PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Marketing Strategies(910008)
Academic Year 2019/2020
Prof. Jan Freidank
Master Degree Course in International Management, Entrepreneurship and Finance
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Table of contentInternational Marketing Strategy / Internationalization
1. Globalization as basis for international marketing strategy
2. Market, competitive and internal analysis
3. Competitive positioning and international segmentation
4. Development of an international marketing strategy
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PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
12 Worldwide Megatrends
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Source: Zukunftsinstitut, 2019 - https://www.zukunftsinstitut.de/dossier/megatrends/
• Individualization
• New Work
• Globalization
• Gender Shift
• Health
• Urbanization
• Silver Society
• Neo Ecology
• Mobility
• Knowledge Culture
• Connectivity
• Security
Megatrends are driving future market development and consumer behavior
1. Globalization as basis for international marketing strategy
https://www.zukunftsinstitut.de/dossier/megatrends/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Dimensions of the global organizational environment
Strong increase of complexity through additional market players
4
Competitors
FIRM
Government Labor
Changes in society
Newtechnologies
Suppliers
Customers
Foreign governments
Foreign Labor
Foreign Competition
Foreign CustomersCompetitiors
Customers
Government Labor
FIRM
1950 - today
1900 - 1950
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Global Digital Snapshot
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Source: We Are Social global 2020
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Internet Penetration 2020
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Source: We Are Social global 2020
1. Globalization as basis for international marketing strategy
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Source: Wearesocial, 2020
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 8
Source: Wearesocial Report, 2020
Social media – Status now
Strong rise of new Platforms like Tiktok
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Online platforms - Structure
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1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The four functions of the platform business model
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https://www.applicoinc.com/blog/what-is-a-platform-business-model/
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Platform businesses in the S& P 500 over the last forty years
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1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Online platforms - Structure
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1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Media Adoption
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Source: Annan, 2012
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
VUCA and the need for changemanagement
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http://zwei2eins.de/en/what/leadership/vuca-world/Video VUCA World
1. Globalization as basis for international marketing strategy
https://www.youtube.com/watch?v=9jd4tq_mwlM
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Influence of environmental changes on organizational dynamics
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Increasing intensity due to fierce competition among all stake holders
Increasing complexity due to additional dimensions
Accelerated changedue to a fast change of
technologies and society
Growing dynamics within
business enterprises‘ environment
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Examples of Companies „loosing theiredge“
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1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Evolution of Strategic Management
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Financial Budgeting
DCF-based capital budgeting
Financial Control through operating budget
Corporate Planning
Medium-term economic forecasting
Formal corporate planning
Diversification and quest for synergy
Creation of corporate planning departments
Strategy as Positioning
Industry Analysis
Market Segmentation
The experience curve
PIMS Analysis
Planning business portfolios
Quest for Competitive Advantage
Analysis of resources and capabilities
Shareholder value maximization
Restructuring and re-engineering
Alliances
Strategy for the New Economy
Strategic innovation
New business models
Disruptive technologies
Strategy in the New Millemium
CSR and business ethics
Competing for standards
Winner-take-all markets
Global strategies
1950 1960 1970 1980 1990 2000 2009
Source: Grant, 2012
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 18
Companies have to think and act globally because of …Domestic-market saturation in the industrialized parts of the world and marketing opportunities overseas (e.g., emerging markets!) are evident in global marketing.
Competition around the world – including new competitors from developing countries is intensifying.
Global competition also leads to global cooperation.
The Internet and electronic commerce (e-commerce) are bringing major structural changes to the way companies operate worldwide.
The term global refers to both the competitive pressure and expanding market opportunities.Companies (whether global or not) can no longer avoid competition from around the world.
Saturation of domesticmarkets
Global competition
Need for global cooperation
Internet revolution
Source: Kotabe/Helsen, 2015.
Why International Marketing is Imperative
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 19
„International Marketing is the performance of businessactivities that direct the flow of a company‘s goods and
services to consumers or users in more than onenation for a profit.“ (Ghauri/Cateora, 2014, p. 7)
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 20
Environmental uncontrollables
country market A
Environmental uncontrollables
country market B
Environmental uncontrollables
country market C
Source: Ghauri/Cateora, 2014.
The International Marketing Task1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 21
Home country is superior to others
Sees only similarities in other countries
Assumes products and practices that succeed at home will be successful everywhere
Leads to a standardized or extension approach (export marketing)
Ethnocentric
Each country is unique
Each subsidiary develops its own unique business and marketing strategies
Often referred to as multinational
Leads to a localized or adaptation approach that assumes products must be adapted to local market conditions
Polycentric
Source: Keegan/Green, 2017.
Marketing Orientations: The EPRG-Framework
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 22
A region is the relevant geographic unit
E.g., the NAFTA or the EU
Some companies serve markets throughout the world but on a regional basis (decisions made regionally)
Standardize within regions, but not across
Regiocentric
Entire world is a potential market
Strives for integrated global strategies
Focus on standardization efforts (wherever it is culturally andcost effective), coordination across markets and global integration, e.g. global sourcing
Leads to a combination of extension and adaptation elements
Geocentric
Source: Keegan/Green, 2017.
Marketing Orientations: The EPRG-Framework
1. Globalization as basis for international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Process of international strategyformulation
Source: Czinkota/Ronkainen 2004, p. 404
Assessment and Adjustment of Core Strategy
Market/Competitive Analysis Internal Analysis
Formulation of International Strategy
Choice of Competitive Strategy Choice of Target Countries and Segments
Development of International Marketing Strategy
Implementation
Organisational structure Control
Process of international strategy formulation
2. Market, competitive and internal analysis
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PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Common elements in successful strategies
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Simple, consistent goalsProfound understanding
of the competitive environment
Objective appraisal of resources
Effective Implementation
Source: Grant 2012
Successful Strategy
2. Market, competitive and internal analysis
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Model of comparative competitive advantage (CCA)
In addition to focusing on buyers the marketing has to be adjusted to all market players to gain a sustainable competitive advantage
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CCAs
Needs and wants of buyers
Problem solving know-how of competition
Problem solving know-how of
supplier
Source: Adopted from Backhaus & Voeth, 2014
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Model of comparative competitive advantage (CCA)
In addition to focusing on buyers the marketing has to be adjusted to all market players to gain a sustainable competitive advantage
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CCAs
Needs and wants of buyers
Problem solving know-how of competition
Problem solving know-how of
supplier
Strengths & Weaknesses
Opportunities & Threats
Source: Adopted from Backhaus & Voeth, 2014
2. Market, competitive and internal analysis
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A framework for competitive analysis
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StrategyHow is the firm competing?
Predictions What strategy changes will the
competitor initiate? How will the competitor respond to
our strategic initiatives?
Source: Grant 2012
ObjectivesWhat are competitor‘s current goals?Is performance meeting these goals?How are its goals likely to change?
AssumptionsWhat assumptions does the competitor hold about the industry and itself?
Resources and CapabilitiesWhat are the competitor‘s key strengths and weakness?
