INBU 3450: International Business

4 Phases of Globalization

-1st (1830s to late 1800s): triggers include growth of railroads and ocean transport. Characteristics include risk of manufacturing -2nd (1900 to 1930): triggers include rise of electricity and steel production. Characteristics include emergence of MNEs, primarily from Europe and North America -3rd (1948 to 1970s): triggers include end of WW2, Marshall Plan, GATT treaty (preceded WTO). Characteristics include reduction of trade barriers, re- emergence of Japan, rise of global capital markets -4th: triggers include privatization of state-owned enterprises, revolution in technology, and rapid growth of emerging markets. Characteristics include rapid growth of trade in goods, services, capital; broad growth of prosperity

The Cultural Iceberg

-Above the surface: behaviors and practices -Below the surface: perceptions, attitude, beliefs, values -Things feeding into it: climate, geography, demographics, economics, media, education, ideologies, religion

Questions to ask before taking a brand global

-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?

Characteristics of Awareness, Consideration, Trial, Repeat in the Funnel

-Awareness: TOM, unaided, aided -Consideration: image, uniqueness, relevance, believability, price -Trial: satisfaction, fulfillment -Repeat: ongoing factors

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

Factors that Affect How to Participate

-Business objectives, e.g. revenue, profit, margin. -Fit and potential of category and brand. -Market size and potential for growth. -Amount of control the company wants. -Level of political, regulatory and economic risk. -Cultural similarities and differences. -Nature of competition. -Amount of resource commitment necessary.

Brand Positioning Statement: frame of reference

-Categorization lives here. It's the buyer's consideration set. -Tells the buyer what kind of product/service is being offered, so that they can compare it to others in the category. -Brand must have certain points of parity with others in the category to establish its membership in the group.

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.

Global Market Opportunity Assessment: (1) Analyze Organizational Readiness

-Conduct thorough SWOT analysis: SW = internally focused. OT = externally focused, i.e. current, potential markets. -What does company hope to gain from going international? -What is the source of the company's competitive advantage? -Is the international venture consistent with the company's other goals, now and in the future? -Are the company's brands, offerings, experience, resources, skills, technology, etc., truly transferable? -What demands will the venture place on company resources, e.g. managerial time, personnel, finance, and production and marketing capacity?

Global Market Opportunity Assessment: (2) Assess Suitability of Your Offering

-Core task: Determine your brand's competitive advantage. -Characteristics that denote suitability for foreign markets: sells well in the home market, caters to universal needs (think Maslow's hierarchy). Addresses a need not well served in the new market. Addresses a new or emerging need abroad. -Would company be introducing a new category or entering an existing (and perhaps competitive) category? -Consumer questions: Who buys the offering, how is it used, why do they buy it, where do they but it? -What economic, cultural, geographic, regulatory and other local factors might limit potential sales?

Global Market Opportunity Assessment: (4) Assess Industry Market Potential

-Core task: determine your brand's competitive advantage. -Assess industry in a manageable number of countries, i.e. 5-6. -Estimate current and future (e.g. 3-5 years) sales for category. -Start understanding degree to which adaptation is necessary. -Consider opportunities and barriers for category growth. -Assessment methods: attend international trade shows, ask supplier networks, monitor key industry indicators, monitor key competitors, perform simple trend analysis. Analyze GRDI window of opportunity: opening, peaking, maturing, and closing

The 4 Types of Risks in International Marketing

-Country (Political and Legal) Risk -Cross-Cultural Risk -Currency/ Financial Risk -Commercial Risk -Risk is always present in business, whether domestic or international. -Effective managers anticipate risk, plan for it and work to reduce it. -You cannot totally eliminate risk, you can only try to minimize it.

