Global Marketing


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Global Marketing

  2. 2. Arbitrage: Managing Differences <ul><li>“ AAA” Triangle </li></ul><ul><ul><li>New framework for achieving global integration </li></ul></ul><ul><li>Central Challenge </li></ul><ul><ul><li>Strike the right balance between economies of scale and responsiveness to local conditions </li></ul></ul><ul><ul><li>Manage the large difference that arise between the borders </li></ul></ul>
  3. 3. Arbitrage: A part of 3 A’s <ul><li>Adaptation </li></ul><ul><ul><li>To boost revenue and market share by maximizing the firm’s local relevance </li></ul></ul><ul><ul><li>For a country centered organization </li></ul></ul><ul><ul><li>Companies that do a lot of advertising in order to adapt to local market </li></ul></ul><ul><li>Aggregation </li></ul><ul><ul><li>Attempts to deliver economies of scale </li></ul></ul><ul><ul><li>Standardizing the products and scale </li></ul></ul><ul><ul><li>Companies that do a lot of R&D </li></ul></ul><ul><li>Arbitrage </li></ul><ul><ul><li>Exploitation of differences between national or regional markets </li></ul></ul><ul><ul><li>Balancing of supply and demand within and across organizational boundaries </li></ul></ul><ul><ul><li>For firms whose operations are labor intensive, since labor costs vary greatly from country to country </li></ul></ul>
  4. 4. Need for Arbitrage <ul><li>Competitive advantage </li></ul><ul><ul><li>Achieve absolute economies through international specialization </li></ul></ul><ul><li>Configuration </li></ul><ul><ul><li>To exploit some elements of distance in diverse set of countries </li></ul></ul><ul><li>Controls </li></ul><ul><ul><li>Narrowing spreads </li></ul></ul><ul><li>Change Blockers </li></ul><ul><ul><li>Heads of key functions </li></ul></ul><ul><li>Corporate diplomacy </li></ul><ul><ul><li>Address the exploitation of displacement of suppliers, channels, intermediaries which are potentially most prone to political disruption </li></ul></ul>
  5. 5. Types of Arbitrage <ul><li>Cultural Arbitrage </li></ul><ul><ul><li>Exploiting of culture to gain advantage </li></ul></ul><ul><ul><li>Eg: US Fast food chains </li></ul></ul><ul><li>Administrative Arbitrage </li></ul><ul><ul><li>Exploiting legal, institutional and political differences from country to country </li></ul></ul><ul><ul><li>Eg. Tax differential in Mauritius </li></ul></ul>Adaptation: Advertising to sales Aggregation R&D to sales Arbitrage Labor to sales
  6. 6. Types of Arbitrage <ul><li>Geographic Arbitrage </li></ul><ul><ul><li>Not as important now due to reductions in transportation costs, but can be used in areas such as telecommunications (local vs. long-distance) and distribution networks </li></ul></ul><ul><li>Economic Arbitrage </li></ul><ul><ul><li>Includes exploitation of differences in costs of labor and capital, variations in knowledge or availability of complementary products, technologies or infrastructure </li></ul></ul>
  7. 7. Four Stages of Internationalization <ul><li>Most organizations go through four stages in their development of international markets </li></ul><ul><li>The best route to go global can be decided by using Rugman’s Decision Tree. </li></ul>
  8. 8. Rugman’s Decision Tree
  9. 9. Issues concerning Indian Firms <ul><li>The major issues faced by Indian firms: </li></ul><ul><ul><li>Social and Cultural </li></ul></ul><ul><ul><li>Market Structure and Technology </li></ul></ul><ul><ul><li>Logistics and Distribution </li></ul></ul><ul><ul><li>Economic, Legal and Financial </li></ul></ul>
  10. 10. Social and Cultural Issues: <ul><li>Bane of expansion efforts- Communication </li></ul><ul><li>Different cultures </li></ul><ul><li>Problems with foreign owned and foreign-directed management </li></ul><ul><li>May include public relations, advertising, marketing, product positioning </li></ul><ul><li>Different parameters in governance and ethics </li></ul><ul><li>Remedies: </li></ul><ul><ul><li>Conduct focus group studies </li></ul></ul><ul><ul><li>Create Ideal products </li></ul></ul><ul><ul><li>Establish pricing mechanism </li></ul></ul>
  11. 11. Market Structure and Technological Issues <ul><li>Markets are wide spread and some times fragmented </li></ul><ul><li>Technology needs to be changed frequently </li></ul><ul><li>Future technological trends need to be perceived in advance </li></ul><ul><li>Laws governing selling also affects logistics </li></ul><ul><li>Knowledge of distribution networks </li></ul>Logistics and Distribution Issues