2. Market, competitive and internal analysis
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Model of competitive dynamics
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New competitive action
Source: Dess et al. 2010
Threat analysis
Motivation & capability to respond
Types of competitive action
Likelihood of
competitive reaction
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Model of competitive dynamics
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New competitive action
Reasons for launching new competitive action
› Improve market position › Capitalize on growing demand› Expand production capacity› Provide innovative solution › Obtain first mover advantage› Build reputation for innovativeness of
efficiency
Acts that might provoke competitors to react, such as new entry imitating successful products, price cutting expanding production capacity ….
Strengthen financial outcomes Capture extraordinary profits
that industry leaders enjoy Business growth
Source: Dess et al. 2010
2. Market, competitive and internal analysis
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Model of competitive dynamics –New competitive action
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Five “Hardball” Strategies
Description Example
Devastate rivals’ profit sanctuaries
Focus attacks on rivals most profitable segments
Wal-Martoffered extended warranties on home electronics after learning that Best Buy derived most of their profits from extended warranties
Plagiarize with pride
Successful imitation by observing how customers respond; make improvements; and launch a better version without all the market development costs
Blockbustercopied online DVD rental strategy of rival Netflix
Deceive the competition
Good gambit sends competition of in wrong direction. May cause rivals to
miss strategic shifts; spend money pursuing dead ends; orslow their responds
BoeingFor several years Boeing touted plans for new high speed airliner. After knowing customers value efficiency over speed, Boeing quietly shifted its focus
Source: Dess et al. 2010
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Model of competitive dynamics –New competitive action
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Five “Hardball” Strategies
Description Example
Unleash massive overwhelming force
Full-frontal attack where a firm commits significant resources to a major campaign to weaken rivals position Necessary to have stamina and mass
to win before declaring „war“
Southwest Airlinestook on US Airways in Baltimore decrease of US market share from over 50% to 10%
Raise competitors costs
Having superior insights into complex costs and profit structure of industry as competitive advantage Compete in a way that steers rivals
into relatively higher cost/lower profit areas Use of deception
Ecolabencouraged competitor (Diversity) to go after low-volume, high margin customers. Only Ecolab knew that high servicing costs associated with this segment make this segment unprofitable
Source: Dess et al. 2010
2. Market, competitive and internal analysis
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Model of competitive dynamics
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Environmental scanning and monitoring Assessing whether companies are close competitors
› Market commonality › Ressource similarity
Threat analysis
Firms awareness of its closest competitors and the kinds of competitive actions they might be planning
Source: Dess et al. 2010
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Model of competitive dynamics
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Actions taken to respond determined by resource capabilities and motivation for responding.
Types of competitive action
Motivation & capability to respond
Assessment of not only how to respond to a competitive attack, but also reasons for responding and ability to respond
Source: Dess et al. 2010
2. Market, competitive and internal analysis
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Model of competitive dynamics –Types of competitive actions
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Actions Example
Strategic actions Entering new markets Make geographical expansions Expand into neglected markets Target rivals‘ markets Target new demographics
New product introductions Imitate rivals’ products Address gaps in quality Leverage new technologies Leverage brand name with related products Protect innovation with patents
Changing production capacity Create overcapacity Tie up raw materials sources Tie up preferred suppliers and distributors Stimulate demand by limiting capacity
Mergers/Alliances Acquire/partner with competitors to reduce competition
Tie up key suppliers through alliances Obtain new technology/intellectual property Facilitate new market entry
Source: Dess et al. 2010
2. Market, competitive and internal analysis
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Model of competitive dynamics –Types of competitive actions
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Actions Example
Tactical actions Price cutting (or increases) Maintain low price dominance Offer discounts and rebates Offer incentives (e.g., frequent flyer miles) Enhance offering to move upscale
Product/service enhancements Address gaps in service Expand warranties Make incremental product improvements
Increased marketing efforts Use guerilla marketing Conduct selective attacks Change product packaging Use new marketing channels
New distribution channels Access suppliers directly Access customer directly Develop multiple points of contact with
customers Expand Internet presence
Source: Dess et al. 2010
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Model of competitive dynamics
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Factors determining how a competitor might respond› Market dependence› Competitor‘s resources› Actor‘s reputation
Likelihood of
competitive reaction
Evaluation of competitors reactions
Source: Dess et al. 2010
2. Market, competitive and internal analysis
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Basic Questions of the SWOT-Analysis
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Opportunities Threats
Environment What opportunities does the market offer? What risks does the market pose?
Consumer / Customer
What needs do consumers have?
What prohibits sales with consumers?
Competition What gaps/deficiencies does our competition have?What advantages does our
competition have?
Strengths Weaknesses
Own Strategy What strategic advantages does our company possess?What are our strategic
weaknesses?
Own Capabilities
What are our strongest resources?
Where do we have our most important needs for improvement?
2. Market, competitive and internal analysis
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Porter‘s Value added chain
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Marketing& Sales
Incoming Logistics
Outgoing Logistics
Production Service
SecondaryActivities
Primary
Activities
Company Infrastructure (Leadership, Finance Management, etc.)
Purchasing (raw materials, Capital Equipment, Equipment, etc.)
Technology development (Research & Development, IT-Systems, etc.)
Personnel Management (Personnel Planning, -Recruitment, -Development, etc.)
• Incoming goods
• Ware-housing
• etc.
• Manu-facturing
• Packaging• etc.
• Pricing• Distribution• Advertising• Sales• etc.
• Warehouse Manage-ment
• Delivery• etc.
• Installation/Configuration
• Maintenance• Accessories• Aftersales• etc.
Source: Porter 2014
2. Market, competitive and internal analysis
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Analysis of the value added chain
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Step 1: Mapping of business model through value added chain
Step 2: Analysis of cost positions and value added activities
Step 3: Identification of differentiation possibilities for each value added activity
Step 4: Analysis of technology level of value added activity
Step 5: Identification of value added activities which are critical for success
Step 6: Derivation of concrete action recommendationsSource: In Accordance with Eschenbach, 1996
2. Market, competitive and internal analysis
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Results of the value added chain analysis
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Value Added Activity
Activity 1
Activity 2
Activity 3
…
Activity n
Competitive Advantage
Relative Cost Position
Differentiation Potential
Potential for Innovation
Source: Kerth et al, 2011
2. Market, competitive and internal analysis
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Definition core competence
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A resource structure which ...
differentiates itself from competition and is highly market relevant,
cannot be substituted or can only be partially substituted, and
can therefore be used to gain long term competitive advantages,
... is the core competence of an organization.
Most firms therefore – if at all – have only one core competence
2. Market, competitive and internal analysis
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Identification and development of potential core competence
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Existing success factors
Potential sucess factors
Customer value
Rareness
Protection from imitation
Specific to the organization / difficult to substitute
Core competence
Core competence analysis
Identification oforganizationalcompetences
Identification of core competence
Existing
Potential
Source: In accordance with Barney, 2010
2. Market, competitive and internal analysis
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Key questions regarding core competence
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Competitive advantage
Corecompetence
What is providing future customer value?
What specific resources do we posses or do we need?
Where are our hard to reach competitive advantages?
Company view
Customer
Competition
Source: In accordance with Barney, 1997, p. 145
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Identifying key success factors
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Analysis of demand Who are our customers? What do they want?
