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07/06/10 1
By :
Prof. Amit Kumar
07/06/10 2
International marketing has become a major concern for business schools to develop global strategies to lead and sustain in the much expanded and
competitive arena. Liberalization thus catalyzing market competition, poses challenge for the
managers in handling the rigors of expanding global marketplace.
Syllabus aims at providing contemporary knowledge & skills on issues of global
marketing management.
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Importance of this course
Global Marketing Management
07/06/10 3
Course: Global Marketing Management
1. Framework of Global Marketing Management
2. Global Marketing Research
3. Decision Making in International Marketing
4. Foreign Market Entry & Export Marketing
5. Product Planning & Development
6. Global Pricing Strategies
7. Global Distribution System
8. Promoting Product Internationally
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Global Marketing Management
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Global Marketing Management Decision Making in International marketing
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Contents• Targeting Global ICT Markets by Country like INDIA• Hurdles in Reaching Global Market• Tools for Selecting the countries for doing business
Market Potential Index (MPI) Global Competitive Index (GCI) Foreign Direct Investment Confidence Index (FDICI) Global Political Risk Index (GPRI)
• Country Segmentation Country Segmentation on the Basis of Income Segmentation of Indian on Basis of Household Income Segmentation of Chinese Market on the Basis of Age Segmentation on the Basis of International Marketing
Opportunity and Attractiveness• Tools for International Market Analysis• Case Study: Identifying International Marketing
Opportunities in Medical services
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Learning OutcomesAfter reading this chapter you will understand:• The tools for selecting the countries for doing business
• How to take decisions with the help of indices such as Market Potential Index (MPI), Global Competitive Index (GCI), Foreign Direct Investment Confidence Index (FDICI) and Global Political Risk Index (GPRI)
• How to calculate MPI and its advantages• The importance of GCI and FDICI• Calculation of GPRI and the countries currently covered
under GPRI
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Global Marketing Management Decision Making in International marketing
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Identification of Niche Segment in International Markets
Targeting Global ICT Markets by a developing Country like INDIA
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Targeting Global ICT Markets by a developing Country like INDIA
The NASSCom has also forecasted that by 2008, ICT s/w and services exports will account for 35% of India’s total
exports. Employment in this industry grew from 160,000 in 1997 to an estimated 410,000 in 2000.
Today, some 40% of the Fortune 500 corporations are clients of the Indian s/w industry, while more than 25% of Indian
s/w firms meet the requirements set by ISO 9000.
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Hurdles in Reaching Global Market
A firm has to overcome several other hurdles to reach international markets.
IILM-GSM
Global Marketing Management Decision Making in International marketing
Geographical Distance
Economic Distance
Political Distance
Psychic Distance
Domestic Firm
TargetMarket
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Tools for Selecting the Countries for doing Business
• Firms expanding internationally need to carry out research on business opportunities, evaluate different countries and select the potential locations for doing business.
• International marketing research has to be done scientifically with the help of tools available to resolve business problem.
• Various tools for measuring the economic, political and social risk of a country can be classified as:
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Tools for Selecting the Countries 1. Market Potential Index (MPI)
• The market potential database contains more than 2,200 items, grouped into 35 categories that provide information about goods, services, attitudes and activities collected from consumer surveys conducted by Mediamark Research Inc. Doublebase 2005.
• The various categories include:• Electronics (PC, DVD, Film, Cameras, Internet usage)• Financial Investments (banking services)• Health & beauty (health, fitness, personal care)• Restaurants (family, fast food)• Sports & leisure (sporting events, travelling, reading)• Retail (apparel, convenience store, automotive, home)• Pets & products (pet food, pet accessories)
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Tools for Selecting the Countries 1. Market Potential Index (MPI)
Construction of MPI• The indexing study is conducted by MSU-CIBER to help
companies compare the emerging markets with each other on several dimensions.
• Eight dimensions are chosen to represent the market potential of a country over a scale of 1 to 100. Each dimension is measured using various indicators & is weighted in determining their contribution to overall MPI.
• Market Potential data measures the likely demand for a product or service. This database projects the expected number of consumers and provides a MPI.
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Tools for Selecting the Countries 2. Global Competitive Index (GCI)
• Since 1979, the World Economic Forum’s annual Global Competitiveness Reports have examined the many factors enabling national economies to achieve sustained economic growth and long-term prosperity.
• The goal has been to provide benchmarking tools for business leaders and policymakers to identify obstacles to improve competitiveness.
