GMM The Final Slide

Amity Business School

MBA 2011, 4th Semester Global Marketing Management Amanpreet Kang
Module I: Management of Global Market Mix. (GMM)

Shobhit Mathur shobhit_mathur1@yahoo.com +91 98101 00348
2
Agenda
Module I: Management of Global Market Mix. (GMM) What is GMM, Business Customs in Global Marketing, Required Adaptation, Methods of doing Business, Global Market Mix. Strategy, Improved Products & Program Effectiveness.
What is GMM?
Global Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the Global market
Product Price Place (Distribution) Promotion
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Business Customs in Global Marketing
Types of Customs
3 Types of Customs
1. Cultural Imperatives
Business customs and expectations that MUST be met in order to conduct successful business transactions in other countries/cultures
2. Cultural Electives
Business customs and expectations that are OPTIONAL, in which business executives may participate/conform in, but is not required. May help to establish rapport and respect when participation occurs Majority of customs fall into this category
Types of Customs
3. Cultural Exclusives
Customs that are reserved exclusively for the locals, where foreign participation is EXCLUDED
Example: Foreign business people criticizing local politicians, business practices where it is acceptable for the local to do so
Language - Low/high context Religion, Values and Attitudes, - Europeans Family first, Americans more competitive, individualistic Education, Social Organizations, - caste/class systems, role of women Technology and Material Culture, Law and Politics and - UK laws mkt based, precedence & legislation based, Iran - Islamic Aesthetics. - Traficante" an Italian mineral water found a great reception in Spain's underworld. In Spanish it translates as "drug dealer
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Terpstra and Sarathy Cultural Framework 8 categories
ADAPTATION VS. STANDARDIZATION
Elements of the marketing mix could be

Standardized across all markets Adapted to appeal to particular market segments
Standardization
Essentially the same approach to the 4 Ps in every target market
Adaptation
Marketing mix is tailored to country or to market segment within a country
9
Global Product
Hybrid I Mktg Strategy ebaY.in customised for Indian audience Coca Cola Light
Ideal Global Mktg Strategy DELL replicated its direct selling Amity Business School practices globally
Nike
National Product
Ideal National Mktg Strategy
Hybrid II Mktg Strategy
Haldirams - caters to Indians in India & abroad Nirma - caters to rural & low income segments in India
McDonalds - Retailing formula & mktg activities are same around the World, & product is suited to local markets
National Market Segment
Global Market Segment
Product Strategy Segmentation Strategy

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FACTORS IN PRODUCT ADAPTATION

Internal company considerations
Human and financial resource constraints Costs of developing and producing distinct products
Customer considerations
Customer preferences (example: GMOs) Economic situation of customers (example: farm machinery) The total size of the market
12
FACTORS IN PRODUCT School Amity Business ADAPTATION (continued)

Competitive considerations
Degree of competition in target market Exploiting gaps in competitors product lines
Legal and regulatory considerations

Sanitary standards Tariff and nontariff barriers (example: milk components)
Bottom line: is adaptation profitable, and how long will it take for it to become profitable?
13
EXAMPLE OF PRODUCT ADAPTATION

Kit-Kat roughly $1 billion in sales worldwide
In Russia, its slightly smaller and the chocolate is coarser In Japan, its strawberry flavored Each of these product variations is the result of thorough market research on local tastes. There is no global consumer for the food-andbeverage business. This is a deep belief we have, Brabeck says. (Peter Brabeck is the Chairman
and CEO of Nestle)
15
PACKAGING AND LABELING

Protection of the product
Climate control Transportation and handling
Packaging usually needs to be more durable for export
Shelf life
Size of the package

Pillsbury uses packages with 6-to-8 servings in developing countries, while 2-serving packages are most popular in North America 2-liter bottles of Coke were too large for the compartments in most refrigerators in Spain
16
PACKAGING AND LABELING (continued)

Legal Constraints
Packaging recycling requirements Consumer information requirements (food labels) Multilingual labeling requirements
Canada (French and English) Belgium (French and Flemish) Finland (Finnish and Swedish)
Promotion of the product

Brand image Distinguish product from the competition
17
PRICE
Pricing situations
Export pricing Foreign market pricing (production abroad)
Pricing strategies
Cost-based strategies Demand-based strategies Eclectic strategies based on short- and longterm company goals
18
COST-BASED STRATEGIES: EXPORTING

Standard worldwide pricing
Price is based on average fixed, variable, and export-related production costs
Dual pricing
Export price is based on marginal costs rather than average costs Constitutes dumping (an example of cost dumping)
19
COST-BASED STRATEGIES: School Amity Business PRODUCING ABROAD

Standard within-market pricing
Price in each market in based on average fixed and variable production costs in that market
With either exporting or producing abroad, cost-based strategies may be out of alignment with market conditions
20
DEMAND-BASED PRICING STRATEGIES

Price discrimination
Charge different prices in different markets Can do with exporting or producing abroad A type of dumping when applied to exports (price dumping)
How does it work?

Lower prices in market segments with more priceelastic demands, higher prices in segments with less price-elastic demands
If price differences are too large, run into
21
ECLECTIC STRATEGIES BASED ON

Short- and long-term company goals
Profitability Market share
Production costs Demand-side considerations Competitive considerations
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PLACE
Distribution choices are the least flexible choices in the marketing mix International challenges
Lack of familiarity with distribution channels Use of intermediaries means relinquishing control
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PROMOTION
Promotion mix includes
Advertising Personal selling Publicity Sales promotions
Target audience Company objectives Product or service being marketed Resources available
Mix will depend on

24
INTERNATIONAL ADVERTISING
Media strategy
Which media reach your target market? May be much different from India Media regulations vary by country
Promotional message
Why would the target consumer buy the product? Emphasize those attributes How is the product positioned? Ads should be consistent with positioning Rational versus emotional appeals Be very sensitive to cultural considerations
25
INTERNATIONAL ADVERTISING (continued)

Ad literacy of target audience
Is audience used to connecting ad images and ad messages?
Annual per capita spending on advertising varies tremendously by country and region:
United States: $153 Canada: $64 Europe: $43 Latin America: $5 Asia and Pacific: $4 Middle East: $2 Africa: 80
Statistics: ad spending per capita by top 100 marketers in 2006 Sources: Advertising Age and Population Reference Bureau
26
ADDITIONAL PROMOTION TOOLS

Personal selling often used
In early stages of international expansion For high-cost products For industrial goods
Publicity/Public Relations
To earn public understanding and acceptance Anticipate or counter criticisms Portray as good citizens of host country
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SALES PROMOTIONS
Covers all promotions except for advertising, personal selling, and publicity Includes:
Coupons Free samples Consumer education Product demonstrations Point-of-purchase materials Discounts Direct mail Prizes and giveaways
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IN-CLASS EXERCISE
In groups of 3-5 people, come up with an Indian food product that, as far as you know, isnt currently sold in the UK Outline a plan for how you would market that product in the UK Report your findings to the class
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Methods of Doing Business

Methods of doing business can vary not only across culture, but within cultures. Methods of doing business can vary in:
Levels of Authority Management Objectives Communication Emphasis Formality and Tempo Negotiations Gender Attitudes
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Levels of Authority
There are three general authority patterns which describes who makes the decision in an organization:
Top-level management Decentralized Committee or group
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Levels of Authority Question
What level of authority does the person you are interacting with have in making decisions? What is the best way to get to the decision maker?
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Management Objectives
Understanding the managers objectives can be an important tool when doing international marketing. Management objectives can be broadly classified in the following areas:
Personal Goals Security and Mobility Personal Life Social Acceptance Power
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Management Objective Questions
What is the management objectives of the person I am dealing with?

How do these objectives affect the decision he could potentially make?
How can I tailor my product around the managers objectives?
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Communication Emphasis
Communications should be kept formal both in written and spoken form. Communication may go far beyond words.
Depending on the society you are doing business with, how you say something is as important as what you say.
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A low context language is one that is heavily dependent on explicit verbal expression what is said is what is meant
Swiss, German, Scandinavian
Low Versus High Context Language
A high context language is one that relies heavily on the context or nonverbal communications what is said may not be meant
Japanese, Arabian, Latin American
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Communication Questions
When doing business in a foreign country, how important is the context of the language when conversing? What constitutes a confirmation or denial in the language you are doing business in?
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Formality
Formality relates to the level of respect and manners you give to your customer. As a marketer, you must know what the formal rules are for dealing with customers.
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Formality Questions
What is the proper greetings for the person you are doing business with? When and where is it appropriate to talk business? What is appropriate side discussion? What is the formal business dress?
Eg US East Coast vs the West
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Tempo and Time
Tempo is related to how you deal with time and the use of it. How cultures handle time can be viewed in the following:
Polychronic Time (P-Time) Monochronic Time (M-Time)
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P Versus M-Time
M-Time tends to focus on doing one thing at a time.

