INBU 3450: Final Exam

Questions to ask yourself before taking your brand global (C.11)

-Are you winning in your home market? -Does your brand have strong equity? -Is your brand gaining market share? -Is your business model strong and sustainable? -Are margins healthy enough to invest in growth? -Will going global suck valuable resources from - and potentially endanger - the home market?

Brand Ladder: car manufacturer example

-BMW: ultimate driving -Audi: progressive german -Mercedes: unmatched prestige -Lexus: Japanese quality -Volvo: superior safety Attributes: leather upholstery, wood paneling, minimal cabin noise, sophisticated engine, state of the art audio

Breakfast Bars: What to do in Hungary?

-Beware depositioning the brand when downsizing. -Maintain or increase price/unit within a package. -Avoid cheapening the presentation vs. competitor.

Nestle's Decentralized Approach

-Company gave local managers significant autonomy from the start (to avoid distribution disruptions, ease rapid expansion, respond to local needs) -Switzerland headquarters has grown in importance, although local managers still retain much authority, especially in major markets. -Central marketing teams are increasingly staffed by former local managers, who try to influence markets to adopt standard products and practices.

Coke's Centralized Approach

-Company spread globally during World War II, as bottlers followed U.S. troops around the world. -Atlanta headquarters makes all strategic decisions. -Brand name, concentrate formula, positioning and advertising are virtually standard worldwide. -Sweeteners, packaging and carbonation levels can differ across countries. -Local managers are responsible for distribution and sales programs.

Can vs Must Adapt

-Discretionary: Bordeaux wineries starting making lighter, fruitier wines to match global tastes. The change reversed five-year sales decline .-Mandatory: Microsoft declined to translate software to Icelandic, with no repercussions. Started translating when government required it, rather than leave the market. Some discretionary changes can become "mandatory."

Managing Political Risk

-Diversify your business portfolio - across countries, regions. -Form alliances with qualified local partners, e.g. subsidiaries, mergers, joint ventures, partnerships. -Beware protection via legal contracts, i.e. contract law varies widely by country. -Strictly adhere to ethical standards, i.e. beware bribery. -Be ready to renegotiate! Build in the time to do so. -Take advantage of investment incentives and tax breaks

Coordination Best Practices

-Global marketing organization's most valuable asset is trust. -Strive to understand before you strive to be understood. -If you're in the center, visit the markets as much as possible. And if you're in the markets, welcome those visits. -Build relationships, not just the business, during visits. -Come together for major events: annual planning, kicking off initiatives, celebrating global wins. -Constantly emphasize "freedom within a framework." -Leverage regional representatives, usually lead markets, to assure minor markets that they're being heard.

The Global Career Paradox

-Go Earlier vs. Go Later -More Flexibility vs. Less Flexibility -Less Value vs. More Value -Local Hire vs. Expat Assignment It depends!

Common Political Systems

-Government can include multiple bodies: regulatory, legislative and judicial. -The particular system strongly defines how businesses operate and might fare within the country. -A country's government treats business in particular ways to achieve its national goals. -Three major political systems globally: totalitarianism, socialism and democracy. -Definitions are not necessarily absolute - there are points across the political spectrum.

Is the pay-back growth rate realistic?

-How does it compare to the category growth rate? -How does it compare to the growth rate of the brand's key competitor? -Can you afford the additional marketing support needed to drive sales growth? -Are you able to clearly communicate the proposed adaptation to consumers? -Is it an adaptation that the consumer cares about? Utilize consumer tests (preferably quantitative) to determine how meaningful the proposed adaptation is.

How Mastercard utilized promotional strategy to become a major competitor

-In 1997, Mastercard stood for nothing. -Five ad campaigns in 10 years, losing share continuously. -Each country used a different agency, strategy and campaign. -Then Mastercard discovered a universal consumer insight: that pricey purchases could result in priceless experiences. Led to the "Priceless" campaign, used in nearly 200 countries -Mastercard stopped selling on the functional features of the credit card. -It leveraged an emotional benefit that most people could relate to, and was rooted in a deep consumer insight. "When they bought things they couldn't afford, it was usually for the good of the family. They bought a TV so everyone in the family could watch TV together. They had noble reasons for buying things they couldn't afford and that was a really interesting insight. We came up with a line that Mastercard was a good way to pay for the things that really mattered." - Nina Disesa, Creative Director, McCann-Erickson

What happens when local managers tightly control the country's marketing?

-Inconsistent brand identities. -Limited product focus. -Slow new-product launches. Everyone risks missing out on the most valuable commodity in global marketing: great ideas!

Examples of Political Risk

-Laws favoring local firms. -Abrupt termination of contracts. -Regulations and taxes. -Boycotts. -War, terrorism, pandemic.

Class 26 Takeaways

-Political risk, also called country risk, can be highly significant and very complex when operating abroad. -Political systems include not just government, but also other parties that interact with it. -Most common political systems are totatitarianism, socialism and democracy - each one strongly associated with particular economic systems. -Legal systems: common, civil, religious and mixed, have a major impact on all business operations.

Variables in Distribution Strategy

-Product Strategy -Pricing Strategy -Promotion Strategy -Distribution Density -Channel Alignment -Channel Length -Distribution Logistics

Cultural Forces Driving Growth of Cereal

-Significant increase in women working outside home. -Higher demand for convenient breakfast options. -Greater acceptance of non-traditional breakfast foods. -Ever growing need for good taste, nutrition and value. Maturity of Cereal Category: -Intro: china, india, africa -growth: southeast asia, middle east -maturity: eastern europe, latin america -decline: north america, western europe In early-stages markets, Corn Flakes is an inexpensive and basic form similar to traditional breakfast foods. As markets mature, familiar brand names such as Nesquik and all-family brands such as Cheerios help alleviate the risk of trial. As markets mature even further, consumers become open to cereal's other benefits, such as weight loss offered by Fitness.

Different factors of brand that should be adapted vs standardized

-Standardized: positioning, brand name, product design, base packaging, ad theme -In the middle: ad copy and pricing -Adaptation: distribution and sales promo

Religious Law

-Strongly influenced by religious beliefs and values. -The most prevalent examples worldwide are based on Jewish, Islamic and Hindu faiths.

Why KFC's FCK worked

-The "profanity" was relevant and sincere - not just gratuitous swearing for swearing's sake. -It addressed the problem head-on and expressed the company's authentic emotions. -It reflected Brits' rather distinct sense of humor (dry, irreverent, self-deprecating) -It got people talking about the brand in a positive way, thereby increasing consideration and trial.

Class 20 Takeaways

-The Marlboro example demonstrates the power of identifying a powerful global idea - based on a universal consumer insight - and that consumers aren't always literal. -A brand's promotion strategy must effectively address category development, competitive intensity, the consumer's path to purchase and the accessibility of media. -Promotion can fail to hit the mark at different stages, involving either creative or media or both. -Marketers must overcome the two largest challenges in global advertising: finding strong ideas, affording adequate media.

Promotion tactics that are usually localized

-Trade deals, consumer discounts, coupons. -Demos, samples, point-of-sale tactics. -Loyalty programs, sweepstakes, contests. -Trade shows and sales meetings. -PR events and sponsorships. -Crisis management.

Mixed Systems

-Two or more legal systems operating together. -Contrast between civil and common law becoming blurred as countries combine both systems. -Democracy is most associated with common law, civil law and mixed systems. -Totalitarianism is most associated with religious law.

Regulatory Considerations & Constraints

-Watch for local regulations that can preclude or limit the use of standardized campaigns. -Example: Russian law forbids ads that advocate violence or cruelty, e.g. Pepsi commercial. -Example: E.U. regulatory agencies are cracking down on health claims made by food companies, as well as products with certain ingredients above specific levels, e.g. sugar. -Example: Public advocacy organizations, at both national and regional levels, are pressuring regulators to limit or ban food ads, e.g. European Consumers Association. -Ex: Malaysia prohibits ads that show women's bare arms and underarms -Ex: China prohibits ads with superlative claims, e.g. "the best," "No. 1."

