1.

Globalization

Global Marketing Environment

2. Global Economic 4. Cultural issues and Buying

Environment Behavior

3. Financial Environment 5. Political/ Legal Environment

Development of Competitive Strategy

6. Global Marketing
Research

7. Global Segmentation and 8. Global Marketing Strategies

Positioning

Contd….
 9. Global Market Entry Mode

Global Marketing Strategy Development

10. Global Product Development 13. Communicating with the

11. Marketing Product and world Consumer
Services 14. Sales Management

15. Global Logistic and

12. Global Pricing Distribution
16. Export/Import Management

Managing Global Operation

17. Planning, Organization and Control of Global Marketing Operations

18. Marketing in Emerging Markets

19. Global Marketing and the Internet

3

Chapter 8
Global Marketing
Strategies
 Chapter Overview
4

1. Information Technology and Global

Competition
2. Global Strategy
3. Global Marketing Strategy
4. R&D, Operations, Marketing Interfaces
5. Regionalization of Global Marketing
Strategy
6. Competitive Analysis
 Introduction
5

 On a political map, country borders are clear

as ever. But on a competitive map, financial,
trading, and industrial activities across
national boundaries have rendered those
political borders increasingly irrelevant.
 Not only firms that compete internationally
but also those whose primary market is
considered domestic will be affected by
competition from around the world.
 Introduction
6

 The firm is essentially a collection of activities

that are performed to design, procure
materials, produce, market, deliver, and
support its product.
 This set of interrelated corporate activities is
called the value chain.
 In this chapter, we explain the nature of global
competition and examine various ways to gain
competitive advantage along the value chain
for the firm facing global competition.
 1. Information Technology and
Global Competition
7

 Today, we are observing the emergence of

a gross information product, and it
dwarfs the gross domestic product.
 Electronic Commerce (e-Commerce)
 e-Company
 Faster Product Diffusion
 Global Citizenship
 2. Global Strategy
8

 Global strategy is to array the

competitive advantages arising from
location, world-scale economies, or
global brand distribution, namely, by
building a global presence, defending
domestic dominance, and overcoming
country-by-country fragmentation
 2. Global Strategy
9

From Chapter 1, recall that:

 Global Marketing refers to marketing
activities that emphasize the following:
1. Standardization efforts: Marketing
programs across countries
2. Coordination across markets: reducing cost
inefficiencies and duplication of efforts
3. Global integration: participating in major
world markets to gain CA
 Global Strategy
10

 Companies that operate on a global

scale need to integrate their worldwide
strategy, in contrast to the earlier
multinational or multidomestic approach.
 The earlier strategies would be
categorized more truly as multidomestic
strategies rather than as global
strategies.
 2. Global Strategy
11

 Global strategy consists of five

conceptualizations:
1. Global industry
2. Competitive industry
3. Competitive advantage
4. Hypercompetition
5. Interdependency
 2. Global Strategy
12

 Global Industry:
 Those industries where a firm’s competitive position
in one country is affected by its position in other
countries.
 Therefore, we are talking about not just a collection
of domestic industries, but also a series of interlinked
domestic industries in which rivals compete against
one another on a truly worldwide basis
 The first question that faces managers is the extent
of globalization of their industry.
 Every industry has global or potentially global
aspects.
 2. Global Strategy
13

 Global Industry:
 For example, 25 years after Honda began
making cars in Ohio, it is increasingly relying
on US market.
 Today, more than half the passenger sedans
sold in US are import brands, and more than
half the vehicles sporting foreign
nameplates are made in the US.
 Global Strategy
14

 Assuming that the firm’s activities are indeed

global or that the firm wishes to grow toward global
operations and markets, managers must design
and implement a global strategy.
 Indeed, a case has been made that the
globalization of markets has already been
achieved, that consumer tastes around the world
have converged, and that the global firm attempts,
unceasingly, to drive consumer tastes toward
convergence.
 Four major forces determine the globalization
potential of industry
 Industry Globalization Drivers
15
 2. Global Strategy
16

 Industry Globalization Forces

Four forces interact to determine the potential of
industry globalization.
1. Market forces: depend on the nature of customer
behaviour and the structure of channels of distribution.

