Global Marketing PGE Session 3 EC 2.2

Campus de Rouen
GLOBAL MARKETING
SESSION 3
Academic department : Marketing

Course coordinator : Branko BOZIC
Instructor : Edouard CABASSE
© Copyright NEOMA Business School. All rights reserved
jeudi 3 février 2022

1
The Internationalization process
1. Why? Motives
2. When? Assessment of international competitiveness
Assessment of Market’s Attractiveness

3. Where? and Local Competitive Strengths
Elaboration of the
International Marketing Strategy
(Entry Mode, Standardization vs Adaptation)
4. How?
Implementation of the
International Marketing Strategy. Anne CORNU

2
Session 3
5. Elaborating an International
Marketing Strategy
5.1 Market Entry Modes
5.2 Standardization versus Adaptation
5.3 Impact on Organizations
Reference:
GLOBAL MARKETING, 6th Ed. 2014. Hollensen.
FT Pearson Hall. Pearson Education. PART 3

3
Elaborating an International Marketing Strategy

4
Elaborating an International
Marketing Strategy
PART 5 5.1 Market Entry Modes


5
Market Entry Modes
 Four different modes of foreign market entry:

 Exporting
 Contractual agreements
 Strategic alliances
 Direct foreign investments
 Choice based on analysis of market characteristics

such as:
 Potential sales
 Strategic importance
 Strengths of local resources
 Cultural differences
 Country restrictions

6
Alternative
Market-Entry Strategies
Externalization
Internet
Exporter
Exporting
Importer
Distributor
Direct sales
Licensing
Contractual agreements
Franchising
Joint venture
Strategic alliances Consortia • Involvement
• Risk
• Control
Ownership • Potential profitability
Direct investment Channels
Internalization

7
Exporting
Accounts for some 10% of global activity.
Domestic market
INDIRECT
Manufacturer
 Can be Direct or Indirect:
Exporter
 Direct exporting:
DIRECT
the manufacturer sells directly to an
importer located in a foreign market.
Foreign market
 Indirect exporting:
the manufacturer uses independent
organizations located in its country Importer
to export its products.
GLOBAL MARKETING, 4th Ed. 2007. Hollensen. FT Pearson Hall. Pearson Education. PART 3
Chap. 10 / pp 313-318

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Contractual Agreements
Long-term, nonequity associations
between a company and another in a foreign market.
 Licensing
 An agreement wherein the licensor gives the right to use a patent,
manufacturing know-how, technical or marketing advice or assistance, a
trade mark in exchange of a certain performance and payment from the
licensee.
 Franchising
 The franchisor gives a right to the franchisee to use a total business
concept/system, including use of trade marks, against agreed royalties.
Master franchise:
Gives the franchisee the rights to a specific area
with the authority to sell or establish sub franchises

9
An example
• Disney is the world’s top licensor.

10
Eyeglasses Frames
LUXOTTICA (1)

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Eyeglasses Frames
LUXOTTICA (2)

12
Franchising
• Franchising
– a specialized form of licensing
– includes providing an intangible asset and continually
infusing necessary assets
• Franchise organization
– Master franchise
• Operational modifications
• Can you think of famous examples?

13
Strategic International Alliances
International Joint Ventures

 A partnership of two or more companies that have joined
forces to create a separate legal entity.
 Four Characteristics:
 Partnerships between legally incorporated entities
such as companies, chartered organizations, or
governments, and not between individuals
 Established, separate, legal entities
 Acknowledged intent by the partners to share in the
management
 Equity positions are held by each of the partners

14
Strategic International
Alliances
International Joint Ventures
2008-2015 2008-2019
Bharti Airtel – Mittal Group since 1995

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Factors affecting the

Foreign Market Entry Mode Decision
Internal Desired Mode Transaction-specific External
factors Characteristics factors factors
• Risk adverse • Sociocultural distance
Externationalization
• Flexibility between home & host

countries
• Country risk / demand
uncertainty
• Intensity of
competition
• Firm size • Control • Know-how difficult to • Market size & growth

• International transfer • Direct & indirect trade
Internalization
experience • Transaction costs barriers

Product • Small number of
• Product complexity relevant export
intermediaries
• Product differentiation available
advantage

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1. Rigor Weight Machines Company has decided to manufacture its machines in

Canada so it will not have to pay the rather high Canadian taxes on foreign
goods. Which of the following market entry modes has Rigor Weight Machines
chosen to enter the Canadian market?
A. Direct exporting
B. Licensing
C. Joint venturing
D. Direct investment
2. What is a “born global” firm?