Legal Systems

1. Common law 2. Civil law 3. Religious law 4. Mixed Systems

Biggest Problems Doing Business in Emerging Markets

1. Corruption 2. Poor transport infrastructure 3. Gov policies 4. Difficult customs procedures 5. Security

How can the center improve coordination between itself and the markets?

1. Informing 2. Persuading 3. Coordinating 4. Approving 5. Directing Utilize 1-5: positioning Utilize 1-4: product, name, package Utilize 1-2: ad heme and ad copy Utilize 1: distribution, sales promo, cust service

Place Strategy

1. Manufacturer 2. Phone, mail, internet, door-to-door directly operated stores manufacturers sales force retailers wholesalers agents 3. End Users

1. CQ: The harder a consumer will work to find your offering, the less dense your distribution network will be 2. CQ: The more retail outlets your your product is sold in, the shorter your channel length will be CQ: The less volume you sell through a distributor, the easier it is to align with them

1. True 2. False 3. False

Principles for Managing Global Brands

1.Balance tension. 2.Decide who you are and are not. 3.Find the best way to get there. 4.Give and take. 5.Watch, fear, wonder.

Marketplace Innovation Cycle

1.Center and markets constantly scan the marketplace for innovation opportunities. 2. Local market develops new product - global potential is seen. 3. Similar markets adopt (maybe adapt) the new product. 4. The product enters other markets, based on their readiness and need. ~OR~ 1. Center and markets constantly scan the marketplace for innovation opportunities. 2. Center and markets collaborate to develop global new product. 3. New product is designed primarily for lead markets. 4. The product enters other markets, based on their readiness and need.

Brand Benefit Ladder: ladder up to anchor down

1.Global brands start with clear global positioning. 2.In building the positioning, lean toward emotional benefits rather than functional features. 3.Position the brand around values that are universal 4.Establish a position as high on the benefit ladder as possible, while still being practical and believable. -Low end of ladder is local, functional, and attributes. -High end of ladder is global, emotional, and values Aim your brand positioning at high (global) positioning and strive for standardization. If you have to make adaptations, try to limit it to this bottom tier of the ladder. Strive to develop global concepts to maximize efficiency. The key is identifying a global consumer insight that transcends borders. Make adaptations at the local level, only as much as necessary. Ex: Haagen Dazs adapt on level of flavor, taste, expensive, available etc so that they can standardize the values (accomplishment, self esteem, family)

Six Critical Factors to a Global Career

1.Learn a second language. 2.Put some stakes down in Asia. 3.Understand human relationships. 4.Adapt your approach. 5.Develop an enterprise perspective. 6.Be willing to take risks.

Seven Rules of Global Distribution

1.Select your distributors, not the other way around. The ones that approach you may be the wrong ones for you. 2.Look for distributors capable of developing markets. Avoid the ones with few contacts or prefer the status quo. 3.Treat local distributors as long-term partners. See them as more than temporary market-entry vehicles. 4.Support distributors via money, managers and marketing. Show commitment and give them the tools to succeed. 5.Control marketing strategy from the very start. Maintain authority over prioritization, positioning, budgets. 6.Make sure distributors provide market and financial data. Without detailed information, difficult to make decisions. 7.Build links among distributors. Create network for sharing ideas and planning jointly.

Elmer's 7 Tips for Working abroad

1.To increase your chances of going abroad - and succeeding once you're there - first get really good at what you do. 2.If you work in a global company, make your interest in going abroad known fairly early. 3.If possible, don't be too picky about your first overseas job - they don't come up very often. 4.Don't worry about "falling behind" in your career or taking a job that's "beneath you." 5.Once there, do less talking and more listening. Go to learn! 6.Don't just talk business. Talk about their lives outside work - family, hobbies, history. 7.Expand your social circles beyond Americans and expats.

3 Stages of Communication

1.What the brand is... 2.What the brand does... 3.How the brand makes you feel... Ex: Nature Valley advertisements

Principles for Managing Global Brands: (4) Give and Take and (5) Watch, Fear, Wonder

4. Give and Take: organize to share knowledge 5. Beware of new competitors

The Provenance Paradox

A brand can strengthen its positioning by highlighting its country of provenance. But for brands from emerging markets, this often doesn't work, no matter how good the quality. Strategies 1.Stick to colonial history => Turkish rugs. 2.Build a brand for the long haul => Honda, Toyota. 3.Flaunt your country of origin => Colombian coffee. 4.Downplay your country of origin => Corona beer. 5.Hide behind a front country => ???.

CQ: What is true about developing global innovation?

A local market can be the starting point for innovation

Class 13 Takeaways

Ability to scale and level of cultural grounding have major influence on whether and how to adapt. Some product adaptations are discretionary, some are mandatory - and some are discretionary but become mandatory. Adapting - even if due to regulatory compliance - can result in disappointed consumers.

Language & Casting Considerations

Accurate translation of English can be a challenge: -Watch differences between English-speaking countries. -Beware literal translations, e.g. "Got Milk" in Spanish. -Rely on local teams and agencies to do the translations, and be careful about insisting on 100% match. Some global brands rely on imagery rather than language to reduce the risk, but usually works best for brands that are already well known. Showing "local" characters can be challenging: -Most countries' populations are fairly homogeneous. -At the same time, some countries are becoming more diverse, e.g. Turks in Germany, North Africans in France, sub-Sahara Africans in Italy. Ex: Cartier's focus on print and outdoor ads in Brazil, Russia, Japan and dozens of other countries.

Is a centralized or decentralized approach better?

Actually, neither! Both do a good job of balancing standardization and adaptation, centralization and decentralization, efficiency and suitability - based on how they first went international.

NU Study: Characteristics of Successful Expats

Adventurousness is defined as the expat's desire to have exciting and new experiences, both at work and in life outside of work. Cultural sensitivity is defined as the expat's ability to understand the culture in which they are living and working, and to integrate/fit into it. Curiosity is the expat's interest in learning about their new culture, environment and job. Flexibility is the expat's willingness to try new ways of doing things. Open-mindedness is the expat's ability to look at their new environment with a desire to learn about and understand it and an interest in seeing things differently. OM and flexibility are very important

The 4 A's to 4 P's

Applicability Availability Affordability Affinity ~to~ Product Place Price Promotion

Consequences of Arbitrage and steps to fight parallel imports

Arbitrage has damaging consequences: -Results in dilution of distributor's exclusivity. -Wronged distributor might try to retaliate, e.g. lower-quality service that hurts the supplier. -Unauthorized reseller might be distributing product of lesser quality, past its expiration date or in violation of labeling laws. Steps to fight parallel imports: -Enforce discipline in distribution network. -Carefully police distribution agreements. -Cut supply or raise prices to gray-market distributors. -Alter design of products shipped to different countries.

Promotion is HIGHLY critical

Arguably the most important part of the marketing mix - nothing else matters if the consumer doesn't travel down the path to purchase. Usually the most scrutinized part of the marketing mix - because the brand comes to life via personality, images, emotions, words and faces. Probably the most contentious part of the marketing mix - it's often where the debate about "standardization vs. adaptation" gets most heated.

The Rise of Large-Scale Retailers

As markets become more economically developed, the retail scene begins to be marked by fewer, larger stores. Especially apparent in grocery industry, where the number of smaller retailers has declined while large discount outlets and hypermarkets have grown. Three factors contributing to the trend: -Increase in car ownership. -Increase in working women. -Increase in homes with refrigeration. Example: Europeans have gone from shopping several times per week to more one-stop shopping in supermarkets, due to transport capacity, refrigerator capacity, higher cash flow.

