Global Marketing Management and Strategy

1. Leveraging the
Business
By: Ryan D. Montilla, MBA

2. Always think outside the box and embrace opportunities
that appear, wherever they might be. – Lakshmi Mittal

3. There are many ways to generate growth options
that leverage the core business. Creative thinking
process, introduced in Chapter 10, can help. Good
outcomes more often come from having good
options on the table rather than making optimal
decisions among mediocre ones. The creative
thinking exercise can best be engaged around the
following series of questions, which have proved to
be a good source of options:

4. Which assets and competencies can be
leveraged?
What brand extensions are possible?
Can the scope of the offering be expanded?
Do viable new markets exist?

5. WHICH ASSETS AND COMPETENCIES
CAN BE LEVERAGED?
 A focus on assets and competencies starts by creating an
inventory in order to identify the real strengths of the
business.
 The second step is to find a business area where the assets
and competencies can be applied to generate an advantage.
 The final step is to address implementation problems. Assets
and competencies may require adaptations when applied to
a different business.

6. Marketing Skills
A firm will often either possess or lack strong marketing skills
for a particular market. Thus, a frequent motive for expanding
into new product markets is to export or import marketing skills.
Proctor & Gamble’s (P&G’s) acquisition of Gillete in 2005 was
substantially about deploying and acquiring marketing skills. At
a very basic level, P&G had great skills in marketing to women.
Its brands include Olay, Camay, and Max Factor: On the other
hand, Gillete, with its range of innovative razor and shaving
products, had been regularly cited as the firm that understood
the men’s personal care market better than anyone else.
Adding the two groups together widens the product mix in a
logical way and provides avenues for market learning on both
sides.

7. Capacity in Sales or Distribution
A firm with a strong distribution capability may add products or
services that could exploit that capability. Thus, Tesco’s store
network and later its strength as an on-line store helped provide
a boost to its financial services business. Post officers have
strengths in distribution and security that provide them with an
asset that can be exploited. In the United Kingdom, the Post
Office uses these strengths to offer foreign exchange,
insurance, and investments. Similarly, in Ireland the national
postal service, An Post, offers money transmission and banking
services. E-commerce firms such as Amazon often have
operations that can add capacity just by adding a button to
access another product group. The result can be additional
sales and margins to offset the fixed costs of the operation.

8. Design and Manufacturing Skills
Design and manufacturing ability can be the basis for
entry into a new business area. Cadburry’s expertise in
the manufacture flace and in extrusion allowed them to
create the TimeOut snack bar. The ability to integrate
design, manufacturing, and store operations is central to
Zara’s leadership positioning in the fashion market. The
ability to make small products has been a key for Sony as
it has moved from product to product in consumer
electronics.

9. R&D Skills
Expertise in a certain technology can lead to a new business
based on that technology.
Nokia is often cited as a packaging firm that became a mobile
phone manufacturing. While this is true, it masks the full story
of its historical involvement in cable manufacture and then
electronics and telephone exchange equipment. What is
common among these areas and the driving force of Nokia’s
excellence is a commitment to R&D-driven innovation. The
challenge is to be open to channelling R&D towards new
business areas. Dyson has been very successful at using R&D
to drive new business, developing from the ballbarrow to the
dual-cyclone vacuum cleaner to the two drum washing machine
to the Airblade hand dryer. In general, breakthroughs in a
business area tend to come from technologies owned by other
industries. Creativity, often in short supply, is needed to provide
opportunities for basic technology and the R&D capability that
supports it.

10. Achieving Economies of Scale
Product market expansion can sometimes provide
economies of scale. Two smaller sales forces, new
product development or testing programmes, or
warehousing and logistics systems. However, the
combination of these firms may be able to operate at an
efficient level.

11. Brand Extensions
One common exportable asset is a strong, established
brand name – a name with visibility, associations, and
loyalty among a customer group. The challenge is to take
this brand asset and use it to enter new product markets.
The name can make the task of establishing a new
product more feasible and efficient, because it makes
developing awareness, trust, interest, and action all
easier.

