Chapter 1-Global Marketing Introduction Flashcards
Marketing:
the activities that research ‘people’; the intent being to design and implement communication that will enhance business opportunities.
Marketing Mix:
The 4 Ps (Product, Price, Placement, Promotion) - Advertising is the output of marketing
Global Marketing:
Extending marketing beyond the original domestic market.
Standardization vs Adaptation:
defined as the extent to which each aspect of a marketing plan needs to be adjusted to accommodate different country markets.
Customer preferences, managing competitors, channels of distribution, communication and the 4 P’s usually require changes.
Typically, a marketing plan that is designed for one country will not necessarily work in another. Customer preferences are the primary issue; competition and logistics are also major concerns.
Marketing Activity Methods:
Concentration
Coordination
Integration
Concentration:
Concentration: a defined marketing plan that is being applied to one country (and possibly a nearby identical country) Bottle of scotch in Airplanes.
Coordination
Coordination: a modified marketing plan that is being applied to the same customer segment, but in multiple countries.
Integration:
Integration: multiple marketing plans being applied to similar segments in multiple countries. In some cases, their success are interdependent.
Product/Market Growth Matrix
- Market Penetration
- Market Development
- Product Development
- Diversification
Market Penetration
defined as getting your existing customers to buy more of the same products (or finding more customers within the same targeted area). This is the preferred (less risky) option if the current market has not reached ‘saturation’.
Market Development
defined as taking existing products into new markets. Example: a product being sold to U of M students could be offered to all Canadian university campuses. This is minimal risk because you are selling the product to a specific (and researched) segment. You only need to find them at a new location (which is easy because you know where they are) and introduce them to the product.
Product Development
defined as developing new products and placing them in existing markets. Example: a company that sells bathroom cleaning products launches kitchen cleaning products. There is minimal risk because you have already researched the target audience.
Diversification
defined as developing new products for new markets.
“Related Diversification” (example: a coffee shop gets a liquor license so it can offer wine in the evenings): you have minimal research; risky.
“Unrelated Diversification” (selling a new product to a new target market). Not recommended; failure is common (but not advertised).
Single-Country Marketing Strategy: The Process
Use research to position and target the primary target audience.
Refine the Marketing Mix for the primary segment:
1. Product
2. rice
3. Promotion
4. Place
Global-Country Marketing Strategy: The Process
Use research to position and target the primary target audience (with government regulations, tax laws and cultural preferences being substantial inputs to the process).
Refine the Marketing Mix (the 4 P’s); determine the required degree of standardization vs customization.
Coordinate marketing activities across borders.
Develop contingency plans for the competitor’s response.
Trends Affecting Global Business Today
The constant negotiation of trade agreements.
The Internet’s attack on national borders and cultures.
Threats of terrorism.
Confidentiality.
The economic power of Brazil, Russia, India and China.
Foreign acquisitions.
Marketing Factors: Controllable Factors
- Product
- Price
- Promotion
- Channels of Distribution
- Research
Marketing Factors: Domestic Environment Uncontrollables
- Economics (micro)
- Competition
- Available Technology
- Infrastructure
- Political & Legal Forces
- Cultural Variations
- Geography (logistics)
Marketing Factors: Foreign Environment Uncontrollables
- Economics (micro and macro)
- Competition
- Available Technology
- Infrastructure
- Political & Legal Forces
- Cultural Variations
- Geography (logistics)
- Duties, Taxes, Tariffs
- Currency, Inflation
The Self-Reference Criterion (SRC);A Major Obstacle
SRC is an unconscious (and singular) reference to one’s own cultural values, experiences, and knowledge as a basis for decisions.
Cultural ethnocentricity:
is the belief that aspects of one’s culture are superior to another’s.
Consumer ethnocentrism
is the belief that it is wrong or inappropriate to buy foreign made products. With the latter belief, a person would buy a domestic product even if a superior or less expensive foreign made item were available.
These perspectives restrict the ability to assess a foreign market opportunity.
Cultural Considerations
Research: easily learned; provides the foundation for understanding how to interact with a culture.
Examples: preferences to colour, attire, religious obligations.
Experience: observing (or using the documented observations of others) to understand the unspoken variances in cultures.
Examples: the value of time, the social status within a society, the degree of trust of foreigners, the degree of control of a person’s future (which is often a function of religious or spiritual teachings that are carried into business life).
Resistance to Change
A consumers’ acceptance of new products or services is partially controlled by the training and expectations of their specific culture.
