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Global Marketing. Chapter 17. Presentations on a country or a region (even a town/city in U.S.) some other subject in global business An especially good chance to discuss your home or your ancestors ’ home Up to 12 points extra on class participation grade

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Global marketing l.jpg

Global Marketing

Chapter 17


Extra credit opportunity l.jpg

Presentations on

a country or

a region(even a town/city in U.S.)

some other subject in global business

An especially good chance to discuss your homeor your ancestors’ home

Up to 12 points extra on class participation grade

Details available on web site

Extra credit opportunity


Nike debate l.jpg

A ‘Town Hall’ meeting May 3

One group of people at front are Nike executives

Second group is activists critical of Nike

The question: Should Nike change its approach to global sourcing?

Audience plays roles of stakeholders

Nike debate


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3-4 people required for each team

Preference given to people whose midterm essays showed good critical thinking

Extra credit – up to 8 extra points on second midterm

The rest of us will prepare questions for the debate in groups April 26


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The process by which the firm’s abilities, products, and services are

brought to the attention of customers,

then sold and

delivered

Much more than just advertising and selling

What is ‘Marketing?’


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Choosing a Strategy services are


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Important to determine when product services arestandardization is appropriate in an international market

Firms mayneed to vary marketing mix in each different country

Globalization may be the exception rather than the rule, especially in consumer goods markets

and also, often, in industrial markets

The Globalization of Markets and Brands


Kodak in russia l.jpg

Kodak entered Russia in the early 1990’s services are

Russian consumers had little knowledge

Market for photography undeveloped

No infrastructure for selling or processing

Consumers were poor

Kodak’s succeeds - growth rate 26%

Sell lower-end film and cameras

Built a distribution channel through franchising

A clear, consistent marketing message

Corporate image as firm that opposes corruption

Low prices

Kodak in Russia


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Great franchise services are

Lots of interest in U.S.

What happened?

AstroBoy


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Refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways

Segments can based on:

Geography

Demography

Socio-cultural factors

Psychological factors

Market Segmentation


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Product purchasing behavior differs from others in important ways

Place (=‘Distribution Strategy’ in text)

Promotion (=‘Communication Strategy’ in text)

Price (Pricing Strategy)

‘4 Ps’ of Marketing


Product attributes l.jpg

Cultural differences purchasing behavior differs from others in important ways

Levels of economic development

Product and technical standards

Mostly standards set by governments

Product Attributes


Distribution l.jpg

Definition – “The course that goods take between production and consumption”

physical path and

legal title – Who buys the product from the maker and sells it to others closer to the final customer?

Today we’re mostly interested in how products get to final customer once they’re in a particular country

Distribution


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Shipping production and consumption”is part of distribution

But more important is the companies and the process through which the product is sold

to retailers

to the final customer

These companies and processes for distribution are called marketing “channels”


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Choice of the optimal production and consumption”channel for delivering a product to the consumer

Depends on differences between countries

Retail concentration

Channel length

Channel exclusivity

Distribution Strategy (Place)


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Selling production and consumption”direct to foreign retailers or end users

Often difficult

But gives you control of the process

Avoids risk of a lazydistributor

Direct Selling

17-10


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A production and consumption”distributor – a firm that buys from maker or a larger distributor and sells to a retailer or a smaller distributor (or sometimes to the final customer)


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Need to provide a production and consumption”sales program

Promotional materials, services, training of sales people discounts for quantity, credit

Don’t be quick to cut the base price

Selling is complex everywhere – but even more so abroad


Pricing is much more complex in international business l.jpg

Changing values of currency production and consumption”

Diversity of markets

Costs of transportation, warehousing

Tariffs, quotas

Government regulations

Distribution methods have to differ from one country to the next

Pricing is much more complex in international business


Distribution systems result in price escalation l.jpg

U.S., Canada, much or Europe have production and consumption”concentrated system

It is impossible to build huge stores in many countries

So many buyers must be reached through long, complex channels –a ‘fragmented’system

They typically buy at small stores within walking or public transit distance from home

Small distributors serve the small stores

Distribution systems result in ‘price escalation’


Price escalation l.jpg
Price escalation production and consumption”

Sell to retailer for $1.50

US production cost = $1

U.S. retailer sells for $2.25

Ship & sell to retailer in Canada

for $1.60

Ship & sell to distributor in Japan

Canada retailer sells for $2.40

Tariff = .05Shipping = .20Your cost=$1.25

Store in Japan has high costs, adds 60%, sells for $4.32

Big distributor buys for $1.875, takes 20% markup, sells for $2.25

Small distributor adds 20%, sells for $2.70


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Government involvement – no consistency production and consumption”

Some laws set minimum prices – to prevent ‘monopoly,’ Japan, Germany protect small stores

Many prohibit selling below ‘cost’

Others set maximum prices


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Benefits of a longer distribution channel production and consumption”

Cuts selling costs when the retail sector is fragmented

Longer channels can provide increased market access

If channel quality is poor, a firm should consider what steps it could take to upgrade the quality of the channel

This may include establishing its own distribution channel

Choosing a Distribution Strategy


Communication strategy promotion l.jpg
Communication Strategy production and consumption”(Promotion)

  • Defines the process the firm will use in communicating the attributes of its product to prospective customers

Cultural barriers

Source effects

Noise levels


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Push strategy emphasizes personal selling production and consumption”

Requires intense use of a sales force

Relatively costly

Pull strategy depends on mass media advertising

Can be cheaper for a large market segment

Determining factors of type of strategy

Product type and consumer sophistication

Channel length

Media availability

Push Versus Pull Strategy


Product type and consumer sophistication l.jpg

Pull strategy production and consumption”

Consumer goods

Large market segment

Long distribution channels

Mass communication has cost advantages

Push strategy

Industrial products or complex new products

Direct selling allows firms to educate users

Short distribution channels

Used in poorer nations for consumer goods where direct selling only way to reach consumers

Product Type and Consumer Sophistication


Channel length l.jpg

Pull strategy production and consumption”

Needed for long or exclusive distribution channels

e.g. Japan

Mass advertising to generate demand to pull product through various layers

Push Strategy

In countries with low literacy levels to educate consumers

Channel Length


Media availability l.jpg

Pull strategy production and consumption”

Relies on access to advertising media

Common in developed nations

Push strategy

Media availability limited by law

All electronic media state owned with ‘no commercials’ policy

Media Availability


Pricing strategy l.jpg

Three aspects of international pricing strategy production and consumption”

Price discrimination

Strategic pricing

Regulatory influence on prices

Pricing Strategy


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Multipoint pricing strategy production and consumption”

Two or more international firms compete against each other in two or more national markets

A firm’s pricing strategy in one market may impact a rival in another market

Kodak and Fuji

Strategic Pricing


Strategic pricing38 l.jpg

Experience curve pricing production and consumption”

Firms price low worldwide to build market share

Incurred losses are made up as company moves down experience curve, making substantial profits

Cost advantage over its less-aggressive competitors

Strategic Pricing


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Antidumping regulations production and consumption”

Selling a product for a price that is less than the cost of producing it

Antidumping rules vague, but place a floor

Competition policy

Regulations designed to promote competition and restrict monopoly practices

Regulatory Influences on Prices


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Configuring the Marketing Mix production and consumption”

Standards

Differences Here

Competition

Distribution

Economy

Gov’t Regs

Culture

Product Attributes

Pricing Strategy

Requires Variation Here

Communications Strategy

Distribution Strategy