Source: Grant 2012
Prerequisite for success
What do customers want? How does the firm survive competition?
Analysis of competition What drives competition? What are the main dimensions
for competition? How intense is competition? How can we obtain a superior
competitive position?
KEY SUCCESS FACTORS
2. Market, competitive and internal analysis
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Identifying key success factors –Steel
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Source: Grant 2012
What do customers want?Analysis of demand
How do firms survive competition?Analysis of competition Key success factors
• Low price• Product consistency• Reliability of supply• Specific technical
specifications for special steel
• Commodity products, excess capacity, high fixed costs, excess capacity, exit barriers, and substitute competition mean intense price competition and cyclical profitability
• Cost efficiency and financial strength essential
• Cost efficiency requires: large-scale plants, low-cost location, rapid capacity adjustment
• Alternatively, high technology, small-scale plants can achieve low costs through flexibility and high productivity
2. Market, competitive and internal analysis
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Identifying key success factors –Fashion Clothing
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Source: Grant 2012
What do customers want?Analysis of demand
How do firms survive competition?Analysis of competition Key success factors
• Diversity of customer preferences in terms of garment type, style, quality, color
• Customers willing to pay premium for brand, style, exclusivity, and quality
• Low barriers to entry and exit, low seller concentration, and buying power of retail chains imply intense competition
• Differentiation can yield substantial price premium, but imitation is rapid
• Combining differentiation with low costs
• Differentiation requires speed of response to changing fashions, style, reputation, and quality
• Cost efficiency requires manufacturing on low wage countries
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Identifying key success factors –Supermarkets
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Source: Grant 2012
What do customers want?Analysis of demand
How do firms survive competition?Analysis of competition Key success factors
• Low prices• Convenient location• Wide range of products
adapted to local preference• Fresh/Quality produce; good
service; ease of parking; pleasant ambience
• Intensity of price competition depends on number and proximity of competitors
• Bargaining power is a critical determinant of cist of bought in goods
• Low costs require operational efficiency, scale-efficient stores, large aggregate purchases, low wage costs
• Differentiation requires large stores (to allow wide product range),convenient location, familiarity with local customer preferences
2. Market, competitive and internal analysis
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Identification of success factors
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…
Evaluation
poor neutral goodSuccess Factors Comments
9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9
…
…
…
…
…
…
…
…
…
Weighting
low medium high
Push Points to left or right according to their evaluation
Source: Kerth et al, 2011
x
x
x
x
x
x
x
x
x
x
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Identification of potential core competence
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Source: Kerth et al., 2011
Competencies derived from business processes (Step 1)•…
Competencies which need further
development (Step 2)
•…
Distinct competitive advantages (Step 1)
•…
Competencies derived from success factors (Step 1)•…
Leads for potential core competetencies
•…
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Identification of potential core competence
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Source: Adapted form Barney 1991 as quoted by Dess et al. 2010
Is the resource or capability ….
valuable? rare? difficult to imitate?
specific from the organization?
Implications for competitiveness?
No No No No Competitive disadvantage
Yes No No No Competitive parity
Yes Yes No No Temporary competitive advantage
Yes Yes Yes Yes Sustainable competitive advantage
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Examples of companies that own de facto industry standards
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Source: Grant 2012
Company Product category StandardMicrosoft PC operating systems Windows
Intel PC microprocessors X86 series
Sony/Philips Compact disks CD-ROM format
ARM (Holdings) Microprocessors for mobile devices ARM architecture
Oracle Corporation Programming language for web apps Java
Rockwell and 3Com 56K modems V90
Qualcomm Digital cellular wireless communication CDMA
Adobe Systems Common file format for creating and viewing documents
Acrobat Portable Document Format
Adobe Systems Web page animation Adobe Flash
Adobe Systems Page description language for document printing Post Script
Bosch Antilock braking systems ABS and TCS
IMAX Corporation Motion picture filming and projection systems IMAX
Apple Music downloading system iTunes / iPod
Sony High definition DVD Blu-ray
2. Market, competitive and internal analysis
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Choice of target countries and segmentsis a critical step in the international strategy formulation
Source: Czinkota/Ronkainen 2004, p. 404
Assessment and Adjustment of Core Strategy
Market/Competitive Analysis Internal Analysis
Formulation of International Strategy
Choice of Competitive Strategy Choice of Target Countries and Segments
Development of International Marketing Strategy
Implementation
Organisational structure Control
Process of international strategy formulation
3. Competitive positioning and international segmentation
52
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The Diamond – Four distinct strategic positions
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System Lock-In System Economics Market Dominance Achieving Complementor Share
Best Product Product Uniqueness Technological Leadership Achieving Product Share
Total Customer Solutions Customer Economics Cooperation Achieving Customer Share
Source: Own Graphics in Accordance with Hax & Wilde, 2003
Cost Leadership Product Economics Efficiency Achieving Market Share
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The Diamond – Four distinct strategic positions
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System Lock-In System Economics Market Dominance Achieving Complementor Share
Best Product Product Uniqueness Technological Leadership Achieving Product Share
Total Customer Solutions Customer Economics Cooperation Achieving Customer Share
Source: Own Graphics in Accordance with Hax & Wilde, 2003
Cost Leadership Product Economics Efficiency Achieving Market Share
Ryanair
SAP
Amazon Thermomix
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The Diamond – Four distinct strategic positions
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System Lock-In System Economics Market Dominance Achieving Complementor Share
Best Product Product Uniqueness Technological Leadership Achieving Product Share
Total Customer Solutions Customer Economics Cooperation Achieving Customer Share
Source: Own Graphics in Accordance with Hax & Wilde, 2003
Cost Leadership Product Economics Efficiency Achieving Market Share
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The Diamond – Four distinct strategic positions
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System Lock-In System Economics Market Dominance Achieving Complementor Share
Best Product Product Uniqueness Technological Leadership Achieving Product Share
Total Customer Solutions Customer Economics Cooperation Achieving Customer Share
Source: Own Graphics in Accordance with Hax & Wilde, 2003
Cost Leadership Product Economics Efficiency Achieving Market Share
https://www.sap.com/germany/why-sap.html
Example: SAP
Current/Past Profile
Future Target Profile
3. Competitive positioning and international segmentation
https://www.sap.com/germany/why-sap.html
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The Adaptive Processes –Linking Strategy with execution
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Business Model
Customer TargetingOperational Effectiveness
Innovation The production and delivery of products and services to the customer
Should produce the most effective cost and asset infrastructure to support the chosen strategic position of the business
The process of new product development Should assure a continuous stream of new products and
services to maintain the future viability of the business Should define the most effective renewal infrastructure for
products and services
The management of the customer interface
Identification and selection of attractive customers and enhancement of customers’ performance
Should establish best revenue infrastructure for chosen strategy
Source: Adapted from Hax & Wilde, 2003
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The Role of the Adaptive Process in supporting the Strategic Options of the Diamond
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Cost Leadership Best Product
Customer Targeting Target Distribution Channels
Maximize coverage through multiple channels Obtain low cost distribution Cut slack within distribution channel Identify and enhance the profitability of each
product by Channel
Target Premium Lead Customers
Identify and exploit customer needs Increase customer value and possible alliances to
bundle solutions Select key vertical markets Examine channel ownership options
Innovation Process Innovation
Develop family of products based on common platform
Find optimum price value solutions Research on lowering resources input Solutions for simplification
Product Innovation
First to market, or follow rapidly — stream of Products
Rapid development of new products Outperform current standards Quality Leadership
OperationalEffectiveness
Best Product Cost
Identify product cost drivers Improve stand alone product Cost
Best Customer Experience
Improve customer economics Improve horizontal linkages in the components of
total Solutions
Source: In Accordance with Hax & Wilde, 2003
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
The Role of the Adaptive Process in supporting the Strategic Options of the Diamond
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Total Customer Solutions System Lock-In
Customer Targeting Target Customer Bundles
Identify and exploit opportunities to add value to key customers by bundling solutions and customization
Increase customer value and possible alliances to bundle solutions
Select key vertical markets Examine channel ownership options
Target System Architecture
Identify leading complements in the system Consolidate a lock-in position with complements Expand number and variety of complements Whenever possible create ownership of direct
distribution Channels
Innovation Customer Service Innovation
Identify and exploit joint development linked to the customer value chain
Expand your offer into the customer value chain to improve customer economics
Integrate and innovate customer care functions Increase customer lock-in through customization
and Learning
System Innovation
Create customer and system lock-in, and competitive lock-out
Design proprietary standard within open architecture
Complex interfaces Rapid evolution Backward Compatibility
OperationalEffectiveness
Best Customer Benefits
Improve customer economics Improve horizontal linkages in the components of
total Solutions
Best System Performance
Improve system performance drivers Integrate complements in improving system
Performance
Source: Hax & Wilde, 2003
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Definition and use of target groups
A target group reflects the particular segment of a total population on which a company focuses its product or service
The process of market segmentation leads to target groups
Members of the target group are highly homogeneous, but heterogeneous in comparison to other groups
The needs and preferences of the target group should differ sufficiently to warrant individual marketing mixes (4Ps)
Why is it so important to know your target group?
