12_Global Brands & Local Markets23

8/14/2019 12_Global Brands & Local Markets23

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Definition: Globalization has been defined in business schools as the

production and distribution of products and services of ahomogenous type and quality on a worldwide basis.

Why?

The fact that foreign sales account for more than 50 per centof the annual revenues of companies such as HewlettPackard, IBM, Johnson and Johnson, Mobil, Motorola, Procter& Gamble, etc..


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Features of globalisationRemoval of barriers to free tradeCloser integration of national economiesShrinking planet phenomenonNetwork society

Globalization process involves: costs risks challenges conflict

potential benefits


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Yesterdays Globalism

In yesterdays one-size-fits-all world, big companies couldoften migrate something that was a hit in the U.S. orEurope by tweaking the language and advertising .

Examples:

Mercedes-Benz, traded on its reputation for buildinghighly engineered automobiles to drive into foreignmarkets.

Coca-Cola Co. and Marlboro cigarettes traded ontheir American-ness to create large overseasfollowings.

Sony Corp. found that compact, economical, and

reliable electronics like the Walkman, struck a chordwith people everywhere.


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Todays Globalism

Things have changed.

No company can safely assume there will be

viable foreign markets for an existing product.Any company seeking to expand globally needs

to ask if its offerings are culturally and sociallyappropriate for its targeted market.


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Problems faced byGlobal brands

Companies find it difficult to succeed in new markets thatare culturally unfamiliar.

They often underestimate differences in the patternsof daily life in the new markets.

This makes it difficult to develop products and servicesthat fit peoples lives,

It is difficult to extend their brand, and manageculturally diverse teams.

Western companies are now paying a great deal ofattention to the growing number of people withexpendable income in China, India, and otherdeveloping regions where the cultures are verydifferent from those in the West.


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Coca-cola : Global is Out,

Local is In Initial set backs in 80s the benefits of global integration are

sought and the need to adapt products to local markets islargely ignored.

Coke is instituting a strategy of think local, act local byputting increased decision making in the hands of localmanagers.

Make model citizen by reaching out to the localcommunities and getting involved in civic and charitableactivities.

Better understanding and appealing to local differences.


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sney: earn ng o ay u oYes

Before :

Workers were required to speak English, even if most people in attendance were French.

Liquor was not sold in the park, they have a drink with lunch or dinner.

Many of the exhibits and rides did not have a local theme, they were the same as thosein Disneyland USA and thus did not appeal to Europeans.

After :

Began creating European-specific attractions

Started to serve alcoholic beverages


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Kingfisher: Where Retail isDetail

The Kingfisher Group, a British retail enterprisewith annual sales of over $10 billion, wasfounded in 1989.

Retail is detail and local knowledge is vital.

The approach that is used in managing thesegeographically dispersed operations


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Advanta

gesof

global

isation


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Advantages

Incresed free trade between nations

Increased liquidity

Greater flexibilty Mass media

Increased flow of communication


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Advantages

Greater ease of transportation

Reduction of cultural barriers

Spread of democratic ideals

Reduction in chances of war

Increase in evironmental protection


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Disadvantages of globalisation


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Disadvantages

Economic disruptions

Local culture and tradition is threatened

Spread of materialistic lifestyle and attitude Greater chances of reactions being voilent


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Risks posed by globalization

1.Income differentials cause basic poverty-associatedconditions for poor health.

2. Job insecurity, substandard wages, lowest-common

denominator approach to occupational environmentalconditions & safety can jeopardize health of workers &their families.

3. Diseases ofdietary excesses, as food production &food processing become intensified, & as urbanconsumer preferences are shaped by globally

promoted images.4.Continued widespread rise ofurban obesity.


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Extreme Stage ofGlobalisation

Global market participation

Global products and services

Global location of activities

Global marketing

Global competitive moves


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Two general types of research that companies use tounderstand new markets

1. product-focused research: asks consumersthrough surveys, focus groups, interviews, home

visits and usability tests, about existing orprototypical products and services.

2. culture-focused research:uses measures like census-taking and demographic data, to look at general patterns

of daily life like value systems, social structures, andrelationships among friends and relatives.

How Companies Try toUnderstand Consumers?


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Tips

Do not assume an integrated global market.

Be prepared to design strategies that take into

account regional trade and investmentagreements.

Encourage all your managers to think

regional, act local and forget global!


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Contd. The foreign market is not always the same as your

home market.

Make alliances and foster cross-cultural awareness.

When global brands target their regional markets using

the appropriate economic integration/nationalresponsiveness, they tend to be successful.

Develop new thinking and knowledge about regionalbusiness networks and assess the similar attributes ofcompetitors, rather than always developing pure global

strategies.


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Steps to be followed Which market do we want to access. Take macro and micro data to make a segmentation

decisions on these markets and choose our priorities. How can we modify our product to make more

attractive to each sepate group: you can change.

Performance levels Design Support Speed of services Packagining

Positioning Price?

Can we position ourselves as being the best wherethere are many others to choose from?


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How it will help?

Planning products and services for

culturally divergent markets.

Managing their brand across cultures. Create and managing teams of culturally

diverse employees.


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Thankyo

u

Documents

12_Global Brands & Local Markets23