Dr. Charlene Ashley - Getting Ready for the global game

Presented by Dr Charlene Ashley Presented by Dr Charlene AshleyPresented by Dr Charlene Ashley

GETTING READY GETTING READY

FOR THE FOR THE

GLOBAL GAMEGLOBAL GAME


HOW TO COMPETE HOW TO COMPETE SUCCESSFULLY BY SUCCESSFULLY BY

RADICALLY RETHINKING RADICALLY RETHINKING YOUR ORGANISATIONYOUR ORGANISATION’’S S

BUSINESS BUSINESS ANDANDMARKETING MARKETING


STRATEGIES FOR STRATEGIES FOR ENTERING THE GLOBAL ENTERING THE GLOBAL

MARKET PLACEMARKET PLACE


RADICALLY RETHINKING RADICALLY RETHINKING YOUR YOUR

ORGANISATIONORGANISATION’’S S BUSINESSBUSINESS


What does your business represent?

What does it mean :–§To you§To your staff§To your customers


Where do you want to go?How are you going to get

there?


Evolutionary Thinking is VitalEvolutionary Thinking is Vital

§ Even more than in start-up situations, evolutionary thinking is vital when entering and developing international markets. § Today we will examine modes of market

entry, marketing entry strategies, and discuss carious elements of critical consideration to international marketing.


The process of penetrating and then developing an international market

is a difficult one which many companies still identify as an Achilles’ heel in

their global capabilities.


§ In fundamental terms, entering a new country-market is very much like a start-up situation, with no sales, no marketing infrastructure in place, and little or no knowledge of the market. § Despite this, companies usually treat

this situation as if it were an extension of their business, a source of incremental revenues for existing products and services.


What are Your Real CostsWhat are Your Real Costs

§ Many firms enter new country-markets through the indirect channel of a local independent distributor or agent, in which case, the multinationals do not know their costs and therefore their operating profitability in the markets. This causes a mismatch between expectations and situational requirement.§ We must scrutinise any lack of control over strategic

marketing and a failure to think rigorously about how the business will develop over the course of several years.


How Will the Business Progress in The How Will the Business Progress in The FutureFuture

§ We must begin by examining these unique international marketing challenges and in turn, several phases of the process of market entry and development, inclusive of the following:


§ The objectives of market entry, which will have implications for the strategy.§ The choice of market entry mode. § The market entry strategy. § Target market per territory.§ A framework for the overall evolution of an

international marketing strategy.


We Must Change the Thinking We Must Change the Thinking ……There are typically two ways in which expansion into

the international market is approached:-1.Companies often pursue this new business

opportunity with a focus on minimising risk and investment - the complete opposite of the approach

usually advocated for genuine start-up situations. 2.Second, from a marketing perspective, many

companies break the founding principle of marketing - that a firm should start by analysing the market, and then, and only then, decide on its offer, in terms of products, services, and marketing

programs.


Product Need SatisfactionProduct Need Satisfaction

The need which a product fills in our own culture, may not be the function in others.

A product of convenience in one culture may be an indulgence or treat in another culture. Thus we must be aware of consumers true motives, desires and expectations in buying a product.


International Marketing must be International Marketing must be seen as a Marketseen as a Market--driven Approachdriven Approach

§ In fact, it is far more common to see international markets as opportunities to increase sales of existing products and so to adopt a “sales push” rather than a market-driven approach. Given this overall approach, it is not surprising that performance is often disappointing.


Focus on ProfitabilityFocus on Profitability

§ On the business and finance side, it has been found that profitability in international markets has lagged behind average firm profitability for much of the last two decades (the “foreign investment profitability gap”). § This may well be because of what Ghemawat

and Ghadar describe as “top-line obsession,”a focus on revenue growth rather than profitability growth.


Collaboration and Management VisibilityCollaboration and Management Visibility§ Often Managers want information to be rolled

up across multiple projects, departments, business units, and geographies. § Disconnected processes and information

systems create silos of project information, limiting the collaboration and management visibility and transparency that is crucial for responding effectively to changing market demands. § Thus, in being aware of these considerations,

you, as company executives, may take principles of project management and put them into play.


Businesses go through varying stages

Some may purely domestic while others may be in the

discreet export, international, multi-national

or global stages


Let’s start by looking briefly at the various stages

representing points on a continuum from a purely domestic orientation to

a truly global one

§ Companies may fall in between these discrete stages, and different parts of the firm may have characteristics of various stages


A purely domestic firm focuses only on its home market, has no current ambitions of expanding abroad, and does not perceive any significant competitive threat from abroad.

This type of firm may:-§ Get some orders from abroad, which are seen

either as:-§ an irritation (for small orders, there may be

a great deal of effort and cost in order to obtain relatively modest revenue) or § "icing on the cake."


