Chapter 12

Global Marketing
Management Planning
and Organization

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Learning Objectives
LO1 How global marketing management differs from
international marketing management

LO2 The need for planning to achieve company goals

LO3 The important factors for each alternative

market-entry strategy

LO4 The increasing importance of international

strategic alliances

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Market Segmentation
1970s
• Standardization versus Adaptation
1980s
• Globalization versus Localization
1990s
• Global Integration versus Local Responsiveness

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Global Marketing Management
 The fundamental question was whether the global
homogenization of consumer tastes allowed global
standardization of the marketing mix.
 The Internet revolution of the 1990s, with its
unprecedented global reach, added a new twist to the
old debate.
 Even today, some companies are calling “global” the way
to go.
 In many parts of the world, consumers have become
pickier, more penny-wise, or a little more nationalistic.

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Netflix Package via Sky Atlantic

© John Graham
Source: Amol Sharma, “TV Studios Tune into Foreign Markets, Wall Street Journal, November 30, 2014, pp. A1,14.
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Coke and Pepsi advertisements in India

© John Graham
© John Graham

© John Graham
The competition among soft drink bottlers in India is fierce. Here Coke and
Pepsi combine to ruin the view of the Taj Mahal. Notice how the red of Coke
stands out among its competitors in the picture.
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Disney Princess Collection

© Richard Drew/AP Images

Items in the Disney Princess collection are on display at the Licensing
International show at New York’s Javits Convention Center.
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Market Segments
 The ideal market segment size, if customer satisfaction is
the goal, is one.
• “Forward-looking, proactive firms have the ability and
willingness . . . to accomplish both tasks [standardization and
localization] simultaneously.”

 As global markets continue to homogenize and diversify

simultaneously, the best companies will avoid the trap of
focusing on country as the primary segmentation
variable.
• Other segmentation variables are often more important—for
example, climate, language group, media habits, age, or income.

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The Nestlé Way: Evolution Not Revolution

Think and plan long term

Decentralize

Stick to what you know

Adapt to local tastes

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Benefits of Global Marketing
 Economies of scale in production and marketing can be
important competitive advantages for multinational
companies.
 Global diversity in marketing talent leads to new
approaches across markets.
 Marketing globally also ensures that marketers have
access to the toughest customers.

 Diversity of markets served carries with it additional

financial benefits.

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Planning for Global Markets
 A systematized way of relating to the future
 An attempt to manage the effects of external,
uncontrollable factors on the firm’s strengths,
weaknesses, objectives, and goals to attain a
desired end
 A commitment of resources to a country market to
achieve specific goals
 The job of making things happen that might not
otherwise occur
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Structures of Planning
 Corporate planning
• Generalized goals for the enterprise as a whole over a long term

 Strategic planning
• Conducted at the highest levels of management
• Deals with products, capital, research, and the long- and short-
term goals of the company

 Tactical planning
• Conducted at the local level
• Addresses marketing and advertising questions
• Pertains to specific actions and to the allocation of resources
used to implement strategic planning goals in specific markets

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Company Objective and Resources
 Defining objectives clarifies the orientation of the
domestic and international divisions, permitting
consistent policies.
 Foreign market opportunities do not always parallel
corporate objectives and resources.
• Change the objectives
• Alter the scale of international plans
• Abandon foreign market

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International Commitment
 Management needs to be prepared to make the level
of commitment required for successful international
operations.
• Dollars to be invested
• Personnel for managing the international organization

 Management must be determined to stay in

the market long enough to realize a return on
investments.