A. firm that is, from its beginnings, immediately or very quickly reliant on a
global presence to survive and succeed.
B. A firm that relies on cutting-edge technology
C. A firm that exploits commercial opportunities that arise from bridging
resource inputs and market niches in different global locations
D. All of the above.

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Coffee Break

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Marketing Strategy


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Different World Markets
National Markets Regional Markets Global Markets
Press Cars Functional

products
Cheese
Luxury

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A Phenomenon of Convergence
 Standard of living
increase
 Global brands “Tribes”
 New Global Lifestyles

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Chosing a Marketing Strategy
Three options:
Standardization: Adaptation:
Global strategy Local strategy
Adaptive Standardization:
Global + Local
=
Glocal strategy

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Standardization (Global strategy)
 Based on the similarities between countries.
 The company considers that consumer needs are the same &
develops the same marketing strategy & marketing mix for
different geographic markets.
 Standardisation helps to:

 Generate economies of scale,
 Develop a uniform brand image
 Make it easier to manage general marketing activities

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“Global strategy” oriented: examples

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Benefits of Global Marketing
 Large market segments

 Economies of scale in production and marketing.
 Improved coordination and integration of marketing activities

 Transfer of experience and know-how across countries
 Marketing globally also ensures that marketers have access to

the toughest customers
 Japanese customers: the best testing ground for high quality
products & services
 Diversity of markets served

 Additional financial benefits: stability of revenues & operations.

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Adaptation (Local strategy)
 Takes account of the special features of different markets.
 The company targets the dominant segment and adapts the

marketing strategy and the marketing mix in relation to the
characteristics of each country (taste, regulations…).
 This approach can be very expensive and assumes that the

company is only operating in a small number of countries.

26
“Local strategy” oriented: example

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Global & Local strategies:

Pro’s and Con’s
GLOBAL (Standardization) LOCAL (Adaptation)
• Economies of scale • Appropriate if clear differences in the
(purchasing, R&D, production, consumption habits, needs & desires
logistics) of consumers
• Communication economies • Adaptation to local competition
(creation and media)
• Adaptation to local distribution
• Easier to manage systems, often heterogeneous
depending on country
• Brand image coherence
• Many media channels strictly national
• Differences in regulations &
administrative procedures
• A one-size-fits-all approach does not • Expensive

work in all markets

28
Key to succeed internationally:
Standardization: Adaptation:
Global strategy Local strategy
Adaptive Standardization:
Global + Local
=
Glocal strategy

29
Adaptive standardization
(Glocal strategy)
 To satisfy the demands of local markets, whilst limiting the

costs, many multinational companies adopt a strategy of
adaptive standardization.
« Think global, act local »
 The objective is to standardize marketing decisions, but adapt
certain actions to better satisfy the expectations of local
customers.
 This alternative combines the advantages of Standardization
and Adaptation.

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GloCal strategies: examples
Fanta « Shokata »
Samsung Guru E1220 made of elderberry / Romania
with anti-dust keypad
in India
Procter&Gamble,
Ariel washing powder sachets
for emerging markets

31
Citroën cars for export in 2021
C3 for Indian and South
American markets
(made in Brazil and
India)
C4 for Chinese
market
(made in China)

32
Marketing Strategy


33
Impact on Organizations
Three
Local
Global
strategy
alternatives: strategy
Geographical divisions
Global product divisions
responsible for
responsible for product sales
all products and functions
throughout the world
within a given geographical area
Glocal
strategy Matrix organization
a combination of area operations
and global product management
“Think Global, Act Local”

