The Global Marketing Communications (1) Compiled by: Sunarto Prayitno 1

The Global Marketing The Global Marketing Communications (1)Communications (1)

Compiled by:

Sunarto Prayitno11

IntroductionIntroduction

International marketingInternational marketing is the extension is the extension of the home country marketing strategy of the home country marketing strategy and plan to the world.and plan to the world.

Multinational marketingMultinational marketing is the is the development of a strategy for each country development of a strategy for each country that responds to the unique differences that responds to the unique differences and conditions in each country. and conditions in each country.

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IntroductionIntroduction

Global marketingGlobal marketing is the integration of the is the integration of the internationalinternational and and multinationalmultinational approach approach where the objective is to create the where the objective is to create the greatest value for customers and the greatest value for customers and the greatest competitive advantage for the greatest competitive advantage for the company.company.

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1. The 211. The 21stst-Century -Century MarketplaceMarketplace

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The Future of MarketingThe Future of MarketingCor Molenaar, 2002Cor Molenaar, 2002

People may not change, but technology People may not change, but technology does. After all, technology empowers does. After all, technology empowers organizations to change and technology organizations to change and technology changes the relation between people and changes the relation between people and organizations. People no longer have to organizations. People no longer have to go work; work can also go to people. We go work; work can also go to people. We no longer have to go shopping; the no longer have to go shopping; the shopping can be done from home. shopping can be done from home. Suddenly the home and the community Suddenly the home and the community are important again. are important again.

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We can organize our business and private We can organize our business and private matters from our own home. We can matters from our own home. We can reassess our private lives, redefine the reassess our private lives, redefine the division of roles with regard to our work division of roles with regard to our work and our private lives, our partners and our and our private lives, our partners and our children. There is now longer a strict children. There is now longer a strict division between home and work, between division between home and work, between studying and work and between business studying and work and between business and private life.and private life.

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CustomersCustomers now want you to remember who now want you to remember who they are, understand their needs and they are, understand their needs and provide them with a specific product to provide them with a specific product to meet these needs. meet these needs. The internetThe internet has has changed the way customers think forever.changed the way customers think forever.

‘‘This studies’This studies’ will help you to build your will help you to build your marketing strategy to attract, retain and marketing strategy to attract, retain and grow profitable customers into the future.grow profitable customers into the future.

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Global Building BlocksGlobal Building BlocksCommunicating Globally, Don E. Schultz et al., Communicating Globally, Don E. Schultz et al.,

20002000

The four major interrelated elements or building The four major interrelated elements or building blocks are driving changes in the market place blocks are driving changes in the market place and thus marketing and marketing and thus marketing and marketing communications:communications:

DigitalizationDigitalization

Information TechnologyInformation Technology

Intellectual PropertyIntellectual Property

Communication SystemsCommunication Systems

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DigitalizationDigitalization

The ability to convert almost all types of The ability to convert almost all types of knowledge, information, and materials into 1s knowledge, information, and materials into 1s and 0s manipulate those digits through and 0s manipulate those digits through computers and electronic systems has literally computers and electronic systems has literally changed the world.changed the world.

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Information TechnologyInformation Technology

By By information technologyinformation technology we mean all those we mean all those devices, techniques, and capabilities that allow devices, techniques, and capabilities that allow human knowledge, data, or experience to be human knowledge, data, or experience to be transferred quickly and easily between transferred quickly and easily between organizations or individuals around the world.organizations or individuals around the world.

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Intellectual PropertyIntellectual Property

Historically, nations, business organizations, and Historically, nations, business organizations, and individuals have been valued on the basis of individuals have been valued on the basis of their tangible assets – raw materials, land, their tangible assets – raw materials, land, factories and buildings, and even cash and factories and buildings, and even cash and precious metals.precious metals.

Today the new wealth is knowledge, experience, Today the new wealth is knowledge, experience, understanding, and capabilities.understanding, and capabilities.

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Communication SystemsCommunication Systems

Historically, communication systems have been Historically, communication systems have been linear, developed, organized, and delivered from linear, developed, organized, and delivered from a single source, whether that was a newspaper, a single source, whether that was a newspaper, a radio or television station, or a magazine, to a radio or television station, or a magazine, to masses of listeners or readers or viewers.masses of listeners or readers or viewers.

Communication systems, however, have Communication systems, however, have changed dramatically in the last few years. In changed dramatically in the last few years. In addition, many form of media have become addition, many form of media have become interactive; that is audience can be both interactive; that is audience can be both receivers and senders of messages and receivers and senders of messages and information.information.

