Global marketing

HideShow resource information

Global marketing

Global strategy versus global localisation

Some businesses sucess by having a gloval marketing strategy that applies to all their operations worldwide. this works well when their market have similar expectations wherever they are. a global approach to marketing mix makes good sense. this can be seen as a 'one size fits all' approach

A global marketing strategy means that the same products & strategy can be used in all markets.

  • producing on a large scale is cheaper, designs can be standardised & there may be economies of scale
  • the product range an be smaller
  • the same marketing campaign can be used everywhere
  • less time has to be spent on researching individual marets
  • less time is spend on developing individual products for many markets
1 of 20

.

But...

  • some sales will be lost if not all segments are catered for
  • turnover & profits may not be maximised
  • marketing tactics & or products may cause negative reactions from some segments of the markets

for most businesses, a global marketing strategy will not be effective. it is likely that some degree of adaption to local conds & preferences will be needed. the business will face v.different kinds & levels of comp in its various different markets; these will require a differentiated response

2 of 20

Global localisation

where markets differ, & the frequentl do, businesses need to plan marketing strategies that will fit individual market preferences

  • market segments will often overy in nature, reflecting local cultural norms, fashion & individual tastes. the marketing plan must take account of customers' expectations & aspirations
  • promotion strategies must fit in with local media availability. potential customers first have to be identified & then promotion must focus on the media to which those customer have access

Global localisation means that although the business operates on a global basis, it may adapt or change its products & marketing plans to suit individual countries/ market segments. solutions will vary hugely depending on the product, the market, & the preffered strategy

3 of 20

Glocalisation

Global localisation is sometimes referred to as glocalisation:

  • sales are likely to increase as each market is specifically targeted. product featurs are tailored to customer needs, preferences & incomes. promotion reflects local media faclities
  • turnover & profits are maximised
  • marketing tactics and / or products are ideally suited to the local situation

But...

  • the business cannot fully exploit economies of scale
  • researching each market & adapting / developing products takes time & is costly
  • wider product ranges & multiple marketing campains are harder to manage
  • average costs are therefore likely to be higher

Glocalisation combines the word 'globalisation' & 'localisation' to emphasise the idea that a global product/ service is more likely to sucess if it is adapted to the specific requirements of local practices and cultural expectations

4 of 20

Cost-effectivness

there is a trade-off between the v.cost effective approach of the global straegy and the painstking procedures involved in global localisation. but can work well, in certain circumstances. a global strategy works for Cola because its an iconic product, brand recognition is almost universal & the image is crucial to that

5 of 20

Diagram

.

6 of 20

definitions

Ethnocentric Model: an approach to marketing based on the tendency to look at the world primarily from the perspective of one's own culture. a business believes that what was a cuess story in the domestic market will also be so in the other countries in which it operates

Geocentric approach: sees the world as a potential market with both similarities and differences in domestic and foreign markets. an effort is made to develop integrated world market strategies to gain the best from both of these strands

Polycentic model: an approach that considers each host country to be unique. each of its subsidiary businesses develops its own unqiue business & marketing strategies in order to suit these particular needs

7 of 20

planning

Which is the best?

there is no best as such. in reality it is unusual for a business to adopt a purely ethnocentric/ polycentric strategy. most businesses will use elements for both i.e. a geocentric strategy

8 of 20

adaption

The marketing mix

There are many factors that dictate the actual approach used & these are based around the marketing mix.

Product

  • industries with high product development costs & rapidly changing technology need globally standardised products & services; this applies to many electronic products
  • by serving large markets, development costs can be quickly recovered
  • products such as Ferrari or an iPad need little adaption or change for different markets
  • products such as food & drink are much more easily adapted
  • they also have to take into account different cultures & tastes
  • mcDonalds has adapted its menus to suit a whole range of differeing requirements
9 of 20

.