Product Life Cycle

As sales & time increase: -intro -growth -maturity -decline In the maturity cycle is where lead market should be. Globally led innovation usually starts here. As other markets come up the curve, the "new" product is then introduced there. Ex: U.S. launched Fiber One Brownies, which became a huge hit. We tested the concept in the U.K., Australia, India and Malaysia - it showed good potential. The product was reformulated to meet the U.K.'s standards, and was eventually sold in markets on three continents. Lead Markets U.K. - biggest European business. Australia - high volume potential. India - very new, but big potential. Malaysia - representative of Asia.

Types of Bias in Global Innovation

Availability Bias: The tendency to think that examples that come readily to mind are more representative than they really are. Confirmation Bias: The tendency to seek, interpret and recall information in a way that supports your existing beliefs. Variance Bias: The tendency to perceive out-group members as more similar to each other as are the in-group members.

Ten worst countries in the world for working people

Bangladesh, brazil, columbia, egypt, honduras, india, kazahstan, phillipines, turkey, zimbabwe Walmart pays $282 mil to put years-long bribery investigation behind it Fake stores in China: Ikea, Apple, Subway, Dairy Fairy

Benefits of Standardization vs Benefits of Adaptation

Benefits of Standardization: -Lower production costs via economies of scale. -Lower input costs via volume purchasing. -Cost savings via not supporting adaptation. -Fast, efficient new product development. -Core consumers may prefer global version. -Can enhance consumer perception of brand. Benefits of Adaptation: -Greater sales by meeting norms, preferences. -Meets requirements to enter closed markets. -Enables use in different climates, infrastructure. -Perform better under different use conditions. -Decrease input costs by sourcing locally. -Lower cost by eliminating unnecessary features.

Class 23 Takeaway

Beware the three cognitive biases that can have an outsized (i.e. constricting) influence on innovation. Innovation is arguably the most centralized aspect of business - right up there with strategy - due to high costs and specialized resources. Developing innovation at the global level is faster and more efficient, but you still have to account for local needs. The same thinking that goes into whether to adapt or standardize product and promotion applies to innovation.

Adapting for Promotions: Burger King Japan

Burger King Japan offered KURO Pearl and KURO Diamond burgers: buns and cheese darkened with bamboo charcoal, and black pepper flavored patties topped with squid ink, with enhanced garlic sauce. This U.S. holiday promotion featured the standard Whopper topped with A1 Thick & Hearty Sauce and served inside a black bun. The results were a mix of good news, bad new

Legal Systems

Business operates best in legal systems where rules are clear, publicly disclosed, fairly enforced and broadly respected by individuals, organizations and the government. Economic activity suffers and uncertainty increases when the rule of law is weak. Rule of law ensures order by resolving disputes in commercial activities, as well as protecting intellectual property and taxing economic output. Four major types of legal systems: common law, civil law, religious law and mixed systems.

Guest Speaker: Shay

CQ: According to Shay, what is true: many mexicans use their ovens for storage rather than for baking, you need to put "boots on the ground" to truly understand a new market, a strong brand manual is key in having brand consistency Worked for Pillsbury: center of message was at love Worked for Haagen Dazs: most premium and global brand. Had to stay true to it as a global brand. To offset desire to adapt they had to maintain the brand vision. Adapting was gonna only bring in a ST gain. CQ: According to Shay, which of the following can help a brand maintain its global consistency: clear brand manual & strong brand vision & consumer feedback Global brand manual is the key to finding what's acceptable and what's not. That brand manual is one way to execute "freedom within a framework." The really good brand manuals strike a balance between too restrictive (from the markets' perspective) and not restrictive enough (from the center's perspective). Having the authority to lay down the law is helpful. The global brand manual comes to be from teams of people that collaborate. Adapt manual as time goes on. CQ: What does Shay say about the brand manual? -Global brand manuals often start as the home country's guide before being taken overseas -creating the global brand manual should be a collaborative effort between center and markets To offset local team wanting growth: you need strength in brand vision, can't have 40-50 markets doing their own thing. A lot of times the consumer will tell you if it's acceptable or not. Maintain brands passion, brand champions and historians. Don't have rapid turnover CQ: According to Shay, the longer a company operates globally, the easier it all gets: False

Issues that Promotion Must Address

Category Development: The less developed a category is, the harder promotion has to work to explain the brand's function and value. Competitive Intensity: The more competitive the category is, the harder promotion has to work to make the brand break through. Path to Purchase: The farther back the consumer is (or the slower they're moving), the harder promotion has to work to move them toward trial. Accessibility of Media: The less accessible that broad-reaching media is, the harder it is to execute an effective pull strategy.

Principles for Managing Global Brands: (1) Balance Tension

Center: "We're overcomplicating the business and diluting the brand by adapting to every local variation." Markets: "The head office doesn't know enough to recognize the differences in our consumers." Consistency and Adaptation: -Balance consistency and adaptation by using market data and consumer insights. -Recognize value of tension and channel it to productive ends. -Resolve the paradox constructively rather than giving in to one extreme or the other. -Ask yourself, "Will this decision help sell one more case?"

Beware the New Global Challengers

Challengers from Emerging Markets -Brazil: Embraer, Sadia & Perdiago, Natura. -Mexico: Bimbo, America Movil, Grupo Modelo. -India: Ranbaxy, Infosys, Tata, WIPRO. -China: Lenovo, Galanz, Haier, Chunlan Group. -Turkey: Koc Holding, Vestel & Sisecam. Traits of the New Global Challengers: -Agile, lean ownership structures. -Adept at managing broad range of risks. -Keen sense of problem-solving -Masters of improvisation. -Practitioners of frugal innovation.

Examples of how different companies have had to adapt due for different reasons

Climate: Nature Valley had to produce Sweet & Salty Bars without a chocolate base, to avoid melting in Latin American and Asian markets. Infrastructure: Refrigerated trucks aren't common in all markets, forcing many food companies to reformulate their products for ambient shipping. Use Conditions: Japanese consumers use battery-operated trimmers on their small lawns. The motors and batteries didn't last as long and needed to be modified. Color: Red sells well in Japan, where it has happy associations. But green doesn't sell well in Malaysia, where it's associated with the jungle and disease. Sound: Software that pinged when users tried to do something that wasn't possible had to be modified, because Japanese office workers were mortified that colleagues would know when they made mistakes. Tradition: Frito-Lays' potato chips didn't sell well during summer in China. Consumers associate fried foods with yang, which according to traditional medicine generates heat and should be avoided in summer. Spatial Characteristics: Three years after entering the U.S., Ikea abandoned its smaller European furniture, linens - even glasses - to accommodate significantly larger American homes. Physical Characteristics: A leading Italian shoe manufacturer had to modify its designs for the U.S. after learning that Americans have narrower, flatter feet and thicker ankles. Price - Downsizing: In Brazil, where many live on less than $2/day, Nestle downsized its Bono cookie packs from 200g to 149g. Sales increased 40 percent. Price - Multiple Options: In India, Unilever sells Sunsik shampoo in bottles for the upper classes and in single-use sachets for the lower classes. Price - Reformulating: After determining what consumers in emerging markets could afford, P&G reformulated its Ace laundry detergent to omit enzymes (which does affect efficacy). Religious Standards: In India, where Hindus consider cows sacred, the Big Mac was adapted to become the Maharaja Mac, made with chicken. India's large vegetarian population - also due to religion - can order the McAloo Tikki Burger. Legal Standards: The Italian candy maker Ferrero has made Kinder Surprise eggs - hollow chocolate containing small toy prizes - popular around the world. But Ferrero was barred from selling them in the U.S. due to safety concerns.

