1

Chapter 8

Global Marketing

2

The marketing mix in a global context

PRODUCT

DISTRIBUTION

POSITIONING

BRAND

PRICE

SERVICES• Call centres• After sales

• Name• Image• Advertising

• Target segments• Value proposition

• Specifications• Size / Packaging• Product launch

Standardization/Adaptation

High End/Low end Same across the world/Country segment specific

Global brands/Local Brands Communication messages Single/multiple agencies

Waterfall/Sprinkle

Single Channels/Multiple Channels Centralized/ Decentralised

Centralized/ Decentralised

Global Pricing/multiple

• Mass vs Specialized• Logistics

3 3

Marketing

AppleSwatch Mc Donald’s UnileverVolvo

Product

Message

CustomerGroup

Usage

Distribution

Brand

AdaptiveUsage

Pure Global

Fully Adaptive

AdaptiveProduct

Same

Same

Same

Same

Same

Same

Same

Same

Same

Same

Same Same

Different

Different

Different

Different

Different

Different

Different

Different

Different

Different

Different

Different

Price Same Different DifferentDifferent

4

What determines the choice?

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

Supply

● Costs (economies of scale)● Competition● Company’s capabilities● Company’s identity and

brand integrity

5

GLOBAL

REGIONAL

LOCAL

The vast majority of the population for most of:• Food

• Basic Services (Banks, Telecom,..)• News, entertainment

Most consumers for durable goods:

• Cars• Washers,• Cookers

Cosmopolitan elites

Consumers Segments Business-to-Business Segments

Large globalaccounts for:- Finances- Insurances- Telecom- IT, consulting- Sourcing, logistics - Commodities- Capital equipment

Nearly all companies for:-Travel services and logistics

(unless global firms)- Some intermediate products

Nearly all companies for:- Ancillary supplies

- Specific localised services: taxation, etc..

The majority ofSMEs

Market segmentation across countries

6

Global Segment

Existence of a significant global segment across countries

Homogeneous needs and behaviour

7

Multiple types of global segmentation

HEINEKEN

SWATCH

CITIBANK CONSUMER BANKING

VOLVO

ScandinaviaElsewhere

UK

USA

Hong Kong

Everywhere

Everywhere

8

Generic Segmentation

High End:• Differentiated products• Functionalities and Performances• Less Price sensitive

Low End:• Undifferentiated Products• Mass Production and distribution• Price sensitive

Top End

Lower High End

Lower End

Higher Low End

Segments within countries

Developing World Segmentation

• Lower End dominates• Rising middle class but still relatively small• Tiny highly wealthy segment

Lower End

Higher Low EndMiiddle Class

Top End

Industrialized Countries Segmentation

Higher Low End

Top EndLower Top End

Higher End

Lower High End

Lower End

• Diverse segmentation• Middle Class Markets dominates

9

High End:• Differentiated products• Functionalities and performances• Less price sensitive

Low End:• Undifferentiated products• Mass production and distribution• Price sensitive

Top End

Lower High End

Lower End

Higher Low End

Positioning and segments choice within countriesAdvantages• Higher margin• Higher switching costs

Disadvantages• Lower volume

Advantages• High volume• Cost based advantages

Disadvantages• Lower margin• Price rivalry

10

Unilever Survey

The physical product would have to be completely different to be sold in each European country

The physical product could be sold successfully in each Europeancountry without modification

COCA COLA & PEPSI

0 1 2 3 4 5 6 7 8 9 10

BOTTLED WATER

PEANUT BUTTER

COFFEE

BUTTER

YOGURT

BEER

CANNED MEAT

CHOCOLATE

COOKIES

DESSERT

CHEESE

FROZEN DINNERS

SAUSAGES

ICE CREAM

BREAD

11

Launchin country of origin

Launch in countries ,Region A

Launch in countries ,Region B

Launch in countries ,Region C

Time

Launchin country of origin

Launch in countries ,Region A

Launch in countries ,Region B

Launch in countries ,Region C

SprinkleWaterfall

Product Launch

iPad 3: Sales, Launch in 25 Countries

12

• Consistent positioning• Address similar customer needs worldwide• Easy to prononce• Be present geographically in a balanced way

