Lec 7 - Global Marketing

ENG 207 Global Marketing
Class Objectives:
Global Marketplace
Globalization of Customers & Competitors
Identifying Products/Services for International
Expansion
Choice of Strategic Markets. Emerging Markets
Finding Partners. International Alliances
Partnerships and Joint Ventures
Segmentation, Targeting and Positioning in the
Branding Across Cultures
Global Advertising
seremenko@ucsd.edu, 2017
Case: Hyundai
The core market was in South Korea: in the 1990s

Hyundai began an aggressive global expansion.
By 2007, 70% of sales came from outside Korea. The

company expanded products, adding SUVs to its
traditional small, inexpensive cars.
Recently, Hyundai launched its Genesis sedan “to take

share from BMW, Mercedes and Lexus.”
seremenko@ucsd.edu, 2017 Knowledge@Wharton, 2010
Mini CASE:
2006: Best Buy acquired a majority interest in Chinese

retailer Jiangsu Five Star Appliance. 2007: first store
“It was the wrong format, at the wrong

time, in the wrong market,”
Robert Gregory, research director at Planet Retail.
seremenko@ucsd.edu, 2017 www.businessinsider.com.au/best-buy-europe-2011-11

JV: 2008,
first store: 2010
January 2012, the Best Buy Europe joint venture was

discontinued, with all 11 stores and the transactional
website (www.bestbuy.co.uk) closing on that day.
seremenko@ucsd.edu, 2017 www.businessinsider.com.au/best-buy-europe-2011-11

Before making a major decision test your

assumptions!
Do market research!
Model: Chesbrough & Rosenbloom
© Vadim Kotelnikov
Growth Value
Strategy Proposition
Competitive
Strategy INNOVATION Market
Segments
Market Segment – target group of customers that “meets

three criteria: they are identifiable by common
Revenue Value Chain
characteristics,Model
they are profitable, and they are growing.“
Structure
Brent R. Grover, Evergreen Consulting, LLC
Is there a demand for your product or service?

Figure 2: Alternative Growth Strategies
New New
New
Customers
New
h y
a p
r
e og
G
Existing New
Products
seremenko@ucsd.edu, 2017 Roberts, et al, New Business Ventures and the Entrepreneur, HBS, 2007
What do you know about your customer?
What factors buyers consider when

selecting your product or service?
What else you want to know about your

customer?
Cross-Cultural Market Research
Primary research – the one a firm conducts for its

specific needs (e.g., focus groups, surveys,
interviews, etc.)
Secondary – finding info collected by someone
else (less expensive & faster, may not be specific,
can be less reliable)
Hard data – objective & quantifiable (stat. info)

Soft data – subjective (culture)
Global segmentation:
Macro level (country)
Micro level (segments within a country)
The aim of marketing is to know and understand the

customer so well the product or service fits him and
sells itself.
Peter Drucker
Product
Adapting a product to Benefits of
the unique demands of standardization; consistent
a country market global brand image
Mandatory adaptations
(voltages in U.S. vs. Europe)
Discretionary adaptations
(cultural adaptations)
Want Customized Global Presence

+ Economy of Scale?
Answer: the hub system

Companies customize only in a
maximum of 20 gateway
countries.
Modified from: Prahalad & Bhattacharyya, 2011
Case: GE Primary business: high-end

medical imaging products
Late 1980s: GE Healthcare invests in ultrasound

machines (separate devices for use in obstetrics and
cardiology); becomes a market leader, with premium
products with cutting-edge technologies.
Primary market: big hospitals in rich Western
countries.
seremenko@ucsd.edu, 2017 Prahalad & Bhattacharyya, 2011


1990s: GE sees huge potential in emerging markets

(China, India). Customer needs: portable with basic
features, low cost machines. GE Healthcare creates
semi-autonomous “local growth teams”.
The price of a conventional Western ultrasound

machine US$100,000 - $350,000. GE’s first portable
machine for China was launched at a price of $30,000,
and by 2007 a newer machine for $15,000.

Mobile inexpensive devices became popular in

rich countries (at accident sites, clinics and
emergency rooms).
Sales rose from zero to over $300 million in

five years.

Understanding your customer….
CASE: Haier (China)

Customer Complaint #1: “My washing machine
won’t work after I use it to rinse the morning’s
harvest.”
06/17/2010, www.forbes.com
Employees of China's Haier discovered that rural

customers used their washing machines not only to
launder clothes but also to clean vegetables.
A few minor modifications and Haier markets the

machines as versatile to wash both clothing and
vegetables, and rapidly became the market leader in
rural areas of China.
Sull, 2004
Keys to Positioning…
Typical mistake companies make is to position based

on features.
– Customers don’t buy features – they buy benefits!
– They buy perceived benefits!
China's 'Rent-a-Foreigner'
industry is booming
Foreigners hired to pose as celebrities by

Chinese real estate developers to sell property in
"ghost towns" by making them appear more
international.
seremenko@ucsd.edu, 2017 www.nytimes.com/2015/04/28

Businesses try to avoid extreme competition

by differentiating their product from rivals.
This gives companies some power over price.
Product Design
Advertising
Establishing a
brand name
Branding
Americans are comfortable with category specific

brands, Japanese consumers look for a major brand
name on the packages as a sign of quality.
Japanese Keiretsus span and use their brand name

across multiple industries—e.g., Mitsubishi,
among other things, sells food, automobiles,
electronics, and heavy construction equipment.
seremenko@ucsd.edu, 2017 http://www.consumerpsychologist.com

