Chapter 6 Strategic Planning Developed by Cool Pictures

Global Marketing • “…the world is becoming more homogenous…” • “. . . distinctions between national markets are fading and may disappear…” Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Global Marketing Evolution Develop Core Business Strategy Internationalize the Strategy Globalize the Strategy Country A Country B Country C Country D Source: Reprinted from “Global Strategy… In a World of Nations? ” by George S. Yip, Sloan Management Review 31 (Fall 1989): 30, by permission of the publisher. Copyright 1989 by Sloan Management Review Association. All rights reserved. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Globalization Drivers • Market Factors – new consumer groups, developed infrastructures, globalization of distribution channels, cross-border retail alliances • Cost Factors – avoiding cost inefficiencies and duplicated efforts • Environmental Factors – reduced governmental barriers, rapid technological evolution • Competitive Factors – rapid product innovation, introduction, distribution Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

The Strategic Planning Process • Understanding and adjusting the core strategy begins with a clear definition of the business for which the strategy is to be developed. • The Strategic Business Unit – Based on product market similarities • Similar needs or wants to be met • Similar end user customers to be targeted • Similar products or services used to meet needs of specific customers Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

The Strategic Planning Process Global Strategy Formulation Assessment and Adjustment of Core Strategy Market/Competitive Analysis - Internal Analysis Formulation of Global Strategy Choice of Target Countries, Segments, and Competitive Strategy Development of Global Marketing Program Implementation Organizational Structure - Control Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Market and Competitive Analysis • First, understand the structure of the global market industry; the common features of customer requirements and choice factors. • Internal analysis – Examine the readiness and capability of the firm to undertake strategic moves with its current resources. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Formulating Global Marketing Strategy • Formulation begins with a series of strategic decisions • Choice of Competitive Strategy – Cost leadership – Differentiation – Focus • Country-Market Choice – Concentration or diversification – Factors in country markets selection • The stand-alone attractiveness of the market • Global strategic importance of the market • Possible synergies offered by the market Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Competitive Strategies Source of Competitive Advantage Competitive Scope Industry-wide Single Segment Low Cost Leadership Differentiation Broad Differentiation Focus SOURCE: Michael Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1998), chapter 1. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Bases for Global Market Segmentation Bases for International Market Segmentation Marketing Management Variables Environmental Variables Geographic Variables Product Variables Developed by Cool Pictures & Multi. Media Presentations Political Variables Promotion Variables Economic Variables Price Variables Cultural Variables Distribution Variables Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Global Marketing Program Development • Development Decisions – Product offering • The degree of standardization and adaptation in the product offering. – The marketing approach • The marketing program beyond the product variable. – The location and extent of value-adding activities • Pooling production. • Exploiting factor costs or capabilities. • Strategic alliances. • Concurrent engineering. – Competitive moves to be made • Cross-subsidization using resources accumulated in one market to wage a competitive battle in another. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Implementing Global Marketing • Success will come from a balance between local and regional / global concerns. • “Think globally, act locally” is the operative phrase for global marketers competing in country markets. • Product choices should consider individual markets as well as transfer products from one region to another. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Global Marketing Pitfalls to Avoid • • Insufficient local market research. The tendency to over standardize the product. Inflexibility in planning and implementation. The “Not-Invented-Here” syndrome (NIH). – How to avoid the NIH syndrome • Ensure that local managers participate in the development of global brand marketing strategies. • Encourage local managers to develop ideas for regional or global use. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Localizing Global Marketing • Achieving a balance between in-country managers and global product managers at corporate headquarters will require action to develop and implement a global strategy. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Localizing Global Marketing • Management processes – Enhance the global transfer of communications. – Interchange personnel to gain experience abroad. – Headquarters should coordinate and leverage resources. – Permit local managers to develop their own programs within defined parameters Maintain a product portfolio that includes local as well as regional or global brands. – Allow local managers control over marketing budgets to respond to local customer needs and counter global competition. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.

Localizing Global Marketing • Organization structures – The shift to global account management. • Corporate culture – The world is not one single market. – Plan and execute programs on a worldwide basis. – A global Identity favors no specific country. Developed by Cool Pictures & Multi. Media Presentations Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.