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The Manufacturer-Driven The Manufacturer-Driven MarketplaceMarketplace

Producer or Manufacturer

Marketplace

ConsumerConsumer Consumer

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The Manufacturer-Driven The Manufacturer-Driven MarketplaceMarketplace

Most marketing history and certainly most Most marketing history and certainly most of today’s marketing activities assume a of today’s marketing activities assume a marketplace in which the manufacturer or marketplace in which the manufacturer or producer of products and services has producer of products and services has most of the marketplace power. most of the marketplace power.

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Communications Flow in the Communications Flow in the Manufacturer-Driven MarketplaceManufacturer-Driven Marketplace

Producer or Manufacturer

Marketplace

ConsumerConsumer Consumer

Media Media

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Communications Flow in the Communications Flow in the Manufacturer-Driven MarketplaceManufacturer-Driven Marketplace

As shown, in the manufacturer-driven marketplace, the As shown, in the manufacturer-driven marketplace, the seller or producer or marketer has almost total control seller or producer or marketer has almost total control over the communication systems.over the communication systems.

The buyer or consumer comes to the marketplace The buyer or consumer comes to the marketplace seeking goods, but the search is totally up to him or her.seeking goods, but the search is totally up to him or her.

The marketer or seller controls that information as it sees The marketer or seller controls that information as it sees fit.fit.

Thus almost all communication is outbound, and it is Thus almost all communication is outbound, and it is almost all linier in structure; that is, it flows out from almost all linier in structure; that is, it flows out from seller to buyer with little or no return loop.seller to buyer with little or no return loop.

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The Distribution-Driven The Distribution-Driven MarketplaceMarketplace

ManufacturerManufacturer Manufacturer

Distribution Channel

Consumer Consumer Consumer

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The Distribution-Driven The Distribution-Driven MarketplaceMarketplace

Over the last thirty or so years, the traditional Over the last thirty or so years, the traditional manufacturer-driven marketplace has involved into what manufacturer-driven marketplace has involved into what we now call the distribution-driven marketplace. we now call the distribution-driven marketplace.

This has come primarily as the result of retailers, This has come primarily as the result of retailers, distributors, whole sellers, or other forms of channel distributors, whole sellers, or other forms of channel organizations gaining control of the four marketplace organizations gaining control of the four marketplace building blocks.building blocks.

As shown, the distribution-driven marketplace is now in As shown, the distribution-driven marketplace is now in the center of the system. From that central location, the center of the system. From that central location, channel control marketplace power.channel control marketplace power.

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Communication Flow in the Communication Flow in the Distribution-Driven MarketplaceDistribution-Driven Marketplace




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Distribution is now in the center of the marketing Distribution is now in the center of the marketing communication system.communication system.

Manufacturers or producers, while they still try to speak Manufacturers or producers, while they still try to speak to or communicate with consumers and end users, to or communicate with consumers and end users, generally trough forms of mass media, increasingly have generally trough forms of mass media, increasingly have focused their communication efforts through their focused their communication efforts through their distribution channels.distribution channels.

Thus they have become dependent on the channels to Thus they have become dependent on the channels to provide information about usage and purchases of their provide information about usage and purchases of their products or services by ultimate consumers or end products or services by ultimate consumers or end users.users.

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At the other end of the communication system, At the other end of the communication system, consumers or end users have come to rely on the consumers or end users have come to rely on the channels or distribution systems to provide the products channels or distribution systems to provide the products and services they wants or needs.and services they wants or needs.

Being in the middle of this communication exchange Being in the middle of this communication exchange system, the retailer or distributor is now the dominant system, the retailer or distributor is now the dominant element in this distribution-driven marketplace.element in this distribution-driven marketplace.

The communication systems that have developed in this The communication systems that have developed in this marketplace are also generally one way and outbound. marketplace are also generally one way and outbound. For the most part these communication system are still For the most part these communication system are still fairly traditional, relying on establish media system such fairly traditional, relying on establish media system such as newspapers, radio, television, and magazines.as newspapers, radio, television, and magazines.

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The Interactive MarketplaceThe Interactive Marketplace




Distributor Distributor

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The Interactive MarketplaceThe Interactive Marketplace

The basic structure of this marketplace began to develop The basic structure of this marketplace began to develop in the early 1990s, with the growth and expansion of in the early 1990s, with the growth and expansion of various forms of electronic communication, such as the various forms of electronic communication, such as the internet, the commercialization of the World Wide Web, internet, the commercialization of the World Wide Web, and the develop of e-commerce.and the develop of e-commerce.

