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Global Marketing Foreign Entry Local Marketing Global Management
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Page 1: Global Marketing Foreign Entry Local Marketing Global Management.

Global Marketing

Foreign Entry

Local Marketing

Global Management

Page 2: Global Marketing Foreign Entry Local Marketing Global Management.

Why go Global?

Emergence of WTO Creation of Free Trade Areas Benefits of Foreign Trade Revolution in Global Communications Fast and Efficient Transportation Opening of Previously Closed Markets

Page 3: Global Marketing Foreign Entry Local Marketing Global Management.

Means to go Global

Exports to foreign Countries Strategic Alliances

– Licensing– Franchising– Contract Manufacturing

Joint Ventures Wholly Owned Subsidiaries

Page 4: Global Marketing Foreign Entry Local Marketing Global Management.

Multinational Phase

After WW-II, MNC’s from US & Europe expanded into Asia, Europe and Latin America.

Parent company maintained nominal control over subsidiaries

Manufacturing & marketing of products were localized to meet local demands

Foreign markets needs are subordinate to the home markets

Page 5: Global Marketing Foreign Entry Local Marketing Global Management.

Global Phase

Theodore Levitt’s “Globalization of markets” highlighted the merits of standardization – Noted the convergence of world markets

Selling standardized products in standardized methods all over the world

Centralized core competence activities– R&D, Manufacturing, Management, etc– E.g.: Semiconductors, Software, Boeing etc.

Page 6: Global Marketing Foreign Entry Local Marketing Global Management.

Transnational Phase

Sumantra Ghoshal, Christopher Bartlett etc developed a Transnational business idea

Decentralized but Coordinated operations Products are tailored to suit local needs Central marketing plan but Local execution Subsidiaries network with each other and

share knowledge. Head Quarters manages and coordinates

activities

Page 7: Global Marketing Foreign Entry Local Marketing Global Management.

Global Products

People all over have similar needs This implies that some products have

Global demand– E.g. Industrial products Steel, Chemicals etc.– Semiconductors, Internet services, Software

Global products are usually impersonal products.– People have no personal preference and

decision is made on price or technical merits.

Page 8: Global Marketing Foreign Entry Local Marketing Global Management.

Global –Local Products

People in different cultures have different styles and different tastes– E.g: Food, Clothes, Housing etc.– Cell Phones, Software – Different languages

Government Regulations force Local Modifications – Electrical Appliances, Cars, Automobiles etc.

Regional Economic Differences– Purchasing power, economic development etc.

Page 9: Global Marketing Foreign Entry Local Marketing Global Management.

Global Marketing Defined

Marketing activities that are coordinated and integrated across multiple markets– Integration can involve Standardized products,

Identical Brand names, Uniform packaging, Synchronized product introductions, Similar advertising messages etc.

– Coordination can involve competitive pricing, sales campaigns, market promotions etc.

Page 10: Global Marketing Foreign Entry Local Marketing Global Management.

Other Terms Used

International Marketing or Foreign Marketing– Primarily for exports to selective countries

Multi-domestic marketing– Different Products sold in different countries.– Driven to localize and adapt to local markets– E.g: HLL and Unilever

Page 11: Global Marketing Foreign Entry Local Marketing Global Management.

Global Markets

Increasingly Common Consumer requirements and preferences as lifestyles, tastes and behavior narrow.

Disappearing National trade boundaries with new Free Trade Agreements

Global Brand Recognition– E.g: Nike, Reebok, Coke, Nikon, Honda, Sony

Global Communication Revolution

Page 12: Global Marketing Foreign Entry Local Marketing Global Management.

Global Competition

Competitors are expanding globally Home market is challenged by a Global

competitor Global Raw Material procurement will

drive down costs– Can also be Man power, finished products etc.

Saturated home market is slowing down growth

Page 13: Global Marketing Foreign Entry Local Marketing Global Management.

Global Channels

Global Distribution, Transportation, Marketing Channels– Walmart, Metro, Costco – Global retailers

Global Channels– CNN, Star TV, Zee etc.

Transferable Marketing– I.e.: Similar marketing strategies all over

Leading markets– Need to learn from the leading markets. E.g.

Scooters in Italy, Cars in Germany

Page 14: Global Marketing Foreign Entry Local Marketing Global Management.