2. Cost forces: depend on the economics of the

business. These forces particularly affect production
location decisions, as well as global market
participation and global product development decisions.
 2. Global Strategy
17

 Industry Globalization Forces

3. Government forces: Rules set by national
governments
can affect the use of global strategic decision-
making

4. Competition forces: Competitive forces raise

the
globalization potential of their industry and spur the
need
for a response on the global strategy levels.
 2. Global Strategy
18

Market Forces
1. Per capita income convergence
2. Rich consumers in emerging markets
3. Revolution in communication technology
4. Organizations behaving as global
customers
5. Growth of global and regional channels
6. Establishment of world brands
7. Spread of global and regional media
 2. Global Strategy
19

 Cost Forces
1. Global economies of scale and scope
2. Steep experience curve
3. Global sourcing efficiencies
4. Favorable logistics
5. Difference in country costs
6. High product development costs
7. Fast-changing technology
8. Shorter product life cycles
 2. Global Strategy
20

 Government Forces
1. Favorable trade policies
2. Compatible technical standards
3. World Trading Regulations
4. High growth/low labor cost developing countries
5. Deregulation/privatization of industries
 Competitive Forces
1. High exports and imports
2. Competitors from different continents and
countries
3. Interdependent countries
4. Globalized competitors
 2. Global Strategy
21

 The implications of a distinction between

multidomestic and global strategy are quite profound.
 In a multidomestic strategy, a firm manages its
international activities like a portfolio. Its subsidiaries
or other operations around the world each control all
the important activities necessary to maximize their
returns in their area of operation independent of the
activities of other subsidiaries in the firm.
 The subsidiaries enjoy a large degree of autonomy,
and the firm’s activities in each of its national markets
are determined by the competitive conditions in that
national market.
 2. Global Strategy
22

 In contrast, a global strategy integrates the

activities of a firm on a worldwide basis to
capture the linkages among countries and to
treat the entire world as a single, borderless
market.
 This requires more than the transferring of
intangible assets between countries
 In effect, the firm that truly operationalizes a
global strategy is a geocentrically oriented
firm.
 2. Global Strategy
23

 It considers the whole world as its arena of

operation, and its managers maintain
equidistance from all markets and,
 Develop a system with which to satisfy its
needs for both global integration for economies
of scale and scope and, responsiveness to
different market needs and conditions in
various parts of the world operations
 Resulting in a complex configuration of assets
and capabilities on a global basis.
 2. Global Strategy
24

 This is in contrast to an ethnocentric

orientation, where managers operate under
the dominant influence of home country
practices,
 Or a polycentric orientation, where managers
of individual subsidiaries operate
independently of each other—the polycentric
manager in practice leads to a multidomestic
orientation, which prevents integration and
optimization on a global basis.
 Nature of Competitive Industry
Structure
25
 2. Global Strategy
26

 Competitive Structure
 Nature of Competitive Industry Structure:

»Industry competitors
»Potential entrants
»Bargaining power of suppliers
»Bargaining power of buyers
»Threats of substitute products or services
 2. Global Strategy
27

 It identifies the key structural factors that determine the

strength of competitive forces within an industry and
consequently industry profitability.
 Competition is not limited to the firms in the same industry. If
firms in an industry collectively have insufficient capacity to
fulfill demand, the incentive is high for new market entrants.
 However, such entrants need to consider the time and
investment it takes to develop new or additional capacity, the
likelihood of such capacity being developed by existing
competitors, and the possibility of changes in customer
demand over time.
 Indirect competition also comes from suppliers and
customers, as well as substitute products or services.
 2. Global Strategy
28

 Gaining Competitive Advantage

 Generic Strategies
 Cost leadership
 Product differentiation
 Niche strategy
 First-mover advantage versus first-
mover disadvantage
 Competitor-focused approach
 Customer-focused approach
 2. Global Strategy
29