• 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)

Most of the time

Sometimes

*John Quelch, « Global Brands:Taking Stock, Business Strategy Review,1, 1999

SonyIntelSwatchNike

Common features of global brands (John Quelch*)

13

Source: Nestlé:Andrew Parsons,« The Vision of Local Managers », The McKinsey Quarterly,2, 1996

10 Worldwidecorporatebrands

Nestlé Branding Tree

NestleCarnation

BuitoniMaggiPerrier

KitKatPolo

CerelacBaci

Mighty DogSmarties

After EightCoffee-Mate

MackintoshVittelContadinaStouffer’sHertaAlpoFindus

TexicanaBrigadeiroRockySolis

7,500 Local brands

Responsibility of local markets

140 Regionalstrategic brandsResponsibility of strategicbusiness unit and regionalmanagement

45 Worldwide strategic brandsResponsibility of generalmanagement at strategicbusiness unit level

14

Coke’s 232 Brands

South Africa

Germany

Mexico

El Salvador

Ecuador

Chile Japan

Argentina

Japan

India

China

Taiwan

Philippines

Brazil

15

Global Brands

Avantages Disadvantages• 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

16

17

Global Pricing

Advantages Disadvantages

• Avoid arbitrage• Protect brand integrity• Facilitate the servicing of

global customers

Sub-optimization

0

20

40

60

80

100

120

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Price

Volume

CountryAVa= 204-6Pa

CountryBVb= 160-4Pb

-150

-100

-50

0

50

100

150

200

250

300

350

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Price

Profit

Demand Functions Profit Functions

Country BCountry A

18

Customer base Few customers (High Concentration)

Many customers (High Dispersion)

Frequency of purchase

Low (Once in a while)

High (Often)

GLOBALSALES FORCE

LOCALAGENT

Civil aircraftLarge projects

GLOBAL/ REGIONALSALES FORCE

LOCAL DISTRIBUTOR

MachineryComputers

LOCALSALES FORCES &

DISTRIBUTION CHANNELS

Fast moving Consumer goodsDistribution

Sales

Few customers (High Concentration)

Many customers (High Dispersion)

High (Often)

Low (Once in a while)

Channels

19

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

CONSULTINGSolution to strategic,managerial, technical problems

INFORMATION TECHNOLOGY

Customised applications of EDP,communication problems

ENGINEERING Turn key projects

20

Customer:Tianjin

Project leader:Hong Kong

Subsidiaryregulation:

Sydney

Subsidiaryturbine:Pittsburg

CorporateLegal and IT: DusseldorfSubsidiary

generator:Manchester

Global solution selling: a power plant project in China

21

Conclusions (1)

1. Trends towards global marketing

2. However need to facilitate regional/local adaptation of certaincomponents 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

22

Source: Prahalad, C. K. and Stuart Hart (2002), "The Fortune at the Bottom of the Pyramid," Strategy+Business, 26.

4 billion people live with less than $4 per day1 billion people live with less than $1 per day.

Conclusions (2)Marketing at the bottom of the pyramid

2323

Traditional Middle Class Bottom of the Pyramid

Value pricing based on differentiation and segmentation

Products obsolescence and renewal Products, services functionalities and packaging

are adaptation of industrialized markets Advertising on mass TV and media supports

Products designed on ‘regular” environments

Urban areas focus

Transfer of technology

Use of skilled resources

Build supplies chains similar to industrialized world

Find new price-performances relationships leading to quality at low prices

Products built to last

Products, services functionalities packaging are “reinvented”to fit local conditions

Communication and advertising rely less on mass

advertising and more on educational campaigns using government programs and non government organizations.

Products designed on “hostile environments.

Rural focus

Hybrid technology: combination of advanced and adaptation

Deskill the work process

Adapt supplies chains to local conditions

Differences between Traditional Middle Class strategies and Bottom of the Pyramid strategies

24

de Abreu Filho, Gilberto Duarte, Nicola Calicchio, and Fernando Lunardini (2003), "Brand Building in Emerging Markets," McKinsey Quarterly (2), 6.

Conclusions (2)Marketing at the Bottom of the Pyramid

Share of purchases by low-income and middle consumers in clothing and grocery