Cross-Cultural Risk

-Cultural distance -Negotiation patterns -Decision-making styles -Ethical practices Ex: Tesco grocery store in US. US consumers didn't have same needs as UK Ex: Walmart entering Germany

Currency/Financial Risk

-Currency exposure -Asset valuation -Foreign taxation -Inflationary and transfer pricing Ex: Netflix charging 7.50 in India even tho their GDP per capita is low

Netflix as a Global Brand

-Developed local (ex country specific) knowledge: political, institutional, regulatory, technical, cultural, customers, competitors -But maintained certain central (ex global) aspects: singular business model, customer-centric data analysis, brand identity and symbols -Netflix demonstrates exponential globalization: orchestrated cycle of expansion, executed at increasing speed, to an increasing number of countries. Enabled by the internet, plus mastery of local contexts Think of it as "enter, learn, refine, repeat by faster each time

Global Market Opportunity Assessment: (6) Forecast company sales potential

-Do this after determining current and future for total category: estimate your share of category, using key assumptions. Must exercise substantial judgment and triangulation. -In estimating, must address key concerns: first mover or category follower. Competitive response. Risk tolerance and ability to invest. Timetable for penetration, profitability. -Methods for forecasting sales: conduct trade audits, partner interviews, survey end users or execute a test market. -Use analogy: Draw on statistics from another, similar country. -Use proxies: Estimate sales of one product by knowing sales of another, similar product. -Use competitors as benchmark, adjusting for key differences.

Global Market Opportunity Assessment: (3) Screen Potential Countries

-Geographic and psychic proximity are good starting points. -Key dimensions: market size and growth rate. Market intensity, e.g. consumer buying power. Consumption capacity, e.g. size/growth of middle class. Commercial infrastructure, e.g. suppliers, work force. Economic freedom, e.g. regulations, taxes, IP. Market receptivity, e.g. do people even want it? Country risk, e.g. political stability. -Data sources: local governments, global agencies (UN, OECD), trade organizations. -Methods: (1) gradual elimination, (2) indexing and ranking. -Gradual elimination: gradually narrow prospects via increasingly specific data. Initial data can include population, income, imports. Subsequent data is more specific to the industry/category-Indexing and ranking: first, identify appropriate market-potential variables. Second, assign a weight and then a score to each variable. Total up the scores and rank countries accordingly. -Reduce to a manageable number for deeper investigation.

Global Consumer Segments

-Global Citizens: 55% Rely on a company's global success as a signal of quality and innovation. But also concerned whether companies behave responsibly on issues such as health and environment. -Global Dreamers: 23% Less discerning about global companies, but more ardent in their admiration of them. See global brands as quality goods, but less concerned with social responsibility. -Antiglobals: 13% Skeptical that global companies deliver higher-quality goods. Don't trust global companies to behave responsibly. -Global Agnostics: 8% Don't regard company's global nature as anything special.

The Global Marketing Paradox

-Globalize vs. Localize -Centralize vs. Decentralize -Standardization vs. Adaptation -Efficiency vs. Suitability -Prioritize Profit vs. Prioritize Revenue IT DEPENDS

Prioritize revenue or profit? It depends on:

-In early stages, companies typically prioritize revenue, i.e. establish large footprint, create critical mass, discourage competitors. -In later stages, companies typically prioritize profit, i.e. pay off the investment, leverage economies of scale, invest funds elsewhere. -Strong revenue growth usually comes before strong profit growth

Participation Strategies: Hands-Off Strategies

-Indirect Exporting: Company uses local third party (e.g. trading company, export agent) to handle all logistics of exporting goods. Little, if any, opportunity for company to participate in marketing activities. -Direct exporting: Goods exported to intermediary located in foreign country or handled through domestic department working directly with foreign customers. Company has greater participation in marketing activities, which can include foreign-based sales representatives. -Licensing: Perhaps the quickest way to enter foreign markets. License can cover design, patents, trademarks, know-how, production processes, etc., for a fee and royalty payments. Ex: Burberry and The Walt Disney Company -Franchising: More complete form of licensing, with right to use business model, marketing plan, operating manual, trademarks, etc. In exchange, franchisor receives fee and royalty payments.

