GLOBAL MARKETING MANAGEMENT- EXERCISES SESSIONS

LESSON 1

INTRODUCTION

Importance of Global marketing: 14 billion coffee capsules are sold every year

General Definition: Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

You need to communicate your product, and you need to know how to make it. Delivering techniques are also
important.

à Create and maintain (long-term) customer relationships. This is a narrow definition. Important to find new
customers and make them stay.

MARKETING MIX (4 P)

PRODUCT

PRICE

PROMOTION

PLACE

This all should create value. Also, attention to sustainability.

If we talk about services, we also have people, processes, and physical facilities (like stores).

EVOLUTION OF GLOBAL MARKETING

- Domestic marketing: focuses on the domestic markets (ethnocentrism, operating in your own country,
looking at customers' needs)
- Export marketing: firm operates in the domestic markets but starts exporting abroad. Rather reactive
(they respond to an order, then don’t look to other countries to go to them) than proactive strategy.
Ethnocentrism (foreign market as an extension of the domestic market).
- International marketing: figuring out where to expand. When they see potential, they do it.
Polycentrism. The target market is seen on his own. Own promotion, own distribution policies. Each
country in which a company does business is unique. They can easily adapt to the consumer needs in a
specific country. There are really high overall costs. No economy of scale here.
- Multinational marketing: interesting when the company operates also in America. Regiocentrism
(concentration in USA, Canada), then European countries and so on. Standardized marketing within a
region but not across regions. Possibility of economics of scale. Distribution policies and distribution
channels possible.
- Global Marketing: until now there has always been fragmentation. In the Global Marketing no! They
start thinking of the consumer. Why does that specific consumer buy that computer and not the other. No
coordination region by region or country by country, but globally. There is now a global view.
Geocentrism. Standardizing marketing across countries, Coordination across markets

NESPRESSO COMMERCIAL

George Clooney commercials. The last one is easier to adapt because they don’t talk a lot.

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First clip is very focused on George Clooney and less focused on coffee. The second one is more about the
coffee. Third one is easier to adapt. George Clooney brand investor.

CASE STUDY:

The company fears a drop in their growth rates since their capsule patents are going to expire and competitors
begin to enter the market (e.g., Ethical Coffee Company, Senseo), which can produce cheaper and ecologically
friendlier capsules. Therefore, Nespresso seeks to broaden its product range by offering a new product:
Nespresso&. It is a ready-to-drink coffee-alcohol mix of 80ml coffee (=espresso doppio) and a 20ml shot.
Nespresso& is also supposed to acquire new customers, since it does not need a separate machine.

Which influences or variables must be thought of when introducing such a new product to the market in different
countries?

à Legal environment: legal age, tariffs applied to alcohol. Countries where alcohol is banned.

à Political environment: protect local competition. Political instability regarding own supply chain.

à Economic environment: purchasing power. Macro perspective of the country, where is the country placed in
the cycle.

à Financial environment: currencies, exchange rates.

à Cultural environment: culture on coffee and alcohol and how alcohol is seen. Religion, sustainability.

Adding alchol would bring more aspects to consider.

LESSON 2

ENVIRONMENTAL FACTORS

Marketing mix: Priceà legal environment, product à cultural environment we should also think of the political
situation, promotion à financial environment it has an influence because of exchange rates (it’s not something
that will be done to the consumer), place à economic environment (gdp)

CULTURE

What is culture? More than one definition

“Ways of living, built up by a group of human beings, that are transmitted from one generation to another”
“Collective programming of the mind that distinguishes the members of one category of people from those of
another” Both definitions tell that there are specific values and norms.

One person can be part of different cultures at the same time.

Culture:
• Pervasive influence which underlies all facets of social behaviour and interaction
• Conscious and unconscious

Children learn how to behave themselves based on the culture. Leaned, interrelated, shared

Interrelated: religion and marriage are related

THREE LEVELS OF CULTUREà culture being an iceberg

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 ex: you can see that lots of people drink beer.

Clothing and body language can change in a short period of

time, instead values may not. It’s hard to make people
change their believes or their religion for example

What you can’t observe, instead, is related to values and

social morals or basic cultural assumption

When going abroad remember there are different aspects

that you won’t see but should figure out.