As will be shown, this new marketplace will be radically As will be shown, this new marketplace will be radically different from those that have gone before.different from those that have gone before.

Most important, it will, for the first time, put marketplace Most important, it will, for the first time, put marketplace power in the hand of consumers rather than with power in the hand of consumers rather than with traditional producers or channels.traditional producers or channels.

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Communication Flow in an Communication Flow in an Interactive MarketplaceInteractive Marketplace




Distributor Distributor

MediaMedia Media

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Communication Flow in an Communication Flow in an Interactive MarketplaceInteractive Marketplace

Marketing communication changes dramatically in the Marketing communication changes dramatically in the interactive marketplace as well.interactive marketplace as well.

Traditional flows of information through marketing Traditional flows of information through marketing communication now become two way rather than linear. communication now become two way rather than linear. That in itself is a major change for most marketing That in itself is a major change for most marketing organizations.organizations.

As shown, the major change for the marketing As shown, the major change for the marketing organizations is that it must develop skills in responding organizations is that it must develop skills in responding to marketing communication inquiries from customers to marketing communication inquiries from customers and prospects, not just in developing messages and and prospects, not just in developing messages and information that it wants to deliver or send out to the information that it wants to deliver or send out to the marketplace.marketplace.

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HistoricalMarketplace

Marketer

Information

Channel

Media

Customer Customer

Marketing Diagonal

Mktr Mktr Mktr Mktr Mktr Mktr

Channel Channel

Information

Media

Customer Customer

Current Marketplace

Mktr Mktr Mktr Mktr Mktr Mktr

Channel Channel

Media Media Media

Information

Customer Customer

Twenty-First-Century Marketplace

Source: Don E. Schultz & Beth E. Barnes, Strategic Brand Communication Campaigns, NTC Business Book, 1999.

Marketing Diagonal

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2. Understanding the 2. Understanding the Global MarketplaceGlobal Marketplace

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The Global Evolution of a Company

Domestic

Multidomestic

GlobalGlobal Evolution

The Old ModelTime

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The Global Evolution of a The Global Evolution of a CompanyCompany

As shown, the x-axis is time and the y-axis is As shown, the x-axis is time and the y-axis is global evolution. Based on the model, once global evolution. Based on the model, once organization grows from the domestic base to a organization grows from the domestic base to a multi-domestic organization in multiple multi-domestic organization in multiple geographies, the next step is for the geographies, the next step is for the organization to become a global company.organization to become a global company.

The problem is, of course, that global companies The problem is, of course, that global companies are radically different from the domestic or multi-are radically different from the domestic or multi-domestic organizations that call themselves domestic organizations that call themselves international organizations.international organizations.

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The Contextual Determinants of Global Marketing

Determinants

of Internal

Marketing

Cultural Context

Operational Context

Entry Context

Market Development

Political Stability

Government Policy

Ideology-Driven Economy

Fear of ColonialismInfrastructure

Adjustments

Functional Adjustments

PLC Management

Cross-Cultural Differences

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The Cultural ContextThe Cultural Context

This context includes such factors as cross-This context includes such factors as cross-cultural differences between the organization cultural differences between the organization and the market in which it is operating, the level and the market in which it is operating, the level of market development, and the political stability of market development, and the political stability of the region.of the region.

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The Entry ContextThe Entry Context

This is how the organization has entered or has been This is how the organization has entered or has been allowed to enter the new market.allowed to enter the new market.

For example, government policy has much to do with how For example, government policy has much to do with how the organization can be structured and how it might the organization can be structured and how it might operate in the new market.operate in the new market.

Another important consideration is the ideology that drives Another important consideration is the ideology that drives the economy. That ideology can be political, religious, or the economy. That ideology can be political, religious, or perhaps simply the beliefs.perhaps simply the beliefs.

Fear of imperialism often drives countries or economies to Fear of imperialism often drives countries or economies to set up specific laws and regulations that restrict the ability set up specific laws and regulations that restrict the ability of the organization to grow, develop, and derive profits.of the organization to grow, develop, and derive profits.

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The Operational ContextThe Operational Context

This context includes items such as infrastructure This context includes items such as infrastructure adjustment that might be necessary for the organization adjustment that might be necessary for the organization to apply its operating systems or hiring practices in the to apply its operating systems or hiring practices in the new country.new country.

