Marketing Management

Assignment No. 2

MBA-2

Hunain Aziz

AM 551522

Banking & Finance

Global Marketing Strategies

Introduction

The process of conceptualizing and then conveying a final product or service worldwide with the hope of reaching the international marketing community. Proper global marketing has the ability to catapult a company to the next level, if they do it correctly. Different strategies are implemented based on the region the company is marketing to. A global market is tied into international trade. International trade is when companies or governments trade between each other. When this happens it is said that the goods and services where traded on the global market.

Global marketing strategy used mainly by multinational companies to sell goods or services internationally. Global marketing requires that there be harmonization between the marketing policies for different countries and that the marketing mix for the different countries can be adapted to the local market conditions. Global marketing is sometimes used to refer to overseas expansion efforts through licensing, franchises, and joint ventures.

Definition of MARKETING

Marketing is the process of communicating the value of a product or service to customers. Marketing might sometimes be interpreted as the art of selling products, but selling is only a small fraction of marketing. Marketing is the activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get the attention of target audiences by using slogans, packaging design, celebrity endorsements and general media exposure. The four 'Ps' of marketing are product, place, price and promotion.

The management process through which goods and services move from concept to the customer. It includes the coordination of four elements called the 4 P's of marketing: (1) identification, selection and development of a product, (2) determination of its price, (3) selection of a distribution channel to reach the customer's place, and (4) development and implementation of a promotional

Why to Enter Global Market?

When foreign markets present higher profit opportunities then domestic market. Large customer base to achieve economies of scale. Expand market size by expanding into other countries Counterattack competitors in their home market. Customers require international service To take advantages of growing market in other countries

Risks in Entering Global Market

Risk of foreign competitors Foreign culture and traditions Foreign regulation and unexpected costs Managers with lack of international experience Economical conditions, commercial laws and value of currency

Which Markets to Enter

Market entry and market costs are low Product and communication costs are low Low barriers to entry from foreign firms Income growth and market growth rate is high

How to Enter Global Markets

Once a company decides to target a particular country, it has to determine the best model of entry. It is very important for a company to choose the best option for entering the global market, because it can affect the overall growth and expansion of the company. Following are some of the routes to enter an international market:

The decision of how to enter a foreign market can have a significant impact on the results. Expansion into foreign markets can be achieved via the following four mechanisms:

Exporting Licensing Franchising Joint Venture Direct Investment Strategic Alliance

Exporting

Exporting is the marketing and direct sale of domestically-produced goods in another country. Exporting is a traditional and well-established method of reaching foreign markets. Since exporting does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses.

Exporting commonly requires coordination among four players:

Exporter Importer Transport provider Government

Licensing

An international licensing agreement allows foreign firms, either exclusively or non-exclusively to manufacture a proprietor’s product for a fixed term in a specific market.

Summarizing, in this foreign market entry mode, a licensor in the home country makes limited rights or resources available to the licensee in the host country. The rights or resources may include patents, trademarks, managerial skills, technology, and others that can make it possible for the licensee to manufacture and sell in the host country a similar product to the one the licensor has already been producing and selling in the home country without requiring the licensor to open a new operation overseas. The licensor earnings usually take forms of one time payments, technical fees and royalty payments usually calculated as a percentage of sales.

Franchising

The franchising system can be defined as: “A system in which semi-independent business owners (franchisees) pay fees and royalties to a parent company (franchiser) in return for the right to become identified with its trademark, to sell its products or services, and often to use its business format and system.” 

Compared to licensing, franchising agreements tends to be longer and the franchisor offers a broader package of rights and resources which usually includes: equipments, managerial systems, operation manual, initial trainings, site approval and all the support necessary for the franchisee to run its business in the same way it is done by the franchisor. In addition to that, while a licensing agreement involves things such as intellectual property, trade secrets and others while in franchising it is limited to trademarks and operating know-how of the business.

Joint Venture

There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.

Such alliances often are favorable when:

the partners' strategic goals converge while their competitive goals diverge; the partners' size, market power, and resources are small compared to the industry

leaders; and Partners' are able to learn from one another while limiting access to their own proprietary

skills.

The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions.

Potential problems include:

conflict over asymmetric new investments mistrust over proprietary knowledge performance ambiguity - how to split the pie lack of parent firm support cultural clashes if, how, and when to terminate the relationship

Joint ventures have conflicting pressures to cooperate and compete:

Strategic imperative: the partners want to maximize the advantage gained for the joint venture, but they also want to maximize their own competitive position.

The joint venture attempts to develop shared resources, but each firm wants to develop and protect its own proprietary resources.

The joint venture is controlled through negotiations and coordination processes, while each firm would like to have hierarchical control.