Drivers of Globalization

-Industrialization, economic development and modernization: transformation from producing low value to high value goods -Worldwide reduction of barriers to trade and investment: facilitated partly by the World Trade Organization (WTO) -Market liberalization and adoption of free markets: particularly free market reforms in China and former USSR -Integration of world financial markets: raise capital, borrow funds, exchange currency from anywhere -Advances in technology, communication, & transportation: reduces costs by allowing interaction with firms worldwide -Example: Myanmar no ATM machines, one year later they had ATMS and machines that process credit card payments

Features of Globalization

-Integration and interdependence of national economies: governments contribute by lowering trade barriers -Rise of regional economic integration blocs: free-trade areas such as NAFTA, EU, MERCOSUR. Depends on world peace -Growth of global investment and financial flows: foreign direct investment, currency trading, capital markets -Globalization of production: manufacturing in low labor-cost markets -Globalization of services: outsourcing of business processes to overseas vendors -Convergence of buyer lifestyles and preferences: facilitated by ever-present global media -Ex: German beer hall in Japan, Irish pub in Nigeria, Starbucks in India

International Business vs Global Business

-International Business: the exporting of products to other countries and/or conducting business in foreign markets through generally separate operations. Main Idea: emphasis on AUTONOMY. Competing in multiple countries, i.e. international business, creates more complexity - and often, disjoined results. -Global Business: conducting business in foreign markets, with integration between markets and HQ to optimize the company's total revenue and profit. Main Idea: emphasis on SYNERGY. Operating as a global business should result in synergies that can optimize total revenue and profit for the company. -International expansion adds complexity that can be mitigated by adopting global operations

Participation Strategies: Hand On Strategies

-Joint venture: partnership that allows companies to share risk through joint ownership of newly created business entity. Allows for greater participation in profits than hands-off modes, at lower risk due to complementary capabilities. Ex: CPW -Foreign direct investment: can be via acquisition/merger, where company gets instant entry, with facilities, operations, brands, relationships, etc. Can be via greenfield investment, where company creates a business entity from the ground up.

Evaluating Brand Positioning

-Liking: Is it appealing? -Uniqueness: Is it different? -Believability: Will it do what it claims? -Relevance: Does it matter in my life? Check off all four boxes, and you should have a brand with high purchase intent. Weakness in any one area will need to be addressed via the marketing mix (4 Ps).

Societal Consequences of Market Globalization

-Loss of National Sovereignty: business activity can interfere with government's ability to control their own economies and social-political systems -Offshoring, Job Flight and the Effect on the Poor: creates jobs and raises wages, but also disrupts local job markets. Ex: small town in Novotishawoye is abandoned for larger cities with jobs -Contagion-rapid spread of crises: economic recession, unemployment, bankruptcy, disease -Effect on the Natural Environment: industrialization generates pollution and habitat destruction -Effect on National Culture: traditions, norms, values, behaviors may homogenize over time. Ex: Wu Chao Ying studies English as her father looks on in rural China, she is now a college student

Cross-Cultural Risk: negotiation patterns, decision-making styles, ethical practices

-Negotiation Patterns: in many countries, it's not customary to "meet in the middle," as we do in the U.S. If you enter a negotiation not knowing this, you may find yourself giving up more than you intended. -Decision-Making Styles: In some countries, they need to reach a business decision by broad consensus. This can result in unexpected delays. -Ethical Practices: Are you willing to pay a bribe to get something done? That's considered the norm in some countries, but it goes counter to American norms.

Firm-level Consequences of Market Globalization

-New Business Opportunities: untapped customer, categories and capabilities -New Risks and Intense Rivalry from foreign competitors -Demanding buyers, who source from suppliers worldwide -Greater emphasis on proactive globalization: -Globalization of Firms' Value Chain: more complex issues to deal with around the world

Global Market Opportunity Assessment: (5) Select Foreign Business Partners

-Potential partners depend on company's capabilities: channel intermediaries, e.g. distributors, brokers. Raw-material suppliers, co-manufacturers, franchisees, joint-venture partners. -Key criteria: competence, capabilities, knowledge. Financial resources and stability. Established reputation. Commitment and loyalty.

