Chapter 8
Global Marketing
1
The marketing mix in a global context
PRODUCT
POSITIONING
BRAND
• Specifications
• Size / Packaging
• Product launch
 Standardization/Adaptation
 Waterfall/Sprinkle
• Target segments
• Value proposition
 High End/Low end
 Same across the world/Country segment specific
• Name
• Image
• Advertising
PRICE
DISTRIBUTION
SERVICES
 Global brands/Local Brands
 Communication messages
 Single/multiple agencies
 Global Pricing/multiple
•Mass vs Specialized
• Logistics
•Call centres
• After sales
 Single Channels/Multiple Channels
 Centralized/ Decentralised
 Centralized/ Decentralised
2
Marketing
Pure
Global
Adaptive
Usage
Adaptive
Product
Fully
Adaptive
Same
Same
Different
Different
Same
Different
Same
Different
Same
Different
Same
Different
Same
Different
Same
Different
Distribution
Same
Different
Same
Different
Brand
Same
Different
Same
Different
Price
Same
Different
Different
Different
Volvo
Mc Donald’s
Unilever
Product
Message
Customer
Group
Usage
Apple
Swatch
3
3
What determines the choice?
Supply
● Costs (economies of scale)
● Competition
● Company’s capabilities
● Company’s identity and
brand integrity
Demand
● Market segmentation across countries
Existence of a significant global segment across countries
● Market segmentation within countries
Existence of a significant differentiated segment within countries
4
Market segmentation across countries
Large global
accounts for:
GLOBAL
- Finances
- Insurances
- Telecom
- IT, consulting
- Sourcing, logistics
- Commodities
- Capital equipment
Cosmopolitan
elites
Most consumers
for durable goods:
• Cars
• Washers,
• Cookers
REGIONAL
Nearly all companies for:
-Travel services and logistics
(unless global firms)
-Some intermediate products
The vast majority of the population
for most of:
• Food
• Basic Services (Banks, Telecom,..)
• News, entertainment
Nearly all companies for:
- Ancillary supplies
-Specific localised services:
taxation, etc..
LOCAL
The majority ofSMEs
Business-to-Business Segments
Consumers Segments
5
Global Segment
Existence of a significant global segment across countries
Homogeneous needs and behaviour
6
Multiple types of global segmentation
CITIBANK
CONSUMER
BANKING
SWATCH
USA
UK
Everywhere
Hong Kong
VOLVO
HEINEKEN
Scandinavia
Everywhere
Elsewhere
7
Segments within countries
Top End
High End:
• Differentiated products
• Functionalities and Performances
• Less Price sensitive
Lower High End
Higher Low End
Lower End
Top End
Generic Segmentation
Higher Low End
Miiddle Class
Low End:
• Undifferentiated Products
• Mass Production and distribution
• Price sensitive
Top End
Lower Top End
Higher End
Lower High End
Higher Low End
Lower End
Lower End
Developing World Segmentation
Industrialized Countries Segmentation
• Lower End dominates
• Rising middle class but still relatively small
• Tiny highly wealthy segment
• Diverse segmentation
• Middle Class Markets dominates
8
Positioning and segments choice within countries
Disadvantages
Advantages
• Lower volume
• Higher margin
• Higher switching costs
Top End
Lower High End
Higher Low End
Lower End
High End:
• Differentiated products
• Functionalities and performances
• Less price sensitive
Low End:
• Undifferentiated products
• Mass production and distribution
• Price sensitive
Advantages
Disadvantages
• High volume
• Cost based advantages
• Lower margin
• Price rivalry
9
Unilever Survey
COCA COLA & PEPSI
BOTTLED WATER
PEANUT BUTTER
ICE CREAM
COFFEE
BUTTER
YOGURT
BEER
CANNED MEAT
CHOCOLATE
COOKIES
DESSERT
CHEESE
BREAD
FROZEN DINNERS
SAUSAGES
The physical product would have
to be completely different to be sold
in each European country
0
1
2
3
4
5
6
10
7
8
9
10
The physical product could be sold
successfully in each European
country without modification
Product Launch
Sprinkle
Waterfall
Launch
in country of
origin
Launch
in country of
origin
Launch in
countries ,
Region A
Launch in
countries ,
Region B
Launch in
countries ,
Region A
Launch in
countries ,
Region B
Launch in
countries ,
Region C
iPad 3: Sales, Launch in 25 Countries
Launch in
countries ,
Region C
Time
11
Common features of global brands (John Quelch*)
Most of the time
• Consistent positioning
• Address similar customer needs worldwide
• Easy to prononce
• Be present geographically in a balanced way
Sony
Intel
Swatch
Nike
Sometimes
• Product category focus (Mc Donald, Coke, Imac)
• Strong in home market (Budweiser, Malboro )
• Value of country of origin ( McDonald’s, Coke)
• Corporate name (Disney, Sony, Gillette)
12
*John Quelch, « Global Brands:Taking Stock,
Business Strategy Review,1, 1999
Nestlé Branding Tree
7,500 Local
brands
Texicana
Brigadeiro
Rocky
Solis
Responsibility of
local markets
140 Regional
