Unit IV: Global Marketing Decisions: Product Policy and Planning
advertisement
Unit IV: Global Marketing Decisions: Product Policy and Planning- Global Pricing StrategiesGlobal Channels of Distribution. Chapter 11 Product Decisions Overview z Basic Concepts z Product Positioning z Product Saturation Levels z Product Design Considerations z Attitudes Towards Country of Origin z Geographic Expansion z New Products in Global Marketing z Summary Learning Objectives z Know the differences between local, national, international & global brands z Learn alternatives for positioning global brands z Appreciate the importance of saturation levels z Be aware of design considerations and attitudes toward country of origin z Know why development of new products are keys to survival and global growth Basic Concept of Products z Products can be defined as a collection of physical, psychological and symbolic attributes that can collectively yield satisfaction, or benefit, to a buyer or user. z Products can be classified into consumer & industrial goods z Products can be classified by the way they are purchased or their life-span Local, National, International and Global Products z Local products are offered in a portion of a national market z National products are offered in a single national Market z International products are offered in multinational, regional markets z Global products are offered in the global market. They are international and multiregional Global Brand z A symbol about which customer have beliefs & perceptions z Same name or same meaning in another language z Similar image & position z Guided by same strategic principles z Marketing mix may vary from country to country Positioning of Products and Services z Attribute or Benefit z Quality/Price z Use/User z High-Tech Positioning z High-Touch Positioning Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Product Saturation Levels in Global Markets z Many factors determine a product`s market potential z Product saturation level increases as national income per capita increases z The presence or absence of a particular companion product can be significant Product and Service Design Considerations z Preferences z Costs z Laws and Regulations z Compatibility z Labeling and instructions Attitude towards the Country of Origin z Stereotyped attitudes toward foreign products & services can favor or hinder marketing efforts z If the quality is perceived to be low y Foreign origin of the product can be disguised y Foreign identification of the product can be continued & consumer attitudes towards the product can be changed z In some market segments foreign products have a substantial advantage because they are foreign Geographic Expansion-Strategic Alternatives Communications Different Strategy 2: Product Extension, Communications Adaptation Strategy 4: Dual Adaptation Example: Greeting Cards Example: Motorbikes Strategy 1: Dual Expansion Example: Applications Software Strategy 3: Product Adaptation, Communication Extension Example: Electrical products Same Same Product Different edlich Global Product Planning: Strategic Alternatives for Expanding into Global Markets Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Strategy 1: Product/Communication Extension or Dual Extension z Company sells exactly the same product or service with the same advertising as used in the home country z Company assumes that all markets are alike z Does not work in all markets z Often used because it saves costs z Example: Campbell Soup Strategy 2: Product Extension, Communications Adaptation z If the product serves different needs in various countries, only marketing communication may have to be adapted z Adaptation can happen by design or accident z Cheap implementation because product does not change z Example: Motor scooters Strategy 3: Product Adaptation, Communication Extension z Product is adapted to the new market, but basic home market communication strategy remains unchanged z Product is adapted to the environment and the preferences of the consumers in the new market z Example: Exxon Strategy 4: Product/Communication Adaptation or Dual Adaptation z Using Dual Adaptation the company must adapt the product or service as well as the marketing communication to the foreign market z Example: Unilever fabric softener Strategy 5: Product Invention z Demanding but potentially rewarding strategy for reaching mass markets in LDCs z Product quality is essential but must be supported with imaginative, value-creating advertising & marketing communication How to Choose a Strategy z 3 Stages Cave Dweller – primary motivation is to dispose of excess capacity Naïve Nationalist – Sees adaptation as the only alternative Globally Sensitive- Evaluated across countries with some standardization & some differentiation Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates New Products and Services in Global Marketing (1) z New to consumer & company ( Product or service innovation) z New to consumer but not new to company (Product/service or line extension) z Not new to consumer but new to company (New product or service duplication) Newproduct development process z Permanent identification of new-product ideas z Screening of these ideas and identification of candidates for further investigation z Stringent investigation and analysis of the selected new-product ideas z Organisation of sufficient resources z The international new-product department z Testing new products & services in national markets New Products in Global Markets - Reiner z Global companies in fierce competition so must be world class z Focus on 1 or a few businesses z Senior management is actively involved z Recruit & retain the best & the brightest z Understand the importance of speed to market Summary z Product and services are the most important elements of the marketing program z Important factors: preferences, costs, laws and regulations, and compatibility z Five strategic alternatives for geographic expansion: y Product/communication extension, product extension/communications adaptation, product adaptation/communications extension, dual adaptation and product invention Chapter 12 Global Pricing Overview z Basic Pricing Concepts z Environmental Influences on Pricing Decisions z Global Pricing Objectives & Strategies z Gray Market Goods z Dumping z Transfer Pricing z Three Policy Alternatives z Summary Learning Objectives z Know about the complexity of international price setting z Appreciate which external & internal factors influence international pricing z Learn about different approaches to setting prices z Be aware of factors promoting or inhibiting international price standardisation z Know how to react to dumping by competitors z Learn which key issues are involved in transfer