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Part D
The extended Marketing Mix
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Course Content
Part A The Concept and Process of Marketing
Part B Segmentation, targeting, positioning
Part D Market segments and contexts
Types of Market
Services Marketing
International Markets
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Part C Types of Markets
Chapter 14
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Consumer Markets
Fast moving consumer goods (FMCGs)
Frequently bought
Low price / low risks
Can be subject to impulse purchase
Are basics High switching cost if product not available
=> Impact for marketer: ensure availability, brandawareness and use onsite advertisement topromote impulse purchase
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Consumer Markets
Consumer goods (as opposed to
industrial goods) Convenience goods (grocery)
Specialty goods (jewellery)
Unsought goods (catalogues,..)
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Impact for the marketer
Analyse the graph page 379
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B2B marketsPrimary, Secondary, Tertiary industries
Industrial goods: Capital goods (plants)
Accessories
Raw materials Components
Supplies (office stationery)
Business services
We have discussed when we covered Buying behaviourthe differences bewteen B2C and B2B (+ in case studyPortakabin)
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Differences between marketing for
B2C and Marketing for B2B
See summary figure 14.2 page 386
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Charity and not for profit marketing
Objective is not making a loss
Focus on attracting funds and achievinga particular response from their target
Marketing is view as a way to improvethe performance of the organisation
Most often use the 7Ps of the Mix Pricing strategy is the most different
element
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Part C Services Marketing
Chapter 15
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How Important is the Service Sector
in Our Economy? In most countries, services add more economic value
than agriculture, raw materials and manufacturing
combined
In developed economies, employment is dominatedby service jobs and most new job growth comes from
services Jobs range from high-paid professionals and
technicians to minimum-wage positions
Service organizations can be any sizefrom hugeglobal corporations to local small businesses
Most activities by government agencies and nonprofit
organizations involve services
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Services dominate the United States Economy:
GDP by Industry, 2001
Finance, Insurance,Real Estate
20%Manufacturing 14%
Agriculture, Forestry,
Mining, Construction 8%
Source: Bureau of Economic Analysis, November 2002
Wholesale andRetail Trade
16%
Transport, Utilities,Communications8%
Health6%
BusinessServices
5%
Other Services 11%
Government(mostly services)
13%
SERVICES
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Changing Structure of Employment
as Economic Development Evolves
Agriculture
Time, per Capita Income
Industry
Source: IMF, 1997
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Distinguishing Characteristics of Services
Customers do not obtain ownership of services
Service products are ephemeral and cannot be
inventoried
Intangible elements dominate value creation
Greater involvement of customers in roduction rocess
Other people may form part of product experience
Greater variability in operational inputs and outputs
Many services are difficult for customers to evaluate
Time factor is more important--speed may be key
Delivery systems include electronic and physical channels
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Difference between physical goods and servicesPhysical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution areseparated from consumption
Production, distribution andconsumption are simultaneous
processesA thing An activity or process
Core value processed in factory Core value produced in the buyer-seller interaction
Customers do not participate in theproduction process
Customers participate in production
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership
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Marketing Implications - 1
No ownership
Customers obtain temporary rentals, hiring ofpersonnel, or access to facilities and systems
Pricing often based on time
Customer choice criteria may differ for rentingvs. purchase--may include convenience, qualityof personnel
Cant own people (no slavery!) but can hireexpertise and labor
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Marketing Implications - 1
Services cannot be inventoried after
productionService performances are ephemeraltransitory,perishable
Balancing demand and supply may be vitalmarketing strategy
Key to profits: target right segments at right
times at right priceNeed to determine whether benefitsare
perishable or durable
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Marketing Implications - 2 Customers may be involved in production process
Customer involvement includes self-service andcooperation with service personnel
Think of customers in these settings as partial employees
productivity, so marketers need to educate/train customers
Changing the delivery process may affect role played bycustomers
Design service facilities, equipment, and systems withcustomers in mind: user-friendly, convenientlocations/schedules
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Marketing Implications - 2 Intangible elements dominate value creation
Understand value added by labor and expertiseof personnel
Effective HR management is critical to achieve
serv ce qua yMake highly intangible services more concrete
by creating and communicating physical images
or metaphors and tangible clues
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Value Added by Tangible vsIntangible Elements in Goods
and Services
Salt
Soft drinks
CD PlayerGolf clubs
New carTailored clothing
Hi
Fast food restaurantPlumbing repair
Office cleaning
Health club
Airline flightRetail banking
Insurance
Weather forecast
Furniture rental
Lo HiIntangible Elements
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Marketing Implications - 3
Greater variability in operational inputs and outputs
Must work hard to control quality and achieveconsistency
Seek to improve productivity through
standardization, and by training both employeesand customers
Need to have effective service recovery policies in
place because it is more difficult to shield
customers from service failures
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Marketing Implications - 3
Other people are often part of the service product
Achieve competitive edge through perceived quality ofemployees
Ensure job specs and standards for frontline serviceersonnel reflect both marketin and o erational
criteria Recognize that appearance and behavior of other
customers can influence service experience positivelyor negatively
Avoid inappropriate mix of customer segments atsame time
Manage customer behavior (the customer is not
always right!)
