Part 7: Creating Successful Long-Term Growth
Chapter 18 – Managing Marketing in the Global Economy
I. Chapter Overview/Objectives/Outline
A. Overview
Organizations have engaged in international marketing for years. However, as working across
global boundaries has become easier, the competition precipitated by global markets has
intensified. A small Midwestern manufacturing business, for instance, may find itself suddenly
thrust into a global competitive market. Parts of a larger product may be manufactured in a
number of countries, brought together into a third country for assembly, then sent to another
country for final preparation and sale. The world has come to the doorstep of every business.
Participating in some aspect of global business is not a question of “if,” it is more a question of
“how.”
An organization must address the following areas before entering into a global market:
It must decide whether to go abroad in the first place. While going abroad may present new
profit opportunities, it does include risks. Risks include: failure to understand the customer’s
needs and behavior, not knowing or understanding the dynamics of the respective business
culture in the country targeted, lack of government regulation and restriction knowledge, not
being able to staff with experienced personnel, failure to assign probability of occurrence for
investment to undertake.
Once it has determined its high-level mode of entry, it then must define a more tactical strategy
for its marketing mix. Some questions to be addressed with regard to the marketing mix
include:
Will the organization deliver its current products as is, modify them, or create totally
new products?
be identified and leveraged.
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The importance of internal marketing cannot be stressed enough. As the dynamics of a
must be implemented in all respective areas of an organization’s business. Organization
structural design can be an enabler or an inhibitor with respect to implementing a
marketing strategy. For example, a functional design, i.e., silos, reduces flexibility in
responding to a marketing threat or opportunity. Sales force structure may provide a
Once a marketing strategy is implemented, it must be closely monitored and open to a
continuous improvement mode of operation. So the initial strategy must contain the
flexibility to change the marketing mix quickly and efficiently in an effort to respond to
new opportunities and threats and the overall competitive environment.
B. Learning Objectives
internationally
Define the major ways of entering foreign markets.
Understand key success factors to internal marketing.
Gain insight to companies can be responsible social marketers.
Identify how tools can facilitate marketing activity monitoring and enhancement.
C. Chapter Outline
Introduction
International Marketing)
A. Deciding Whether to Go Abroad
1. Higher profit opportunities than domestic
2. Need larger customer base to establish economies of scale
3. Counterattack competition abroad
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4. Risks include failure to understand the customer, the consumer, and
business culture, failure to understand regulations and laws. and inability
to staff experienced personnel
B. Deciding Which Markets to Enter
1. Determine proportion of foreign to domestic sales
2. Typical entry strategies:
onset
3. Types of countries to consider influenced by product, geography, income
and population, political climate
C. Deciding How to Enter the Market – modes of entry
investment and risk)
2. Licensing
a) Licensor gains entry at little risk
brand name.
c) Licensor has little control over licensee and when contract ends
may find it has created a competitor
3. Joint ventures
b) Partners may disagree
c) Joint ownership may prevent a multinational company from
worldwide basis.
D. Deciding on the Marketing Program –
2. Adapted marketing program –consistent with the marketing concept
Communication Strategies)
3. Product
c) Product invention – two forms
(1) Backward invention – reintroduce earlier product form
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(2) Forward invention – create new product
4………………………………………………………………………………………Communications
product
5. Price
margins, wholesaler margins, retailer margins
b) “Gray market” – branded products diverted from normal or
or across international borders
6. Distribution
a) Vary widely across countries
b) Small retail operations in most countries drive costs higher
E. Country of Origin Effects
1. Companies increasingly concerned about the respective country’s
perceptions attitudes and beliefs of their brands and country of origin
effect
2. Companies need to strengthen image in respective target country to help
sell their products
3. Consumers may view brands as symbolically important to their own
cultural heritage and identity
II. Internal Marketing – requires that everyone in the organization buy into the concepts
and goals of marketing and engage in choosing, providing, and communicating
customer value.
A. Organizing the marketing department
1. Functional Organization – most common form, easy to administer but
less effective from a marketing perspective due to “silo-based” mentality
2. Geographic organization – supports optimal use of sales representatives
and enhanced when area market specialists also used
3. Product- or Brand-Management Organization – Alternatives
a) Product manager concentrates on developing a cost-effective
marketing program and reacts more quickly to new products in
the marketplace.
b) Some firms assign each major brand to a brand-asset
management team (BAMT) with representatives from functions
affecting the brand’s performance
c) Eliminate product manager position for minor products and
assign two or more products to each remaining manager
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d) Introduce category management, focusing on product categories
to manage the firm’s brands
4. Market Management Organization
a) Usually adopted when products are sold to diverse markets
b)…………..Market managers supervise several market-development
Managers, market specialists or industry specialists and
draw on functional services as needed
c) Market-centered organizations – organize along market
lines.
d) Customer-management organization organize to deal with
individual customers
5. Matrix Management Organization – can create competitive advantage
but costly and difficult to manage
B. Relations with Other Departments
1. Chief marketing officer (CMO) has two tasks
a) Coordinate organization’s internal marketing activities
b) Coordinate marketing with other operational functional areas
2. Determine optimal mix of marketing and non-marketing activity
III. Socially Responsible Marketing – Forces are driving forms to practice a higher level of
corporate social responsibility, such as rising customer expectations.
A. Legal and Ethical Behavior
1. Firms must ensure employees know and observe relevant laws
2. Firms must adopt and disseminate:
a) Written code of ethics
b) Build a company tradition of ethical behavior
c) Hold employees responsible for observing ethical and legal
guidelines
B. Social Responsibility Behavior
1. Company should exercise their social conscience in specific dealings
with customers
2. Company should check their record on social and environmental
responsibility to help them decide which companies to buy from, invest
in, and work for.