Hofstede's Cultural Dimensions

-Power distance -Collectivism vs individualism -Uncertainty avoidance -Femininity vs masculinity -Temporal orientation 1.Dimensions are measured at a societal level. Within any society, there can be significant variation among its members. 2.Where a society sits on particular dimension can significantly influence how a brand is marketed. 3.Not all dimensions are equally relevant. Certain dimensions will be more important, depending on the brand, category and target consumer. 4.Also inform how you should manage workplace relationships, e.g. collaboration, negotiation.

What about anti-American sentiment?

-Research shows that any anti-American sentiment does not affect purchase decisions. -Some foreign consumers say a brand's American origin affects their decision, but their actual behavior does not bear that out.

What Culture is NOT

-Right or wrong: culture is relative and there are few (if any) cultural absolutes. Each culture has its own notions of what's acceptable and unacceptable. -About individual behavior: culture refers to collective behavior and beliefs. Individuals often behave and believe differently. -Inherited: culture is delivered via the social environment. People are not born with a shared set of values and attitudes. Marketing must adjust to the culture. Culture doesn't adjust to marketing (at least in the short term

Brand Positioning Statement: target

-Segmentation lives here. Don't try to be everything to everyone. -The most common segmentation methods are demographic, geographic, psychographic and behavioral. -The best segments share a common need; are identifiable and accessible; and have effective demand.

Culture is Learned

-Socialization: the process of learning the rules and behavioral patterns appropriate to one's society. -Acculturation The process of adjusting and adopting to a culture other than one's own. (See expats!) We often become most aware of our own culture when we encounter another one.

3 Simple Thought Starters

-Start thinking global instead of international -Global marketing involves constant trade-offs, involving standardization vs customization -Ultimately the tradeoffs revolve around maximizing revenue vs maximizing profit

How Do You Understand Culture Right

-Start with the global opportunity assessment. -Secondary research, then primary research if necessary. -Emphasis on observational methodologies: store visits, focus groups, ethnographies -Validate qualitative findings with quantitative research. -No matter how much research and what kind: beware overconfidence, seek out the underlying rationale. Practice empathy - beware the single story.

Main Takeaways from the Stella Artois Case

-Try as much as possible to preserve brand's global positioning - revise only when and where it really matters. -Brand positioning should stay the same, while adjusting the marketing mix and execution to fit the new market. -When learning from other countries, consider key similarities and differences between markets to ensure relevance. -Consider the development stage of prospective markets: Are the conditions right for long-term success? -When entering a new market, make awareness of the brand - name and positioning - your No. 1 priority.

Commercial Risk

-Weak partner -Operational problems -Timing of entry -Competitive intensity -Poor execution of strategy Ex: When Target entered Canada, it expanded too rapidly, creating problems for its supply chain Ex: Shell branded lego toys got backlash after Shell had been accused of questionable environmental practices Ex: In France, Disney entered during a recession and initially struggled. In Japan, it entered during a boom and experienced great success.

KFC's Global Paradox: Their Radical Approach in China

-What was KFC's business model in the U.S.? Fried chicken, limited menu, low prices, emphasis on takeout. -What was KFC's management setup in 1992? Unit of PepsiCo, which was hands-off...as long as financial results were good. KFC China led by team of ethnic Chinese. -5 Elements of KFC's strategy in China: (1) Infuse Western brand with Chinese characteristics: portrayed as local community not fast-food from west. Offered new products/year. Encourage dining in (2) Expand rapidly, mainly in smaller cities: avoid going head on with McDonalds, led to economies of scale (3) Develop vast logistics network. (4) Train employees in customer service: created learning organization culture and teamwork (5) Focus on ownership rather than franchising.

Country (Political and Legal) Risk

-social/political unrest and instability -economic mismanagement & inflation -distribution of income & size of middle class -government intervention & bureaucracy & red tape -market access & barriers & profit repatriation -legal safeguards for intellectual property right Ex: China dispute over censorship or Uber to end services in Denmark

Global Market Opportunity Assessment

1.Analyze organizational readiness to go international. 2.Assess suitability of your offering for foreign markets. 3.Screen potential countries to identify target markets. 4.Assess industry (i.e. category) market potential. 5.Select foreign business partners. 6.Forecast company sales potential. Keep in Mind: -Nature and weight of variables depend on industry. -No single country is attractive on all dimensions. -Country rankings and trends are not static. -Rarely is there simple, obvious answer management must make tradeoffs to balance risk/reward.

