Global Marketing

Global Marketing

Global Marketing refers to the marketing strategies used by businesses when operating in global markets. The elements of the marketing mix may be the same or different according to which part of the global market a business is in.

There are three different views a business can adopt when considering a global marketing strategy:

The domestic approach (Ethnocentric model – look at the world primarily from the perspective of one’s own culture).

Businesses that transfer their existing domestic business model to international business – i.e. they see foreign markets as identical to their domestic market. There is no need to change the design of the product or marketing – ‘if it works at home, it’ll work abroad’.

The international approach (Polycentric model)

There can be significant social and cultural differences in different international markets. This means that many firms operating on a global basis will adapt its marketing mix (the 4 Ps) to maximise sales in different markets.

Each individual market is seen as distinctive and so products and marketing activities are all individually customised. This usually results in sales increases on a local basis but usually at the expense of profit! Customisation inevitably results in increased costs as there is a limited application for economies of scale.

The mixed approach (Geocentric model)

A happy medium – where businesses enjoy some of the advantages of a standardised approach, thus taking advantage of economies of scale, but at the same time catering for the needs of individual markets in order to maximise sales.

This approach sees the world as a potential market with both similarities and differences in domestic and foreign markets. An effort is made to develop integrated world market strategies to gain the best from both strands

Think global, act local

Glocalisation combines the words ‘globalisation’ and ‘localisation’ to emphasise the idea that a global product or service is more likely to succeed if it is adapted to the specific requirements of local practices and cultural expectations.

So perhaps the solution lies somewhere in between the two extremes? I.e. some form of global standardisation is necessary with some customisation for individual markets. To an extent Coca-Cola did that with their South Africa World Cup campaign. They have a clear corporate and global brand identity that is the same the world over, yet their campaign had a strong regional and African emphasis aimed at maximising sales at that point and in that area at the time.

Some have coined the phrase glocalisation – a saleable mix of the global and the local. This emphasises the idea that a global product/service is more likely to succeed if it is adapted to the specific requirements of local practices and cultural expectations.

An excellent example is Kit-Kat, with tailored made products as well as advertising in each of its international markets. Russia = smaller and coarser. USA = more sugar and less milk. Japan = array of flavours. Their chairman stated “each of these product variations is the result of thorough market research on local tastes. There is no global consumer for the food-and-beverage business”. Do you agree?

McDonalds has a polycentric approach, highly tailored. Have you ever eaten in a McDonald’s abroad!? McDonalds and the food industry is one thing and ‘easily’ tailored. Industries like consumer electronics are another, characterised by high product development costs and rapidly changing technology. Thus developing globally standardised products is the norm – to serve large markets and gain from economies of scales to help to cover costs.

For example: Apple iphone 7 is the same the world over. Thus the product can be standardised, but the marketing can still be tailored.

Global Marketing, figure 1

Price and non-price competition in global markets

We have seen how products can be changed to suit the local market as with McDonald’s, or not, as with Apple.

Price is one of the critical Ps in regards to successful marketing in a global context. The level of economic development may not permit standard western pricing tactics. E.g. McDonalds has recognised this in India with local pricing strategies that make its products affordable for at least those on middle incomes. Nokia phones and Tata’s Nano car both carry low prices too. Levi jeans in India dry out quick (for monsoon season) & they have developed a ‘pay-as-you-wear’ scheme.

In developing and emerging markets, competing on price is a key factor if there are many potential suppliers. However pricing policies will depend on the market segment that the MNCs are targeting – people on low incomes need low priced necessities for example. It all goes back to 3.2.2 – factors to consider when locating to market/sell! Selling luxury products will involve premium prices to add exclusivity – e.g. Gucci! Marketing would complement this exclusivity and sell it as a highly desirable status symbol. Therefore businesses need to do thorough market research, consider market positioning and decide on their target market.

Global Marketing, figure 1

In some markets the key factor will be product design. In others, promotion can help significantly and is most effective when tailored to suit local tastes and interests – as we have been seeing with Coca-Cola/Snickers. Another example in relation to India is ‘organised chaos’ supermarkets, selling things in a traditional way.

Place is also an important consideration. Unilever’s Shakti Programme is a unique distribution channel. It helps women in rural India set up small businesses as direct-to-consumer retailers. The scheme equips women with business skills and a way out of poverty – a big CSR PR opportunity or green marketing – you decide! It does means that their products now reach millions of potential new customers in rural areas who would not have been accessed beforehand (600 mill potential customers in 2010!!).

Reverse innovation

BRIC markets are rapidly becoming the new mass markets of the world! They are very different from MEDC consumers – they are less well off and there are many many more of them!!

Arguably if businesses used the ethnocentric model – products from MEDCs would only appeal to the wealthy or 10% of the potential market in these LEDCs. The real potential lies in unlocking the other 90%, thus reverse innovation holds the key.

Rather than making products that become more and more sophisticated, MNCs are looking very carefully at the needs of poorer consumers and designing new products with those needs in mind! This does not mean that they are ‘cheap and nasty’ – but tough and reliable. E.g. Nokia is now making phones with a built in powerful torch to help cope with power cuts, several phone books for people who share a phone and menus in different languages.

Thus it should become evident to see that there are many topics that overlap here – market research, market mapping, social and cultural differences, CSR, etc etc etc. there are many links to be made when planning imaginative solutions to business problems. Thus let’s see you bring in a variety of topics into your answers!

Branding and differentiation

Branding = reliability and consistency. Unbranded products carry a degree of uncertainty as to quality. Consumers like to know that they are getting value for money and branding offers assurance. The difficulty is that branding is often accompanied with premium pricing (?) as it makes you more price inelastic (?). However, if you reverse innovate (aka frugal innovation) – the product has been purposely designed to target a large but not wealthy market.

Product differentiation goes together with branding as it highlights that the product is distinctive and gives it a competitive advantage. This is how Coca-Cola, McDonalds and Starbucks became massive global markets.