• For the past several years, the WEF has based its competitiveness analysis on the Global Competitiveness Index (GCI), a highly comprehensive index for measuring national competitiveness, which captures the micro and macroeconomic foundations of national competitiveness.
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Tools for Selecting the Countries 2. Global Competitive Index (GCI)
• Competitiveness is defined as the set of institutions, policies and factors that determine the level of productivity of a country.
• The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy.
• The diagram shows the 12 pillars of competitiveness.
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Tools for Selecting the Countries 3. FDI Confidence Index (FDICI)
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Tools for Selecting the Countries 4. Global Political Risk Index (GPRI)
• The GPRI measures stability-defined as the capacity to withstand internal and external shocks or crises-in 24 emerging countries.
• Each country’s score is based on 20 indicators in four equally weighted subcategories:
1. Government2. Society3. Security and4. Economy
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Eurasia Group, a political and economic risk analysis firm, has composed Global Political Risk Index
(GPRI).
The index is a composite measure of the state of a country’s government, security and economy. All indicators are scored on a scale of 0 to 100. The higher the number , the greater the political stability.
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Tools for Selecting the Countries 4. Global Political Risk Index (GPRI)
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Political Risk Assessment
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Ran
king
of c
ount
ries
on G
PRI b
y Eu
rasi
a
Countries 2010 2011Hungry 78 77S. Korea 76 75Poland 74 72Bulgaria 70 69Mexico 67 67China 66 61Brazil 66 64Argentina 66 66S. Africa 64 65Russia 63 61India 62 62------- -- --Iran 51 49Venezuela 50 52Nigeria 48 47Pakistan 45 50
Assesses political risk associated with doing business in foreign countries, firms should evolve suitable strategies to manage such risks.
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Tools for Selecting the Countries 4. Global Political Risk Index (GPRI)
Global Marketing Management Decision Making in International marketing
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Country Segmentation on the Basis of Income
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Several international agencies including the Organization for Economic Cooperation and
Development (OECD) and United Nations classify countries by their economic status. But the best
known system of classification is the one recommended by the world bank in which ‘184
economics with the population of at least 30,000 are ranked by their levels of gross national income
(GNI) per capita’.
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Country Segmentation on the Basis of Income
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Global Marketing Management Decision Making in International marketing
• Then these economics are then classified as low-income (LIC), lower-middle income (LMC), upper-middle income (UMC), high-income countries (HI).
• LIC countries are those having per capita GNI in 2000 of $735 or less; LMC between $736 and $2995; UMC between $2996 and $9265 and high-income countries with $9266 or more.
• Generally speaking, LIC, LMC, and UMC are developing countries and the rest are developed nations.
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Segmentation of Indian Market on Basis of Household Income
The generic model of the Indian market has been depictedon the five consuming classes, as defined by NCAER.
1. Rich (Benefit Maximizers)- Household with annual income above Rs 2,15,000, 4% in 2009-10
2. Consuming (Cost-benefit Optimizer)- Rs 45,000 to Rs 2,15,000, 38%
3. Climbers (Cash-constrained Benefit Seekers)- Rs 22,000 to Rs 45,000, 36%
4. Aspirants (New Entrants into Consumption)- Rs 16,000 to Rs 22,000, decline to 14%
5. Destitutes (Hand-to-Mouth Existence)- Less than Rs 16,000 are very poor people, decline to 8%
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Segmentation of Chinese Market on Basis of Age
Demographic classification of Chinese market on the basis ofage indicates three distinct segments:
1. Generation I ( Age 45 to 59)• Generation of the socialistic society, talented got university degree
and have become high-ranking government officials, some are retired2. Generation II (Age 30 to 44)
• Lost opportunity to get proper education, mainly working for state-owned enterprise
3. Generation III (Age 18 to 29)• Good educational background with opportunity to work for foreign-
affiliated firms, they are blessed with a good aspect of the market economy system that promises a brighter future for people who earned good money
For international marketers, G-III is most attractive segment.
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Segmentation on the Basis of International Marketing Opportunity
The stages of demands for products and services variessignificantly in countries. On the basis of opportunity, international markets can be classified as:
1. Existing Market2. Latent Market3. Incipient Market
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Segmentation on the Basis of International Marketing Opportunity
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Existing Latent Incipient
Competitive
Improved
Breakthrough
Low
Low
HighHigh
Cost andRisk ofProductLaunch
Cost and Risk
Market Segment
Prod
uct T
ype
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Segmentation on the Basis of International Marketing Opportunity
Marketing opportunities may be classified in three distinctproduct types as follows:Competitive Product:• Is one which has no significant advantage over those
already an offer. It is a ‘me too’ market offering.Improved Product:• Although an improved product is not unique, it provides
some improvement over the presently available market offering.
