demand to make the business profitable
- Highly specialised & characterised by very loyal customers & premium prices
Why target global market niches
- Technology can be used to make small batches of products
- Selling a unique product or service to a niche group of customers can be highly profitable
- Niches can be stepping stones to a mass market
Advantages of global niche market
- There is less competition and greater customer loyalty in niche markets
- Prices are likely to be higher and therefore profits may be greater
- Risk may be reduced as sales are spread across different countries
- Social media allows brands to be promoted worldwide
Disadvantages of selling in a global market niche
- Some of the possible global economies of scale may not be achievable as each market will need individual attention
- Co-ordination and communications may be more difficult across differing brands and markets
- Some products may require unique ingredients or production techniques that increase costs
- Cultural differences may impact on the ability of the firm to reach its taget customers