Using Hofstede’s work as a reference, a market’s degree of resistance to change is related to the culture’s:
High individualism: willing to try new ideas.
High collective: prefers to follow practices.
Low uncertainty avoidance: accepts risk.
High uncertainty avoidance: avoids risk.
Economic Risks
- Exchange Controls
- Local-Content Laws
- Import Restrictions
- Tax Controls
- Price Controls
- Labour Problems
Infrastructure and Development
From a marketing perspective, ‘Infrastructure’ represents the required capital investment that has been made by a country for the supply chain management of its industries.
Included in a country’s infrastructure are paved roads, railroads, seaports, communications networks, and reliable energy supplies.
The quality of an infrastructure directly affects a country’s economic growth potential and the ability to engage effectively in business.
The Stages of International Marketing Research
- General information about the country (and its political stability).
- General information about social and economic variables that may affect marketing decisions.
- Specific information about existing competitors and possible marketing opportunities.
- Specific information used to make product, promotion, distribution, and price decisions.
- Specific information about the company’s capabilities to undertake this venture.
Emerging Markets
Changes in a country’s economic conditions will reflect on its social conditions.
Changes in a country’s social conditions creates demand.
Changes in demand creates business opportunities.
Strategies for International Expansion
Ethnocentric - conduct marketing plan in 1 country without changing model
Polycentric – Conduct marketing plan in a lot of countries, very costly
Regiocentric Orientation – Regions in a specific country
Geocentric Orientation – Big Players
Ethnocentric Orientation:
based on the concept of ‘extending a standard plan’. It assumes that the 4 P‘s applied at home will be successful everywhere.
This model leads to a ‘standardized’ international plan.
Foreign sales are seen as secondary; they often don’t get adequate investment (in time or money). Example: most Japanese cars made in the 1970‘s that were shipped to North America failed because they were not designed for cold winters or hot summers.
The foreign market is often seen as a place for ‘dumping’ old stock.
–> The result: low costs, low sales, low profits.
Polycentric Orientation:
Assumes that each country is unique and requires individual marketing strategies.
–> This is the extreme case of ‘customized’ marketing.
–> The result: high costs, high sales, low profits.
Geocentric Orientation
The entire world is perceived as a single market; marketing strategies are fully-integrated activities.
There are several ‘headquarters’; each one is identified from a functional perspective (rather than a geographic perspective).
The result: shared costs (globally), higher sales, higher profits.
Regiocentric Orientation:
Assumes that one marketing plan can be developed for a similar group of countries.
–> Standardization exists within each region.
–> Customization exists for each region.
–> The result: shared costs, higher sales, higher profits.
Globalization: 4 Points of View
- Support
- Opposition
- Observers (Philosophers)
- Macro-Economists
Support:
Globalization is evolution – it is the process of using technology to give people what they want.
Global businesses have evolved into integrated organizations that satisfy consumer needs regardless of their location.
Global technology is bringing cultures closer to common beliefs and values.
Government regulations evolve too slowly. To be as effective as possible, governments should minimize their controls on global businesses and allow the market to govern itself.
Opposition
Globalization is not evolution – is a managed long-term strategic plan.
Global organizations (some with net values greater than the countries where they have manufacturing facilities) control weak governments for only their own economic benefit.
Globalization serves only the interests of the powerful and wealthy.
Observers (Philosophers)
In relation to the Industrial Revolution (of the past 200 years) and business principles (of the past 2000 years), Observers view ‘Globalization’ as merely a short-term event; a ‘phase’ in the evolution of business.
Observers believe that every trend has its supporters and critics; it is more important to focus on ‘where we are going’ as opposed to the ‘where we are’.
Macro-Economists
They seek to understand the cause-and-effect relationships within globalization.
They see globalization as neither exclusively ‘good’ or ‘evil’; merely as something to study.
In theory, their intent is to study historical patterns in order to make future predictions regarding economic patterns.
In reality, most of their work is meaningless because the collective body of the profession’s work often contradicts itself.
To Summarize
Standardization vs Adaptation and Product vs. Market are two decisions that evolve throughout the strategic planning process.
Trends and controllable factors enhance opportunities.
Uncontrollable factors and economic risk limits opportunities.
Cultural considerations enhance (and limit) opportunities.
The political/legal environments enhance (and limit) opportunities.
Expansion strategies are often the result of the Executive’s knowledge and awareness of cultural differences.
Globalization perspectives range from positive and evolutionary to negative and management driven/supported.
