4.3 global marketing Flashcards
what is global marketing strategy?
the process of planning, producing, placing and promoting a business’s product or service to the global market
what will happen to a business as they expand into international markets? (marketing)
they will often need to adapt their marketing strategies to meet the needs of an international customer
what does the level of adaptation that a business adopts depend on?
-the branding and core competencies of the company
-the nature of its products or service
what are the four generic approaches to marketing in international markets?
-glocalisation
-ethnocentric (domestic)
-polycentric (international)
-geocentric (mixed)
what is glocalisation?
the process of adapting global products or services to local markets (it recognizes that different markets have different preferences and needs)
features of the ethnocentric/domestic approach:
-businesses see the domestic market and foreign markets as very similar
-no changes to the products for global markets, marketing of the product will be the same
advantages of the ethnocentric approach:
1) businesses benefit from economies of scale → the product is standardised and mass produced
2) costs are lower, there’s no investment into product development to adapt products for different markets
3) the approach maximises the appeal and unique features of such things as regional food that would usually be exported to a foreign market
disadvantages of the ethnocentric approach:
-the business could lose sales as the product is not tailored to the needs and wants of markets overseas
-this approach can be perceived as cultural insensitivity and may not resonate with local customers in other countries
example of a business that uses the ethnocentric approach:
Apple sells standardised products across their global markets e.g. iPhone, iPad which helps them to reduce costs as they can benefit from economies of scale
features of the polycentric/international approach:
-business adapt their marketing strategy by tailoring their products to the local market
-the company treats each country as a unique market and develops a customised marketing mix for each market
advantages of the polycentric approach:
-sales are likely to increase as the product is tailored to meet the needs of customers
-helps to develop brand loyalty in overseas markets
-allows better competition with established local brands
disadvantages of the polycentric approach:
-product development to adapt the product is expensive
-additional costs in market research to find out about the market
-difficult to compete with established local brands regardless of adaptation (stronger brand identity)
example of a business that uses the polycentric approach:
-KitKat (Nestle) has developed different adaptations of the chocolate to reach different consumers in the international market
-the packaging for KitKat in Japan was changed to include cherry blossoms, a symbol of good luck
↳ additional flavours, such as purple sweet potato and matcha powder, were included to appeal to the tastes of the local market
features of the geocentric/mixed approach:
(a mix of the polycentric and ethnocentric approach)
-slight adaptations and tweaks to suit each international market
-a consistent brand image is maintained across markets
(glocalisation)
advantages of the geocentric approach:
-products are still tailored to suit the needs of the local market (sell well)
-a brand identity is maintained/built between markets
disadvantages of the geocentric approach:
there will be costs associated with the product development and changes required to meet the needs of the local market
example of a business that uses the geocentric approach:
-McDonald’s has a geocentric approach by adapting their menu to meet the tastes and culture of different overseas markets
-McDonald’s do not offer beef or pork in India due to religious reasons. However in the majority of western countries, McDonald’s has standardised products such as the Big Mac
Examiner Tips and Tricks
The question can ask you to recommend which type of approach a business should take when expanding abroad. You should take into account the best approach for the type of business that is being considered in the extracts
what is the marketing mix?
deals with the way in which a business uses price, product, place (distribution) and promotion to market and sell its product
(the 4Ps)
how do businesses use the marketing mix when selling abroad?
businesses have to adapt the marketing mix to a new overseas market ensure the success of the product/service
what is an advantage of adapting the marketing mix to local needs?
companies can effectively penetrate global markets and build a strong global brand
application & adaptation of marketing mix (4Ps): place
-businesses have to identify the best channel of distribution to get the product/service to the customer in a particular market (MNCs, exporting)
-they also need to consider the available technology (e-commerce)
businesses need to take into account how local customers typically buy their products
application & adaptation of marketing mix (4Ps): product
-businesses consider how much they should adapt their products to meet new markets overseas
-they need to consider if they will take an ethnocentric, polycentric or geocentric approach
application & adaptation of marketing mix (4Ps): price considerations
when deciding on a pricing strategy, businesses must consider…
-customer incomes
-costs of production
-taxes
-competition
-the economic environment
-the stage of the product life cycle the product is at within that market
application & adaptation of marketing mix (4Ps): promotion
-promotion must to be adapted to meet language and cultural differences
-businesses must aim to choose the most effective method of promotion for that market
which strategy can be adapted & applied to global markets?
ansoff’s matrix
what is ansoff’s matrix?
a strategic planning tool that helps businesses identify potential growth opportunities by analysing their product and market strategies
which strategies does ansoff’s matrix include?
