Global Marketing: Pricing, Channels, and Strategy

Posted on Mar 27, 2025 in Business Administration and Management (BAM)

Global Pricing Strategies and Issues

1. Law of One Price

Ensures equitable treatment and competitive balance in markets.

2. Reasons for Price Differences Across Markets

National market prices differ due to variations in:

Costs: Logistics, labor, taxes.
Competition: Local competitive intensity.
Regulation: Government rules and interventions.

3. Key Pricing Decisions

Pricing Objectives: Such as profit maximization, market penetration, or market skimming.
Pricing Strategy: Determining price levels, positioning, and considering customer perception.
Influencing Factors: Product features, product cost, company profitability goals, and target costing.

4. Environmental Influences on Pricing

Currency fluctuations
Inflation rates
Government controls, regulations, and subsidies
Competitive behavior and actions

5. Global Pricing Strategies

Ethnocentric Pricing (Extension): Applying the same price worldwide.
Polycentric Pricing (Adaptation): Adapting prices to suit local market conditions.
Geocentric Pricing: A balanced approach using standardized elements with local adaptation, learning from global experience, and coordinating prices without fully relinquishing control to local branches.

6. Gray Market Goods

Authentic products sold through unauthorized channels, often due to significant price differences between markets.

Negative Effects:

Potential legal issues.
Loss of exclusivity for authorized dealers.
Missed revenue opportunities.
Damage to relationships with official channel partners.

7. Dumping

Selling products in a foreign market at prices below the cost of production or below the price in the home market.

8. Price Fixing

An illegal agreement between competitors (horizontal price fixing) or between manufacturers, wholesalers, and retailers (vertical price fixing) to set prices at a certain level.

Consequences:

Harms market competition.
Limits consumer choice and potentially increases prices.
Leads to legal action, fines, and voided contracts.

9. Countertrade

An alternative payment method where goods and services are exchanged for other goods and services instead of currency.

Aspects:

Benefits: Can facilitate entry into new markets, especially those with limited foreign exchange.
Risks: Involves complexities in valuation and quality assessment of bartered goods.
Enables deals that might not otherwise happen due to financial constraints.

Global Marketing Channels and Retailing

1. Marketing Channels and Utility

Marketing channels create value, or utility, by making products available to consumers:

Place Utility: Available in convenient locations.
Time Utility: Available when consumers want to purchase.
Form Utility: Modifying products to be ready for consumption.
Information Utility: Providing necessary information about the product.

2. Key Channel Participants

Manufacturer: Produces the goods.
Retailer: Sells goods directly to the end consumers.
Wholesaler: Buys from manufacturers and sells to retailers or other businesses.

3. Types of Marketing Channels

Direct Channel: Manufacturer sells directly to the consumer (e.g., Apple’s retail stores or website).
Indirect Channel: Involves one or more intermediaries (e.g., Nike selling through retailers like Foot Locker).

4. Criteria for Selecting Distributors

Key factors to consider when choosing distribution partners (based on Arnold’s framework):

Proactive screening of potential partners.
Commitment to market development.
Potential for a long-term partnership.
Investment resources to support market entry.
Capabilities for control and monitoring.
Access to relevant market data and insights.
Established connections and network within the distribution system.

5. Considerations for Global Retailing

Retailers must carefully evaluate the potential advantages and disadvantages of expanding globally versus focusing on or strengthening their position in domestic markets.

6. Global Retailing Environment Factors

Market saturation in the home country.
Economic conditions, including recessions or growth periods.
Government regulations affecting retail operations.
High operating costs in certain international markets.

7. Types of Retail Stores

Department Store
Specialty Store
Supermarket
Convenience Store
Discount Store
Hypermarket
Supercenter
Category Killer (e.g., Toys “R” Us)
Outlet Store

8. Travel Retailing

Retailing targeted at travelers, often in captive market environments like airports. Includes duty-free shops (e.g., featuring brands like Pernod Ricard).

9. Global Retailer Classification Matrix 1

A framework classifying retailers based on:

X-axis: Product Mix Focus (Own Label Focus vs. Manufacturer Brand Focus)
Y-axis: Category Mix Breadth (Fewer Categories vs. Many Categories)

(Note: Specific placement of examples like Ikea, Carrefour, Toys “R” Us, Douglas, 7-Eleven, Benetton, M&S, Dixons, Amazon, Walmart, Primark depends on the specific matrix version referenced as ‘cuadrante verde’).

10. Global Retailing Strategy Matrix 2

A framework classifying market entry strategies based on:

X-axis: Market Entry Ease (Easy to Enter vs. Difficult to Enter)
Y-axis: Cultural Distance (Culturally Close vs. Culturally Distant)

(Note: Specific placement of strategies like Organic Growth, Acquisition, Joint Venture/Licensing, Franchising depends on the specific matrix version referenced as ‘cuadrante azul’).

