Académique Documents
Professionnel Documents
Culture Documents
By,
Maaz Khalid and Ahsan Faheem
Subject Teacher,
Mr. Nadir Ali Kolachi
Bahria University Karachi
Acknowledgement
In the name of “Allah”, the most beneficent and merciful who gave us strength and
knowledge to complete this report. This report is a part of our course “Marketing
Management”. This has proved to be a great experience. This report is a combine effort
of Maaz Khalid and Syed Muhammad Ahsan Faheem.
We would like to express our gratitude to our marketing teacher Mr. Nadir Ali Kolachi;
who gave us this opportunity to fulfill this report. We would also like to thank our
colleagues who participated in a focus group session. They gave us many helpful
comments which helped us a lot in preparing our report.
Executive Summary
• Why Global Marketing?
• Worldwide Competition
• E-Commerce
• Evolution to Global Marketing
- Domestic Marketing
- Export Marketing
- International Marketing
- Multinational Marketing
- Global Marketing
• Major Decisions in International Marketing
- Deciding whether to go abroad
- Blunders in International Marketing
- Deciding which market to enter
- How many markets to enter
- Evaluating potential markets
- Deciding how to enter the market
• Direct investment
- Joint ventures
- Licensing
• Direct and Indirect export
- Advantages of indirect export
- Ways a company can carry on direct exporting
• Global Web Strategy
• Global adaptation
• Product adaptation
• Deciding on the marketing program
• Global market offering
• Global firms in Pakistan:
- Telenor
- ABN AMRO
- KFC
- P&G
+ Pantene
+ Head & shoulders
+ Vicks
+ Safeguard
+ PUR
- Gillette
Why Global Marketing?
Here are three reasons for the shift from domestic to global marketing.
For a company to keep growing, it must increase sales. Industrialized nations have, in many product
and service categories, saturated their domestic markets and have turned to other countries for new
marketing opportunities. Companies in some developing economies have found profitability by
exporting products that are too expensive for locals but are considered inexpensive in wealthier
countries.
Worldwide Competition
One of the product categories in which global competition has been easy to track is in U.S.
automotive sales. Three decades ago, there were only the big three: General Motors, Ford, and
Chrysler. Now, Toyota, Honda, and Volkswagen are among the most popular manufacturers.
Companies are on a global playing field whether they had planned to be global marketers or not.
E-Commerce
With the proliferation of the Internet and e-commerce (electronic commerce), if a business is online,
it is a global business. With more people becoming Internet users daily, this market is constantly
growing. Customers can come from anywhere. According to the book, “Global Marketing
Management,” business-to-business (B2B) e-commerce is larger, growing faster, and has fewer
geographical distribution obstacles than even business-to-consumer (B2C) e-commerce. (Kotabe &
Helsen, p.4) With e-commerce, a brick and mortar storefront is unnecessary.
Domestic Marketing
A company marketing only within its national boundaries only has to consider domestic competition.
Even if that competition includes companies from foreign markets, it still only has to focus on the
competition that exists in its home market. Products and services are developed for customers in the
home market without thought of how the product or service could be used in other markets. All
marketing decisions are made at headquarters.
The biggest obstacle these marketers face is being blindsided by emerging global marketers. Because
domestic marketers do not generally focus on the changes in the global marketplace, they may not be
aware of a potential competitor who is a market leader on three continents until they simultaneously
open 20 stores in the Northeastern U.S. These marketers can be considered ethnocentric as they are
most concerned with how they are perceived in their home country.
Export Marketing
Generally, companies began exporting, reluctantly, to the occasional foreign customer who sought
them out. At the beginning of this stage, filling these orders was considered a burden, not an
opportunity. If there was enough interest, some companies became passive or secondary exporters by
hiring an export management company to deal with all the customs paperwork and language
barriers. Others became direct exporters, creating exporting departments at headquarters. Product
development at this stage is still focused on the needs of domestic customers. Thus, these marketers
are also considered ethnocentric.
International Marketing
If the exporting departments are becoming successful but the costs of doing business from
headquarters plus time differences, language barriers, and cultural ignorance are hindering the
company’s competitiveness in the foreign market, then offices could be built in the foreign countries.