Cost Drivers

Economies of Scale– E.g. Reliance Petroleum

Economies of Scope– E.g. Infosys, Wipro, TCS

Global Sourcing Advantages– E.g TELCO in Italy, Cisco in Bangalore

Avoid Duplication – Capitalize on spillover effects– E.g P&G with Pantene Shampoo

Page 15: Global Marketing Foreign Entry Local Marketing Global Management.

Government Drivers

Favorable Trade policies– Export promotion, Foreign Investments

Common Technical Standards– ISO 9000

Free Trade Agreements– NAFTA, ASEAN, EU etc.

Active Government Promotion– E.g Halliburton

Page 16: Global Marketing Foreign Entry Local Marketing Global Management.

Limits to Globalization

Internal Resources– Capital, Labor, Experience etc.

Industry Factors – Not All industries can go global e.g Medical services, Defense etc.

Global Turmoil– Recession, Political coup, war etc.

Product Mixes– Culturally sensitive products cannot be

Globalized

Page 17: Global Marketing Foreign Entry Local Marketing Global Management.

Global Localization

Products that need large scale customization Strategy formulation is Globalized Execution is Localized Examples

– McDonalds, Pizza Hut – HLL soaps

Resource limitations force Local Execution– E.g MTR

Page 18: Global Marketing Foreign Entry Local Marketing Global Management.

Developing Knowledge Assets

Knowledge from Global operation can be a powerful competitive advantage– E.g Fiat learnt a lot about emerging markets in

Brazil and applied the same concepts in India

Knowledge is build through exposure to new competition, customers, government rules, technology and business methods

Learning Organizations can apply their newly acquired skills in other regions

Page 19: Global Marketing Foreign Entry Local Marketing Global Management.

Skill Benefits

Transferring competitive information and new products to other markets (including home market)

Capitalizing on the knowledge of foreign markets– Offer distribution service to other companies

Stretching and Building the firm’s capability– New markets need new skills. Going Global

helps

Page 20: Global Marketing Foreign Entry Local Marketing Global Management.

Global Marketing Objectives

Exploit Market Potential and Growth Gain Economies of Scale and Scope Learn from the Leading Market Pressuring Competitors Diversifying Markets Learning How to do Business Abroad

Page 21: Global Marketing Foreign Entry Local Marketing Global Management.

Roles of a Global Manager

Select & Implement Foreign Market Entry– Select Countries, Mode of Entry etc

Perform Local Marketing Abroad– Promote Products and Services– Conduct Market Research– Manage Advertising Campaign

Manage Global Operations

Page 22: Global Marketing Foreign Entry Local Marketing Global Management.

Skills of Global ManagerSkills Foreign Entry Local marketing Global

Management

Market Analysis

Market Research

Barriers to Entry

Local Customer Behavior

Local Market Research

Global Segmentation, Targeting, Positioning

Strategy Modes of Entry

Expansion Paths

Local Marketing Strategy

Global Marketing Strategy

Implement

& Execution

Finding the right Agent

Marketing in New Countries

Meeting Goals, Motivating &

E-Commerce

Page 23: Global Marketing Foreign Entry Local Marketing Global Management.

Anti-Globalization Phase

Anti-Globalization movement started gaining ground in year 1998

Underdeveloped countries questioned the economic benefits

Developed Countries are afraid of losing Jobs

Developing Countries are worried about Financial Instability– Thailand, Mexico, Brazil, Indonesia, South

Korea

Page 24: Global Marketing Foreign Entry Local Marketing Global Management.

Global Competitive Analysis

The Fundamental aim of business Strategy is to create and sustain competitive advantages

First Step is to conduct competitive analysis. SWOT Porter’s 5 Forces Model Porter’s Diamond Value Chain Analysis

Page 25: Global Marketing Foreign Entry Local Marketing Global Management.

Competitive Self Analysis

Analyze firm’s Strengths & Weakness Clear Identification of Firm Specific

Advantages How Mobile & Flexible are these

Advantages? Best way to leverage these advantages in

Foreign Markets & gain advantage over Local Firms

Dealing with Global Competitors

Page 26: Global Marketing Foreign Entry Local Marketing Global Management.

