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