(2) Global Marketing Mix
Firms cannot reasonably expect to standardize all elements of their marketing program across the entire world. Indeed, there are probably diminishing returns upon reaching a certain level of standardization and uniformity worldwide. The key in global strategy is to find the best balance between local adaptation and global standardization. So global marketing is not a blind adherence to standardization of all marketing elements for its own sake, but a different, global approach to developing marketing strategy and programs that blends flexibility with uniformity. Global marketing comprises all the elements of the marketing mix product, price, promotion/advertising, and distribution conducted across the firms markets worldwide.
(i) Applying the global marketing approach is said to result in cost reduction, enhanced customer preference, improved program effectiveness, and increased competitive leverage. Please explain how this is true. That is, please explain how having a global marketing strategy leads to each of these particular benefits.
The accrued benefits of focused, global marketing strategies of a global company generally include cost reduction, enhanced customer preference, more developed program of effectiveness and more competitive leverage. Cost reduction is the most direct and more evident outcomes of a global marketing approach. This is because there is an economy of scale and the production of various marketing materials and the costs of creativity behind these marketing materials are dramatically cut. (Yip & Hult, 2002) Regional marketing efforts are to be discarded and what marketing programs are implemented in one international market will be the same program applied to the other markets. This implies the homogeneity in the target audience, which also entails cost reduction in terms of other marketing activities such as market research, CRM, customer service efforts, etc.
In enhanced customer preference, global marketing strategy produces more value for the company as its product recall and brand awareness is enhanced single-handedly. (Yip & Hult, 2002) For instance, a single marketing launch for a product or any of its versions can create a global branding or product recall for a multinational company in just one marketing effort or program. Hence, the launch of the iPhone can attest to this global marketing strategy. One worldwide product launch of the device resounds to a marketing success which integrates various regional and local markets and translates to a whooping amount of sales for the global mobile computing leader.
Another important benefit of a global marketing strategy is that the product or the marketing program’s effectiveness is reinforced. (Yip & Hult, 2002) Good marketing ideas across world audiences can be a resounding success for the global company. This means that they have employed and implemented the best concept and its execution with the least cost and resources. Since the development of marketing ideas and product development are not centered on the corporate headquarters, the chance for greater synergy and further product success is multiplied. For instance, the special challenges of a certain consumer product in one of its regional markets can be solved through the research and finding of solutions for the product’s other problems in other regions. Hence, the collective resolutions may mean that the product is more reinforced and better reformulated.
Finally, the competitive advantage of a company is intensified as the marketing efforts are reduced; the resources are fully utilized to bring about a more magnified power for the company’s product or service. (Yip & Hult, 2002) It also enables smaller global players to utilize focused marketing strategies and approaches to outcompete their larger competitors through their more effective competitive strategies. It also means being ultra focused with their good ideas to translate it to the best product feature or enhanced features.
(ii) Global advertising is a key approach for economies of scope and generally minimizing the costs of doing business globally. Please describe a strategic approach that firms should follow in order to succeed with global advertising, based on your understanding of chapter 6. You can frame your answer in terms of advertising strategy, execution, and media.
I think that the more popularly conceived global advertising strategy that has been presumed to be employed by global companies is the standardization of advertising. This approach contends that the specificity between countries is just a matter of degree. However, it maintains the similarity in the direction of the ads. Advertisers will just have to focus on the similarities of global consumers. However, I believe that the moderate or the contingency approach to global advertising is more effective and more appropriate. This strategy assumes that neither total standardization or a homogenized advertising strategy nor the local adaptation is needed by the global markets.
Instead, a good combination of these two distinct approaches in global advertising is more meaningful. This combined and integrated approach can guide advertising in various global markets after a thorough assessment of the various marketing factors, which can influence the effective execution of an advertising strategy or campaign, have been considered or studied.