Sometimes companies buy firms in the foreign countries to take advantage of relationships,
storefronts, factories, and personnel already in place. These offices still report to headquarters in the
home market but most of the marketing mix decisions are made in the individual countries since that
staff is the most knowledgeable about the target markets. Local product development is based on the
needs of local customers. These marketers are considered polycentric because they acknowledge that
each market/country has different needs. (Kotabe & Helsen, p.16)
Multinational Marketing
At the multi-national stage, the company is marketing its products and services in many countries
around the world and wants to benefit from economies of scale. Consolidation of research,
development, production, and marketing on a regional level is the next step. An example of a region
is Western Europe with the US. But, at the multi-national stage, consolidation, and thus product
planning, does not take place across regions; a regiocentric approach.
Global Marketing
When a company becomes a global marketer, it views the world as one market and creates products
that will only require tweaks to fit into any regional marketplace. Marketing decisions are made by
consulting with marketers in all the countries that will be affected. The goal is to sell the same thing
the same way everywhere. (Levitt, 'Harvard Business Review) These marketers are considered
geocentric.With faster communication, transportation and financial flows, the world are rapidly
shrinking. Product developed in one country are finding enthusiastic acceptance in other countries as
well. Since 1969, the number of Multinational Corporation in the world’s 14 richest countries has
more than tripled, from 7000 to 24000. Many companies have conducted international marketing for
decades. Nestle, Shell and Toshiba are familiar to consumer around the world.
Competing on a global basis
Companies that are selling in the global industries have no choice but to internationalize their
operations. To do this they must make series of decision
Deciding which
market to enter
Deciding how to
enter the market
Deciding on the
marketing
program
Deciding on the
marketing
organization
Before making a decision to go abroad, the company must weigh several risks:
1. The company might not understand the foreign country’s business culture or know how to
deal effectively with foreign customers
2. The company might underestimate foreign regulations and incur unexpected costs.
3. The company might not understand foreign customer preferences and fail to offer a
competitively attractive product (Table lists some blunders in this arena).
Blunders in International Marketing
Coca Cola had to withdraw its two liter bottle in Spain after discovering that few Spaniards
owned refrigerators with large enough compartments to accommodate it.
General Foods’ Tang initially failed in France because it was positioned as a substitute of
orange juice at breakfast. The French drink little orange juice and almost none at breakfast
Mountain Dew initially failed in Pakistan because its color was like a beer but afterwards its
color was changed to light green and it was positioned as a drink of younger generation
Procter & Gamble’s Crest toothpaste initially failed in Mexico when it used the U.S.
campaign. Mexicans did not care as much for the decay-prevention benefits, nor did
scientifically oriented advertising appeal to them
The company must also decide on the types of countries to consider. The Attractiveness is influenced
by the product, geography, income and population, and other factors. The seller might have a
predilection for certain countries or regions.
The unmet need of the developing world represents huge potential markets for food, clothing, shelter,
consumer electronics, appliances, and other goods. Many market leaders are rushing into Eastern
Europe, Asia and Cuba, where there are many unmet needs to satisfy
At other times, psychic proximity determines choices. Many Chinese and Japanese firms prefer to
sell in Pakistan and India- rather than in larger markets such as Germany and France- because they
feel more comfortable with laws and culture
A company prefers to enter countries that rank on high market attractiveness that are low in market
risk in which it possesses a competitive advantage
Direct investment
Joint Venture
Licensing
Direct investment
Indirect exporting
Direct investment
The ultimate form of foreign involvement is direct ownership of foreign based assembly or
manufacturing facilities. The foreign company can buy part or full interest in a local company or
build its own facilities. If the market appears large enough, foreign production offers distinct
advantages.
First, the firm secures cost economies in the form of cheaper labor or raw material and freight
saving. Second, the firm strengthens its image in the host country because it creates jobs. Third, the
firm develops a deeper relationship with government, costumers, local suppliers, and distributors,
enabling it to adapt its products better to the local environment. Fourth, the firm retains full control
over its investment and therefore can develop its manufacturing and marketing policies that serves
its long term international objectives.
The main disadvantage of direct investment is that the firm exposes a large investment to risks such
as blocked or devalued currencies, worsening markets, or expropriation.
Joint ventures
Foreign investors may join hands with local investors to create a joint venture company which hey
share owner ship and control.
Coca-Cola and Nestle joined forces to develop the international market for “ready to drink” tea and
coffee, which currently sell in significant amounts in Japan.