It tends to view time as linear and is usually related to low-context cultures.
P-Time tends to focus on doing many things at a time.

It tends to focus on many tasks at once and is usually seen in high context cultures.
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Tempo Questions
How does the client consider usage of time? Are you coming off too hasty in your business dealings? Are you losing out because you are not following the tempo of your client/customer?
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Negotiations
Negotiation tactics differ greatly from one country to the other. Much care must be taken with someone from a foreign culture so you do not offend. By not understanding a cultures negotiation tactics, you run the risk of putting yourself at a disadvantage.
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Negotiation Questions to Consider
Does the culture you are dealing with like to bargain? Does the culture your dealing with get insulted if you try to negotiate to much? What aspect of fairness comes into negotiations?
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Gender Bias
It exists both at home and abroad. There is no correct way of dealing with gender bias. The worst thing to do is go into a culture and try to change its view. The best thing to do is understand why the bias exists and try to work around it.
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Business Ethics
What people believe is right or wrong can be different for every culture. The standard issue related to business ethics in international marketing usually is related to bribery. The other major issue related to ethics is socially responsible acts.
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Bribery
Bribery is related to giving someone money to seek an unlawful advantage. Extortion is when a payment is requested for you to get an unlawful advantage. Lubrication is money being given to facilitate or expedite an event to occur.
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Social Responsibility
Social responsibility of the marketer pertains to:

Employment practices and policies Consumer protection Environmental protection Political payments and involvement in political affairs Basic human rights and fundamental freedoms
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Social Responsibility Questions

Is it legal? Is it right? How will the public and vested stakeholders view your actions?
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Business Customs and the Internet
Language on a website is one of the most important considerations. Since your website can be anywhere in the world, special consideration should be taken as to the colors and symbols you use on the website. Care should be taken when designing a website to make sure it is intuitive to the client.
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Module II: Product Management (GMM)

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Agenda
Module II: Product Management(GMM) Anatomy of Global Product launch, product for Global Consumer, Managing MNC product lines, Product standardisation & world product mandate, Product alternatives and adaptation. The Industrial product Market, Product piracy, Country of Origin stereotypes, Made in India hurdle
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Anatomy of global product launch
Clearly define launch & post launch objectives Define launch strategy Incorporate learning from past launches Have a well defined communication strategy for pre, during & post launch phases
Social media an integral part
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Case study Cisco 9000

Clearly define launch & post launch objectives
Introduce the Cisco 9000 for Visual Networking Telepresence Drive Service Provider awareness globally Continue cool factor for the switch Tie campaign to Ciscos overall human network campaign
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Define launch strategy Cisco 9000

Strategy use the Video, Web2.0, and mobile drivers that are creating the need for the Switch to promote it Anticipate -> See -> Experience ->Talk >Play -> download -> compare
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Learnings from Switch 1000 launch
All-around campaign integration Revaluation of launch vehicles and methods Localised content available at the time of or shortly after US launch Keeping momentum going post launch
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Communication strategy for pre, during & post launch phases Channels deployed direct Email, Social mediasocial networking, part an integral traditional web &
banners
Social networking share with a friend Facebook, Twitter etc.
Pre-launch communication flow

Drive registrations to view exclusive content
Launch communication flow

Draw visitors to reveal portals, continue onto solution page
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ADAPTATION VS. STANDARDIZATION
Elements of the marketing mix could be

Standardized across all markets Adapted to appeal to particular market segments
Standardization
Essentially the same approach to the 4 Ps in every target market
Adaptation
Marketing mix is tailored to country or to market segment within a country
59
Global Product
Hybrid I Mktg Strategy ebaY.in customised for Indian audience Coca Cola Light
Ideal Global Mktg Strategy DELL replicated its direct selling Amity Business School practices globally
Nike
National Product
Ideal National Mktg Strategy
Hybrid II Mktg Strategy
Haldirams - caters to Indians in India & abroad Nirma - caters to rural & low income segments in India
McDonalds - Retailing formula & mktg activities are same around the World, & product is suited to local markets
National Market Segment
Global Market Segment
Product Strategy Segmentation Strategy

60
FACTORS IN PRODUCT ADAPTATION

Internal company considerations
Human and financial resource constraints Costs of developing and producing distinct products
Customer considerations
Customer preferences (example: GMOs) Economic situation of customers (example: farm machinery) The total size of the market
62
FACTORS IN PRODUCT School Amity Business ADAPTATION (continued)

Competitive considerations
Degree of competition in target market Exploiting gaps in competitors product lines
Legal and regulatory considerations

Sanitary standards Tariff and nontariff barriers (example: milk components)
Bottom line: is adaptation profitable, and how long will it take for it to become profitable?
63
EXAMPLE OF PRODUCT ADAPTATION

Kit-Kat roughly $1 billion in sales worldwide
In Russia, its slightly smaller and the chocolate is coarser In Japan, its strawberry flavored Each of these product variations is the result of thorough market research on local tastes. There is no global consumer for the food-andbeverage business. This is a deep belief we have, Brabeck says. (Peter Brabeck is the Chairman
and CEO of Nestle)
65
PACKAGING AND LABELING

Protection of the product
Climate control Transportation and handling
Packaging usually needs to be more durable for export
Shelf life
Size of the package

Pillsbury uses packages with 6-to-8 servings in developing countries, while 2-serving packages are most popular in North America 2-liter bottles of Coke were too large for the compartments in most refrigerators in Spain
66
PACKAGING AND LABELING (continued)

Legal Constraints
Packaging recycling requirements Consumer information requirements (food labels) Multilingual labeling requirements
Canada (French and English) Belgium (French and Flemish) Finland (Finnish and Swedish)
Promotion of the product

Brand image Distinguish product from the competition
67
PRICE
Pricing situations
Export pricing Foreign market pricing (production abroad)
Pricing strategies
Cost-based strategies Demand-based strategies Eclectic strategies based on short- and longterm company goals
68
COST-BASED STRATEGIES: EXPORTING

Standard worldwide pricing
Price is based on average fixed, variable, and export-related production costs
Dual pricing
Export price is based on marginal costs rather than average costs Constitutes dumping (an example of cost dumping)
69
COST-BASED STRATEGIES: School Amity Business PRODUCING ABROAD

Standard within-market pricing
Price in each market in based on average fixed and variable production costs in that market
With either exporting or producing abroad, cost-based strategies may be out of alignment with market conditions
70
DEMAND-BASED PRICING STRATEGIES

Price discrimination
Charge different prices in different markets Can do with exporting or producing abroad A type of dumping when applied to exports (price dumping)
How does it work?

Lower prices in market segments with more priceelastic demands, higher prices in segments with less price-elastic demands
If price differences are too large, run into transshipment (smuggling) problems
71
ECLECTIC STRATEGIES BASED ON

Short- and long-term company goals
Profitability Market share
Production costs Demand-side considerations Competitive considerations
72
PLACE
Distribution choices are the least flexible choices in the marketing mix International challenges
Lack of familiarity with distribution channels Use of intermediaries means relinquishing control
73
PROMOTION
Promotion mix includes
Advertising Personal selling Publicity Sales promotions
Target audience Company objectives Product or service being marketed Resources available
Mix will depend on

74
INTERNATIONAL ADVERTISING
Media strategy
Which media reach your target market? May be much different from India Media regulations vary by country
Promotional message
Why would the target consumer buy the product? Emphasize those attributes How is the product positioned? Ads should be consistent with positioning Rational versus emotional appeals Be very sensitive to cultural considerations
75
INTERNATIONAL ADVERTISING (continued)

Ad literacy of target audience
Is audience used to connecting ad images and ad messages?
Annual per capita spending on advertising varies tremendously by country and region:
United States: $153 Canada: $64 Europe: $43 Latin America: $5 Asia and Pacific: $4 Middle East: $2 Africa: 80
Statistics: ad spending per capita by top 100 marketers in 2006 Sources: Advertising Age and Population Reference Bureau
76
ADDITIONAL PROMOTION TOOLS

Personal selling often used
In early stages of international expansion For high-cost products For industrial goods
Publicity/Public Relations
To earn public understanding and acceptance Anticipate or counter criticisms Portray as good citizens of host country
77
SALES PROMOTIONS
Covers all promotions except for advertising, personal selling, and publicity Includes:
Coupons Free samples Consumer education Product demonstrations Point-of-purchase materials Discounts Direct mail Prizes and giveaways
78
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Product Piracy
Downside for the Manufacturer Any aspect of the product is vulnerable