 Gaining Competitive Advantage

 Companies may adopt different strategies for
different competitive advantage.
 The firm has a competitive advantage when it is
able to deliver the same benefits as competitors
but eat a lower cost, or deliver benefits that
exceed those of competing products.
 Thus, a competitive advantage enables the firm
to create superior value for its customers and
superior profits for itself.
 2. Global Strategy
30

 Simply stated, competitive advantage is a

temporary monopoly period that a firm
can enjoy over its competitors.
 To prolong such a monopolistic period, the
firm strives to develop a strategy that
would be difficult for its competitors to
imitate.
 2. Global Strategy
31

First-Mover Advantage versus First-Mover

Disadvantage.
 For many firms, technology is the key to success in

markets where significant advances in product

performance are expected.
 A firm uses its technological leadership for rapid

innovation and introduction of new products. The

timing of such introductions in the global
marketplace is an integral part of the firm’s strategy.
 However, the dispersion of technological expertise

means that any technological advantage is

temporary, so the firm should not rest on its laurels.
 2. Global Strategy
32

 The firm needs to move on to its next source of

temporary advantage to remain ahead. In the
process, firms that are able to continue creating
a series of temporary advantages are the ones
that survive and thrive.
 Technology, marketing skills, and other assets
that a firm possesses become its weapons to
gain advantages in time over its competitors.
 The firm now attempts to be among the
pioneers, or first-movers, in the market for the
product categories that it operates in
 2. Global Strategy
33

 In general, stable markets favor the first-mover

strategy while market and technology
turbulence favor the follower strategy.
 Followers have the benefit of hindsight to
determine more preciously the timing, form,
and scale of their market entry.
 It is therefore important for the firm to clearly
assess the key success factors and the
resulting likelihood of success for achieving the
ultimate targeted position in the highly
competitive global business environment.
 2. Global Strategy
34

 A firm’s competitive advantage lies in its capability

to effectively anticipate, react to, and lead change
continuously and even rhythmically over time.
 Firms should ‘‘probe’’ into the unknown by making
many small steps to explore their environments.
 These probes could take the form of a number of
new product introductions that are ‘‘small, fast, and
cheap,’’ and can be supplemented by using experts
to contemplate the future, making strategic
alliances to explore new technologies, and holding
meetings where the future is discussed by
management
 2. Global Strategy
35

 To compete on the edge, firms need to understand that:

 1. Advantage is temporary. In other words, firms need to
have a strong focus on continuously generating new
sources of advantages.
 2. Strategy is diverse, emergent, and complicated. It is
crucial to rely on diverse strategic moves.
 3. Reinvention is the goal. It is how firms keep pace with a
rapidly changing marketplace.
 4. Live in the present, stretch out the past, and reach into
the future. Successful firms launch more experimental
products and services than others while they exploit
previous experiences and try to extend them to new
opportunities.
 Global Strategy
36

 5. Grow the strategy and drive strategy from

the business level. It is important for
managers to pay attention to the timing and
order in which strategy is grown and agile
moves are made at the business level.
 6. To maintain sustainable power in fast-
paced, competitive and unpredictable
environments, senior management needs to
recognize patterns in firms’ development and
articulate semi-coherent strategic direction.
 Global Strategy
37

 With these strategic flexibilities in mind, we

could think of two primary approaches to
gaining competitive advantage.
 The competitor-focused approaches
involve comparison with the competitor on
costs, prices, technology, market share,
profitability, and other related activities.
 Such an approach may lead to a preoccupation
with some activities, and the firm may lose
sight of its customers and various constituents.
 Global Strategy
38

 Customer-focused approaches to gaining

competitive advantage emanate from an analysis
of customer benefits to be delivered.
 In practice, finding the proper links between
required customer benefits and the activities and
variables controlled by management is needed.
 Besides, there is evidence to suggest that listening
too closely to customer requirements may cause a
firm to miss the bus on innovations because
current customers might not want innovations that
require them to change how they operate.
 2. Global Strategy
39