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Marketing Implications - 4Often difficult for customers to evaluate
servicesEducate customers to help them make good
choices, avoid risk
Tell customers what to expect, what to look forCreate trusted brand with reputation for
considerate, ethical behavior
Encourage positive word-of-mouth from satisfiedcustomers
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GUIDELINES FOR SERVICE
PROMOTION
1. PROVIDE TANGIBLE CLUES
2. MAKE THE SERVICE UNDERSTOOD
3. MM I ATI TI ITY
4. PROMISING WHAT IS DELIVERED
5. CAPITALISING ON WORD OF MOUTH
6. DIRECT COMMUNICATION TOEMPLOYEES
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Marketing Implications - 4 Time factor assumes great importance
Offer convenience of extended service hours up to 24/7
Understand customers time constraints and priorities
Minimize waiting time
Distribution channels take different forms
Tangible activities must be delivered through physicalchannels
Use electronic channels to deliver intangible, information-based elements instantly and expand geographic reach
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SERVICE LOCATION:SITUATIONS & THEIR
IMPACT
SITUATION IMPACT
SERVICE PROVIDER GOESTO THE CUSTOMER LOCATION BECOMES LESSIMPORTANT
SERVICE PROVIDED AT LOCATION BECOMES
ARMS LENGTH WITHOUTSERVICE PROVIDER &
CUSTOMER INTERACTION
INSIFNIFICANT
CUSTOMER GOES TO THESERVICE PROVIDER &
INVOLVES CLOSE
INTERACTION
APPROPRIATE LOCATIONOR MULTI LOCATIONS
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Determinants of service quality
Reliability delivering on promises
Responsiveness willing to help
Assurance ins irin trust and
confidence
Empathy individualizing customers
Tangibles- physical representation
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Moments of truth
It is the customer service encounter
Every positive or negative experience ofthe consumer would have fall-out on the
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In services, the last experienceremains uppermost in your.
Therefore, it is not enough to begood, you have to be
consistently good
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Elements of The Services Marketing Mix:
7Ps vs. the Traditional 4Ps
Rethinking the original 4Ps Product elements
Place and time
Price and other user outlays
Adding Three New Elements
Physical environment
Process
People
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The 7Ps: (1) Product Elements
All Aspects of Service Performance thatCreate Value
Core product featuresboth tangible andintangible elements
Bundle of supplementary service elements Performance levels relative to competition
Benefits delivered to customers (customers
dont buy a hotel room, they buy a goodnights sleep)
Guarantees
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The 7Ps: (2) Place and Time
Delivery Decisions: Where, When, and How
Geographic locations served
Service schedules
Physical channels
Electronic channels
Customer control and convenienceChannel partners/intermediaries
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The 7Ps: (3) Promotion and Education
Informing, Educating, Persuading, and Reminding Customers Marketing communication tools
media elements (print, broadcast, outdoor, retail, Internet, etc.) personal selling, customer service
sales promotion
Imagery and recognition
branding
corporate design
Content information, advice
persuasive messages
customer education/training
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The 7Ps:(4) Price and Other User Outlays
Marketers Must Recognize that Customer Outlays Involve
More than the Price Paid to Seller
Traditional Pricing Tasks Selling price, discounts, premiums
Margins for intermediaries (if any)
re t terms
Identify and Minimize Other Costs Incurred by Users
Additional monetary costs associated with service usage (e.g., travel toservice location, parking, phone, babysitting,etc.)