Definition:
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3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Source: Bradley 2005, p. 208
Concentrated or differentiated strategy Company possesses information on relevant buyer
characteristics Company´s product appeals only to a limited group of customers Marketing efforts can be effectively focused on the chosen
segment Segments are large, profitable and stable
Undifferentiated strategy Market is so small that marketing to a portion of it is not profitable Heavy users constitute such a large proportion of sales volume
that they are the only relevant target (e.g. B2B) Own brand is the dominant brand in the market Product fulfills the needs of a broad customer base
Circumstances that influence the optimal degree of market segmentation
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3. Competitive positioning and international segmentation
http://www.google.de/imgres?imgurl=http://www.apfelmag.com/wp-content/uploads/2009/08/deutsche-telekom-logo.jpg&imgrefurl=http://www.apfelmag.com/tag/telekom/&h=141&w=472&sz=12&tbnid=SbWopY0vO1hWZM:&tbnh=39&tbnw=129&prev=/images?q=logo+telekom&hl=de&usg=__SslShquD2Yqm8Z4NPKzT44_JELQ=&ei=8BQFS4zaDpeanwOql820Cg&sa=X&oi=image_result&resnum=4&ct=image&ved=0CA8Q9QEwAwhttp://www.google.de/imgres?imgurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/coca-cola-logo.jpg&imgrefurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/cat_11_markenanalyse_sammlung.html&h=200&w=300&sz=41&tbnid=aTT_3i543_NmYM:&tbnh=77&tbnw=116&prev=/images?q=coca+cola+logo&hl=de&usg=__CrRUCtkQUXPryWMBRAdhpE6_kq8=&ei=FEEES-vUDKGOnQPpovBz&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.google.de/imgres?imgurl=http://www.rosiestancermarsnorthpolesolo.co.uk/layout/logo_MARS-large.gif&imgrefurl=http://www.rosiestancermarsnorthpolesolo.co.uk/sponsors.htm&h=99&w=238&sz=9&tbnid=ankvosXK8AZxFM:&tbnh=45&tbnw=109&prev=/images?q=mars+logo&hl=de&usg=__AVOGx7bCpIaKQbH-RLYZxrcEwQ8=&ei=0RUFS4fJC4XWmQOG4b27Cg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.google.de/imgres?imgurl=http://upload.wikimedia.org/wikipedia/de/thumb/4/45/Mercedes-Benz-Logo.svg/744px-Mercedes-Benz-Logo.svg.png&imgrefurl=http://de.wikipedia.org/wiki/Datei:Mercedes-Benz-Logo.svg&h=538&w=744&sz=73&tbnid=f3PbNqvIzRXDmM:&tbnh=102&tbnw=141&prev=/images?q=mercedes+benz+logo&hl=de&usg=__XEiUjhltjWTjzi6nAAD28xyCf0Q=&ei=8IUGS-nFDozwngOO7_G_Cg&sa=X&oi=image_result&resnum=1&ct=image&ved=0CAoQ9QEwAA
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Global Brand Strategy Standardized brand strategy and
markting mix in multiple markets Common brand name for many
products in all/various countries Marketing strategies are centrally
coordinated
Customized brand strategy and mix Use of local brands that address
country- or culture-specific needs Subsidiaries have significant
decision-making power
Multinational Brand Strategy
Global Brands … … are well-known
internationally … are available in
various countries
… are largelystandardized … have a global
status
Source: Exler, 2008.
International Branding StrategyGlobal vs. Multinational
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 63
Sources: Berndt/Fantapié Altobelli/Sander, 2010; Exler, 2008; Sattler/Völckner, 2007.
Pros (Global Brands)
Standardization leads to lower costs Globalness as a brand valueHigher brand awareness because of
cross-border brand recognitionGlobalness is associated with quality,
status and modernity Avoidance of consumer confusion
(e.g., of frequent travellers) andeffective targeting of global consumers Ability to leverage good ideas quickly
and efficiently Stronger bargaining power
towards retailers etc.
Differences in consumer needs, wants, and usage patterns for products cannot be met effectively Low flexibility, e.g. responses to
competitive actions in one market Resistance of consumers with anti-
globalization and/or ethnocentricattitudes and values Rapid cross-border dissemination of
corporate scandals Problem of counterfeiting
Cons (Global Brands)
International Branding StrategyGlobal vs. Multinational
3. Competitive positioning and international segmentation
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International Branding StrategyGlobal vs. Multinational
3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 65
Source: Kotabe/Helsen, 2015, exhibit 11-2.
Example: Anheuser-Busch InBev Brands
International Branding StrategyGlobal vs. Multinational
3. Competitive positioning and international segmentation
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Example: Fabric Softener from Unilever
International Branding StrategyGlobal vs. Multinational
3. Competitive positioning and international segmentation
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Buying behavior in different countries influences target group identification in international sales Socio-economic structures and values can differ between nations and
cultures
In some countries trend towards harmonisation of cultures/buyingbehaviour
Opposite trend: restistance against cultural harmonization
Country of origin-effect
Ethnocentrism
Specific product preferences in many countries such as food, beverages, household cleaning, personal hygiene
To what extend customers are homogenous across national boundaries depends on the specific country and specific product.