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The Planning Process
 First-time foreign marketer
• Products to develop
• Markets to develop the products in
• Level of resource commitment

 Company that is already committed

• Allocating effort and resources among countries and product(s)
• Deciding on new market segments to develop or old ones to
withdraw from
• Determining which products to develop or drop

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Exhibit 12.1 International Planning Process

A systematic guide to planning for the multinational firm operating in several countries
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Phase 1: Preliminary Analysis and Screening
—Matching Company and Country Needs
 Evaluate market potential: new to international
marketing or heavily involved

 Analyze and screen countries to eliminate those that

do not offer sufficient potential for further
consideration

 Analyze the environment within which a company

plans to operate

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Phase 2: Defining Target Markets and
Adapting the Marketing Mix Accordingly
 Decide on a marketing mix adjusted to the cultural
constraints imposed by the uncontrollable elements
 Determine possibilities for applying marketing tactics
across national markets
 Answer three major questions:
1. Are there identifiable market segments that allow for
common marketing mix tactics across countries?
2. Which cultural/environmental adaptations are necessary
for successful acceptance of the marketing mix?
3. Will adaptation costs allow profitable market entry?
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Coffee houses in China and Russia

© John Graham

© John Graham
© John Graham

Given all the tea in China, it’s particularly amazing that for almost eight years
you could buy a mocha frappuccino in the Forbidden City in Beijing.
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Phase 3: Developing the Marketing Plan
 Begins with a situation analysis

 Culminates in
• the selection of an entry mode

• a specific action program for the market

 Establishes what is to be done, by whom, how it is to be

done, and when

 Includes budgets and sales and profit expectations

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Phase 4: Implementation and Control
 All marketing plans require coordination and control
during the period of implementation.

 An evaluation and control system requires

performance-objective action.

 Utilizing a planning process and system:

• encourages the decision maker to consider all variables
that affect the success of a company’s plan
• provides the basis for viewing all country markets and their
interrelationships as an integrated global unit

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Alternative Market-Entry Strategies
 Exporting

 Contractual agreements

 Strategic alliances

 Direct foreign investment

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 Exhibit 12.2
Alternative Market-Entry Strategies

As sales revenues grow, the firms often proceed down through the series of steps listed here.
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Exporting
 Direct exporting
• The company sells to a customer in another country
 Indirect exporting
• The company sells to a buyer (importer or distributor) in
the home country, which in turn exports the product
 The Internet
• IIM: International Internet Marketing
 Direct sales
• For high-technology and big ticket industrial products

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Contractual Agreements: Licensing
 A means of establishing a foothold in foreign markets
without large capital outlays
 Company grants
• Patent rights
• Trademark rights
• Rights to use technological processes

 Granted for
• Production processes
• Use of a trade name
• Distribution of imported products
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Licensing
 Advantageous when:  Disadvantages include:
• capital is scarce • choosing the wrong
partner; quality and other
• import restrictions forbid production problems
other means of entry
• payment problems
• a country is sensitive to
foreign ownership • contract enforcement

• patents and trademarks • loss of marketing control

must be protected against
cancellation for nonuse

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Contractual Agreements: Franchising
 The franchiser provides
• A standard package of products
• Systems
• Management services

 The franchisee provides

• Market knowledge
• Capital
• Personal involvement in management
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Franchising
 Provides an effective blending of skill centralization
and operational decentralization

 The key factors that influence success of franchising

approaches are:
• monitoring costs

• the principal’s international experience

• the brand equity in the new market

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Strategic International Alliances
 A business relationship established by two or more
companies to cooperate out of mutual need and to
share risk in achieving a common objective
 Firms enter into SIAs for several reasons:
• Opportunities for rapid expansion into new markets
• Access to new technology
• More efficient production and innovation
• Reduced marketing costs
• Strategic competitive moves
• Access to additional sources of products and capital

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Star Alliance strategic alliance