 Hypercompetition
 Competition that is tougher than Oligopolistic or
monopolistic competition, but is not perfect
competition
 Monopolistic competition many producers sell
products that are differentiated from one another
(e.g. by branding or quality) and hence are not
perfect substitutes.
 Firms competes on the basis of price; quality, timing,
and know-how; creating strongholds (entry barriers);
and financial resources to outlast its competitors
 2. Global Strategy
40

 This form of competition is pervasive not

just in fast-moving high-technology
industries like computers and deregulated
industries like airlines, but also in
traditional industries, like processed
foods.
 The central thesis of this argument is that
no type of competitive advantage can last
—it is bound to erode.
 2. Global Strategy
41

 In any given industry, firms jockey among

themselves for better competitive position,
given a set of customers and buyers, the
threat of substitutes, and the barriers to entry
in that industry.
 However, the earlier arguments represent the
description of a situation without any temporal
dimension; there is no indication as to how a
firm should act to change the situation to its
advantage. For instance, it is not clear how
tomorrow’s competitor can differ from today’s.
 2. Global Strategy
42

 A new competitor can emerge from a

completely different industry given the
convergence of industries
 Such a shift in competition is referred to
as creative destruction.
 This view of competition assumes
continuous change, where the firm’s focus
is on disrupting the market.
 2. Global Strategy
43

 Interdependency:
 Interdependency of modern companies: No.
of technologies used in a variety of
products in numerous industries is rising.
 Example: Global computer industry
 Governments also play a larger role,
affecting parts of the firm’s strategy.
 2. Global Strategy
44

 Recent research has shown that the number of

technologies used in a variety of products in
numerous industries is rising.
 Because access to resources limit how many
distinctive competencies a firm can gain, firms
must draw on outside technologies to be able to
build a state-of-the-art product.
 Since most firms operating globally are limited by a
lack of all required technologies, it follows that for
firms to make optimal use of outside technologies,
a degree of components standardization is
required.
 2. Global Strategy
45

 Such standardization would enable

different firms to develop different end
products, using, in a large measure, the
same components.
 Research findings do indicate that
technology intensity—that is, the degree
of R&D expenditure a firm incurs as a
proportion of sales—is a primary
determinant of cross-border firm
integration.
 2. Global Strategy
46

 In the international context, governments

also tend to play a larger role and may,
directly or indirectly, affect parts of the
firm’s strategy.
 Tariff and non-tariff barriers such as
voluntary export restraints and restrictive
customs procedures could change cost
structures so that a firm could need to
change its production and sourcing
decisions.
 3. Global Marketing Strategy
47

 Benefits of Global Marketing:

 Cost Reduction
 Improved Products and Program Effectiveness
 Enhanced Customer Preference
 Increased Competitive Advantage
 Limits to Global Marketing:
 Standardization vs. adaptation issues
 Globalization vs. localization
 Global integration vs. local responsiveness
 Scale vs. sensitivity
 3. Global Marketing
48
Strategy
 Global marketing is not about
standardizing the marketing process on a
global basis.
 Although every element of the marketing
process—product design, product and
brand positioning, brand name,
packaging, pricing, advertising strategy
and execution, promotion and distribution
— may be a candidate for standardization
 3. Global Marketing
49
Strategy
 Standardization is one part of a global
marketing strategy and it may or may not be
used by a company, depending on the mix of
the product-market conditions, stage of
market development, and the inclinations of
the multinational firm’s management.
 For instance, a marketing element can be
global without being 100 percent uniform in
content or coverage. Assume that this firm
does not have a manufacturing facility in each
country it serves.
 Variation in Content and Coverage
of Global Marketing
50
 3. Global Marketing
51
Strategy
 The extent that various markets have a uniform
content, and presumably similar operations, there is
a requirement for coordination with manufacturing
facilities elsewhere in the firm’s global network.
 Also, where content is not uniform, any change
requirements for the non-uniform content of
distribution require corresponding changes in the
product and/or packaging.
 Thus, a global marketing strategy requires more
intimate linkages with a firm’s other functions, such
as research and development, manufacturing, and
finance.
 3. Global Marketing
52
Strategy
Global marketing strategy is but one
component of a global strategy.
 For an analogy, you may think of a just-in-
time inventory and manufacturing system
that works for a single manufacturing
facility to optimize production.
 Extend this concept now to finance and
marketing, and include all subsidiaries of
the firm across the world as well.
 3. Global Marketing Strategy
53