Language and aesthetics as two facets of culture

Language (verbal and non-verbal):

• Important means of communication

• Various forms such as e.g. theatre plays and poetry
• In global marketing important for information gathering, access to local society

There are different examples of communication trouble, for example umbrella in Japanese is similar to breaking
up, so it might need to be taken into account. It is beneficial when the manager speaks the local language. When
you speak a language, you automatically learn something about the culture. When talking about non-verbal, it’s
important to take into consideration the non-gesture part. Research might be fundamental before a business
meeting abroad to know how to move and how to act. (regali mr.streeter Canada) . furthermore, colors for
example are perceived in a different way

Aesthetics:

• Overall sense of what is beautiful and represents good taste. Packaging, sustainability… all things to be
considered. Remember the culture in total (from the company prospection), but also the customer should adapt
a little

LESSON 3

STANDARDIZATION VS DIFFERENTIATION

Standardization saves costs, but a differentiated product could be seen good too.

Companies should choose between one of the two. (it would be better but not essential)

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Both internal and external factors are important. Where in the life cycle the product has importance in the choice
between standardization and differentiation. Culture has a big influence on consumer behavior.

Life cycle shouldn’t be always the same.

Example of McDonald’s

Product: Big Mac is standardized, but other products are differentiated

Promotion: I’m loving it usually, but in countries like France, they modified it and adapted.

Place: freestanding restaurants in high-traffic public areas but also at-home delivery in India and on a ferry in
Oslo.

Price: average price, but it depends on the country.

Some things can be standardized, but not all of them.

CULTURE as a macro variable

Contingency approach à cluster your target market: trying to figure out how similar are the countries or the
people.

General aim: Pool similar data points (i.e., countries) to homogeneous clusters (i.e., groups), which in turn differ
from each other

1. Variable and country selection: questions I should ask myself

§ Which characteristics (i.e., country variables), shall be used to compare the final groups?

§ Of which countries shall our groups consist of?

2. How to measure dis(similarity)?

§ (Dis)similarity = distance How do we calculate it? I use the variables that should be metric (numbers)

§ “How do we draw the line between two data points?

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From the 55 I throw out 4. Then again I throw out some of them

D is the distance. It’s the same formula for all three approaches. Quadradic Euclidian distance is the most used.
We square the value and the distance will be even higher (we get a higher distance from what is actually is for
different countries and this is what we want, to see how related two countries are). Quadratic has 2 for r and 1
for c.

3. How do we bring this clusters together? we need rules because it can happen to have ambiguous
situations

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Ambiguous situations: there are four variables.

Distance between the countries closer to one another will be taken into consideration. The smaller distance is
the one decided (single linkage). The smaller distance is decided for the merging process.

Outliers are easier to be noted with the nearest neighbor rule.

Furthest neighbor: the furthest counties. The data points used for the decision are different from the ones used
in the first approach. Once this is calculated, the clusters with the shortest distance will be merged!

The difference is only the data points used for the calculations.

The third approach is the one used the most. Ward approach. Minimize the increase of variance within the
groups. How homogeneous are the data points in the cluster. We try to keep the countries as similar as possible.

Single linkage is very used to individualize outliers, the ward rule is also used. The less used is the furthest
neighbor.

4. Finding a solution
Determine the number of clusters in order that the pooled countries within groups are similar and
dissimilar across groups.

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We need to figure out how many countries we need to cluster. In our case is 4 (dal punto che scegli scendi e vai
a controllare nella x axis).

Guarda i risultati della cluster analysis nelle slide tutorial 3 su icloud.

The green one could be the primary market. Blu ones weren’t super attractive. Collectivists are very attractive,
but they will leave them out probably. They have very selective organization…Nespresso wouldn’t focus on this
one.

LESSON 4

Developing new products is always a good idea.

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The core of the product is what is necessary. The next level is everything additional to that. Support services is
the third level, and it’s all about the different services that are offered for the product (like maintenance). HIGH:
means that the product itself is easy to standardize. (ex-technology is the same throughout the countries)à core
product easy to standardize. MEDIUM: we would need to think of what’s the best price for every country, color is
hard to standardize. LOW: even for individual customers in one country it might be very different. It can be very
individual à hard to standardize.