Time expenditures, especially waiting
Unwanted mental and physical effort
Negative sensory experiences
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The 7Ps: (5) Physical Environment
Designing the Servicescape and providing tangibleevidence of service performancesCreate and maintaining physical appearances
buildings/landscaping
interior desi n/furnishin s
vehicles/equipment staff grooming/clothing
sounds and smells
other tangibles Select tangible metaphors for use in marketing
communications
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7Ps: (6) Process
Method and Sequence in Service Creation and
Delivery Design of activity flows
Providers of value chain components
Nature of customer involvement
Role of contact personnel
Role of technology, degree of automation
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The 7Ps:(7) People
Managing the Human Side of the Enterprise The right customer-contact employees performing tasks well
job design recruiting/selection
training
evaluation/rewards empowerment/teamwork
The right customers for the firms mission fit well with product/processes/corporate goals
appreciate benefits and value offered
possess (or can be educated to have) needed skills (co-production)
firm is able to manage customer behavior
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Managing the 7Ps Requires Collaboration between Marketing,Operations, and HR Functions
OperationsManagement
MarketingManagement
Customers
Human ResourcesManagement
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Service TriangleService Triangle
Management
Sellin theEnablin the
Employee CustomerDelivering the
promise
promise
promise
Interactive Marketing
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The Services Marketing TriangleThe Services Marketing Triangle
Internal MarketingInternal MarketingVertical Communications
Horizontal Communications
External MarketingCommunicationAdvertising
Company
Interactive MarketingPersonal Selling
Customer Service CenterService Encounters
Servicescapes
Public RelationsDirect Marketing
CustomersEmployees
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
A h f I i S i
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Approaches for Integrating Services
Marketing Communication
Manage
CustomerExpectations
Goal:Delivery
greater thanor equal topromises
ImproveCustomerEducation
ManageService
Promises
ManageInternal
MarketingCommunication
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Service Quality
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Part C International Markets
Chapter 16
Reasons of Recent International Growth
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Reasons of Recent International Growth
Rapid Increase in TechnologyRapid Increase in Technology
Liberalization, Privatization & GlobalizationLiberalization, Privatization & Globalization
D l m n f In i i n r inD l m n f In i i n r in
& facilitating International Trade& facilitating International Trade
Consumers/Customers PressureConsumers/Customers Pressure
Increased Global CompetitivenessIncreased Global Competitiveness
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Other Drivers Convergence of consumer tastes
Emergence of global niche markets Self Reliance to Interdependence
conom es o ca e
Standardisation
Consumerism
E-commerce and Internet technology
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International Marketing - Definition
The definition of International Marketing is differentThe definition of International Marketing is different
from the general definition of Marketing only in thatfrom the general definition of Marketing only in thatgoods and services are marketed across politicalgoods and services are marketed across political
boundaries.boundaries. (Albaum)(Albaum)
International Marketing is the performance ofInternational Marketing is the performance of
business activities that direct the flow of a companysbusiness activities that direct the flow of a companys
goods and services to consumers or users in moregoods and services to consumers or users in morethan one nation for profit. (Cateora)than one nation for profit. (Cateora)
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International Marketing - Definition
Thus International Marketing revolvesThus International Marketing revolves
around:around: Identifying needs & wants of DiverseIdentifying needs & wants of Diverse
International MarketsInternational Markets
Marketing Mix Decisions & Strategies in relationMarketing Mix Decisions & Strategies in relationto Diverse & Dynamic International Markets.to Diverse & Dynamic International Markets.