It might also include functional adjustments – It might also include functional adjustments – circumstances that cause the organization to rethink or circumstances that cause the organization to rethink or organize the functional structures it uses both internally organize the functional structures it uses both internally and externally.and externally.

Product life cycle management also has a great impact Product life cycle management also has a great impact and how the organization will operate in the new and how the organization will operate in the new economy.economy.

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Integrated Global Integrated Global MarketingMarketing

Source: Don E. Schultz & Philip J Kitchen, Communicating Globally: An Integrated Marketing Approach, NTC Business Book, 2000

Global Processes

Global Processes

Global Systems

Global Systems

Global Managers

Global Managers

Global Account

Management

Global Account

Management

Global Brands

Global Brands

Global Products

Global Products

Global Sourcing

Global Sourcing

Global Logistics

Global Logistics

Global Commerce

Global Commerce

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Finally, the global marketer must develop integrated Finally, the global marketer must develop integrated systems and processes that can be applied around the systems and processes that can be applied around the world.world.

Inherent in a globally successful marketing approach will Inherent in a globally successful marketing approach will be the ability of the organization to develop and provide be the ability of the organization to develop and provide seamless, transparent products and services to seamless, transparent products and services to customers and prospects around the world.customers and prospects around the world.

That will require and integrated approach that, as shown, That will require and integrated approach that, as shown, will start with understanding of global commerce.will start with understanding of global commerce.

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This effort will require global products that are adaptable This effort will require global products that are adaptable for use in multiple markets around the world.for use in multiple markets around the world.

Those products or services will need to be backed by Those products or services will need to be backed by globally recognizable brands using some type of global globally recognizable brands using some type of global account management system that will be run by global account management system that will be run by global managers.managers.

The global manager will require global production, The global manager will require global production, operations, and logistical processes and global systems.operations, and logistical processes and global systems.

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And, to succeed, this global systems will require global And, to succeed, this global systems will require global sourcing of ingredients, raw materials, or skilled sourcing of ingredients, raw materials, or skilled employees along with the development of global employees along with the development of global logistical systems.logistical systems.

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Global Marketing Global Marketing OrganizationOrganization

There are three major forces that suggest drive the There are three major forces that suggest drive the strategy of organizations competing across strategy of organizations competing across borders, boundaries, and cultures:borders, boundaries, and cultures:

Global IntegrationGlobal Integration

Responsiveness to National EnvironmentsResponsiveness to National Environments

Administrative HeritageAdministrative Heritage

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Global IntegrationGlobal Integration

The past decade or so has been an era in which global The past decade or so has been an era in which global political boundaries were re-forming.political boundaries were re-forming.

Regional blocs were emerging, technological advances Regional blocs were emerging, technological advances were changing, the economic structure that underlay were changing, the economic structure that underlay industries and competitive dynamics were reformulating industries and competitive dynamics were reformulating the rules of the game in industry after industry.the rules of the game in industry after industry.

All this forces for ‘global integration’ required companies All this forces for ‘global integration’ required companies to be more integrated and coordinated across national to be more integrated and coordinated across national boundaries.boundaries.

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Responsiveness to National Responsiveness to National EnvironmentsEnvironments

As any international company well understands, there As any international company well understands, there are other forces that require sensitivity and are other forces that require sensitivity and responsiveness to national environments.responsiveness to national environments.

Most obviously, consumers differ country by country; Most obviously, consumers differ country by country; national infrastructures differ; competitors vary market by national infrastructures differ; competitors vary market by market; and host-country governments require market; and host-country governments require companies to accommodate the interest of each companies to accommodate the interest of each particular nation-state.particular nation-state.

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Administrative HeritageAdministrative Heritage

The many aspects of a company’s past – its home The many aspects of a company’s past – its home company cultural, its history, the influence of specific company cultural, its history, the influence of specific individuals – collectively constitute a company’s individuals – collectively constitute a company’s ‘administrative heritage’.‘administrative heritage’.

It is vital that a company understand its administrative It is vital that a company understand its administrative heritage for two reasons: a company’s strengths lie heritage for two reasons: a company’s strengths lie deeply embedded in this heritage, and a company must deeply embedded in this heritage, and a company must recognize those strengths to protect them.recognize those strengths to protect them.

But, at the same time, administrative heritage can be the But, at the same time, administrative heritage can be the biggest barrier to change.biggest barrier to change.

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Global Marketing Global Marketing OrganizationOrganization

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Documents

The Global Marketing Communications (1) Compiled by: Sunarto Prayitno 1