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IMS (Fach) / Marketing (Lektion)
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- Forces affecting globalization (Driving Forces) Liberalization of world market Multilateral trade agreements Converging market demands (“global village”) Internet revolution Improvement in areas such as transportation and communication Product development costs and product life cycle Growing number of new middle class consumers in developing countrie
- Forces affecting globalization (Restraining Forces) protectionist tendencies and national control Ethnocentrism of the management Organizational culture Societal resistance against globalization Cultural differences Tariff and non-tariff trade barriers
- Globalisation Reflects the trends of firms buying, developing, producing and selling products and service in most countries and regions of the world.
- Internationalisation Doing businessesin many countries of the world, but often limited to a certain region (e.g. Europe).
- Marketing Strategy Marketing strategy is ...a set of integrated decision and actions by which ...a business expects to achieve ...its marketing objectives and ...meet the value requirements of its customers.
- Purpose of the International Marketing Plan Basis for the international marketing plan is the companies mission (purpose of the business) and vision (where to go)!
- International marketing plan is a systematic process involving • the assessment of market opportunities and internal resources, • the determination of marketing objectives, and • the plan for implementation of the international marketing mix
- Mission, Vision, Values Vision Desired future state: the aspiration of the organization Mission Overriding purpose in line with the values and expectations of stakeholders Values and basic principles Essential and lasting basic principles
- Should the company internationalise it all? Industry Globalism Preparedness for Internanationalization Industry Globalism: • High degree: many interdependencies between markets, customers and suppliers, industry is dominated by a few powerful players • Low degree: multidomestic market environment, markets exist independently of one another • Preparedness for Internationalization: • The firms ability to carry out strategies in the international marketplace (depending on skills or organizational capabilitie
- Implications of Global Marketing • Develop of a global marketing strategy, based on similarities/ differences across countries • Exploit knowledge of the headquarter (home organization) through worldwide learning and adaptions • Transfer knowledge and best practice from any of its markets and use them in other international markets
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- EPRG Framework (1/2) Ethnocentric •Transfer of a strategy from the home country to foreign countries. •Decisions are taken in the headquarter of the home country. Polycentric •Strong orientation towards foreign market •Individual strategy decisions for the different foreign markets -manager positions from the foreign country Regio-centric •Pooling of country groups to regions. •Filling of management positions with the best employees from the region Geocentric •Uniform market penetration •Orientation on cross national, global target groups.
- Global Marketing The companies...“...commitment to coordinate its marketing activities across national boundaries in order to find and satisfy global customer needs better than the competition.
- Internationalisation vs. Global integration vs. Market responsiveness •Internationalisation: A company expands its research and development (R&D), production, selling or other business parts into international markets •Market responsiveness: Responding to markets needs and wants •Global Integration: Recognising the similarities between international markets and integrate them into global strategy
- Disruption Disruption is... “...a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.”
- The Value Chain A value chain is a business model that describes the full range of activities needed to create a product or service.
- The service value chain (‘value shop’) 1. Problem finding and acquisition 2. Problem-Solvin 3. Choice Cyclical & iterative process 4. Execution 5. Control Evaluation
- Internationalization motives Market Seeking Efficiency Seeking Resource Seeking Strategic Asset Seeking
- Starting Internationalisation Proactive motives Profit and growth goals Managerial urge Technology competence /unique products Foreign market opportunities / market information Economies of scale Tax benefit Reactive motives Competitive pressure Domestic market: small and saturated Over production/excess capacity Extended sales of seasonal products Proximity to international customers / psychological distance
- Triggers of export initiation Internal triggers Perceptive of Management Specific internal event Importing as inward internationalizatio External triggers Market demand Network partners Gompeting firms Trade associations and other outside experts Financing
- Barriers hindering internationalization • Insufficient finances • Insufficient market knowledge • Lack of foreign market connections • Lack of export commitment • Lack of capital to finance expansion into foreign market • Lack of productive capacity to dedicate to foreign market • Lack of foreign channels of distribution • Management emphasis on developing domestic market • Cost escalation due to high export manufacturing, distributing and financing needs
- Internationalisation Theories Traditional Marketing Approach Life cycle’ Concept Uppsala Internat. Model intern./Transaction CostApproach Network Approach
- Uppsala Internationalisation Model Stage 1: Sporadic export Stage 2: Export modes Stage 3: Foreign Sales subsidiary Stage 4: Foreign Production / Sales Subisidary
- Uppsala Model Critical View 1) Model is too deterministic 2)doesnt consider interdependencies between different country markets 3)Leapfrog is also reality 4)Not valid for highly internationalized companies 5)Technological development and internationally experienced people make the entry to foreign markets easier
- The Network Approach Business network relationships based on technical, economic, legal and, in particular, personal ties. relationships as bridges to other networks in other countries.
- Born Globals Born Global • Organizations that within a few years from being founded enter several international markets and have a global mindset from day one. • Known as early internationalizers, e.g. new ventures, high tech start-ups, Global start ups etc. • Seeks to derive significant competitive advantage from the resources and the sale of outputs in multiple countries Traditional Companies that start selling products in their home markets and they sequentially look at new countries • Traditional business gradually increases the international involvement • E.g. Lifecycel stage or Uppsala Internationalization model
- International Competitiveness 1. Analysis of thenational competitiveness(the Porter Diamond) (Macro Level) 2. Competition analysis in an industry(Porters Five Forces) (Meso Level) 3. Value Chain Analysis (Micro Level) • Traditional Value Chain • Competitive triangle • Benchmarking
- Competitiveness: Five Forces New entrants Suppliers Market competitors -> intensity of rivalry Buyers Substitutes
- Competitiveness: Competitive Triangle The firm or competitor winning the customer’s favour depends on the perceived value offered compared with the relative cost. customer, company, competition Perceived value= customer's overall evaluation of the product/service offered by a firm
- Value Chain Analysis Product Benefits: Service Benefits: Direct monetary costs for consumer: Indirect costs for customer: Customer Perceived Value: What does finally create competitive advantage amongst competitors towards customers CPV = Get / Give = Product Benefits + Service Benefits // Direct Costs + Indirect Costs
- Benchmarking: Competence Profile ( vergleich mit besseren unternehmen) The customer-perceived value of different competitor offerings along the value chain give feedback on the firm’s core competences Upstream Economies of scale (production) Product Development Internal Logistics Downstream Market Knowledge Personal Selling After Sales Service
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- Blue Ocean and Innovation Cost reduction 1. Which factors that the industry takes for granted can be eliminated? 2. Which factors should be reduced well below the industry standard? Buyer value incease 1. Which factors should be raised well above the industry standard? 2. Which factors should be created that the industry has newer offered?
