4.3 Global Marketing

Question 1

what is the essay structure for a 20 marker

Answer 1

introduction: AO1 - knowledge

first option - argue in favour and against

second option - argue in favour and against

conclusion
- answer question:
it depends upon:
1. the market the business is operating in
2. objectives of the business
3. products the firm is making/selling
4. situation eg the external environment

Question 2

How is Economies of Scale defined?

Answer 2

Savings facilitated by an increased level of production.

Question 3

How is Globalisation defined?

Answer 3

The process of businesses starting to operate internationally and develop international influence.

Question 4

How is Global Marketing Strategy defined?

Answer 4

The process of adjusting a company’s marketing strategies to reflect conditions, consumer tastes and demand in other countries.

Question 5

How is Glocalisation defined?

Answer 5

The practice of conducting business according to both local and global considerations

Question 6

How is Localisation defined?

Answer 6

Strategies that adjust products to fit with target customers

Question 7

What is Global Localisation?

Answer 7

• this differs from having a common strategy for all countries
• it involves adapting to local expectations in order for a business to succeed in an international market
• ‘think global’ act local’ –> aim to reach customers around the world but to be successful with those potential customers businesses need to take account of local tastes, customs and traditions.

Question 8

What are the different marketing approaches?

Answer 8

1 - Ethnocentric (domestic) approach
2- Polycentric (international) approach
3 - Geocentric (mixed) approach

Question 9

What is Ethnocentric marketing?

Answer 9

Products and marketing are not adapted and the firm approaches the global market the same as the domestic market

Question 10

What are the advantages to Ethnocentric marketing?

Answer 10

Firms can take advantage of economies of scale because products are standardised

Question 11

What are the disadvantages to Ethnocentric marketing?

Answer 11

However, the product may not sell well if it isn’t adapted to a local market

Question 12

What is Polycentric marketing?

Answer 12

Each host country is considered unique, and businesses adapt their products to the local market

Question 13

What are the advantages of Polycentric marketing?

Answer 13

The product should sell well because it has been tailored to specific customer needs

Question 14

What are the disadvantages of Polycentric marketing?

Answer 14

However, production costs may be higher because opportunities for economies of scale are lost

-difficult to compete with established local brands

Question 15

What is Geocentric marketing?

Answer 15

-A combination of the ethnocentric and polycentric approaches.
Firms promote the global brand but tailor the products to local markets

Question 16

What are the advantages of Geocentric marketing?

Answer 16

-Tailoring product to local taste and needs can lead to higher sales

Question 17

What are the disadvantages of Geocentric marketing?

Answer 17

• Higher cost of product development

Question 18

How can we apply the Marketing Mix to global marketing?

Answer 18

• Product –> how much should a business modify its product (ethnocentric/polycentric/geocentric)
• Price –> Must consider, local incomes, taxes, rents etc.
  The iPhone costs less in Russia than in US. Prices will also reflect different local factors, such as wage rates and taxes
• Place –> need to take into account of how local consumers typically buy there products e.g. US consumers usually shop using large supermarkets than convenience store
• Promotion –> Must be conscience of language and culture differences

Question 19

How can we apply Ansoff’s matrix to global marketing?

Answer 19

• Market penetration –> exists where a business adapts product in markets which it already operates. e.g. Mcdonald’s already operates in Japan so they developed the Teriyaki Mcburger into this (existing) market
• Product development –> bringing in a new product into existing markets
  -Market development –> marketing existing products into new markets. this is not always straight forward, as different customers in different places have their own tastes and preferences. the existing product might need refining to meet these needs
  -Diversification –> occurs when new products are developed for new markets

Question 20

How is Global Niche Market defined?

Answer 20

customers who live in more than one country and have particular needs that are not fully met by the global mass market.

Question 21

What is a Global Niche Market?

Answer 21

• Like niche markets, they target a specific group of people, known as subcultures.
• Global niche markets are where customers live in more than one country and have particular needs not met by the mass market.
• The local market is too small, but through the global market it is viable. Trends, whereby international perceptions, believe a particular country and brand produces quality products.

Question 22

What are the Features of Global Niche Markets?

Answer 22

Higher prices can be charged on these products and this is a very desirable position for a business. Features of the markets are:
- A clear understanding of the needs and wants of the market segment
- An emphasis on quality
- Excellent customer service
- Expertise in the product area
- Prioritising profit rather than market share
- Innovation

Question 23

Why do people pay higher prices for global brands rather than local equivalents?

Answer 23

• this lies in the global nature of the world economy. Aspirational, niche brands in the UK are likely to be similarly aspirational in other countries. This transmission of desirability is the function of a range of factors:
• The internet and e-commerce –> these have provided an important marketing tool and an opportunity to spread information. e-commerce has allowed businesses to spread into foreign market and create and meet local demands that would otherwise have been impossible
• Social Media –> youtubers and vloggers help promote niche brands to subscribers
• Ease of Travel –> global brands are in multiply countries, far away from their home country, so tend to see them wherever you go. these have been facilitated by low-cost airlines.

Question 24

How has Culture Diversity impact business?

Answer 24

• As English becomes more of a dominant language (more so than 30 years ago due to the expansion of the EU), it make it easier for UK businesses.
• Other cultural difference may affect how a product is marketed:
  
  • Name suitable in one country may have a totally
    different meaning in another
  • Cultures and traditions means some products
    wouldnt work elsewhere
  • Colours have different meanings in different
    countries e.g. black in the Far East is associated with
    mourning
  • payments may be seen as bribes in some countries,
    but in other payments to government or industry
    official many be required to get things done, form
    electricity connection to securing contracts

Question 25

How can the marketing mix be adapted to global niches?