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.

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. Ex: Haagen Dazs adapt on level of flavor, taste, expensive, available etc so that they can standardize the values (accomplishment, self esteem, family)

How Consumers Value Global Brands

1.Quality Signal: global brands are perceived as being higher quality, therefore demanding a premium price & global companies are seen as trying to develop new products faster than local rivals. 2.Global Myth: consumers see global brands as symbols of cultural ideals, i.e. a global identity that they share with like-minded people in other countries. "Local brands show what we are. Global brands show what we want to be." (Costa Rica) "Global brands make you feel part of something bigger and give you a sense of belonging." (New Zealand) 3.Social Responsibility: global companies are recognized as wielding great influence, both positive and negative, on society. Consumers expect them to address social problems tied to what they sell and how they do business. Local companies are not held to same high standard as global companies.

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

4. Give and Take: organize to share knowledge 5. Beware 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 => ???.

Different Operating Structures

A company can organize its global business in various ways, usually based on how it entered the international marketplace to begin with.

Hofstede's Cultural Dimensions: Collectivism vs Individualism

A society's position on this dimension reflects whether people's self-image is defined in terms of "I" or "we." Collectivism: Preference for tightly knit social framework in which individuals can expect their in-group to look after them in exchange for unquestioning loyalty. Individualism: Preference for loosely knit social framework in which individuals are expected to take care of only themselves and their immediate families. SK is collectivism following by BR and US is individualism

Firm-Level Consequences of the Full Global Context: Vitality Air Example

Air from Banff Canada is sold to consumers in areas such as Shanghai bc their quality of air is so crappy due to pollution from production

Opportunity Assessment & Participation Strategies

Based on control, flexibility, commitment of resources, and risk -Company can begin participating via any strategy that makes sense according to the opportunity assessment. -Can then progress in any direction, depending on company goals, circumstances, resources and competition. Participation Strategies: -exporting indirect and direct -licensing and franchising -joint venture -acquisition/ merger -greenfield investment

Chimamanda Adichie

Born in Nigeria, educated at Johns The Danger of a Single Story

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?"

Global Retail Development Index (GRDI)

China, India, Ghana are most attractive marks. Based on country risk (economic and political) and market potential based on market size, saturation, and time pressure

Cultural Considerations and Cross Cultural Risk

Coca-Cola had to withdraw its 2-liter bottle in Spain. Turns out, few Spaniards had refrigerators large enough to hold a bottle that big. When Walmart entered Argentina: -It supplied only T-bone steaks at the meat counter. Argentinians much prefer rib steaks and tail rumps. -It sold tools and appliances for 110-volt electric power. Standard home voltage in Argentina is 220 volts. American are only 4.2% -A market's culture has significant impact on how you present your brand and your company. -Culture is a demonstration of a society's values, attitudes, manners and customs.

Born Globals

Companies that have reached share of foreign sales of at least 25% within 2-3 years after their establishment. High-tech companies are particularly prone to the born-global effect. Defy the traditional "stage model," in which a company first grows solidly in its home market, then explores expansion opportunities in adjacent countries. Research has found that this is enabled by (1) new market conditions (2) tech advances (3) managerial change Uber doesn't own any vehicles, facebook doesn't own any content, airbnb doesn't own any real estate

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

Global Marketing = 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.

What Drives Culture

Culture: The learned, shared and enduring orientation patterns in a society. Is driven by: -Values: person's judgments about what's good, acceptable, important, normal. -Attitudes: based on values; often held unconsciously and may lack rational basis -Manners & Customs: habits and behaviors that are generally accepted in a society.