Choosing the right International Market entryChoosing the right International Market entrymode/modesmode/modes
Decisions in line with dynamic InternationalDecisions in line with dynamic InternationalMarketing EnvironmentMarketing Environment
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Terms In International Marketing
Made up of many facets based on levels of
involvementDomestic Marketing
Export Marketing International Marketing
Multi National Marketing
Global Marketing
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Domestic Marketing One set of Competitors
One Economy One set of Market Pressures
One set of Customers
Marketing mix and plan for domestic market.
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Export Marketing
Where the company sells its goods/servicesacross national or political boundaries
Usuall a reactive situation
Emphasis on product modification, if required.
Most traditional and least complicated form ofinternational marketing.
I i l M k i
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International Marketing
Entire marketing strategy will need to be adapted.
Understanding ofdifferent environmentsbecomes
essential. Several markets
Differing controllable variables across markets
Differing uncontrollable variables across markets
Giving
Differing infrastructures
Differing advertising/promotions Differing complexity of market
M lti ti l M k ti
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Multinational Marketing
Where similar activities apply to more than one
country Some limited control on the market place
Markets may be independent profit centres Marketing strategy can be tailored to local
market, individual strategy per location, can
have many and varied strategies.
PAN REGIONAL MARKETING
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PAN-REGIONAL MARKETING
Marketing strategies for regions ratherthan countries.
e.g. Asia, fastest growing market for GMMotors, Honda, Toyota, Dior, Rolex,Cartier, Gucci..
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Global Marketing The whole organisation exploits one strategy on a
worldwide basis
No individual country influence, although oftensome form of local modification necessary.
ne s ra egy sne s ra egy s a
Efficiencies of scaleEfficiencies of scale
Needs significant market segmentssignificant market segments withsimilar demand all over the worldsimilar demand all over the world
Might need marketing mix tweakedmarketing mix tweaked per region?
Cl ti it
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Class activity
List the reasons why Vietnamese
companies will want to enter overseasmarkets ?
List what types of problems they mightalso encounter?
Write them on the board
Significance of International MarketingSignificance of International Marketing
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Significance of International MarketingSignificance of International Marketing
Provides new markets
Presents opportunities for growth, expansion &
income
Allows for the flow of ideas, services & capital
Increases the speed of innovation Allows for better usage of human capital
Allows greater access to financing
Gives consumers more choice
Objectives of Going InternationalObjectives of Going International
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Objectives of Going InternationalObjectives of Going International
Growth & ProfitabilityGrowth & Profitability
Economies of ScaleEconomies of ScaleMinimizing RiskMinimizing Risk
global player)global player)
Acquiring Inputs, Resources & TechnologyAcquiring Inputs, Resources & Technology
Uniqueness Providing OpportunitiesUniqueness Providing Opportunities
Opportunities Arising out of PLCOpportunities Arising out of PLC
R&D Cost SpreadR&D Cost Spread
See also in your course notes book page 412 for other reasons/ objectives
Why is International Marketing Different?Why is International Marketing Different?
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Why is International Marketing Different?Why is International Marketing Different?
Culture Diverse, Multi-cultured Markets Widespread, Fragmented,different Data Difficult to get, expensive Politics Varying stability and attitudes
u es owar s ore gn ra e
Competitors Varying levels Economies Varying levels & Systems Finance Varying systems & regulatory bodies
Currencies Varying & Fluctuating Businesses Cross Cultural Influences Control Remote & Difficult
See also in your course notes book page 412 & 413
Problems of International Marketing
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Problems of International Marketing
Debt / InvestmentDebt / Investment
Unstable countriesUnstable countries
Tariff regulationsTariff regulations
Instability in Foreign Exchange marketsInstability in Foreign Exchange markets
Non tariff barriers, e.g. specifications, quotas,Non tariff barriers, e.g. specifications, quotas,
B i t I t ti l M k tiB i t I t ti l M k ti
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Barriers to International MarketingBarriers to International Marketing
Control
Language
Cash flow
Logistics
Lack of trained staff
Tariff & Non-Tariff Barriers
Need to mNeed to manipulate a series of Variablesanipulate a series of Variables
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Need to mNeed to manipulate a series of Variablesanipulate a series of Variables
Controllable by business (Internal)Controllable by business (Internal)
PricePrice
PromotionPromotion DistributionDistribution
ProductProduct
Uncontrollable by business (External)Uncontrollable by business (External)Economic structureEconomic structure
CompetitorsCompetitors
CulturalCultural
LegalLegal
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Decision to enter International Markets
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Decision to enter International Markets
Can be Strategic or Tactical move
To perform the analysis of Internationalmarketing opportunities you can use/
Class activity what can the 12 Cs stand for?