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Who is more similar?
International Segmentation3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 69
Possible Scenarios:
Source: Kotabe/Helsen, 2015.
Universal or global segments: Segments transcend national boundaries global cross-country segmentation
Could also be a niche Examples: Global youth, international business travelers
Regional segments: Similarity in customer needs and preferences exists at the
regional level regional cross-country segmentation
Example: ERASMUS students, European aristocracy
International Segmentation3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 70
Possible Scenarios:
Source: Kotabe/Helsen, 2015.
Unique (diverse) segments: Gaps in cross-country customer needs and preferences
are too substantial that meaningful cross-national segments cannot be derived intranational segmentation
Marketing must be localized Examples: Segments related to food & beverages
International Segmentation3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 71
Source: Kotabe/Helsen, 2015.
Example: Benefit Segments of Toothpaste Markets:
International Segmentation3. Identifying growth strategies – Segmentation
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Three choices of target groupidentification in international sales
1.Countries = market segmentsClustering of countries with homogenous buying behavior into segments.
2.Intranational market segmentationMarket segmentation within one country
3.Cross-country market segmentation Identification of market segments thatspan national boundaries
F G I
F G I
F G I
Source: Berndt/Fantapié-Altobelli/Sander 2005, Kutschker/Schmid 2008
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Cross-Country Segmentation as part of thechoice of target country and segments
Source: Kutschker, M./Schmid, S. 2008, p. 979
Europe
Germany France Italy
Identical target groups across countries
1. Target Country Selection
2. Target Group Selection
Intranational Market segmentation
Cross-Country Market segmentation
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Intranational market segmentation Overview of segmentation criteria
DemographicCriteria
Marital status
B2C• Gender• Age•• Residence
B2B• Place of head office • Lengths of business
relationship
Socioeconomic Criteria
B2C:• Income
Education•• Occupation
B2B• Turnover• Industry
GeneralPersonality TraitsB2C:• Lifestyle• Attitude• Interests
Criteria based on BenefitB2C• Price• Quality• Image• Service
B2B:• Price• Quality• Image• Service
Criteria related to
Choice of retailB2C•outlets
• Choice of product• Buying frequency
Distribution channelB2B:•• Buying frequency
Buying behavior
• Price sensitivity• Information seeking behavior
Source: Homburg/Krohmer 2009
Ideally, the criteria to identify target groups are measurable, stable, relevant to the buying behavior and enable the addressability of the target group.
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Demographic
Criteria
Marital status
B2C
•
Gender
•
Age
•
•
Residence
B2B
•
Place of head office
•
Lengths of business
relationship
Socioeconomic
Criteria
B2C:
•
Income
Education
•
•
Occupation
B2B
•
Turnover
•
Industry
General
Personality Traits
B2C:
•
Lifestyle
•
Attitude
•
Interests
Criteria based on Benefit
B2C
•
Price
•
Quality
•
Image
•
Service
B2B:
•
Price
•
Quality
•
Image
•
Service
Criteria related to
Choice of retail
Buying behavior
B2C
•
outlets
•
Choice of product
•
Buying frequency
Distribution channel
B2B:
•
•
Buying frequency
•
Price sensitivity
•
Information seeking behavior
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Cross-country segmentation:Euro-Socio Styles as an example of Life-Style-Typologies
Assumption: fundamental structure of value systems and consumer characteristics (lifestyles) - independent from social class and age
GfK Euro-Socio-Styles is a multi-dimensional, pan-European lifestyle typology
Eight identical clusters of consumers in every country, based on representative national surveys about value systems, behavior, habits, opinions, attitudes, motivation and emotions
Different cluster sizes reveal regional and national differences Clusters can be used as target groups
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History and methodological background of the Euro-Socio-Styles®
International survey with 24.000 respondents in two waves.Started in 1989; since then measurement of value changes.Up to 6.000 questions in the basic survey(s) to identify value dimensions lifestyles a battery of indicators (Key Questions)
Link of the Euro-Socio-Styles® with ad-hoc studies and consumer panels for additional measurement and analysis of real consumer behaviour.
…based on extensive basic research
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Source: GFK 2002, percentages for Germany
11%
9%
8%11%
19%
14%
15%
13%
Cross-country Segmentation:Description of the eight Euro-Socio Styles
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3. Competitive positioning and international segmentation
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Source: GFK 2002
Three approaches to international targetgroup identification
Germany France Great-Britain Netherlands Austria Switzerland Spain
Steady World 135 159 124
Secure World 142
Magic World 147 115
Crafty World 120 110
Cosy Tech World 160 203
New World 112
Authentic World 126 132 197
Standing World 122 114 133
Selected Indices of Euro Socio Styles, Europe = 100
The percentage of people belonging to „Authentic World“ is especially large in Germany, Austria and Switzerland
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3. Competitive positioning and international segmentation
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Euro-Socio-Styles® in the coffee marketOutput example: Usage and attitudes on the lifestyle map
Plain Coffee as preventive measure Industrial product
Fast lifeCoffee
as stimulating whip lash
Return to roasting based on the old recipe
Quantitynot expensive
brands at a relatively low price
supermarket
Excellent coffee for demanding
gourmets
Brand loyalty concerning
prestige brands
Healthy lifeCoffee as practical
cultural rite
Physicalstimulus
Friendly hospitality
Intellectual stimulus Quality of life
Qualityexpensive
authentic productcoffee shop
Waking you up
Due to pleasure
In the morning
Due to loyalty
Appeal of new products
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3. Competitive positioning and international segmentation
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Cross-country segmentation: Need todeliberate individual chances and risksChances
Existence and development of identical cross-country target groups essential for implementation of a standardised marketing mix
Standardised marketing mix across national boundaries offers cost and time benefits
Identical cross-cultural target groups allow fulfillment of specific consumer needs
Risks
Life-Styles-Typologies are more relevant to high involvement goods
Same lifestyle does not mean same product preferences, esp. with food, beverages, household cleaning, personal hygiene
Money- and time-consuming collection for data, especially when company applies specific surveys Source: Berndt/Fantapié-Altobelli/Sander 2005
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Market/Customer target group
Concentration Diversification
Cou
ntry C
once
n-tra
tion
1 2
Div
ersi
ficat
ion
3 4
Market expansion matrix
Source: Ayal/Zif 1979, p. 84, Hollensen 2001, p. 200-207, Carpano/Chrisman/Roth 1994, p. 639. 649-652, Kutschker/Schmid 2008, p. 982
Four basic market expansion strategies:1. Few customer groups in few countries2. Many customer groups/segments in few countries3. Few customer groups/segments in many countries4. Many customer groups/segments in many countries
Choices about country and customersegmentation result in market expansionstrategies
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http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Source: Ayal/Zif 1979, p. 84, Hollensen 2001, p. 200-207, Carpano/Chrisman/Roth 1994, p. 639. 649-652, Kutschker/Schmid 2008, p. 982
Market/Customer target group
Concentration Diversification
Cou
ntry C
once
n-tra
tion
1 2
Div
ersi
ficat
ion
3 4
Four basic market expansion strategies1. Few customer groups in few countries2. Many customer groups/segments in few countries3. Few customer groups/segments in many countries4. Many customer groups/segments in many countries
Market expansion matrix
