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Chapter 16: Global Marketing and Supply Chain
Chapter 16
Global Marketing and
Supply Chain
International Business
Oded Shenkar and Yadong Luo
Chapter 16: Global Marketing and Supply Chain
Do You Know?
• How to determine market potential of a foreign country?
• What adaptations are necessary for a product to sell in another country?
• That there can be domestic manufacturing influence, translating to product demand?
• That channel decisions are very important in international marketing?
Chapter 16: Global Marketing and Supply Chain
Marketing Domino’s Internationally
• Domino’s opened its first foreign store (Winnipeg) in 1983. Japan was in 1984; United Kingdom was in 1985, Mexico was in 1989. It hit Taiwan in 1987, and Hong Kong in 1984.
• Per store sales volume in Asia is more than twice the United States. Their secret: product adaptation (corn and squid on pizza??), pricing determination, national promotion and advertising, and customized transportation (the scooter in Asia).
Chapter 16: Global Marketing and Supply Chain
The International Marketing Challenge
• International markets offer vast opportunities for firms with a product or service in high demand.
• Newness, cultural adaptation, attractiveness, and appropriate marketing strategies can help tremendously.
Chapter 16: Global Marketing and Supply Chain
Assessing Market Potential
• To assess market potential, firms seek to identify the aggregate demand for a product and estimate the costs associated with product introduction and distribution.
• Population growth provides a coarse estimate of future market potential. So do consumption patterns.
Chapter 16: Global Marketing and Supply Chain
Globalization and Localization in International Markets
• Striking a balance between globalization and localization is a key challenge.
• Generally, the more closely defines the market segment, the less important are national stereotypes (Germans and ecology, Italians on performance).
• Across national markets, there is a trend toward greater similarity on product specifications, price, and packaging. On the other hand, cultural and national differences exist and require flexibility in communication with customers.
Chapter 16: Global Marketing and Supply Chain
Globalization Forces
• Global Brands (Kellogg’s, McDonalds, Budweiser, Coke) are products that enjoy worldwide recognition and are relatively unaltered in terms of brand and appearance when sold abroad.
Chapter 16: Global Marketing and Supply Chain
Globalization Forces
Exhibit 16-6: International decision making: more vs. less successful companies
Chapter 16: Global Marketing and Supply Chain
Globalization Forces
Exhibit 16-7: Shared vision about global marketing activities between country managers and global
marketing groups
Chapter 16: Global Marketing and Supply Chain
Globalization Forces
Exhibit 16-8: Use of globally uniform marketing practices
Chapter 16: Global Marketing and Supply Chain
Globalization Forces
Exhibit 16-9: Strength of (selected) individual globalization drivers
Chapter 16: Global Marketing and Supply Chain
Localization Forces
• Localization forces represent pressures towards adjustment in product marketing or distribution to make it more appealing or to meet requirements particular to a foreign market.
Chapter 16: Global Marketing and Supply Chain
Product Adaptation
• Faced with a foreign market with different characteristics, a firm may choose not to offer a product or a service in that market, to offer the same product it offers in other markets, or to adapt it to regional or country requirements.
• The Benefit/Cost approach and the User/Needs approach help determine whether adaptation is necessary.
Chapter 16: Global Marketing and Supply Chain
Product Adaptation
• McDonald’s Product Adjustments: The Veggie Mac (Switzerland), Chicken Rice (Singapore), no pork (Saudi), McMacos and McFiesta (Paraguay), McKroket (Netherlands), Teriyaki McBurger (Japan), Curry Pie (Hong Kong), McRoyal (Germany), McCafe (Argentina), McCafe (Australia), McPalta (Chile). Hey, you deserve a break today!!
Chapter 16: Global Marketing and Supply Chain
Country-of-Origin Effect
• This is the influence of the country of manufacturing image on the buying decision.
• The effect consists of innovativeness; design; and workmanship.
• There is strong evidence that country of origin influences buyer’s decisions.
Chapter 16: Global Marketing and Supply Chain
Branding
Branding is the process of creating and supporting positive perceptions associated with a product or service. Branding is especially complex in the international market. Some issues:
• Selecting the right name• Understand the local market• Fine tune the size, price, value construct• Quality/reliability at competitive price • Holistic marketing using multiple channels
…/…
Chapter 16: Global Marketing and Supply Chain
Branding
• Turning trademarks into “trustmarks”
• Establishing leadership brands, and changing social habits
• Selecting allies and partners
Chapter 16: Global Marketing and Supply Chain
Channel Decisions
• Export Intermediary choice is very important
• Direct Marketing is a potential channel
• Niche marketing is also very viable
Chapter 16: Global Marketing and Supply Chain
Promotion
• It is important to choose the right mix marketing communications like advertising and direct marketing.