Porter’s Five Forces Model

New Entrants

Firm’s Intense Rivalry

BargainingPower

ofCustomers

Threat Of substitutes

BargainingPower

ofSuppliers

Page 27: Global Marketing Foreign Entry Local Marketing Global Management.

Strategic Groups

A Strategic Group consists of competitors who offer similar products or service in that Segment

E.g: IBM, Accenture, EDS for Infosys but NOT Bian, McKinsey, BCG

Strategic Group can consist of competitors who offer Substitute Products

E.g: Nestlé's water for Pepsi and Coca Cola

Page 28: Global Marketing Foreign Entry Local Marketing Global Management.

Country Specific Advantages

A Firm possesses some advantages because of the country from where it Operates.

E.g: Infosys, Wipro have a cost advantage by operating in India

E.g: Cosco, a Chinese furniture manufacturer has a cost advantage when competing in US

E.g: IBM has a cost advantage by operating in India, has famous Brand Name & Recognition

Page 29: Global Marketing Foreign Entry Local Marketing Global Management.

National Competitive Advantage

A country might provide an absolute advantage by the virtue of having certain resources– Oil in Saudi Arabia, Labor in China– High Technology in USA

Comparative Advantage : When one country is better in producing a certain type of product– Coffee in Brazil– Software & Garments in India

Page 30: Global Marketing Foreign Entry Local Marketing Global Management.

New Trade Theory

Man made Locational Advantages has a big impact on the Trade Patterns

Certain Areas have a huge concentration of certain Industries– Software firms in Bangalore, Silicon Valley– Garments in Delhi, Financial services in

Mumbai

Page 31: Global Marketing Foreign Entry Local Marketing Global Management.

Country of Origin Effects

Customers give a value for “Made-in-XXX” label.

Products or services from a country with a positive image tend to be favorably evaluated, while products from less positively perceived countries tend to be downgraded– Chocolates from Belgium, Watches from

Switzerland, Computers from USA : Positively Perceived

– Cars from Kenya, Brazil : Negatively Perceived

Page 32: Global Marketing Foreign Entry Local Marketing Global Management.

Domestic Competitors

Domestic Competitors : They have the same Country Specific Advantages as you.– E.g: Wipro & Infosys

Country Specific Advantages are derived from Government Rules, Regulations, Tax benefits, Availability of Raw materials, Human Resources etc

A large Home Market also helps domestic competitors. E.g: IBM, DELL & EDS– Also called Demand Conditions

Page 33: Global Marketing Foreign Entry Local Marketing Global Management.

Foreign Competitors

Foreign Competitors : Foreign Firms are the most direct competitors of a Globalizing firm. – Foreign Competitors from the same country can

be analyzed as a separate Strategic Group. E.g: Samsung, LG, Daewoo

– Firms from the same country follow similar strategy

– Regional Trade Blocs also help Foreign Competitors E.g: Electrolux from EU

Page 34: Global Marketing Foreign Entry Local Marketing Global Management.

New Entrants & Substitutes

Potential New Entrants & Substitutes are another competitive threat to a Firm– Banks face a threat of more competition with

new entrants from Japan, US, Europe– Banks face a threat from substitutes like Web-

Bank, Investment companies like Charles Schwab, E-Trade etc.

– Banks face threat from Chit-Funds, Mutual Funds etc.

Page 35: Global Marketing Foreign Entry Local Marketing Global Management.

First Mover Advantages

An Emerging market offers an opportunity to be a first mover and create demand. Emerging Market can be a Country or Introducing a new Product/Services

Higher Brand Recognition Positive Brand Image More Customer Loyalty Longer Market Experience Wider Distribution

Page 36: Global Marketing Foreign Entry Local Marketing Global Management.

Pioneering Costs

Customer Tastes & Preferences are unknown

New Distribution Channel may have to be set up

Customers have to be educated Advertising Expenses, Promotion expenses

will be high Few Firms tend to be Followers – “Second

Mover Advantage”

Page 37: Global Marketing Foreign Entry Local Marketing Global Management.

Porter’s Diamond

Firm Strategy,Structure & Rivalry

DemandConditions

Factor Conditions

Related & Supporting Industries

Page 38: Global Marketing Foreign Entry Local Marketing Global Management.