34
Geographical Division Structure
Kotabe M. and Helsen K., Global Marketing Management, 5th Ed, John Wiley and sons Inc., 2009
Rarely used

35
Global Product Division Structure

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Example of a Global Product Structure
Level 2
Level 1

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Global Matrix Structure

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Matrix Organization. Example 1
http://www.nestle.com/asset-
library/documents/library/documents/corporate_govern
ance/corp_governance_report_2014_fr.pdf
PRODUCT DIVISIONS
GEOGRAPHIC DIVISIONS

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Matrix Organization. Example 2
Company President
Functions World Regions
Vice-President Vice-President
Marketing EMEA …..
Global
Marketing Director
… Regional
Brand manager
Regional
Sales manager
Product range A Product range A Region A
…
Subsidiary 1
Global
Marketing managers
Product Manager
…
Product range A
Global Direct report (hierarchical relationship)

NPD Manager
Product range A
Dotted lines (functional relationship)

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Instructions for the case study work
TEAM WORK
1. Select an industry you find interesting
2. Create a fictitious company within the industry
(name the company, describe the industry)
3. Select one international market you want to enter (explain why this market)
4. Decide on STP within the selected market
5. Perform/decide on the appropriate market entry mode
6. Develop product/service
7. Make appropriate pricing decisions
8. Determine appropriate distribution and communication strategy
9. Presentation : Power Point of 15 mn max on class #10
IMPORTANT:
For each decision you need to say why you think the decision is most
optimal. This is the most important part of your case work

41
See you next time !
Thank you for listening !

42

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Campus de Rouen

Academic department : Marketing

© Copyright NEOMA Business School. All rights reserved

jeudi 3 février 2022

2. When? Assessment of international competitiveness

Assessment of Market’s Attractiveness

International Marketing Strategy. Anne CORNU

International Marketing Strategy. Anne CORNU

International Marketing Strategy. Anne CORNU

PART 5 5.1 Market Entry Modes

International Marketing Strategy. Anne CORNU

Market Entry Modes

 Four different modes of foreign market entry:

 Choice based on analysis of market characteristics

International Marketing Strategy. Anne CORNU

International Marketing Strategy. Anne CORNU

International Marketing Strategy. Anne CORNU

International Marketing Strategy. Anne CORNU

jeudi 3 février 2022

jeudi 3 février 2022

jeudi 3 février 2022

• Can you think of famous examples?

jeudi 3 février 2022

Strategic International Alliances

International Joint Ventures

International Marketing Strategy. Anne CORNU

Bharti Airtel – Mittal Group since 1995

Factors affecting the

• Flexibility between home & host

• Firm size • Control • Know-how difficult to • Market size & growth

experience • Transaction costs barriers

International Marketing Strategy. Anne CORNU

1. Rigor Weight Machines Company has decided to manufacture its machines in

2. What is a “born global” firm?

International Marketing Strategy. Anne CORNU

International Marketing Strategy. Anne CORNU

PART 5 5.1 Market Entry Modes

International Marketing Strategy. Anne CORNU

Different World Markets

National Markets Regional Markets Global Markets

Press Cars Functional

International Marketing Strategy. Anne CORNU

 Global brands “Tribes”

 New Global Lifestyles

International Marketing Strategy. Anne CORNU

Chosing a Marketing Strategy

International Marketing Strategy. Anne CORNU

Standardization (Global strategy)

 Based on the similarities between countries.

 Standardisation helps to:

International Marketing Strategy. Anne CORNU

“Global strategy” oriented: examples

International Marketing Strategy. Anne CORNU

Benefits of Global Marketing

 Large market segments

 Improved coordination and integration of marketing activities

 Marketing globally also ensures that marketers have access to

 Diversity of markets served

International Marketing Strategy. Anne CORNU

Adaptation (Local strategy)

 Takes account of the special features of different markets.

 The company targets the dominant segment and adapts the

 This approach can be very expensive and assumes that the

International Marketing Strategy. Anne CORNU