Market expansion strategies - Examples
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http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/http://upload.wikimedia.org/wikipedia/de/f/fa/McDonald's_ichliebees-Logo.svghttp://www.google.de/imgres?imgurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/coca-cola-logo.jpg&imgrefurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/cat_11_markenanalyse_sammlung.html&h=200&w=300&sz=41&tbnid=aTT_3i543_NmYM:&tbnh=77&tbnw=116&prev=/images?q=coca+cola+logo&hl=de&usg=__CrRUCtkQUXPryWMBRAdhpE6_kq8=&ei=FEEES-vUDKGOnQPpovBz&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.google.de/imgres?imgurl=http://joyloft.net/en/wp-content/uploads/2007/12/ikea_logo.jpg&imgrefurl=http://joyloft.net/en/&h=101&w=280&sz=28&tbnid=ZnUZPZXulKt_DM:&tbnh=41&tbnw=114&prev=/images?q=logo+ikea&hl=de&usg=__KUZLOlH3PG-8iAn9ClSbBBOTCcg=&ei=BEIES5jDC5-CmwPm6KF6&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.burnus.de/products/body/sibonethttp://www.google.de/imgres?imgurl=http://www.infomat.net/1/focus/foci/nivea/images/nivea_logo1.gif&imgrefurl=http://www.brandingyp.com/2009/03/nivea-skin-and-beauty-care-products.html&h=68&w=193&sz=3&tbnid=9r9o2RbeLtGnaM:&tbnh=36&tbnw=103&prev=/images?q=nivea+logo&hl=de&usg=__bujuC7qkb_Ierjave_LJXRr3iD8=&ei=9EcES_eiFo3ymQOBto1r&sa=X&oi=image_result&resnum=4&ct=image&ved=0CA8Q9QEwAwhttp://www.tesa.de/http://de-de.cunda.de/http://www.google.de/imgres?imgurl=http://madnews.files.wordpress.com/2008/02/gap-logo.png&imgrefurl=http://www.brandingyp.com/2009/04/gap-men-and-womens-clothing-and.html&h=150&w=150&sz=8&tbnid=Zuc9XgxnLXJ7rM:&tbnh=96&tbnw=96&prev=/images?q=gap+logo&hl=de&usg=__dtZyaFmX1b_cb6fYcLTpOcOuBnE=&ei=xE8GS4HaBpDwmwP2nfiyCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAwQ9QEwAQ
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Conclusion: Target group segmentation in international sales
The choice of target country and target group is highly interdependend
The right degree of market segmentation depends on the specific situation
There are three options for target group segmentation in international sales
There are chances and risks of using cross-cultural target groups
Choice of country and target group diversification vs. concentration strategy leads to the four basic market expansion strategies
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Next step in international strategy process: Development of Global Marketing Strategy
Source: Czinkota/Ronkainen 2004, p. 404
Assessment and Adjustment of Core Strategy
Market/Competitive Analysis Internal Analysis
Formulation of International Strategy
Choice of Competitive Strategy Choice of Target Countries and Segments
Development of International Marketing Strategy
Implementation
Organisational structure Control
Process of international strategy formulation
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Alternative Growth Strategies
85
Existing New
Existing
New
ProductsServices
Markets
Market penetration: e.g. through pricing,
communication
Market development:e.g. internationalization,
new target group
Product development: e.g. product innovation, better serving of needs,
second brand
Diversification:- Horizontal (new target group
with differentiated products)- Vertical (pre- and post stages
of the value added chain
Source: In accordance with Ansoff, 1988, Ansoff, 1966
4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
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Source: In accordance with Ansoff, 1988, Ansoff, 1966
Product Existing New
Mar
ket
New
Exis
ting
Market Penetration
Market Development
Product Development
Diversification
Sausage in Germany
Sausage in Peru Vegetarian Sausage in Peru
Vegetarian Sausage in Germany
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 87
Please develop ideas for growth startegies unsing Ansoff‘s Matrix.
- Starbucks- IKEA- Ramazotti
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 88
Source: http://www.livemint.com/Industry/LI85XqTas9YKRKSsssazvK/Starbucks-opens-its-first-store-in-India.html.
Tata Starbucks.
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 89
Source: http://www.livemint.com/Industry/LI85XqTas9YKRKSsssazvK/Starbucks-opens-its-first-store-in-India.html.
Tata Starbucks.
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 90
Starbucks Verismo.
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 91
Ramazzotti Rosato.
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 92
Source: http://www.youtube.com/watch?v=0Nm7-EuctOs.
IKEA.
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.youtube.com/watch?v=0Nm7-EuctOs
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL 93
Source: http://www.welt.de/wirtschaft/article106204452/Ikea-scheitert-mit-dem-Verkauf-von-Fertighaeusern.html.
IKEA.
Solar-energy
Student dormitories /
HotelsTurn Key Housing
Shopping Centers
(construction & management
Development of City
Quarters
Alternative Growth Strategies4. Development of an international marketing strategy
http://www.mcdonalds.de/http://www.mcdonalds.de/http://www.mcdonalds.de/http://strandeast.com/
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Goals of globally oriented companies
Striving for efficiency and standardization
Faster distribution of new conceptsSuccessful positioning against competitionEasier coordinationEasier cross country planningHarmonization of the market approachRealization of synergiesIncrease of the market volumeIncrease of the price rangesSpreading of risksImprovement of communication efficiencyReduction of distribution costsReduction of per unit product costsIncrease of traders’ willingness to cooperate
Goal dimensions important unimportant
Source: Meffert/Bolz 1998 Efficiency and Standardization
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Differences of country markets
Dimensions Culture Language Currency Political system Legislation Climate Geography Taste Physiognomy
Requirements Higher level of uncertainty Increased and additional risks Increased need for information Increased need for coordination
Increase of complexity and potential need for differentiation through internationalization
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Strategic solutions for the global location strategy
Driving for standardization to achieve economies of scale through
globalizationIncrease of complexity and potential need for individualization through international
locations
Solutions
Organizationstrategy
Production locationstrategy
Challenge of globalization
Sales & marketing location strategy
Adaptation of company strategy to location requirements
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Dimensions Culture Language Currency Political system Legislation Climate Geography Taste Physiognomy
Sales & marketing location strategy: country selection
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Dimensions Culture Language Currency Political system Legislation Climate Geography Taste Physiognomy
Reduction of complexity through selection of countries with similar characteristics
Legend: partial similarity high similarity
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Sales & marketing location strategy: country selection
4. Development of an international marketing strategy
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Sales & marketing location strategy
Waterfall strategySprinkler strategy
Country 2
Country 1
Home country
Home country
Country 2Country 1 Country 3
Standardized product: no need for individualization
Complex Product: need for individualization
Source: Becker according to Kreutzer 1998
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Waterfall Strategy
Advantages Successive development and expansion of financial and human resources (including personnel with marketing skills) facilitated by learning effects
Temporal diversification of risks Marketing can be adjusted (if there are problems in a market) with respect
to a later entry into other markets Potential extension of product lifecycle
Disadvantages Risk of market entry by competitors (and establishment of market barriers) Unauthorized sales
SituationalFactors
Necessity for lead/reference markets (e.g., the USA is often a reference market for South America) Longer product lifecycles (since experience gathered in markets that were
exploited early on can be used for further product development and upgrades) Lower competitive intensity in international markets
Source: Homburg, 2015.