- Data for assessment the market potential Primary Data Information that is collected first hand, generated by original research tailor-made to answer specific research questions. Qualitative & quantitative research: • Surveys • Interviews • Discussion Groups Secondary Data information that has already been collected for other purposes and is thus readily available. Already exists: • Firm-generated data • Industry generated data • Macroeconomic data
- Other studies: Sales Forecasting Short-Term Forecasts: • From one up to three month Medium-Term Forecasts: • Normally one year ahead • Rotating perspective: YTD (Year-to-Date); YTG (Year-to-Go) • Based on annual targets Long-Term Forecasts: • Normally two up to five years • Interesting for financial accounts, directors
- Other studies: Scenario planning Stories about plausible alternative futures Convergent Forces: • Factors driving development in the same direction. • e.g. standardization of products, macroeconomic stability Divergent Forces: • Factors driving developments apart from each other. • e.g. Cultural diversity
- Example – Henkel’s Deliverables for gates Decision Gate Kic-off Gate Money Gate Validation Gate Idea description Concept Product briefing incl. volumes Marketing mix launch plan Launch Gate Ready for launch, launch plan
- The new marketing reality goes beyond Market Forces lead to a development of new skills Market forces: Developments in the marke technology New skill of consumer Globalization Social responsibility New skills of the companies
- Big data “...things one can do on a large scale that cannot be done at a smaller one, to extract new insights or create new forms of value, in ways that change markets, organizations, the relationship between citizens and governments and more. • Data became a raw material for business • Data are a vital economic input, used to create a new form of economic value.
- Capitalism vs. Socialism Capitalism Capitalism is an economic system wherethe means of production are owned byprivate individuals Companies live by the profit motive. Theyexist to make money. All companies haveowners and manager It is the government‘s job by enforcinglaws and regulations to make sure there isa level playing field for privately-run companies Socialism The means of production, such as moneyand other formats of capital, are owned bythe state or public. Under a socialist system, everyone worksfor wealth that is in turn distributed toeveryone. The government decides how wealth isdistributed among the people. Theyprovide for the people.
- Opportunities to enter foreign markets The Macro-Economic Perspective • Leverage market potential, • Growth, • Market size, • Purchase power, • Population growth and • Development of technological infrastructures
- Opportunities to enter foreign markets The Micro-Economic Perspective • Putting pressure on foreign markets, • New business in foreign countries, • Enrich experience basis (competence, know how), • Realize economies of scale and scope
- Threats to enter foreign markets The Macro-EconomicPerspective • Payment risks, • Foreign exchange risks, • Risk of inflation, • Interest rate risks, • Demand risks, • Geographic risks
- Threats to enter foreign markets The PoliticalPerspective • Political stability, • Risk of expropriation, • Trade barriers, • Safety risks and • Risk of corruption.
- Risk Profiles: Comparing Countries Expropriation Transfer risk Provision risk Substitution risk Fiscel risk Security risk Legal risk Payment risk Currency risk Transport risk Corruption risk Nature catastrophe risk
- Culture Culture is a complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of the society’. It is commonly agreed that a culture must have these three characteristics: •It is learned: that is, acquired by people over time through their membership of a group that transmits culture from generation to generation. •It is interrelated: that is, one part of the culture is deeply connected with another part, such as religion and marriage, business and social status. •It is shared: that is, tenets of a culture extend to other members of the group
- Layers of Culture Eisberg modell The visible daily behavior • e.g. body language • Lifestyle (clothing) • Drinking and eating habits Values & social morals • E.g. Family values • Sex Roles • Friendship patterns Basic cultural assumptions • National Identity • Ethnic culture • Religion
- Don’t neglect the culture Low Context Culture people speak directly, and communicate what they want their listeners to. -us, Canada, Israel, Sweden, UK, Germany, High Context Culture speak indirectly, relying on other cues to help the listener infer the meaning Japan, Thailand, Chinese, Middle Eastern countries, Russia, Korean
- The different layers of culture in negotiations The behavior of the buyer is influenced by cultural aspects of different levels National Culture Business / Industry Culture Organizational Culture Individual behavior decission maker
- Process of International Market Segmentation The company 1 Selection of the relevant segmentation criteria Environment 2 Development of appropriate segments 3 Screening of segments to narrow down the list of markets/countries choice of target markets/countr 4 Micro segmentation: develop segments in each qualified country or across countries ---> Market Entry
- Basis of International Market Segmentation General and specific characteristics General characteristics Geographic High degree of measurabilit Language accessibility and actionabilit Political factors Demography EconomyIndustrial structure Technology Social organization Religion Education Specific characteristics Low degree of measurability, Cultural characteristics accessibility and actionability Lifestyle (however, high degree of relevance in Personality specific situations) Attitude and tastes
- How to Find the Right Market? Understand the global marke Build relevant segments Select a market