Brand name, logo, design, packaging
Impact is twofold
Monetary losses; eg China where $16B worth counterfeit goods sold each year; P&G estimates 15% sales are fake,leading to annual loss of $ 150M Damage to the brand name poor quality, service Sometimes the fake products are also
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Product piracy preventive steps

Lobbying
With the Govt to toughen legislation & enforcement of existing laws in the foreign country
Legal action
Prosecuting counterfeiters China has setup special courts to stamp out IPR piracy
Customs
Seek their assistance in seizure of counterfeit goods
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Product piracy preventive steps..contd

Product Policy options
Putting holograms on products to distinguish fakes
Distribution
Microsoft got Chinas 4 largest PC makers to bundle XP into their computers
Communications
Advertising, PR campaigns to educate customers, warn counterfeiters
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Country of origin(COO) stereotypes

Made in label COO effect characteristics
They are not stable
Eg current problem with Toyota cars
Japanese consumer electronics, Cars, Swiss watches
In general consumers prefer domestic products

Renault #1 in France, VW in Germany
Some companies setup local Mfg bases to capitalise on patriotic consumers

Toyota Camry - best car built in America
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Country of origin(COO) stereotypes contd

Demographics matter Culture
Elderly, less educated, politically conservative

Individualistic societies like US will be more objective, while Collective like Japan will be more inclined towards a domestic product
Some consumers use COO as a cue when unfamiliar with product brand name
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Coping with COO
Product policy Select a brand name that disguises COO 2 of the most successful apparel retailers in Hongkong have Italian sounding names - Giordano & Bossini Pricing - Low pricing will attract customers Distribution Use big local names eg Hungarian and Chilean wines are successful in UK - they are sold by Tesco Communication 2 fold strategy Improve the Country image Improve the brand image The above may also be used to overcome Made in India hurdle
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Module III: Product Management (GMM)

86
Agenda
Module III: Product Management(GMM) Placement Management

Movement across frontiers, Import oriented distribution, Global Retail Distribution, Foreign Market Channels of Distribution, Use of Free Ports, Time Management & distribution, Key India issues in import distribution.
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Definition of Global logistics
It is defined as the design and management of a system that directs and controls the flow of materials into, through, and out of the firm across national boundaries to achieve its corporate objectives at a minimum total cost.
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Movement across frontiers factors Amity Business School contributing to increased cost and complexity vis--vis domestic
Distance Longer distance means high direct cost of xportation & insurance Exchange rate fluctuations Eg when the Jap yen appreciated in mid 90s, Honda found it better to ship to Europe fm US Vs Japan Foreign intermediaries Addl intermediaries exist to nego border regulations & deal with local govt offcials & distis. Eg JP, CH, KR who knows whom matters Regulation US Merchant Marine Act 1920 makes it mandatory to use US owned , built & manned ships to xport to US Security Post 9/11 xportation costs have increased due to extra sec measures faced by shipping lines and terminal operators
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Movement across frontiers factors Amity Business School that determine the optimal mode of transportation
Value-to-volume ratio Perishability of the product
Quality deterioration over time or product life cycle
Cost of transportation
To be viewed along with both above factors
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Movement across frontiers Amity Business School different modes of transport and their optimal use Ocean Shipping for transport of heavy, bulky, or
nonperishable products eg crude oil, automobiles, and steel Liner Service scheduled passage on established routes Bulk shipping contractual service for pre-specified periods of time Irregular runs Container ships help cut cost due to standardised containers that help loading/unloading, and intermodal xport Some cartels do exist so to cut its costs Honda uses its own ships to ferry cars to North America & brings back us Soya
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Movement across frontiers Amity Business School different modes of transport and their optimal use growth over last Air Freight seen rapid
40 yrs
Volume of goods still < 2%, value >20% High value goods esp with high V to V ratio eg semiconductor chips, LCD screens ,diamonds etc Flowers & perishable agricultural produce Super sized export planes hv facilitated courier groth service eg Fedex, DHL, UPS
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Movement across frontiers Amity Business School different modes of transport and their optimal use Intermodal transportation
Combination of more than 1 means of xportation
Eg upto the domestic port by road / air then ocean
Cost, time to mkt (esp retail) drive the decision
93
Global Retail Distribution
The face of distribution that consumers interact with is the Retail Store Retailers have grown into the largest cos ie Walmart buys as much as JP mkt fm P&G Retailing involves very locally entrenched activities local holidays (sabse sasta din), festivals, seasonal promotion eg winter wear, as well as meeting local competition on a daily basis
94
Global Retail Distribution
Traditional distribution model turned on its head Retailer controls the distribution chain & not the Mfr or wholesaler consumer pull wins over Mfr push Use of IT to analyse sales
Reduced Inventory enabled by Point of Sale (PoS) data automatic replenishment directly to the supplier Mkt Info at Retail Level
Knowledge of Movement of items is used to xtratct better terms fm suppliers
95
Retailing differences across the world

Density - Developed Countries have less outlets than emerging mkts smaller & more frequent purchases due to low incomes Japan difference tight regulations, fresh food ingredients, perishable items (fish), local due traffic congestion Germany limited hours China low price matters most, one-stop shopping, many visits
96
Foreign markets channel of distribution

Exporting
Indirect Exporting
Co sells its products in the foreign market thru an intermediary located in its home country
Pros little risk, no major resource requirement Cons - little or no control over marketing the product in the foreign mkt good beachhead or test mkting strategy
Cooperative Exporting
Cos uses the overseas network of another company to distribute its products Wrigleys entered India thru Parrys
97

Direct exporting
Co sets up its own exporting dept in foreign mkt, once sales become significant
Pros better control over marketing Cons more human & financial resource commitments required than indirect
98

Licensing
Co (licensor), offers some proprietory assets to a foreign company (licensee) in exchange for royalty Fee eg Tokyo Disneyland owned and operated by Oriental Land company under license fm Disney
Pros profitable, not demanding on resources, Cons recovering fees fm Licensee, less profitable than export, patent protection
99

Franchising
Franchisor gives the franchisee the right to use franchisors trade names, trademarks, business models, and/or know-how in a given mkt for a specific time, normally 10 years eg Subway, Dominos, etc., used mainly in service Industry
Pros overseas expansion at a minimum cost, easy exit Cons lack of control over franchisee operations
100
Contract Mfg (also known as Outsourcing)

The Co arranges with a local mfr to mfg a part of the product or the complete product. Mktg is with Co. eg Flextronics. Leading Outsorcers Nike, Cisco
Pros Cost savings esp in low-wage countries, tax holiday, less resources Cons - nurture a future competitor, they can also mfr a product under their own brand Acer had 1.8 B fm contract mfg vs 1.2 B fm own brand, quality needs to be monitored
101

Joint Ventures
The Co agrees to share equity and other resources with other partners to establish a new entity in a target country three types Majority >50%, 50-50, Minority <50%
Eg Cisco with Datacraft Pros High return potential eg licensing gives only royalty fees and not share of profits, sharing of capital and risk, more control, entry strategy-China forbids certain Industries Cons lack of complete control, partner may become a future competitor a lot of Chinas successful cos started as JV partners of multinationals; cultural issues
102

Wholly Owned Subsidiaries
Cos enter a market with 100% equity eg IBM in India

Pros full control, full profits Cons highly resource consuming w/o a local partner, political risks / nationalisation
103
Session V: Brand Management (GMM)

Shobhit Mathur
shobhit_mathur1@yahoo.com +91 98101 00348
105
Agenda
Brand Management
Branding for the world, Global or Local Brands, National Brands, Private Brands, Brand Name change over strategies, Umbrella Branding, Protecting Brand Names, Global Brands in India
106
107
A Brand can convey upto 6 levels of meanings
Attributes : Amul youthful image, wholesome Benefits : healthy, hygienic Values : most successful Indian co-operative, benefits many, well run, diversified food portfolio Culture : The taste of India original Indian product, made in India Personality : witty youngster User : Indian homes, local food joints / Dhabas
108
Deep & shallow brands
Deep brand when the audience can visulaise all six dimensions eg Mercedes Shallow brand Audi is less deep esp on attributes of Benefits, Personality & User profile
109
Branding for the World
Worlds population is growing more homogeneous in their tastes BUT localisation is important Balance between a truly global brand Vs one that allows for local requirements
McDonalds, Coca Cola,Levi Strauss true Global Unilever eg HLL local flavour
110
Branding for the Worldstrategy consideration
What aspect of brand policy is global, what has local flexibility

