This document summarizes key concepts from a marketing class on competing in global markets. It discusses three main international strategies - multi-domestic, global, and transnational - and how they balance global integration versus local responsiveness. The document also summarizes approaches to the global marketing mix, including considerations for pricing models, product standardization versus adaptation, distribution channel choices, and adapting versus standardizing promotions. Reminders are provided about an upcoming marketing simulation and final exam.

1. MARK4210, 2014 Spring, L1/L2
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2
[Class #23]
Competing in a Global
Market

2. Agenda
 Global Marketing Strategic Approaches
 Global Marketing Mix
 Price
 Product
 Place
 Promotion
2

3. Global Marketing Strategic
Approaches
 Three main international strategies:
 Multi-domestic
 Global
 Transnational
 Each strategy involves a different approach to
build efficiency across nations and
responsiveness to variation in customer
preferences and market conditions across
nations
3

4. 4
Globalintegration
WeakStrong
Local responsiveness
Weak Strong
Source: Cavusgil et al. 2012
Coordinate marketing
activities across
countries to maximize
efficiency and
effectiveness
Adapt to the local
environment, meet
the specific needs
of buyers in
individual countries
Global Marketing: Integration-
Responsiveness Framework

5. Multi-domestic Strategy
 HQ delegates autonomy to each country
manager, allowing him/her to operate
independently and pursue local responsiveness
 Sacrifices efficiency in favor of emphasizing
responsiveness to local market requirements
 MTV customizes the programming that is shown on its
channels within dozens of countries, including New
Zealand, Portugal, Pakistan, and India
Source: Strategic Management: Evaluation and Execution, D. Ketchen, J. Short, Flat World Knowledge, Inc., 2012 5

6. Global Strategy
 HQ emphasizes centralized coordination of
country operations to minimize duplication, and
maximize efficiency; minor product modifications
in various markets, but essentially offering same
products
 Sacrifices responsiveness to local market
requirements in favor of emphasizing efficiency
 Microsoft offers the same software around the world
but adjusts the programs to match local languages
 Very effective for firms whose product is largely hidden
from the customer’s view -- silicon chip maker Intel
Source: Strategic Management: Evaluation and Execution, D. Ketchen, J. Short, Flat World Knowledge, Inc., 2012 6

7. Transnational Strategy
 Involves balancing the desire for efficiency with
the need to varying preferences across countries;
seeks middle ground between multi-domestic
strategy and global strategy
 Standardize whenever possible; adapt when
necessary
 McDonald’s relies on the same brand names and the
same core menu items around the world, but make
some concessions to local tastes too
Source: Strategic Management: Evaluation and Execution, D. Ketchen, J. Short, Flat World Knowledge, Inc., 2012 7

8. 8
Globalintegration
WeakStrong
Local responsiveness
Weak Strong
Global Strategy
Transnational
Strategy
Export
Strategy
Multi-domestic
Strategy
Source: Cavusgil et al. 2012
Global Marketing Strategies

9. 9
2013 Top Global Brands

10. 4P’s: Approaches to Global
Pricing
 Ethnocentric Pricing
 Polycentric Pricing
 Geocentric Pricing
10

11. Ethnocentric Pricing
 Per-unit price of an item is the same no matter
where in the world the buyer is located
 Importer must absorb freight and import duties
 Potential problems?
11

12. Price Escalation
 Price escalation is a common result of
ethnocentric pricing
 The increase in the final foreign selling price of
goods traded across borders
12

13. Price Escalation – How to
lessen the Problem?
 Rearrange the distribution channel
 Eliminate costly features or downsize the product
 Production in local or a low-cost market
13

14. Polycentric Pricing
 Permits affiliate managers or independent
distributors to establish price as they feel is most
desirable in their circumstances
14

15. Geocentric Pricing
 Global pricing with local adjustments
 Allows firms to take into account global markets
and global competitors in establishing prices, but
also local factors
 Local costs
 Income levels
 Competition
 Local marketing strategy
15

16. 16
4P’s: Global Product
Strategies
• Firm adopts
the same
policy used in
home market
• Offering
product
virtually
unchanged in
all market
• Firm caters to
the needs and
wants of foreign
customers
• Changing
elements of
design,
function, and
packaging
• Firm designs a
product from
scratch for
foreign
customers
Source: W.J. Keegan, Multinational Product Planning: Strategic Alternatives, Journal of Marketing, 33, 1969, pp.58-62
Straight
Extension
Product
Adaptation
Product
Innovation

