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18 Managing Marketing in the
Global Economy
Chapter Questions
What factors should a company review before deciding to market internationally?
What are the major ways of entering foreign markets?
What are the keys to effective internal marketing?
How can companies be responsible social marketers?
18-2
18-3
What is a Global Firm?
A global firm operates in more than one country and captures R&D, production,
logistics, marketing and financial advantages that are not available to purely domestic
competitors.
Major Decisions in International Marketing
Deciding whether to go
Deciding which markets to enter
Deciding how to enter
Deciding on the marketing program
Deciding on the marketing organization
18-4
Deciding Whether to Go: Reasons for Pursuing Global Markets
Better profit opportunities than domestic
Larger customer base to achieve economies of scale
Less dependence on any one market
Desire to counterattack global competitors in their home markets
Customers require international service
18-5
Deciding Whether to Go: Risks to Going Abroad
Lack of knowledge of foreign culture
Lack of understanding of foreign needs
Lack of understanding of foreign regulations
Lack of managers with international expertise
Changes in the country environment
18-6
18-7
Global MarketingAdvantages
Economies of scale
Lower marketing costs
Power and scope
Consistency in brand image
Ability to leverage
Uniformity of marketing practices
Disadvantages
Differences in consumer needs, wants, usage patterns
Differences in consumer response to marketing mix
Differences in brand development process
Differences in environment
The Internationalization Process
1. No regular export activities
2. Export via independent agents
3. Establish sales subsidiaries
4. Establish production facilities abroad
18-8
18-9
Deciding Which Markets to Enter
Regional free trade zones
European Union
NAFTA
APEC
ASEAN
Key emerging markets
Brazil
Russia
India
China
Indonesia
South Africa
Deciding How to Enter: Five Modes of Entry into Foreign Markets
Indirect exporting Direct
exporting Licensing Joint ventures Direct
investment
Commitment, Risk, Control, Profit Potential
18-10
18-11
ExportingDirect Exporting
Domestic-based export department
Overseas sales branch or subsidiary
Traveling export sales representatives
Foreign-based distributors or agents
Indirect Exporting
Domestic-based export merchants
Domestic-based export agents
Trading companies
Licensing
18-12
The licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or loyalty.
Joint Ventures
18-13
Foreign investors join with local investor to create a joint venture company in which they share ownership and control.
Direct Investment
18-14
The foreign company buys part or full interest in a local company or builds its own facilities to gain from cost economies, government incentives and freight savings.
18-15
Deciding on the Marketing Program
Standardized marketing mix
Adapted marketing mix
Product features
Brand name
Packaging, Labeling
Colors, Materials
Prices
Sales promotion
Advertising themes, media, execution
International Product and Communication Strategies
18-16
18-17
Levels of Product Adaptation
Production of regional product versions
Production of country versions
Production of city versions
Production of retailer versions
18-18
Price Choices
Set a uniform price everywhere
Set a market-based price in each country
Set a cost-based price in each country
18-19
What is a Gray Market?
A gray market consists of branded products diverted from normal or authorized
distributions channels in the country of product origin or cross international
borders; dealers in lower priced countries sell products in higher priced countries
18-20
Distribution
Seller
International headquarters
Channels between nations
Channels within nations
Final buyers
Country of Origin Effects
18-21
… distinct attitudes and beliefs about brands or products from particular countries
Deciding on the Marketing Organization
18-22
Export Departments
International Divisions
Global Organization
Internal Marketing
R&D
Purchasing
Manufacturing
Marketing
Sales
Logistics
Finance/ Accounting
Public Relations
Other Customer- Contact Personnel
18-23
Internal Marketing requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value.