In India Coca-Colas large brand is Thums Up as they didnt want to lose thesweet cola mkt
What brands will become Global mega, which should be kept Local
111
Branding for the World strategy considerations
Condensing of many local brands into smaller, and more manageable number of global ones Execution of changeover from a local to a global brand Building of a portfolio of global brands
P&G Pringle, Pantene, Ariel
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113
Global branding issues

Branding_URLetc.ppt
114
Global or Local Brands
No easy answer companies such as Nestle, Unilever, P&G have

Local, Regional, and Global brands
Brand Structure / Brand Portfolio is a firms current set of brands across Countries, businesses and product markets
115
4 types of Branding
Solo Branding Each brand stands on it own with a brand manager running it
Eg Unilever Lux, Knorr, Surf , P&G Ariel, Pantene
Hallmark branding co tags one main brand no sub brands eg HSBC, banking sector Umbrella (Family) branding us corporate brand a an authority symbol eg Sony Playsation, Apple iPhone Extension branding start with one product and extend to other categories, as far as possible eg Ralph Lauren's Polo brand successfully extended from clothing to home furnishings such as bedding and towels
116
Factors shaping global brand structure / brand portfolio Firm based drivers drivers Centralised firms more likely to have a global brand
Organic or in-organic growth strategy Product diversity Nokia can be fully global as fewer products than Unilever
Product Market drivers

How homogeneous are the segments, are they local, regional, global? Products with strong local preference Thums Up
Market dynamics what distribution channels are available in a country

117
Brand Architecture
At local level At regional level At Global level
It guides the dynamics of firms brand portfolio
Eg Nestle
10 WW Corporate brands Nestle, Maggi, etc. 45 WW strategic brands Kitkat, Polo 140 Regional strategic brands Vittel, Findus 7500 local brands - Nestle Everyday Ghee, Nestle Everyday Dahi
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Converting local brands to regional or Global
Cost of 4 Ps Are there significant economies of scale? What local associations will be associated in global name? Is it culturally ok to use the local brand name globally? Eg Japanese drink Pokari Seat, Dutch beverage Sisi
119
Local branding
Often justified by Cultural barriers
Brand names like Healthy Choice, Weight Watchers etc. may not be relevant in non-English speaking countries
Patriotism and Buy local attitudes

Heineken people identify with their local brewery; unlike soaps, and electronics Danone of France grew in China by acquiring local food companies & continue selling under local names, 80% of Danones sales came from these local brand names
120
Started by Shoppers Stop with their STOP brand Initially the private label was only targeted towards the non branded product range which included wheat flour, masalas and papads. Now the private label brands have grown out of proportion by entering into high technology electronic gadgets like mobiles by Univercell,
121
Private brands/Private label branding/Store branding
Brand name change over strategies Local to Global Fade-in/fade-outbrand
Global brand name is tied with the existing brand, after a period local name is dropped Paris EuroDisney -> Euro Disneyland -> Disneyland
When Whirpool acquired Philips whitegoods div, kept the name Whirlpool & Philips, afterwards Philips dropped
122
Co-branding to combine brands
Brand name change over strategies Local to Global Transparent forewarning brand
Alerts the Customer to the brand name change eg Hongkong Bank of Canada / Australia -> HSBC
Summary axing
Simply drop the brand name overnight and replace with a Global one
123
Protecting Brand names
Legal registration most common way

Paris Convention for the protection of Intellectual Property is supported by 100 Countries European Union SMA (Single Market Act) Differences exist
Developed Countries view IP as right for Innovativeness Developing Countries regard IP as a public good
124
Protecting Brand names

What should be protected??
Brand name
Traslation Transliteration representation in the local language that can have the same sound
Slogans, jingles and visual aspects eg McDonalds Golden arches Scope of protection
What product classes should be covered
125
Global brands in India

Global Village.pdf
126
Session V: Brand Management (GMM)

127
Agenda
Brand Management
Branding for the world, Global or Local Brands, National Brands, Private Brands, Brand Name change over strategies, Umbrella Branding, Protecting Brand Names, Global Brands in India
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Global Advertising & Culture

Barriers
Language Barriers
Apart from translation, another challenge is poor interpretation of ideas; IBMs Solutions for a small planet had to be changed to IBMs Solutions for a small world in Argentina as planet failed to convey the conceptual thrust Original slogan When I used this shirt, I felt good Translation Until I used this shirt, I felt good Second category relates to words that have multiple meanings
Eg Avoid embarrassment use Parker pens Spanish word for embarrassment also means pregnancy Parker was unconsciously advertising its product as a contraceptive
Third category stems from idioms or local slang

Eg you can use no finer napkins at your dining table. In Britain, napkin is slang for diapers
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Overcoming the Advertising Amity Business School language barrier

Involve local advertising agencies or translators in development of your campaign Dont translate into local language, use English version worldwide
Eg Tag Heuer Dont crack under pressure For TV commercials subtitles in local language may be added For Radio or TV Commercials, voice overs that use local slang often become necessary
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Other Cultural barriers in Advertising Amity Business School

Religion In Saudi Arabia only veiled women can be shown, except from the back Political sensitivities Cadburys Kashmir gaffe too good to share Work with local translators / ad agencies Ad campaigns should be in tune with the Cultural value systems of target audience Individualism, Collectivism, Feminism, Masculinism
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Setting the Global Advertising Budget Amity Business School

Percentage of Sales method Pros simple; Cons the objective of advertising is to impact sales a case of Dog wagging the tail Competitive Parity Use competitors advertising budget as benchmark Cons new entrants need to spend more Objective and Task method Most popular, used by almost two thirds of the cos Necessitates a solid understanding of relationship between advertising spending and stated goal mkt share, brand recall Field experiments are used to achieve this Resource Allocation method Bottom Up each country Microsoft, FedEx Top Down Bausch & Lomb, AT&T
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Creative Strategy
The standardisation Vs adaptation debate

Standardisation means one or more elements of the campaign are the same. Elements are strategy, selling proposition, platform A truly global campaign is uniform in message and often in execution (atleast in terms of visuals) as well Pros of standardisation
Scale Economies
Levi Strauss saved $ 2.2 Million by shooting a single TV ad for 6 European Countries
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Creative strategy
Pros of standardisation
Consistent Image
Matters esp to the globe trotting Consumers
Global Consumer Segments

the young and the rich have very similar tastes globally
Ray-Ban has a pan Asia campaign
Creative talent
Creative talent in ad agencies is in short supply
Cross-fertilisation
Marketers encourage their affiliates to adopt or atleast consider adopting ideas that are successful in other markets
When P&G introduced Pantene in Latin America it used and ad that was produced for Taiwan
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Creative strategy
Barriers to standardisation
Cultural Differences Advertising Regulations
While Ray-Ban had a pan Asia ad, in Malaysia ads featuring Caucasians are not allowed, shot with locals
Market maturity
Products relatively new to the market need education
Not-Invented-Here (NIH) Syndrome

ThumsUp vs Coke in early days ?
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Laissez Faire each Country follows its own course, no centralised decision making Pepsi ads with Indian cricketers, Coke with actors Export Advertising the same positioning theme used WW BMW, ultimate driving machine Prototype standardisation Guidelines given to subsidiaries for execution of strategy Mercedes Tag Heuer, Wrigleys Regional Approach Nokia strategic decisions made by a central forum; execution local Pattern Standardisation HQ spells guidelines for positioning theme and brand identity all its global advertising showed distorted object clear thru Smirnoff
Approaches to create multinational Ads
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Media Infrastructure
Media Planning / Media decisions
Abundant In Western Countries new media channels emerge continuously; not so in others, Regulations Germany TV advertising allowed only during limited timeframes of the day Japan scarce supply of ad space early planning
Media Limitations
Creative options Intel used bike reflectors in Shanghai and Beijing Intel inside, Radio Taxis, etc
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Media landscape major trends
Growing commercialisation and deregulation of mass media Shift from radio and print to TV and Internet television Shopping Network Teleshop Rise of global and regional media MTV and ESPN, regional websites eg Yahoo India Growing spread of interactive Marketing Xbox with an interactive ad Growing popularity of text messaging Most popular in Asia - mobile phone penetration is highest Improved monitoring of broadcast spots Improved TV viewership measurements by using people 138
Advertising Regulations
Culture - Malaysia banned a Toyota ad with Brad Pitt humiliation against Asians why do we need to use Western faces in our Ads?, Are our own people not handsome? Advertising of Vice Products and Pharmaceuticals rules on advertising of liquor and tobacco getting more severe Comparative advertising China doesnt allow product comparisons, Use of best; US is OK
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Advertising Regulations
Content of Advertising messages
Regulated by local regulators
Ads may be taken off air if they are offensive, indecent
Advertising targeting children highly regulated