A joint venture may be necessary for economic or political reasons. The foreign firm might lack the
financial, physical, or managerial resources to undertake the venture alone; or the foreign
government might require joint ownership as a condition for entry. Even corporate giants need joint
ventures to crack the toughest markets.
Joint venture has certain drawbacks. The partner might disagree over investment, marketing, or
other policies. One partner might want to reinvest earnings for growth, and other partner might
want to declare more dividends. It can also prevent a multinational company from carrying out
specific manufacturing and marketing policies on a worldwide basis.
Licensing
Licensing is a simple ay to become involved in international marketing. The licensor licenses a
foreign company to use a manufacturing process, trademark, patent, or other items of value for a fee
or royalty. The licensor gains entry at little risk; the licensee gains production expertise or a well
known product or brand name.
Licensing has potential disadvantages. The licensor has less control over the licensee than it does over
its own production and sales facilities. Furthermore, if the licensee is very successful, the firm has
given up profits; and if and when contract ended the company may find that it has created a
competitor. The best strategy for the licensor is to lead the innovation so that the licensee will
continue to depend on licensor.
Finally a company can enter a foreign market through franchising, which is a more complete form of
licensing. The franchiser offers a complete brand concept and operating system. In return, the
franchisee invests in and pays certain fees to the franchiser.
K F C CORPORATION
K F C is among the world’s largest fast-food chicken chain, owning or franchising more than 12000
outlets in about 90 countries 60 % of them outside U.S.A. KFC had a number of obstacles to
overcome when it entered the Japanese market. Japanese do not trust this brand. To build trust in
the KFC brand, advertising showed scenes depicting Colonel Sander’s beginnings in Kentucky that
conveyed southern hospitality, old American tradition, and authentic home cooking. The campaign
was hugely successful and in less than 8 years K F C expanded its presence from 400 locations to 1000
locations.
Direct and Indirect export
The normal way to involved in an international market is through exporting. Occasional exporting is
a passive level of involvement in which the company exports from time to time either on its own
initiative or in response to unsolicited orders from abroad. Active exporting takes place when the
company makes the commitment to expand into a particular market. In either case, the company
produces its goods in the home country and might or might not adapt them to international market.
Companies typically start typically starts with indirect exporting- that is, they work through
independent intermediaries. Domestic-based export merchants buy the manufacturer’s products and
then sell them to abroad. Domestic-based export agents seek and negotiate foreign purchases and are
paid the commission. Cooperative organizations carry on exporting activities on behalf of several
producers and are partly under their administrative control. Export management companies agree to
manage a company’s export activities for a fee.
The company should review the following elements and determine which would add more revenue than
cost:
• Product features
• Brand name
• Labeling
• Packaging
• Colors
• Advertising execution
• Materials
• Prices
• Sales promotion
• Advertising themes
• Advertising media
Product adaptation
Product adaptation involves altering the product to meet the local conditions or preferences. There are
several levels of adaptation.
• A company can produce a regional version of its product, such as Nokia developers built in
rudimentary voice recognition for Asia, where keyboards are a problem, and raised the ring
volume so the phone could be heard on the crowded streets of Asia.
• A company can produce a country version of its product, such as Kraft blends different coffees for
the British (who drink their coffee with milk), the French (who drink their coffee black).
• The company can produce a city version of its product; IKEA offers verity of plastic furniture in
Dubai and wooden furniture in Al-Ain because of higher humidity in Dubai.
• A company can produce different retailer version of its products, such as one coffee for the Migros
chain and another for the cooperative chain stores, both in Switzerland.
Deciding on the marketing program
International companies must decide how much to adapt their marketing strategy to local conditions.
At one extreme are companies that use a globally standardized marketing mix worldwide.
Standardization of the product promises the lower costs.
At other extreme is an adapted marketing mix, where the producer adjusts the marketing program
to each target market.
Between two extremes many possibilities exists. Most brands are adapted to some extent to reflect
significant differences in consumer behavior, brand development, competitive forces, and the legal or
political environment. Cultural differences can often be pronounced across countries. Hofstede
identifies four cultural dimensions that can differentiate countries
Advantages
Disadvantages
Individualism vs. Collectivism, In collectivist societies, such as Japan, the self-worth of an individual
is rooted more in the social system than in individual achievement.