Organizing the Marketing Department
Functional Organization
Geographic Organization
Product- or Brand-Management Organization
Market-Management Organization
Matrix-Management Organization
Global Organization
18-24
Functional Organization
18-25
The Product-Management Organization
18-26
1827
Trends in Marketing Practices
Reengineering
Outsourcing
Benchmarking
Supplier partnering
Customer partnering
Merging
Globalizing
Flattening
Focusing
Accelerating
Empowering
Tasks Performed by Brand Managers
Develop long-range and competitive strategy for each product
Prepare annual marketing plan and sales forecast
Work with advertising and merchandising agencies to develop campaigns
Increase support of the product among channel members
Gather continuous intelligence on product performance, customer attitudes
Initiate product improvements18-28
Types of Product Teams
18-29
Category Management
18-30
In Category Management, a company focuses on product categories to management its brands.
Market-Management Organization
Market managers supervise several market- development managers, market specialists, or industry specialists
Market managers are staff people with duties like those of product managers. They develop long-range and annual plans for their markets.
Companies organized this way are called market-centered organizations.
18-31
18-32
Building a Creative Marketing Organization
Developing a company-wide passion for customers
Organizing around customer segments instead of products
Understanding customers through qualitative and quantitative research
18-33
How Can CEOs Create a Marketing-Focused Company?
Convince senior management of the need to become customer focused
Appoint a senior marketing officer and marketing task force
Get outside guidance
Change the company’s reward measurement and system
Hire strong marketing talent
18-34
How Can CEOs Create a Marketing-Focused Company?
Develop strong in-house marketing training programs
Install a modern marketing planning system
Establish an annual marketing excellence recognition program
Shift from a department focus to a process- outcome focus
Empower the employees
The Marketing Control Process
18-35
Types of Marketing Control
Annual Plan Control (sales & market share analysis, sales-to-expense ratios)
Profitability Control (by product, territory, customer, segment, order size, trade channel)
Efficiency Control (sales force, advertising, sales promotion, distribution)
Strategic Control (marketing audit, CSR review)
18-36
Approaches to Annual Plan Control
Sales analysis
Market share analysis
Sales-to-expense ratios
Financial analysis
Market-based scorecard analysis
Approaches to Profitability Control
Product
Territory
Customer
Segment
Trade channel
Order size
18-37
Efficiency Control Approaches
Sales force
Advertising
Sales promotion
Distribution
18-38
Strategic Control Approaches
Marketing effectiveness rating instrument
Marketing audit
Marketing excellence review
Company ethical and social responsibility review
18-39
18-40
What is a Marketing Audit?
A marketing audit is a comprehensive, systematic, independent, periodic
examination of a company’s or business unit’s marketing environment, objectives,
strategies, and activities with a view to determining problem areas and
opportunities, and recommending a plan of action to improve the company’s marketing
performance.
18-41
Characteristics of Marketing Audits
Comprehensive
Systematic
Independent
Periodic
18-42
Corporate Social Responsibility
Socially responsible behavior
Ethical behavior
Legal behavior
18-43
Cause-Related MarketingCause-related marketing links the firm’s contributions to a designated cause with customers’ engaging directly or indirectly in revenue-producing transactions with the firm.
Cause-Marketing Benefits
Build brand awareness
Enhance brand image
Establish brand credibility
Evoke brand feelings
Create a sense of brand community
Elicit brand engagement
18-44
18-45
Key Success Factors for Social Marketing Programs
Chose target markets that are ready to respond
Promote a single, doable behavior in clear, simple terms
Explain the benefits in compelling terms
Make it easy to adopt the behavior
Develop attention-grabbing messages
Consider an education-entertainment approach
18-46
Social Marketing Planning Process
Where are we?
Where do we want to go?
How will we get there?
How will we stay on course?
Top-Rated Companies for Social Responsibility
Microsoft
Johnson & Johnson
3M
Coca-Cola
General Mills
UPS
Sony
Toyota
Procter & Gamble
Amazon.com
Whole Foods
Walt Disney
Honda Motor
Fed Ex
18-47
18-48
Sustainability
Sustainability is the importance of meeting humanity’s needs without harming future generations.