Synthese 

: Global Marketing

Session 1 : The evolution of marketing – Sustainability

Part I: introduction

a. Marketing and creating shared value

b. The globalization imperative
1. Why are companies going global?
2. Marketing and global marketing
3. Global strategies and organizational settings
c. Global information systems and market research
1. Information systems
2. Marketing research

Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.

The purpose of business is to create customer and firm value and marketing can and should
be a central player in both types of value creation.

Marketing is changing... - From exclusive to inclusive...

- From vertical to horizontal...
- From individual to social...

People aren’t buying things, they are buying experiences

"We think the best form of advertising is great experiences spread by word-of-mouth,"
Modern companies don’t sell products, they sell value for the customer
“In the factory we make cosmetics, in the store we sell hope.”
Marketing is all about creating value

Sustainable development goals Adopted by the United Nations in 2015

ULTIMATE OBJECTIVES: -1. Eradicate hunger and poverty in the world,
-2. Protect the planet
-3. Ensure that all human beings, today and tomorrow, live in peace
and prosperity
What is the role of companies with respect to the SDGs ?
« Every business will benefit from operating in a more equitable, resilient world if we
achieve the SDGs. We have an opportunity to unlock trillions of dollars through new
markets, investments, and innovation. But to do so, we must challenge our current practices
and address poverty, inequality and environmental challenges »

Creating shared value :Three ways to create shared value

- Reconceiving products & markets
- Redefining productivity in the value chain
- Building supportive industry clusters at the company’s locations

Strategic Target Marketing:

How to create value? S.A.V.E.D. strategy

S.A.V.E.D : From product to solution:
Focus on Solution instead of Product:
Many organizations are moving their business model from product- oriented to service- and
solution-oriented.
Customers don’t care about the product; all they care about is solving their problems.
What is the job you have to get done for your customer?
« People don’t buy what you do, but why you do it. »

THE GOLDEN CIRCLE:

WHAT–Every organization on the planet knows WHAT they do.
HOW–Some organizations know HOW they do it. These are the things that make them
special or set them apart from their competition.
WHY–Very few organizations know WHY they do what they do. WHY is not about making
money; it’s the result. WHY is a purpose, cause or belief. It‘s the very reason WHY your
organization exists.

WHY– Standing up with one foot in design and the other in social responsibility. Refusing to
choose between design and social responsibility.
HOW– Choosing the most sustainable and responsible way to create, produce and deliver
shoes.
WHAT– Making fashionable sneakers.

S.A.V.E.D : Focus on Access instead of Place:

Many organizations are moving their business model from ownership to ‘access to’.
Nowadays, many businesses operate around always-on, high speed Internet access. Place is
irrelevant, it’s all about access.
What do you give a customer at this precise moment that they want or need?
• Desintermediation & retail transformation

S.A.V.E.D : Focus on Value instead of Price:

Customers have concerns about price, but only after their concerns about value. What is the
value you create? When designing new business models your value proposition is key.

S.A.V.E.D : From promotion to education and experience:

Businesses today can act as ‘entreproducers’, providing current and potential customers
with information relevant to their interests to create a sense of familiarity and trust long
before a purchase is even made.

S.A.V.E.D : D for digital:

Companies today are rushing to become more "digital" as it is the only way for any business
to ensure its sustainability. Becoming "digital" should be considered as a way of doing
business and creating value in the new era of business utilizing the emerging technologies
and engaging with the customer across channels.
Business is changing...

Corporate social responsibility

CSR is the responsibility of enterprises for their impact on society
Companies can become socially responsible by
• integrating social, environmental, ethical, consumer, and human
rights concerns into their business strategy and operations
• following the law

Is marketing deceptive?
˃ Over a long period of time, a large majority of people have believed that advertising is
untruthful
˃ Difference between the use of puffery, or obvious, and recognized, exaggeration of a
product’s benefits, and deliberate deception (often prohibited by legislation)

Is marketing manipulative?
˃ The charge of manipulation implies that advertising is a strong force that is capable of
making people act in ways they would not normally do
˃ Growing body of evidence indicates that advertising, via traditional media at least, is a
relatively weak force, particularly in mature markets
Advertising is unlikely to create fear and insecurity to an extent that people will
suddenly start buying products for which they previously had no use
˃ Ideally, it presents people with potential solutions to problems they recognize