What Stage is your Company At?What Stage is your Company At?Export Stage

§ As the firm begins to export more, it enters the export stage, where little effort is made to market the product abroad, although an increasing number of foreign orders are filled.

International Stage§ As certain country markets begin to appear particularly attractive with

more foreign orders originating there, the firm may go into countries on an ad hoc basis—that is, each country may be entered sequentially, but with relatively little learning and marketing efforts being shared across countries.


Multi-National Stage§ Here, some efficiencies are pursued by standardising across

a territory. Let’s say Central America or the Caricom.

Global Stage§ Companies in the global stage focus on the entire world

market. At this stage decisions are made to optimise the product’s position across markets—the home country is no longer the center of the product. An example of a truly global company is KFC.


Where on the continuum is your company vs

where you want to be creates the

International Marketing Imperative


The International Marketing ImperativeThe International Marketing Imperative

The company must examine various marketing strategies appropriate in the international market. The following must be undertaken:-§ Proper and thorough market research§ An examination of what / countries are to be

penetrated – which will be most profitable§ Projected income vs marketing injection§ Zoning of markets§ Entry strategy § Pricing strategy


Applying Marketing Knowledge Applying Marketing Knowledge in a Practical Sensein a Practical Sense

As Marketers and Business Leaders we must address the following:-§ What Is Different about International Marketing? § Modes of Market Entry§ Market Entry Strategies§ Learning from Emerging Markets§ Objectives of Market Entry§ Learning in Lead Markets§ Competitive Attack or Defense§ Scale Economies or Marketing Leverage§ Modes of Market Entry


A Look at Varying ObjectivesA Look at Varying ObjectivesBusiness Level Objectives:§ It is not enough to simply state a firm’s goal

as maximising the present value of total profit since this does not differentiate it from other firms and says nothing about how this objective is to be achieved.


Unique ResourcesUnique Resources

A business plan must:§ suggest how the firm can best put its

unique resources to use and to maximise stockholder value.

Business level objectives


Business Level ObjectivesBusiness Level ObjectivesA number of resources come into play—e.g.,• Distinctive competencies - knowledge of how to

manufacture, design, or market certain products or services effectively

• Financial - possession of cash or the ability to generate it• Ability and willingness to take risk• The image of the firm’s brand• Organisational Structure - People who can develop new

products, services, or other offerings and run the needed supports

• Running facilities (no amount of money is going to get a new microchip manufacturing plant started tomorrow); and

• Contacts with suppliers and distributors and others who influence the success of the firm


Brand Level ObjectivesBrand Level Objectivesto Contribute to Profit to Contribute to Profit MaximisationMaximisation

• Ultimately, brand level profit centers are expected to contribute to the overall maximization of the firm’s profits.

• However, when a firm holds several different brands, different marketing and distribution plans may be required for each. Several variables come into play in maximizing value.


Profits can be Maximized in the Short Run, or an Profits can be Maximized in the Short Run, or an Investment can be Made into Future EarningsInvestment can be Made into Future Earnings

Brand / product profit can be measured in several ways:-§ If one sells an item which costs $950 to make

for $1,000, one is making only a 5% gross profit.§ However, selling a product that cost $5 to

make for $10 will result in a much higher percentage profit, but a much lower absolute margin.

Brand level objectives


PositioningPositioning

§ A decision that is essential at the brand level is positioning.§ Options here may range from a high-

quality, premium product to a lower priced value product.



Become Market DrivenBecome Market Driven …Distribution issues come into play heavily in deciding

brand level strategy.§ In order to secure a more exclusive brand label, for

example, it is sometimes necessary to sacrifice volume - it would do no good, for Mercedes-Benz to create a large number of low priced automobiles.

§ Some firms can be very profitable going for quantity where economies of scale come into play and smaller margins on a large number of units add up - McDonald’s survives on much smaller margins than upscale restaurants, but may make larger profits because of volume.

§ Some firms choose to engage in a niche market strategy



Product Line Objectives§ Some of you make money on the totality of

products and services that your company sells, and sometimes, profit can be maximized by settling for small margins on some, making up on others.

Distribution ObjectivesDistribution Objectives§ Inter-related objectives: A firm’s distribution

objectives will ultimately be highly related to sales, marketing and customer service objectives – How much penetration is required to reach valuable customers.


Product Introduction§ Companies have various alternatives in

marketing their products across marktes. They may choose:-§ Customisation§ Standardisation§ Adaptation§ Mandatory § Discretionary

There may also be physical product versus communication adaptations


It may not be obvious whether higher margins in a selective distribution setting will compensate for smaller unit sales. Here, various research tools are useful.

