APPLIED MARKETING STRATEGIES

Lecture 32

MGT 681

The New Global Paradigm

Part 6

Lecture Agenda• What factors should a company review

before deciding to go abroad?• How can companies evaluate and select

specific foreign markets to enter?• What are the differences between marketing

in a developing and a developed market?• What are the major ways of entering a

foreign market?

Lecture Agenda• To what extent must the company adapt its

products and marketing program to each foreign country?

• How do marketers influence country-of-origin effects?

• How should the company manage and organize its international activities?

What is a Global Firm?A global firm is one that operates in more

than one country and captures R&D, production, logistical, marketing, and

financial advantages in its costs and reputation that are not available to purely

domestic competitors.

Major Decisions in International Marketing

• Deciding whether to go• Deciding which markets to enter• Deciding how to enter• Deciding on the marketing program• Deciding on the marketing organization

Reasons for Pursuing Global Markets

• Better profit opportunities• Larger customer base to achieve economies

of scale• Less dependence on any one market• Desire to counterattack global competitors

in their home markets• Customers require international service

Risks to Going Abroad

• Lack of knowledge of foreign culture• Lack of understanding of foreign needs• Lack of understanding of foreign regulations• Lack of managers with international expertise• Changes in the country environment

Four Stages of Internationalization

• Stage 1: No regular export activities• Stage 2: Export via independent agents• Stage 3: Establish sales subsidiaries• Stage 4: Establish production facilities

abroad

Momentum in Market Entry

Waterfall Approach

Sprinkler Approach

Born Global

Local Dynamos

Regional Free Trade Zones

• European Union• NAFTA• MERCOSUL• APEC• ASEAN

Key Emerging Markets

• Brazil• Russia• India

• China• Indonesia• South Africa

Five Modes of Entry into Foreign Markets

• Indirect exporting• Direct exporting• Licensing• Joint ventures• Direct investment

Indirect Exporting Methods

Direct Exporting Methods

• Domestic-based export department• Overseas sales branch or subsidiary• Traveling export sales representatives• Foreign-based distributors or agents

Licensing

Joint Ventures

Direct Investment

Global MarketingAdvantages• Economies of scale• Lower marketing costs• Power and scope• Consistency in brand image• Ability to leverage• Uniformity of marketing practices

Disadvantages• Differences in consumer needs, wants, usage patterns• Differences in consumer response to marketing mix• Differences in brand development process• Differences in environment

Cultural Dimensions• Individualism versus collectivism—In collectivist societies, the self-

worth of an individual is rooted more in the social system than in individual achievement (high collectivism: Japan; low: United States).

• High versus low power distance—High power distance cultures tend to be less egalitarian (high: Russia; low: Nordic).

• Masculine versus feminine—This dimension measures how much the culture is dominated by assertive males versus nurturing females (highly masculine: Japan; low: Nordic countries).

• Weak versus strong uncertainty avoidance—Uncertainty avoidance indicates how risk-aversive people are (high avoidance: Greece; low: Jamaica). Consumer behavior differences as well as historical market factors lead marketers to position brands differently in different markets.

What Marketing Aspects Might Be Adapted for International Marketing?

• Product features• Labeling• Colors• Materials• Sales promotion• Advertising media

• Brand name• Packaging• Advertising execution• Prices• Advertising themes

Commandments of Global Branding

• Understand similarities and differences in the global branding landscape

• Do not take shortcuts in brand building• Establish a marketing infrastructure• Embrace integrated marketing

communications• Establish brand partnerships

Commandments of Global Branding

• Balance standardization and customization• Balance global and local control• Establish operable guidelines• Implement a global brand-equity

measurement system• Leverage brand elements

Five International Product and Communication Strategies

Levels of Product Adaptation

• Production of regional product versions• Production of country versions• Production of city versions• Production of retailer versions

Price Choices

• Set a uniform price everywhere• Set a market-based price in each country• Set a cost-based price in each country

What is a Gray Market?

A gray market consists of branded products diverted from normal or

authorized distributions channels in the country of product origin or cross

international borders; dealers in lower priced countries sell products in higher

priced countries

Country of Origin Effects

• Country-of-origin perceptions are the mental associations and beliefs triggered by a country.

• People are often ethnocentric and favorably predisposed to their own country’s products