Strategy (3 C's) and Marketing Mix (4 P's)

Customer, Company, Competition Product, Place, Promotion, Price The 3 C's lead to brand positioning which lead to 4 P's

Most important fact a company can do when entering a new market

DRIVE BRAND AWARENESS -what it's called -who it's for -why it matter Anything that detracts from building brand awareness works against a successful launch

Global Branding is rooted in global positional

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.'

Hofstede's Cultural Dimensions: Uncertainty Avoidance

Expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity. Weak Avoidance: High tolerance for uncertainty, ambiguity and risk-taking. The unknown is openly accepted, with lax rules and regulations. Strong Avoidance: Low tolerance for uncertainty, ambiguity and risk-taking. The unknown is minimized through strict rules and regulations. US is weak, then BR, and SK is strong

The convergence of buyer lifestyles and preferences has been hindered by ever-present global media

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Brand Positioning Statement

General format: For [target], [our brand] is the [frame of reference] that provides [point of difference] because [reason to believe]. Ex: Tesla For sports car drivers who want performance, but are also environmentally conscious, the Tesla Model S is a luxury, long-range electric automobile that is the most exhilarating sedan on the road, with unparalleled performance delivered through Tesla's unique, all-electric powertrain. -Each positioning element - target, FOR, POD, RTB - must be grounded in insights and data. -The strongest brand positioning rate highly in liking, uniqueness, believability and relevance.

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.

Great Brand Positioning

Great brand positioning - whether global or domestic - do not start with the product itself. Great positioning start with the consumer or customer. 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.

Global Orientation

HQ with different markets that are 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.

Local Orientation

HQ with multiple different markets. -Markets have autonomy, as long as they meet their objectives. -No or limited communication and coordination between markets. -Markets are generally free to build brands to fit local context. -Pro: Markets can create brands that fit their needs exactly. -Con: Markets don't learn from others or gain economies of scale. Ex: Pillsbury

Hofstede's Cultural Dimensions: Temporal Orientation

How a society maintains some links with its past while dealing with the challenges of the present and the future. ST: Focus on the short-term future and place greater emphasis on the present than on the future. Emphasize quick results. LT: Focus on the long-term future and delay short-term gratification in favor of long-term success. Emphasize persistence and perseverance. US is ST, BR is medium, SK is LT

Hofstede's Cultural Dimensions: Femininity vs Masculinity

In the business context, Masculinity vs. Femininity is sometimes related to as "tough vs. tender" cultures. Feminine: Preference for cooperation, modesty, caring for the weak and quality of life. Society is more consensus-oriented. Masculine: Preference for achievement, heroism, assertiveness and material rewards for success. Society is more competitive. SK is feminine, then BR, and US is masculine

Taking Cheerios Abroad

In the early 1990s, best-selling franchise in the U.S. cereal category, with two of the top five brands in market share. Positioning in US: For busy mothers constantly on the go, Cheerios is the convenient breakfast meal that provides a reassuring combination of health and taste because it's made from whole grains. Taking Cheerios to China: Cheerios' global success led to the decision to launch in China, with its huge volume potential. But global product - 4 grains in white package - didn't translate well: 4 is considered unlucky, and white is the color of death and mourning. Formula didn't translate well either: It got soggy quickly when consumers added warm liquid (not cold milk). China team proposed an adaptation to 5 grains, yellow packaging and reformulated product. Center was concerned about higher COGS and manufacturing complexity, resulting in lower gross margins. Agreed that the huge opportunity in China would offset lower margins, so launched with 5 grains and hardier formula, but retained white box. By sticking with the white pack, created room to eventually launch Honey Nut Cheerios in same yellow pack used in other markets. Checked all 5 criteria for managing global brands

Theodore Levitt

Levitt popularized the term "globalization" as it applies to business -Gone are accustomed differences in national or regional preference. Gone are the days when a company could sell last year's models or lesser versions of advanced products in the less developed world -Ancient differences in national tastes or modes of doing business disappear. The commonality of preference leads inescapably to the standardization of products. -The global competitor will seek constantly to standardize its offering everywhere. It will never assume that the customer is king who knows his own wishes. -Before Levitt, the onus was on managers who called for standardized products and marketing programs to prove their case. The bias was toward LOCALIZATION. After Levitt, the burden was on those who argued for marketing adaptation to show how the extra cost of customization would result in extra profit. The bias was toward GLOBALIZATION