  12. 12. Economic, Legal and Financial Issues <ul><li>Economic Environment: Major determinant of market potential and opportunity </li></ul><ul><li>Stage of Market: </li></ul><ul><ul><li>Low Income Countries High Income Countries </li></ul></ul><ul><ul><li>Lower Middle Income Countries Basket Cases </li></ul></ul><ul><ul><li>Upper Middle Income Countries </li></ul></ul><ul><li>Protectionism: Powerful interests within countries frequently put obstacles- </li></ul><ul><ul><li>Tariff Barriers </li></ul></ul><ul><ul><li>Quotas </li></ul></ul><ul><ul><li>“ Voluntary” Export Restraints </li></ul></ul><ul><ul><li>Subsidies to domestic products </li></ul></ul><ul><ul><li>Non-Tariff Barriers </li></ul></ul>
  13. 13. Economic, Legal and Financial Issues Contd. <ul><li>Local laws only allow Joint Ventures </li></ul><ul><li>Local laws need to be taken into account before expansion </li></ul><ul><ul><li>Eg: Bajaj Auto ran into regulations in Europe for selling their product </li></ul></ul><ul><li>Difficulties in paying for merchandise- Only companies with adequate resources will think of expansion </li></ul><ul><ul><li>Remedy: Digital Currency </li></ul></ul><ul><li>Governments and Politics: Governments can be a strong influence; Stable regimes are conducive </li></ul>
  14. 14. Other Issues: <ul><li>Perception of international consumers: Shoddy quality, packaging not up to standards, unreliable delivery, fluctuating export procedures </li></ul><ul><li>Image Problem: </li></ul><ul><ul><li>Usage of Child Labor </li></ul></ul><ul><ul><li>Lack of environmental safeguards </li></ul></ul><ul><ul><li>Cruelty to animals </li></ul></ul>
  15. 15. International Marketing Strategy Process Understand the environmental influences on a firm’s international markets Segment international markets, identify and analyze opportunities Develop appropriate international marketing strategies, planning and control processes Decide market entry strategy Build added value through effective, marketing mix strategies Feedback and reassess continuously
  16. 16. Global Marketing Strategies for Indian Firms <ul><li>Entry Strategies: </li></ul><ul><ul><li>Partnerships in the form of Joint Ventures, Mergers and Acquisitions and Strategic Alliances </li></ul></ul><ul><ul><ul><li>Eg: Tata acquired Tetly </li></ul></ul></ul><ul><ul><li>Expansion of Scope </li></ul></ul><ul><li>Application of STP to the global market </li></ul><ul><ul><li>Macro Level </li></ul></ul><ul><ul><li>Micro Level </li></ul></ul><ul><li>Global Supply Chaining </li></ul><ul><li>Branding </li></ul>
  17. 17. Global Marketing Strategies for Indian Firms Contd. <ul><li>Value Addition </li></ul><ul><li>Positioning across market </li></ul><ul><li>Branding and Promotion </li></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Price Promotions </li></ul></ul><ul><ul><li>Sponsorships </li></ul></ul><ul><ul><li>Point of Purchase </li></ul></ul><ul><li>International Product Life Cycle </li></ul><ul><li>Pricing </li></ul>
  18. 18. Indian Firm Strategies: An Example
  19. 19. Indian Firm Strategies: An Example <ul><li>Asian Paints </li></ul><ul><li>Strategy: </li></ul><ul><ul><li>The company is focusing on further improving the operations of all of its subsidiaries in India and abroad and has already launched E-Strides, an ERP initiative through which all the overseas ventures are being covered for sharing of global knowledge, best practices and better control on operations. </li></ul></ul><ul><ul><li>Asian Paints has targeted companies in emerging markets of Africa, Southeast Asia and South Asia, Middle East and Pacific region. In order to increase the pace of globalization, the company has also focused on acquiring international companies with widespread presence in the global markets like the acquisition Berger International. </li></ul></ul><ul><ul><li>Enabled by vertical integration, it has also diversified into specialty products such as Pentaerythritol and Phthalic Anhydride. </li></ul></ul>
  20. 20. Indian Firm Strategies: An Example <ul><li>Acquisitions: </li></ul><ul><ul><li>Fiji’s Fourth largest paints company: Taubmana Paints (Fiji) Ltd. </li></ul></ul><ul><ul><li>50.1% stake in Berger International Ltd (2002) </li></ul></ul><ul><ul><li>60% stake in SCIB Chemical, Egypt (2002) </li></ul></ul><ul><ul><li>Entry into South East Asia </li></ul></ul><ul><ul><li>Increased geographic reach – China, Singapore, Thailand, Malaysia, Myanmar, UAE, Jamaica, Barbados, Trinidad and Tobago </li></ul></ul><ul><ul><li>Entry into Egyptian market and African market </li></ul></ul>
  21. 21. Elements of Asian Paints Supply Chain
  22. 22. Indian Companies on Global Scale
  23. 23. Future Trends of Global Marketing <ul><li>Rule of Free Market </li></ul><ul><li>End of Trade-Cycle decision rule </li></ul><ul><li>Rise of Internet and IT </li></ul><ul><li>From monologue to dialogue </li></ul><ul><li>Measurement and Accountability </li></ul><ul><li>Organizational Innovation </li></ul>
  24. 24. THANK YOU