No less than the global coffeee company Starbucks used this advertising strategy. For instance, tea is offered in stores in the UK and in the Far East while stronger coffees are offered in Europe. Starbucks also offer gourmet coffees in the U.S. markets. These different product offerings entail a more general advertising strategy even with the standardized product names, logos and full packaging. However, they have distinct advertising strategies when it comes to different regional stores. (Yip & Hult, 2002)
I agree that there is really no such thing as a global advertising campaign. I believe that each market is unique but with the degree of homogenization promoted by the global forces, there are some similar features which are embodied in the contingency strategy to global advertising.
I suggest that global companies utilize integrated marketing communication (IMC). Its tools are designed to integrate all marketing communications and corporate and brand messaging to consistently bring the message to various audiences. Its strategies are actually complicated because it takes into full account more sources of messages, more tools of communication and expanded audience base. In terms of media, I believe that the most important nowadays are the television and broadcast media, the Internet media and the mobile computing media. I do believe that digital marketing will be a very potent media in the years to come because mobile and social computing is vastly pervading the way people and business interact.
(iii) Ultimately the firm should seek to create and maintain a global brand name. E.g., Coca-Cola, Sony, and BMW all have succeeded by having brand names that are recognized worldwide. What are the advantages of having a global brand name?
A global brand is a universal brand which is acknowledged to carry the same set of market values globally. Global brands such as McDonald’s, Apple, IBM, Mastercard, Pepsi, Coca Cola, etc. overcome their origins and develop fortified and enduring relationships with consumers in various nations (beyond race, culture and other demographic differentiators). These products or services are widely known all over the world and they are often sold internationally. These brands are highly successful and their associated offerings are often patronized and distinguished by their diversed groups of customers as well.
For any global company, the advantage of a global brand is tremendous in terms of market opportunities and increased sales. Having a well known brand is a means for greater and wider costumer recognition. This implies the essential and abstract attributes of branded products and services. They are a source of a company’s competitive edge or advantage. The key benefit of branding is that customers have the greater tendency to remember these distinct products and services than their nameless competitors. A strong brand name and distinguished corporate logo or image also helps a company to be on the top mind of its present and intended customers.
This is very advantageous especially when the product being offered falls on a category which is bought by consumers on impulse. For instance, a well known consumer product such as Coca Cola or Colgate is more likely to be sold in a supermarket or grocery even when there are other numerous selections or alternatives are displayed. This is because the customers recognize the brand and identify with it. If a brand is known, even when the product is new to the market and it just has been introduced to customers, patronage is most likely. This is because the customers identify the brand to be of the values they believe in (i.e. quality, excellent and reliable products).
Aside from excellent growth opportunities, the following benefits can be accrued from the enhanced branding of certain global products and services:
Mass economy in terms of manufactruing and distribution
Reduced marketing costs
Establsihing the groundwork for expansions in the global markets in the future
Upholding unified brand imagery
Instant identification, recognition and combination of innovations
Limiting the entry of global competitors from establishing itself in the local markets or being locked out in the other geographic areas
Enables an extended global media reach (especially with the digital media revolution)
Enables more international business and tourism
The ability to charge for premium prices due to brand names
Internal corporate benefits like being able to maintain more profits and attracting betetr employees or establishing a betetr organizational culture.
If a certain product has a strong brand, it can link some new or similar products for a total market success. The brand name will be extended to the new products being introduced.
Globalization is transforming the world’s economies into a single borderless frontier. Global strategy takes advantage of this transformation via a world-scale integrated, coordinated approach in which the whole world is seen as the firm’s marketplace.
1. In your own words, describe this transformation both qualitatively and quantitatively. What is the significance of this transformation for US businesses as well as for the organization for which you work?
As implied, globalization can be described as a process of homogenization. As the world becomes one economy and one polity, and even one global culture, the interests of the people become universal. (Pralahad, 2010) This brings about a lot of qualitative and quantitative changes for the organization.