Banned in parts of Canada In Finland, children cannot speak the product name
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Coping with Advertising Regulations

Keep track of regulations & pending legislations Screen the campaign early on Lobbying activities Challenge regulations in court Adapt marketing mix strategies eg Kingfisher Water, Soda
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Advertising agency - selection
Market coverage in the entire Geography Quality of coverage Japan an agency with media buying skills is preferred over one with better creative skills Expertise with developing central international campaign Creative reputation Scope & quality of support services eg Mkt Research Desirable image (global Vs local) Size of the agency imp for media buying Conflicting accounts does it work for competitors need for confidentiality agreements
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Global Sales promotion

Direct Marketing
Direct mail, telemarketing, door-to-door selling, the Internet and catalogue selling DELL, AMAZON, ETRADE
Event Sponsorships the sponsored event should reinforce the brand image RED BULL daring image FORMULA ONE racing Trade Shows / Trade Fairs direct sales fm visitors at the booth, as well as indirect impact on sales
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Session VI: Cross Cultural Business Behaviour Shobhit Mathur shobhit_mathur1@yahoo.com (GMM)
+91 98101 00348
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Culture and its implication in Global Marketing

Culture& Mktg Feb 02.ppt
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Cross Cultural Negotiations

4 Stages of Negotiation Process
non-task soundings task-related information exchange persuasion concessions and agreements
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Non-task soundings
Includes all aspects that are used to establish rapport among parties involved
Weather talk, commute for the meeting, any recent sporting event, arrival into the Country
Japanese spend much more time building rapport than Amercicans
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Task-related info exchange

Proposal, timelines, etc.
Japanese prefer to spend much more time on first 2 stages so that little effort is needed for the persuasion stage
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Persuasion
Give and take the deal
For Americans, this is the most important stage
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Concessions and agreement

To achieve consensus / handshake
Eg agreeing to a price discount for better payment terms to achieve closure
Americans prefer to make concessions during the course of the negotiation while as Japanese prefer to defer this to the end
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4. Adapting to Cultures Business School Amity

Global marketers need to become sensitive to cultural biases that influence their thinking, behavior, and decision making. Self-reference criterion (SRC): Refers to the peoples unconscious tendency to resort to their own cultural experience and value systems to interpret a given business situation. Ethnocentrism refers to the feeling of ones own cultural superiority.
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4 step SRC correction mechanism
Define the business problem or goal in terms of your own cultural traits Define the business problem or goal in terms of host cultures cultural traits Isolate the SRC influence Redefine the business problem or goal, this time w/o the SRC influence
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Ethnocentrism
More risky than SRC
Mattel introduced Barbie in Japan called Moba Barbie

Looked akin to what they thought Japanese desired Never got more than 5-6 percent mkt share! After 8 years re-introduced with more western looks, also displayed Japanese girls playing with Barbie in TV ads
Mattel mistakenly tried to cater to Japanese desires

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5. Culture and the Marketing Business School Amity Mix

Culture is a key pillar of the marketplace. Product Policy: Certain products are more culturebound than other products. Food, beverages, and clothing products tend to be very culture-bound. GM introduced Buick in China with better rear seats; Americans put children in rear, Chinese bosses Pricing: Pricing policies are driven by four Cs: Customers Company (costs, objectives, strategy) Competition Collaborators (e.g., distributors) Magic Prices ending with 9 (Rs 19.99) to show good value in emerging markets 155
5. Culture and the Marketing Business School Amity Mix (contd.)
Distribution: Cultural variables may also dictate distribution strategies.

Avon in China had to change its direct-selling model to small counters in departmental stores, kiosks high context culture
Promotion: Promotion is the most visible marketing mix. Culture will typically have a major influence on a firms communication strategy. Local cultural taboos and norms also influence advertising styles.
High context cultures (Japan, Italy, Spain) subtle messaging Low context cultures (Germany, Scandinavia) more use of factual data, reasoning, etc.
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6. Organizational Cultures
Organizational Culture: Most companies are characterized by their organizational (corporate) culture. A model of organizational culture types includes the following four cultures Clan culture Adhocracy culture Hierarchy culture Market culture Most firms have elements of several types of Cultures
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Clan Culture

Cohesiveness, teamwork, sense of family Leadership style father figure, mentor Bonding Loyalty Strategic emphasis development of human resources Japanese cos Tata Group
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Adhocracy culture
Entrepreneurship, creativity Leadership style Entrepreneur, innovator, risk taker Bonding Entrepreneurship, flexibility, risk Strategic emphasis innovation Germany, US Bharti Group Telecom as well as forays into Retail, Food Products, Insurance
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Hierarchy culture
Order, rules & regulations Leadership style coordinator, administrator Bonding rules, policies,and procedures Strategic emphasis stability, predictability, operational excellence France, Japan Most Indian PSUs SBI, LIC, ONGC
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Market Culture
Competitiveness, goal achievement Leadership style decisive, goal-oriented Bonding Goal orientation, production, competition Strategic emphasis - competitive advantage, market superiority UK, US, Japan RIL, Future Group
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7. Global Account Management Business School Amity (GAM)

The coordination of the management of customer accounts across national boundaries are referred to as global account management (GAM). Global Accounts Requirements: May require a single point of contact May demand coordination of resources for serving customers May push for uniform prices and terms of trade May have standardized products and service
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7. Global Account Management Business School Amity (GAM) (contd.)

May require a high degree of consistency in service quality and performance May support in countries where the company has no presence
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7. Global Account Management Business School Amity (GAM)

Managing Global Account Relationships: Clarify the role of the global account management team. Make incentive structure realistic. Pick the right global account managers. Create a strong support network. Make sure that the customer relationship operates at more than one level.
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8. Global Customer Relationship School Amity Business Management (CRM)

The process of managing interaction between the company and its customers is called customer relationship management (CRM): Helps in customer retention Helps in richer communication and interactive marketing Helps in tailored services Helps to maintain a closer contact with the customers
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Enterprise Systems
Demand
Customer Relationship Management
Supply Chain Management
Supply
Manufacturer
Wholesaler
Retailer
Consumer
Purchase
Produce
Distribute
Enterprise Resources Planning
Customer Relationship Management
Sell
Consume
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Single view of the customer?

Card Card
Management
Sales
Spreadsheet Spr eadsheet Document Document
email email
Spr eadsheet Spreadsheet
Marketing
Document Document
Customer
Report Report Report

Spreadsheet Spreadsheet
Support
email
Document Document
Internet
ERP Back Office
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CRM applications
Sales (synchronised, field information) Service (orders, complaints)
Management (decision support, performance)
Partner (promotions, funds, portals)

Data Knowledge Base Consumer (web, clubs) Web
Warehouse
Marketing (analysis, promotions actuals)
CRM System
Other systems, email, telephone
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8. Global Customer Relationship School Amity Business Management (CRM) (contd.)

Benefits of CRM: A better understanding of customers expectations and behavior Ability to measure the customers value to the company Lower customer acquisition and retention costs Ability to interact and communicate with customers in countries where access to traditional channels is limited
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8. Global Customer Relationship School Amity Business Management (CRM) (contd.)

