Global Marketing Strategies & Market Entry

Posted on Oct 16, 2024 in Economy

1. Globalization of Markets

Convergence vs. Divergence

  • Convergence: Markets become homogeneous. Examples: Nike, Barcelona, China.
  • Divergence: National culture dominates values. Consumption varies between countries.
  • Crossvergence: Blend of cultural values in multicultural settings.

2. Global Strategies

Standardization or Adaptation

  • Standardization: Same offering in all countries.
  • Adaptation: Adjustments to meet local differences.
  • Cost Pressure: Economies of scale through standardized products. Examples: Intel, Apple.
  • Adaptation Pressure: Adjusting to local preferences. Example: Volkswagen (cars in the U.S. vs. Europe).

3. Global Competitive Strategies

  • Global Strategy: Homogeneous products, cost reduction.
  • Transnational Strategy: Reduces costs and adapts. Example: Caterpillar.
  • International Strategy: Maintains central control with local adjustments. Examples: McDonald’s, P&G.
  • Multidomestic Strategy: Highly adapted products for each country. Example: Philips.

4. Evolution of Global Marketing

  • Global Marketing: Creates and delivers value, facing competition and diversity.
  • Customer Value: Perceived benefits minus perceived costs.
  • Core Decisions: Selecting markets, entry strategy, and marketing programs.

5. Advantages of Global Marketing

  • Economies of Scale: Lower production and advertising costs.
  • Idea Exploitation: Leveraging the best ideas worldwide.
  • Global Competition and Cooperation: Global competition drives collaboration. Example: Samsung and Apple.

6. Importance of Global Marketing

  • Domestic Market Saturation: Increased competition and costs locally.
  • Emerging Markets: Growing opportunities in developing countries. Examples: China, India.
  • Internet Revolution: Growth of e-commerce. Example: B2B led by the U.S.

7. International Trade & MNCs

  • International Business: Trade and foreign investment, including multinationals.
  • Intra-firm Trade: Trade between affiliated companies, managed by multinationals.

1. Globalization

  • Definition: Interdependent relationships among people from different nations, removing trade barriers.
  • Benefits: Cost reduction, better product quality, higher customer preference, global competitive advantage.
  • Driving Forces: Technology, trade liberalization, global competition, and cooperation between countries.

2. Effects of Globalization

  • Consumer Pressures: Demand for differentiated products and better options. Examples: Amazon, Alibaba.
  • Global Competition: Strategic alliances and mergers to gain market share.
  • International Cooperation: Treaties and agreements to address common issues.

3. Costs of Globalization

  • National Sovereignty: Dependence on large countries for supplies; local restrictions impacted.
  • Environmental Stress: Rapid consumption of resources, pollution, and deforestation.
  • Inequality & Personal Stress: Growing income inequality and job insecurity.

4. International Business

  • Reasons to Internationalize: Sales expansion, resource acquisition, risk reduction.
  • Modes of Operation: Exporting, importing, direct and portfolio investments.
  • Service Exports & Imports: Sectors such as tourism, banking, and licensing. Examples: Air France, tourism in the Bahamas.

5. International Investments

  • Direct Investment: Control over foreign companies. Example: Liverpool Football Club.
  • Portfolio Investment: Financial participation without control. Example: Stocks or bonds.

6. International vs. Domestic Business

  • Physical & Social Factors: Geography, local laws, and cultural norms influence operations.
  • Competitive Environment: Product strategies and resource adaptations vary by market.

1. Cultural Environment

  • Definition of Culture: Shared values that answer fundamental questions about identity and lifestyle.
  • Subcultures: Differences within a country. Example: Rabbit as food in Peru.
  • Cultural Change: Change by choice or imposition. Example: Spanish culture in South America.

2. Elements of Culture

  • Language: Reflects cultural perception. Example: Canada (English and French).
  • Religion: Influences attitudes and business decisions. Example: McDonald’s (no pork in India).
  • Color Meaning: Different associations depending on culture. Example: Red means luck in China.
  • Beliefs & Attitudes: Fixed ideas about the world and predispositions toward certain topics.

