Chapter 10

Global and Multi-Market

Strategies

John S. Hill
 Global and Multi-Market Strategy Formulation topic

layout

Global and Multi-Market Strategy

Formulation

Formulating Global &

Multi-Country Marketing
Global and
Strategies Dealing with Multi-Market
Defining the Core Business Competitors Financial
Strategy Internationalization Competitive Strategies
-Identifying Cross-National Strategies Transfer Pricing
Segments -Global Rivalries Issues
-Speed of Internationalization -Initiating Managing
Globalizing the International Competitive Foreign
Strategy Strategies Exchange Risks
-Building Global Brand -Responding to Global Cash
Portfolios Global Rivals Management
-Building Global Brands Cooperative Global & Multi-
-Standardizing and Adapting Strategies Market Financial
Marketing Strategies -Global Synergies
Alliances Administering
Global Finances
 Chapter Outline
 Formulating Global and Multi-Country
Marketing Strategies
 Dealing with Competitors: Global and Multi-
Market Strategies
 Global and Multi-Market Financial Strategies
 Formulating Global and Multi-Country
Marketing Strategies

 Identifying and Developing Core Businesses

 Contribute significantly to corporate sales and profits
 Take full advantage of the technological and managerial
resources available within corporations
 Have significant potential for development in world markets
Internationalizing the Core
Strategy
 Identifying Cross-
National Customer
Similarities: Global
Segmentation Criteria
 Speed of
Internationalization:
Single, Multi-country or
Global Expansion
Strategies
Internationalizing the Core
Strategy
 Global Segmentation Criteria
 Identifying cross-national customer groupings with
similar needs and who respond in similar fashions
 Demographic Criteria:
 Age segments: babies, children, teens, senior citizens
 Occupational similarities: business, doctors, engineers,
architects, teachers
 Income-based segments: upper income, middle classes
 Gender-based segments: women (and men)
Internationalizing the Core
Strategy
 Global Segmentation Criteria
 Lifestyle-Psychographics Criteria
 International sophisticates: above middle-income consumers with
genuine interests in international products
 Semi-sophisticates: middle and high-income consumers: know little
about world affairs/foreign cultures but buy foreign products for
status reasons
 Provincial consumers: poor or wealthy, with few interests in
international products or world events; often nationalistic
 Global Segmentation Criteria: Product Features (product styling,
performance, reliability) and Benefits (convenience, health,
efficiency)
Internationalizing the Core
Strategy
 Global Segmentation Criteria
 Market Similarities: Cultural, Political and Economic Catalysts to Global
and Multi-country Segmentation
 Trade Blocs, EU, NAFTA, and Mercosur: countries trade together and
assimilate each other’s cultures (‘European’, ‘Latin American’)
 Language similarities: often remnants from colonial eras (English, French,
Spanish, Arabic, German)
 Religious similarities, Buddhism,
Confucianism and Taoism shaping Asia; Islam in the
Middle East
Internationalizing the Core
Strategy
 Speed of Internationalization: Single, Multi-country
or Global Expansion Strategies
 Availability of corporate resources
 Competitor strategies or likely reactions (first mover
advantages; multi-market launches)
 Corporate objectives (market dominance, follower strategies)
 Importance of individual markets: key emerging markets
(India, China, Brazil)
Globalizing the International Strategy
 Advantages and
Disadvantages

 Building Global Product

Portfolios

 Creating Global Brands

Globalizing the International Strategy
 Advantages of Global Branding Strategies
 Simplify marketing task and reduce promotional costs
 Enhances success rates of global product launches and
gives products multi-country momentum
 Good product ideas can gain first mover advantages
 Take advantage of worldwide similarities among
customers
 Country reputations for product expertise can be
leveraged worldwide
Globalizing the International Strategy
 Disadvantages of Global Branding
Strategies
 Standardized products and images are not sensitive to
cultural differences
 Misfortunes accruing to global brands can reverberate
across entire product ranges and tarnish
corporate reputations on a region-wide (Coca Cola in
Europe) or worldwide
scale (Nestle, Perrier)
Globalizing the International Strategy
 Building Global Product Portfolios
 Four Strategies to Globalize Brand Portfolios
 Consolidation from regional and national lines: Proctor &
Gamble in Europe and Asia
 Buying and Selling Brands through Mergers and Acquisitions:
Unilever sold its Harmony hair care brand to EMVI
 Building Global Brands through New Product Development:
Ford 2000 unified North American and European divisions
 Building Global Product Portfolios Through Geographic
Extensions: McDonalds, KFC and Pizza Hut
Globalizing the International Strategy
 Creating Global Brands
 Products and brands: Key difference—brands are
‘covenants with the customer’; built up over time
 Types of global brands
 Building global brand images
 Creating brand personalities
 Building trust and customer relationships
 How global branding contributes to strategy
 Brand associations and country of origin
Globalizing the International Strategy
 Creating Global Brands
 Types of Global Brands
 Corporate (or Organizational) brands, company
reputations as centerpieces of global strategies.
Canon and Johnson & Johnson
 Range Brands, collections of product lines brought
together under business. General Electric (GE)
 Product brands, contribute to and benefit from
corporate and range branding strategies
Globalizing the International Strategy