Common Law vs Civil Law

Common Law: -Also known as english common law -Someone who used a trademark before another registered it could successfully challenge the registration. -Acknowledges preeminance of social norms, with laws arising from what society generally considers as right, and from what has commonly been done and accepted, i.e. legal precedent. -Rooted in England during the Middle Ages, addressing cases in which there was no statute that could be applied. -You can do it if it's not explicitly forbidden. -Could show TV ads for sweet snacks targeted to children, because there was no law prohibiting it. -Example: U.S., U.K., former members of British commonwealth. Civil Law: -Also known as the Napoleonic Code -The first to officially register a trademark is the owner of the trademark, whether they use it or not -Acknowledges preeminance of written laws, which can be more encompassing and more precise. -Rooted in the Roman Empire, and also known as code law. -You can do it only if it's explicitly allowed. -Could not show TV ads for sweet snacks targeted to children because there was no statute allowing it. -Example: Most European countries, plus countries influenced by European colonialism.

Best Practices for Emerging Markets

Conduct boots-on-the-ground research to understand target consumers and indigenous challengers. Customize offerings as necessary, without surrendering too much global advantage. Acquire new capabilities that build competitive advantage, e.g. revised business model, local alliances. Target governments as customers - they buy huge quantities of products and services. Develop relationships with governments and support local communities. Beware overconfidence. Learn from those who came before

Media Budget Considerations

Considerations: -Regulatory. -Cultural. -Language. -Casting. -COST! Every dollar spent on creative adaptation is a dollar taken from the media budget. Make sure it's worth it!

What do strong global brands exhibit?

Consistency, connectivity, and coherence Present the same value proposition in all markets: name, identity, images, benefits, products, messaging Companies take different organizational approaches to building global brands, but tend to standardize elements that they consider the most strategic. Big advantage of strong global brands: They enjoy greater awareness, without need for reeducation in different markets. Ex: Even if you don't speak any of these languages, you'd have no trouble recognizing that it's a Coke or McDonalds

Class 11 Main Takeaways

Consistency, connectivity, coherence - hallmarks of the strongest global brands. Even brands we consider truly global are not global in every single aspect; some categories are easier to globalize than others. Companies take different organizational approaches to building global brands, but tend to standardize elements that they consider the most strategic.

Issues with the sweet and salty nature valley bar

Consumer Issue:In the new market, milk chocolate is the most prevalent type of chocolate found in snack foods. Price Issue:It's an emerging market with lower per-capita income, so the consumers are price-sensitive. Solutions: -replaced whole almonds with pieces & chocolate chunks with bits -Cut bar to 30 g -4 bars/box Regulatory Issue:Snack foods are required to have 5g or less sugar per serving.Vitamin fortification is banned for all snack foods. Solutions: -Cut bar to 30 g -Don't include chocolate base -Add vitamin spray in other markets Production Issue:New country's volume is small, so must be manufactured as part of a larger batch for several other countries.

Box Communication Model

Corner 1: country marketing Corner 2: central marketing Corner 3: central agency Corner 4: country agency

Class 28 Takeaways

Corporate governance is the system that companies use to direct and control their actions: ethics, corporate social responsibility, sustainability. Ethics is about "doing the right thing" - often an elusive concept when doing business abroad, with trade-offs. CSR calls on companies to act in the best interests of all stakeholders, not just stockholders - and still make profits. Sustainability takes long-term view of conserving resources - and what's good for the Earth is also good for profits.

Why do global markets lead to tension?

Countries with poor business performance are more likely to have involvement from headquarters => lean toward global. Small markets depend more on headquarters => global programs often better than what local managers can do. Large markets with strong local managers are less willing to accept global programs => more leeway to localize. Large markets often account for most of the company's investment => headquarters tends to get more involved. To secure acceptance of large markets, headquarters should make standard marketing programs reflect the needs of large markets rather than small markets. Tension can also be defused by granting countries autonomy to manage their own local brands.

Class 21 Takeaways

Country-specific issues - regulations, culture, language, casting - can constrain a company's ability to standardize marketing. Even with standardized positioning, a brand's messaging may need to adapt to where a country sits on the product (brand or category) life cycle. Media strategy depends on the availability and penetration of different mediums, as well as consumer and market factors.

Reasons for Adaptation

Cultural preferences, Consumer appeal, Consumption habits, Disposable income, Energy requirements, Legal regulations, Religion, Climate, Infrastructure, Use conditions, Spatial characteristics, Physical characteristics, Cost and price, Performance, Quality, expectations, Profit margins, Supply-chain costs, Production capability, Input availability, Other issues?

Marlboro's Promotional Strategy

Decided to create a great global concept based on a global consumer insight: "Come to where the flavor is. Come to Marlboro Country" with a cowboy and horse Marlboro's ability to identify a powerful global consumer insight - and then execute against it consistently in every country - led to complete domination of its category. Marlboro's Pull Marketing: -Brand is positioned as the cigarette for men who aspire to the values of the American cowboy: rugged, independent. -Western imagery evokes emotions and values that are well understood by the target segment. -Recognizes that consumers don't always take things literally. -Ads were ubiquitous: TV, print, outdoor, sponsorships. Marlboro's Push Marketing: -Brand's very strong pull marketing activity, fueled by huge budgets, encouraged retailers to execute push tactics. -Brand secured prime shelf placement and merchandising. -Retail presence was widespread: grocery stores, theaters, gas stations, hardware stores, vending machines.

Distribution Strategy: Channel Alignment

Defined as the coordination of the various channel members to ensure a unified approach. Challenges for global companies: -The longer the channel, the more difficult to coordinate. -Companies based far away from their distributors have less control, and risk losing control to the distributor. -Companies whose volume represents a small fraction of their distributor's business have less control. Companies can gain greater control if they have an in-country presence, e.g. local subsidiary, dedicated sales force.

Distribution Strategy: Channel Length

Defined as the number of intermediaries involved in bringing a product from the manufacturer to the consumer. Length is usually influenced by three factors: -Product's distribution density, i.e. products with many final sales points tend to have longer channels. -Average order quantity, i.e. products that have low order quantities tend to have longer channels. -Availability of channel members, i.e. companies with fewer channel members available tend to have shorter channels.

Distribution Strategy: Distribution Density

Defined as the number of sales outlets necessary to provide adequate coverage of the entire market. Depends on shopping/buying habits of the target consumer within the category, e.g. if consumer is unlikely to exert much effort in finding item, then extensive distribution is required. Example: For "convenience goods" such as food items, buyers need many nearby outlets they can visit frequently. Example: For goods such as clothing or appliances, distribution, can be more limited, i.e. buyers may visit 2-3 outlets. Example: For specialty goods, can be very limited or exclusive distribution, i.e. buyer will make the effort to find it.

Examples of Companies with high CSR

Dell: revovered & recycled over 2 bil pounds of used electronics Levi Strauss: donated over $60 mill to HIV/AIDS organizations in over 40 countries Starbucks: committed to making coffee the world's first sustainable product for 1 mill workers Ben & Jerry's: funds & supports nonprofits who advocate for farmers

Political & Economic Systems

Democracy: -Mainly associated with market economies and capitalism. -Decisions largely left to market forces, i.e. supply and demand. -Individual welfare outweighs group welfare. -Great emphasis on private property. -U.S., Canada, U.K., Australia. Socialism: -Associated with mixed economies, which have features of both market and command economies. -Government plays big role in controlling means of production, distribution and commercial activity. -Group welfare outweighs individual welfare. -Commonly called "social democracy," e.g. western Europe. -Also Brazil, Russia, India, China, i.e. BRIC countries.

Key Global Trends

Developed countries' labor forces substantially aging. Economic power shifting to developing nations. Population growth mainly in emerging countries. World's population becoming more global.

Class 25 Takeaways

Different ways to organize global businesses for optimal coordination, with SBUs becoming increasingly common. Beware the three negative outcomes of local teams holding on too tightly. Use the whole continuum of global management styles to achieve marketing alignment - with emphasis on "freedom within a framework." Use the "box communication model" and be aware of low- and high-context relationships.