Perceptions of Marketing:
What products and services have you bought for purely functional reasons?
Distinguish between what you needed and what you wanted
Is marketing a wasteful strategy ?
« Marketing is too important to be left only to the marketing department »
˃ Marketing is directly related to the global strategy of the company
- It shares some of the important objectives of the company: contributing to sales
and profit objectives
- It provides guiding principles: knowledge of markets, competition, consumers, and
company/brand value
- It facilitates and supports the company’s strategy: the marketing plan is an integral
part of the of the annual plan (financial and other) of the organization
« No organization can avoid Marketing. The choice is whether to do it well or poorly. »

How can marketing contribute to the corporate social responsability of the business?
 Legal Behavior
 Ethical Behavior
 Socially responsible behavior
 Sustainability
 Greenwashing
 Cause-related marketing actions
Session 2 : The globalization imperative

Going global:
- The post WWII era brought unparalleled expansion by companies going outside their home
markets.
- Four decades ago the phrase global marketing did not exist.
- Today companies go global to survive as competitors will enter the home market with
lower costs, more experience and better products.

1. Why are companies going global?

Why are companies moving to global markets?
- International trade has grown faster than domestic markets pushing companies to
change their structure
- New regional free trade zones (NAFTA, EU)
- General agreement on tariffs and trade
- Access to new resources
- Local markets reaching maturity
- Follow customers moving abroad
- Domestic competitive attack obliging local firms to react
- Explosion of DIGITALIZATION!
=> Opportunity to increase sales and profit

The importance of going global:

-For U.S. companies, 75% of total world market for goods and services is outside the country
-For Japanese companies, 90% of world market is outside the country
-94% of market potential is outside of Germany for its companies even though it is the
largest EU market.

Competitive advantage: Company’s value > competitors’ value

Measured relative to industry rivals
“Created when a firm has value-creating strategy not simultaneously being implemented by
any current or potential competitors.”

2. Marketing and global marketing

What is global marketing? => The scope of activities outside the home market
• Global vs. “Regular” Marketing
3. Global strategies and organizational settings

GLOBAL MARKETING: What It Is & What It Isn’t

Global strategies and organizational settings:

1. Challenges for global companies
Traits helping companies to grow abroad.
2. The integration responsiveness framework
3. The EPRG framework
4. Standardization or adaptation?

1. Challenges for global teams: -“Repeopling” the leadership tier.

-Redrawing HQ geography.
-Recognizing cultural shifts.

Traits helping firms to grow abroad:

seven ’tudes of international expansion
Sucessfull global companies have:
1/ More flexible processes
2/ Clear vision for external expansion
3/ Greater determination to achieve challenges

2. The integration responsiveness framework

The integration-responsiveness framework is one of the most widely used frameworks to
explain the strategies and organizational settings of multinational corporations (MNCs)
3. The EPRG framework

• Ethnocentric Orientation
– Home country is superior to others
– Sees only similarities in other countries
–Assumes products and practices that succeed at home will be successful everywhere
–Leads to a standardized or extension approach
• Polycentric Orientation
– Each country is unique
– Each subsidiary develops its own unique business and marketing strategies
– Often referred to as multinational
– Leads to a localized or adaptation approach that assumes products must be
adapted to local market conditions
•Regiocentric Orientation
– A region is the relevant geographic unit
• Ex: The NAFTA or European Union market
– Some companies serve markets throughout the world but on a regional basis
• Ex: General Motors had four regions for decades
• Geocentric Orientation
– Entire world is a potential market
– Strives for integrated global strategies
– Also known as a global or transnational company
– Retains an association with the headquarters country
– Pursues serving world markets from a single country or sources globally to focus on
select country markets
– Leads to a combination of extension and adaptation elements

4. Standardization or adaptation ?
• Globalization (Standardization)
– Developing standardized products marketed worldwide with a standardized
marketing mix
– Essence of mass marketing
• Global localization (Adaptation)
– Mixing standardization and customization in a way that minimizes costs while
maximizing satisfaction
– Essence of segmentation
– Think globally, act locally
Session 3: Market Research – part I
Global information systems and market research:
1. Information systems:
- Information is extremely important in developing a successful marketing strategy.
- The lack of familiarity with customers, competitors and the market environment in
combination with the growing complexity and diversity of international markets makes it
critical to collect information in relation to these markets.
- At an international level, a decision regarding the countries and the allocation of resources
needs to be done.

•Marketing information systems: produces a continuous flow of information

•Market research: project-specific, systematic gathering of data.
• The activity that links the consumer, customer, and public to the marketer through
information (AMA)
• Global market research: market research on a global scale
• Important to recognize the differences the way information can be obtained

Information systems:
-Information Technology (IT): An organization’s processes for creating, storing, exchanging,
using, and managing information.
-Management Information System (MIS): A means for gathering, analyzing and reporting
relevant data to provide managers and other decision makers with a continuous flow of
information about markets, customers, competitors and company operations.
-Big Data: Extremely large data sets that can be subjected to computational analysis to
reveal patterns and trends.