strategic brands
Responsibility of
strategic
business unit and
regional
management
Mackintosh
Vittel
Contadina
Stouffer’s
Herta
Alpo
Findus
KitKat
Polo
Cerelac
Baci
Mighty Dog
Smarties
After Eight
Coffee-Mate
45 Worldwide strategic
brands
Responsibility of general
management at strategic
business unit level
Nestle
Carnation
Buitoni
Maggi
Perrier
10 Worldwide
corporate
brands
Source: Nestlé:Andrew Parsons,
« The Vision of Local Managers »,
The McKinsey Quarterly,2, 1996
13
Coke’s 232 Brands
Japan
Argentina
Brazil
Chile
Ecuador
India
China
El Salvador
Mexico
Taiwan
Philippines
Germany
South
Africa
14
Japan
Global Brands
Disadvantages
Avantages
• Concentration of resources
• Targetted impact
• Cross border learning
• Motivation for recruitment
• Quality management
• Over standardization
• Ignorance of level of
market development
• Skimming the surface
• Rigid implementation
15
16
Global Pricing
Disadvantages
Advantages
• Avoid arbitrage
Sub-optimization
• Protect brand integrity
• Facilitate the servicing of
global customers
120
100
350
C ou ntryA
Va = 2 04 -6P a
250
Country A
200
80
C ou ntryB
Vb= 1 60 -4P b
150
Profit
Volume
Country B
300
60
100
50
40
0
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
20
-50
-100
0
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Pric e
Demand Functions
17
-150
Pric e
Profit Functions
Channels
Sales
Distribution
GLOBAL
SALES FORCE
LOCAL
AGENT
Civil aircraft
Large projects
Customer base
Few customers
(High Concentration)
Frequency of
purchase
Low
(Once in a while)
GLOBAL/ REGIONAL
SALES FORCE
LOCAL DISTRIBUTOR
LOCAL
SALES FORCES &
DISTRIBUTION CHANNELS
Machinery
Computers
Fast moving
Consumer goods
Few customers
(High Concentration)
High
(Often)
Many customers
(High Dispersion)
Low
(Once in a while)
18
Many customers
(High Dispersion)
High
(Often)
Global solution selling
The capability for a company to deliver to a customer a customised product
and services integrating capabilities spread across different subsidiaries worldwide.
 BANKS
Financial engineering
 CONSULTING
Solution to strategic,
managerial, technical problems
 INFORMATION
TECHNOLOGY
Customised applications of EDP,
communication problems
 ENGINEERING
Turn key projects
19
Global solution selling: a power plant project in China
Corporate
Legal and IT:
Subsidiary
generator:
Manchester
Dusseldorf
Subsidiary
turbine:
Pittsburg
Customer:
Tianjin
Project leader:
Hong Kong
Subsidiary
regulation:
Sydney
20
Conclusions (1)
1.
Trends towards global marketing
2.
However need to facilitate regional/local adaptation of certain
components of the mix (communication, pricing, channels )
3.
Global marketing management requires:
- Sharing of knowledge across borders
- Institutionalization through:
Global Brand Team ( Co-ordination of brand managers)
or Global Brand Manager ( e.g. IBM’s “brand stewards”)
or Global Management Team ( e.g. P&G’s categories team)
or Brand Champion ( Nestlé)
- Common information and planning tools
David Aaker and Erich Joachimsthaler, The Lure of Global Branding » Harvard Buisness Review, Nov-Dec 1999
21
Conclusions (2)
Marketing at the bottom of the pyramid
4 billion people live with less than $4 per day
1 billion people live with less than $1 per day.
Source: Prahalad, C. K. and Stuart Hart (2002), "The Fortune at the Bottom of the
Pyramid," Strategy+Business, 26.
22
Differences between Traditional Middle Class
strategies and Bottom of the Pyramid strategies
Traditional Middle Class
23
Bottom of the Pyramid

Value pricing based on differentiation and
segmentation

Find new price-performances relationships leading
to quality at low prices

Products obsolescence and renewal

Products built to last

Products, services functionalities and packaging
are adaptation of industrialized markets

Products, services functionalities packaging are
“reinvented”to fit local conditions

Advertising on mass TV and media supports

Communication and advertising rely less on mass
advertising and more on educational campaigns
using government programs and non government
organizations.

Products designed on ‘regular”
environments

Products designed on “hostile environments.

Urban areas focus

Rural focus

Transfer of technology

Hybrid technology: combination of advanced and
adaptation

Use of skilled resources

Deskill the work process

Build supplies chains similar to industrialized world 
Adapt supplies chains to local conditions
23
Conclusions (2)
Marketing at the Bottom of the Pyramid
Share of purchases by low-income and middle consumers in clothing and grocery
de Abreu Filho, Gilberto Duarte, Nicola Calicchio, and Fernando Lunardini (2003), "Brand Building in Emerging Markets," McKinsey Quarterly (2), 6.
24