Solutions & Problems of International Business Ethics Dilemmas

Dilemmas: -labor standards -environment -marketing -corruption -human rights -cultural diversity Answers: From Gov: -national laws -international agreements From Civil Society: -consumer activism -shareholder activism From Corporations: -global ethic codes -agreements (global compant)

Why is a Starbucks latte so pricey?

Does it make sense to be this expensive? -Positioning. -Target segment. -First-mover advantage. -Easier to lower prices later than to raise them.

How Manage Price in Emerging Markets

Downsize the product: -Decrease sizes, even down to single-serve units, to match smaller disposable incomes. Seek cost savings: -Cadbury decreased production costs in India by moving factories out of Mumbai and supporting growth of local cocoa production. -PepsiCo in China invested in improving local potato yields and irrigation systems. Redesign products: In India, P&G reverse-engineered its razors to a specific price point, eliminating lubrication strip and colorful handle.

How a global campaign is made

Either: 1. Markets and center collaborate to develop global creative idea and then the campaign is produced, with adaptations as needed (Early coordination is key. Adaptation needs should be anticipated, rather than be an afterthought) ~or~ 2. Local markets develop a strong campaign and the global potential is seen and then other markets adapt the campaign for their local needs. (Markets should beware the "pride factor" ie being too proud to use another markets idea ~and then~ they purchase media at local level, execute the campaign locally, and monitor/evaluative results

Ethical Relativism, Absolutism, and Universalism

Ethical Relativism: -Ethical principles are not absolute, but depend on the particular culture where the action takes place. -"When in Rome, do as the Romans do." Ethical Absolutism: -Preference is given to the ethical principles of your own culture. -"When in Rome, do as you would back home." Ethical Universalism: -There's a set of universally accepted ethical principles by which we should all abide. -"When in Rome, do as the whole world does."

Ethics

Ethics: moral principles that govern our conduct. Ethical behavior = "do the right thing." Usually prescribed by laws, regulations, customs, tradition, expectations. Ethical behavior typically leads to enhanced brand image, plus advantages in hiring employees, finding business partners, dealing with foreign governments. But ethical standards vary from country to country. Ethical dilemmas can seem more common abroad.

Basic Global Pricing Strategies: Ethnocentric, Polycentric, Geocentric

Ethnocentric pricing (i.e. full standardization): -Sets single price worldwide, for extreme simplicity. -Rarely ideal for maximizing profits; ignores local conditions. Polycentric pricing (i.e. full adaptation): -Completely decentralized, with markets free to set price. -Ignores potential cost differences, plus corporate knowledge. -Sets up potential arbitrage opportunities, i.e. gray markets. Geocentric pricing: -Coordinated approach to protect brand positioning, address local differences and leverage global pricing experience. -Much more effort, taking into account multiple variables that include center and markets.

Renewal of Smaller-Scale Retailers

Even with large retailers growing, small-format retailers have widespread presence in Latin America, Asia and Africa. Global manufacturers are renewing their focus, as a means of reaching lower economic classes. Example: P&G estimates there are 20 million tiny shops that they call "high-frequency stores," often inside of someone's home, of which only 2.5 million carry P&G products. Example: P&G has even entered an agreement with Chinese government to improve small retail outlets, build new ones and provide training to locals from 10,000 villages.

Global Branding is rooted in global positioning: J&J and Diageo examples

Ex: Johnson & Johnson bandaids have higher price but will need to reduce this as they expand into other countries. -Willing to accept lower margins in developing markets. -Offers smaller quantities per package to make it affordable Diageo, British beer and spirits remains with premium price in different countries. Loyal consumers pay for its well known products -Diageo doesn't sell on functional features of the products. -It highlights emotional benefits such as 'cool,' 'sophisticated.'

Biggest Global Brands

Facebook, country garden, netease games, etc Mapping the global 500: mainly in US, Europe, and Asia By 2025 fortune 500 companies will be more in emerging markets (excluding china) and greater china, and less in developed regions Most Valuable Brands: Amazon, Samsung, ICBC, Toyota, BMW

Rise of International Retailers

Facilitated by several factors: -Lower governmental barriers to entry. -Enhanced data communications. -New forms of international financing. -Unification of markets, e.g. European Union. Among the most successful international retailers: Walmart, McDonald's and KFC. Example: Walmart entered Mexico in joint venture with Cifra; overcame high tariffs, red tape and poor infrastructure; came to dominate the retail sector within 10 years. But success isn't guaranteed, as discovered by Home Depot in China, Best Buy in the U.K., Starbucks in Australia.

Sustainability

Focuses on meeting our present needs without compromising future generations' ability to meet their own needs. Composed of three pillars: -Economic, environmental and social. -Also known informally as profits, planet and people. -The growing focus on sustainability maintains profitability as the central goal of business, i.e. practice sustainability in the pursuit of profits, not in place of it. Ex: Ford with water stewardship Ex: GM with recyclables & GHG The best sustainability efforts are good for both the environment and the company's business. Ex: refillable spray bottles, 9x concentrated detergent, less material per unit

Class 27 Takeaways

Four major trends - mainly demographic - are driving the rise of emerging markets. Population growth, economic growth, commercial power and brand value are all shifting toward emerging markets. Emerging markets' economic potential is matched by their inherent risks - manage them carefully. Beware the new global challengers, who can pose a greater threat than multinationals from advanced markets.

Principles for Managing Global Brands: (2) Decide who you are and are not

Global companies have the advantage of scale. Local companies have the advantage of intimacy. Given a global company's disadvantage in consumer and market knowledge, all the more important to realize its scale advantage. Global Positioning: -The brand's declaration of what it is and what it is not. -Says what the brand will do better than anyone else and where it will invest resources to beat the competition. -Best positioning statements define, focus and constrain the company's marketing activities. -Deviation must be a consciously chosen exception, with full recognition of its implications on the whole enterprise.

Global Product Platforms

Global product platforms allow for companies to bridge global efficiency and local suitability. Design a platform (i.e. chassis) that can be altered easily and inexpensively to accommodate the requirements of different countries. This is also known as "modularity." Ex: Sunbeam/Rowenta's global platform for its steam iron resulted in 46% reduction in parts; enabled good/better/best versions; and boosted annual sales by 3.7x.

Factors Affecting Global Pricing:

Goes from company oriented factors to consumer: -shipping, logistics -transfer pricing -tariffs/duties, taxes/VAT -channel costs -exchange rates, inflation, price controls Transportation Costs: -For lower-value commodities, low transportation costs often determine which supplier gets the order. -For higher-value differentiated offerings, transportation has a smaller influence on pricing. -Advances in transport methods help make global companies more competitive, but energy costs remain an issue. Channel Costs: -Are function of channel length, distributor margins, logistics. -Many countries have longer channels (e.g. additional layers of intermediaries) than in the U.S. -Less-developed logistics systems and infrastructure can also drive up costs outside the U.S. -Retailer gross margins tend to be higher outside the U.S. Tariffs: -Taxes imposed on certain classes of imports, meant to regulate foreign trade and safeguard domestic industries. -Levied on the product's landed cost (i.e. all-in cost). -Companies can try to avoid or lessen the effect by having their products reclassified (e.g. Land Rover). Customs Duties: -Most commonly a tax imposed on end users importing goods. -Can also be imposed on exports leaving a country. Value-Added Tax: -Tax levied on products for the "value added" at each stage of production, distribution and sale. -Charged by the final seller and paid by the end user.

Actors in the Political System

Government (i.e. 'public sector') operating at both national and local levels. Pro-business lobbyists and other advocates. Special-interest organizations, including consumer advocates, environmental advocates, labor unions. Regional economic blocs, such as EU and NAFTA. International organizations, such as World Bank, World Trade Organization and United Nations.

