Chapter 12: Flashcards
What is the global marketing management trend today?
Trend towards localizations!
This is because the efficiency of customization is make possible by the internet
AND
The increase in flexible manufacturing processes
What is the marketing perspective on market segmentation?
They say that customization is always best, one has to be flexible, tractable
But, the best companies avoid just using country borders, but more so carefully selecting segments
Explain the trends and development in global marketing
We are moving away from “global” campaigns towards more localized ones.
Consumers are picker, money wise and nationalistic.
What was Nestlé’s way? What was their strategy?
- think and plan long ter
- decentralize
- Stick to what you know
- Adapt to local taste
What are the benefits of global marketing?
- Knowledge helps scale production and marketing efforts for multinational businesses
- Global diversity in marketing talent leads to new approaches across markets
- Improved coordination and integration of marketing allows for transfer of knowledge across countries
- Gives marketers access to toughest customers
- Financial benefits from diversity of markets
What is meant by “planning for global markets”?
Planning is a systematized way of relating to the future.
It is an attempt to manage the effects of external, uncontrollable factors on the firm’s strengths, weaknesses, objectives, and goals to attain a desired end.
Corporate planning
Long term, generalized goals for the enterprise as a whole
Strategic planning
Conducted at the highest levels of managment
Short term and long term goals of products, capital, research
Tactical planning
Conducted locally, addresses marketing and advertising
Actions and allocation of resources to implement the strategic planning goals in specific markets
Company objectives and resources in planning for global markets
Important to define the objectives, without companies normally fail
Company must clarify orientation of domestic and international divisions
Foreign markets might not match, and the company has to redefine its objectives, alter scale or abandon the market
International commitment in planning for global markets
Strong commitment is required for successful international operations. There needs to be enough determination to stay in the market long enough to make profit (could take some time)
Often hard with management, therefore they must invest enough finances and personnel for management
What is the systematic international planning process:
- preliminary analysis and screening
- Defining market segments and adapting to the marketing mix accordingly
- Developing the marketing plan
- Implementing and controlling
Explain phase 1 of the planning process:
- preliminary analysis and screening
Evaluate potential of the foreign market, does it match the company?
Analyse environment in which company plans to operate
Explain phase 2 of the planning process:
- Defining market segments and adapting to the marketing mix accordingly
The potential markets must be identified and analyzed furthers
Analyze questions about adaptation:
- are there cultural/environmental adaptations that must occur?
- will adaptation costs allow profitable market entry?
Explain phase 3 of the planning process:
Developing the market plan
Occurs when target market is specified, entry mode, budget, timeline, ect are made.
After, company may decide to not enter market
Explain phase 4 of the planning process:
Implementation and control:
Planning process continues even after implementation’
What are the four broad modes of foreign market entry?
Exporting
Contractual agreements
Strategic alliances
FDI
Exporting accounts for ___ % of global economic activity
10
What kinds of exporting are there?
Direct exporting
Indirect exporting
Internet
Direct sales
Difference between direct and indirect exporting?
Direct: company sells to a customer in another country
Indirect: company sells to a buyer (importer) in the home country, who then exports the product
Is exporting good for mature MNC?
Yes, if they have strong marketing and relational capabilities. Ex: Boeing
The internet as exporting:
The Internet is becoming increasingly important as a foreign market entry method.
This was unexpected, at first it was only used for domestic sales.
The rise of the internet led to massive markets, multilingual sites and dedicates sites for foreign markets
Direct sales as exporting
Used by high-tech and industrial products, may involve establishing office in foreign country
Contractual agreements as market entry strategy
Contractual agreements are long-term associations between a company and another in a foreign market.
Contractual agreements generally involve the transfer of technology, processes, trademarks, and/or human skills
Two main categories:
- Licensing
- Franchising
What is licensing?
Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing.
It establishes a foothold in a foreign market, low risk
Used by small and medium-sized companies
What is franchising?
The franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management.
Ex: fast-food chains
Fosters local ownership and employment
Strategic international alliances (SIA’s) as market entry strategy
Relationship established by two or more companies where they cooperate on mutual need, and share risks.
Ex: Star Alliance
Why do firms enter into SIA’s?
Rapid expansion into new markets
Access to new tech
More effective production and innovation
Reduced marketing costs
Access to additional products and capital
Joint ventures as market entry strategy
It is when two or more companies create a separate legal entity, with shared management
Equity positions held by both partners
What is a consortia?
Similar to joint venture, but difference is that they typically involve a large number of participants AND they frequently operate in a country or market in which none of the participants are active
It helps lessen risks of JV, and are developed to pool financial and managerial resources
FDI as market entry strategy
Companies may invest locally to capitalize on low cost labor,
to avoid high import taxes,
to reduce the high costs of transportation to market,
to gain access to raw materials and technology
to gain market entry.
Organizing for global competition
There is no clear organizational structure that successfully integrated both domestic and foreign market needs perfectly, there are so many variables.
There are usually 3 structure are
1. Global product division
2. Geographical divisions
3. A matrix organization
Locus of Decision
Where decisions will be made, by whom, and by which method constitute a major element of organizational strategy
Management needs to be clear on the international, regional and local levels
Centralized organizations
They are experts in one location
High degree of control on planning and implementation phase
Decentralized organization
delegate responsibility to regional managers
direct day-to-day contact with the market
lack of braod view