High vs. low power distance, High power distance cultures tend to be less egalitarian
Masculine vs. Feminine, How much the culture is dominated by assertive male versus nurturing
females
Weak vs. strong uncertainty avoidance, How risk tolerant or aversive people are
Product
Price
Promotion
Place
Product
A global company is one that can create a single product and only have to tweak elements for
different markets. For example, Coca-cola uses two formulas (one with sugar, one with corn syrup)
for all markets. The product packaging in every country incorporates the contour bottle design and
the dynamic ribbon in some way, shapes, or form. However, the bottle or can also includes the
country’s native language and is the same size as other beverage bottles or cans in that country.
Price
Price will always vary from market to market. Price is affected by many variables: cost of product
development (produced locally or imported), cost of ingredients, cost of delivery (transportation,
tariffs, etc.), and much more. Additionally, the product’s position in relation to the competition
influences the ultimate profit margin. Whether this product is considered the high-end, expensive
choice, the economical, low-cost choice, or something in-between helps determine the price point.
(Kotabe & Helsen, pp.17-18)
Placement
How the product is distributed is also a country-by-country decision influenced by how the
competition is being offered to the target market. Using Coca-Cola as an example again, not all
cultures use vending machines. In the United States, beverages are sold by the pallet via warehouse
stores. In India, this is not an option. Placement decisions must also consider the product’s position in
the market place. For example, a high-end product would not want to be distributed via a “dollar
store” in the United States. Conversely, a product promoted as the low-cost option in France would
find limited success in a pricey boutique.
Promotion
After product research, development and creation, promotion (specifically advertising) is generally
the largest line item in a global company’s marketing budget. At this stage of a company’s
development, integrated marketing is the goal. The global corporation seeks to reduce costs,
minimize redundancies in personnel and work, maximize speed of implementation, and to speak with
one voice. If the goal of a global company is to send the message worldwide, then delivering that
message in a relevant, engaging, and cost-effective way is the challenge.
Effective global advertising techniques do exist. The key is testing advertising ideas using a
marketing research system proven to provide results that can be compared across countries. The
ability to identify which elements or moments of an ad are contributing to that success is how
economies of scale are maximized. Market research measures such as Flow of attention, and
branding moments provide insights into what is working in an ad in any country because the
measures are based on visual, not verbal, elements of the ad
Global firms in Pakistan
Telenor, ABN-AMRO Bank, KFC, Procter & Gamble and Gillette are among the
companies that have successfully marked global products and they are also doing well in Pakistani
environment.
Mobile operations
Telenor holds controlling interests in mobile operations in 13 mobile operators across Europe and Asia. Our
international mobile footprint covers more than 650 million people.
Fixed
Telenor is Norway's leading provider of fixed-line telecommunications services, and is strongly positioned
in the rapidly growing Nordic market for broadband. Offers include analogue and digital fixed-line
telephony, as well as broadband voice over IP, Internet access, value-added services and leased lines.
Broadcast
Telenor is the leading provider of television and broadcasting services to consumers in Norway
Telenor acquired the license for providing GSM services in Pakistan in April 2004, and launched its
services commercially in Islamabad, Rawalpindi and Karachi on March 15, 2005. On March 23, 2005
Telenor started its services in Lahore, Faisalabad and Hyderabad. Telenor has become the second largest
cellular network in Pakistan by launching over 1100 destinations within two years!
Telenor has its corporate headquarters in Islamabad, with regional offices in Karachi and Lahore.
The company has covered several milestones over the past twenty two months and grown in a number of
directions.
ABN AMRO International is a
prominent banking group - ranked
eighth in Europe and seventeenth
in the world on tier 1 capital, with
over 3,500 branches, a staff of 111,000 and total assets of EUR 597.7 billion
ABN AMRO was established in 1948 and was the first foreign bank to be granted a license by the
Government of Pakistan. With total assets of over PKR 66.5 Billion, equity of PKR 4.5 Billion, and
deposits of almost PKR 52 Billion, ABN AMRO is placed and well positioned as one of the larger
foreign banks in Pakistan. We have posted pre-tax profits of nearly PKR 2.2 Billion (December 31,
2005), and the ROE of almost 51% is amongst the highest in its peer group. Over the last four years,
ABN AMRO has significantly enhanced its profile in Pakistan, and is comfortably ranked amongst
the top 3 foreign banks in the domestic market.
