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18 Managing Marketing in the Global Economy

Chapter Questions

What factors should a company review before deciding to market internationally? What are the major ways of entering foreign markets? What are the keys to effective internal marketing? How can companies be responsible social marketers?


What is a Global Firm?

A global firm operates in more than one country and captures R&D, production, logistics, marketing and financial advantages that are not available to purely domestic competitors.


Major Decisions in International Marketing

Deciding whether to go Deciding which markets to enter Deciding how to enter Deciding on the marketing program Deciding on the marketing organization

Deciding Whether to Go:

Reasons for Pursuing Global Markets

Better profit opportunities than domestic Larger customer base to achieve economies of scale Less dependence on any one market Desire to counterattack global competitors in their home markets Customers require international service


Deciding Whether to Go:

Risks to Going Abroad

Lack of knowledge of foreign culture Lack of understanding of foreign needs Lack of understanding of foreign regulations Lack of managers with international expertise Changes in the country environment


Global Marketing
Advantages Economies of scale Lower marketing costs Power and scope Consistency in brand image Ability to leverage Uniformity of marketing practices Disadvantages Differences in consumer needs, wants, usage patterns Differences in consumer response to marketing mix Differences in brand development process Differences in environment

The Internationalization Process

1. No regular export activities 2. Export via independent agents 3. Establish sales subsidiaries 4. Establish production facilities abroad

Deciding Which Markets to Enter

Regional free trade zones European Union NAFTA APEC ASEAN Key emerging markets Brazil Russia India China Indonesia South Africa


Deciding How to Enter:

Five Modes of Entry into Foreign Markets
Indirect exporting Direct exporting Licensing

Joint ventures

Direct investment

Commitment, Risk, Control, Profit Potential


Indirect Exporting Domestic-based export merchants Domestic-based export agents Trading companies Direct Exporting Domestic-based export department Overseas sales branch or subsidiary Traveling export sales representatives Foreign-based distributors or agents


The licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or loyalty.


Joint Ventures
Foreign investors join with local investor to create a joint venture company in which they share ownership and control.


Direct Investment
The foreign company buys part or full interest in a local company or builds its own facilities to gain from cost economies, government incentives and freight savings.


Deciding on the Marketing Program

Standardized marketing mix Adapted marketing mix

Product features Brand name Packaging, Labeling Colors, Materials Prices Sales promotion Advertising themes, media, execution

International Product and Communication Strategies


Levels of Product Adaptation

Production of regional product versions Production of country versions Production of city versions Production of retailer versions


Price Choices

Set a uniform price everywhere Set a market-based price in each country Set a cost-based price in each country


What is a Gray Market?

A gray market consists of branded products diverted from normal or authorized distributions channels in the country of product origin or cross international borders; dealers in lower priced countries sell products in higher priced countries



Seller International headquarters Channels between nations Channels within nations Final buyers


Country of Origin Effects

distinct attitudes and beliefs about brands or products from particular countries


Deciding on the Marketing Organization

Export Departments

International Divisions

Global Organization


Internal Marketing
Internal Marketing requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value.

R&D Purchasing Manufacturing Marketing Sales

Logistics Finance/ Accounting Public Relations Other CustomerContact Personnel


Organizing the Marketing Department

Functional Organization Geographic Organization Product- or Brand-Management Organization Market-Management Organization Matrix-Management Organization Global Organization


Functional Organization


The Product-Management Organization


Trends in Marketing Practices

Reengineering Outsourcing Benchmarking Supplier partnering Customer partnering Merging

Globalizing Flattening Focusing Accelerating Empowering


Tasks Performed by Brand Managers

Develop long-range and competitive strategy for each product Prepare annual marketing plan and sales forecast Work with advertising and merchandising agencies to develop campaigns Increase support of the product among channel members Gather continuous intelligence on product performance, customer attitudes Initiate product improvements

Types of Product Teams


Category Management
In Category Management, a company focuses on product categories to management its brands.


Market-Management Organization

Market managers supervise several marketdevelopment managers, market specialists, or industry specialists Market managers are staff people with duties like those of product managers. They develop long-range and annual plans for their markets. Companies organized this way are called market-centered organizations.

Building a Creative Marketing Organization

Developing a company-wide passion for customers Organizing around customer segments instead of products Understanding customers through qualitative and quantitative research


How Can CEOs Create a Marketing-Focused Company?

Convince senior management of the need to become customer focused Appoint a senior marketing officer and marketing task force Get outside guidance Change the companys reward measurement and system Hire strong marketing talent


How Can CEOs Create a Marketing-Focused Company?

Develop strong in-house marketing training programs Install a modern marketing planning system Establish an annual marketing excellence recognition program Shift from a department focus to a processoutcome focus Empower the employees


The Marketing Control Process

Types of Marketing Control Annual Plan Control (sales & market share analysis, sales-to-expense ratios) Profitability Control (by product, territory, customer, segment, order size, trade channel) Efficiency Control (sales force, advertising, sales promotion, distribution) Strategic Control (marketing audit, CSR review)

Approaches to Annual Plan Control

Sales analysis Market share analysis Sales-to-expense ratios Financial analysis Market-based scorecard analysis


Approaches to Profitability Control

Product Territory Customer

Segment Trade channel Order size


Efficiency Control Approaches

Sales force Advertising Sales promotion Distribution


Strategic Control Approaches

Marketing effectiveness rating instrument Marketing audit Marketing excellence review Company ethical and social responsibility review


What is a Marketing Audit?

A marketing audit is a comprehensive, systematic, independent, periodic examination of a companys or business units marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities, and recommending a plan of action to improve the companys marketing performance.


Characteristics of Marketing Audits

Comprehensive Systematic Independent Periodic


Corporate Social Responsibility

Socially responsible behavior Ethical behavior Legal behavior


Cause-Related Marketing
Cause-related marketing links the firms contributions to a designated cause with customers engaging directly or indirectly in revenue-producing transactions with the firm.


Cause-Marketing Benefits

Build brand awareness Enhance brand image Establish brand credibility Evoke brand feelings Create a sense of brand community Elicit brand engagement


Key Success Factors for Social Marketing Programs

Chose target markets that are ready to respond Promote a single, doable behavior in clear, simple terms Explain the benefits in compelling terms Make it easy to adopt the behavior Develop attention-grabbing messages Consider an education-entertainment approach


Social Marketing Planning Process

Where are we? Where do we want to go? How will we get there? How will we stay on course?


Top-Rated Companies for Social Responsibility

Microsoft Johnson & Johnson 3M Google Coca-Cola General Mills UPS

Sony Toyota Procter & Gamble Whole Foods Walt Disney Honda Motor Fed Ex

Sustainability is the importance of meeting humanitys needs without harming future generations.