§ It is possible to assess what consumers are looking for and which attributes are more important. Here, one can observe factors such as § how much time is devoted to selecting a product in a given category, § how many products are compared, § what different kinds of products are compared or are substitutes, § what are “complementing” products that may cue the purchase of others

if placed nearby.§ Channel members - both wholesalers and retailers - may have

valuable information, but their comments should be viewed with suspicion as they have their own agendas and may distort information.

Deciding on a StrategyDeciding on a Strategy


THE GLOBAL GAMETHE GLOBAL GAME


CONSIDERATIONSCONSIDERATIONS


As Marketers the Job of Proper and As Marketers the Job of Proper and Effective Target Marketing is Critical to Effective Target Marketing is Critical to

Product and Brand SuccessProduct and Brand Success

Marketing must be the cornerstone of businessthus:-§ the distribution strategy should consider where

one’s target market is most likely to buy § the advertising and promotional strategy should

consider the target’s media habits and what kinds of messages will be most persuasive.


Defining the Target MarketDefining the Target Market

§ Primary target market – persons within the target should respond in similar ways to various treatments.

§ Secondary target markets should also be identified as their members may have their own unique response behavior and significant sales may be generated.


Approaches to Global SegmentationApproaches to Global Segmentation

There are two main approaches to global segmentation:-§ At the macro level, countries are seen as

segments, given that country aggregate characteristics and statistics tend to differ significantly. § At the micro level, where one looks at

segments within countries.

The use of either approaches often parallels the firm’s stage of international involvement.


Approaches to Global SegmentationApproaches to Global Segmentation

There is also:-• Intramarket segmentation involves segmenting

each country’s markets from scratch - i.e., a company entering the American market would do research to segment American consumers without incorporating knowledge of Jamaican buyers.

• In contrast, intermarket segmentation involves the detection of segments that exist across borders. Note that not all segments that exist in one country will exist in another and that the sizes of the segments may differ significantly.


International Product Life CycleInternational Product Life Cycle

§ The international product life cycle suggests that product adoption and spread in some markets may lag significantly behind those of others. § Often, then, a segment that has existed for

some time in an "early adopter" country such as the U.S. or Japan will emerge after several years (or even decades) in a "late adopter" country such as Britain or most developing countries.


The Hierarchical Nature of DecisionsThe Hierarchical Nature of Decisions

§ International market situations are multilevel in their decision focus, with a hierarchy of decisions from country assessment and performance measurement decisions through to more traditional marketing mix allocations and programs.


The Hierarchical Nature of DecisionsThe Hierarchical Nature of Decisions

Thus, an executive responsible for a country in which the firm participates only for revenue generation and not for production (a common situation) is simultaneously managing country-level trends in the economy or government, and marketing decisions such as the product range or price level. In the domestic market, by contrast, these decision levels are addressed by separate specialists.


Managing a MultiManaging a Multi--Market NetworkMarket Network§ The greater the number of national markets in which a

company participates, the more likely it is to seek to manage them as an aggregated network rather than as independent units.

§ Marketing strategy decisions in one country-market may in this case be made against extra-market criteria.

§ For example, price levels may be set to minimise the difference among markets and to maintain a price corridorrather than purely to reflect local market conditions. Similarly, a multinational company may subsidise price levels in one market for strategic reasons while recouping that loss in another market. This ability to leverage a global network is sometimes described as “the global chess game,” and it is increasingly regarded as one of the key advantages enjoyed by a global firm relative to local players.


Organisational DesignOrganisational Design§ It is necessary to create an effective

international organisation in order to:-§ Establish centres of accountability§ Allocate resources – to those who can best decide

on how to put them to work most effectively

*Remember accountability affects motivation and in turn performance


CoCo--location of Strategic Marketing location of Strategic Marketing and Distribution Functionsand Distribution Functions

§ A national distribution channel for an international corporation is usually responsible not just for the traditional distribution functions, but it is the de facto branch of the company in that country with an exclusive agency for the territory and responsibility for marketing strategy. § The distribution unit in the country-market,

whether an independent organisation or a wholly-owned subsidiary, has to manage a strategy for growth, and its success is therefore based on organisational criteria including feasibility, level of desired risk, supportability, and control issues.


STRATEGIES FOR

ENTERING THE GLOBAL MARKET PLACE


Entry StrategiesEntry Strategies

Entry strategies may differ in levels of innovation, aggressiveness, risk, control from parent country


Methods of EntryMethods of Entry

§ Exporting§ Licensing and franchising§ Contract manufacturing§ Direct entry strategies§ Distributors § Co-packers§ Joint ventures§ International strategic alliances


Learning in Lead MarketsLearning in Lead Markets§ In some circumstances, a company might

undertake a foreign market entry not for solely financial reasons, but to learn. § In most sectors, participation in the “lead market”

would be a prerequisite for qualifying as a global leader, even if profits in that lead market were low.

*The lead market will vary by sector: the United States for software, Japan for consumer electronics and telecommunications, France or Italy for fashion, and so on.


