Why a brand or organization is involved in "global marketing"?

Briefly explain what you understand by the statement that a brand or organization is involved in "global marketing"

The statement that a brand is involved in global marketing shows its domestic and foreign marketing activities synergistically contribute to achieve the brands or organizations corporate objectives. This is to maintain a long-term competitive advantage in each of the target markets.

Competitive advantage is conveyed through the brand proposition. This is a product or service that is made distinctive by its positioning to competition in terms of price and product usage and personality in terms of functional attributes and symbolic value.

An example of a fully global brand is Gucci with its premium prices, exclusivity, high-quality product and service targeted to the wealthy and status, conscious customer.

This shows the consistency of its brand propositions and product characteristics align with a segment of consumers across major geographic regions in the world.

By identifying common physical and psychological needs of the consumers they can offer a standardized approach to develop and establish themselves in foreign markets.

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However, a total standardization of marketing mix elements may not feasible because of barriers such as differences in legislation, culture, consumer attitude, local competition, availability of media and organizational environments. Although Theodore Levitt wrote that standardization would be possible as markets converge because of increasing travel and communication. This is becoming evident in trading blocs such as E.U.

Economies of scale and greater control can be achieved through standardizing elements of the marketing strategy whilst adapting maybe necessary to meet local needs and availability e.

g.' think globally act locally'. Read why estle kills babies

To standardise or adapt elements of the marketing mix depends on management orientation in foreign/target market. An ethnocentric approach will consider home country important, a polycentric approach will consider differences in foreign markets and a geocentric approach considers similarities and differences in world markets. Similarities encourage standardising and differences encourage adapting.

Whatever the decision adopted by the brand it must maintain a certain consistency on a global scale to maintain competitive advantage.

I chose Kit Kat as a global brand for my group portfolio. It can be described as global because the Kit Kat name and image is same from country to country. This can be attributed to Kit Kat developing a marketing strategy for each target market. I will explain this with regard to the four components of the marketing mix. That is to analyse what main factors each component is affected by because of geographic difference. This is after a brief introduction of the Kit Kat brand below

The company Rowntree launched Kit Kat in U.K. in 1937, until Nestle acquired the company in 1988. In the general chocolate count line category, Kit Kats main global competitors are Mars and Cadbury. Being Nestl�'s leading confectionary brand in 2000, sales reached �260 million. Internationally the most important markets are Europe and the Middle East.

The marketing strategy takes a geocentric approach to managing the Kit Kat brand. This aims at developing a global strategy, which fulfils local needs at the same time. So from the four strategic alternatives in the global brand strategy matrix below it has adopted the fully adaptive strategy.

Product formulation

Brand proposition

Standardised

Adapted

Standardised

Fully Global

Product Adaptive

Adapted

Proposition Adaptive

Fully Adaptive

(Hankinson & Cowking)

This is reflected through Kit Kat's global product policy. It has adapted shape and product formulations for different markets. The wafer biscuit chocolate finger has three formats in the U.K. The two-finger format, the four-finger format and in 1999 Kit Kat chunky was launched to meet the changing hunger satisfying habits of the 16-24 year old teenage/adult market.

However in Saudi Arabia 3 finger Kit Kat's are sold and in Japan a longer single Kit Kat stick is available.

The four-finger format is not used in Japan because four pronounced in Japanese sounds like the word death.

A Russian Kit Kat is a fraction of an ounce smaller than a Bulgarian one, and the chocolate is coarser than and not as sweet as that in a German Kit Kat.

It also has to consider how climate will affect the product. Producing kit Kat for countries like Saudi Arabia and India protective packaging is important because of the hot climate so quality and durability are not affected. Kit Kat production in Malaysia involves using a special formula for warmer climates.

Positioning of Kit Kat affects product policy. In Japan it is marketed to children who influence the product formulations developed like banana and strawberry flavoured kit Kat.

In Saudi Arabia Islamic law requires halal food so gelatine and certain food additives are not suitable in kit Kats so kit Kats produced for Saudi Arabia in U.K. will have to consider this.

Each of these product variations is the result of market research on local tastes and compatibility and these differences have been catered for, to aid penetration thus sales in each target market.

Kit Kats global pricing policy must reflect internal factors such as production and distribution costs. A strategy for price setting that adds up all costs involved in getting the product to where it must go is cost plus pricing.