Price

  • for some markets price will need to be low to attract consumers. within a mass market, the level of income will be a crucial factor
  • the level of economic development may not permit standard western pricing tactics
  • the fast food companies moving into India always have some low price items on their menus
  • for some producs though, such as luxury goods, a premium price is an important signifier of the states of that good and, more importantly, the purchaser as well. This sometimes referred to as a prestige pricing strategy
10 of 20

local conditions

Promotion

  • this has to link with the potential consumer's culture & background if it is to work
  • a celeb in 1 country can be completely unknown in the next
  • sense of humour can be different as can cultural norms & taboos
  • promotion strategies have to fit in with local media development & cultural expectations

Place

  • in some countries traditional methods of distrubution will not work
  • traditional retail newtorks do not exist in many remote areas
  • in India the Unilever Shakti programme relies on recruiting women to sell their products to friends & families in remote areas
  • at the other end of the scale, in fast-developing places such as India & China, luxury products are sold in opulent & prestigious shopping malls
11 of 20

product development

Backward innovation

The sophisticated manufactured products that sell well in North America & Europe are too expensive to sell well in poorer countries. Yet simpler, cheaper products may sell well. The classic example is mobiles in Africa. There are in priniciple v.cheap to set up because the infrastructure of land lines is not needed. Intially, 2nd hand mobilesthat had been repaired sold v.well & helped to open up new markets & job opportunties for Africans. Later the manufactuers began to make a basic model that would sell much more cheaply than those typically offered in developed countries.

A no, of products are now designed specifically for sale at reasonable price. This is backward innovation.

12 of 20

.

Using sales incentives

In some markets it can be hard for some businesses to create a distrubution network. this is especially likely if the business is targting a mass market in a place where most retailers are small. it may be necessary to create a system of agents, each responisble for marketing in a relatively small area / market segment. The agents will need to be incentivised. There is no way of doing this, & the strategy really will have to be linked to local conditions. Recruitng appropriate people can be the key to sucess.

13 of 20

Global market niches

Global market niches are smaller, more specialised parts of a global market where customers in more than 1 country have particular needs that are not fully met by the global mass market. The product/ service is likely to be differentiated from that of the mass market.

A market niche is a smaller, more specialised segment of a larger market.

Glbal niche markets can transform business prospects because they create opportunties where national niche markets are v.small. Few people can afford a Rolls Royce because they tend to cost around £250,000. But with a world market, there are many more people who have enough money, appreciate the special qualities that car embodies & want to show off their huge wealth publicly. Together they have enabled RR cars to survive & sometimes flourish

14 of 20

.

There are many global niche markets for luxury products but there are man others for people with shared interests. International subcultures form markets that can sustain a variety of bsuinesses. Many relgious groups create international markets for books that reflect their shared values.Other subcultures centre on different kinds of music / practically anything else.

15 of 20

Niche vs Mass

Comparision between niche & mass markets

16 of 20

.

  • a global market niche has very similar characteristics to local niche markets but operate on a global scale
  • some global niches are large while others are v.specialist & small
  • for some producers, production on a global scale is the only option as there is not enough demand in the domestic market to sustain the business
  • for others it is a way to escape the increasingly hostile competition from low cost foreign producers. By concentrating on a section of the market that has particular preferences & adapting their product accordingly they can differentiate & escape direct comp
  • they often cater for subcultures within the main market

subcultures are groups of peopke who have interests & values in common. they may be based on hobbies, life-styles, ethnic/ religous background or just personal enthusiasms & preferences

17 of 20

Characteristics of successful global niche busines

  • they will have a clear understanding of the needs of their customers & their chosen market
  • it may be possible to offer high levels of customer service
  • they will have expertise in their field
  • they will tend ti priotrise profit rather than market share. higher profit margins will be made on a smaller turnover, in contrast to the mass market where low profit margins are made with large turnovers
  • innovations is often the key to satisfying consumers in niche markets
  • they will focus on cost effeciency but not at the expense of quality
  • they will use the marketing mix differently to mass market firms e.g. with more emphasis on the product rather than price
18 of 20

Advantages of operating in a global niche market

  • by focusing on a smaller segment of the market, a business has the ability to provide specialised services & products which are often more valuable & in greater demand
  • Consumer demand in a niche market can be more price inelastic, whicg may enable a higher price to be charged
  • direct competition may be reduced
  • smaller markets allows you to get to know your customers better & develop more effective marketing & sales strategies, thereby boosting sales & profitability
19 of 20

Disadvantages of operating in a global niche marke

  • producing on a smaller scale means that economies of scale cannot be fully exploited & so average costs may be higher
  • market size is ultimately limited
  • a successful niche market may attract competition or a takeover bid
  • niche markets tend to be based on a narrow consumer interest; this may change quite suddenly
  • over time, niche markets can expand and become mass markets and so business can lose the advantages of being a niche producer
20 of 20

Comments

No comments have yet been made

Similar Economics & Business Studies resources:

See all Economics & Business Studies resources »See all Globalisation and trade resources »