Foreign Direct Investment

Foreign direct investment (FDI) is the direct ownership of facilities in the target country. It involves the transfer of resources including capital, technology, and personnel. Direct foreign investment may be made through the acquisition of an existing entity or the establishment of a new enterprise.

Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However, it requires a high level of resources and a high degree of commitment.

Strategic alliance

A strategic alliance is a term used to describe a variety of cooperative agreements between different firms, such as shared research, formal joint ventures, or minority equity participation. The modern form of strategic alliances is becoming increasingly popular and has three distinguishing characteristics:

1. They are frequently between firms in industrialized nations.2. The focus is often on creating new products and/or technologies rather than distributing

existing ones.3. They are often only created for short term durations.

Advantages & Disadvantages of Entering Global Markets

Advantages

The advantages of global market we can introduce our product by using advertising:

Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices Helps to establish relationships outside of the "political arena" Helps to encourage ancillary industries to be set up to cater for the needs of the global player Benefits of eMarketing over traditional marketing

Disadvantages

Differences in consumer needs, wants, and usage patterns for products Differences in consumer response to marketing mix elements Differences in brand and product development and the competitive environment Differences in the legal environment, some of which may conflict with those of the home

market Differences in the institutions available, some of which may call for the creation of entirely

new ones (e.g. infrastructure) Differences in administrative procedures Differences in product placement. Differences in the administrative procedures and product placement can occur

Practical Study of the Organization

Coca ColaHistory

Coca-Cola Enterprises, established in 1986, is a young company by thestandards of the Coca-Cola system. Yet each of its franchises has a strong heritage in the traditions of Coca-Cola that is the foundation for this Company.The Coca-Cola Company traces it’s beginning to 1886, when an Atlantapharmacist, Dr. John Pemberton , began to produce Coca-Cola syrup for sale infountain drinks. However the bottling business began in 1899 when twoChattanooga businessmen, Benjamin F. Thomas and Joseph B. Whitehead, secured the exclusive rights to bottle and sell Coca-Cola for most of the United States from The Coca-Cola Company.

COCA COLA PAKISTAN

The Coca-Cola Company began operating in Pakistan in 1953. Coca-Cola, Fanta and Sprite are the brands in Pakistan. The Coca-Cola System in Pakistan operates through eight bottlers, four of which are majority-owned by Coca-Cola Beverages Pakistan Limited (CCBPL). The CCBPL plants are in Karachi, Hyderabad, Sialkot, Gujranwala, Faisalabad, Rahimyar Khan, Multan and Lahore. The remaining two plants, independently owned, are in Rawalpindi and Peshawar. The Coca-Cola System in Pakistan serves 70,000customers/retail outlets. The Coca-Cola System in Pakistan employs 3000 people. During the last two years, The Coca-Cola System in Pakistan has invested over $130 million (U.S.). It is creating employment opportunities for more than 50,000 people.

Brands

The Coca-Cola Company offers more than 500 brands in over 200 countries, besides its namesake Coca-Cola beverage.

Coca-Cola Coke-Diet Fanta Orange Kinley Minute Maid Splash Sprite Sprite 3G Sprite Zero

PROMISE OF COKE

The basic proposition of our business is simple, solid and timeless. When we bring refreshment, value, joy and fun to our stakeholders, then we successfully nurture and protect our brands, particularly Coca-Cola. That is the key to fulfilling our ultimate obligationto provide consistently attractive returns to the owners of our business.

TARGET MARKET

Coke’s commercials basically based on young generations, So, the young generation is thetarget market of Coke because they want to represent Coke with the youth and energy but they also consider about the old people they take then as a co-target market.

MAJOR SEGMENTS

Major segments are basically those people who take this drink daily and those areas where the demands are higher than the other areas. There are so many people who take this drink daily and those people who take weekly and those who take less often are always there as well. So, their basic segments are those people who take this drink regularly.

Strategy and mission

The strategy of The Coca-Cola Company has for a long time been best characterized as follows: global marketing and local manufacturing. However, the global marketing approach has been changed to local marketing because of the differences in consumer demands and experiences. To implement their “think local, act local” philosophy, the following key areas are considered:

Consumers – by using innovative and tailored marketing programs based on local consumer insights, The Coca-Cola Company will keep growing its core brands while also leveraging its distribution system to capture other growth opportunities in the ready-to-drink nonalcoholic beverage category.

Communities – local offices around the world ensure that the Company is a respectful corporate citizen and participates as an integral part of each community.

Customers – the Company provides value to customers through every consumer purchase, through superior customer service and through great value creation programs.

Coca-Cola System – the Coca-Cola system business model delivers value to the Company and to its bottling partners. By working together, the Coca-Cola system focuses on growing the overall profits from the beverage category in order to provide strong returns for all parties involved.

