Global Branding - Internationalisation

Phase 1 - Deciding whether to internationalise
1. • Assessing global demand and market opportunities for a product • Commitment and competences for internationalising
2. Why internationalise? (Doole & Lowe, 2004)
  1. Improve corporate performance and profits
  2. Saturation and high competition in domestic markets
  3. Access to larger and growing markets
  4. Gain worldwide economies of scale
  5. Access to cheap labour and overhead costs
  6. Multiple recovery of investment and R&D in new markets
  7. Extension of product life cycle in emerging markets
3. Globalisation drivers
  1. Markets opening up
  2. De-regulation of industries
  3. Standardisation of products
  4. Converging consumer tastes
  5. Growing skillpool in '3rd world'/Eastern Europe
  6. Growth of worldwide logistics and communications
  7. Internet - proximity irrelevant and low cost e-presence
  8. Economic/political encouragement of world trade
4. International variations in product life cycle - different economies are at different stages of economic growth/consumer sophistication
  1. Differences and time-lags are shrinking → 'global PLCs'
5. Invest in factories? • fixed assets - major cost (incentives?) • risk can be shared via partnership/alliances • total control over all areas • high risks - loss of flexibility if costs rise
6. Out-source manufacturing? • few fixed assets - increased flexibility to 'move on' • focus on brand marketing, R&D, logistics • need to manage supply chain • danger of adverse publicity - sweatshops
Phase 2 - Deciding which markets to enter - Market Selection
1. • Market potential in regions • Local competition • Competitiveness of firms compared to local/international competitors
2. Market Screening (Doole and Lowe, 2004)
  1. Impossible to enter (legislation, trade barriers, war)
  2. Screened out (impoverished, too small, unstable)
  3. Filtered out (using Morden's 12Cs)
    1. - Country.. facts and figures - Currency and economy - Culture and behavior - Concentration of population - Communications - Channels of distribution - Capacity to pay - Control from the home country - Commitment to market - Choices for consumers - Contractual obligations - Caveats and concerns
  4. Market accessibility?
    1. Geographic, trade or legal barriers (Japan - profitable but too many trade barriers) (USA bans trade with Cuba)
      1. Import duties and quota = higher price = to limit imports and protect domestic producers from competition
  5. Profitability?
    1. High competition, small market, high costs (Africa - accessible but risks of trade partner non-payment)
  6. Market Size?
    1. Volume and value - current and future
  7. Market Opportunities
    1. Existing market
      1. Existing suppliers meeting demand
      2. Difficult/expensive to enter mkt unless cost advantage or superior product
    2. Latent market
      1. Existing demand, no one meeting need
      2. No direct competition (easier to enter) but high market creation costs (high rewards too!)
    3. Incipient market
      1. No current demand but likely to emerge in future
  8. Product Opportunities
    1. Competitive brand
      1. Similar features/price to existing products. No significant advantage over competitors.
      2. Will need to fight for market share. Price wars?
    2. Improved brand
      1. Not unique but improvement (performance/price)
      2. Potential to succeed with heavy promotion. Must overcome competitor brand loyalty.
    3. Breakthrough brand
      1. Innovation and potential competitive advantage.
      2. Must overcome resistance and convince of benefits
Phase 3 - Deciding how to enter foreign markets (market-entry strategies)
1. • Nature of the product (standard/complex) • Behaviour of potential intermediaries • Behaviour of local competition
2. EPRG Model (Wind, Douglas, Perlmutter, 1973)
  1. Ethnocentric Orientation
    1. Domestic market extension concept:
    2. Strategies, techniques and personnel perceived as superior
    3. International customers considered secondary
    4. International markets viewed as outlets for surplus domestic production
    5. International marketing plans developed in-house domestically
    6. Expansion viewed as appendage to domestic operations; same strategies used everywhere
  2. Polycentric Orientation
    1. Multidomestic market concept:
    2. Each international market is important/unique
    3. Establish susbidiaries in each target country
    4. Fully decentralised, minimal co-ord with HQ
    5. Country specific marketing strategies
    6. Result: No economies of scale, duplicated functions, higher final product cost
    7. Ford, Toyota, Suzuki, GM all adapt products locally
  3. Regiocentric Orientation
    1. Global marketing concept:
    2. Regions that share economic, political, cultural traits are perceived as distinct markets
    3. Divisions organised based on location
    4. Marketing strategies co-ord'd by regional offices
    5. Pepsi & Coca Cola cater to segments as single markets
  4. Geocentric Orientation
    1. Global marketing concept:
    2. World is a total market with identifiable, homogenous segments
    3. Marketing strategies aimed at market segments instead of locations
    4. Achieve position as low-cost manufacturer & marketer of product line
    5. Provides standardised product/service throughout the world
    6. McDonalds and Pizza Hut offer same ambience and taste worldwide
  5. Entry options
    1. OBJECTIVES: match with long/short-term aims & objectives SIZE & RESOURCES: within Co capabilities.. notably costs AVAILABILITY: host’s entry restrictions & opportunities QUALITY: competence/reliability of intermediaries & distb’n STAFFING: availability of competent staff… home or host MANAGEMENT: whether it can be managed from home FUTURE INTENTIONS: seen as short/long term operation RISK: posed by options.. expropriation, war, non-payment CONTROL: need to control operations from home
Phase 4 - Designing the international marketing programme (4Ps) (standardisation or adaption)
1. • Buyer behaviour (intermediaries/end cust.) • Competitive practice • Available distribution channels • Media and promotional channels
2. adaptation satisfied immediate demand BUT continual exposure will result in redefinition of needs and change in tastes → larger market share in long term (Doole and Lowe)
3. International Marketing Mix? Product: Will the same product sell? Price: How will price vary? Place: What distribution channels exist? Promotion: What opportunities exist?
  1. Standardisation: Factors which are likely to be able to be standardised across markets
  2. Adaption: Factors which are likely to need to be adapted to local market
  3. Pricing, Distribution, Sales force, Sales promotion, Product, Brand image, Mktg objectives, Mktg Strategy
4. "Companies need to operate as if the world was one big market" (Levitt, 1983)
Phase 5 - Implementing, co-ordinating, and controlling the marketing programme
1. • Negotiation styles in different cultures • Sales by product line, sales force, customer type and country/region • Contribution margins
Keller's 10 Commandments
1. Don't take shortcuts in brand building - bottom up, awareness before image
2. Establish the market infrastructure - McD's investing in potato farms in Russia because fries are a source of brand equity
3. Embrace integrated marketing communications - sponsorship, promotions, etc... Britifying B&J's contest
4. Cultivate partnerships (joint venture, license, franchise, etc...) - gain access to distribution - Lipton/PepsiCo
5. Balance standardisation vs customisation
6. Balance global vs local initiative and control
7. Establish operable guidelines and policies - translated understanding of brand definition
8. Implement global brand equity measurement
9. Understand the differences in markets
10. Leverage the brand but ensure a local "fit"

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Global Branding - Internationalisation

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