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

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

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

Penetration and Buy Rate

Penetration: % of households that bought the product at least once in past year. Requires relatively more marketing activity and investment. Should be the focus of less-mature brands and markets. Buy Rate: # of times the average household bought the product in past year. Requires relatively less marketing activity and investment. Can be the focus of more-mature brands and markets. Penetration increases buy rate when reaching the repeat factor of the funnel

The 4 P Paradox for KFC expanding into China

Product -Standardized: Fried chicken fries, biscuits, corn -Adapted: Chinese flavor profiles, regional spice levels, Chinese items, 2x number of menu items, more frequent innovation Price -Standardized -Adapted: premium (luxury) pricing Place -Standardized: nationwide, in cities, order counters, menus above -Adapted: emphasis on dine-in, larger spaces, front and back. Play area for kids, 2x restaurant staff, K-Pro sub-brand Promotion -Standardized: KFC as brand name, Colonel Sanders, red and white -Adapted: greater focus on service & more emphasis on celebrities

Strategic Business Unit

SBU instead of HQ has many markets that are all connected. -SBU usually based at headquarters (can also be in major market). -SBU oversees global brands, provides strategic framework, and 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. Ex: CPW (cereal partners worlwide) SBU: nesquick, chocapic, fitness, cheerios. Chile: nesquik, fitness, milo, estrellitas China: cheerios & stars UK: shreddies, nesquick, fitness, cheerios France: nesquick, chocapic, fitness

History of Stella Artois

Sebastian Artois purchased brewery in 1717 that had been established in 1366; renamed it Brouwerij Artois. Stella Artois created as a seasonal beer in 1926, then was offered year-round starting in 1930s. Broadly available in Belgium, with reputation for quality. Depicted being served in trademark glass - the chalice. Entered U.K. in 1976 - first major overseas market. Entered U.S. in early 2000s; volume doubled in 2010-15. Other markets include Canada, Brazil, Argentina, Mexico. Through multiple mergers, became part of AB InBev. Global beer market of nearly $600B in 2017, with 3% CAGR. Stella Artois's launch in South Africa was highly successful. It used the traditional intro strategy, emphasizing premium positioning and focusing on high-end on-premise venues. Once a solid foundation was set, Stella Artois did participate in the Water.org promotion, but at a relatively modest level.

The Purchase Funnel

Simple model that shows how consumers interact with an offering, from pre-purchase to post-purchase. Invaluable tool for determining where a company should focus its marketing resources to drive growth Awareness (TOM unaided aided), consideration (brand image, liking, uniqueness, relevance, believability), trial (satisfaction, fulfillment), repeat (ongoing factors). Purchase funnel applies to both brands and categories -Also known as the consumer's "path to purchase." For any given offering, consumer enters the funnel and may or may not travel through each subsequent stage. Consumers can also drop out of the funnel at any stage - but can also return to that stage or an earlier one. Brand's marketing mix has ability to influence consumer's movement - positively or negatively - through the funnel. Use the funnel - where your consumers sit or are 'getting stuck' - to optimize your marketing strategy and tactics.

The Story of Kikkoman

Soy sauce company brewing shoyu outside Tokyo. In 1868, starting shipping kegs of soy sauce to Hawaii and California to serve Japanese immigrant communities. In 1957, formed Kikkoman International in San Francisco, with autonomy to adapt to North American market as appeal grew beyond Japanese immigrants. In the U.S., positioned soy sauce as an "all-purpose seasoning" and encouraged its use on non-Asian foods. In 1973, opened a plant in Wisconsin, followed by another in California in 1998. Differentiated themselves from chemically derived competitors. In the early 2000s, as growth slowed in Japan, there began a renewed shift from local autonomy to globalization.