Coca-Cola People – the Company recognizes the value of its associates and remains focused on ensuring it has the most talented, creative and motivated people throughout the world.

STRATEGIES OF GETTING GOALS I.E. “HIGHPROFITS”

To increase the price is the least thing, which Coke can adopt. There are so many waysthrough which Coke can increase the profits. Some major ways are as follows.

Volume can be increased Interest level of consumers To take part in energetic festivals

How to increase the volume of consumers?

Coke can increase the volume by expanding the industry of coke. Through advertisements, offering different interesting things to attract people towards this product.

How to increase the interest level of consumers?

Coke is increasing the interest level of consumers by offering different flavors. For example Coke is increasing the number of flavors in “Fanta”, this is one of the product of coke. Through offering different flavors Coke can increase the Level of consumers and through this profits can be gained.

How to take part in energetic festivals?

Coke is already taking part in the festival like “Basant”. Coke offers different attractive things in their festival and through this Coke gained high profit and consumption of coke increased on these occasions.

Market Share

Being the biggest company in the soft drink industry, Coca Cola enjoys the largest market share. This company controls about 59% of the world market. Coke is having 35% market share while Pepsi is having 65% Market share in Pakistan this is due to some reasons.

MAJOR CUSTOMERS NEED

First of all the majority don’t care that what they are going to have. In other words, they don’t care before drinking that whether it is “Pepsi” or “coke”. They don’t actually differentiate between these two brands in order to their tastes. Consumers basically drink what they get. They believe on

“WHAT COLD THEY SOLD” 

Consumer’s availability in brands is basically works like:

Push availability

Pull consumer’s demand.

For this reason Coca-Cola has provided their coolers and freezers in the market. They have maximum number of coolers and freezers in the market. They provide thisinfrastructure free of cost just to provide child coke to their customer, which they want to bepurchase.Their salesman and mechanics regularly visit all the shops where coke has itsinfrastructure to check that either it is in proper condition or not, if not then they immediately change or repair it.

MAJOR COMPETITORS

Consumers firstly decide that they are going to have a soft drink. Then they compete brands with each other. Like they compete Coke with Pepsi and Sprite with 7up and team .So the major competitor of Coke is Pepsi. When they motivate to any other brand or on Coke it’s in instinct basically that based on messages derive certain feelings. But Coca Cola thinks in a different way, they believe that RC Cola, new coming AMRATCola, and all juices, even they take water and tea as their competitors.

PROMOTION STRATEGIES

Getting shelves

They gets or purchase shelves in big departmental stores and display their products in that shelves in that style which show their product more clear and more attractive for the consumers.

Eye Catching Position

Salesman of the coca cola company positions their freezers and their products in eye-catching positions. Normally they keep their freezers near the entrance of the stores.

Sale Promotion

Company also do sponsorships with different college and school’s cafes and sponsors their sports events and other extra curriculum activities for getting market share.

UTC Scheme

UTC mean under the crown scheme, coca cola often do this type of scheme and they offer very handy prizes in it. Like once they offer bicycles, caps, tv sets, cash prizes etc. This scheme is very much popular among children.

PRICE STRATEGY

Trade Promotion

Coca Cola Company gives incentives to middle men or retailers in way a that they offer them free samples and free empty bottles, by this these retailers and middle man push their product in the market. And that’s why coca cola seen more in the market. And they have a good sale in the market because according to the expert which product seen more in the market that sells more. “Seen as sold” They do agreements with a shop keepers and stores to exclusive sale in that stores. These stores are called as KEY accounts in their local language. And coke also invest heavy budget on these stores and offers them free samples and free bottles and some time cash incentives.

Different Price in Different Seasons

Sometimes Coca Cola Company changes their product prices according to the season. Summer is supposed to be a good season for beverage industry in Pakistan. So in winter they reduce their prices to maintain their sales and profit. But normally they reduce the prices of their pet bottles or 1 litter glass bottle.

ADVERTISEMENT

Coca Cola Company use different mediums like

Print media Pos material Tv commercial Billboards and holdings

CONCLUSION

After thorough research, we come to the conclusion that the marketing strategy of Coca Cola is working for them and the product is gaining popularity among youth day by day.

RECOMMENDATIONS

After completing our project we have concluded some recommendation for the Coca Cola Company, which are following.

Coca Cola Company should try to emphasis more on providing their infrastructure in the market to facilitate their customers.

According to the survey, conducted by the international firm Pakistani people like little bit sweeter cola drink. So for this coca cola company should produce their product according to the local demand.

Marketing team should try to increase the availability of Coke in rural areas. They should also focus the old people.

References

http://www.coca-cola.com.pk/pages/landing/index.html

http://en.wikipedia.org/wiki/The_Coca-Cola_Company