11. Public Relations (PR) Overview

PR aims to manage a company’s reputation, influence public perception, build trust, and manage communication with stakeholders.

Importance of PR Activities:

Activities like events or publicity stunts can:

Enhance brand reputation.
Influence public opinion.
Generate media attention.

PR is a key component of the marketing communications mix, alongside advertising, sales promotion, etc.

12. Major Public Relations Tools

Events (press conferences, grand openings)
Social Media engagement
Speeches
Publicity Stunts
Sponsorships

13. Advertising vs. Public Relations

PR: Focuses on earning media coverage (editorial content in TV, radio, newspapers, online). Generally perceived as more credible because it’s not directly paid for.
Advertising: Involves paying for media space or time to deliver a promotional message.

14. Elements of Store Design

Key physical and atmospheric elements influencing customer experience:

Entrance design
Store layout and flow
Cash register placement and checkout process
Use of scents (olfactory marketing)
Color schemes and lighting

Global Advertising Strategies

1. Definition of Advertising

Advertising is any paid form of non-personal communication designed to persuade a target audience to purchase or consume a product, service, or idea.

2. Scope of Advertising Campaigns

Regional Advertising: Targeted at a specific geographic region spanning multiple countries.
Global Advertising: Using a largely standardized campaign across multiple countries worldwide.
Global Campaigns: Coordinated international advertising efforts.

3. Standardization vs. Adaptation in Advertising

Standardization: Using the same core message, creative execution, and media strategy across all international markets. Best suited when target audiences share similar needs and motivations.
Adaptation: Modifying elements of the advertising campaign (message, visuals, media) to suit local cultural contexts, consumer behaviors, and regulations. Requires input from local managers and understanding local habits (e.g., social media usage).
Pattern Advertising: A hybrid approach using a standardized global theme or template (the pattern) while allowing for local adaptation in execution.

4. Choosing an Advertising Agency

Agency Holding Groups (e.g., WPP, Omnicom): Offer extensive global networks and resources, beneficial for large, coordinated global campaigns. May be less personalized and more expensive.
Independent/Individual Agencies: Often better suited for smaller companies, niche markets, or local campaigns. Can offer more personalized service and potentially lower costs.

5. Services Offered by Advertising Agencies

Agencies provide a range of services, including:

Social media strategy and management
Content creation (video, copy, graphics)
Branding and identity development
Website design and development
Media planning and buying

6. Creating Effective Global Advertising

Develop a core message suitable for Integrated Marketing Communications (IMarkComm) that is culturally sensitive and relevant across markets.

Message Development Considerations:

Align with the overall marketing strategy (e.g., reinforcing brand identity like Coca-Cola).
Clearly communicate product benefits.
Address relevant customer wants and needs.

7. Key Elements of Global Advertising

Advertising Appeal: The approach used to capture audience interest (e.g., Nike using inspirational athletes). Can be rational or emotional.
Rational Approach: Focuses on practical benefits, features, logic, and information.
Emotional Approach: Appeals to feelings, aspirations, humor, fear, etc.
Selling Proposition: The core message about the unique benefit or reason to buy (Unique Selling Proposition – USP), often summarized in a slogan.
Creative Execution: The specific way the message is presented – style, tone, visuals, format, music, etc.

The Digital Revolution and E-commerce

1. The Digital Revolution

The profound societal and economic shift driven by the widespread adoption of digital technologies, replacing older analog, mechanical, and electronic systems.

2. Convergence

The merging and integration of previously distinct technologies, devices, industries, and media. For example, smartphones converge communication, computing, photography, and entertainment.

3. Categories of E-commerce

B2B (Business-to-Business): Transactions between businesses.
B2C (Business-to-Consumer): Transactions between businesses and individual consumers.
P2P (Peer-to-Peer) / C2C (Consumer-to-Consumer): Transactions directly between individuals (e.g., online marketplaces like eBay).

4. Important E-commerce Trends

Mobile Commerce (M-commerce): Increasing use of smartphones and tablets for online shopping.
International E-commerce: Growth in cross-border online sales.
Streamlined International Shipping: Improvements in logistics for global e-commerce.

5. Website Classifications by Purpose

Promotional Sites: Focus on brand building, marketing communication, and generating leads (e.g., showcasing products without direct sales).
Content Sites: Primarily provide information, news, entertainment, or resources.
Transactional Sites: Enable users to complete transactions online, typically e-commerce stores.

6. How Websites Interact with Customers

Websites facilitate interaction through various features, such as contact forms, live chat support, user accounts and profiles, customer reviews and ratings, personalized content, and integration with social media platforms.