In a qualitative side, the companies are becoming more aware of the global resources and the general environment. Hence, they are transformed to be more inclined for ecological responsibility and ethical governance. As such, American companies (like their other foreign counterparts who are submerged in international markets) are gearing towards corporate social responsibilities. They want world peace, security and order for their lands and their neighboring countries. They want stability and progress. They want stronger international governmental agencies such as the United Nations and other world intermediaries. At the same time, they hate wars and famine and they abhor poverty and foreign debts. They do not want human rights violations. They want their heritage and their environment preserved. (Pralahad, 2010)
On the quantitative side, they depend heavily on competitive strategies and rely on technological advancements and breakthrough to be able to perform better in terms of financial success and sustainability. More and more companies are into various R&D initiatives so that they will realize more margins and profits in the conduct of their global businesses.
The basic significance of these outcomes is that American companies (and even other western corporations) are becoming more socially responsible and ethical in the conduct of their business operations. They are now oriented into more universal values and goals such as a healthy environment, more empowered work force, corporate transparencies and good governance, among others.
2. In your own words, define a global mindset. Why, in your opinion, is a global mindset necessary for US managers? What are the most important characteristics of a global mindset and how do they contribute to an organization’s success both inside and outside of the US?
In the advent of globalization of corporations, especially American companies, global mindset is crucial for US managers. This is because they have to be ingrained with the principles of global mindsetting, that is, being open to and aware of cultural diversity and varied international markets. The most important characteristics of a global mindset include being multi cultural and having the ability and the propensity to recognize common patterns beyond national borders, markets and races.
The major advantage of this global mindset for the managers is that they can effectively utilize and/or exploit market opportunities and challenges and be ready to be flexible in adopting most advantageous local or appropriate practices or applying ingenious ideas. Another advantage is that managers are able to look beyond the cultural and geographic diversities and overcome the differences in achieving the goals of their companies.
Managers must nurture a global mindset to be able to prosper in a highly globalized commercial world. It is also considered as a basic requirement in being a global company. For instance, global and multinational companies such as Nestle, Procter and Gamble, Microsoft, Starbucks, General Electric, among others, employ and utilize global mindsets among its human resources in order to effectively carve good market niches for their products and services worldwide.
They usually overcome cultural barriers to be able to accomplish their goals. To illustrate, the global mindset of Microsoft Corporation can be evidently seen by its deep penetration of the huge, Chinese market. As Microsoft managers recognize the great opportunity in this foreign market, they also embrace the cultural and other extraordinary hurdles invovled in winning this targeted market. Hence, they seriously work to eradicate software piracy in this market while beating their market rivals all at the same time.
3. What are the principal leadership challenges in developing and implementing a global mindset? Please analyze this question from strategic, tactical and operational perspectives and consider perspectives drawn from theory as well as your own personal experience. Please discuss the particular challenges faced by your organization.
Generally, a global mindset enables the company to outcompete its rivals in recognizing several market opportunities. It also allows the company to establish the required market presence and realize a unique global competitive edge against its competitors.
A major leadership challenge in imbibing this corporate, lobal mindset is the general outlook and mindset of the top executives in the company. The specific world view of top management may be advantageous or detrimental to the development and the implementation of a global mindset. These key personnel are also influenced by the unique distribution of power in their company, particularly in their senior management. Of course, even when the middle managers want to nurture a global mindset in their organization, much of the efforts and the effectiveness rest on the top executives who will lead this initiative and follow it through in all their endeavors. If the top management is more ethno-centric or if they just want to cater to a pure breed American or British markets, then, the institution of a global mindset is weak or even unnecessary.
There are also resource and logistic requirements which may impede the management in implementing a global mindset or culture. For instance, if a company traditionally cannot adapt to international markets, then they will have a difficulty in configuring their assets and resources, even those intagible ones such as their market strategies, core competencies and organizational culture.
Another stumbling block for company leaders is the structural hindrances in a company. If a product-oriented company is involved, it may be easier to transform the cultural setting into a more open one. Yet, a more local or regionally oriented company may have difficulties in influencing the local mindsets of its managers, who may be more adept and focused on local operational requirements.
Prahalad, C.S. (2010). The Fortune at the Bottom of the Pyramid. New Jersey: Wharton. ISBN 0137009275.
Yip, George & Hult, Tomast. (April 26, 2002). Total Global Strategy, 3rd ed. New York: Prentice Hall. ISBN-13: 978-0136089834.