Pp Presentation Kristianstad 17.11.2010

Global Marketing
– Born local, Act global

Kristianstad, the 17th November, 2010

By: Svend Hollensen, svend@sam.sdu.dk

- Value Chain - Value net
- Internationalization of the value chain
- ”Born Global” model
- CSR: YouthAids business model – Cause Marketing
- GAM – Global Account Management (IKEA and Licentia)
Cases e.g.
- Nike vs Triumph vs. Bjørn Borg
- Zara vs. Gap vs. H&M
- GAM: IKEA and Licentia 5e, © Pearson Education 2010
Hollensen, Global Marketing

Hollensen, Global Marketing 5e, © Pearson Education 2010

It nearly came to the situation that the US Government even
had to print new 1 dollar notes with a desperate George
Washington ………


The new world order (US loosing its
leadership in the world economy) –
provides new opportunities for
emerging regions to position
themselves in the long-term
development of the world economy


Some background information
about myself, my university and my
books


SDU

Here I live


University of Southern Denmark
Sønderborg


Svend Hollensen

GLOBAL MARKETING
5th Edition

This was how the
authorship came
up:
First edition came
in 1988:


in 1998 2001 in 2004

4th ed. cam
5th ed. came in 2007
in 2010


2nd ed. came in
2010 on Pearson


Came out in Jan. 2009


Definition of Globalization

Reflects the trend of firms buying,
developing, producing, selling and
distributing products and services in
most countries and regions of the world


Globalization
-from the micro-perspective

The Value chain


Value chain of focal firm:
Support functions: - Firm infrastructure
- Human Ressource Man.

R&D Production Marketing Sales and
services
Cus-
Suppliers
- Sales force
tomers
- Product dev. - Prod. capaciy - Marketing info.
- Logistics
- Design - Component parts - Product - Terrms of sales
- Price
- Petents - Assembly - Inventory
- Distribution
- Product features - Material flow
- Communication - Payment
- Engineering - Quality Man. -Customer
- Branding
service
Support functions: - Technology development
- Procurement (buying)

Upstream Downstream


Suppliers: Customers:
Second tier: First tier: First tier: Second tier:
Oil / Refiner Focal firm: Mass Merchan-
Chemicals / Plast parts disers:
Plastic molder
Braun (Gillette) Marks&Spencer
Sainsbury
Tesco, B&Q etc.
Nylon prod. /

End - consumers
Brushhead Electrical retail
DuPont chains:
Dixons
Curry
Comet
Aluminium Electric motor
Prod
Electrical Independent
wholesaler electrical
stores
Chemicals / Rechargeable
Producer of Battery pack
NiCd batteries
Internet:
Amazon.com
Wires / Plugs / Dentist.net
Rubber / Metal Timer / chip / etc.
/ Wire producer Printed circuit ’Internal’ value chain:

B2B B2B B2B B2B B2C

Upstream Hollensen, Global Marketing 5e, © Pearson Education 2010 Downstream

Exhibit 1.4: Pocoyo

Zinkia Entertain- Granada Pocoyo sold to
ment, Madrid Ventures, UK 100 countries
(beginning of 2007)

Upstream Downstream


Value net
How to create value in cooperation
with other actors in the value net


Vertical Network
The Value Net: Suppliers
Horizontal Network

Focal Complemen-
Competitors tors
firm

Customers


Vertical
cooperation:
Suppliers
(Upstream)

Horizontal cooperation:

Competitors: e.g. Focal firm: Complementors: e.g.
Braun (Gillette)

Possible cooperation with
Philips about developing Possible cooperation about
new technologies expanding the total product
in electrical tooth brushing, programme in oral care
e.g. software-development

Customers
(Downstream)

+ =


+

= Successful alliance

What is Irn-Bru?

Irn-Bru is:-

A sparkling mixed fruit flavour soft drink enjoyed by
teenagers and young adults, with a unique and indescribable
taste that delivers a truly alternative refreshment experience.