Host Government Actions

Government Subsidies: -Free gifts that host government dispenses, with the expectation that the overall benefit to its economy will far exceed the cost of the grants. -Example: South Carolina provided subsidies to French company Michelin to open plant in the state. Ownership Restrictions -Requirement that local company becomes part owner of foreign subsidiary operating within the country. -Example: India's stipulation that foreign ownership not exceed 40% led to IBM and Coca-Cola leaving, returning only when the requirement was loosened. Operating Conditions: -Host governments impose regulations that affect all aspects of business - problematic mainly if local and foreign companies are treated differently. -Example: Restrictions on work permits for foreign managers that company may want to employ (i.e. expat employees). Government Boycotts: -Can be directed at companies of a certain origin or have engaged in transactions with political enemies. -Example: Arab countries boycotted companies that engaged in business activity with Israel, e.g. Coca-Cola for licensing a new Israeli bottler, Xerox for financing a documentary about Israel.

Great Brand Positioning & Kikkoman Example

Great brand positioning - whether global or domestic - does not start with the product itself. Great positioning start with the consumer. Marketers begin by asking, "What do they need?" or "What problem are they trying to solve?" Following this question with "Why" can lead you up the benefit ladder to a universal insight and benefit Kikkoman found that Americans weren't looking for soy sauce (if they even knew what it was). What they were looking for was a way to make their meat taste better. Kikkoman didn't focus on the attributes of a little-known product. Instead, it addressed a higher-level emotional benefit: the satisfaction of serving a delicious dinner. By positioning the brand as an "Asian flavor enhancer," Kikkoman was free to innovate beyond soy sauce and to make local product adjustments as necessary.

H&M Social Responsibility

H&M Controversy in China H&M is 'deeply concerned by reports from civil organizations and media that include accusations of forced labor' in Xinjiang. - H&M website, September 2020 'Spreading rumors to boycott Xinjiang cotton, while also wanting to make money in China? Wishful thinking!' - Communist Youth League, via Weibo China erased from e-commerce over xinjiang stance

A Truly Global Orientation

HQ in the middle surrounded by other markets but all connected. Markets maintain some autonomy, within strategic framework. Regular communication and coordination across HQ and markets. Markets use blend of global and local marketing elements. Pro: Markets can learn from others and gain economies of scale. Con: Markets offer products that aren't perfect fit for local needs

Class 19 Takeaways

IMC ecosystem includes many elements, commonly classified as either advertising or sales promotion. All promotion elements can - should! - feed word-of-mouth. Businesses must decide on push vs. pull strategy, depending on the brand, category and market conditions. Promotion strategy can be managed via various combinations, though advertising tends to be managed globally and sales promotion locally. The same thought process used to decide product adaptation also applies to promotion adaptation.

IMC Ecosystem

IMC is in middle with each of the following influencing it: -Brand Name -Ads: TV, internet, mobile, etc -Sales Promo: price discounts, merchandising, coupons, demos, samples, loyalty, sweepstakes, sponsorships, contests -Other: personal selling, trade shows, events Brand Name & Ads is pull Sales Promo & Other is push

Wendy's Case

If your strategy is to emphasize standardization, you may find that the best you can do is to minimize the versions. Be aware of the trade-offs you're making and make sure you're prioritizing what's most important to maintaining the brand. Promotion strategy plays an even more important role when: -category development is low. -competitive intensity is high. -consumers are early on the path to purchase. -desired media is less accessible. When entering emerging markets, a homogeneous society and close psychic distance to the home market help reduce costs.

How Does Transfer Pricing Work?

Import Tariffs: 1. Country of production set unit price 2. Subsidiaries in foreign markets set tariff price Ex: Company pays tariff on $8 value in Florin, but $10 value in Guilder => company profit is optimized. Income Taxes: 1. Country of production set unit price 2. Subsidiaries in foreign markets set tax price Ex: Company pays tax on $5 profit in Florin, but $7 profit in Guilder => company profit is optimized (do consumer price-subsidiary price)

Testing if Adaptation is Worth It

In India Nature Valley, local team said that the introductory lineup needed flavors familiar to Indian consumers, e.g. mango, masala, cumin, turmeric. A concept test revealed that the three flavors with the highest preference were chocolate, honey and almond - all standard global flavors. In the U.K., local team said the standard package needed the addition of fences that are common in the British countryside. Qualitative interviews found that consumers didn't notice the absence of fences, and that adding them wouldn't boost their purchase intent.

Deal vs Relationship Orientation

In deal-oriented cultures, managers place more focus on the task to be done, are impersonal, typically use contracts, and prefer to just "get down to business." Ex: Australia, Northern Europe, North America. In relationship-oriented cultures, managers place more value in getting to know their business partners. Trust and relationships are more important than the deals. Ex: China, Japan, Latin America.

Innovation Efficiency vs Market Suitability

Innovation efficiency is on one side which is more profit or marketing funds. And on the other side we have market suitability which emphasizes more revenue. Innovation efficiency comes from either designing for all markets (e.g. global product platform), or designing for lead markets (e.g. biggest or most strategic markets). With either approach, try to focus R&D's time and resources on innovation with the most global potential

Indirect Distribution

Intermediaries include agents, wholesalers and retailers that perform functions such as holding inventory, financing, selling, promoting, and managing after-sales service. Intermediaries can help companies by reducing the number of transactions, addressing cultural barriers, and simplifying the selling process. Use of intermediaries carries the risk of losing control of the physical flow of products, ability to determine pricing at every stage, and ability to control promotion strategy.

Cultural Considerations & Constraints

Keep an eye out for cultural factors - some are well known, but others can sneak up on you: -Religion, especially in more-devout countries. -Politics, especially in less-democratic states. -Sex, nudity and intimacy. -Gender roles and traditions. -Pay attention to Hofstede's cultural dimensions! Advertising has credibility issues in some countries: -61% of consumers worldwide appreciate advertising, but in the former Soviet Union, only 23% of consumers agree. -Secondary schools in U.K. have "responsible consumer" curriculum that encourages students to criticize corporate advertising. Ex: At CPW, we inadvertently shipped cereal boxes with a barnyard scene on the back panel to the Middle East Ex: Taco Bell couldn't use its popular "talking chihuahua" ads in Asia, where dogs are seen in a different light.

Class 12 Takeaways

Ladder up to anchor down: -Global branding starts with global positioning. -Lean toward emotional, not functional, benefits. -Position around values that are universal. -Go high, but must be practical and believable too. Accept that there'll be deviations - but keep them low on the benefit ladder.

Different Levels of Leveraging a Single Campaign for Efficiency

Least expensive: Use one campaign, with minimal adaptations, e.g. legal requirements Mediocre expensive: Use one campaign, with moderate adaptations, e.g. language voice-over, local pack in end shot More expensive: Use one campaign, with extensive adaptations. e.g. market-specific productions. Modular advertising: i.e. global ad platform, can be a good bridge between globalization and localization. Regional campaigns: can be another effective bridge between full standardization and full adaptation.

Local Hire vs Expat Assignment

Local Hire: -you go abroad on your own, with or without a job -you decide when/where -you pay -earlier in life -less work experience (entry-level roles) -high flexibility & risk -Are you willing to be a free agent in a new country? Expat Assignment: --you go abroad with your company, with a job waiting for you -you/company decide when/where -company pays -later in live -more work experience (at least middle management) -low flexibility and risk -What about your family and corporate career?

The 3 Cs are easier to achieve in some categories than in others

Local: food and beverage, personal care goods, household care goods Global: high end luxury goods, B2B goods/services, industrial offerings These are tendencies, not absolutes.Global vs. local is measured in relative terms

Factors in media strategy

Media strategy depends on category development, competitive intensity and consumers' position on the path to purchase. Also depends on availability and penetration of each medium. Types of media: TV, Display, Search, newspaper, OOH, radio, magazines, etc. Media availability and options matter! Most toy companies would agree that toys cannot be marketed profitably in countries that lack television advertising to children. Ex: Push marketing via POS tactics in Mumbai

How Promotion Can Fall Short

Media: Message may not reach the target audience Creative: Message may reach the target audience, but it isn't understood. Creative: Message may reach the target audience and be understood, but doesn't compel purchase Message can also be obstructed by "noise," e.g. competition.