 Creating Global Brands

 Creating Brand Personalities
 Sincerity: honest, wholesome
 Excitement: sports cars, fashions
 Competence: reliability, intelligence
 Sophistication: upscale appeals
 Ruggedness tough, masculine appeals
Globalizing the International Strategy
 Creating Global Brands
 Building Trust and Customer Relationships
 Clubs and usage programs: airlines, wine clubs
 Public relations program: video games and magazines
 Product shows and event stores: Cadbury World,
Disney
 Publicity stunts: Swatch
 Event sponsorships: athletic events, football, rugby,
tennis, golf, motor racing
Globalizing the International
Strategy
 Creating Global Brands
 How Global Branding Contributes to Strategy
 Branded components confer additional quality onto existing
brands. ‘Intel Inside’
 Flagship Brands “Silver Bullets”, star brands in the
company’s global portfolio. Walkman for Sony
 Global Brand Leverage, product extensions to add additional
brands: Mercedes
 Mega-brands, brand names are leveraged over entirely new
business and product lines. Disney, Richard Branson’s Virgin
 Brand Associations and Country of Origin, Some countries
acquire reputations for specific products, Scotch Whisky
Globalizing the International Strategy
 Creating Global Brands
 Standardizing and Adapting Marketing Strategies (‘be global, act
local’)
 Product strategies some components easier to standardize than others
(brand name, warranties, positioning)
 Distribution worldwide has become streamlined with express mail
services, the internet, and global retailers
 Personal selling and sales management strategies have been harder to
standardize globally
 Pricing strategies are difficult to standardize globally because of factor
price differences, transportation costs, and foreign exchange rate
discrepancies
 Advertising strategy standardization has been facilitated by the growth of
global advertising agencies and global media
Dealing with Competitors: Global and Multi-Market
Competitive and Cooperative Strategies

 Competitive Strategies,
Global rivalries,
leveraging of
competitive advantages
across markets,
offensive competitive
tactics against rivals
 Cooperating with
Competitors: Global
Alliances
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Competitive Rivalries in Global Industries

 Aircraft: Boeing (US) vs. Airbus (Europe)
 Hamburger Franchises: McDonalds (US) vs. Burger King (UK),
etc.
Initiating Competition: Leveraging Competitive
Advantages Across Markets
 Developing a product that becomes an industry standard (Xerox)
 Superior customer service (Caterpillar parts; Federal Express), etc.
 Lower cost, superior styling, technologies, innovation, reliability,
corporate reputation
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Offensive Competitive Strategies

 Frontal Assaults: all-out offensives. Coca-Cola and Pepsi
 Flanking Strategies, attacking market segments ignored by
competitors, Swiss and Japanese watch producers
 Encirclement Strategies, use superior resources to produce
greater product varieties. Japanese motorcycle producers
 Bypass Strategies, focus on future customer needs. “green”
cars by Honda and Toyota
 Guerilla Strategies, disrupting rivals marketing strategies
or stunting sales in major product or service lines
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Geographically-based Offensive
Competitive Strategies
 Emerging Market Strategies, Marketplace rivals
rush into new, big markets (Latin America, Asia,
Eastern Europe) to gain first mover advantages
 Regional Competitive Strategies, to attack (or
defend against) key regional rivals. Spanish
banks targeted banks in Latin America
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Geographically-based Offensive
Competitive Strategies
 Key Market Competitive Strategies, to undermine rivals in
strategically important markets. Airbus and Boeing in
Japan
 Attacking Rivals in the Home Market: to undermine
international corporations with advantages in their
domestic markets: Kodak against Fuji in Japan; Fuji
attacks Kodak in US
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Responding to Global Competitors

 US Counterstrategies
 Government-sponsored trade protection, US imposes tariffs
on steel in 2002
 Collaborative with global rivals, to cooperate with rivals and
learn the secrets of their competitive advantages. GM in
Japan
 Domestic Collaboration, to form industry-wide cooperation
groups. Semi conductor industry
 Competitive Restructuring, to undertake top-to-bottom
evaluations of company and competitor marketing
strategies. Motorola (US) and Philips (Netherlands)
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Responding to Global Competitors