Trade-offs

Standardization vs customization & maximizing revenue vs maximizing profit

Developing a Global Mind

Strong grounding in the principles of business and marketing for a single (domestic) market. Knowledge of other countries, economies, cultures. Understanding of how consumers around the world are different & the same. Sincere willingness to hear other points of view and collaborate for the good of the total business.

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.

Why do companies go global?

TO GROW! revenue, profit, margins, volume, and share but these aspects aren't always compatible

Elements of Great Positioning

Target: Which consumer segment will find the brand appealing? Frame of Reference: Which product/service category does brand belong to? Point of Difference: What's the unique benefit that fulfill's the target's need? Reason to Believe: What are the 1-3 points that make the POD believable?

Nature Valley Trade-offs

The best selling brand of granola bars in United States, and now available on six continents -Product Trade-Off: launch top-selling chocolate-coated bars in AUS, but risk melting as they cross Equator on container ship -Price Trade-off: discount heavily during launch period in Brazil...but risk never being able to attain premium pricing -Place Trade-Off: sell in the countless roadside bodegas in Mexico...but risk low trial because people must ask for it by name -Promotion Trade-off: use locally produced TV ads in the UK but lose economies of scale by not using global commercial

Hofstede's Cultural Dimensions: Power Distance

The degree to which less-powerful members of a society expect and accept that power is distributed unequally. Low Distance: Encourage decentralized decision-making and participative management style. Place emphasis on power distribution. High Distance: Accept a hierarchical order, with inequality and power differences. Encourage bureaucracy, with high respect for rank, authority. US is lower, then SK, then BR is higher

English and the Global Paradox: Should your brand name (and packaging) be communicated in English or in the local language?

Top ten most spoken languages in 2020: english, mandarin, Hindi, Spanish, French Keep brand name and packaging in English => prioritize profit. Adapt brand name and packaging to local language => prioritize revenue

English and the Global Paradox: Honey Nut Cheerios Example

Top-selling cereal brand in United States. Wholesome positioning has all-family appeal. Honey is a favorite flavor around the world. -US: Featuring the bee, a long-time equity character -Canada: English brand name, but bilingual by law -UK: Familiar British term, but local team rejected bee -Poland: Also decided not to use bee as equity character -Portugal: Added bee and honey dripper as flavor cues. -China: Featured Chinese translation to address concerns. Localized or secondary brands typically adapt their brand names (ex: Honey Stars cereal). Some names are universally understood, so no translation necessary (ex: Cookie Crisp)

The Value Equation

Value = Benefit / Cost -For businesses to successfully create value: The strategy, brand positioning and marketing mix must be fully aligned. Ven Diagram: -What our company offers: firm offerings (currently) valued by customers. Our points of difference -What our customer want: customer needs not (currently) met by firm's offering. Unmet needs Competitors point of indifference. -Overlap in the middle: value created for customer by our firm, common points of indifference, competitors points of difference, points of parity Slide 15 in deck 5

How the Paradox Impacts the 4 Ps

What grows the top line does not necessarily grow the bottom line, and vice-versa and think TRADEOFFS: -Prioritize Revenue: customize product for local appeal. Set price to match local incomes. Sell in locally relevant channels. Use locally adapted communication. -Prioritize Profit: tell same product in all markets. Standardize price to cover COGS. Sell in multinational channels. Use globally produced communication

Participation Strategies: Starbucks Example

Where did Starbucks first open outside North America? Japan, in 1996 (followed by the Philippines). The best overseas opportunities aren't always obvious How long did it take Starbucks to turn a profit abroad? Eight years (in 2004). Companies need deep pockets to be successful overseas

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?

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: IBM Product -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

Which of the following is mentioned as an aspect of the offshoring of manufacturing jobs

disruption of local job markets, job creation, and higher wages

The Full Global Context

drivers of market globalization, lead to features of market globalization, which can lead to societal consequences, or firm-level consequences. And these two types of consequences can also lead back up to the features of market globalization.

Market liberalization in these two countries was particularly significant in driving globalization

soviet union & china