Branding – process of identifying

products
 Name
 Symbol/Logo
 Slogan
 Design
Simple
Unique/distinctive
Intuitive
Ill conceived product names
"Fartfull“ means "speedy" in Swedish, yet IKEA

eventually pulled the doohickey from their website.
Between its name and design, we wouldn't be surprised
if more than one child mistook it for a portable toilet.”
www.cracked.com/article_17686_the-8-most-ill-conceived-product-names-all-
time_p2.html#ixzz3HkaiUV4X
Ill conceived product names
The Danish candy manufacturer

Gajol created Spunk for children:
Arla’s products called Cheasy don’t do well

in English-language markets:
UK EU market Shit box
Source: Reiss, Feb. 2013, www.uxmatters.com

Atheist shoes Price: ~130 Euro (~$170)

http://www.atheistberlin.com
“Atheist shoes go missing in God-fearing US”
Packages sent to the US are 10 times more likely to

disappear if they are marked with the company’s logo.
http://www.thelocal.de/20130503/49499
www.theblaze.com/stories/2012/12/27/atheists-get-soles-the-clever-and-vulgar-way-one-shoe-
seremenko@ucsd.edu, 2017 company-is-targeting-the-godless
Digital Billboards Analyze

Shoppers
NeoFace technology is being tested in Japan
Cameras determine the age and sex and display relevant

products.
Brain scans were more predictive of future purchase

behavior than survey questions in the experiment.
(Lieberman, UCLA, 2010).
thesun.co.uk
How do men and women look at

advertisements differently? Research
firm EyeTrackShop surveyed 50 men
and 50 women to find out.
businessinsider.com/eye-tracking-study-2011
Promotional tools:
Advertising — in/on newspapers, radio, television,

billboards, busses, taxis, or the Internet
Price promotions — products are being made available
temporarily for free or at a lower price, or some
premium (e.g., with a package of other product/service)
Sponsorships — events allows sponsors to showcase
their product/service
Next Class: Implementing and Managing

Global Entrepreneurial Strategies
Reading: Global Entrepreneurship and the Successful

Growth Strategies of Early-Stage Companies
Global Entrepreneurship. Case study Compsis
Posted on Ted
Bi-weekly option:
ENG 207 Globalweek 9!
Marketing
New product/service
New technology
New market
Smart Watch
seremenko@ucsd.edu, 2017 Global Market Trend Forecast

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ENG 207 Global Marketing

The core market was in South Korea: in the 1990s

By 2007, 70% of sales came from outside Korea. The

Recently, Hyundai launched its Genesis sedan “to take

2006: Best Buy acquired a majority interest in Chinese

“It was the wrong format, at the wrong

Robert Gregory, research director at Planet Retail.

seremenko@ucsd.edu, 2017 www.businessinsider.com.au/best-buy-europe-2011-11

January 2012, the Best Buy Europe joint venture was

seremenko@ucsd.edu, 2017 www.businessinsider.com.au/best-buy-europe-2011-11

Before making a major decision test your

Market Segment – target group of customers that “meets

Is there a demand for your product or service?

What do you know about your customer?

What factors buyers consider when

What else you want to know about your

Cross-Cultural Market Research

Primary research – the one a firm conducts for its

Hard data – objective & quantifiable (stat. info)

Macro level (country)

Micro level (segments within a country)

The aim of marketing is to know and understand the

Want Customized Global Presence

Answer: the hub system

Modified from: Prahalad & Bhattacharyya, 2011

Case: GE Primary business: high-end

Late 1980s: GE Healthcare invests in ultrasound

seremenko@ucsd.edu, 2017 Prahalad & Bhattacharyya, 2011

Case: GE Primary business: high-end

1990s: GE sees huge potential in emerging markets

The price of a conventional Western ultrasound

Case: GE Primary business: high-end

Mobile inexpensive devices became popular in

Sales rose from zero to over $300 million in

seremenko@ucsd.edu, 2017 Prahalad & Bhattacharyya, 2011

Understanding your customer….

CASE: Haier (China)

Employees of China's Haier discovered that rural

A few minor modifications and Haier markets the

Typical mistake companies make is to position based

– Customers don’t buy features – they buy benefits!

– They buy perceived benefits!

Foreigners hired to pose as celebrities by

seremenko@ucsd.edu, 2017 www.nytimes.com/2015/04/28

Businesses try to avoid extreme competition

Americans are comfortable with category specific

Japanese Keiretsus span and use their brand name

seremenko@ucsd.edu, 2017 http://www.consumerpsychologist.com

Branding – process of identifying

Ill conceived product names

"Fartfull“ means "speedy" in Swedish, yet IKEA

Ill conceived product names

The Danish candy manufacturer

Arla’s products called Cheasy don’t do well

UK EU market Shit box

Source: Reiss, Feb. 2013, www.uxmatters.com

Atheist shoes Price: ~130 Euro (~$170)

“Atheist shoes go missing in God-fearing US”

Packages sent to the US are 10 times more likely to

Digital Billboards Analyze

NeoFace technology is being tested in Japan

Cameras determine the age and sex and display relevant

Brain scans were more predictive of future purchase

How do men and women look at