Ch 11 Benefits of Global Orientation

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Global Marketing Management Planning and
Organization
Chapter
7-8
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Definitions

• Segmentation
• Targeting
• Positioning

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Global Segmentation Variables
Others May Be More Important

• Climate
• Language Group
• Media Habits
• Age
• Income

Country
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Global Segmentation Variables

• Demographics
• Psychographics
• Product-related
• Frequency of use
• Loyalty to brand
• Benefits sought

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Nestles Way To Dominate Its Global Markets

• Think and plan long term
• Decentralize
• Stick to what you know
• Adapt to local tastes

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Benefits of Marketing Globally
Economies of Scale in Production Marketing
Transfer of Experience and Know-How across
Countries
Uniform Global Image
Control and Coordination of Operations
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International Planning Process
Information derived from each phase, market
research, and evaluation of program performance
Phase 1 Preliminary analysis and screening
Matching company/country needs
Phase 2 Adapting the marketing mix to target
markets
Phase 3 Developing the marketing plan
Phase 4 Implemen- tation and control
Environmental uncontrol-lables, company
character, and screening criteria
Matching mix requirements
Marketing plan development
Implementation, evaluation, and control
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International Planning Process
Phase 1 Preliminary Analysis and Screening
Matching Company/Country Needs
Company Character ? Philosophy ? Objectives ? R
esources ? Management style ? Organization ? Fi
nancial limitations ? Management and
marketing skills ? Products ? Other
Home Country Constraints ? Political ? Legal
? Economic ? Other
Host Country(s) Constraints ? Economic
? Political/legal ? Competitive ? Level of
technology ? Culture ? Structures of
distribution ? Geography ? Competition
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International Planning Process
Phase 2 Adapting The Marketing Mix To Target
Markets
Product ? Adaptation ? Brand name ?
Features ? Packaging ? Service ?
Warranty ? Style ? Standard Price ?
Credit ? Discounts
Promotion ? Advertising ? Personal selling ?
Media ? Message ? Sales promotion Distribution
? Logistics ? Channels
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International Planning Process
Phase 3 Developing the Marketing Plan
? Situation analysis? Objectives and goals?
Strategy and tactics? Budgets ? Action programs
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International Planning Process
Phase 4 Implementation and Control
? Objectives? Standards? Assign
responsibility? Measure performance ? Correct
for error
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Alternative Market Entry Strategies

• Exporting
• Internet
• Contractual Agreements
• Licensing
• Franchising
• Joint Ventures
• Consortia
• Direct Foreign Investment
• Strategic International Alliances

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Licensing

• A contractual agreement whereby one company (the
  licensor) makes an asset available to another
  company (the licensee) in exchange for royalties,
  license fees, or some other form of compensation
• Patent
• Trade secret
• Brand name
• Product formulations

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Advantages of Licensing

• Provides additional profitability with little
  initial investment (ex Coke)
• Provides method of circumventing tariffs, quotas,
  and other export barriers
• Attractive ROI
• Low costs to implement

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Disadvantages of Licensing

• Limited participation
• Returns may be lost
• Lack of control
• Licensee may become competitor
• Licensee may exploit company resources

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Special Licensing Arrangement

• Franchising
• Contract between a parent company-franchisor and
  a franchisee that allows the franchisee to
  operate a business developed by the franchisor in
  return for a fee and adherence to franchise-wide
  policies

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Investment

• Partial or full ownership of operations outside
  of home country
• Foreign Direct Investment
• Forms
• Joint ventures
• Minority or majority equity stakes
• Outright acquisition

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Joint Ventures

• Entry strategy for a single target country in
  which the partners share ownership of a
  newly-created business entity

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Joint Ventures

• Advantages
• Allows for sharing of risk (both financial and
  political)
• Provides opportunity to learn new environment
• Provides opportunity to achieve synergy by
  combining strengths of partners
• May be the only way to enter market given
  barriers to entry

• Disadvantages
• Requires more investment than a licensing
  agreement
• Must share rewards as well as risks
• Requires strong coordination
• Potential for conflict among partners
• Partner may become a competitor

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Global Strategic Partnerships

• Possible terms
• Collaborative agreements
• Strategic alliances
• Strategic international alliances
• Global strategic partnerships
• Examples research firms, airline industries

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Characteristics of Strategic Alliances

• Participants remain independent following
  formation of the alliance
• Participants share benefits of alliance as well
  as control over performance of assigned tasks
• Participants make ongoing contributions in
  technology, products, and other key strategic
  areas

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Disadvantages of GSPs

• Must share control over assigned tasks
• Risk of strengthening a competitor
• Conflict between participants

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Advantages of GSPs

• Enables firms to share high costs for a project
• Accommodates a lack of skills, resources within a
  company by forming an alliance with company with
  those resources (Example Nestle and General
  Mills)
• Provides access to national and regional markets
• Provides learning opportunities

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Attributes of Global Partnerships

• Two or more companies develop a joint long-term
  strategy
• Relationship is reciprocal
• Partners vision and efforts are global
• Relationship is organized along horizontal lines
  (not vertical)
• When competing in markets not covered by
  alliance, participants retain national and
  ideological identities