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?

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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

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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

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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

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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

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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

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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

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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

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Foreign investors join with local investor to create a joint venture company in which they share ownership and control.

Direct Investment

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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.

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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

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Levels of Product Adaptation

Production of regional product versions

Production of country versions

Production of city versions

Production of retailer versions

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Price Choices

Set a uniform price everywhere

Set a market-based price in each country

Set a cost-based price in each country

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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

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Distribution

Seller

International headquarters

Channels between nations

Channels within nations

Final buyers

Country of Origin Effects

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… distinct attitudes and beliefs about brands or products from particular countries

Deciding on the Marketing Organization

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Export Departments

International Divisions

Global Organization

Internal Marketing

R&D

Purchasing

Manufacturing

Marketing

Sales

Logistics

Finance/ Accounting

Public Relations

Other Customer- Contact Personnel

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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

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Functional Organization

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The Product-Management Organization

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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

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Types of Product Teams

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Category Management

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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.

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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

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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

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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

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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)

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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

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Efficiency Control Approaches

Sales force

Advertising

Sales promotion

Distribution

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Strategic Control Approaches

Marketing effectiveness rating instrument

Marketing audit

Marketing excellence review

Company ethical and social responsibility review

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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.

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Characteristics of Marketing Audits

Comprehensive

Systematic

Independent

Periodic

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Corporate Social Responsibility

Socially responsible behavior

Ethical behavior

Legal behavior

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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

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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

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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

Google

Coca-Cola

General Mills

UPS

Sony

Toyota

Procter & Gamble

Amazon.com

Whole Foods

Walt Disney

Honda Motor

Fed Ex

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Sustainability

Sustainability is the importance of meeting humanity’s needs without harming future generations.