Breakthrough Product• It represents significant differentiation with innovation and
therefore has considerable competitive advantage.
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Segmentation on the Basis of International Market Attractiveness
The overall Attractiveness of the market depends on marketsize and growth, risk, government regulations, competitiveintensity, physical infrastructure etc.
1. Platform Country (Singapore & Hong Kong)2. Emerging Markets (Vietnam & Philippines)3. Growth Markets (China, India, Indonesia, Malaysia)4. Maturing Markets (Taiwan, Korea)5. Established Markets (Japan)
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Tools for International Market Analysis
International marketing planning and strategy developmentcalls for use of market analysis tools to adopt differentiatedstrategies for different segments. Two of the widely used tools for analyzing international markets are:
1. BCG Matrix2. Market Attractiveness/ Company Strength Matrix
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Growth-Share (BCG) Matrix
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Such a matrix can be prepared either for a country’s exportsor a firm’s export so as to facilitate segmentation of the
products under four broad categories.
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Growth-Share (BCG) Matrix
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1. High-Growth High-Share Products (Stars)• Such markets offer high growth potential but require lot of
resources to maintain the share in high-growth markets.• 42% of India’s exports fall under this categories. Gems &
Jewellery, Drugs & Pharmaceuticals, Readymade Garments2. Low-Growth High-Share Products (Cash Cows)
• Products bring high profits but a slow market growth rate• Marine products, leather and oil meals, 26% of India’s exports
3. High-Growth Low-Share Products (Question Marks)• Products are under high-risk, also called ‘Problem Children’• Petroleum products, tea, cosmetics, glassware, 9% exports
4. Low-Growth Low-Share Products (Dogs)• India’s export in this category include handicrafts, carpets,
coffee, basmati, cashew etc.
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Major Export Markets & Competitors
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Products Major Export Market Major CompetitorsRice (Basmati) UAE, UK and USA Pakistan
Wheat UAE, Netherlands, Turkey Canada, USA, Australia
Spices West Europe, East Asia Thailand, Indonesia, Brazil, China, Nepal
Oil Meal Singapore, Japan USA, Brazil
Sugar Indonesia, Pakistan, Sri Lanka, Russia, USA
Cuba, Brazil, Thailand
Fruits Middle East, UK, France, USA
Chile, South Africa, Philippines
Vegetables USA, Russia, UK, Germany, UAE
China, Turkey, Thailand
Meat Malaysia, UAE, Mauritius, Saudi Arabia
China, Korea, Thailand
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Market Attractiveness/ Company Strength Matrix
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Global Marketing Management Decision Making in International marketing
Market Attractiveness:• Market Size, Market Growth, Customer’s Buying Power• Average Trade Margins, Seasonality and Fluctuations in
Market• Marketing barriers, Competitive Structure• Government Regulations & Infrastructure• Economic & Political stability
Competitive Strength of a Firm:• Its Market Share, Familiarity & Knowledge about the Country• Price & product Fit to the Market, Demands, Image• Product Quality & Technology Position• Financial Resources• Access to the Distribution Channels & Quality
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Market Attractiveness/ Company Strength Matrix
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Business Unit StrengthHigh Medium Low
Mar
ket A
ttrac
tiven
ess
GE / McKinsey Matrix
High
Medium
Low
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Market Attractiveness/ Company Strength Matrix
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Invest/Grow
Invest/Grow
Invest/Grow
SelectiveStrategies
SelectiveStrategies
SelectiveStrategies
Harvest/Divest/
Combine
Harvest/Divest/
Combine
Harvest/Divest/
Combine
Business Unit StrengthHigh Medium Low
Mar
ket A
ttrac
tiven
ess
GE / McKinsey Matrix
P P
P
S
S
S T
T
T
High
Medium
Low
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Market Attractiveness/ Company Strength Matrix
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Ford for its tractors used the country attractiveness / company strength matrix and
placed India in the extreme right top of the matrix wherein the country attractiveness was very high but the competitive strength of the
company was low.
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Case Study
Identifying International Marketing opportunities in Medical Services
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Case Study: Questions for AnalysisIdentifying International Marketing opportunities in Medical Services
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1. Medical travel is the most visible face of increasing global trade in healthcare services. WTO expects three different modes. What are those?
2. Estimate the market size of the top 10 healthcare services.
3. Identify the areas in which India has a strategic edge in healthcare services.
4. Prepare a checklist of issues that need to be addressed to make India a global hub for healthcare services.