Chapter 16: Global Marketing

Marketing is the planning, executing, conception, pricing, promotion, and distribution of ideas, goods, and services that create exchanges that satisfy both consumers and meet the organization's objectives.

marketing mix

1. product: both tangible and intangible features of product

2. place: in terms of distribution and getting it in front of consumer

3. promotion: enhances desirability and awareness of the brand

4. pricing

product attributes

• cultural differences (labeling, ingredients, disposal, features, warranties)

• economic differences (level of income)

• product and technical standards (health, packaging, labeling requirements, and legal factors)

are product considerations more or less demanding if you do not have a commodity?

• more demanding

economic differences

• consumer behavior is influenced by economic development

• highly developed countries: expectations of high performance characteristics

• less developed countries do not have high expectations (no ac, no GPS, no sound systems, etc.)

why is product reliability important?

the amount of disposable income means people who have bought cars with less income will have higher expectations about how long it lasts

product and technical standards

• government standards can prevent the introduction of global products because of issues with ingredients, environmental standards (entail the need for local responsiveness)

• infrastructure and electrical attributes

distribution strategy

• retail consideration

• channel length

• channel exclusivity

retail considerations

concerned with reach and access (moreso with lesser developed markets)

channel length

longer the channel, higher the cost

channel exclusivity

possible for product to appear in distribution outlets that were not intended

concentrated distribution systems

• big box stores, grocery stores, online businesses

fragmented

• 45,000 Japanese small business toy retailers

promotion

• most cultural bound element

• efforts to influence purchases

• consider the message, language issues

  • to help, get a translator who has knowledge of the local market

push strategy

• industrial/complex products

• short distribution channels

• few print/electronic media

• “sales staff” (local or multinational)

  • from experience in Russia, you’ll do better with Russian sales staffs (fear of Americans)

pull strategy

• for consumer goods

• long distribution channels

• sufficient media to carry message

standardized global advertising

• economic advantages

• scarce talent

• many global brand names

non-standardized global advertising

• messages are misconstrued

• advertising regulations

product comparisons

• in Germany, competitors can take you to court if you made claims about their product

• in Canada, no “puffery” (exaggerated claim), instead use credulous person standard (would someone gullible believe this?)

• in US, “puffery” is okay

best global brands

• Apple ($205)

• Google ($168)

• Microsoft ($125)

How is globalizing your brand valuable?

you are more able to leverage brands across markets

pricing strategies

• price discrimination

• standard pricing

• two-tier pricing

• strategic pricing

price discrimination (market pricing)

charge the profit maximizing price in each market you serve

• keep national markets separate

• different price elasticities of demand or cost

multidomestic firm (localization strategy)

prices according to local conditions because in process of customization, the cost will vary

standard pricing

charge the same price all over the world

• most likely in a firm with a global strategy (they standardize their products) (hard to keep their market separate)

• look at global demand and cost considerations then standardize the profit maxing price across all markets

two-tier pricing

one price domestically, and another for foreign products

• foreign may be higher because of transportation cost

• if price is lower in home country, then you have the issue of possibly being charged with dumping

• companies with international strategy

what is a key element of pricing considerations?

price elasticity of demand where income level and competitive conditions in terms of alternatives for consumers determine elasticity

elasticity

the responsiveness to price changes

• tends to be greater in countries with low income levels

• greater in countries where there are many different competitors

strategic pricing

using price as a competitive weapon

• considering price of competitors

multipoint pricing strategy

• having two firms competing against each other in more than one market

• a firm’s pricing strategy in one market may impact a rival in another market

• ex: US investigating how Japan is doing well in both markets and it being a difference in price

experience curve pricing

firms price low worldwide to build market share and expectation is they will make up for losses once they get larger and gain scale economies and realize the benefits of experience in the market

what are some regulatory considerations in setting price to keep you from charging your profit maximizing price?

antidumping and antitrust

antidumping

selling a product for price in foreign market less than what it costs to make it

• tariffs place a floor under export prices and limit ability to pursue strategic pricing

antitrust

• rules that keep businesses from cheating or playing unfairly to get rid of competition

• they make sure companies don’t team up to hurt customers or smaller businesses.

benefits of using crossfunctional teams?

bringing people from different areas across the world to work on product development

how does using global strategy have an affect on operations/production?

as a means to centralize for low cost with less locations

how does the global strategic approach view marketing a product?

wants you to standardize products so they’ll be cheap

how do global strategies view marketing price?

standard price

how do global strategies view finding places?

focusing on volume (measuring how many items are sold rather than the total revenue generated from those sales)

how do companies advertise in a global strategy?

PRICES ARE LOW

how do multidomestic firms view production?

decentralize so they can make necessary modifications

how do multidomestic firms view marketing products?

they work on customization

how do multidomestic firms react to finding prices?

market research

how do multidomestic firms get their product to consumers?

through merchandising, using retailers and brand management

how do multidomestic firms advertise?

advertising having the best value