Global Marketing Management: Planning and Organization
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Global marketing management
Benefits of Global Marketing
International Planning Process
Market-entry Strategies
The important factors for each alternative
market-entry strategy
11-2
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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
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Smaller companies
 More flexible
 May enable them to reflect the demands of global
markets and redefine programs more quickly
11-3
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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).
11-4
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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
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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)
11-5
Nestle – world’s 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
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Think and plan long term
Decentralize
Stick to what you know
Adapt to local tastes
Long-term strategy works for Nestle
 Because the company relies on local ingredients
 Markets products that consumers can afford
11-6
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When large market segments can be identified
 Economies of scale in production and marketing
 Important competitive advantages for global companies
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Transfer of experience and know-how
 Across countries through improved coordination and
integration of marketing activities
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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
11-7
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Planning is the job of making things happen
that might not otherwise occur
Planning allows for:
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Rapid growth of the international function
Changing markets
Increasing competition, and the
Turbulent challenges of different national markets
11-8
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Planning is both a process and philosophy
 Relates to the formulation of goals and methods of
accomplishing them
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▪ Corporate planning
▪ Strategic planning
▪ Tactical planning
Company objectives and resources
 Each new market requires
▪ A complete evaluation, including existing commitments,
relative to the parent company’s objectives and resources
 Defining objectives clarifies the orientation of the
domestic and international divisions, permitting
consistent policies
11-9
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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
company’s involvement
11-10
Exhibit 11.1
11-11
What product, which market, and how?
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Phase 1 – Preliminary analysis and screening
 Matching Company and Country Needs.(SWOT
and PESTEL analyses)
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Phase 2 – Adapting marketing mix to target
markets (e.g., KFC)
Phase 3 – Developing the marketing plan
Phase 4 – Implementation and control
11-12
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An entry strategy into international market
should reflect on analysis
 Market characteristics
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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
11-13
Exhibit 11.2
11-14
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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
11-15
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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
11-16
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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)
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Direct sales
 Particularly for high technology and big ticket
industrial products
11-17
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Contractual agreements
 Long-term,
 Nonequity association between a company and another in
a foreign market
 Contractual agreement (e.g., transfer of technology,
processes, trademarks, human skills)
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Licensing
 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
11-18
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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.
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(e.g., KFC, McDonalds)
11-19
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A strategic international alliance (SIA)
 A business relationship established by two or more companies to cooperate
out of mutual need
 To share risk in achieving a common objective
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SIAs are sought as a way to shore up weaknesses and
increase competitive strengths
Firms enter SIAs for several reasons
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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.)
11-20
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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)
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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
11-21
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Factors that influence the structure and
performance of direct investments
 Timing
 The growing complexity and contingencies of
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contracts
Transaction cost structures
Technology transfer
Degree of product differentiation
The previous experiences and cultural diversity of
acquired firms
Advertising and reputation barriers
11-22
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Devising a standard organizational structure is difficult
 Because organizations need to reflect a wide range of company-specific
characteristics
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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
11-23
Exhibit 11.4
11-24
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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
11-25
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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
11-26