Understanding the Global Marketing Environment

Class 5

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The Marketing Task

Marketing Strategy

(Controllable)

Implementation

•Segmentation•Targeting•Positioning

• Product• Price• Promotion• Distribution

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How is a product “positioned?”

ProductPricePromotionsPlace

Implementation of Marketing Strategy

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4 Ps - Product Product decisions are all decision which relate to the physical product

and/or service offering, including its name, packaging, warranty, and availability. Product dimensions include: Size of the product Color(s) of product Scent of the product Materials/ composition of the product Design of the product Packaging materials Package colors and package design Brand name Warranty Availability of options Customizing services After-sale service offerings Inventory levels

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4 Ps - Price Price decision are all decisions which relate to the price of the

product, price negotiation, and payment terms. Pricing dimensions include: Price to end user Price to distribution intermediaries Fixed vs. negotiated pricing Negotiation policies Credit policies Credit charges Payment terms (the amount of time allowed for payment and any

discount given for payment on time) Volume discounts Introductory allowances Trade-in policies

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4 Ps - Place

Place (distribution) decisions are all decisions which relate to the places at which the product or service is made available to buyers and the methods by which the product or service reaches those places. Place dimensions include: Selection of geographic markets Types of outlets from which end-users buy Level of competition among end-use outlets Number of end-use outlets Required qualifications for end-use outlets Specific identities for end-use outlets Types of intermediaries which service end-use outlets Level of competition among intermediaries Number of intermediaries which service end-use outlets Required qualifications for intermediaries which service end-use outlets Specific identities for for intermediaries which service end-use outlets Push v. pull policy

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4 Ps - Promotion Promotion decisions are all decisions which relate to communication with buyers about the

product or service, solicitation of purchases, and short-term purchase incentives. Promotion dimensions include:

Size of advertising budget, if any Selection of all ad media (television, radio, magazines, etc.) Selection of ad vehicles (Time, Sports Illustrated, etc.) Ad Scheduling Ad appeals Ad executions Ad allowance (co-op advertising) programs Size of sales force Levels of sales force compensation Method of sales force compensation Sales quotas at which commissions or bonuses activate or change Sales territory definitions Sales force selection and training Size of budget for consumer promotions Types of consumer promotions to be used. Size of budget for “trade promotions” Types of trade promotions used.

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Creating Marketing Strategies for International Markets

Standardization/Globalization

Adaptation/Localization

VS.

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Global Marketing

A global marketing strategy involves the creation of a single strategy for a product, service, or company for the entire global market

A basic strategyA basic strategy

Flexibility to adapt to local market Flexibility to adapt to local market conditions where necessaryconditions where necessary

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Coca-ColaGlobal Marketing Strategy

Think GlobalAct Local

GLOCAL

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International Marketing Concepts

Ethnocentric Domestic Market Extension/ Standardized

International Marketing Strategy

Managers’ International Orientation

Global Market Segmentation

Polycentric Multidomestic Extension/ Localized

Regiocentric Pan Regional

Geocentric Globalized

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Country Selection

Which particular country markets should a firm enter?

Two Common Errors1) Ignore countries with good potential

2) Spend too much time and effort investigating countries with poor potential

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The Search Begins…

Macrovariables Describe total market in terms of

economic, social, geographic, political information

Macrovariables are especially useful for determining which countries get rejected early on!

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Geographic Indicators

Size of country, in terms of geographic area

Climatic conditions

Topographical characteristics

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Demographic Characteristics

Total population Population growth rate Age distribution of the

population Degree of population

density

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Economic Characteristics

Total gross national product

Per-capita income (also income growth rate)

Personal or household disposable income

Income distribution

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World (Total) $25,097 $30,783 100 100 $4,678 $5,863

Triad (Total) 19,119 16,992 76 55 24,203 21,511

North America* 7,253 7,246 29 24 24,903 24,877

Japan 4,247 2,849 17 9 33,748 22,636

EU 7,619 6,898 30 22 20,435 18,502

Other High Income 844 631 3 2 34,415 35,904

Upper Middle Income 2,239 3,504 9 11 4,397 7,604

Lower Middle Income 2,403 7,480 10 24 1,001 3,126

Low Income 491 2,176 2 7 300 1,370

GLOBAL INCOME AND POPULATION: 1995GLOBAL INCOME AND POPULATION: 1995

GNP GNPwith PPP

GNPPer

Capita

GNPPer Capitawith PPPMarket

*Not including Mexico

Purchasing Power Parity Compared

(billion)

% ofworldGNP

% ofworldGNP

with PPP

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Standard of Living

China 70 5 724 37.5 76.9

384,000,000

Hong Kong 77 7 933 4.0 1.6 95,000

Japan 79 11 609 1.6 1.9 130,000

U.S. 76 12 404 1.2 1.3 28,000

Russia 60 275

150,000,000

LifeExpectancy

Schooling(av. years)

Number of people per:

Doctor TV Phone McDonald’s

Sources: WEFA, AsiaWeek, McDonald’s, The New York Times

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Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994

Food (includes eating out) $22.10 $38.00

Savings 11.40 17.00

Clothing 5.60 9.00

Child's Education 4.70 7.00

Home (includes Rent & Utilities) 4.30 8.20

Daily Goods other than Food 3.50 4.80

Medical Expenses & Drugs 2.30 4.00

Entertainment 1.30 3.20

National Urban Areas

SOURCE: Gallup China.

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Developing a Marketing Strategy

Situation Analysis Segmentation and Targeting Positioning Marketing Objectives Implementation - Marketing Mix Budget

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Roper Starch Worldwide Global Study

Shopping Styles Deal Makers (29%) - love the buying process Price Seekers (27%) - place primary value on the

price of the product that they are buying Brand Loyalists (23%) - purchase name brands

and remain true to them Luxury Innovators (21%) - seek new, prestigious

brands

40,000 consumers in 40 countries

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How the World Shops

Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Price Brand Luxury Deal Seekers Loyalists Innovators Makers

India 7.4 34.6 35.8 22.2Saudi Arabia 8.9 14.8 34.4 40.3Mexico 23.4 19.1 19.9 35.0China 23.4 27.9 19.1 35.0Czech Republic 26.9 23.9 25.7 22.6U.K. 27.2 28.7 17.5 25.5Spain 34.4 27.0 18.1 19.6U.S. 36.0 11.3 17.0 37.0Japan 41.0 23.5 7.9 27.1Germany 43.7 16.9 15.7 21.9France 45.5 19.5 8.5 26.6

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Type Of Segmentation

Grouping CountriesSegments Within and Across Foreign

Markets

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Global Scan Segmentation Study

0%

20%

40%

60%

80%

100%

Japan USA UK

Strivers

Achievers

Pressured

Traditionals

Adapters

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Life Style

Exhibit : Typology of European Car Market

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International Positioning Strategies

Global Positioning and Segmentation StrategiesUniversal Segment / Uniform Positioning

ThemeUniversal Segment / Different Positioning

ThemesDifferent Segment / Different Positioning

Themes

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Global Positioning & Segmentation Strategies