7. Characteristics of an Effective Website

Technical Performance & Functionality: Fast loading speed, reliability, works correctly.
Mobile Responsiveness: Adapts seamlessly to different screen sizes (desktops, tablets, phones).
Search Engine Optimization (SEO): Optimized for visibility in search engine results.
Security: Protects user data, ensures secure payment processing, and maintains privacy.
Layout & Design: Visually appealing, clear, and consistent design.
Easy Navigation: Intuitive structure and clear pathways for users.
Interactivity: Engaging features that encourage user participation.

8. Emerging Technologies and Products

Wearable technology (smartwatches, fitness trackers)
Cloud computing services
Internet of Things (IoT) connected devices
Artificial Intelligence (AI) applications
Autonomous driving technology
E-books and digital publishing
High-speed broadband internet access

Competitive Analysis and Strategy

1. Porter’s Five Forces Analysis

A framework for analyzing the competitive structure of an industry to understand its profitability potential and attractiveness, often used when considering entry into new markets.

The Five Forces:

Bargaining Power of Suppliers: How much power suppliers have to raise input prices.
Bargaining Power of Buyers: How much power customers have to drive down prices (e.g., Walmart’s influence on its suppliers).
Threat of New Entrants: How easy or difficult it is for new competitors to enter the market.
Threat of Substitute Products or Services: The likelihood of customers finding different ways to meet their needs.
Intensity of Rivalry Among Existing Competitors: The degree of competition between current players in the industry.

2. Competitive Advantage

A company achieves competitive advantage when it implements a strategy that creates superior value for customers and that competitors are unable to duplicate or find too costly to imitate. It allows the company to outperform its rivals.

Often conceptualized through the Value Equation: Value = Perceived Benefits / Price.

3. Sustainable Competitive Advantage

A long-term competitive advantage that is not easily eroded or imitated by competitors (e.g., Apple’s ecosystem and brand loyalty).

Potential Sources:

Strong brand loyalty and customer trust.
Continuous investment in Research & Development (R&D) and innovation.
Consistently high product quality.
Superior customer service and support.

4. Generic Strategies for Competitive Advantage

Two fundamental ways companies can achieve competitive advantage, according to Porter:

Lower Cost Strategy: Becoming the lowest-cost producer in the industry while maintaining acceptable quality.
Differentiation Strategy: Offering unique products or services that are valued by customers and command a premium price.

5. Porter’s Four Generic Strategies Matrix

This matrix combines the two basic types of competitive advantage (cost vs. differentiation) with the scope of activities (broad vs. narrow target market):

X-axis (Competitive Scope): Broad Target vs. Narrow Target
Y-axis (Source of Competitive Advantage): Lower Cost vs. Differentiation

The Four Strategies:

Cost Leadership (Broad Scope, Lower Cost): Serving a wide market at the lowest cost (e.g., Walmart).
Differentiation (Broad Scope, Differentiation): Offering unique value to a wide market (e.g., Apple).
Cost Focus (Narrow Scope, Lower Cost): Serving a niche market at the lowest cost (e.g., Aldi).
Differentiation Focus (Narrow Scope, Differentiation): Offering unique value to a niche market (e.g., Rolex).

6. Strategic Intent

Refers to an organization’s ambitious long-term vision and goals that stretch its capabilities and resources. A key aspect is the relentless pursuit of developing new sources of competitive advantage faster than competitors can imitate existing ones (e.g., Huawei’s push into foldable phone technology).

7. Creating Advantage via Strategic Intent

Methods companies use to achieve ambitious goals:

Layering Advantages: Building a portfolio of advantages sequentially over time.
Loose Bricks: Identifying and exploiting specific weaknesses in competitors’ strategies.
Changing the Rules of Engagement: Fundamentally altering the competitive landscape (e.g., Uber disrupting the taxi industry).
Collaboration: Forming strategic alliances or partnerships (e.g., Samsung supplying components to Apple).

8. Hypercompetition

An environment characterized by intense, rapid, and dynamic competition. In hypercompetition, competitive advantages are short-lived and constantly challenged, making sustained advantage difficult to maintain.

9. Dynamics in Building Competencies

Competitive advantages and the competencies required to achieve them evolve based on various factors:

Cost & Quality Dynamics: Shifts driven by new technologies or processes (e.g., the impact of quartz technology on traditional watchmaking).
Timing & Know-how: Advantages gained through innovation and speed to market (e.g., Sony’s early lead with personal stereos).
Entry Barriers: Creating new barriers or finding ways around existing ones (e.g., Dell’s direct B2C sales model bypassing traditional retail channels).
Deep Pockets: Leveraging significant financial resources to invest, innovate, or withstand competitive pressure.