Determinants of National Advantage

Porter’s Diamond highlights:– Intense Competition creates a National

Advantage– Strong Local Demand is Important– Favorable Conditions must exist– Related & Supporting Industries creates a

National Advantage

Exercise: Does India have a National Advantage in Medical Services?

Page 39: Global Marketing Foreign Entry Local Marketing Global Management.

Stages in Product Lifecycle

Sales

1 2 3 4 5 6

Legend

1: Pioneer2: Early Adopter3: Early Majority4: Late Majority5: Late Adopter6: Laggards

Time

Page 40: Global Marketing Foreign Entry Local Marketing Global Management.

Trade & Product Lifecycle

International Product Lifecycle theory is based on past trends.

New Products will be first introduced in developed markets & exported worldwide, As the product matures, it will be manufactured in developing countries at a lower cost and imported to developed countries

E.g: It is advantageous for US to TV & concentrate on Computers

Page 41: Global Marketing Foreign Entry Local Marketing Global Management.

Firm Specific Advantages Firms develop competitive advantages which is

unique to them– E.g: Patents, Distribution Network, Manufacturing

techniques, Access to Raw materials etc Knowledge Based FSA: Soft skills such as

marketing, brand management etc. Skills reside in employees and experience of the Firms

Resource Based FSA: Resources such as products, technology, know-how & Services

Firms have to build both Knowledge based & Resource based advantages

Page 42: Global Marketing Foreign Entry Local Marketing Global Management.

Taking FSA Abroad

FSA cannot always be transferred abroad. The degree of transferability depends on FSA itself

Intangible “skills” are toughest to transfer FSA tied to home country infrastructure

cannot be transferred. E.g: Distribution– Budweiser Beer, Henkel detergents etc

Page 43: Global Marketing Foreign Entry Local Marketing Global Management.

Externalization of FSA There are several ways to enter a country’s

Market. The mode of entry depends on FSA If a firm choose to License or Franchise abroad,

then it has to transfer its FSA to another partner abroad – Called Externalization of FSA

E.g: Coca-Cola, McDonalds, FedEx Problem with licensing – Unable to learn from the

new market, Loss of FSA Outsourcing parts in Value chain is

Externalization of FSA

Page 44: Global Marketing Foreign Entry Local Marketing Global Management.

Internalization of FSA

If a firm chooses to maintain a tight control over its FSA & internal advantages, it can:– Export or FDI

Both Cases, company can maintain tight control over its FSA

Choice between Export or FDI depends on trade barriers, market size, transaction costs, CSA etc.

Retaining the firm’s value chain when going abroad is Internalization of FSA

Page 45: Global Marketing Foreign Entry Local Marketing Global Management.

Transaction Costs

Transaction Costs are costs incurred when completing a transaction between a buyer and a seller.

Includes hidden costs such as negotiation costs, finding partners, communication overheads etc. In addition to obvious costs such as transportation, taxes, brokerage fees etc.

Banks & middlemen lower transaction costs by performing “Market Making” functions

Page 46: Global Marketing Foreign Entry Local Marketing Global Management.

Hypercompetition The intense rivalry between global firms and

domestic competitors is common in Global business.

Competitive advantages are increasingly difficult to sustain is face of Hypercompetition

Bench Marking reduces competitive advantages of the competitors

Lack of sustainable competitive advantages is forcing companies to develop intangible skills like customer service, quality, Brand image etc

Page 47: Global Marketing Foreign Entry Local Marketing Global Management.

Winning in Hypercompetition

Firms can win in a hypercompetitive environment by continuously moving to new grounds, I.e raising standards, improving product/Service quality etc.

Hypercompetition forces firms to concentrate on:– Cost & Quality: Lower cost, improve quality

– Timing & Know-how: Market Knowledge

– Defending Strongholds

– Financial Resources: Financial strength is necessary to keep competitive edge; R&D, M&A, Advertising etc.

Page 48: Global Marketing Foreign Entry Local Marketing Global Management.

Closing Thoughts Going global will stretch and mold company

resources into a globally effective marketing organization.

Global Managers will have to select the right entry strategies, decide on trade-offs between localization or global standardization to achieve the optimal local responsiveness and global scale of economies.

When Going global, it is better to take help from experts for market entry, market research & international Financing

Page 49: Global Marketing Foreign Entry Local Marketing Global Management.