How

Global Brands Compete (2004) by Holt,

Quelch & Taylor in Harvard Business Review
Lewitt (1983) economics of
simplicity & grow by selling
standardized products all over
the world.
achieve a least-common
denominator positioning that
would be effective across
cultures.
popular in 1980s, BUT
consumers had trouble
relating to generic products
SO hybrid strategies
evolved; save money on b ack-
stage operations, but
customized features,
communications, etc.
Social responsibility:
- extraordinarily influential
both negative & positive on
societys well-being
- Nestles infant-formula,
Bhopal gas tragedy in 84,
etc., people are convinced
that global brands have a
special duty.
- different rules for
local/MNC, e.g. factories in
China/India.

PROBLEMS:
Anti-globalisation protests,
e.g. McDonalds, Nike, Coke
Most visible & vulnerable
symbols
In 2002, 62/100 valuable
brands America, problems
with war in Afghanistan.
2002, 15% in developed
countries; by 2030, only
10%.

STUDY: 1,500 urban consumers
btw20 and 35 in 41 countries,
then 1,800 in 12 countries.

Lewitt didnt produce

homogenous market, rather
homogenous culture, i.e.
breakdown of national
cultures.
-- globalization, increased
flow of people, access to
culture abroad
-- doesnt mean same
tastes/values, m erely
conflicting viewpoints but
shared
conversations/symbols
(GLOBAL BRAND).
-- awed by transnational
companies; turnover more
than GDP, impact in peoples

Global myth:
- symbols of
cultural ideals
use to create am
imagined global
identity that is
shared with like-
minded individuals
- local brands
show who we are,
global b rands show
what we want to
be

Global brands compete against each other.

Price/performance/features, but ALSO global
brand characteristics
Think globalness: Treat as global symbols,
learn to participate in polarized conversation &
influence it. Mass media & rhizome-like
discussions are key. Executives must cater to
peoples perceptions of transnationals as
behemoths with extraordinary capacities. E.g.
Samsung 1990s ads showing off engineering,
design feats -> changed perceptions to global
provider of leading-edge technologies.
Manage the dark side: In 1990s, IBM found
that customers perceived them to b e arrogant
and b ureaucratic so, Solutions for Small Plant
ads, relaxed atmosphere, delivering new
technologies. Address the criticism.
Build credible myths: authoring identity-
affirming myths. Microsoft where do you want
to go today selling dream of personal
empowerment. BP-oil-sustainability not

credible
as a minor player in renewable energy.

Quality signal:
- watch fierce war and
admire victors
- the more people b uy it,
the better it is
- compete b y developing
new products, innovative
- country of origin only
1/3 as important as
globalness

American
values:
- people said
they cared, but
impact on
purchase habits
was negligible
- anti-American
sentiment
rising, but
people still
bought the
products

Global Citizens: 55%, quality signal &

concern over CSR. US/UK few, B/Ch/In a lot.
Global Dreamers: 23%, see as quality
products & buy into m yths, but less admiring
Antiglobals: 13%, dont think they deliver
better quality, dislike American preachings,
dont think they are socially responsible. High
in UK/Ch but low in Eg/SA.
Global Agnostics: dont buy based on global
attributes, 8%. More US/SA, low Ja/In/Ch.
-Treat antiglobals as customers: civil
society only top of iceberg. Kleins No logo,
Fastfood nation bestsellers, easily
accessible. One in ten wouldnt buy global
brands if given a choice importance of
building up trust.
-Turn CSR into entrepreneurship: most
firms have launched CSR initiatives, b ut
impact is questionable mostly just PR.
Proactive, but needs to be sustainable (i.e.
money-making). P&G in Latin America
identified safe drinking water as a critical
social problem within expertise. Reduced
Diahorrea by 25%.

The antecedeants and consequances of integrated

global marketing (2001) by Sheth & Parvatiyar
Philosophy: standardization whenever possible, customization whenever
necessary
Contextual determinants of
international marketing:
political stability,
government policy, ideology-
driven economy, fear of
colonialism (= 5th P, politics
& PR, impact on market
entry modes & operating
strategies)
marketing transfer issues
(operational challenges &
promotions adjustments
across boarders), lack of
infrastructure, North-South
dichotomy (economic
development theories)
East/West dichotomy
(cultural differences) &
product life cycles

Creation of EU, ASEAN,

etc. titled debate in
favor global marketing;
removing country-
specific barriers
(labor, products, etc.)