Guidelines for Successful CRM Implementation: Make the program business-driven rather than IT-driven Monitor and keep track of data protection and privacy laws in those countries where CRM systems are being used or are in the planning stage A good data is the main pre-requisite. Rewards being sent out to customers are relevant, targeted, and personal.
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Session X : Pricing (GMM)

Shobhit Mathur
171
Chapter OverviewAmity Business School
1. 2. 3. 4. 5. 6.
Drivers of Foreign Market Pricing Managing Price Escalation Pricing in Inflationary Environments Global Pricing and Currency Movements Transfer Pricing Global Pricing and Antidumping Regulation 7. Price Coordination 8. Countertrade
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Introduction
Global pricing is one of the most critical and complex issues in international marketing. Price is the only marketing mix instrument that creates revenues. All other elements entail costs. A companys global pricing policy may make or break its overseas expansion efforts. Multinationals also face the challenges of how to coordinate their pricing across different countries.
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1. Drivers of Foreign Market Pricing
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176
Driversthe 4 Cs

Company costs, goals Customers price sensitivity, segments Competition nature, intensity Channels distribution channels
177

Main drivers affecting global pricing: Company Goals Satisfactory ROI Market Share Specified Product Goal
New Balance shoes, sold in France as premium, twice the US price Altruistic goals Merck sells its AIDS drug at 85% discount in Asia
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Company Costs
Fixed & Variable costs variable costs that change with volume, fixed costs overheads that do not change with volume Cost-Plus Pricing
Adds international cost plus markup to domestic mfg cost
Dynamic Incremental Pricing

Price arrived at after removing fixed costs FC has to be borne anyhow export or not- Mfg costs hv to be managed HLL spends a large sum on R&D to lower mfg costs McDonalds only imports potatoes, has setup a large R&D to improve Indian potatoes
Could lead to dumping / grey mkt
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Company costs
Kelloggs on the other hand entered India with costly packaging and expensive advertising result Champion cornflakes piggybacked on their Mktg efforts and conquered the cereal mkt with one fifth the cost of mfg
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2. Drivers of Foreign Market Pricing Amity Business School
Customer Demand
It is a function of buying power, habits and substitutes Customers; willingness to pay sets a ceilingwhile Starbucks is viewed as premium in US, it faces formidable rivals in Europe and Asia who charge much lower Buying power is a key consideration
Eg Shampoo sachets in rural India 80% of sales
Niche player Haagen Dazs charges a premium price worldwide Country specific products
Have a portfolio of products that caters to every income tier HLL
Sell Older versions

Mercedes sells older models in India
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Competition
Cross-Border Price Differentials
Caused by differences in competitive situations across countries

Fewer competitors in a country Global vs local players Private vs govt players (enjoying subsidies, cheaper loans) Counterfeits / piracy also forces firms to cut prices China has a huge smuggled car polulation from Japan and Korea
Bottomiline Companies will be price leaders in some countries and price takers in othersHeinzs policy is to cut prices in markets where its not the market leader
Nonprice Competition
Competition in advertising, channel coverage Coke vs Pepsi
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Distribution Channels
Variations in Trade Margins and Length of Channels

Eg France & UK have huge retailers who buy in bulk hence are able to nego large discounts Rest of Europe, smalll retailers have formed cross-border coops to negotiate better with manugacturers
Issues of Every Day Low Prices (EDLP)

Mfr offers consistently lower prices to retailers / consumers
Distributors have a problem with this In UK PCs are 50% more expensive than US and Germany where there is an option of channel choices direct marketers, supermarkets, large speciality chains like BestBuy in US
Parallel Imports (Gray Market)

Moevement of goods from low price countries to high price countries
To curtail, firms consider lowering cross-border price disparities 183
Government Policies
Even after launch of the Euro, car prices vary by 50% across European countriesreason..
Sales tax, value added taxes, tariffs, price controls Taxes have a direct impact on prices
Indirect impact huge government deficits may raise the cost of capital, hence high interest rates, Volatility, high inflation, etc. Government interference
Chinese government sets minimum prices in 21 industriesviolators slapped with hefty fines
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2. Managing Price Escalation

Several options exist to lower the export price: 1. Rearrange the distribution channel
To byepass the notorious Japanese distribution infra, many US companies resorted to direct Mktg catalog sales, telesales
2. Eliminate costly features (or make them optional) make the products no-frills 3. Downsize the product Ariel reduced the package size fm 200 to 150 g in Egypt 4. Assemble or manufacture the product in foreign markets Japanese cars in the US
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Managing Price Escalation..contd School Amity Business

Premium positioning strategy
Lego has positioned its toys as educational in Indiaeg Lego Learning toys, Construction toys
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Pricing in Inflationary EnvironmentsSchool Amity Business

In January 1990 a Big Mac meal in Russia costed 6 rubles, 3 years later the same meal costed 1100 rubles!!!
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3. Pricing in Inflationary Environments
Alternative ways to safeguard against inflation may include:

1. Modify components, ingredients, parts and/or packaging materials. 2. Source materials from low-cost suppliers. 3. Shorten credit terms. 4. Include escalator clauses in long-term contracts. 5. Quote prices in a stable currency. US$ or Euro 6. Pursue rapid inventory turnovers. 7. Draw lessons from other countries Otis and MacDonald used their Managers in Latin America to
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3. Pricing in Inflationary Environments
Companies faced with price controls can consider several alternatives: 1. Adapt the product line 2. Shift target segments or markets. 3. Launch new products or variants of existing products - In Zimbabwe bakers added raisins to dough to call it raisin bread to escape price control on bread 4. Negotiate with the government. 5. Predict incidence of price controls.
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5. Transfer Pricing Amity Business School
Sales transactions between related entities of the same companies are called transfer prices. Determinants of Transfer Prices:
1. Market conditions in the foreign country 2. Competition in the foreign country 3. Reasonable profit for foreign affiliate 4. U.S. federal income taxes 5. Economic conditions in the foreign country 6. Import restrictions 7. Customs duties 8. Price controls 9. Taxation in the foreign country 10. Exchange controls
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Criteria for making transfer pricing decisions: Tax regimes
Cos would like to boost their profits in low tax countries
Could lead to audit issues in high tax countries
Local market conditions

To gain mkt share, Cos may initially underprice intercompany shipments
Market imperfections
High import duties may prompt Cos to lower transfer prices
Joint venture partner

Need to protect interest of local JV partners
Morale of local country managers

Esp when employee performance is linked to sales, esp an issue in high tax countries
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Setting Transfer Prices
Market-based transfer pricing: Arms length prices

As if the transfer had occurred between unrelated Cos Yardstick market price
Nonmarket-based pricing: Cost-based pricing

Simple mark-up to the cost of goods Issue : consensus on fair profit splits and allocation of corporate overhead Many instances when tax authorities do not accept it
196
Transfer pricing
Negotiated pricing
Country affiliates negotiate a transfer price
A recent study shows that compliance with financial reporting norms, fiscal and custom rules, and anti-dumping regulations prompt companies to use market-based transfer pricing.
197
5. Transfer Pricing
Government-imposed market constraints (e.g., import restrictions, price controls, exchange controls) favor nonmarket-based transfer pricing. Most firms use a mixture of market-based and non-market pricing procedures. Minimizing the Risk of Transfer Pricing Tax Audits: Basic Arms Length Standard (BALS)
198
To minimize the risk of tax audits, decisions should center around the following five questions (see Exhibit 13-6): 1. Do comparable/uncontrollable transactions exist? 2. Where is the most value added? Parent? Subsidiary? 3. Are combined profits of parent and subsidiary shared in proportion to contributions? 4. Does the transfer price meet the benchmark set by the tax authorities? 5. Does the tax MNC have the information to justify the transfer prices used?
199
6. Global Pricing and Antidumping School Amity Business Regulation

Dumping occurs when imports are sold at an unfair price.
Govts may impose counterveiling duties or fines to protect local mfrs
Voluntary Export Restraint (VER)
201
To minimize risk exposure to antidumping Amity Business School actions, exporters might pursue any of the following marketing strategies:
Tradiing-up
Move from low value to high value products, Japanese car mfrs
Service enhancement
add support services to core products to differentiate
Distribution and communication

Strategic alliances with local Distributors
202
7. Price Coordination Business School Amity

The following considerations will be necessary when developing a global pricing strategy: 1. Nature of customers 2. Amount of product differentiation 3. Nature of channels 4. Nature of competition 5. Market integration 6. Internal organization 7. Government regulation
203

Global-Pricing Contracts GPCs (see Exhibit 137): Purchasers often demand GPCs from their suppliers. GPCs can also benefit suppliers. A GPC can offer the opening toward nurturing a lasting customer relationship. Small suppliers can use GPCs as a differentiation tool to get access to new accounts.
204
7. Price Coordination
205

Aligning Pan-Regional Prices A Pricing Corridor (to find the middle ground by upping prices in low-price countries and cutting them in high-price countries) works as follows: Step 1. Determine optimal price for each country. Step 2. Find out whether parallel imports (gray markets) are likely to occur at these prices. Step 3. Set a pricing corridor.
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Implementing Price Coordination: Global marketers can choose from four alternatives to promote price coordination within their organizations: 1. Economic measures 2. Centralization 3. Formalization 4. Informal coordination
207
Countertrade
Unconventional trade-financing transactions that involve some form of non-cash compensation

