International companies or marketers may choose between two alternative approaches in developing its marketing strategies or marketing mix. These two approaches are: a. Global Marketing Strategy – defines a standard marketing mix and implements it with minimal modifications in all of its domestic and foreign markets. This standard approach saves money because it allows large-scale production runs and reinforces the brand’s image. It can foster collaborative innovation. Through global marketing strategy, Global firms can effectively market some goods and services to segments in many nations that share cultures and languages.
This approach works best for products with strong, universal appeal such as McDonalds and for luxury products that target upscale consumers everywhere. b. Multidomestic Marketing Strategy- assumes the differences between market characteristics and competitive situations in certain nations require firms to customize their marketing decisions to effectively reach individual marketplaces. In other words, it is an application of market segmentation to foreign markets by tailoring the firm’s marketing mix to match specific target markets in each nation. Keegan has distinguished five adaptation strategies of product and promotion to a foreign market (see figure below).
1. Global Product Strategies
a. Straight Extension – introducing the product in the foreign market without any changes. This strategy permits economies of scale in production and marketing, for it involves no additional R&D expense, manufacturing retooling, or promotional modification. Once implemented successfully, it cerates universal recognition of a product for consumers from country to country.
b. Product Adaptation- involves altering the product to meet local conditions or preferences. There are several level of adapatations, it could be regional version, country version, city version and retailer version. c. Product Invention- consists of creating something new. It can take two forms, Backward invention and Forward invention. It is a costly strategy but the payoffs can be great. i. Backward Invention – is reintroducing esrlier product forms that are well adapted to a foreign country’s needs. ii. Forward Invention- is creating a new product to meet a need in another country.
2. Global Promotion Strategies
d. Communication Adaptation – is the process in which a company run the same advertising and promotion campaigns used in the home market or change them for each local market. e. Dual Adaptation- is the process in which both the product and communication are being changed for each market/country.
3. Global Pricing Strategies
Global Firms faces several pricing problems when selling abroad, they must deal with price escalation, transfer prices, dumping charges, and gray markets. f. Price Escalation- needs to adjust the marginal cost depending on the added costs including the currency-fluctustions risks to the product’s factory price inorder to attain the same profit locally. Because the price escalation varies from country to country, the question is how to sell the prices in different countries. Companies have three choices:
iii. Setting uniform price everywhere
iv. Setting a market-based price in each country
v. Setting a cost-based price in each country
g. Transfer Price- different prices that is being charged to its subsidiary in different countries/market h. Dumping – it occurs when a company charges either less than its costs or less than it charges in its home market, inorder to enter or win a market. i. Arm’s-lenght price – the rpice charged by other competitors for the same or a similar product j. Gray market – it occurs when the same product sells at different prices geographically. 4. Global Place (Distribution Channels)
Many companies/manufactuers think their job is done oncethe product leaves the factory, however they should pay attention to how the product moves within the foreign country. They should take a whole-channel view of the problem of distributin products to final users. k. Seller’s international marketing headquarters- the export department or international division makes decisions on channels and other marketing mix- elements l. Channel’s between nation- gets the products to the borders of the foreign nation. The decision that is made on this link includes the types of intermediaries, type of tranportation, and financing and risk arrangements. m. Channel’s within foreign nations- gets the products from their entry point to final buyers and users.
II. Deciding on the Marketing Organizations
Companies manage their international marketing activities in three ways: through export departments, international divisions, or global organization. a. Export Department
b. International Division
i. Geographical Organization-each with vice presidents per region and each regional vice presidents has country managers who are responsible for a sales force, sales branches, distributors, and licensees in their respective country. ii. World Product Group-each with an international vice president responsible for worldwide sales of each product group iii. International Subsidiaries- each headed by a president
c. Global Organization
Several firms have become truly global organizations, these companies however faces several organizational complexities thus Bartlett and Ghoshal have proposed circumstances under which different approaches work best. They describe forces that favor ‘global integration’ versus ‘national responsiveness’. They distinguish three organizational strategies: d. A gloabl strategy treats the world as single market. e. A multinational strategy treats the world as a portfolio of national opportunities. f. A “glocal” strategy standardizes certain core elemetns and localizes oter elemets.
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