The Borderless World:

- Regional integration: EU, ASEAN, NAFTA 70% of world GDP &
75% of world trade
- Technology advances: Revolutionized business processes &
practices (esp. through digital electronics & commerce). Internet,
dispersion of info. Product cycles shorted, R&D increased.
Marketing penetration, rather than skimming, prevail.
- Ideology-free world: collapse of those countries, resulting in
privatization of public sector, less regulation, development of
precompetitive policies to encourage innovation.
- Borderless enterprises: globalization of domestic companies,
mainly through global sourcing & global competition.

From international differences to transnational

similarities:
A Worldwide markets instead of home market with
diffusion; rather, rely on world demographics; e.g.
target teenagers. Evident in soft drinks, clothing &
internet.
B Mass customization standard platforms, but
custom applications; oxymoron of efficiency with
effectiveness of personalization
C Relationship management increasingly important
to rely on customer/supplier relationships to preempt
competition; reduce market uncertainties, model
more consistent behavior with theories of learning &
social exchange
D Trickle-up theory best to deploy new tech in low-
end applications and the move up to high-end ones
(market upstreaming) may witness more
homogeneity in demand/use of consumer electronics.

From functional adjustment to cross-

functional integration:
A Global accounts as customers b ecome
global & rationalize buying, demand met
unique needs. Global
delivery/pricing/uniform product
characteristics/etc. IBM/Siemens/Xerox
have established global management
programs to address needs of largest
customers.
B Cross-functional consistency as
organized around global accounts,
increasingly necessary to deploy quality
consistency across all functional units (not
only manufacturing, but staff as well)
C Value-based costing formerly based on
accounting principles, then ABC, now value
based is gaining popularity.
D N etworked organization beginning to
rely on relationship with external
organizations; need of coordination &
communication.

Brand positioning through advertising in Asia, N. America, & Europe:

the role of global consumer culture (1999) by Alden, Steenkamp, Batra
Summary: examine the emergence of brand
positioning in adverting that parallel the
growth of the global marketplace. A new
global consumer culture
construct,
positioning is proposed

China TV ads: family values, tradition & technology

USA TV ads: enjoyment, cost savings, and
individualism.

Research results:
LCCP used in 59% ads, versus GCCP 22.4% & 3.8% for
FCCP.
Only 5.5% of ads in USA used GCCP compared to25.6% in
other countries.
Key strategic issue: identification of country, consumer
segment, and product segment factors that favor use of
GCCP, FCCP, or LCCP. If historically effective to use FCCP,
manager may use it initially.
Possible that GCCP work better than LCCP in less
developed countries, maybe due to admiration
Central components:
1. Language: English has come to signal
modernism/internationalism /cosmopolitan. CONTRAST
to FCCP/LCCP which use a local/foreign language, e.g.
Volkswagen used slogan Fahrvergngen
2. Aesthetic styles: spokesperson characteristics (e.g.
Michael Jordan for Nike VS German engineer for Audi).
Symbols less tied to a specific culture (e.g. N ikes swoosh,
AT&T abstract globe)
3. Story themes: Toshiba computer used in N Y/Delhi/Paris
transnational commerce culture.

Visual symbolism in Japan kanji

(Chinese ideograms) represents
tradition/formality, hiragana
(simplified 1/2 stroke characters)
connotes femininity & softness, and
katakana (used to express foreign
words) implies newness,
foreignness and directness.
GCCP can be contrasted with local
consumer culture positioning (e.g.
Budweisers association with a
small-town American culture) &
specific foreign culture (e.g.
Singapore Airlines Singapore Girl)
---- building a global image gives a
brand more power and value

Lecture 10 International Marketing and Global Economies

International marketing is the performance of business activities
that direct flows of a companys goods and services to consumers
or users in more than one nation for profit VERSUS global
marketing is the marketing that integrates or standardizes
marketing actions across geographic markets
1. No direct foreign m arketing
2. Infrequent foreign marketing
3. Regular foreign marketing
4. International Marketing
5. Global marketing

Foreign environment
(uncontrollable)
- Political/legal forces
- Cultural forces
- Geography and infrastructure
- Structure of distribution
- Level of technology
Competitive forces
- Economic forces
Advantages of standardization:
Economies of scale
Economies of scope
Reach ability
Brand equity
Ease of planning

Domestic
environment
(uncontrollable
- Political/legal
forces
- Competitive
structure
- Economic
climate

Business in the 21st century:

Open m arkets
Connectivity
Sustainability
New global economic
order
Competitors, suppliers,
and customers may b e
international!