12 Cs
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12 Cs
Country
Culture and customer behaviour
Concentration Communication
Channel of distribution
Capacity to pay
Currency
Control & co-ordination
Commitment
Choices Contractual obligations
Caveats / limitations
EPRG CONCEPT Howard PerlmutterO i t ti I t ti l M k ti O i ti
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Orientation: International Marketing Organization
ETHNOCENTRICETHNOCENTRICConsiders own culture as superiorConsiders own culture as superiorsame Marketing stratesame Marketing strate
Ignore environmental differencesIgnore environmental differences
Domestic or extension to export marketingDomestic or extension to export marketing
POLYCENTRICPOLYCENTRIC Highly market OrientedHighly market Oriented
Considers each market UniqueConsiders each market Unique
Treats region as a uniform market SegmentTreats region as a uniform market Segment
Adapts similar marketing strategy within region butAdapts similar marketing strategy within region but
across the regionacross the region
REGIOCENTRICREGIOCENTRIC
GEOCENTRICGEOCENTRIC
Needs corporate resourcesNeeds corporate resources
Whole world a single marketWhole world a single market
Formulate integrated marketing strategiesFormulate integrated marketing strategies
Economies of scaleEconomies of scale
Evolutionary ProcessEvolutionary Process-- Global MarketingGlobal Marketing
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Stages Marketing Market Focus Orientation Marketing Mix DecisionsI
Domestic DomesticEthnocentric
SMEs
Domestic Customer
Focussed
II Export Overseas
Ethnocentric
Food products,Jewelleries,
-Mainly Domestic customers
-Overseas mkt. only an Extn.of domestic marketing
- Decisions made at HQ
Differentiation b Pol centric Product develo ment u on
.
International
developing
products & brands
Corporate
sector
Country needs. Decisions by
individual subsidiaries
IV Multinational
Consolidation of
operations
on regional basis.
Gains from
Economies of Scale
Regiocentric
Product standardization
within regions
but not across them.i.e., Regional basis
V GlobalConsolidation on
global basis
Geocentric
IBM, SONY
Globalisation of marketing mix
decisions with local variations
t. Decision making across glob
Process Of Internationalization
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Process Of Internationalization
GLOCAL MARKETINGGLOCAL MARKETING
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GLOCAL MARKETINGGLOCAL MARKETING
Evolution from Domestic to Exports,
Exports to International Markets,
. ,
Multinational to Global Markets, and
Global approach with Local orientationGlobal approach with Local orientation
GLOCAL MARKETINGGLOCAL MARKETING
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GLOCAL MARKETINGGLOCAL MARKETING
Strategic advantage as positive stimulus:
Gains in terms of increased profits,
Increased market share,
Economies of scale,
Competition in domestic or in other
international operated market
High degree of marketing complexity
Structure choice
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Structure choice
Simple exporting
Licensing (patents, design, trade)
Franchising
Joint Ventures
Trading companies
Manufacturing abroad / direct ownership
Marketing Mix in International context
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g
Product:
Standardise or Adapt? Straight extension no change
Communication adaptation
Product and communication adaptation
Product invention
Global Products
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Localisationof a product or service to fit localregulation and usage requirements e.g. localvoltages and safety laws
Adaptationfits the product to buyerpreferences e.g. Air-conditioning in USA
Standardisedglobal products are not adaptedto local preferences, but must still belocalised. E.g Coca-Cola obey local hygienelaws
Advantages of standardisation
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g
Cost reduction - e.g. economies of scale
Improved quality - resources can be focussed Enhanced customer preference - positive
x ri n l l l r n l l
Global customers - uniform quality andservices
Global segments - e.g. software, cameras.
