INTERNATIONAL MARKETING

Chapter 6

Global Marketing Management:

Planning and Organization
 Chapter outline

1. How global marketing management differs from

international marketing management

2. The important factors for each alternative

market entry strategy.

3. The increasing importance of international

strategic alliances

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 Global Marketing Management

• “standardization
1980s • “global
vs. adaptation” • “globalization integration vs.
vs. localization” local
responsiveness”

1970s 1990s

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 Global Marketing Management

• The issue is if the global homogenization of consumer tastes allow for the
global standardization of the marketing mix
• The Internet revolution of the 1990s added a new twist to the old debate
• In many parts of the world, consumers have become pickier, more penny-
wise, or a little more nationalistic
• They are spending more of their money on local drinks whose flavors are
not part of the Coca-Cola lineup
• The trend back toward localization is because of the efficiencies of
customization because of the flexible manufacturing processes
• The debate about standardization versus adaptation is an example of
ethnocentrism in the U.S.
• As global markets homogenize and diversify simultaneously, the best
companies will avoid focusing on country as the primary segmentation
variable
• Other segmentation variables are often more important—for example,
climate, language group, media habits, age, or income
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 Benefits of Global Marketing

▪ Economies of scale in production and marketing

▪ Transfer of experience and know-how across countries
▪ Global diversity in marketing talent leading to new approaches
▪ Marketing globally ensures that marketers have access to the toughest
customer
▪ Spreading the portfolio of markets brings stability of revenues and
operations to many global companies

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12-6
 Global Strategy

Offering the same

products using the same
marketing strategy in
all national markets

+ Cost savings from

standardization

– May overlook varying

buyer preferences
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 Multinational Strategy

Adapting products and

their marketing strategies
in each national market
to suit local preferences

+ Respond quickly to
buyer preferences

– Difficult to exploit
economies of scale
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 Alternative Market-Entry Strategies

• A company has four different modes of foreign market entry from which
to select: exporting, contractual agreements, strategic alliances, and
direct foreign investment
• The amount of equity required by the company to use different modes
affects the risk, return, and control that it will have in each mode

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Alternative Market-
Entry Strategies

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 Developing an Export Strategy

Step 1 Step 2 Step 3 Step 4

Identify a potential Match needs to Initiate Commit

market abilities meetings resources
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Degree of Export Involvement

Direct exporting Indirect exporting

(sell to buyers) (sell to intermediaries)

• Sales representatives • Agents

• Distributors • Export trading companies

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 Licensing
Company owning intangible property (licensor) grants
another firm (licensee) the right to use it for a specified time

+ Finance expansion
+ Reduce risk
Advantages + Reduce counterfeits
+ Upgrade technologies

– Restrict licensor’s future

Disadvantages – Reduce global consistency
– Lend strategic property

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 Franchising
Company (franchiser) supplies another (franchisee)
with intangible property over an extended period

+ Low cost and low risk

Advantages + Rapid expansion
+ Local knowledge

Disadvantages – Lost flexibility

– Potential free riding

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Management Contract

Company supplies another with

managerial expertise for a
specific period of time
Advantages
+ Few assets risked
+ Nations finance projects
+ Develops local workforce

Disadvantages
– Personnel at risk
– Create competitor

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 Turnkey Project
Company designs, constructs, and tests
a production facility for a client
+ Firms specialize in core
competency
Advantages
+ Nations obtain infrastructure
projects

– Politicized process
Disadvantages – Create competitor

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Wholly Owned Subsidiary

Facility entirely
owned and controlled
by a single parent company

Advantages
+ Day-to-day control
+ Coordinate subsidiaries

Disadvantages
– Expensive
– High risk

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 Joint Venture
Separate company created and jointly owned by two or more
independent entities to achieve a common business objective

Advantages Disadvantages
• Reduce risk level
• Penetrate markets • Partner conflict
• Access channels • Lose control
• Protect interests

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 Strategic Alliance

Entities cooperate (but do not form a separate

company) to achieve strategic goals of each

Advantages
Share project cost
Disadvantages
Tap competitors’ strengths Create competitor
Gain channel access Partner conflict
Protect interests

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Entry Modes: Strategic Factors

Cultural environment

Political/Legal environments

Market size

Production and shipping costs

International experience
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Risk, Control, Experience

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