Marketing
(Controllable)
- Price
- Product
- Promotion
- Channels of
distribution

Advantages of adaptation:
Economic differences
Infrastructure differences
Political/legal restrictions
Local market orientation
Sensitivity to cultural differences
(e.g. humor/ traditions)

Why go
international?
-Attack or
counterattack

competition
-Pursue sales and
profits elsewhere
-Enlarge customer
base
-Achieve
economies of scale

-Reduce
dependency on a
single market
-Service customers

who are expanding

abroad

Textbook Ch 20 The Global Marketplace

Global industry: An industry in which the strategic positions
of competitors in given geographic or national markets are
affected by their overall global positions.
Global firm: A firm that, by operating in m ore than one
country, gains R&D, production, marketing and financial
advantages that are not available to purely domestic
competitors
Global Marketing: marketing that is concerned with
integrating or standardizing marketing actions across
different geographic regions.

1. Looking at the global marketing

environment
2. Deciding whether to go
international
3. Deciding which markets to enter
4. Deciding how to enter the market
5. Deciding on the global marketing
programme
6. Deciding on the global marketing
organization

Case study Jgermeister:

Family-owned, mid-sized but with
country-specific advertising.

USA: no media ads, instead
jgerettes giving out free samples
at music festivals. Youthful &
aggressive image associated with
heavy metal and college parties.
Italy: upmarket, elegant version of
local after-dinner drinks.
Germany: seen as traditional
schnapps, albeit with an
increasingly cool image.

The international trade

system
Tariff/quota/embargo/
exchange controls/non-
tariff b arriers
WTO/GATT
Free-trade
zones/economic
communities
EU/NAFTA

Economic environment:
Subsistence consume most of output
Raw-material-exporting, e.g. Chile (tin), Saudi
Arabia (oil) often many foreigners and a wealthy
upper-class
Industrializing, e.g. India, Brazil, Egypt
manufacturing accounts for 10-20% of economy
growing m iddle class
Industrial: large exporters of manufactured goods
and investment funds, e.g. Taiwan, Malaysia.
Note income distribution
Culture: a set of b asic values, perceptions, wants and
behaviors learnt by a member of society from family
and other important institutions.
I.
Impact of culture on marketing strategy
a. Frenchmen use 2x cosmetic/beauty
products as female partner
b. Germans & French eat more packaged,
branded spaghetti than Italians
c. Way of business. Western norm is to go
straight to the point, Asians find this
offensive
d. Business cards in UK vs China
II.
Impact of marketing strategy on culture
a. Americanising via McDonalds, Coco-Cola,
Starbucks worry that countries are loosing
individuality
b.
Businessweek 12/15 top brands were
American

Case study China:

50% can barely afford
rice, but booming
number of millionaires
keen to show off their
newfound wealth.
Carmakers (A6 car of
government officials)
and luxury clothing
brands cash in

Political-legal environment:
Attitudes towards international
buying: some countries are receptive
(Singapore, Thailand), others arent
(India import quotas, currency
restrictions)
Government bureaucracy: extent to
which government runs an efficient
system for helping foreign firms, e.g.
customs handling, good market
information.
Political stability: Governments
change hands, sometimes violently
Monetary regulations: what currency,
changing exchange rates, barter, cash
trades, compensation, etc.
What market to enter:
- Demographic characteristics (size of
population, age composition)
- Geographic characteristics (climate,
country size, density, rural/urban,
transportation)
Economic factors (GDP, income
distribution, natural resources)
- Technological factors (education)
- Socio-cultural factors (consumer
lifestyle, business norms, language)
- Political and legal factors (stability)

