Understanding the Global Marketing Environment Class 5

The Marketing Task (Controllable) Implementation Product Marketing Strategy Product Price Promotion Distribution Segmentation Targeting Positioning

How is a product “positioned?” Price Promotions Place Implementation of Marketing Strategy

4 Ps - Product Product decisions are all decision which relate to the physical product and/or service offering, including its name, packaging, warranty, and availability. Product dimensions include: Size of the product Color(s) of product Scent of the product Materials/ composition of the product Design of the product Packaging materials Package colors and package design Brand name Warranty Availability of options Customizing services After-sale service offerings Inventory levels

4 Ps - Price Price decision are all decisions which relate to the price of the product, price negotiation, and payment terms. Pricing dimensions include: Price to end user Price to distribution intermediaries Fixed vs. negotiated pricing Negotiation policies Credit policies Credit charges Payment terms (the amount of time allowed for payment and any discount given for payment on time) Volume discounts Introductory allowances Trade-in policies

4 Ps - Place Place (distribution) decisions are all decisions which relate to the places at which the product or service is made available to buyers and the methods by which the product or service reaches those places. Place dimensions include: Selection of geographic markets Types of outlets from which end-users buy Level of competition among end-use outlets Number of end-use outlets Required qualifications for end-use outlets Specific identities for end-use outlets Types of intermediaries which service end-use outlets Level of competition among intermediaries Number of intermediaries which service end-use outlets Required qualifications for intermediaries which service end-use outlets Specific identities for for intermediaries which service end-use outlets Push v. pull policy

4 Ps - Promotion Promotion decisions are all decisions which relate to communication with buyers about the product or service, solicitation of purchases, and short-term purchase incentives. Promotion dimensions include: Size of advertising budget, if any Selection of all ad media (television, radio, magazines, etc.) Selection of ad vehicles (Time, Sports Illustrated, etc.) Ad Scheduling Ad appeals Ad executions Ad allowance (co-op advertising) programs Size of sales force Levels of sales force compensation Method of sales force compensation Sales quotas at which commissions or bonuses activate or change Sales territory definitions Sales force selection and training Size of budget for consumer promotions Types of consumer promotions to be used. Size of budget for “trade promotions” Types of trade promotions used.

Creating Marketing Strategies for International Markets Standardization/ Globalization Adaptation/ Localization VS.

Global Marketing A basic strategy A global marketing strategy involves the creation of a single strategy for a product, service, or company for the entire global market A basic strategy Flexibility to adapt to local market conditions where necessary

Coca-Cola Global Marketing Strategy Think Global Act Local GLOCAL

International Marketing Concepts Managers’ International Orientation International Marketing Strategy Ethnocentric Domestic Market Extension/ Standardized Polycentric Multidomestic Extension/ Localized Regiocentric Pan Regional Geocentric Globalized Global Market Segmentation

Country Selection Which particular country markets should a firm enter? Two Common Errors Ignore countries with good potential Spend too much time and effort investigating countries with poor potential

The Search Begins… Macrovariables Describe total market in terms of economic, social, geographic, political information Macrovariables are especially useful for determining which countries get rejected early on!

Geographic Indicators Size of country, in terms of geographic area Climatic conditions Topographical characteristics

Demographic Characteristics Total population Population growth rate Age distribution of the population Degree of population density

Economic Characteristics Total gross national product Per-capita income (also income growth rate) Personal or household disposable income Income distribution

GLOBAL INCOME AND POPULATION: 1995 Purchasing Power Parity Compared % of world GNP with PPP % of world GNP GNP Per Capita GNP Per Capita with PPP GNP with PPP Market GNP (billion) World (Total) $25,097 $30,783 100 100 $4,678 $5,863 Triad (Total) 19,119 16,992 76 55 24,203 21,511 North America* 7,253 7,246 29 24 24,903 24,877 Japan 4,247 2,849 17 9 33,748 22,636 EU 7,619 6,898 30 22 20,435 18,502 Other High Income 844 631 3 2 34,415 35,904 Upper Middle Income 2,239 3,504 9 11 4,397 7,604 Lower Middle Income 2,403 7,480 10 24 1,001 3,126 Low Income 491 2,176 2 7 300 1,370 *Not including Mexico

Standard of Living Number of people per: Life Expectancy Schooling (av. years) Doctor TV Phone McDonald’s China 70 5 724 37.5 76.9 384,000,000 Hong Kong 77 7 933 4.0 1.6 95,000 Japan 79 11 609 1.6 1.9 130,000 U.S. 76 12 404 1.2 1.3 28,000 Russia 60 275 150,000,000 Sources: WEFA, AsiaWeek, McDonald’s, The New York Times

Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994 National Urban Areas Food (includes eating out) $22.10 $38.00 Savings 11.40 17.00 Clothing 5.60 9.00 Child's Education 4.70 7.00 Home (includes Rent & Utilities) 4.30 8.20 Daily Goods other than Food 3.50 4.80 Medical Expenses & Drugs 2.30 4.00 Entertainment 1.30 3.20 SOURCE: Gallup China.

Developing a Marketing Strategy Situation Analysis Segmentation and Targeting Positioning Marketing Objectives Implementation - Marketing Mix Budget

Roper Starch Worldwide Global Study 40,000 consumers in 40 countries Shopping Styles Deal Makers (29%) - love the buying process Price Seekers (27%) - place primary value on the price of the product that they are buying Brand Loyalists (23%) - purchase name brands and remain true to them Luxury Innovators (21%) - seek new, prestigious brands

How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Type Of Segmentation Grouping Countries Segments Within and Across Foreign Markets

Global Scan Segmentation Study

Life Style Exhibit : Typology of European Car Market

International Positioning Strategies Global Positioning and Segmentation Strategies Universal Segment / Uniform Positioning Theme Universal Segment / Different Positioning Themes Different Segment / Different Positioning Themes

Global Positioning & Segmentation Strategies