3. Attempts at doing a “good thing” may have negative consequences if the
company is seen as exploitive or if it fails to live up to a “good guys”
image.
C. Sustainability
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3. Possible unintended consequence – greenwashing – products give the
appearance of being environmentally friendly without living up to their
promise.
4. Consumer interest in sustainability is creating opportunities – refer to
D. Cause-Related Marketing
1. Links the firm’s contributions to a designated cause to customers’
engaging directly or indirectly in revenue-producing transactions with
the firm
2. Part of corporate societal marketing (CSM) which Minette Drumwright
3. Cause related marketing can:
a) Build brand awareness
b) Enhance brand image
c) Establish brand credibility
d) Evoke brand feelings
e) Create a sense of brand community
f) Elicit brand management
Skills: Cause-Related Marketing”
IV. Marketing Implementation and Control
A. Marketing implementation turns marketing plans into action or the who, where
when and how versus strategy which addresses the what and why. Many firms
use Marketing Resource Management (MRM) software to automate, integrate,
brand relationships.
B. Marketing Control and Metrics (Table 18.2 lists different Types of Marketing
Control, Table 18.3 provides a list of Marketing Metrics) There are four types of
Marketing Control:
1. Annual-Plan Control – shows whether the company achieved the sales,
2. Profitability Control
3. Efficiency Control
4. Strategic Control
C. The Marketing Audit – a comprehensive, systematic, independent, and periodic
examination of a company’s (or business unit’s) marketing environment.
components:
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1. Macroenvironment and task environment
2. Marketing strategy
3. Marketing organization
4……………………………………………………………………………………Marketing systems
5……………………………………………………………………………..Marketing productivity
6. Marketing function
about.
A. To succeed in the future, marketing must:
1. Be more holistic and less departmental
2. Achieve larger influence in the company
3. Continuously create new ideas and strive for customer insight by
treating customers differently but appropriately
4. Build brands more through performance than promotion
B. To achieve above marketers need:
marketing, brand-building and brand-asset management, experiential
marketing, integrated marketing communications and profitability
analysis
C. Emerging markets offer enormous new sources of demand
D. Marketers face ethical dilemmas.
relationships with a range of constituents
VI. Executive Summary
II. Lectures
A. “Managing Global Marketing”
The focus in this discussion is on the important role of understanding the options
Teaching Objectives
To provide students with a framework to address options in global market entry
To explain the concepts related to understanding how global forces are impacting
their business
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Discussion
INTRODUCTION
make key decisions at the onset.
DECIDING WHETHER TO GO ABROAD
Reasons for contemplating going abroad may include: higher profit opportunities than the
domestic market, larger customer base to achieve greater economies of scale, leverage
international resources, and diversify its market. There are risks that must be assessed as well.
have personnel with experience in the respective geographic target area. This may include local
talent. A country’s economic and political volatility must also be assessed in terms of
probability and contingency plans, because a response to any negative economic or political
impact should be defined and understood by all personnel who have an impact or can be
impacted by these forces.
DECIDING HOW TO ENTER THE MARKET
Modes of entry may include:
marketers need to reassess the diversity and breadth of their offerings into a
manageable good-better-best selection.
3. Joint ventures allow for risk and gain sharing. Organizations entering into this
type of relationship should consider their respective approaches to decision
joint ventures.
4. Direct investment, where the organization invests capital and other resources
into entities present in the target geography.
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DECIDING ON THE MARKETING PROGRAM
however it may be extremely costly and perhaps unattainable. In conclusion, each organization
must decide on the approach that provides acceptable risk and gains. The instructor may then
wish to focus on one or more of the marketing mix variables.
Student exercises
B. “Internal Marketing”
Focus: Gain a competitive advantage or maintain a competitive position by leveraging
internal marketing initiatives.
Teaching Objectives
every employee).
To understand the key role value chains play in the organization’s marketing strategy.
Discussion
ORGANIZATION DESIGN
The text elaborates on different organization structures, functional, geographic, product, or
VALUE CHAIN PARTENERS
As organizations outsource non-core competency functions in order to reduce cost and increase
efficiencies, they become more reliant on their value chain partners. This is a good thing
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resolution may be an issue as the two organizations must be managed by the consumer. There
is not a one-stop place for the consumer to go to for service. There is no sole owner of the
customer.
Scenario 2. A consumer purchases an appliance form a major retailer. The retailer subcontracts
organization’s marketing strategy of servicing the customer at all cost, i.e., “The customer is
the king.”
Scenario 4. A software company that was about to release a new software product to its
business customers arranged training for all of its employees. The training included an in-depth
and received the same qualified answers to his or her product questions.
III. Background Article
Issue: Internal Marketing
Source: “Selling the Brand Inside,” Harvard Business Review January,
2002. Author – Colin Mitchell.
Discussion
IV. Case
A.
The Leo Burnett Company LTD.: Virtual Team Management
IVEY Case: 903M52-211 TN: 803-M52
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Teaching Perspectives
the relationships are strained. Further complicating matters are a number of client and
agency staffing changes that could jeopardize the stability of the team and the
agency-client relationship. The global account director must decide whether to proceed
with the expected decision to modify the global team structure to give one of the teams
B.
P&G Japan: The SK-II Globalization Project
HBS Case: 9-303-003 TN: 5-304-023
Teaching Perspectives
The case focuses on whether to build a market for a $120-a-bottle product in Japan,
major global reorganization.
This case presents the following objectives:
Explore the process of formulating and implementing a global strategy and
particularly the issues related to the globalization of local brands
Examine how product innovation is developed and diffused on a global basis
multinational corporation
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