CQ: What is true about the 3 global trends?

More working women means higher household incomes Companies see small retailers as a way to expand business Major retailers such as Best Buy and Starbucks do not always succeed abroad

Class 18 Takeaways:

Most global pricing considerations - for both top-line revenue and bottom-line profit - are the same as for domestic. Three basic global pricing strategies: ethnocentric, polycentric and geocentric. Certain international-specific conditions can lead to significant price escalation. Two common practices that also impact final price: transfer pricing and parallel imports. Three basic methods for making products more affordable in developing countries: downsize, cut costs, redesign product.

The major aspects of the marketing mix that collectively are the brands presentation to consumers

Name, product feature, colors, labeling, packaging, materials, ad themes, ad media, ad execution, pricing, sale promotion Research indicates that the average product requires only 4-5 adaptations out of 11 marketing elements

Where it's easiest to do business

New Zealand, Singapore, Hong Kong, Denmark, South Korea, US, Georgia, UK, Norway, Sweden Least corrupt: new zealand, denmark, finland More corrupt: syria, south sudan, somalia

Importance of the life cycle in marketing

Often the issue is not culture, but that the country is at a different point in the product - or brand - life cycle. Ensure the campaign matches the market's level of awareness and understanding of the brand or category

Will the adaption pay back?

On one hand we have production efficiency with more profit or marketing funds. On the other marker suitability with more revenue. Will the cost of local adaptation be paid back in incremental revenue growth? Every marketer should ask: "Will this change result in incremental sales?" Example: -Assume that the cost of making a local adaptation is $3/unit. -This results in an 11% shortfall in gross profit ($3/$27 = 11%). -To make the adaptation worth it, you'd need to sell 20 more units (total $525) to offset the lost profit ($525/$27 = 19.4). -So for the adaptation to pay off, you'd need to grow revenue by 11% (20 units/175 units = 11%).

To Adapt or Not to Adapt

On one side we have low potential for scaling, strong cultural grounding and lean to localize On the other we have high potential for scaling, weak cultural grounding and lean to globalization

Adaptations

Packaging: think mayonnaise (squeeze bottle, jar, etc) Labeling: Country clusters can save costs via multi-lingual packaging: -Scandinavia (Sweden/Denmark/Norway/Finland). -Eastern Europe (Hungary, Czech Republic, Slovakia). -Iberia (Spain/Portugal). Seek synergy: Find an idea that worked in another market and adapt it for your own market. Adapting for a country's position on the product-life cycle is a common tactic in emerging markets, i.e. meet consumers where they are.

Parallel Imports (AKA Gray Markets)

Parallel importing is the unauthorized import of goods, i.e. without the express permission of the exporting company. Its legality depends on the laws of a particular country. -Often lead to arbitrage -The internet has made parallel imports easier. -Common currencies (e.g. Euro) have fueled the growth of gray markets. -Gray markets undermine a company's ability to charge different prices in different markets. -Gray markets have implications beyond profit. Ex: Apple launched its latest iPhone in nine countries. So Russia, the 10th biggest wireless market, was left out Ex: When Ikea expanded globally, South Africa was low on the priority list of potential markets

Characteristic of Emerging Markets

Poorer than advanced markets, especially vs. "triad." Generally higher growth - now and in the future. Big demographic variation among markets, e.g. BRIC. Psychic distance typically higher for triad countries. Higher political and economic risk, plus corruption. Incentives increasingly available for foreign firms. Limited availability and reliability of business data. Poorer markets are usually less competitive. Poor infrastructure and logistics systems.

Political (a.k.a. Country) Risk

Potentially adverse effects on company operations caused by the political or legal environment of a foreign country. -Harmful or unstable political system. -Regulations unfavorable to foreign firms. -Inadequate or undeveloped legal system. -Bureaucracy and red tape. -Corruption and other ethical blunders. -Government intervention, protectionism. -Barriers to trade and investment. -Management of national economy.

Elements within Promotions Strategy

Promotion strategy can be any combination of these elements: center idea, push, localize, market idea, pull, globalize Like most of global marketing, not usually an either/or decision

The Elements of Promotion

Promotion: programs that communicate the offering's benefit, encourage purchase and build brand equity. All these elements help feed word-of-mouth, which may be the most persuasive promotion element of all: -Brand name -Advertising -Packaging -Sales promotion -Trade promotion -Direct marketing -Public relations -Events & trade shows -Sponsorships -Personal selling Word of mouth is super important, especially in developing markets

Push vs. Pull Strategy

Push Strategy -Focuses on distribution channel. -Incentives are offered to wholesalers or retailers to carry and promote the product. -Ensure the product is present when and where the purchaser is looking. -Shorter-lasting effects, i.e. buy now. -Works best when product is not widely used, channel is short, product is complex, advertising media is less accessible. -Helps business create leverage within distribution channel. If you're visiting a distribution channel and a company tries to push a brand on you, that's PUSH. Push marketing typically relies on short-term incentives such as discounts, coupons, merchandising. Pull Strategy: -Focuses on final purchaser. -Potential purchasers are exposed to information about the product. -Ensure the consumer is aware of and considers the product to fill their need. -Longer-lasting effects, i.e. brand equity. -Works best when product is widely used, channel is long, product isn't very complex, advertising media is well developed. -Helps if business lacks leverage within distribution channel. If you're elsewhere and a company tries to pull you into a distribution channel to buy their brand, that's PULL. Pull marketing typically relies on brand-building messages about the benefit and point-of-difference. Mature markets tend to favor pull strategy. Emerging markets tend to favor push strategy.

Quality Expectations: Higher and Lower

Quality Expectations Higher:In Japan, BMW had to raise its already high standards, because when service is required, Japanese luxury-car owners expect home pickup and return. Quality Expectations Lower: When Phillips started selling in rural India, it scaled back features to deliver inexpensive products like wind-up radios and back-to-basics TVs.

Strategic Business Unit

SBU in the middle surrounded by other markets but all connected. SBU usually based at headquarters (can also be in major market). SBU oversees global brands, provides strategic framework, facilitates sharing of consumer insights and best practices. Globally managed: positioning, ad creative, formulation, innovation. Locally managed: ad and package translations, promotions, media plan. Markets free to manage their own local brands autonomously.

SBU example: Cereal Partners Worldwide

SBU: nesquick, chocapic, fitness, cheerios UK: nesquik, fitness, cherrios as well as shreddies China: cheerios as well as stars Chile: nesquik, fitness, as well as milo ad estrelittas France: nesquik, chocapic, fitness, as well as lion

Class 14 Takeaways

Seek synergy: Find an idea that worked in another market and adapt it for your own market. Adapting for a country's position on the product-life cycle is a common tactic in emerging markets, i.e. meet consumers where they are.

Host Country vs Home Country Ethical Decisions

Should you accept the gift from the prospective distributor... or risk offending them and losing their business? Should you bribe the official to expedite a building permit... or endanger your business by waiting three years? Should you hire 14-year-olds to work in your factory... or see them support their families via street crime? Should you keep workers' hourly wage below U.S. levels... or cut 50% of jobs to fund the increased pay?

Elmer's Position on Adaptation

Start with a few basic premises: -People in different countries have far more in common with each other than we like to believe. -The differences we do have tend to be relatively minor and don't significantly impact purchase intent. -Adaptations are usually a local team's attempt to eliminate every iota of risk in the business. -Adaptations are often a way for local teams to assert more control or prove their worth. -Great businesses ruthlessly protect their margins - drive the dollars to marketing or to the bottom line! 1.Use the global standard as much as possible. 2.If adaptation is needed, do as little as possible. 3.If adapting, do it as far downstream as possible.