 Not every element need be standardized

to the same degree
 Degree of product standardization varies
widely based on many factors
 3. Global Marketing
54
Strategy
 One can imagine the magnitude and
complexity of the task when a manager is
attempting to develop and implement a
global strategy.
 One implication is that without a global
strategy for R&D, manufacturing, and
finance that meshes with the various
requirements of its global marketing
strategy, a firm cannot best implement
that global marketing strategy.
 Degree of Standardizability of Products
in World Markets
55
 4. R&D, Operations and Marketing
Interfaces
56

 Marketing managers cannot develop a

successful marketing strategy without
understanding how other functional areas, such
as R&D and operations, influence the degree of
their marketing decision-making as well as how
those functions may be influenced by them. I
 There are three most important interrelated
activities in the value chain: R&D (e.g.,
technology development, product design, and
engineering), operations (e.g., manufacturing),
and marketing activities.
 4. R&D, Operations and Marketing
Interfaces
57

 Marketing managers should understand and

appreciate the important roles that product
designers, engineers, production managers,
and purchasing managers, among others, play
in marketing decision making.
 Marketing decisions cannot be made in the
absence of these people.
 Management of the interfaces, or linkages,
among these value-adding activities is a crucial
determinant of a company’s competitive
advantage
 Interfaces among R&D,
Manufacturing, and Marketing
58
 4. R&D, Operations and Marketing
Interfaces
59

 R&D/Operations Interface
 Operations/Marketing Interface
 Core Components Standardization
 Product Design Families
 Universal Products with all Features
 Universal Product with Different Positioning
 Marketing/R&D Interface
 Interfaces among R&D,
Manufacturing
60

 Technology is broadly defined as know-

how.
 It can be classified based on the nature of
know-how composed of product
technology (the set of ideas embodied in
the product) and process technology (the
set of ideas involved in the manufacture
of the product or the steps necessary to
combine new materials to produce a
finished product).
 Interfaces among R&D and
Manufacturing
61

 However, executives tend to focus solely

on product-related technology as the
driving force of the company’s
competitiveness.
 Product technology alone may not
provide the company a long-term
competitive edge over competition
unless it is matched with sufficient
manufacturing capabilities
 Interfaces among Manufacturing
and Marketing
62

 A continual conflict exists between manufacturing

operations and marketing divisions.
 It is to the manufacturing division’s advantage if all
products and components are standardized to
facilitate standardized, low-cost production.
 The marketing division, is more interested in
satisfying the diverse needs of customers, requiring
broad product lines and frequent product
modifications, which add cost to manufacturing.
 How have successful companies coped with this
dilemma?
 Interfaces among Manufacturing
and Marketing
63

 With aggressive competition from multinational

companies emphasizing corporate product policy
and concomitant manufacturing
 Companies have realized that product
innovations alone cannot sustain their long term
competitive position without an effective product
policy linking product and manufacturing process
innovations.
 The strategic issue, then, is how to design a
robust product or components with sufficient
versatility built in across uses, technology, and
situations.
 Interfaces among Manufacturing
and Marketing
64

 Four different ways of developing a global

product policy are generally considered an
effective means to streamline manufacturing
operations, thus lowering manufacturing
cost, without sacrificing marketing flexibility:
 (1) core components standardization,
 (2) product design families,
 (3) universal product with all features, and
 (4) universal product with different
positioning.
 Interfaces among R&D and
Marketing
65

 Both R&D and manufacturing activities are

technically outside the marketing manager’s
responsibility.
 But, the marketing manager’s knowledge of
consumers’ needs is indispensable in product
development.
 Without a good understanding of the
consumers’ needs, product designers and
engineers are prone to impose their technical
specifications on the product rather than
fitting them to what consumers want.
 5. Regionalization of Global
Marketing Strategy
66