PRODUCT POSITIONING: how do firms position itself in the market

It’s a key activity. Trying to build a specific position. Country of origin and branding are two possibilities.

COUNTRY OF ORIGIN: initially we have “information cues”. People have stereotypes, make assumptions. They
transfer the image to the country to a product. In fact,

Country of origin effect: Definition: “the overall perception consumers form of products from such a country,
based on their prior perceptions of the country’s production and marketing strengths and weaknesses”

Complex phenomenon:

§ Stability over time: CoO effects are not stable; perceptions change over time

§ Design vs. manufacturing: country of design and country of production play a role § Consumer demographics:
demographics make a difference Difference between designing and manufacturing

§ Emotions: emotions play a role when people are angry, they would focus on COO, when they are sad they
wouldn’t care too much.

§ Culture: cultural orientation plays a role In countries where collectivism is high would care more on the COO of
their country

§ Brand name familiarity: if no brand name familiarity à CoO as a cue

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 § Product category: CoO effects depend on product category, different for each country there are countries
known for car buildings so Germany, but for shampoo made in Germany wouldn’t work as much as for the cars.
The product category could modify the way we value COO.

Now TOBLERONE had to change the packaging when they transferred the production of the chocolate to
Slovakia. They changed the packaging, but people wouldn’t even care about that. The firm decides if it wants to
use still the COO or not.

Nespresso is from Switzerland but the coffee beans are not from Switzerland. Sw is known for high quality, and
this is what they focus on, even if they don’t focus on where the beans are form (definitely not Switzerland).
Nespresso, intensely swiss. Focus on the production process.

Car à for Germany it is easy to use the country of origin effect. For Hungary we wouldn’t use it. They should
rather focus on other aspects of marketing.

BLIND TEST à uguale a marketing agroalimentare.

Brand equity: “A set of brand assets and liabilities linked to the brand, its name and symbol, that add to or
substract from the value provided by a product or service to a firm or the firm’s customers” (Aaker, 1991).

• Brand loyalty: firms want to build loyalty with the customer • Brand awareness so that people actually know the
brand and that it exists • Perceived quality is crucial. It's all about what quality the customer thinks when
experienced the product • Brand associations à thinking about apple, they should have very specific
associations with the brand. People are willing to buy a more expensive phone if associated to a brand that
gives “lots” (like quality, style…)

SENSORY BRANDING: sight, sound, smell, taste, touch. Touch comes in with packaging, ex material of the
packaging. not just thinking of how it looks, but also on how it sounds, tastes…

PRODUCT LIFE CYCLE

Intro, growth, maturing and declining

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After the breakeven point they start making a revenue. Every product gets outdated after a certain period of
time.

Also the level of product has a life cycle, like technology. TLC stands for technology life cicle.

BCG MATRIX

The Boston Consulting group's product portfolio matrix (BCG matrix) is designed to help with long-term strategic
planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where
to invest, to discontinue, or develop products. Optimally the different products of a firm should be in different
quadrants to have a good cash flow.

important for every country to develop new products, see

what the consumer wants…

INTERNATIONAL PRODUCT LIFE CYLCE (ILPC) à more focused on where the production takes place.
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MACROECONOMIC ONE à single product life cycle for each country. They can look very different from one
specific product in different countries. More specific to the product.

TABELLA ESERCIZIO DA GUARDARE (UPLOADED)

LESSON 5

Internal and external factors influence the pricing strategies.

Costs selected, then price settled. Lots of influences when selling the price.

Result above one: local currency is less strong (1.13)

80% coffee à sold already

It’s important that the price is higher than the costs.

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LECTURE 6

In general we have 10 options for price ending à finishing with 0, or with 9

They occur at different likelihood à 1 is not common, while 0 yes. 0 ending represents a round number: easy to
access what it means. Also 5 is easy.

Underestimation effect: price tag à 1.99€, in Europe we first see the left side. Underestimation of the real
number they actually have to pay

We should take into account superstitions

Look all the superstitions on the powerpoint

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