Internationalisation Process:

Passive, reactive exporting
↓
Active, proactive exporting
↓
Local production

Barr 1980s → Barr 2009

PEPSI BOTTLING GROUP

PARTNERSHIP
IN
RUSSIA

Production of Irn-Bru started in February 2002


 Irn-Bru adds to PBG in-store presence
 Helps “shut” Coke out


IRN-BRU : RUSSIA


Global Marketing Strategies

Globalization Localization
(Standardization) (Differentiation)

100% 100%

Global Low-cost
Production and Culturally Close
Selling to Consumer

Flexible Response
Global roll-out
of Concepts /
High speed
GLOCAL to local customer
needs

Regional
and local market
Low penetration
complexity

09-12-2010 45

Comparison of different
Business models


Sporting
Rubber, Fabric Shoe Goods,
and Other Raw Manufacturing Marketing Departments
Materials and Assembly and Shoe
Stores

Customers
Online Catalog
Product
and Other
Development
Retailing

Nike Branded
Stores

Customer Needs/Wants Feedback


Brand Pyramid: Women‘s underwear (lingerie)

High price/
(‘higher’ perceived
value)
High-end
market

Agent Provocateur
Chantelle, La Senza
Victoria‘s Secret , Marie Jo

Mid-market

Marks & Spencer
National brands (e.g. Femilet , DK)

Low-end market

Low price/ Asda Tesco Sainsbury H&M Private Labels
(‘lower’ perceived
value)


Entry
Suppliers: Manufacturer: modes: Retail: Consumers:
Main Triumph 50 subsidiaries +
production sites: distribution centres
around the world

Bangko
Many
k Independent different
stores countries
(approx. 40,000 and
Morocc partner stores)
o
Many
Triumph Own stores different
China (1,620 in total)
International countries
(HQ in Switzerland)

India Many
Other Clothing different
Store chains countries
(supplied with private
labels) from Triumph)
others

In total:
27 production
centres

Most fashionable Items with longer
items (own shelf life, e.g. basic T-
production): shirts (out-sourced
- Own factories in Spain production ):
Suppliers:
an Portugal (app. 50% Low-cost producers in: Info-
of all supplies) Turkey, India, Bangla feed-
- Rest of Europe (app. Desh and China back

25% of all supplies)
75% 25%

In the customer
Inditex feed-back chain,
Zara stores act as
ZARA: customer
information
gathering
Info- terminals, that will
feedback bring back the
information to Zara
HQ in order to
create new
designs, that will
1500 ZARA stores around the world be produced in the
factories
Info-
feedback

End-customers:
Millions of end-customers around the world


Master
franchisor -
BBW - Louis,
Missouri , USA

Master franchisee -
Choose Holding ApS
Owns franchise
Rights to DK, S, N , D

Choose Choose Choose Choose
Denmark Sweden Norway Germany
ApS AB AS GmbH

8 stores 1 store 2 stores 4 stores

Sold in 2008 to one of
the founders of Choose
Holding ApS


Hvad er lighedspunkterne rent marketingmæssigt mellem de to produkter?


Cause-related marketing
&
CSR


Provide awareness for Aldo shoes
by making the campaign / tag
YouthAIDS trendy among celebrities
ALDO Shoes
(A non-profit organization
operating in more than 60
countries to stop spred of HIV (Canadian owned shoe retail
/ AIDS) chain with 1,000 stores
operating in 37 countries
USD 3.5 million for the sales of around the world)
nearly 1 million tags in Aldo stores


Blue Ocean Strategy
Red Oceans: Tough head-to-head
competition in mature industries often results
in bloody red oceans of rivals fighting over a
shrinking profit pool

Blue Oceans: The unserved market, where
competirtors are not yet structured and market
is relatively unknown. Here it is about avoiding
head-to-head competition


The three main competitors:
Microsoft Xbox 360: Sony Playstation 3: Nintentendo Wii:


Relative performance level -
perceived by customers

10

0
2
4
6
8
Pr
ice
CP
St U
or Po
ag we
e r
Hi (h
ar
gh d
de di
sk
fin )
itio
n
Vi
de
o
Co
nn
ec DV
tiv D
ity
M (o
ot nl
io in
n e)
co
nt
Fa Un ro
m iq
lla
bl
ily ue e
or ga
ie m
nt

Factors of Competition
ed ep
la
(la
rg y
e
pu
bl
ic)

Value curve - Wii vs. Xbox and SP3

Nintendo Wii

Sony Playstation 3
Microsoft Xbox 360

2005 2006 2007 2008
Mill. Units Mill. Units Mill. Units Mill. Units
% % % %
Sony:
PS2 16.8 11.7 8.6 7,4
PS3 - 1.2 7.2 10,3
Total 16.8 12.9 15.8 17,7
69% 53% 40% 33%
Microsoft:
Xbox 3.6 0.7 - -
Xbox 360 1.2 6.8 7.8 11,2
Total 4.8 7.5 7.8 11,2
20% 31% 20% 21%
Nintendo:
GameCube 2.7 1.0 - -
Wii - 3.0 15.5 24,8
Total 2.7 4.0 15.5 24,8
11% 16% 40% 46%
Total 24.3 24.4 39.1 53,7
100% 100% 100% 100%