Scale Economies or Scale Economies or Marketing LeverageMarketing Leverage

§ A number of objectives result from internationalisation undertaken as what is sometimes described as a “replication strategy” , in which a company seeks a larger market arena in which to exploit an advantage. § In many manufacturing industries, for example,

internationalisation can help the company achieve greater economies of scale, particularly for companies from smaller domestic country-markets. § In other cases, a company may seek to exploit a

distinctive and differentiating asset (often protected as intellectual property), such as a brand, service model, or patented product.


Scale Economies or Scale Economies or Marketing LeverageMarketing Leverage

§ In both cases, the emphasis is on “more of the same,”with relatively little adaptation to local markets, which would undermine scale economies or diminish the returns from replication of the winning model. § To achieve either of these objectives, a company must

retain some control, so it may enter markets with relatively high-intensity modes, such as joint ventures. In particular, either franchising or licensing are business models naturally suited for the rapid replication of businesses through expansion of units since both are centered on protected and predefined assets.


Consumer BehaviourConsumer Behaviour

In entering a market a company must be cognisant of not only differences in consumer behaviour across regions and countries but must also do thorough research of :-

§ ‘hard data’ - This refers to quantifiable measures such as a country’s GDP, number of telephones per thousand residents, birth rates, media landscapes – cost per thousand ... and

§ ‘soft data’, which refers to more subjective issues such as country history or culture is also critical.

§ Issues such as consumer behaviour elements, understanding cultural differences, taste preferences, behaviour profile are as important if not more important in understanding a market and making ample preparations for mode of entry.


Cultural ExamplesCultural Examples§ Within the Muslim tradition, the dog is considered a "dirty"

animal, so portraying it as "man’s best friend" in an advertisement is counter-productive.

§ Packaging, seen as a reflection of the quality of the "real" product, is considerably more important in Asia than in the U.S

§ Many cultures observe significantly greater levels of formality than that typical in the U.S., and Japanese negotiator tend to observe long silent pauses as a speaker’s point is considered.

§ In the 1960s, a supposedly well read American psychology professor referred to India’s culture of "sick" because, despite severe food shortages, the Hindu religion did not allow the eating of cows. The psychologist expressed disgust that the cows were allowed to roam free in villages, although it turns out that they provided valuable functions by offering milk and fertilizing fields.


Prospects for EProspects for E--CommerceCommerce

It should be recognised that so far, sales over the Internet account for only a small portion of sales – particularly outside of the U.S.

Obstacles to diffusion:-§ Lengthy downloads§ "Glitches" in online ordering systems § Difficulty navigating through a malfunctioning site. § The lack of non-English language sites § Shipping small packages across countries may be inefficient

due to high local postage rates and inefficiencies in customs processing.

§ Legal concerns§ Maintenance of databases§ Taxation and collection


Marketing Blue PrintMarketing Blue Print


In ConclusionIn Conclusion……There are numerous issues and concerns applicable to a

company when considering international marketing:§ We must identify trends that affect sales and profitability

being aware of the difference in cultures. § Population shifts, legal developments, and the local

economic situation should be monitored to quickly identify problems and opportunities.

§ It is also important to keep up with competitors' market strategies.

§ Corporate governance requirements and business pressures make it imperative for persons to invest company’s time and resources wisely.

§ We must also look at law and ethics - Together, they combine to define how individuals choose to interact with one another. Though law often embodies ethical principals, law and ethics are far from co-extensive.


In ConclusionIn Conclusion§ To succeed not only locally but also

internationally, entrepreneurs must attract and retain a growing base of satisfied customers. Marketing programs, though widely varied, are all aimed at convincing people to try out or keep using particular products or services.

§§ Marketing is based on the importance of Marketing is based on the importance of customers to a businesscustomers to a business and has two important principles: 1. All company policies and activities should be directed toward satisfying customer needs.2. Profitable sales volume is more important than maximum sales volume.


In ConclusionIn ConclusionTo best use these principles, a business should: § Determine the needs of their customers through

market research§ Analyse their competitive advantages to

develop a market strategy§ Select specific markets to serve by target

marketing§ Determine how to satisfy customer needs by

identifying a market mix

Successful marketing requires timely and relevant market information particularly in the

international market.


Again we must Again we must radically rethink our radically rethink our

business, improve our business, improve our standards and standards and

continue to build our continue to build our brands as we move to brands as we move to

enter the enter the international sceneinternational scene


THANK YOU THANK YOU FOR ALLOWING ME FOR ALLOWING ME

TO MAKE THIS PRESENTATION TO MAKE THIS PRESENTATION

TO YOUTO YOURegards,Regards,Dr Charlene AshleyDr Charlene Ashley

Dr. Charlene Ashley - Getting Ready for the global game

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