-market penetration
-market development
-product development
-diversification
which two strategies of ansoff’s matrix link to expanding into global markets?
as a business moves into an international market it will either adopt a market development strategy (ethnocentric or geocentric) or a diversification strategy (polycentric)
drawbacks of market development:
-businesses may have to adapt the product to meet the needs & preferences of customers in global markets
-strategy carries more risk as customers may not understand the product & businesses may not understand customer behaviours
requirements of product development:
-market research to identify the target market’s needs and preferences (expensive, time consuming)
-developing products that meet identified needs
-adaptation of the marketing mix to ensure that the products resonate with local consumers
drawbacks of diversification:
-high risk strategy → the business may have limited knowledge about the market
-strategy requires a deep understanding of local market conditions and consumer behaviour to ensure that the new product and market are a good fit for the business
what is a global niche market?
-targeting a specific, small group of the global market (subcultures)
-people with common interests and unique needs
-the customers for a global niche market live in more than one country and have specific needs that are not met fully by the global mass market
numbers of subcultures:
subcultures may be very small within an individual country, however when combined across the world the number of customers may be significant
features of niche global markets:
-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
features of niche global markets: excellent customer service
as customers are usually paying higher prices for the product/ service, they expect exceptional customer service
features of niche global markets: innovation
innovation ensures that products are highly differentiated and maintain a unique selling point (USP) that meets the needs of the target market
features of niche global markets: prioritising profit over market share
Niche markets are lucrative and businesses focus on increasing profits that they can re-invest into improving their products/services
features of niche global markets: expertise in product area
having employees that are highly skilled and keeping up to date with the latest developments within the niche market helps to build value for the customers
features of niche global markets: emphasis on quality
businesses need to ensure the quality of the product is exceptional as they are targeting customers who pay for high value products
features of niche global markets: clear understanding of the wants and needs of customers
the business may have relatively few customers so needs to ensure that the needs and wants of these customers is fully understood
global niche markets & international expansion:
-sometimes businesses that offer a highly specialist product in one market find it easier to expand internationally
-because the innovation, expertise and specialist knowledge may not already exist in other countries, unlike the situation for most mass markets
challenges of global niche marketers:
the challenge for niche marketers is not developing desirable products, but being able to find, attract and supply their products to a small group of particular customers
niche markets & the transmission of desirability:
-highly desirable and exclusive brands in one country are often just as desirable in another country
-in many situations, they may even be more desirable because they are seen as more exclusive and perhaps exotic
international niches:
-though common niches with similar characteristics can exist across countries, it is also possible for businesses to find niches that are unique to a country
-niche markets are small by definition, but they can also differ through the fact that people have different cultures, values and interests in different parts of the world
-mass markets transcend international boundaries, but a niche market may only exist within a country
factors contributing to international desirability: (global niches)
-the internet and e-commerce
-ease of travel
-social media
-music, form & tv
how does the internet and e-commerce allow businesses that target global niche markets to succeed?
-it allows information to be spread on a global scale
-the internet allows businesses to understand and meet local demands that before would not have been possible
how does ease of travel allow businesses that target global niche markets to succeed?
-low cost airlines
-increased travel allows individuals to be exposed to global brands when visiting other countries
how does social media allow businesses that target global niche markets to succeed?