 European Responses
 International Offensive Strategies, such as engineering
conglomerate Asea-Brown- Boveri; and L’Oreal
 International Defensive Strategies, to consolidate market
positions within Europe. Solvay (Belgium – chemicals) and
Heineken (Netherlands)
 National Defensive Strategies , to maintain home market
dominance while contemplating international expansions
 Restructuring or Exit Strategies, by firms unable to sustain
their market positions in European theater of operations.
Philips
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Responding to Global Competitors

 Emerging Market Responses
 Defender Strategies: where industry globalization influences are
low and competitive assets are home-market-customized. Bajaj
countered Honda’s entry into Indian market
 Dodger Strategies: by firms with home-market oriented assets
but under high competitive pressures; localize or JV
 Contender Strategies: larger, well resourced emergent firms to
upgrade existing technologies and/or transfer competitive assets
into foreign markets (Mexico’s Cemex)
 Extender Strategies: use local market expertise and products to
move into similar markets abroad. Jollibee
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Cooperating with Competitors: Global Alliances

 Characteristics
 Tend to be contractual agreements rather than equity-based
relationships such as joint ventures
 Often involve parts of corporate supply chains rather than
entire supply chains
 Are not necessarily permanent
 Often involve divisions of companies
rather than entire firms
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Collaborating with Competitors: Global

Alliances
 Advantages—GAs used for:
 Technology and product development
 Getting into related businesses
 Distribution-sharing agreements
 Technology and market access agreements
 Shared production
 Creating size and critical mass
Dealing with Competitors: Global and Multi-Market Competitive
and Cooperative Strategies

 Collaborating with Competitors: Global Alliances

 Keys to managing Global Alliances
1. Take time to get to know and trust partner
2. Choose a partner with complementary products
3. Be patient: do not expect instant results
4. “Live like brothers and do business like strangers”
(Arabic proverb)
5. Maintain management team continuity where possible.
6. Objectives should be set out in a ‘pre-nuptial agreement’
7. Be sure that alliances contribute to long term goals
8. Know when a relationship has accomplished its goals
Global and Multi-Market
Financial Strategies
 Transfer Pricing Issues
 Managing Foreign Currency Risks

 Global Cash Management: Settling Corporate

Subsidiaries
 Global and Multi-Market Financial Synergies

 Administering Global Finances

Global and Multi-Market
Financial Strategies
 Transfer Pricing Issues
 Corporate perspectives on transfer pricing: price to earn profits where
they want; under-charge/over-charge on shipments among subsidiaries
 Country perspectives on transfer pricing: subsidiaries should charge
“arm’s length” prices and pay appropriate taxes
 Managing Foreign Currency Risks
 Transaction risk: risks on individual transactions when exchange rate
values fluctuate; forward rates an option
 Translation risks: ‘paper losses/gains’ when asset valuations fluctuate
with exchange rate values
 Economic risks: Transaction and translation risks projected over the
long-term; preferences for weak currency nations
Global and Multi-Market
Financial Strategies
 Global Cash Management: Settling Corporate Subsidiary
Accounts
 Settling individual accounts as exchange rates fluctuate poses problems as
payment delays cause losses for one party
 Centralized cash management: Netting strategies simplify settlement by
reducing number of settlement payments
 Global and Multi-Market Financial Synergies
 Disposal of Surplus Funds: in best-yield markets
 Raising capital: best interest rates
 Administering Global Finances
 Internal administration: ‘treasuries’ settle internal accounts
 External administration: by banks for less experienced firms
Key points
 Formulating global strategies involves defining core business
strategies, internationalizing those strategies, and then
globalizing them for competitive strategies
 Core businesses contribute to corporate profits, and have
significant global potential
 Internationalizing core strategies involves recognizing global
similarities in customers and markets
 Globalizing international strategies entails creating global
brands and global brand portfolios
 Total product standardization, distribution, pricing and
promotional strategies rare—some adaptation usually required
Key points
 Global brands can be classified into corporate brands, range
brands, and individual brands
 Offensive competitive strategies can be product-based or
geographically-based
 US companies respond to global rivals by asking for trade
protection, working with competitors, forming domestic
collaborations, or restructuring themselves. European companies
go for offensive or defensive international strategies, national
defensive strategies, or exiting the industry. Emerging market
firms can go for defender, dodger, contender, or extender
strategies.
 Companies can collaborate with rivals by global alliances.
Thank You!