Answer 25

Product –> global niche products often place emphasis on quality, differentiate its standard product into something that shows it is meeting the needs of niche customers
Price –> can charge a premium price
Place –> more careful and exclusive about distribution channels. Mercedes-Benz have exclusive dealerships. Montblanc sells through authorised retailers. Adds to the exclusivity of a brand
Promotion –> methods are based around brand name and exclusivity.they need to be more targeted than in mass market promotion The name may need a change due to the language. Car names are often changed. by being sensitive to national land cultural difference the promotion costs can therefore increase, this can impact prices, and ultimately competitiveness

Question 26

What are the advantages of global niche marketing?

Answer 26

• Prices are higher than in mass markets – demand is more price inelastic
• The product is distributed through specialist retailers or directly to the consumer. This has advantages in terms of image. For example, the Billabong surfer image might be compromised if sold widely in supermarkets.

Question 27

What are the disadvantages of global niche marketing?

Answer 27

• Products sell in relatively low volumes (compared with mass markets), so profits need to be high enough to make it worthwhile.
• The niche market must be large enough to support the business and specialist distribution. The small size may prevent economies of scale that compete with larger competitors

Question 28

How is Culture audit defined?

Answer 28

Study and examination of an organisation’s cultural characteristics (such as assumptions, norms, philosophy, and values) to determine whether they hinder or support its vision and mission.

Question 29

How is Ethnocentrism defined?

Answer 29

The tendency of people to view their own cultures, ethics and norms as superior. The evaluation of other cultures according to preconceptions originating in the standards and customs of one’s own culture.

Question 30

How is High-context culture defined?

Answer 30

Cultures, including much of the Middle East, Asia, Africa and South America, that are relational, collectivist, intuitive, and contemplative. This means that people in these cultures emphasis interpersonal relationships. Developing trust is an important first step to any business transaction.

Question 31

How is Low-context culture defined?

Answer 31

Cultures such as those of North America and much of Europe, that tend to say what they mean. A communication style that relies heavily on explicit and direct language..

Question 32

How does Cultural and Social factors affect global marketing?

Answer 32

• doing business across cultures can be challenging. without an understand of national and corporate cultures and languages the potential to offend is very real.
• In order to market effectively in other countries, businesses must overcome ethnocentrism (the tendency of people to view their own culture, ethics and norms as superior).
• In international business you must try to understand the values of the country and the business and try to do right by them

Question 33

How can cultural difference affect business operations?

Answer 33

• working across national culture can ad levels of complexity to business operations.
• each step in conducting business need to be carefully prepared for and considered , to take account of cultural differences and build trust.
• to understand how companies need to think about each level of the business relationship: the introductions, the negotiations and communicating on a day-to-day basis
• Businesses may have formal and informal procedures that if ignored can cause offence.
  eg Vietnam – you shake both hands when entering a room, nod heads and exchange business cards, which must be received with both hands. The card should be studied, otherwise they will take great offence.

Question 34

What are some Cultural or Social factors that can affect business operations?

Answer 34

• Language
• Unintended meanings
• Different tastes
• Inappropriate branding and promotion

Question 35

How can language affect business operations?

Answer 35

• Although most international business is done in English, knowing other languages helps build relationships and can avoid misunderstandings so reduces risk and shows sensitivity.
• Communication is also different for high-context and low-context cultures.
• Low Context –> Europe and USA – say what you mean
  direct.
  
  • Get down to business, socialise after, what is said is
    taken at face value, formal letters/contracts are
    essential and relied upon during and after
    negotiations are completed
    -High Context –> Middle East/Asia/Africa-SA.
  • Sometimes yes doesn’t mean yes in high context
    cultures In Saudi Arabia, ‘yes’ means ‘I hear you’,
    rather than ‘I agree’. Socialising and building trust can
    take first to create relationships place before
    ‘negotiating actually happens.

Question 36

How can Unintended meanings affect business operations?

Answer 36

Can cause great offence
- Thumbs-up –> in Iran it can mean ‘sit on it’ which is their equivalent to holding a middle finger up
- OK sign –> in Brazil and Italy it signifies a similar shaped part of the human anatomy
- Pointing with the index finger –> in japan its considered rude and aggressive
- Come hither gesture –> Philippines its considered fit for dogs and is actually punishable by arrest
-Use of left hand –> In Muslim countries the left hand is reserved for ‘cleaning yourself’

Question 37

How can different tastes affect business operations?

Answer 37

• Some countries will require more adaptations to products than others. e.g. the changes from UK product to Australian markets is less than to Chinese markets as they are cultural more similar.
• However, drinks, like Coke, have the same formula, but the water may taste different in different countries.
• Other differences can be based on religious beliefs. The use of halal meat is common in fast food restaurants in the Middle East. By respecting these beliefs businesses ensure they adapt sufficiently to gain a market share from local businesses who may be better suited to understand regional specifications.
• Some adaptations are based on legal requirements. Some US products such as Pringles and Starbursts have to have additives removed to be able to be used in the UK.

Question 38

How can inappropriate branding and promotion affect business operations?

Answer 38

• There are many accounts of mistakes involving language, mistranslations and unintended meanings when businesses operate
• Sometimes this can be due to laziness and poor efforts to check with native speakers of a language that a translation is correct. e.g. General Motors sold its branded ‘Nova car; in Latin America where its name in Spanish means ‘no go’ which isnt bey good for a name of a car
• direct translations and local colloquialisms arent possible in other languages.
• there is also a different approaches to promotion. In Africa – due to low levels of literacy, products have an image of what is inside the packaging, Nestle put a picture of a baby on their baby food products!
• Promotions and advertising should be adapted too. Just because a marketing campaign worked in one country doesnt mean it will work in another Not considering your new market can be costly.