Over the last four years, ABN AMRO has significantly enhanced its profile in Pakistan, and is
comfortably ranked amongst the top 3 foreign banks in the domestic market. The Bank currently has
a presence in 6 cities namely, Karachi, Lahore, Islamabad, Rawalpindi, Multan and Faisalabad
employs 458 employees country wide.
The Pantene Pro-V line of shampoos is the best selling shampoo and
conditioner system in the world loved by women in more than 100
countries.
Pantene has always been on the cutting edge of hair care technology
being the shampoo that provides solution to different types of hair
problems.
Pantene was launched in Pakistan in 1995 and currently every 6th female
shampoo user uses Pantene for her hair care needs.
Pantene in Pakistan has 5 variants that provide solution to different hair
problems as below:
Head & Shoulders is the world's leading Anti Dandruff shampoo. It has been
awarded "the best Anti Dandruff shampoo" by many medical associations
including US dermatologists. In Pakistan, H&S has a 65% market share of Anti
Dandruff shampoo segment. It has consolidated this position since the new
Renaissance launch. The new, best ever formula for Head & Shoulders contains
extra moisturizers, which clear away dandruff and also leave hair looking
beautiful.
Vicks
Vicks is a well-established and leading brand for cough and cold Relief
across the world. Globally, there are a broad range of products under
the Vicks umbrella, ranging from Multi-symptom relief medicine
(Nyquil and Dayquil) to the world famous Vicks Vaporub to other cough
and cold relief syrups (Formula 44), tablets (Action 500).
In Pakistan Vicks Vaporub is the leading external medicine brand for
cough and cold relief while Vicks Throat Drops are fast gaining
acceptance as an instant relief for throat irritation. In the years to come,
the Vicks team in Pakistan will introduce more and more of its successful
products to the consumers of the country.
Safeguard
PUR
Gillette the most successful global consumer-packaged good companies, well known for product
innovation. It offers insights on the innovation, acquisition, and global strategies of Gillette. It is
chronologically well organized and is filled with interesting examples and facts.
Here it is highlighted about the keys of Gillette’s success in Pakistan and globally. The Sensor shaving
system is one of the enduring innovation successes of Gillette. Gillette figures a way to manufacture
“Sensor”, underscoring the fact that consumers come before manufacturing for Gillette. Gillette's marketing
acumen was another driving force behind Sensor's success. The now famous tag line "The Best a Man Can
Get" was born in the late 1980s for the brands Atra in the U.S. and Contour in Europe, but was used heavily
for promoting Sensor. This advertising blitz was preceded by a teaser ad campaign that announced “Gillette
is about to change the way men shave forever”. Symons, who then was president of the Shaving Systems
Group, was so obsessed with the masculine perception of the product that he wanted a proper masculine
sound and feel as the package was ripped open!
Gillette also has its own new product organization structure that has contributed to its success. It has a
program management system under which all technical activity - R&D, engineering and manufacturing - is
consolidated by product category. Such a program allows Gillette to a have a holistic approach to
innovation in each category. Although this program faced initial resistance from employees, it eventually
was well accepted.
Here is a good summary of Gillette's strategies and operations in Pakistan. For those interested in the
multinational versus global debate, this summary reveals something about where Gillette stands on the
issue. By Gillette's own admission, it was operating more as a multinational company than as a truly global
company prior to 1991. Gillette offers the same spectrum of products made to the same world standards
under the same factory principles. Although it may sell more of one product in Pakistan and another in
Egypt, the product is the same. Gillette also has a global plan for its new products. For example, Sensor
was simultaneously introduced in 19 countries.
The book claims that Gillette's recipe for offering products in new markets is an evolutionary or "Stone
Age" strategy. In the razor market, the strategy revolved around the principle that Gillette will always offer
double-edged blades that would highlight Gillette's quality over those of the local products and will
upgrade their customers to use higher quality products over time. This strategy has relied on the existence
of a sizeable affluent segment in every country. This upgrading strategy is not new to many companies, but
what is interesting to note is that Gillette expects to continue with this simple strategy for the foreseeable
future.
Reference List
Direct Investment
Marketing Management, 12th Edition by Philip Kotler & Kevin Lane Keller
Telenor
www.telenor.com/ir.
ABN-AMRO
www.ABNAMRO.com.pk
KFC
www.KFC.com
P&G
www.procter&gamble.com
Gillette
www.gillette.com