Global Marketing Management: Planning and Organization

Global marketing management Benefits of Global Marketing International Planning Process Market-entry Strategies The important factors for each alternative market-entry strategy

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Multinational companies
Confronted with increasing global competition for

expanding markets Changing their marketing strategies and altering their organizational structure Nearly 75% of North American and European corporations are smarten up their business processes

Smaller companies
More flexible May enable them to reflect the demands of global

markets and redefine programs more quickly

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1970s standardization versus adaptation 1980s global integration versus localization 1990s global integration versus local responsiveness Example of new mass customization by Dell. Risk involves with global standardization (e.g., Barbie Doll, Coca-cola).
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The trend back toward localization

Caused by the new efficiencies of customization Made possible by the Internet Increasingly flexible manufacturing processes

From the marketing perspective customization is always best Global markets continue to homogenize and diversify simultaneously
Best companies will avoid trap of focusing on country as the

primary segmentation variable. Other segmentation may work better (e.g., lifestyle)
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Nestle worlds biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water 8500 products produced in 489 factories in 193 countries Nestle strategy

Long-term strategy works for Nestle

Because the company relies on local ingredients Markets products that consumers can afford
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Think and plan long term Decentralize Stick to what you know Adapt to local tastes

When large market segments can be identified

Economies of scale in production and marketing Important competitive advantages for global companies

Transfer of experience and know-how

Across countries through improved coordination and

integration of marketing activities

Marketing globally
Ensures that marketers have access to the toughest

customers Market diversity carries with it additional financial benefits Firms are able to take advantage of changing financial circumstances
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Planning is the job of making things happen that might not otherwise occur Planning allows for:

Rapid growth of the international function Changing markets Increasing competition, and the Turbulent challenges of different national markets

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Planning is both a process and philosophy

Relates to the formulation of goals and methods of

accomplishing them
Corporate planning Strategic planning Tactical planning

Company objectives and resources

Each new market requires
A complete evaluation, including existing commitments, relative to the parent companys objectives and resources

Defining objectives clarifies the orientation of the

domestic and international divisions, permitting consistent policies

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International commitment
Commitment in terms of Dollars to be invested Personnel for managing the international organization Determination to stay in the market long enough to realize a return in investments. The degree of commitment to an international

marketing cause reflects the extend to a companys involvement

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Exhibit 11.1

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What product, which market, and how?

Phase 1 Preliminary analysis and screening

Matching Company and Country Needs.(SWOT

and PESTEL analyses)

Phase 2 Adapting marketing mix to target markets (e.g., KFC) Phase 3 Developing the marketing plan Phase 4 Implementation and control
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An entry strategy into international market should reflect on analysis

Market characteristics
Potential sales Strategic importance Strengths of local resources Cultural differences Country restrictions

Company capabilities and characteristics

Degree of near-market knowledge Marketing involvement Management commitment
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Exhibit 11.2

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Companies most often begin with modest export involvement A company has four different modes of foreign market entry
Exporting Contractual agreements

Strategic alliances
Direct foreign investments
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Exporting accounts for some 10% of global activity Direct exporting the company sells to a customer in another country Indirect exporting the company sells to a buyer (importer or distribution) in the home country, who in turn exports the product Customers include Wal-Mart and Sears
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The Internet
Initially, Internet marketing focused on domestic sales A surprisingly large number of companies started

receiving orders from customers in other countries,

Resulting in the concept of international Internet marketing (IIM)

Direct sales
Particularly for high technology and big ticket

industrial products
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Contractual agreements
Long-term, Nonequity association between a company and another in

Licensing

a foreign market Contractual agreement (e.g., transfer of technology, processes, trademarks, human skills)
A means of establishing a foothold in foreign markets

without large capital outlays. Patent, trademark rights, and the right to use technological processes. A favorite strategy for small and medium-sized companies
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Franchising
A rapid growing form of licensing. Franchiser

provides a standard package of products, systems, and management services Franchise provides market knowledge, capital, and personal involvement in management Expected to be the fastest-growing market-entry strategy as it provides an attractive form of corporate organization for companies wishing to expand quickly with low capital investment.

(e.g., KFC, McDonalds)

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A strategic international alliance (SIA)

A business relationship established by two or more companies to cooperate

SIAs are sought as a way to shore up weaknesses and increase competitive strengths Firms enter SIAs for several reasons

out of mutual need To share risk in achieving a common objective

Opportunities for rapid expansion into new markets Access to new technology More efficient production and innovation Reduced marketing costs Strategic competitive moves Access to additional sources of products and capital (e.g., in airline industry One world Alliance consists of British Airways, Japan Airlines etc.)

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International joint ventures (IJVs)

A partnership of two or more participating companies that have joined forces

to create a separate legal entity (e.g., merge with foreign company in order to gain better access in the new market)

Consortia
Similar to joint ventures and could be classified as

such except for two unique characteristics

Typically involve a large number of participants Frequently operate in a country or market in which none of the participants is currently active
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Factors that influence the structure and performance of direct investments

Timing The growing complexity and contingencies of

contracts Transaction cost structures Technology transfer Degree of product differentiation The previous experiences and cultural diversity of acquired firms Advertising and reputation barriers
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Devising a standard organizational structure is difficult

Because organizations need to reflect a wide range of company-specific

characteristics

Companies are usually structured around one of three alternatives

Global product divisions responsible for product sales throughout world Geographical divisions responsible for all products and functions within a

given geographical area A matrix organization consisting of either of these arrangements

With centralized sales and marketing run by a centralized functional staff, or a combination of area operations and global product management
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Exhibit 11.4

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To keep abreast of the competition and maintain a viable position for increasingly competitive markets, a global perspective is necessary Cost containment, customer satisfaction, and a greater number of players mean that every opportunity to refine international business practices must be examined in light of company goals

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Important avenues to global marketing that must be implemented in the planning and organization of global marketing management
Collaborative relationships Strategic international alliances Strategic planning Alternative market-entry strategies

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