This can lead to price escalation because of transportation duty (tariffs/quotas) and distribution profit margins of exporting. This may not be a problem if market demand for kit Kat is inelastic. How ever if the value of the currency in place of production is strong relative to foreign market it can make kit Kat exporting expensive.

At present it exports to Saudi Arabia, if it aims to establish a strong competitive market position then this will require holding market share and rigid cost plus pricing may not be feasible. Price variations may be necessary because of local competition and ability and willingness of customers to pay due to differing levels of disposable income.

Kit Kat sold in E.U. member states or within trading blocs can develop towards standardising price because of reduction in trade barriers and transportation costs and harmonisation of tax laws which otherwise adds to costs.

But for countries like India and Malaysia product saturation levels may be low because the level of disposable income is low, so lower prices may need to be considered to penetrate the market. But also in comparison to the � the exchange rate is low.

Kit Kat is produced in ten countries in the world. It will make economic sense to place production of Kit Kat in regions where exchange rates fluctuate, for example Hershey manufacturers in U.S. produce Kit Kat and there is a production site in Japan. So any changes in dollar to the yen should not affect price. This is to maintain price control.

Kit Kats pricing policy should therefore reflect flexible cost plus pricing because it produces and sells in many countries and prices can remain competitive if it produces in or near the target market. This also means less loss in revenue and profits.

Global promotion of kit Kat is carried through its distinguished packaging, the use of umbrella branding, the unique slogan and the approach of the communication adaptive strategy.

The logo can be recognised from a white oval and red background. The two/four finger bars are packaged using a red band and silver foil and the Chunky kit Kat is flow wrapped. In Germany kit Kat is flow wrapped but this standardisation is resisted in U.K. because of the ritualistic way consumers eat kit Kat.

Kit Kat has become "Nestle kit Kat" because it's a major contributor to confectionary sales. This has the advantage that the Nestle banner endorses Kit Kat in countries where Kit Kat is not well known and the Kit Kat brand endorses Nestle' where Kit Kat is known and Nestle' is not. This is called umbrella branding. It is used as an endorsement to indicate origin and guarantee of quality as an instrument to enter new markets.

The slogan is "Have a break have a kit Kat". This promotes and positions kit Kat as a snack product in all target markets

Kit Kat advertising campaigns have used the communication adaptive strategy, which focuses on one idea" have a break" as a basis for different executions The different executions are tied to a particular cultural attribute. The advertising in UK demonstrates this. There is strong emphasis on humour in the salmon advert where it shows how a salmon struggles to swim upstream and it says at the end, " remember you are not a salmon" and he unwraps a kit Kat. This may not be effective in Germany because they prefer structure, directness and fact.

J. Walter Thompson is a global brand Advertising Company that handles Kit Kat advertising in UK. This agency branches in Kit Kats foreign markets but not all. This can help coordinate promotional activities but as Kit Kat has adopted the differentiated promotional approach, using local agencies may develop a better understanding of the market.

This shows kit Kats global promotion strategy is adaptive in each country because different advertising styles are prevalent in different countries but more so because the differing context of the "break" and buying motives of snacking in each country

The global distribution network involves getting kit Kat from the manufacturer to the end user. Internationally it has manufacturing sites in Canada, U.K, Germany, India, Malaysia, China, Japan, Australia, South Africa and the United States.

Kit Kat is largely available through grocers/supermarkets and CTN'S (confectioners/tobacconists/newsagents) in U.K. direct involvement from manufacturer to retailer is a more cost effective means of serving large volume retailers.

Whilst indirect involvement is a more cost effective means for reaching CTN's such as through wholesalers, distributors or independent agents.

However kit Kat has a short shelf life so direct channels are more appropriate because they're perishable. But in countries like India shopping habits are different. There are smaller retail outlets. So it may be ideal to place a good commissioned distributor or agent and a key person from kit kat in host country to ensure sales objectives are met.

Each element of the marketing mix is effectively determined by segmentation of the target market. This identifies groups with similar characteristics. Snacking is a universal phenomenon for Kit Kat therefore segmentation will be largely based on age and eating habits. Therefore demographic and behavioural segmentation is used to identify the changing needs of these target markets. This is because snacking and eating habits differ among age groups and across regions.

In summary kit Kat standardising elements of the Kit Kat brand such as packaging colour, name and the "break" concept associated with kit Kat, it has contributed towards a consistent global identity whilst adapting product formulations, positioning and promotion in each country it has adjusted to local consumer eating habits and tastes in foreign markets.