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Sprinkler Strategy
Advantages Establishment of market entry barriers
Regional/geographical diversification of risks
Disadvantages Increased short-term financial and human resource requirements
Major losses if the strategy fails
Situational Factors Short product and technology lifecycles
Long R&D times (since there is a higher chance to rapidly recuperate)
Universal segments
Source: Homburg, 2015.
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Product-/supply strategies
Specialized trade, z.B.: H&M
Fast Food, z.B.: Mc Donalds
Department store, z.B.: Karstadt
The bigger the supply‘s focus the better the potential applicability to globalisation
Applicability to globalisation
high
low
narrow broadChoice
e.g. consumer market
Soft Drink, z.B.: Coca Cola
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Different levels of standardization –Example: International advertising
Same advertising message world wide(only change of language, colours and names)
Same advertising message but adaptation to local environment
Global pool of compatible advertising themes which are mutually compatible
Complete adaptation to local markets
Source: Kotler/Bliemel 2001, S. 640ff.
Standardization
Differentiation
R5
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http://www.google.de/imgres?imgurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/coca-cola-logo.jpg&imgrefurl=http://weblogs.mki.fh-duesseldorf.de/greenci/archive/cat_11_markenanalyse_sammlung.html&h=200&w=300&sz=41&tbnid=aTT_3i543_NmYM:&tbnh=77&tbnw=116&prev=/images?q=coca+cola+logo&hl=de&usg=__CrRUCtkQUXPryWMBRAdhpE6_kq8=&ei=m88HS53IM5vymwOftrDHCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAkQ9QEwAQhttp://www.google.de/imgres?imgurl=http://vivi-car.com/imagenes/logo_goodyear.jpg&imgrefurl=http://vivi-car.com/imagenes/&h=231&w=1024&sz=32&tbnid=QbWSFjFGRf6mGM:&tbnh=34&tbnw=150&prev=/images?q=goodyear+logo&hl=de&usg=__epzC5YQc_XXwQ4xEdx1OyRidqgI=&ei=tNMHS7POGY3emAO-88DHCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAwQ9QEwAQhttp://www.google.de/imgres?imgurl=http://www.thebicyclingguitarist.net/graphics/coincidences/newer_Schwinn_logo.jpg&imgrefurl=http://www.thebicyclingguitarist.net/philosophy/coincidences.htm&h=383&w=389&sz=40&tbnid=XXeG5qhiodvTKM:&tbnh=121&tbnw=123&prev=/images?q=schwinn+logo&hl=de&usg=__ugAz3I3BTa6HWJDjP1WBWy6YYLI=&ei=7tMHS9HmD4XkmgOupbTFCg&sa=X&oi=image_result&resnum=1&ct=image&ved=0CAcQ9QEwAAhttp://www.google.de/imgres?imgurl=http://www.renault-clio-williams.de/Renault/Logos/Renault%20Logo%20neu.jpg&imgrefurl=http://www.renault-clio-williams.de/Renault/Logos/Renault%20Logos.htm&h=205&w=300&sz=5&tbnid=SbPDc056bweqvM:&tbnh=79&tbnw=116&prev=/images?q=renault+logo&hl=de&usg=__Vvj4WW7R0Jc6O3OcXC32ICdaI3I=&ei=mtQHS_brIYb0mQOztOW1Cg&sa=X&oi=image_result&resnum=5&ct=image&ved=0CA8Q9QEwBAhttp://www.google.de/imgres?imgurl=http://www.7-forum.com/news/2007/technoclassica/bmw_logo_2007_p0034956-b.jpg&imgrefurl=http://www.7-forum.com/bild.php?bild=news/2007/technoclassica/bmw_logo_2007_p0034956-b.jpg&title=BMW%20Logo,%202007&cpy=bmw&h=590&w=800&sz=32&tbnid=Ez_VmiVcX4y9dM:&tbnh=105&tbnw=143&prev=/images?q=bmw+logo&hl=de&usg=__vMu0q-icBOh4pMAGkJL3FCE1Je4=&ei=Z0gKS9WOJ4mInQO-sZ3BCg&sa=X&oi=image_result&resnum=4&ct=image&ved=0CA0Q9QEwAwhttp://www.google.de/imgres?imgurl=http://i76.photobucket.com/albums/j4/cnrward/Misc%20Blog%20Pics/logo_loreal.jpg&imgrefurl=http://hipcandy.blogspot.com/2007/07/shame-shame-shame-loreal-france.html&h=225&w=300&sz=13&tbnid=mQZMK-8d8nzJTM:&tbnh=87&tbnw=116&prev=/images?q=loreal+logo&hl=de&usg=__Vw9IXBqmLaV0ohHOtMvGytACoLA=&ei=b88HS9ibIYvAmgPt2OGmCg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CAwQ9QEwAQhttp://www.google.de/imgres?imgurl=http://www.goodlogo.com/images/logos/united_colors_of_benetton_logo_2892.gif&imgrefurl=http://www.goodlogo.com/extended.info/2892&h=117&w=350&sz=9&tbnid=dWrIWEmeJgTTqM:&tbnh=40&tbnw=120&prev=/images?q=benetton+logo&hl=de&usg=__g9k3IXZn8nTSlrIn7TtmVnGRb7s=&ei=9oEKS8fWEYaImwO31Yw_&sa=X&oi=image_result&resnum=1&ct=image&ved=0CAcQ9QEwAAhttp://www.google.de/imgres?imgurl=http://www.tenfoldhq.com/assets/images/uploads/projects_images/cache/levis_logo_705x530.jpg&imgrefurl=http://www.tenfoldhq.com/projects/client/select/exposure/P1/&h=529&w=705&sz=28&tbnid=yjU_iOtyQwtcxM:&tbnh=105&tbnw=140&prev=/images?q=levi%C2%B4s+logo&hl=de&usg=__b6687vHHkGW9fR-rD4i6n71Kvx8=&ei=IYIKS5SBBYqqmAOgt_XECg&sa=X&oi=image_result&resnum=2&ct=image&ved=0CA0Q9QEwAQ
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
„As global as possible – as national as necessary!“ - Example
Germany: Ja zum Leben, ja zur LiebeSpain: Oui la vie, Oui a l amour
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Optimal degree of standardization ofcommunication depends on several factors
Efficiency / cost aspects
Effectiveness / sales aspects
Barriers for standardization
Overall goals and strategy of the organization
Competence profile of company
Degree of standardization of other marketing mix instruments (especially product policy)
Standardization
Differentiation
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Production strategy
Retooling-optimisation, e.g.: Toyota
Platform strategy, e.g.: Volkswagen
Product differentiation, e.g.: General Motors
Low production sizes allow strategies in product differentiation
For break even
purposes required
batch size
small
great
1920
Considering as example automotive industryInternet distribution,z.B.: BMW high
low
Degree of customisation
industrial mass production, e.g.: Ford
1970 19901950 1980
Source: Piller, 1997
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Production location strategy
low
high
high
difficult
stringent
low
significant
significant
significant
significant
significant
large
high
low
low
simple
permissive
low
LocalGlobal networkCentralizedAlternatives
Strategy depends on requirements of country marketsSource: Ansoff/McDonnell 1990
Economies of scale
Transportation costs
Tariff barriers
Balancing currency
Legislation enforcinglocal productionDifferential in labor costs
Variables
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4. Development of an international marketing strategy
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ServiceSalesMar-ke-ting
Organisation strategy
Source: McKinsey 1994
Global focus of corporate culture and local implementation autonomy
Pro-duct-ion
Con-struc-tion
R&D
Evolutionphase Home country Important foreign markets
Export
Local presence
Start of local production
Autono-mous country or-ganizations
Globalintegration
Total local integration, all functions are present locally
Local production
Sales & Service
Own sales organization
Trader
Personal
Joint R&D, finance, value systems, corporate identity
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Business case: international strategy of H&M
Gross sales(in millions of SEK)
Sales outside Sweden
Operating profit (in m. SEK)
Total number of stores
Number of countries active
Average number of employees
210,400
95,5%15,493496864
123,283
Highly international and successful company Source: H&M annual report 2018
Business segment:Clothing Fashion Retailer
109
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Business case: international strategy of H&M
Source: H&M annual report 2004
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Business case: international strategy of H&M
Source: H&M annual report 2004
111
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Business case: international strategy of H&M