Case study: Emerging markets

Bad examples: Coca-Cola offering expensive 350ml bottles; Ford launching mid-sized cars to a small-
cars market; Kellogg offering perioum-priced cereal..
Good examples: Hindustan Level with Project Shakti recruiting women for self-help and micro-loans to
start direct-to-home distribution; Hindustan Lever start using railway and providing credits to extend
reach; Levi started targeting less rich people for more profitable business; GSMs Horlicks family
nourishment

Exporting:
Indirect: Working through independent international marketing intermediaries. Less investment,
less risk
Direct: Firms handle their own exports. Internet communication is an advantage of the industry
today
Joint Venturing:
Licensing: the company enters an agreement with a licensee, offering the right to use a
manufacturing process, trademark, patent, trade secret for a fee or royalty. E.g. Coca Cola license
bottlers around the world and supplying them with needed syrup.
Contract manufacturing: Company contracts with m anufacturers in a foreign market to produce the
product or provide its service. Decreased control of manufacturing process, and loss of profit
potential, but less risk and later opportunity to buy manufacturer.
Management contracting: domestic firm supplies the management knowhow to a foreign company
that supplies capital; the domestic firm exports management services rather than products. E.g.
Hilton.
Joint ownership: a company joins investors in a foreign market to create a local business in which
the company shares joint ownership and control. E.g. Tesco & Hymall in China. Alternatively,
governments can require joint ownership for entry. E.g. India. May lead to disagreements, and
distrust.
Direct investment
Developing foreign-based assembly or production facilities. Lower costs, deeper relationship
with institutions, improve image in host country, full control of investment.
Standardization/ adaptation?
Standardization: basically using
the same product, advertising,
distribution channels and other
elements of the marketing m ix in
all of the companys international
markets
Adaptation: adjusting the
marketing m ix to each
international target market,
bearing more costs but hoping for
a large market share and return.
Through internet, satellite TV
and telecommunication
networks consumers are
becoming increasingly similar.
Globalization and
standardization; convergence
on needs and wants, so
economies of scale and global
brands
BUT more effective if directly
targeted so think globally,
but act locally

Product:
- Straight product
extension:
marketing a
product in a
foreign market
without any
change, e.g.
Heineken beer,
Gillette razors.
Tempting as no
additional
product
development
costs are
incurred
- Product
adaptation: e.g.
Philips made
smaller shavers
- Product
invention:
creating
something new
for the m arket

Promotion:
- Seemingly
innocent brand
names and
advertising
phrases can
take on
unintended or
hidden
meanings when
translated into
other
languages.
- Media needs
to be adapted,
as media
availability
differs from
country to
country
(airtime,
magazines)

Price:
Standardization:
same price
everywhere but
PP is the different
Price escalator:
need to add costs
for transportation,
tariffs, etc. E.g.
luxury brands.
Transfer price: if
charges subsidiary
too much higher
taxes, but too little
dumping.

EU less price
differentiation
within EU,
transparency with
the euro
Internet-
consumers can
easily compare
prices across firms
and countries.

Distribution
channels:
Seller sellers HQ for
international
marketing channels
between nations
channels within
nations final user or
buyer

Differences: size &
character of retail units
abroad. Large
supermarket chains in
the US/UK but in
India, small &
independent stores
where families buy
often due to lack of
refrigerators.

Case study McDonalds: in

France, greeted by hosts in
tie and jacket, an get
chocolate with coffee. In
UK, refurbished to look
like stylish coffee shops. In
India, no b eef, so McAloo &
McVeggie. In Japan,
McTatsuta. In Thailand,
McPork Burger.

Case study LG Electronics: special space

for kimchi in Korea fridges. 86% of sales
from abroad localization in the new
market is very important. E.g. in India, LG
is virtually the leader in every category of
home appliances. In India, launched
fridges that had bigger water-storage
compartments, power supplies that could
withstand sudden surges, color
preferences. In Middle East, cell phones
has a prayer alarm, and gold TVs.

When Coco-Cola entered China, shops didnt have fridges so Coco-Cola

set up direct-distribution channels, investing heavily in fridges and trucks,
and wiring so retailers can install coolers. Try to reach every place where
coke can be consumed restaurants, shops, barbershops, etc.