Global Marketing of:


Global Marketing Strategies

Globalization Localization
(Standardization) (Differentiation)

100% 100%

Global Low-cost
Production and Culturally Close
Selling to Consumer

Flexible Response
Global roll-out
of Concepts /
High speed
GLOCAL to local customer
needs

Regional
and local market
Low penetration
complexity

09-12-2010 77

of „Global Marketing‟

Russia – pure translation

Europe:

India – Co-authorship

Latin America – Co-authorsh

USA: “Competitive” alliance


Entering is difficult


Two
contrasts

Result: .. in Middle East,


But then something happened ….. A
lecturer in Teheran presented the
book to Iranian students.

And today is quite popular
”underground” literature among
Iranian business students


Textbooks for courses in ”International Marketing”:

• Fragmented market
• No clear market leader
• Intensive competition on the publisher level


High degree of competition between textbooks on publisher level:

and many more ..


High degree of internal competition:


What to do as a supplier with small relative power? Business schools = end customers
Supplier: Customer:
Reps in UK
R&D Production & Marketing (home)
Lecturers Students
Product development
GAM -relation Reps in
Benelux Lecturers Students

Reps in
Lecturers Students
Skandinavia

HQ in UK (London) Reps in
Eastern Lecturers Students
= The wold’s biggest
Europe
publisher within business
literature for uni. courses
Reps in
Africa and Lecturers Students
Asia

Reps in
North Lecturers Students
America


A specific product strategy
for a specific market


Value chain configuration for emerging and developing countries (1)
Problem today:
Today companies in developing and emerging countries often only
get access to 15-20 % of the total added in the value chain from raw
materials to final product

Developing /
Emerging
Countries:
Consume
e.g. in WE
15-20% 80-85%

Raw Final
materiels Product

Total value added from developing / emerging
Countries to end end-consumer


The Banana Split Model
Plantation workers 2%

Plantation owners 10%

Retailers 40%

Transnational companies 31%
(includes 5% EU tariff)

Ripeners /
Distributors 17%
There is a high degree of overlap between the transnational companies and the ripeners / distributors:
Four of the five transnationals are also involved with ripening: Chiquita, Dole, Del Monte


Nike


Value chain configuration for emerging and developing countries (2)
Challenge tomorrow for companies in developing and emerging
countries:
To get access also to the remaining 80-85 % of the total added in the
value chain from raw materials to final product

Developing /
Emerging
Countries:
Consumer
e.g. in WE:
15-20% 80-85%

Raw Final
materiels Product

Total value added from developing / emerging
Countries to end end-consumer

How do I contribute to letting the developing
countries get access to the 80% of the value
chain:
-Writing a Pearson textbook, about lifting their
competence level in Global Marketing & Supply
Chain Management

- Contributing to the development of business in
these countries, e.g. a B2B Programme
(Udenrigsministeriet) about development of a e-
commerce system in Ghana


Born Global


’Born Globals’


The three founders (from the left):
Frank Thygesen, Håkan Löfholm and Johnny
Ragazzo


The product ’One Café’ and how it is used


Cooperation Distributors / Retail End-con-
(Fair Trade Wholesalers Outlets sumers:
concept) (Super-
Markets) In-home
Roasters
(e.g. Kraft Cafes /
Small coffee Foods, Sara Restaurants
bean farmers Lee, Nestlé,
P&G, Tchibo) Out-of-
Airlines home
Middlemen
(brokers,
Hotels
importers)

? ? ?
A new player
appears:
One Café (Uganda) Searching for the right international partners
and customers


Global Account
Management
(GAM)


Global Account Management (GAM)

Supplier HQ

GAM = Management of supplier’s
relations to large powerful customers
(GAs) with worldwide operations

Customer (GA) HQ


Consolidation takes place everywhere and not only in the pharmaceutical industry ……..

Kilde: www.ims-global.com/.../ news_story_010425.htm


GAM relationship with relative high customer power:

Supplier HQ

Traditional HQ-HQ negotiations
with decentralized distribution
DC logistics DC logistics

Customer (GA) HQ

Country Country Country …….. Country
A B C N


Production units


Thank you for your attention


Pp Presentation Kristianstad 17.11.2010

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