17. Source: Kotabe and Helsen 2012
4P’s: Global Product Strategies
17
Advantages of Product
Standardization
• Scale economies
• Global image
• Easier planning and
control
• Convergence in consumer
tastes
• Global customers
Advantages of Product
Adaptation/Innovation
• Meet local consumer
needs
• Meet local economic,
climatic, technological,
requirements
• Utilize local advantages
• Increase motivation for
local staff
• Meet legal and technical
standards

18. 18
Global Product Planning:
Strategic Alternatives
Product
Same Different
Communi-
cation
Different
Same
Strategy 1:
Dual Extension
Strategy 2:
• Product Extension
• Communication
Adaptation
Strategy 4:
Dual Adaptation
Strategy 3:
• Product Adaptation
• Communication
Extension

19. 19
Global Product Planning:
Strategic Alternatives Examples
Product Strategy
Product
Example
Consumer
Need Satisfied
Product
Strategy
Communication
Strategy
Strategy 1: Product
& Communication
Extension
Gillette
Razor
Disposable,
easy to use
product
Extension Extension
Strategy 2: Product
Extension/
Communication
Adaptation
Wrigley
Chewing
Gum
USA: Substitute
for Smoking
Europe: Dental
benefits
Extension Adaptation
Strategy 3: Product
Adaptation/
Communication
Extension
McDonald Fast-Food
Adaptation:
Add local
products to
range
Extension:
Using global
campaign
Strategy 4: Product
& Communication
Adaptation
Slim Fast
Identical:
Lose Weight
Adaptation:
Preferences for
different flavors
Adaptation:
Celebrity in DE,
Teacher in UK
Source: W.J. Keegan

20. 20
PRS: Which Strategy Is It?
Product
Same Different
Communi-
cation
Different
Same
Strategy 1:
Dual Extension
Strategy 2:
• Product Extension
• Communication
Adaptation
Strategy 4:
Dual Adaptation
Strategy 3:
• Product Adaptation
• Communication
Extension

21. 21
4P’s: Global Distribution
Strategy – Key Decisions

22. Guidelines for international
distributors
 Select distributors – do not let them select you
 Look for distributors capable of developing markets
 Treat the local distributors as long-term partners
 Support market entry by committing money, managers
and proven marketing ideas
 Maintain control over marketing strategy
 Make sure distributors provide you with detailed market
and financial performance data
 Build links among national distributors at the earliest
opportunity
22

23. 23Source: adapted from Cavusgil et al. (1995)
Evaluating Foreign Distributors

24. 24
Source: Paliwoda (1993, p. 300). Reprinted with permission from Butterworth-Heinemann Publishers, a division of Reed Educational & Professional
Publishing Ltd.
Grey Marketing (Parallel
Importing)

25. Strategies to Reduce
Grey Marketing
 Seek legal redress
 Change the marketing mix
– Product strategy
– Pricing strategy
– Warranty strategy
25

26. 26
4P’s: Global Promotions: Elements
of International Communication

27. Standardization vs. Adaptation of
Advertising Strategy: Benefits
 Standardization reduces costs: No duplication of
effort for each market
 Individual (customized) campaigns delay product
launches
 Consumers increasingly share similar frames of
references with regard to products and
consumption
27

28. Barriers to Standardization
 Communication infrastructure
 Agencies might not serve a particular market
 Consumer literacy
 Legal restrictions and self-regulation
 Differing values and purchase motivations
 Attitudes toward product country of origin
 Promotional mix elements
28

29. Reminders: PharmaSim
 PharmaSim Team Live Play Round 2
 Started April 22 @ 7am
 Ends May 8 @ 8pm
 Periods 0-8
 NO replay, NO restarts, NO consultation
 PharmaSim Final Report by May 14, 9AM
 Peer Evaluations (excluding self)
 7 Points (%) to Final Grade
 Based on contribution to team effort
 Anonymous, online link (http://ipeer.ust.hk) will be
posted by May 9
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30. Reminders: Finals
 When: May 17, Saturday, 16:40 to 18:10
 90 minutes exam time
 Please arrive at venue by 16:25 (15 minutes before exam starts) to
look for your assigned seats
 Where: HALL
 G/F Entrance of Sports Hall Complex is blocked
 Use the open staircase between the Library and Lift No.3 only
 What: Lectures/discussions from Class #9 (Product
Strategies) onwards
 Open notes (handwritten notes, class slides, course packet)
 Bring your own calculator (no borrowing, no laptops, no
smartphones)
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