pricing Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates 8 Pricing Considerations Environmental Influences on Pricing Decisions (1) z Currency Fluctuations y Two positions: x Fix prices in country target markets x Fix prices in home-country currency y Pricing should be consistent with the company`s marketing strategy z Exchange Rate Clause y Allows the buyer & selller to agree to supply & purchase at fixed prices in each company’s national currency y Designed to protect bother from unforeseen large swings in currencies z Inflationary Environment y Require periodic adjustments due to rising costs y Must maintain operating profits y LIFO – last in – first out is more appropriate z Government Controls & Subsidies y In countries with severe financial difficulties, governments may restrict price increases or prescribe fixed prices z Competitive Behaviour y Pricing decisions are also dependent on the nature of demand and competitive action Market Skimming z Deliberate attempt to reach a segment that is willing to pay a premium price z Often used in introductory phase of product life cycle z Goal is to maximize revenue on limited volume & reinforce customer’s perception of high product value Penetration Pricing z Uses price as a competitive weapon to gain market position z Practiced by many companies in Pacific Rim z Means that the product may be sold at a loss for a certain time to gain market share z Companies new to exporting cannot absorb such losses Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Market Holding z Dictates that source-country currency appreciation will not be automatically passed on in the form of higher prices z May accept lower margins z May have to shift production to other countries or licensing Cost-Plus Price Escalation z Adding up all the costs required to get the product to where it is sold z All costs incurred in getting a product to an international market are taken into account z Sometimes ignores competitive conditions z Mostly used by companies new to foreign business Gray Goods z Trademarked products that are exported form one country to another where they are sold by unauthorized persons or organizations z Bring a product produced in one country into another in competition with authorized importers – parallel importing Dumping z A company exports a product at a price lower than the price it normally charges in its own home market z Dumping is an important global pricing issue, because it is sometimes regarded as unfair competition z Organisations like the WTO or OECD have issued guidelines how to treat these problematic situations Transfer Pricing z Pricing transactions between buyers and sellers that belong to the same corporation z The approach used will vary with the nature of the firm: y Cost-Based Transfer Pricing y Market-Based Transfer Pricing y Negotiated Transfer Pricing Tax Regulations & Transfer Prices z Companies sometimes use transfer prices to shift profits from high-tax to low-tax countries z The principle of arm`s length is a way of establishing a transfer price between company units. The price shall amount to what two independent, unrelated entities would negotiate 3 Policy Alternatives Extension/ethnocentric y Price is the same around the world y Importer absorbs freight & import duties Adaptation/polycentric Permits subsidiary to establish price Invention/geocentric Strikes and intermediate position Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Summary z Different approaches to price setting y Market Skimming y Penetration y Market Holding y Cost Plus Price Escalation z Gray Market: Unauthorized distributors z Dumping: selling products in international markets at prices below those in the home country z Transfer Pricing: intracorporate exchanges Chapter 13 Global Marketing Channel and Physical Distribution Decisions Overview z Channel Objectives & Constraints z Distribution Channels z International Channel Innovation z Channel Strategy for New Market Entry z Physical distribution & logistics z Case Example: Japan z Summary Learning Objectives z Recognize the complexity of global channels & distribution z Know which characteristics influence the design of distribution channels for international markets z Know how new developments reshape international distribution Channel Objectives z Create utility of place, time & information z Can be a source of competitive advantage z Important because of number & nature of relationships z Must analyze each market z Must fit overall marketing objectives of company International Channel Strategies z Two forms of channel strategy y direct involvement Own sales force, retail stores, etc. y indirect involvement Independent agents, distributors, wholesalers Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Characteristics Impacting on Channel Design and Strategy I z Customer characteristics y customer number, geographic distribution, income, shopping habits, reactions to different selling methods y Need for multiple channels increases as the number of customers increased z Product characteristics y perish ability, service requirements, bulk z Middleman characteristics y attitude towards the manufacturer z selection & care of distributors & agents z distributor & agent performance z termination z Environmental characteristics y economic, social & political dimensions Distribution Channels for Consumer Products z Door-to-door z Manufacturer-owned store z Franchise operations z Combined structures Top 5 Food Franchises Abroad Chain: Intl share 1. McDonald’s 49% 2. KFC 52 3. Pizza Hut 35 4. Burger King 21 5. Tim Hortons 97 Source: Restaurant Business International Channel Innovation Only in the most highly developed systems Directly related to level of economic development Helped or hindered by local demographic/geographic factors, social mores, government action, competitive pressures & infrastructure Accelerated by actions of aggressive individual firms Strategy for New Market Entry z Use established channels, build own channels or abandon the market z Must provide incentive to channel agents to take on a new product z Either using existing channels or establishing their own direct distribution is expensive z Direct distribution is most effective Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Physical Distribution & Logistics z Order processing z Warehousing z Inventory management z Transportation Summary z Channel decisions are difficult to manage globally z A global marketer must y tailor the marketing program to different types of channels y or introduce new retail concepts z Retailing will see an increasing trend towards globalisation of operations Get MBA study materials, articles, order business templates and stock market updates from or www.easymbaguide.com or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates
