Chapter 8

Global Marketing

The marketing mix in a global context

PRODUCT

POSITIONING

BRAND

Specifications
Size / Packaging
Product launch

Standardization/Adaptation
Waterfall/Sprinkle

Target segments
Value proposition

High End/Low end

Same across the world/Country segment specific

Name
Image
Advertising

PRICE
DISTRIBUTION
SERVICES

Global brands/Local Brands

Communication messages
Single/multiple agencies
Global Pricing/multiple

Mass vs Specialized
Logistics

Call centres
After sales

Single Channels/Multiple Channels

Centralized/ Decentralised

Centralized/ Decentralised

Marketing
Pure
Global

Adaptive
Usage

Adaptive
Product

Fully
Adaptive

Same

Same

Different

Different

Same

Different

Same

Different

Same

Different

Same

Different

Same

Different

Same

Different

Distribution

Same

Different

Same

Different

Brand

Same

Different

Same

Different

Price

Same

Different

Different

Different

Volvo

Mc Donalds

Unilever

Product
Message
Customer
Group
Usage

Apple
Swatch

What determines the choice?

Supply

Costs (economies of scale)

Competition
Companys capabilities
Companys identity and
brand integrity

Demand
Market segmentation across countries
Existence of a significant global segment across countries

Market segmentation within countries

Existence of a significant differentiated segment within countries

Market segmentation across countries

Large global
accounts for:

GLOBAL

Cosmopolitan
elites
Most consumers
for durable goods:

Cars
Washers,
Cookers

REGIONAL

Nearly all companies for:

-Travel services and logistics
-

The vast majority of the population

for most of:

Food
Basic Services (Banks, Telecom,..)
News, entertainment

Finances
Insurances
Telecom
IT, consulting
Sourcing, logistics
Commodities
Capital equipment

(unless global firms)

Some intermediate products

Nearly all companies for:

LOCAL

- Ancillary supplies
Specific localised services:
taxation, etc..

The majority ofSMEs

Business-to-Business Segments

Consumers Segments

Global Segment
Existence of a significant global segment across countries

Homogeneous needs and behaviour

Multiple types of global segmentation

CITIBANK
CONSUMER
BANKING

SWATCH

USA
UK

Everywhere
Hong Kong

VOLVO
HEINEKEN

Scandinavia

Everywhere

Elsewhere

Segments within countries

Top End

High End:
Differentiated products
Functionalities and Performances
Less Price sensitive

Lower High End

Higher Low End
Lower End
Top End

Generic Segmentation
Higher Low End
Miiddle Class

Top End
Lower Top End
Higher End
Lower High End

Higher Low End

Lower End

Lower End

Developing World Segmentation

Low End:
Undifferentiated Products
Mass Production and distribution
Price sensitive

Industrialized Countries Segmentation

Lower End dominates

Rising middle class but still relatively small
Tiny highly wealthy segment

Diverse segmentation
Middle Class Markets dominates

Positioning and segments choice within countries

Disadvantages

Advantages

Top End

Higher margin
Higher switching costs

High End:
Differentiated products
Functionalities and performances
Less price sensitive

Lower High End

Higher Low End
Lower End

Low End:
Undifferentiated products
Mass production and distribution
Price sensitive

Advantages

Lower volume

Disadvantages

High volume
Cost based advantages

Lower margin
Price rivalry

Unilever Survey
COCA COLA & PEPSI
BOTTLED WATER
PEANUT BUTTER
ICE CREAM
COFFEE
BUTTER
YOGURT
BEER
CANNED MEAT
CHOCOLATE
COOKIES
DESSERT
CHEESE
BREAD
FROZEN DINNERS
SAUSAGES

The physical product would have

to be completely different to be sold
in each European country

10

10

The physical product could be sold

successfully in each European
country without modification

Product Launch
Sprinkle

Waterfall

Launch
in country of
origin

Launch
in country of
origin
Launch in
countries ,
Region A
Launch in
countries ,
Region B

Launch in
countries ,
Region A

Launch in
countries ,
Region B

Launch in
countries ,
Region C

iPad 3: Sales, Launch in 25 Countries

Launch in
countries ,
Region C

Time

11

Common features of global brands (John Quelch*)

Most of the time

Consistent positioning
Address similar customer needs worldwide
Easy to prononce
Be present geographically in a balanced way

Sony
Intel
Swatch
Nike

Sometimes

Product category focus (Mc Donald, Coke, Imac)

Strong in home market (Budweiser, Malboro )
Value of country of origin ( McDonalds, Coke)
Corporate name (Disney, Sony, Gillette)

12

*John Quelch, Global Brands:Taking Stock,

Business Strategy Review,1, 1999

Nestl Branding Tree

7,500 Local
brands

Texicana
Brigadeiro
Rocky
Solis

Responsibility of
local markets
140 Regional
strategic brands
Responsibility of
strategic
business unit and
regional
management

Mackintosh
Vittel
Contadina
Stouffers
Herta
Alpo
Findus
KitKat
Polo
Cerelac
Baci
Mighty Dog
Smarties
After Eight
Coffee-Mate

45 Worldwide strategic
brands
Responsibility of general
management at strategic
business unit level

Nestle
Carnation
Buitoni
Maggi
Perrier

10 Worldwide
corporate
brands

Source: Nestl:Andrew Parsons,

The Vision of Local Managers ,
The McKinsey Quarterly,2, 1996

13

Cokes 232 Brands

Japan

Argentina

Brazil
Chile
Ecuador

India

China

El Salvador

Mexico

Taiwan
Philippines
South
Africa

Germany

14

Japan

Global Brands
Disadvantages

Avantages

Concentration of resources
Targetted impact
Cross border learning
Motivation for recruitment
Quality management

Over standardization
Ignorance of level of
market development
Skimming the surface
Rigid implementation

15

16

Global Pricing
Disadvantages

Advantages
Avoid arbitrage

Sub-optimization

Protect brand integrity

Facilitate the servicing of
global customers

120

100

350
C ountryA
Va= 204-6Pa

250

Country A

200

80
C ountryB
Vb= 160-4Pb

150
Proft

Volume

Country B

300

60

100
50

40

0
20

-50

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

-100
0
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Price

Demand Functions

17

-150
Price

Profit Functions

Channels
Sales
Distribution

GLOBAL
SALES FORCE
LOCAL
AGENT
Civil aircraft
Large projects

Customer base

Few customers
(High Concentration)

Frequency of
purchase

Low
(Once in a while)

GLOBAL/ REGIONAL
SALES FORCE
LOCAL DISTRIBUTOR

LOCAL
SALES FORCES &
DISTRIBUTION CHANNELS

Machinery
Computers

Fast moving
Consumer goods

Few customers
(High Concentration)

High
(Often)

Many customers
(High Dispersion)

Low
(Once in a while)

18

Many customers
(High Dispersion)

High
(Often)

Global solution selling

The capability for a company to deliver to a customer a customised product
and services integrating capabilities spread across different subsidiaries worldwide.

BANKS
CONSULTING
INFORMATION
TECHNOLOGY
ENGINEERING

Financial engineering
Solution to strategic,
managerial, technical problems
Customised applications of EDP,
communication problems
Turn key projects

19

Global solution selling: a power plant project in China

Corporate
Legal and IT:
Dusseldorf

Subsidiary
generator:
Manchester
Subsidiary
turbine:
Pittsburg

Customer:
Tianjin
Project leader:
Hong Kong

Subsidiary
regulation:
Sydney

20

Conclusions (1)
1.

Trends towards global marketing

2.

However need to facilitate regional/local adaptation of certain

components of the mix (communication, pricing, channels )

3.

Global marketing management requires:

- Sharing of knowledge across borders
- Institutionalization through:
Global Brand Team ( Co-ordination of brand managers)
or Global Brand Manager ( e.g. IBMs brand stewards)
or Global Management Team ( e.g. P&Gs categories team)
or Brand Champion ( Nestl)
- Common information and planning tools

David Aaker and Erich Joachimsthaler, The Lure of Global Branding Harvard Buisness Review, Nov-Dec 1999

21

Conclusions (2)
Marketing at the bottom of the pyramid

4 billion people live with less than $4 per day

1 billion people live with less than $1 per day.
Source: Prahalad, C. K. and Stuart Hart (2002), "The Fortune at the Bottom of the
Pyramid," Strategy+Business, 26.

22

Differences between Traditional Middle Class

strategies and Bottom of the Pyramid strategies
Traditional Middle Class

23

Bottom of the Pyramid

Value pricing based on differentiation and

segmentation

Find new price-performances relationships leading

to quality at low prices

Products obsolescence and renewal

Products built to last

Products, services functionalities and packaging

are adaptation of industrialized markets

Products, services functionalities packaging are

reinventedto fit local conditions

Advertising on mass TV and media supports

Communication and advertising rely less on mass

advertising and more on educational campaigns
using government programs and non government
organizations.

Products designed on regular

environments

Products designed on hostile environments.

Urban areas focus

Rural focus

Transfer of technology

Hybrid technology: combination of advanced and

adaptation

Use of skilled resources

Deskill the work process

Build supplies chains similar to industrialized world

Adapt supplies chains to local conditions

23

Conclusions (2)
Marketing at the Bottom of the Pyramid
purchases by low-income and middle consumers in clothing an

de Abreu Filho, Gilberto Duarte, Nicola Calicchio, and Fernando Lunardini (2003), "Brand Building in Emerging Markets," McKinsey Quarterly (2), 6.

24