1
Chapter 8
Global Marketing
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The marketing mix in a global context
PRODUCT
DISTRIBUTION
POSITIONING
BRAND
PRICE
SERVICES• Call centres• After sales
• Name• Image• Advertising
• Target segments• Value proposition
• Specifications• Size / Packaging• Product launch
Standardization/Adaptation
High End/Low end Same across the world/Country segment specific
Global brands/Local Brands Communication messages Single/multiple agencies
Waterfall/Sprinkle
Single Channels/Multiple Channels Centralized/ Decentralised
Centralized/ Decentralised
Global Pricing/multiple• Mass vs Specialized• Logistics
3 3
Marketing
AppleSwatch Mc Donald’s UnileverVolvo
Product
Message
CustomerGroup
Usage
Distribution
Brand
AdaptiveUsage
Pure Global Fully
AdaptiveAdaptiveProduct
Same
Same
Same
Same
Same
Same
Same
Same
Same
Same
Same Same
Different
Different
Different
Different
Different
Different
Different
Different
Different
Different
Different
Different
Price Same Different DifferentDifferent
4
What determines the choice?
Demand
● Market segmentation across countries
Existence of a significant global segment across countries
● Market segmentation within countries
Existence of a significant differentiated segment within countries
Supply
● Costs (economies of scale)● Competition● Company’s capabilities● Company’s identity and
brand integrity
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GLOBAL
REGIONAL
LOCAL
The vast majority of the population for most of:• Food
• Basic Services (Banks, Telecom,..)• News, entertainment
Most consumers for durable goods:
• Cars• Washers,• Cookers
Cosmopolitan elites
Consumers Segments Business-to-Business Segments
Large globalaccounts for:- Finances- Insurances- Telecom- IT, consulting- Sourcing, logistics - Commodities- Capital equipment
Nearly all companies for:-Travel services and logistics
(unless global firms)- Some intermediate products
Nearly all companies for:- Ancillary supplies
- Specific localised services: taxation, etc..
The majority ofSMEs
Market segmentation across countries
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Global Segment
Existence of a significant global segment across countries
Homogeneous needs and behaviour
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Multiple types of global segmentation
HEINEKEN
SWATCHCITIBANK CONSUMER BANKING
VOLVO
ScandinaviaElsewhere
UK
USA
Hong Kong
Everywhere
Everywhere
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Generic Segmentation
High End:• Differentiated products• Functionalities and Performances• Less Price sensitive
Low End:• Undifferentiated Products• Mass Production and distribution• Price sensitive
Top End
Lower High End
Lower End
Higher Low End
Segments within countries
Developing World Segmentation
• Lower End dominates• Rising middle class but still relatively small• Tiny highly wealthy segment
Lower End
Higher Low EndMiiddle Class
Top End
Industrialized Countries Segmentation
Higher Low End
Top EndLower Top End
Higher End
Lower High End
Lower End
• Diverse segmentation• Middle Class Markets dominates
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High End:• Differentiated products• Functionalities and performances• Less price sensitive
Low End:• Undifferentiated products• Mass production and distribution• Price sensitive
Top End
Lower High End
Lower End
Higher Low End
Positioning and segments choice within countriesAdvantages• Higher margin• Higher switching costs
Disadvantages• Lower volume
Advantages• High volume• Cost based advantages
Disadvantages• Lower margin• Price rivalry
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Unilever Survey
The physical product would have to be completely different to be sold in each European country
The physical product could be sold successfully in each Europeancountry without modification
COCA COLA & PEPSI
0 1 2 3 4 5 6 7 8 9 10
BOTTLED WATER
PEANUT BUTTER
COFFEEBUTTER
YOGURT
BEER
CANNED MEAT
CHOCOLATE
COOKIES
DESSERT
CHEESE
FROZEN DINNERS
SAUSAGES
ICE CREAM
BREAD
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Launchin country of origin
Launch in countries ,Region A
Launch in countries ,Region B
Launch in countries ,Region C
Time
Launchin country of origin
Launch in countries ,Region A
Launch in countries ,Region B
Launch in countries ,Region C
SprinkleWaterfall
Product Launch
iPad 3: Sales, Launch in 25 Countries
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• Consistent positioning• Address similar customer needs worldwide• Easy to prononce• Be present geographically in a balanced way
• Product category focus (Mc Donald, Coke, Imac)• Strong in home market (Budweiser, Malboro )• Value of country of origin ( McDonald’s, Coke) • Corporate name (Disney, Sony, Gillette)
Most of the time
Sometimes
*John Quelch, « Global Brands:Taking Stock, Business Strategy Review,1, 1999
SonyIntelSwatchNike
Common features of global brands (John Quelch*)
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Source: Nestlé:Andrew Parsons,« The Vision of Local Managers », The McKinsey Quarterly,2, 1996
