To what extent must the company adapt its products and marketing program to each foreign country?

Standardized marketing program

developing same marketing program for multiple countries

Adapted marketing program

Modifying marketing programto reflect characteristics of a market

• Economies of scale• Lower marketing costs• Power and scope• Brand Consistency• Leverage ideas quickly and

efficiently• Uniformity of marketing

practices

Standardized Marketing

DisadvantagesIgnores differences in:• Consumer needs, wants,

and usage patterns• Consumer response• Brand and product

development• Legal environment• Marketing institutions• Administrative procedures

Global Similarities and Differences

The development of the Web and global linking of telecommunications networks have led to a convergence of lifestyles

Similarities

Soft Drink Consumption

Differences

Americans 760Mexicans 674Brazilians 315Russians 149Chinese 39

Median Age

Cultural Differences

Individualism

Collectivism

Uncertainty avoidance Power distance

Consumer behavior differences as well as historical market factors lead marketers to position brands differently in different markets.

Netherlands - Mid-tier

Toyota Camrymiddle-class car - United States high end - China

Marketing Adaptation

Product features

Best global brands are consistent in theme but reflect significant differences in consumer behavior,brand development and competitive forces

Global Product Strategies

PRODUCT STANDARDIZATION

Standardization - developing same productfor multiple countries

High-end products also benefit from standardization,because quality and prestige often can be marketed similarly across countries

Food and beverage marketers find it more challenging to standardize given widely varying tastes and cultural habit

PRODUCT ADAPTATION STRATEGIES

Product Adaptation - modifying product to reflect characteristics of a market

Straight extension introduces the product in the foreign market without any change

No additional R&D expense, No manufacturing retoolingNo promotional modification

successful for cameras, consumer electronics, and many machine tools

Product adaptation alters the product to meet local conditions or preferences

Nokia customized its 6100 series phone for every major market

Product invention

Backward invention

Forward invention

Creates a new product to meet a need in another country

Reintroduces earlier product forms well adapted to a foreign country’s needs

BRAND ELEMENT ADAPTATION

When they launch products and services globally,marketers may need to change certain brand elements

A laundry soap ad claiming to wash “really dirty parts” was translated in French-speaking Quebec to read “a soap for washing private parts.”

When Coors put its brand slogan “Turn it loose” into Spanish, some read it as “suffer from diarrhea

Global Communication Strategies

Changing marketing communications for each local market is a process called communication adaptation. If it adapts both the product and the communications, the company

engages in dual adaptation

The company can use one message everywhere, varying only the language, name, and perhaps colors to avoid taboos in some countries

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The second possibility is to use the same message and creative theme globally but adapt the execution

coce

Developing a global pool of ads from which each country selects the most appropriate.

Global Pricing Strategies

PRICE ESCALATION

A Gucci handbag may sell for $120 in Italy and $240 in the United States. Why? Gucci must add the cost of transportation, tariffs, importer margin, wholesaler margin, and retailer margin to its factory price

Companies have three choices for setting prices in different countries:

Set a uniform price everywhere

Set a market-based price in each country.

Set a cost-based price in each country

TRANSFER PRICES

A different problem arises when one unit charges another unit in the same company a transfer price for goods it ships to its foreign subsidiaries.

If the company charges a subsidiary too high a price, it may end up paying higher tariff duties, If the company charges its subsidiary too low a price, it can be accused of dumping,

GRAY MARKETS

Selling products made for low price in high price countries

Risk to the customers

Gray market activity accounts for billions of dollars in revenue each year and makes up about 8 percent of total global IT sales of $725 billion

COUNTERFEIT PRODUCTS

Counterfeiting is estimated to cost over a trillion dollars a year

Global Distribution Strategies

CHANNEL ENTRY

Seller

Channels within foreign nations

Channels between nations

Seller’s marketing headquarters

Final buyer