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Published by: Jyoti Mehta on Mar 25, 2011
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Global Marketing Mix

AG BM 338 Agribusiness in the Global Economy

After today¶s class, you should be able to:

1. 2. 3. 4.

Articulate the four P¶s of the marketing mix Understand alternative production adaptation and product line planning strategies Understand alternative global pricing strategies Understand alternative international promotion tools

MARKETING marketing .the effort to create. develop. and defend markets that satisfy the needs and wants of individual and business customers .

THE MARKETING MIX The 4 P¶s of the marketing mix:     Product Price Place (or distribution) Promotion .


ADAPTATION VS. STANDARDIZATION Elements of the marketing mix could be  Standardized across all markets  Adapted to appeal to particular market segments Standardization  Essentially the same approach to the 4 P¶s in every target market Adaptation  Marketing mix is tailored to country or to market segment within a country .

PRODUCT PROFILE Product characteristics  Inherent features of the product Packaging and labeling characteristics  Protects the product  Communicates information  Promotes the product Service characteristics  Information and advice (pre.and post-sale)  Product repairs and upgrades (durable goods) .

FACTORS IN PRODUCT ADAPTATION Internal company considerations  Human and financial resource constraints  Costs of developing and producing distinct products Customer considerations  Customer preferences (example: GMOs)  Economic situation of customers (example: farm machinery)  The total size of the market .

FACTORS IN PRODUCT ADAPTATION (continued) Competitive considerations  Degree of competition in target market  Exploiting gaps in competitors¶ product lines Legal and regulatory considerations  Sanitary and phytosanitary standards  Tariff and nontariff barriers (example: milk components) Bottom line: is adaptation profitable. and how long will it take for it to become profitable? .

product line because of financial and market limitations Starting out with a limited product line in a foreign market provides a way to test the market before expanding .PRODUCT LINE PLANNING Deciding on the right individual product for a market is only one part of the story Need to decide what family of products should be offered The foreign product line is often smaller than the U.S.

EXAMPLE OF PRODUCT ADAPTATION Kit-Kat ± roughly $1 billion in sales worldwide  In Russia. This is a deep belief we have. it¶s slightly smaller and the chocolate is coarser  In Japan. µThere is no global consumer for the food-and-beverage business. it¶s strawberry flavored  ³Each of these product variations is the result of thorough market research on local tastes.´ (Peter Brabeck is the Chairman and CEO of Nestle) .¶ Brabeck says.

PACKAGING AND LABELING Protection of the product  Climate control  Transportation and handling Packaging usually needs to be more durable for export  Shelf life Size of the package  Pillsbury uses packages with 6-to-8 servings in developing countries. while 2-serving packages are most popular in North America  2-liter bottles of Coke were too large for the compartments in most refrigerators in Spain .

PACKAGING AND LABELING (continued) Legal Constraints  Packaging recycling requirements  Consumer information requirements (food labels)  Multilingual labeling requirements Canada (French and English) Belgium (French and Flemish) Finland (Finnish and Swedish) Promotion of the product  Brand image  Distinguish product from the competition .

PRICE Pricing situations  Export pricing  Foreign market pricing (production abroad) Pricing strategies  Cost-based strategies  Demand-based strategies  Eclectic strategies based on short.and long-term company goals .

variable. and export-related production costs Dual pricing  Export price is based on marginal costs rather than average costs  Constitutes dumping (an example of cost dumping) .COST-BASED STRATEGIES: EXPORTING Standard worldwide pricing  Price is based on average fixed.

COST-BASED STRATEGIES: PRODUCING ABROAD Standard within-market pricing  Price in each market in based on average fixed and variable production costs in that market With either exporting or producing abroad. cost-based strategies may be out of alignment with market conditions .

run into transshipment (smuggling) problems .DEMAND-BASED PRICING STRATEGIES Price discrimination  Charge different prices in different markets  Can do with exporting or producing abroad  A type of dumping when applied to exports (price dumping) How does it work?  Lower prices in market segments with more price-elastic demands. higher prices in segments with less price-elastic demands If price differences are too large.

and long-term company goals  Profitability  Market share Production costs Demand-side considerations Competitive considerations .ECLECTIC STRATEGIES BASED ON« Short.

PLACE Distribution choices are the least flexible choices in the marketing mix International challenges  Lack of familiarity with distribution channels  Use of intermediaries means relinquishing control .

PROMOTION Promotion mix includes         Advertising Personal selling Publicity Sales promotions Target audience Company objectives Product or service being marketed Resources available Mix will depend on .

 Media regulations vary by country Promotional message  Why would the target consumer buy the product? Emphasize those attributes  How is the product positioned? Ads should be consistent with positioning  Rational versus emotional appeals  Be very sensitive to cultural considerations .S.INTERNATIONAL ADVERTISING Media strategy  Which media reach your target market? May be much different from the U.

INTERNATIONAL ADVERTISING (continued) Ad literacy of target audience  Is audience used to connecting ad images and ad messages? Annual per capita spending on advertising varies tremendously by country and region:        United States: $153 Canada: $64 Europe: $43 Latin America: $5 Asia and Pacific: $4 Middle East: $2 Africa: 80¢ Statistics: ad spending per capita by top 100 marketers in 2006 Sources: Advertising Age and Population Reference Bureau .

ADDITIONAL PROMOTION TOOLS Personal selling ± often used«  In early stages of international expansion  For high-cost products  For industrial goods (example: an ingredient) Publicity/Public Relations  To earn public understanding and acceptance  Anticipate or counter criticisms  Portray as good citizens of host country .

SALES PROMOTIONS Covers all promotions except for advertising. personal selling. and publicity Includes:         Coupons Free samples Consumer education Product demonstrations Point-of-purchase materials Discounts Direct mail Prizes and giveaways .


IN-CLASS EXERCISE In groups of 3-5 people. come up with a U. as far as you know.S. isn¶t currently sold in Mexico Outline a plan for how you would market that product in Mexico Report your findings to the class . food product that.

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