Accounts for 10-15 % of worlds trade
209
8. Countertrade
Motives behind Countertrade: Gain access to new or difficult markets Overcome exchange rate controls or lack of hard currency Overcome low country credit worthiness Increase sales volume Generate long-term customer goodwill
210
8. Countertrade
Forms of Countertrade: Simple barter
China & Morocco traded $260 M worth of pesticides vs phosphates
Clearing agreement
2 Govts enter into agmt to import a specified value of goods from one another
Indoenesia and Iran paper, rubber for Iranian oil
Switch trading
Clearing house with a third party which uses the surplus credits to buy goods from the deficit country
Buyback (compensation)
Seller provides the equipment and is ready to receive part payment thru sales of goods produced from the equipment
211
Countertrade
Counterpurchase
Similar to buyback
Offset
Seller agrees to offset the purchase price by sourcing from the importers country
MIG Corporations deal with HAL
212
8. Countertrade
Shortcomings of Countertrade: No in-house use for goods offered by customers Timely and costly negotiations Uncertainty and lack of information on future prices Transaction costs
213
8. Countertrade
Words of advice regarding countertrade: 1. Always evaluate the pros and cons of countertrade against other options. 2. Minimize the ratio of compensation goods to cash. 3. Strive for goods that can be used in-house. 4. Assess the relative merits of relying on middlemen versus an in-house staff. 5. Check whether the goods are subject to any restrictions. 6. Assess the quality of goods.
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Session XI : Global Market Research

Shobhit Mathur
217
Global Marketing Research
218
Overview
1. Research Problem Formulation 2. Secondary Global Marketing Research 3. Primary Global Marketing Research 4. Market Size Assessment 5. New Market Information Technologies 6. Managing Global Marketing Research
219
Introduction
Given the complexity of the global marketplace, solid marketing research is critical for a host of global marketing decisions
Walmarts Jewellery counters in Argentina stocked precious stones, while Argentine women prefer gold & silver! Hardware dept had tools at 110 Volts, standard is 220 Volts!!
Most of the cultural blunders in global marketing stem from inadequate marketing research.
220
Six steps in conducting global market research:

1. Define the research problem(s) 2. Develop a research design 3. Determine information needs 4. Collect the Data (secondary and primary) 5. Analyze the data and interpret the results 6. Report and present the findings of the
221
Major challenges faced by global marketing researchers:
1. Complexity of research design due to environmental differences 2. Lack and inaccuracy of secondary data 3. Time and cost requirements to collect primary data 4. Coordination of multicountry research efforts 5. Difficulty in establishing comparability across multi-country studies
222
1. Research Problem Formulation
Any research starts off with a precise definition of the research problem(s).
What does the motorist in a country demand of his car?
In an international context, the marketing research problem formulation is hindered by the self-reference criterion (SRC).
Local subsidiaries should be consulted to minimise this
A major difficulty in formulating the research problem is unfamiliarity with the foreign environment. Omnibus surveys are regularly conducted by
223
1. Research Problem Formulation School Amity Business (contd.)

Once the research issues have been stated, management needs to determine the information needs.
224
2. Secondary Global Marketing School Amity Business Research

Secondary Data: Data/information which is already available. Primary Data: When the information is not useful, or simply does not exist. Selected Secondary Data Sources: Lexis/Nexis, FINDEX, National Trade Data Bank, U.S. Department of Commerce, Japan External Trade Organization (JETRO), OECD, IMF, The Economist Intelligence Unit (E.I.U.), ACNielsen Co, Taylor Nelsen Sofres, etc.
225
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2. Secondary Global Marketing School Amity Business Research (contd.)

Problems with Secondary Data Research: Accuracy of Data Age of data Reliability over Time Comparability of Data Triangulate Functional or Conceptual Equivalence
In US bicycles are used for sport; while in China & Netherlands used for transport
Lumping of Data
Arising from the tendency of official data sources to often group statistics on certain variables in very broad categories
227
3. Primary Global Marketing Amity Business School Research
Focus Groups
Hiring well trained moderators is critical to international MR
Survey Methods for Cross-Cultural Marketing Research: Questionnaire Design Conceptual and Functional Equivalence
Across cultures
Translation and Scalar Equivalence

Careless translations can lead to embarrassment
228
Sampling: A sampling plan consists of:

Sampling unit
Who should be surveyed
Sample size Sampling procedure

Heterogeneous cultures like India demand larger sample sizes than Korea Inapproachability of women in Muslim countries
229
Contact Method
Mail Telephone Person-to-person interviews (shopping mall intercepts) Online Survey Methods E-mail surveys Random Web site surveys Panel Web site surveys
230
Some methods prevail in some cultures; some in others

Germans more resistant to telephone interviewing than other Europeans Daytime telephone calls dont work in Saudi Arabia as women cannot talk to strangers Brazil has issues with lost mail Some countries do not have adequate telephones Chinese managers reluctant to discuss issues over phone, face to face ok
231
Online survey research

3 types
E-mail surveys
Self-administered questionnaire sent out
Website surveys
Visitors to a site are asked to fill out questionnaire
Panel website surveys

Rely on a panel of respondents
232
Pros and cons of Internet as a tool for Global MR

Pros
Large samples possible in short time Global access Lower costs, scale independent Anonymity Easier data analysis : can be directly loaded into statistical tools and databases Overall short response time
233
Pros and cons of Internet as a tool for Global MR

Cons
Poor IT infrastructure in many countries Sample representative ness Speed of access Low response rates Multiple responses (from same respondent)
234
3. Primary Global Marketing Amity Business School Research (contd.)

Collecting the Information Issues of nonresponse
Due to reluctance to talk with strangers
Courtesy bias
Esp in Asia and Mid east, respondent feels obliged to give answers that please the interviewer
Social desirability bias

Subject attempts to reflect a certain social status in response
Redundancy (asking the same question in different ways) Issues of ethnographic research
Field Researchers embed themselves in target society Intel does this in India, China & Chile
235
4. Market Size Assessment

Method of Analogy Longitudinal method of analogy Trade Audit Chain Ratio Method Cross-Sectional Regression Analysis
236
Analysis by Inference Business School Amity

Market assessment by inference uses available facts about related products or other foreign markets as a basis for inferring the necessary information for the market under study Related products Related markets size Related environmental factors Analysis of demand patterns
237
Method of Analogy Business School Amity
The assumption is that there is an analogy between the relationship of a factor and demand for a particular product or commodity in two countries Let
XA = demand for product X in country A YA = factor that correlates with demand for product X in country A, data from country A XB = demand for product X in country B YB = factor that correlates with demand for product X in country A, data from country B
If we assume that :
XA/YA = XB/YB
and if XA, YA, and YB are known, we can solve for XB as follows:
238
Longitudinal Method of Analogy

Displacing time is a useful method of market analysis when data are available for two markets at different levels of development The assumption is that an analogy between markets exists in different time periods Let XA1 = demand for product X in country A during time period 1 YA1 = factor associated with demand for product X in country A during time period 1 XB2 = demand for product X in country B during time period 2 YB2 = factor or factors correlating with demand for product X in country A and data from country B for time period 2 If we assume that : XA1/YA1 = XB2/YB2 and if XA, YA, and YB are known, we can solve for XB as follows:
239
4. Market Size AssessmentAmity Business School (contd.)

When using market size estimates, keep the following rules in mind: Use several different methods. Dont be misled by numbers. Dont be misled by fancy methods. Do a sensitivity analysis by asking what-if questions. Look for interval estimates with a lower and upper limit rather than for point estimates.
240
5. New Market Information Amity Business School Technologies

Major developments/innovations: Point of sale (POS) store scanner data Consumer panel data Single source data Shift from mass to micro marketing Continuous monitoring of brand sales/market share movements Scanning data are used by manufacturers to support marketing decisions.
241
5. New Market Information Amity Business School Technologies (contd.)