-the rise of platforms such as Facebook, Twitter and YouTube has lead to a growing trend for vloggers
-vloggers often promote niche brands to subscribers
adapting the marketing mix to suit global niches involves…
tailoring the 4Ps of marketing to meet the specific needs and preferences of a particular niche market
adapting the marketing mix to suit global niches: product
-marketers design products with a focus on quality and premium service (luxury cars, watches)
OR
modify the features of the product to meet the specific needs of a niche target audience
↳ (e.g. a business that produces luxury watches can offer a line of vegan watches for consumers who are looking for high-quality and exclusive products that are also cruelty-free)
adapting the marketing mix to suit global niches: price
-the nature of niche markets dictates that pricing must deliver a high profit margin on each unit sold
-higher prices are sold so that the product isn’t intended for the mass market
adapting the marketing mix to suit global niches: promotion
-branding is vital in niche markets → promotional tools will emphasise exclusivity (often based around the brand name) and carefully target customers
-needs to be more targeted than mass market promotions
-business must be sensitive to cultural differences
adapting the marketing mix to suit global niches: place
-a narrow range of channels using specialist agents and dealers will support an image of quality and exclusivity
-must be careful when selecting distribution channels so that control is maintained & the brand isn’t tarnished
what is cultural diversity?
the idea different groups across the globe have different interests & values)
business activity & cultural diversity:
businesses need to take into account the different cultural behaviours and customs when operating in overseas markets
(In India, beef and pork are not consumed for religious reasons. Fast food outlets have adapted their menu to take this into consideration)
(in the United Arab Emirates there are rules around the consumption of alcohol that businesses need to adhere to)
what is a barrier to successful marketing in international markets?
cultural/social factors
(global businesses must consider various cultural and social factors to effectively market their products/services in different countries and regions)
benefits of understanding cultural differences:
businesses can build strong relationships with their global customers and achieve long-term success
what are the social and cultural factors that a business should consider?
-cultural differences
-different tastes
-language
-unintended meanings
-inappropriate/inaccurate translations
-inappropriate branding & promotion
what is culture?
it includes the beliefs, values, norms and attitudes of a society
cultural difference considerations:
this will range from the way people greet one another to what sort of behaviour is considered appropriate
(introductions, day to day communications, formal and informal procedures)
different tastes:
-tastes and preferences vary between cultures and regions →
businesses must adapt their products and services to meet local preferences
-taste can include actual taste for flavours of foods, but also tastes in styles and fashion
-religious beliefs may impact on ingredients used, or preparations -legislation may also differ from country to country, requiring products to be altered
language considerations:
-businesses should make sure that their marketing messages are translated accurately and appropriately
-this involves understanding language nuances and idioms
issues resulting from language:
-mistranslations/insensitive translations can cause confusion and misunderstanding → affect brand identity
examples of language mistakes:
when KFC entered the Chinese market, it translated its slogan “Finger-Lickin’ Good” into Chinese as “Eat Your Fingers Off”, which had negative connotations in the Chinese culture
what are unintended meanings?
unintended meanings can arise when businesses use images, symbols, or language that have different connotations in different cultures
unintended meaning considerations:
-businesses have to consider both verbal and non-verbal communication
-gestures in one region, may have differing meanings in other regions and cultures
high-context cultures:
-cultures are those that communicate in ways that are implicit and rely heavily on context
(much of the middle east, asia, africa and south america)
-these are collectivist & emphasise interpersonal relationships
-developing trust is an important first step to any business transaction
low-context cultures:
-cultures such as those in north america and much of Europe, that tend to say what they mean
-communication style that relies heavily on explicit and direct language
inappropriate or inaccurate translations:
can have serious consequences for businesses → loss of credibility, legal implications, damage to brand reputation
how can businesses prevent inappropriate or inaccurate translations?
-businesses must use professional translation services and consult with native speakers to ensure that their messages are accurately translated and culturally appropriate
-not all words can always be translated directly in to another
inappropriate branding or promotion:
-inappropriate branding and promotion can occur when businesses use images, symbols, or language that are offensive or inappropriate in different cultures
-it is important to also consider cultural norms when creating advertisements to ensure that they don’t cause offence
why do businesses often get marketing and communications wrong when operating in international markets?
ethnocentrism: the fact that people tend to view their own ethics, culture and norms as absolute and superior to others
business cultural norms:
parts of asia prefer to use formal salutations and surnames whereas many western cultures will accept the use of first names when conducting business.
in norway organisational hierarchies are more flat and communication in general is less formal than in most parts of the world.
In parts of italy or mexico being several minutes late for a meeting is considered acceptable, but it is poor manners in the UK.
what is a cultural audit?
a study and examination of an organisation’s cultural characteristics (norms, values)
to determine whether they hinder or support its vision and mission