Source: H&M annual report 2016
112112
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
Market entries by year
113
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
Market entries by year
114
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
Market entries by year
115
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
Market entries by year
116
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
Market entries by year
117
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
Market entries by year
118
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
Market entries by year
119
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
Market entries by year
120
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
Market entries by year
121
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
A1994
Market entries by year
122
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
A1994
L1996
Market entries by year
123
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
A1994
FIN1997
L1996
Market entries by year
124
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategySWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
L1996
Market entries by year
125
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
USA 2000
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
Market entries by year
126
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
Market entries by year
USA 2000
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
P 2003
I2003
PL2003
CZ2003
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4. Development of an international marketing strategy
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H&M country strategyMarket entries by year
USA 2000Canada 2004
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
P 2003
I2003
PL2003
CZ2003
SI2004
128
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategyMarket entries by year
USA 2000Canada 2004
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
P 2003
I2003
PL2003
CZ2003
IRL2005
SI2004
HU2005
129
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategyMarket entries by year
USA 2000Canada 2004China 2007
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
P 2003
I2003
PL2003
CZ2003
SI2004
IRL2005
HU2005
GR2007
SK2007
130
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
Market entries by year
USA 2000Canada 2004China 2007
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
P 2003
I2003
PL2003
CZ2003
SI2004
IRL2005
HU2005
GR2007
SK2007
Japan 2008Russia 2009
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
Market entries by year
USA 2000Canada 2004China 2007
SWE 1947
NOR 1964
DEN1967
GB1976
CH1978
GER1980
NL1989
B1992
F1998
A1994
FIN1997
E 2000
L1996
P 2003
I2003
PL2003
CZ2003
SI2004
IRL2005
HU2005
GR2007
SK2007
Japan 2008Russia 2009
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Australia 2014Philippines 2014Peru 2015Puerto Rico 2016New Zealand 2016Cyprus 2016Franchise 13 countries
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
133
Source: H&M annual report 2017
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M country strategy
134
Source: H&M annual report 2016
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M: Production location strategy
Economies of scale
Transportation costs
Tariff barriers
Balancing currency
Legislation enforcinglocal productionDifferential in labor costs
low
high
high
difficult
stringent
low
significant
significant
significant
significant
significant
large
high
low
low
simple
permissive
low
LocalGlobal networkCentralizedVariablesAlternatives
H&M production needs require a global network strategySource: own, Ansoff/McDonnell 1990
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M: Global network as production location strategy
Around 900 suppliers in Asia (60%) and Europe (40%) 15 production offices in Asia and Europe
Source: H&M annual report 2013
H&M global production network spans across Europe for speed and Asia for low costs
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M Product Offer Strategy
Women‘s wear all ages
Source: Annual Report 2000
Focussing on the teenager segment forforeign markets
Children‘s wear Men‘s wear all ages Women‘s wear all
ages
Cosmetics Children‘s wear Men‘s wear all ages Women‘s wear all
ages
Cosmetics Children‘s wear Men‘s wear all ages Women‘s wear all
ages
Clothes forteenagers
Cosmetics Children‘s wear Men‘s wear all ages Women‘s wear all
ages
Clothes forteenagers
1947 1968 1975 1976 1995
Focus for GB andcontinental Europe
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M Production StrategyTraditional value added process Product to market time 3-6 months Maximum number of collection cycles for break even 2-4 per year
Source: Annual Report 2000, Goldman Sachs 1997 Faster and more individual response to the market possible
Producer Wholesaler Retailer
Producer Wholesaler Retailer
control control control
control
H&M value added process Product to market time 3-8 weeks Maximum number of collection cycles for break even 8-10 per year
138
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
H&M organization strategy
Source: H&M annual report 2000, Goldman Sachs 1997
Sales
Store management
Logistics
Facility management
Customer services
Personnel
H&M head officeStockholm
Country 1 Country 2
...
Productionoffice
country 1
Productionoffice
country 2
...
Product design
Quality control
Product sourcing
Logistics
Production
Corporate strategy Finance Investor relations Product design Purchasing Marketing Store design IT Logistics
Corporate culture Corporate identity Trend scouting Personnel (career opportunities)
14 Country offices 21 Production offices
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Strategic solutions for the global location strategy
Driving for standardization to achieve economies of scale through
globalizationIncrease of complexity and potential need for individualization through international
locations
Solutions
Organizationstrategy
Production locationstrategy
Challenge of globalization
Sales & marketing location strategy
Reduction of complexity through selection of countries with similar attributes
Assurance of: Global corporate identity Globally coordinated strategy Local execution autonomy
Adjustment of production locations to country and product requirements
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4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Portfolio analysis: Boston Consulting Group matrix
141
Simple 2-component concept to generate 4 norm strategies
Relative market sharelow high
Market growth
?
Dog CashCow
high
low
Source: Boston Consulting Group, 1971
4. Development of an international marketing strategy
PROF. DR. JAN FREIDANK© 2019 THM BUSINESS SCHOOL
Portfolio analysis: Ashridge portfolio display
142
Source: Ashridge Strategic Management Centre, as quoted by Grant, 2012
LOW
HIGH
LOW HIGH
Potential for value destruction from misfit between needs of the business and parent’s corporate management style
Potential for parent to add value to the business
HEARTLANDbusinesses with high potential for adding value
EDGE OF HEARTLANDbusinesses where for value adding potential is lower or of negative risks higher
BALLASTtypical core business position:fit high, but limited potential to add more value
VALUE TRAPpotential for adding value is seldom realized because of problems of management fit
ALIEN TERRITORYexit: no potential for value creation
4. Development of an inte
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