10 Worldwidecorporatebrands
Nestlé Branding Tree
NestleCarnation
BuitoniMaggiPerrier
KitKatPolo
CerelacBaci
Mighty DogSmarties
After EightCoffee-Mate
MackintoshVittelContadinaStouffer’sHertaAlpoFindus
TexicanaBrigadeiroRockySolis
7,500 Local brands
Responsibility of local markets
140 Regionalstrategic brandsResponsibility of strategicbusiness unit and regionalmanagement
45 Worldwide strategic brandsResponsibility of generalmanagement at strategicbusiness unit level
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Coke’s 232 Brands
South Africa
Germany
Mexico
El Salvador
Ecuador
Chile Japan Argentina
Japan
India
China
Taiwan
Philippines
Brazil
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Global Brands
Avantages Disadvantages• Concentration of resources• Targetted impact• Cross border learning• Motivation for recruitment• Quality management
• Over standardization• Ignorance of level of market development• Skimming the surface• Rigid implementation
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17
Global Pricing
Advantages Disadvantages
• Avoid arbitrage• Protect brand integrity• Facilitate the servicing of
global customers
Sub-optimization
0
20
40
60
80
100
120
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30Price
Volume
CountryAVa= 204-6Pa
CountryBVb= 160-4Pb
-150
-100
-50
0
50
100
150
200
250
300
350
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Price
Profi
t
Demand Functions Profit Functions
Country BCountry A
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Customer base Few customers (High Concentration)
Many customers (High Dispersion)
Frequency of purchase
Low (Once in a while)
High (Often)
GLOBALSALES FORCE
LOCALAGENT
Civil aircraftLarge projects
GLOBAL/ REGIONALSALES FORCE
LOCAL DISTRIBUTOR
MachineryComputers
LOCALSALES FORCES &
DISTRIBUTION CHANNELS
Fast moving Consumer goodsDistribution
Sales
Few customers (High Concentration)
Many customers (High Dispersion)
High (Often)
Low (Once in a while)
Channels
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Global solution selling
The capability for a company to deliver to a customer a customised product and services integrating capabilities spread across different subsidiaries worldwide.
BANKS Financial engineering
CONSULTING Solution to strategic,managerial, technical problems
INFORMATION TECHNOLOGY
Customised applications of EDP,communication problems
ENGINEERING Turn key projects
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Customer:Tianjin
Project leader:Hong Kong
Subsidiaryregulation:
Sydney
Subsidiaryturbine:Pittsburg
CorporateLegal and IT: DusseldorfSubsidiary
generator:Manchester
Global solution selling: a power plant project in China
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Conclusions (1)
1. Trends towards global marketing
2. However need to facilitate regional/local adaptation of certaincomponents of the mix (communication, pricing, channels )
3. Global marketing management requires:
- Sharing of knowledge across borders- Institutionalization through: Global Brand Team ( Co-ordination of brand managers)
or Global Brand Manager ( e.g. IBM’s “brand stewards”) or Global Management Team ( e.g. P&G’s categories team) or Brand Champion ( Nestlé)
- Common information and planning tools
David Aaker and Erich Joachimsthaler, The Lure of Global Branding » Harvard Buisness Review, Nov-Dec 1999
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Source: Prahalad, C. K. and Stuart Hart (2002), "The Fortune at the Bottom of the Pyramid," Strategy+Business, 26.
4 billion people live with less than $4 per day1 billion people live with less than $1 per day.
Conclusions (2)Marketing at the bottom of the pyramid
2323
Traditional Middle Class Bottom of the Pyramid Value pricing based on differentiation and
segmentation Products obsolescence and renewal Products, services functionalities and packaging
are adaptation of industrialized markets Advertising on mass TV and media supports
Products designed on ‘regular” environments
Urban areas focus
Transfer of technology
Use of skilled resources
Build supplies chains similar to industrialized world
Find new price-performances relationships leading to quality at low prices
Products built to last
Products, services functionalities packaging are “reinvented”to fit local conditions
Communication and advertising rely less on mass
advertising and more on educational campaigns using government programs and non government organizations.
Products designed on “hostile environments.
Rural focus
Hybrid technology: combination of advanced and adaptation
Deskill the work process
Adapt supplies chains to local conditions
Differences between Traditional Middle Class strategies and Bottom of the Pyramid strategies
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de Abreu Filho, Gilberto Duarte, Nicola Calicchio, and Fernando Lunardini (2003), "Brand Building in Emerging Markets," McKinsey Quarterly (2), 6.
Conclusions (2)Marketing at the Bottom of the Pyramid
Share of purchases by low-income and middle consumers in clothing and grocery