Principles for Managing Global Brands: (3) Find the best way to get there

Successful global marketers know that the best place for customization is not in the positioning, but in the execution. Flexible Execution: -Positioning statement should not limit or preclude creativity of local managers, but instead make it more productive. -Local teams should focus on what they do best: refining the in-market execution to meet circumstances of the country. -Most common places to refine execution: product features, distribution channels, communication approach, deviations based on product life cycle.

CQ: What is true about the lead markets we chose for Fiber One Brownies?

The UK was their biggest market in Europe, India was a new market but with huge potential, and Malaysia had a population of similar to Asia's

Corporate Social Responsibility

The concept that businesses should act in the interests of society at large, i.e. be a good "corporate citizen." EU re CSR: "Companies integrate social and environmental concerns in their business operations and their interactions with their stakeholders on a voluntary basis." Benefits of strong CSR: -Can result in higher margins, increased valuation. -Can enhance and differentiate the brand. -Can help recruit and retain good employees. -Can help avoid increased taxation and regulation. -Can build closer relations with local communities. Because of their large size and economic power, the expectation is that global companies' ethical and social behavior will go beyond what's required by law.

Three Major Global Trends in Retailing (Beyond Growth of the Internet)

The rise of large-scale retailers in countries historically served by mom-and-pops Renewed interest in smaller-scale retailers as companies improve efforts to work with them The rise of international retailers that originated in developed markets where growth has now slowed

Corporate Goverance

The system of rules, practices and processes that are used by companies to direct and control their actions. Determining the "appropriate" conduct is especially challenging for global companies operating in highly different countries. Leads into ethics, sustainability, and corporate social responsibility

Class 24 Takeaways

There are eight basic models of global distribution - three of them direct, five indirect. (Ex: slide 7, class 24) Ideal channel strategy is first influenced by other parts of the marketing mix, i.e. product, price, promotion. From there, channel strategy depends on four other variables: density, length, alignment and logistics. Seven basic rules can help companies overcome their global distribution challenges. Remember the middle ground, e.g. "glocal" or regional strategy. Be careful you don't overweigh certain factors, e.g. Disneyland Paris not serving alcohol in the beginning.

Top Line & Bottom Line Considerations in Pricing Strategy

Top-Line Considerations(what the market will bear): Brand positioning Target segment Competition Revenue growth Bottom-Line Considerations:(what your shareholders expect): Cost of goods sold Operating expenses Taxes and debt Profit margins Aside from dumping, businesses are generally free to charge whatever they want. (Dumping: pricing below cost of production or less than price that's normally offered in country of origin.)

CQ: Is it possible that market B launches the new product five years after the lead market does, and that market c doesn't launch it at all

True

CQ: The approach for driving global innovation is very similar to that of a global product or global promotion

True

Largest Ad Challenges and their implications

Two largest advertising challenges: 1.Identifying strong campaign ideas with global potential - the great ones are priceless! 2.Finding enough money to fund media plans that will reach the target audience. Implications of these challenges: 1.Work collaboratively - center and markets - to develop campaign ideas that transcend borders. 2.Be judicious, as every dollar spent on local adaptation is a dollar taken from the media budget.

Regions and Lead Markets

Two ways to bridge gap between globalization and localization. Regions: -Group of markets with close geographic or psychic proximity. -Continents, language or development are common links. -Regional brands and marketing elements drive efficiency. Lead Markets: -Large and/or strategic markets that play outsized role. -Usually markets that are further along product life cycle. -Representative of smaller or less-strategic markets. -Serve as focal points for innovation and market tests. Regional headquarters are usually in lead markets, e.g. Europe regional office in London, Asia regional office in Shangai. Ex: CPW Global HQ: Minneapolis Joint Venture HQ: Lausanne UK Market: London China Market: Beijing Europe Region: Paris LatAm Region: Mexico City SE Asia Region: Manila Ex: Nature Valley Global HQ: Minneapolis Canada Market: Toronto EMEA & ANZ Region: London LatAm Region: Sao Paulo Asia Region: Hong Kong

Direct Distribution

Was door-to-door in early days, but now driven by internet growth. Directly operated stores growing in importance, as it creates brand value and differentiation against competitors. Manufacturer's sales force good for companies with limited number of customers, allowing for dedicated service. Ex: Apple, Giorgio Armani, CAT, IBM

The Oreo Experience

Watch for how Oreo addressed standardization vs. adaptation re product, place and promotion. For promotion, Oreo also considered its packaging and manufacturer brand name. Oreo's advertising decisions encompassed both the creative idea and the media plan. Orea packaging is completely different in most countries. Smaller quantities of oreos in other countries. CQ: what is true about Oreo's global experience: -in some markets, it's the child who introduces the dunking ritual to the parents - in Venezuela oreos advertises outdoors to reach consumers during drive time - in china oreos use TV bc the medium is associated with high-quality products

The Subway Experience

Watch for how Subway used different campaigns in certain countries, depending on where they were on the product life cycle. Subway emphasized the sharing of creative assets, plus openness to good ideas coming from anywhere. Subway used blend of push tactics (e.g. $5 footlong) and pull tactics (e.g. advertising). CQ: what is true about how Subway approaches global marketing? -They see advertising as an asset, not an expense -the markets look to each other for great ideas -the $5 footlong promo came from a store owner

Test for a Strong Global Brand

Will someone traveling from country A to country B recognize the brand and see that it provides the same benefit, while accepting that there might be local differences as well?

Steve Greer Guest Speaker

Worked at General Mills in Minneapolis and at Cereal Partners Worldwide in Switzerland. After that he was a director of consumer promotions, charged with identifying and executing ideas worldwide. Promotion: about giving consumers the reason to buy the brand rn, it's ST. It's also a risk because it can cause ST thinking. When we talk about it in class promotion refers to 4 P's, but Steve refers to promotion as the push-type levers that incent immediate purchase Realized kids are the same and their interests are the same all over the world. Attached rubber pieces to soccer shoes to help spin the ball better - found in cereal boxes leading up to the World cup. Deep down adults are very similar too but they have more interests and identities pulling them into different views. Focused on ways for consumers to lose weight during key times CQ: According to steve which is true: -the desire to look good for swimsuit season is pretty universal, which made it a good subject for a global promotion -Europeans have different views on school funding, which is why Boxtops for education didn't work outside the US -Research showed that kids around the world have similar play patterns leading to global promotions Advice he got: get out there and listen at markets in Europe. Gave opportunity to find common ground Swiss cheese concept: idea with some holes in it CQ: what did Steve do to build his relationships with the markets? Embark on a listening tour shortly after he arrived -Listen, understand, before you talk listen. -But have to have global standards. -Let's get all the ideas on the table. CQ: what is true about global coordination, according to Steve? Once a decision is made everyone needs to move forward together & just because you have the authority doesn't mean you should just give orders

Population Growth

World is adding a billion people every 12 years! Almost all population growth is in poorest countries Biggest Economies in the World: China, US, India, Japan, Germany, Russia, Indonesia, Brazil, UK, France, Mexico, Italy Growth Projections: -Increase in Global economy -Increase in emerging markets & developing economies -Decrease in advanced economies

Keegan's Adaptation Strategies: extend, adapt, or create

You have a global brand and positioning, Now what? Matrix with communications on y axis and product on x axis. -Straight Extensions: don't change product & don't change communications -Communication Adaptation: don't change product & adapt communications Ex: IBMProduct -Adaptation: adapt product & don't change communications Ex: BMW -Dual Adaptation: adapt product & adapt communications Ex: Toyota -Product Innovation: develop new product & don't change communications ~or~ develop new product & adapt communications Ex: Nike entering China. Just do it line doesn't do well in China, changed price

China's Content-First, Mobile-Centric Approach

think content, not channels or advertising Revolves around: -ads -brand stories -sales promo -key opinion leaders & consumer engagement