Scanning data are used to provide merchandising support to retailers.
242
6. Managing Global Marketing School Amity Business Research

Selecting a Research Agency: The following considerations should be taken into account while choosing agency: Level of expertise Qualifications Track record Credibility and experience Client record
243
Coordination of Multi-Country Research: Amity Business School Emic versus Etic dilemma
The emic school focuses on the peculiarities of each country. The etic approach emphasizes universal behavioral and attitudinal traits. In cross-cultural market research, the need for comparability favors the etic paradigm with an emphasis on the cross-border similarities and parallels. Several approaches may be used to balance these conflicting demands.
244
Thank You
245
International Marketing Research

Managing Marketing Information to gain
Customer Insights
246
Introduction
Importance of customer information ??? Not just customers but also competitors and stakeholders.
Why and how is information gathered?
Some cases Case of Pizza Hut CAT - Cab comfort in India CAT reliability vs. efficiency of the machines Lays and baseball matches (analytics) Apples iPod Touring the store with the customer (Major retail chains in the world grocery as well as departmental stores)
247
Introduction
Customer needs and buying motives not obvious difficult for customers to articulate Givaudan Customer insights Understanding of customers and the marketplace derived from marketing information that become the basis for creating customer value and relationships.
Harley Davidson Customer Insights teams at IMRB
Marketing information system assess information needs, develop the needed information and help in decision making (generate and validate actionable customer and market insights)
Caterpillar, Infosys (Knowledge Management Portals on intranet of organisations)
248

American Marketing Association defines marketing research as systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.
Some issues related to International Marketing Research: Culture Information to be communicated across cultural boundaries Case of Human Rights and perceptions of people Case of equal rights of employees irrespective of gender, Japan, France, Germany, India Environment in which research tools are applied are different Varies from country to country Use of Kiosk in case of CAT Use of internet to gather data Use of technology in market research
249

Lack of knowledge
First time exporters Closed country environments Socialist countries earlier; Arab World more recently
Unfamiliarity with foreign markets

Small exporters, only 27% use research and tools Country reports by reputed institutions are helpful (Occasional papers and industry reports by ECGC, Exim Bank, EPCs in India)
Complex
Across cultures, context may be different Use of 5 point scale (Poor, Fair, Good, Very Good and Excellent) cultural context Models often used, not adapted as per country
250

Unpredictable consumer demands
Givaduan (fragrances) Colors (apparels, garments) Changing beliefs, values Indian breakfast South East Asia and Food Habits China Tea vs. Coffee Family Size Attention to children
DINKS DISKS Little princes and princesses of China
Socio-technographic profile of people (Psychographics)
In terms of expenditures countries that spend a lot on research are US, UK, Japan, Germany
251

Breadth and scope of International Marketing Research Three types: General information about country, area and market Information for future marketing requirements by anticipating social, economic, consumer and industry trends Specific market information to make product, promotion, distribution and price decisions Economic Cultural, sociological and political climate Overview of market conditions Technological environment Competitive situation PEST, PESTLE, PESTEL
252
International Marketing Research Process

Marketing problem vs. Research problem Research objectives Cost and benefits of the research effort Data sources
Secondary data
Availability of data Reliability of data Comparability of data Validating secondary data Who collected the data? For what purpose was the data collected? How was the data collected? Is data internally consistent and logical w.r.t. known sources of data or market factors?
253
Process
Data sources
Secondary data
Different data collection methods Classification differences Unit of measurement Definitional differences Case of normative databases Understanding of scales by the consumers Sensitivity
254

Primary data Gathering data Personal, Mail surveys, Telephonic, E-Mail, Survey Panels Agencies that are engaged in collecting data Internal sources Case of Pizza Hut (Yum Brands) Tesco Caf Coffee Day External agencies Cross tab Online survey panels (Speak Asia Online) Experience surveys (Advergaming, virtual environments) Qualitative Communication Phrases, cultural context
255

Primary data Quantitative Questionnaires, Mail Surveys Ability to communicate opinions Willingness to respond Sampling in field surveys Experience, duration of the interview, sampling units and possibilities of reformed forms of sampling,
Language and comprehension Back translation Parallel translation Decentering

256

Multicultural research involves dealing with countries that have different languages, economies, social structures and attitude patterns Culture in general may be defined as the set of values, attitudes, beliefs, behaviours and customs that distinguish a society. A societys culture prescribes the rules, which determine how individuals operate in that society. Culture is acquired knowledge that people use to interpret experience and generate social behaviour. This knowledge forms values, creates attitudes, and influences behaviour
257

A societys culture determines how its members communicate and interact with each other. The basic elements of Culture are:
Social Structure Language Communication Religion Values and Attitudes
Values are the principles and standards accepted by members of a society. Attitudes that result from a societys values. The three components are:
thoughts, feelings and actions.
258

Studies to find similarities and differences Four principles to be remembered include: Individuals vs. Society individuals may not confom Differences may not be culture based (incorrect sampling, etc. Understand self Existence of continuums and not extremes Stereotyping Ethnocentrism
259

Kluckhohn and Strodtbecks Cultural Dimensions based on values: Time Relation to other individuals Motive for behaving Relation to natural environment Edward T. Hall He identified two classic dimensions of culture: High-Context Versus Low-Context Cultures Monochronic and Polychronic Cultures
260

Hofstede: 4 initially, followed by two more:
ways of coping with inequality (Power Distance) ways of coping with uncertainty (Uncertainity Avoidance) the relationship of the individual with her or his primary group (individualism vs. Collectivism) the emotional implications of having been born as a girl or as a boy (Masculinity vs. Feminity) Long term vs. Short term orientation Indulgence vs. restraint
Trompenaars
261

The 9 Dimensions that were considered in the GLOBE Project:
Uncertainty avoidance Power distance Collectivism I: Social collectivism Collectivism II: In-group collectivism Gender egalitarianism minimalist gender role differences and gender discrimination Assertiveness Future orientation oriented towards planning for future Performance orientation Humane orientation individuals rewarded for being fair, altruistic, generous, caring & kind.
262

Research on internet Online surveys and buyer panels Online focus groups Web visitor tracking Advertising measurement
Customer identification systems

E-mail marketing lists
Embedded research
263

Estimating Market Demand Expert opinion Analogy Problems in analyzing and interpreting the research information Responsibility for conducting Marketing Research Communicating with the decision makers
264

Comparability?
265
Shipping, Free Ports, Time Management and Distribution, Key
issues in Indias Import Distribution
266
Introduction
Shipping
Oldest mode of transportation Dependence on waterways Type of cargo: loose/ bulk, containerized Quantity & weight Cost fixed vs. variable
Major shipping lines in the world
Advantages % world trade volume

By air By sea
Developed after changes in: technology, containersation and handling equipment, computerisation (helps in tracking)
267
Introduction
Shipping
Deadweight capacity Total carrying capacity of ships Unit of measurement Types
Tankers
Liquids/ gases, 30% of all, Oil/ LNG/ Edible Oil/ Acid & Chemical Special pumps & heating and cooling units
Bulk carriers
Dry cargo, grain, coal iron ore, metal scrap, cement, feed, gravel, sugar, seeds, etc.
General cargo vessels

Break bulk cargo
Container ships
Only containers, need specialised cargo handling equipment
268
Introduction
Shipping
Types
Container ships
Only containers, need specialised cargo handling equipment Containers 20/ 40/ 45 ft Reefers and non reefers Tramp and Liner vessels
Freight/ schedules/ routes Freight demand/supply, conference/ cartels, liner owners
Shipping routes
Trans-atlantic/ trans-pacific North atlantic US/ Europe Med. Sea, Red Sea, Indian Ocean Cape route Panama canal Cape route Trade volume, Supply/ demand, weather, safety of the sea-route
269
Introduction
Air transport
Advantages Disadvantages Freight
Specific commodity rate (for specific types of commodities Freight all kinds (all pooled and charged as one)
Choosing transport
Cost, Speed, Availability, Dependability, Capability, Frequency, acessibility, safety of goods/ security Fixed, variable, joint cost
Multimodal transport
270
Introduction
Free Ports Time Management & Distribution
Key issues in Indias distribution

Import Export
271

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Amity Business School

Amity Business School

Amity Business School

Module I: Management of Global Market Mix. (GMM)

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Business Customs in Global Marketing

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Amity Business School

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Terpstra and Sarathy Cultural Framework 8 categories

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ADAPTATION VS. STANDARDIZATION

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Elements of the marketing mix could be

Ideal National Mktg Strategy

Hybrid II Mktg Strategy

National Market Segment

Global Market Segment

Product Strategy Segmentation Strategy

FACTORS IN PRODUCT ADAPTATION

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FACTORS IN PRODUCT School Amity Business ADAPTATION (continued)

Legal and regulatory considerations

EXAMPLE OF PRODUCT ADAPTATION

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PACKAGING AND LABELING

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Size of the package

PACKAGING AND LABELING (continued)

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Promotion of the product

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Export pricing Foreign market pricing (production abroad)

COST-BASED STRATEGIES: EXPORTING

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COST-BASED STRATEGIES: School Amity Business PRODUCING ABROAD

DEMAND-BASED PRICING STRATEGIES

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How does it work?

If price differences are too large, run into

ECLECTIC STRATEGIES BASED ON

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Production costs Demand-side considerations Competitive considerations

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Mix will depend on

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INTERNATIONAL ADVERTISING (continued)

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ADDITIONAL PROMOTION TOOLS

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Amity Business School

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Methods of Doing Business

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Levels of Authority Question

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Management Objective Questions

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