12. Brand Extension Logic

13. Brand extension options can be created by
determining the current brand image and
what products and services would fit these
associations. In what arenas would the
brand be considered relevant? The
evaluation of each extension alternative is
based on three questions, each of which
must be answered in the affirmative for the
extension to be viable:

14. 1. Does the brand fit the new product context? If the customer is
uncomfortable and senses a lack of fit, acceptance will not come
easily. The brand may not be seen as having the needed
credibility or expertise, or it may have the wrong associations for
the context. In general, successful extensions will have one or
more basses of fit, such as:
 A companion product – Bertolli extended from margarine in
dressing, olive oil, and pasta sauce;
 A common user – The Economist’s lifestyle magazine Intelligent
Life, Gerber baby clothing;
 A distinctive attribute/benefit – easyCar.com, Terry’s Chocolate
Orange bar;
 An expertise – Disney English, located in Shanghai, uses
Disney characters to teach English to Chinese children, building
on its ability to deliver great service and its fund relationship
with children and trusting relationships with parents;
 A personality/self-expressive benefits – Kingfisher Airline took
the personality of its founder, Vijay Mallya, and Kingfisher beer
and extended them to the growing airline business in India.

15. In general, a brand that has strong ties to a product class and
attributes (for example, Airbus, Hyundai, or Petrobras) will
have a more difficult time stretching than a brand that is
associated with intangibles such as a brand personality (for
example, Helmut Lang or Australia’s Crown Entertainment
brand) In a survey of brands extensions by TippingSprung,
consumers were not enthused about Burger King men’s
clothing, Kellogg’s hip-hop streetwear, Allstate Green
insurance, and Playboy energy drinks, in part because of a fit
problem.

16. 2. Does the brand add value to the offering in the new product
class? A customer should be able to express why the brand
would be preferred in its new context. In spite of the fact that
cruise ships are difficult to tell apart, nearly anyone could
verbalize rather clearly how a Disney cruise ship would be
different from others – it would have Disney characters
aboard, contain more kids and families, and provided magical
family entertainment. India’s Kingfisher Airline is part of the
United Breweries group, which also sells the well-known
Kingfisher beer. Given the strength and financial importance of
the drinks brand, it was imperative that the airline business
add value.

17. 3. Will the extension enhance the brand name and image?
The ideal is to have extensions that will provide visibility,
energy, and associations that support the brand. Monsoon’s
Accessorize supports its position as a concept fashion retailer.
Disney’s extension into theme parks in Europe and Asia, retail
stores, and cruises all reinforced the brand. The extension of
the original easyJet brand to on-line shopping
(easyValue.com), job search (easyJob.com), mobile phones
(easyMobile.com), and on-line personal finance
(easyMoney.com) and its ongoing move into other areas all
provide an energy and momentum to the brand and help to
attract new groups of customers to the brand and other
offerings.

18. Subbrands and Endorsed Brands
Subbrands and endorsed brands become options when
to unfortunate realities exist.
 First, the existing brands are judged to have the wrong
associations or to have a risk of being damaged by the
extension.
 Second, the organization does not have the size or
resources to build a new brand, perhaps because the
task is too difficult in a cluttered context or because the
business does not justify the investment needed.

19. Expanding the Scope of the Offering
A firm may regard its in-depth knowledge of and access
to a marketing segment as an underleveraged asset.
Dometic, the Sweden-based international specialist
refrigeration company, made absorption refrigerators
characterized by silent operation, which were sold to
hotels as minibars and for the wider mobile home, leisure
vehicle, and marine industry. This success led the
company to add other products such as air conditioning,
automated awnings, generators, and systems for
cooking, sanitation, and water purification. The business
was broadened from refrigeration to interior systems and
enabled Dometic to create a direct-to-dealer distribution
system that became an ongoing competitive advantage.