Place : developing and international
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distribution strateyKey strategic areas :
Distribution density (exposure/ coveragedesired)
Channel length & channel partners
Distribution logistics (flow of product)
What influence international pricing?
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The cost of manufacturing, distributing and marketing yourproduct.
The physical location of production plants might influence price.
Of course fluctuations in foreign currencies affect pricing. The price that the international consumer is willing to pay for your
product.
Your own business objectives will influence price. For example,
large international companies such as Starbucks may operate ata loss in some locations but still need a local presence in order tomaintain their economies of scale, as well as their reputation as aglobal player.
The price that competitors in international markets are alreadycharging.
Business environment factors such as government policy andtaxation.
International Pricing strategy
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g gy
Export Pricing - a price is set for by the home-based
marketing managers for the international market.
Non-cash payments - less and less popular these days, non-cash payments include counter-trade where goods are
exchanged for goods between companies from different
parts o t e or .
Transfer Pricing - prices are set in the home market, andgoods are effectively sold to the international subsidiary
which then attaches its own margin based upon the best
price that local managers decide that they could achieve.
Standardization versus adaptation - do you use a
standard, common approach to pricing in each market, or do
you decide to adapt the price to local conditions?
International Promotion
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There are a number of factors that will impact upon choice andavailability of media such as:
The nature and level of competition for channels in your target market.
Whether or not there is a rich variety of media in your target market.
The level of economic development in your target market (forexample, in remote regions of Africa there would be no mainse ectr c ty on w c to run s or ra os .
The availability of other local resources to assist you with yourcampaign will also need to be investigated (for example, sales peopleor local advertising expertise).
Local laws may not allow specific content or references to be made inadverts (for example, it is not acceptable to show naked legs in adverts
displayed in Muslim countries). And of course a lot depends upon the purpose of the international
campaign in the first place. What are your international marketingcommunications objectives?
Example of the extended marketing
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Mix in an international context Pepsi cola and Coca cola marketing
strategy in India
Globalization
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It has been said that arguing againstIt has been said that arguing againstglobalization is like arguing against the law ofglobalization is like arguing against the law of
gravity.gravity. General Kofi Annan, - UN Secretary
Global characteristicsGlobal characteristics
-- Customer needs are similar internationallyCustomer needs are similar internationally
-- Compete in globalized industriesCompete in globalized industries
-- Locate valueLocate value--adding activities in places worldadding activities in places world--widewide
where competitive advantage can be gainedwhere competitive advantage can be gained-- Integrate & coordinate intl. activities betweenIntegrate & coordinate intl. activities between
countriescountries
Class activity
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Are you For or Against Globalisation?
Is Globalisation an opportunity or threat?
Globalization: Opportunity or Threat?
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Promotes free trade
More goods & services are available at lower cost to
wider people
Globalized capital markets attract money to economies
for growth and allow for greater returns for investors
Creates jobs and economic growth
Creates a common culture, allowing people around the
world to understand each other more easily
Breaks down isolation
Globalization: Opportunity or Threat?
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Favors wealthy, industrialized countriesFavors wealthy, industrialized countries
Occurs at the expense of workers in poorerOccurs at the expense of workers in poorer
countriescountries
political, economic and social problemspolitical, economic and social problems
Exploits cheap labor and natural resources whereExploits cheap labor and natural resources where
laws dont adequately provide protectionlaws dont adequately provide protection
Undermines traditional culture, language andUndermines traditional culture, language and
valuesvalues
Future of Intl. Business &Future of Intl. Business &
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GlobalizationGlobalization
Globalization is inevitable
Intl. Business to grow along
Regional lines than Global lines.
Anti-Globalization & Anti Intl. Business Forces
to slow down.
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Source: International Trade Statistics (WTO)
The Powerful MNEs
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Modern MNEs are larger economies thansome nations
Measuring company sales against GDP,
world are companies
Mitsubishi is larger than Indonesia
Ford is bigger than Turkey Wal-Mart is bigger than Israel
CocaCoca--ColaCola
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80% of operating incomeis derived outside theU.S.
Distributes its productsin more than 200countries
Employs more than71,000 worldwide
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Thanks!