4. Relational Preferences

  • Power Distance: Relationship between superiors and subordinates. Example: Consultative styles in low power distance cultures.
  • Individualism vs. Collectivism: Individualists seek self-fulfillment; collectivists prefer security. Example: U.S. vs. China.

5. Information Processing

  • High/Low Context Cultures: Low context (U.S.) is direct; high context (Latin America) values extended conversation.

6. Strategies for Cultural Differences

  • Adaptation: Companies should adjust to local expectations. Example: Foreign firms in China.
  • Cultural Shock: Reaction to a different culture, followed by adjustment. Example: Expats in mining camps.

7. Business Attitudes in Foreign Markets

  • Polycentrism: Companies act as locals in other countries.
  • Ethnocentrism: Ignores national differences, believing their approach is superior.
  • Geocentrism: Adopts hybrid strategies, balancing national and international standards.

1. Information in Global Marketing

  • Necessary Information: Understanding consumer needs, marketing environment, and competition.
  • Objective: Improve decisions based on similarities and differences between countries.

2. Marketing Information System (MIS)

  • Needs Assessment: Balance what is desired, needed, and feasible to obtain.
  • Cost-Benefit: Evaluate the cost of obtaining and processing information.

3. Market Research Process

  • Step 1: Define the problem. Types: Exploratory, descriptive, causal.
  • Step 2: Develop the plan. Includes: Primary/secondary data, contact methods, sampling.
  • Step 3: Collect, analyze, and present data.

4. Primary Data Collection

  • Methods: Observation, surveys, experiments. Examples: Panels, audits.
  • Instruments: Questionnaires, Likert scales, mechanical instruments (e.g., supermarket scanners).

5. Secondary Data Collection

  • Sources: Online databases, scan data.
  • Problems: Accuracy, timeliness, comparability between countries.

6. Sampling Techniques

  • Probability Sampling: Everyone has an equal chance of being selected.
  • Non-Probability Sampling: More economical, but lacks statistical error calculation.

7. Market Size

  • Estimation Methods: Correlation analysis, trade audit, chain ratio method.
  • Market Evaluation: Apply various methods and perform sensitivity analysis.

8. Information Technologies in Marketing

  • Innovations: Scan data, consumer panels, micro-to-macro marketing.
  • Tools: CATI/CAPI for data collection accuracy and speed.

9. Global Marketing Research Management

  • Agency Selection: Consider experience, credibility, and clients.
  • Emic vs. Etic Dilemma: Address unique cultural differences (Emic) or global similarities (Etic).

1. Consumer Buying Process

  • Stages: Problem recognition, information search, alternative evaluation, purchase decision, post-purchase evaluation.
  • Consumer Attitudes & Values: Formed in childhood, guide actions, and may change over time.

2. Market Segmentation

  • Main Variables: Geography, demographics, psychographics, behavior.
  • Segmentation by Consumer Groups: Identify homogeneous groups and target distinct, viable segments.
  • Segmentation Methods:
    • Demographics: Gender, age, income, education, ethnicity.
    • Psychographics: Activities, interests, opinions. Examples: Innovators, Believers.

3. B2B Segmentation

  • Objective: Group organizations into meaningful clusters for improved service.
  • Segmentation Methods: By industry, size, location, product usage, customer value.

4. Segment Evaluation (Targeting)

  • Evaluate Segment Size & Growth: Current sales and expected profitability.
  • Segment Structural Attractiveness: Competition, substitute products, bargaining power.
  • Company Resources: Examine capabilities to compete and provide superior value.

5. Segmentation Strategies

  • Mass Marketing: Standard product for all.
  • Segmented Marketing: Tailored to different segments.
  • Niche Marketing: Focused on a specific segment.
  • Micromarketing: Focused on local or individual consumers.

6. Positioning

  • Product Positioning: A product’s place in the consumer’s mind relative to competitors.
  • Positioning Process: Create an identity for the product/brand in the consumer’s mind.
  • Perceptual Maps: Visualize the product’s position in relation to others.
  • Unique Selling Proposition (USP): Key competitive advantage.

1. Market Selection Introduction

  • Entry Decision: Influences marketing mix decisions.
  • Selection Criteria: Target product/market, objectives, entry mode and timing, marketing plan, and control system.