© John Graham
Lufthansa and Thai Airlines share several aspects of their operations,
including ticketing and reservations, catering, cargo, and airport slots.
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Exhibit 12.3
Building Strategic Alliances (1 of 3)
Primary Typical Actions, Interactions, Key Relationship
Relationship Activity Activities Skill
Senior executives leveraging personal Good radar
networks
Good
Dating
Wondering how to respond to inquiries relationship
Wondering how to seek out possibilities Self-awareness
Seeing the reality in possibilities
Creating a shared vision from being
Imaging Creating intimacy
together
Involving trusted senior managers
Bringing key executives into action
Initiating Trust building
Creating trust through face-to-face time
Source: Adapted from Robert E. Spekman, Lynn A. Isabella, with Thomas C. MacAvoy, Alliance Competence (New York: Wiley,
2000), p. 81. Reprinted with permission of John Wiley & Sons, Inc.
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 Exhibit 12.3
Building Strategic Alliances (2 of 3)
Primary Typical Actions, Interactions, Key Relationship
Relationship Activity Activities Skill
Facilitating the creating of personal
relationships at many levels
Interfacing Traveling to partner facilities and Partnering
engaging in technical conversations
Blending social and business time
Demonstrating that managers are fully
committed to the alliance and each other
Managing the conflict inherent in making
Committing Commitment
hard choices
Accepting the reality of the alliance and
its relationships
Source: Adapted from Robert E. Spekman, Lynn A. Isabella, with Thomas C. MacAvoy, Alliance Competence (New York: Wiley, 2000),
p. 81. Reprinted with permission of John Wiley & Sons, Inc.
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Exhibit 12.3
Building Strategic Alliances (3 of 3)
Primary Typical Actions, Interactions, Key Relationship
Relationship Activity Activities Skill
Relying on mature and established
relationships Growing with
Fine-tuning
Facilitating interaction and relationships another
with future successors

Source: Adapted from Robert E. Spekman, Lynn A. Isabella, with Thomas C. MacAvoy, Alliance Competence
(New York: Wiley, 2000), p. 81. Reprinted with permission of John Wiley & Sons, Inc.

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International Joint Ventures
 A partnership of two or more participating
companies that have joined forces to create a
separate legal entity
• JVs are established, separate, legal entities.
• They acknowledge intent by the partners to share in the
management of the JV.
• They are partnerships between legally incorporated
entities, such as companies, chartered organizations, or
governments, and not between individuals.
• Equity positions are held by each of the partners.
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Complexities of Joint Ventures
 Choice of partners
 Qualities of relationships
 Sharing of control
 Institutional (legal) environments
 Marketing capabilities
 Experience
 Extent to which knowledge is shared across partners
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Consortia
 Developed to pool financial and managerial
resources and to lessen risks

• They typically involve a large number of participants.

• They frequently operate in a country or market in which

none of the participants is currently active.

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Direct Foreign Investment
 Investment within a foreign country
• To capitalize on low-cost labor

• To avoid high import taxes

• To reduce the high costs of transportation to market

• To gain access to raw materials and technology

• As a means of gaining market entry

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Direct Investments: Factors
 Timing—first movers have advantages but are
more risky
 The growing complexity and contingencies of contracts
 Transaction cost structures
 Technology and knowledge transfer
 Degree of product differentiation
 The previous experiences and cultural diversity of
acquired firms
 Advertising and reputation barriers
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Organizing for Global Competition
 Companies are usually structured around one of
three alternatives:
• Global product divisions responsible for product sales
throughout the world
• Geographical divisions responsible for all products and
functions within a given geographical area
• A matrix organization consisting of either of these
arrangements with centralized sales and marketing run by
a centralized functional staff, or a combination of area
operations and global product management

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Exhibit 12.4
Schematic Marketing Organization Plan Combining Product,
Geographic, and Functional Approaches

A company may be organized by product lines but have geographical

subdivisions under the product categories. Both may be supplemented by
functional staff support.
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Locus of Decision
 Major elements of organizational strategy
• Where decisions will be made
• Corporate headquarters
• International headquarters
• Regional level
• National level
• Local level
• Who will make the decision
• Which method will be used to make the decision

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Centralized versus
Decentralized Organizations
 Basic organizational patterns for the headquarters’
activities of multinational firms:
• Centralized
• availability of experts at one location
• the ability to exercise a high degree of control on both the
planning and implementation phases
• the centralization of all records and information
• Regionalized
• Decentralized
• have direct day-to-day contact with the market
• lack a broad company view

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Summary
 Expanding markets around the world have increased
competition for all levels of international marketing.
 Global competition requires quality products
designed to meet ever-changing customer needs and
rapidly advancing technology.
 Collaborative relationships, strategic international
alliances, strategic planning, and alternative market-
entry strategies are important avenues to global
marketing that must be implemented in the planning
and organization of global marketing management.
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