Global marketing planning and organization

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Global marketing planning and organization
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Learning objectives

• Increased importance of international strategic
  alliances
• Need for planning to achieve company goals
• Market entry strategies

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Market segmentation argument

• Country, Climate, Language, media habits, age,
  income etc. - Ferrari
• Standardization, Globalization Vs Localization,
  local responsiveness, customization.
• Finance managers Standardization
• Marketing Customization.
• Nestle 1. Think and plan long term 2.
  Decentralize 3. Stick to what you know. 4. Adapt
  to local tastes.

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Global Marketing Management

• The trend back toward localization
• Caused by the new efficiencies of customization
• Made possible by the Internet
• Increasingly flexible manufacturing processes
• From the marketing perspective customization is
  always best - Dell
• Global markets continue to homogenize and
  diversify simultaneously - Barbie
• Best companies will avoid trap of focusing on
  country as the primary segmentation variable

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Glocalization
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Benefits of Global Marketing

• When large market segments can be identified
• Economies of scale in production and marketing
  Black and Decker
• Important competitive advantages for global
  companies
• Transfer of experience and know-how
• Across countries through improved coordination
  and integration of marketing activities -
  Unilever
• Marketing globally
• Ensures that marketers have access to the
  toughest customers - Japan
• Market diversity carries with it additional
  financial benefits
• Firms are able to take advantage of changing
  financial circumstances

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International Planning

• Planning making goals and how to accomplish
  them.
• Planning for international markets is an attempt
  to manage the effects of outside uncontrollable
  factors on the firms strengths weakness
  objectives and goals in order to achieve the
  firms purpose.
• It commits resources to a country market to make
  things happen that might not happen otherwise.

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Levels of planning

• Corporate long term general goals
• Strategic products, money, research, long and
  medium term goals
• Tactical specific actions and allocation of
  resources to meet goals. Local level.
• Clear objectives and commitment are needed for a
  plan to be successful.

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International Planning Process
Exhibit 12.1
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Adapting the marketing mix to target markets

• 1. Are there identifiable market segments that
  allow for common marketing mix tactics across
  countries?
• 2. Which cultural/environmental adaptations are
  necessary for successful acceptance of the
  marketing mix?
• 3. Will adaptation costs allow profitable market
  entry?

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Alternative Market-Entry Strategies (1 of 2)

• An entry strategy into international market
  should reflect on analysis
• Market characteristics
• Potential sales
• Strategic importance
• Strengths of local resources
• Cultural differences
• Country restrictions
• Company capabilities and characteristics
• Degree of near-market knowledge
• Marketing involvement
• Management commitment

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Alternative Market-Entry Strategies (2 of 2)

• Companies most often begin with modest export
  involvement
• A company has four different modes of foreign
  market entry
• Exporting
• Contractual agreements
• Strategic international alliances
• Direct foreign investments

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Alternative Market-Entry Strategies
Exhibit 12.2
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Exporting

• Indirect exporting a company uses a trading
  company or export agent, to handle all the
  logistics of exporting its goods overseas, e.g.
  customer payments
• Direct exporting products are typically exported
  to an intermediary located in the foreign country
  or handled through a domestic department or
  division. It also provides greater return and
  participation in marketing mix activities.

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Contractual Agreement (1 of 3)

• Contractual agreements
• Long-term,
• Nonequity association between a company and
  another in a foreign market
• Licensing
• A means of establishing a foothold in foreign
  markets without large capital outlays
• A favorite strategy for small and medium-sized
  companies
• Legitimate means of capitalizing on intellectual
  property in a foreign market

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Contractual Agreement (2 of 3)

• Franchising
• Franchiser provides a standard package of
  products, systems, and management services
• Franchise provides market knowledge, capital, and
  personal involvement in management
• Expected to be the fastest-growing market-entry
  strategy

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Contractual Agreement (3 of 3)

• Contract manufacturing or outsourcing they
  provide the necessary technical specifications to
  a local company to manufacture or assemble
  products or parts of products. Many companies now
  solely focus on contract manufacturing.

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Joint ventures

• Partnerships between two or more parties in a
  particular market, allows companies to share risk
  through joint ownership of a newly created
  business entity. Partnering with a local company
  not only allows for greater participation in
  profits than the modes of entry previously
  discussed, but also allows the foreign company to
  learn about a new market with relatively lower
  financial and political risk.

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Strategic International Alliances

• Four characteristics define joint ventures
• JVs are established, separate, legal entities
• The acknowledged intent by the partners to share
  in the management of the JV
• There are partnerships between legally
  incorporated entities such as companies,
  chartered organizations, or governments, and not
  between individuals
• Equity positions are held by each of the partners

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Strategic International Alliances

• Consortia
• Similar to joint ventures and could be classified
  as such except for two unique characteristics
• Typically involve a large number of participants
• Frequently operate in a country or market in
  which none of the participants is currently
  active
• Consortia are developed to pool financial and
  managerial resources and to lessen risks

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Strategic International Alliances

• With technological advances, falling trade
  barriers, and a growing belief that globalization
  is inevitable, companies have developed more
  flexible and innovative strategic partnerships.
• Airlines use global alliances through which they
  offer frequent fliers easier access to benefits,
  smoother international flight connections, and
  improved customer service.

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Direct Foreign Investment

• 1. Acquisition/merger, where a company gains
  instant entry into the foreign market, with
  facilities, operations, relationships, expertise,
  and brand names
• 2.Greenfield investment, where a company creates
  a business entity from the ground up in the
  foreign country. Both are also referred to as FDI.

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Direct Foreign Investment

• Factors that influence the structure and
  performance of direct investments
• Timing
• The growing complexity and contingencies of
  contracts
• Transaction cost structures
• Technology transfer
• Degree of product differentiation
• The previous experiences and cultural diversity
  of acquired firms
• Advertising and reputation barriers

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Questions

• Give 3 benefits of global marketing?
• Why would a marketer exclude a country after
  Phase 1 or 2 of the marketing plan?
• In what kind of situations would a joint venture
  or licensing be suitable?

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Internet task

• Visit the websites of Ford and Nestle. Compare
  their international involvement and strategies
  towards international markets. How do they differ?