2. Target Market Selection

  • Four-Step Process:
    1. Select indicators and collect data. Example: McDonald’s targets countries similar to the U.S.
    2. Determine indicator importance with weights.
    3. Rate countries on each indicator (0-100 scale).
    4. Calculate an overall score for each country.

3. Choice of Entry Mode

  • External Criteria:
    • Market Attractiveness: Size, growth, regulations, competition, infrastructure.
    • Risk: Political and economic stability. Example: Middle East, Africa.
    • Government Regulations: Ease of doing business.
    • Cultural Distance: Impacts decisions; joint ventures are preferred to minimize risks.
    • Local Infrastructure: If deficient, outsourcing is viable.

4. Market Size & Growth

  • Investment Strategy: Allocate more resources to large or high-growth markets. Example: Joint ventures in large emerging markets.

5. Competitive Environment

  • First-Mover Advantage: Early entry can yield significant control. Example: SABMiller in South America.

1. Entry Mode Selection

  • Country Types: Platform, emerging, growth, and mature countries.
  • Factors to Consider: Company objectives, need for control, internal resources, flexibility.

2. Exporting

  • Indirect: Using agents or export management companies. Low risk, limited control.
  • Direct: Creating an export department. Examples: Whole Foods (intermediary), machinery (B2B).

3. Licensing

  • Definition: Granting intellectual property rights for royalties.
  • Advantages: Rapid global market access, low risk.
  • Disadvantages: Low licensee motivation, risk of creating competitors.

4. Franchising

  • Method: Franchisor grants use of business concept and brand.
  • Benefits: Expansion with minimal investment.
  • Disadvantages: Limited supervision and franchisee performance issues.

5. Contract Manufacturing (Outsourcing)

  • Advantages: Low labor costs, quick market access.
  • Disadvantages: Potential future competition, quality issues.

6. Joint Ventures

  • Definition: Cooperation between companies, usually with shared ownership.
  • Benefits: Access to distribution networks, shared synergies.
  • Disadvantages: Conflicts over strategies, cultural differences.

7. Wholly-Owned Subsidiaries

  • Acquisitions & Mergers: Quick access to local brands. Example: Delta and Virgin.
  • Greenfield Operations: Flexibility to manage resources, but full risk.

8. Exit Strategies

  • Reasons: Sustained losses, high competition, resource reallocation.
  • Risks: Fixed exit costs, loss of long-term opportunities.

1. Domestic Marketing

  • Marketing Type: National focus, concerned only with the local market.
  • Orientation: Ethnocentric, focused on the home country’s needs.
  • Product Planning: Products developed exclusively for local customer needs.
  • Marketing Mix Decisions: Made at headquarters, with no consideration for other markets.

2. Export Marketing

  • Marketing Type: Starts selling in other countries, but focus remains domestic.
  • Orientation: Ethnocentric, focused on home country needs, though it chooses export countries.
  • Product Planning: Minimal adaptation, centered on exporting existing products.
  • Marketing Mix Decisions: Still made at headquarters, but country selection and timing are planned.

3. International Marketing

  • Marketing Type: Adapts marketing strategy individually for multiple countries.
  • Orientation: Polycentric, recognizing each country as different and adapting products to each market.
  • Product Planning: Local products based on specific needs in each country.
  • Marketing Mix Decisions: Made in each country, focusing on modifying the marketing strategy and sharing advertising and distribution costs.

4. Multinational Marketing

  • Marketing Type: Groups multiple countries into regions and adapts strategy at the regional level.
  • Orientation: Regiocentric, with standardization occurring regionally, not globally.
  • Product Planning: Products standardized within each region but may vary across different regions.
  • Marketing Mix Decisions: Made regionally, seeking to unify advertising and distribution costs for the entire region.

5. Global Marketing

  • Marketing Type: Unified strategy worldwide, with local variations as needed.
  • Orientation: Geocentric, balancing global standardization and local adaptation.
  • Product Planning: Global products locally adapted to meet market needs.
  • Marketing Mix Decisions: Made jointly with local offices, coordinating the marketing mix across countries and regions, and integrating global strategies.