 Some firms may have difficulty in organizing, or

may not be willing to organize, operations to
maximize flexibility and encourage integration
across national borders.
 Beyond various cultural, political, and economic
differences across national borders, organizational
realities also impair the ability of multinational
firms to pursue global marketing strategies.
 Integration has often been opposed by foreign
subsidiaries eager to protect their historical relative
independence from their parent companies
 5. Regionalization of Global
Marketing Strategy
67

 In finding a balance between the need

for greater integration and the need to
exploit existing resources more
effectively, many companies have begun
to explore the use of regional strategies
 5. Regionalization of Global
Marketing Strategy
68

 Regional strategies can be defined as

the cross-subsidization of market share
battles in pursuit of regional production,
branding, and distribution advantages.
 Regional strategies have been
encouraged by the economic, political,
and social pressures resulting from the
development of regional trading blocs.
 5. Regionalization of Global
Marketing Strategy
69

 Regional trading blocs have had two favourable

effects.
 First, the volatility of foreign exchange rates within
a bloc seems to be reduced.
 Second, with the growing level of macroeconomic
integration with regions, the trend is also toward
greater harmonization of product and industry
standards, pollution and safety standards, and
environmental standards, among other things.
 These regional commonalities further encourage
firms to develop marketing strategies on a regional
basis.
 5. Regionalization of Global
Marketing Strategy
70

 Marketing strategy cannot be developed

without considering competitive and other
market forces from different regions
around the world.
 To face those regional forces proactively,
three additional strategies need to be
considered at the firm level.
 5. Regionalization of Global
Marketing Strategy
71

 Regional strategies are the cross-

subsidization of market share battles in
pursuit of regional production, branding, and
distribution advantages.
 Issues in regionalization of global
marketing strategy:
 Cross-Subsidization of Markets
 Identification of Weak Market Segments
 Use of “Lead Market” Concept
 Marketing Strategies for Emerging Markets
 5. Regionalization of Global
Marketing Strategy
72

 Cross-subsidization of markets refers to

multinational firms using profits gained in a
market where they have a strong
competitive position to beef up their
competitive position in a market where they
are struggling to gain foothold.
 The second strategy that firms should
always keep an open eye for is the
identification of weak market segments
not covered by a firm in its home market
 5. Regionalization of Global
Marketing Strategy
73

 The solution may be to look at the main

requirements of each lead market in turn.
 A lead market is a market where unique
local competition is nurturing product and
service standards to be adopted by the
rest of the world over time.
 6. Competitive Analysis
74
 Firm needs to broaden the sources of competitive
advantage relentlessly over time. However, careful
assessment of a firm’s current competitive position is
also required.
 SWOT (Strengths, Weaknesses, Opportunities, and
Threats) Analysis
 A SWOT analysis divides the information into two main
categories: internal and external factors.
 Based on SWOT analysis, marketing executives can
construct alternative strategies.
 The aim of any SWOT analysis should be to isolate the
key issues that will be important to the future of the
firm and that will be addressed by subsequent
marketing strategy.
 SWOT Analysis
75
 6. Competitive Analysis
76

 The internal factors that may be viewed as strengths

or weaknesses depend on their impact on the firm’s
positions; that is, they may represent strength for
one firm but weakness, in relative terms, for another.
 They include all of the marketing mix (product, price,
promotion, and distribution strategy); as well as
personnel and finance.
 The external factors, which again may be threats to
one firm and opportunities to another, include
technological changes, legislation, socio cultural
changes, and changes in the marketplace or
competitive position.
 6. Competitive Analysis
77

 SWOT is just one aid to categorization; it is not

the
 only technique.
 One drawback of SWOT is that it tends to
persuade companies to compile lists rather than
think about what is really important to their
business.
 It also presents the resulting lists uncritically,
without clear prioritization, so that, for example,
weak opportunities may appear to balance
strong threats.
 6. Competitive Analysis
78

 Furthermore, using the company’s

strengths against its competitors’
weaknesses may work once or twice but
not over several dynamic strategic
interactions, as its approach becomes
predictable and competitors begin to learn
and outsmart it.