• Personal Sources
• As much as 2/3rd of corporate information
• Executives based abroad, company subsidiaries and affiliates
• Travel builds contacts and rapport
• 75% from face-to-face conversations
 • Increasing importance of digital sources: mobile data, user-generated content,
social networking sites and communities...
• Direct Sensory Perception
• Seeing, feeling, hearing, smelling, or tasting firsthand to find out what is going on in
a country
“I believe it is part of any good marketer’s job to be in touch with their audience and their
product. There’s no substitute for face-to-face, eye- to-eye, hand-to-hand.”

Self-Reference criterion:
Be aware! The Self-Reference Criterion is at work when a person’s home-country values and
beliefs influence the assessment of another country.

2. Marketing research
• Marketing research focuses on a specific problem or project with a beginning and an end.
• specifies the information required to address these issues,
• designs the method for collecting information,
• manages and implements the data collection process,
• analyses the results,
• communicates the findings and their implications.

The Marketing Research Process:

Define the problem and research objectives:

• 2 key questions should be the starting point:
What information do I need?
Why do I need this information?

• Market potential

MP = market potential
N = total number of potential consumers
MS = estimated market share—percent of consumers
buying from you
P = average selling price
Q = average annual consumption

Develop the research plan:

Data types:
• Primary Data
• when secondary data not available
• provides accurate data which give exact answers to a given research
problem
• Possible problems
• difficulties in gaining the data
• cost
 • more time is necessary to gather the data
• Primary data collection:
• Qualitative studies (focus groups, in-depth interviews,...)
• To answer WHY questions (poor knowledge of attitudes and motivations).
UNDERSTAND some phenomena
• Small sample
• Interview guide
• Not generalizable -> need to be statistically tested
• Quantitative studies (online surveys, face-to-face questionnaire,...)
• To answer HOW and HOW MUCH questions (already some ideas of what to
test)
• Largesample
• Questionnaire
• Generalizable with statistical testing

Qualitative research

Quantitative research
SURVEY DESIGN:
1.Generate theory
2.Build hypotheses
3.Define variables
4. Formulate questions
5. Develop questionnaire

1.Generating theory :
A theory = A hypothesized general principle or set of principles that explain known findings
about a topic and from which new hypotheses can be generated

2.Generating hypotheses:
A hypothesis = A prediction from a theory
= A statement that can be tested using science, that is, one that can be verified
with reference to empirical evidence
Identify and define one or more variables that you want to measure

Quantitative research: developing hypotheses

1. Develop research questions for your research problem
2. How would you build your hypotheses?
1. Managerial experience
2. Secondary data
3. Theory
4. Qualitative research
3.Define variables:
To test hypotheses, we need to measure variables.
• Independent variable (IV), also called predictor variable:
• A variable thought to be the cause of some effect → What do I, as an independent
variable, change?
 • Its value does not depend on any other variable
• Dependent variable (DV), also called outcome variable:
• A variable thought to be affected by changes in an independent variable → How do
I, as a dependent variable, change?
• Its value depends on the predictor (i.e., the independent variable)

The problem with single-item scales is their validity.

Are you really measuring what you want to measure?
In Marketing, we use multiple-item scales!
Session 4: Market Research – part II

4. Formulate questions
Quantitative research: survey questions => use of likert scales

5. Develop questionnaire
Questionnaire design:
Make questions as simple as possible
Is the question necessary?
Are several questions needed instead of one?

Increase the willingness of respondents:

• Place sensitive topics at the end of the questionnaire
• Ask the question using the third person technique
•Provide response categories (salary)

Structure of the questionnaire

•Length -> not more than 12 minutes
•Put difficult questions in the beginning
•Introduce your questions
•Keep structure
The Marketing Research Process:

Collect the information:

1) Sample plan
2) Collection method

Sampling plan
-Sampling population: Whom should we survey?
-Sample size: How many people should we survey?
-Sampling technique: How should we choose the respondents?

sampling technique: 2 main techniques

Probability sampling:
- Randomized
- Every individual of the population gets an EQUAL chance to be selected
- Will minimize errors due to sampling
- Requires knowledge about entire population
- Highly correlated with costs
Non-probability sampling:
-Non-randomized
- Relies on the personal judgment of the researcher
- Often quick and easy

Collect the information: data collection method:

Online surveys:
• Advantages • Disadvantages
• Inexpensive • Not representative sample
• Expansive • Low completion rates
• Fast • Technological problems &
• Honest & thoughtful inconsistencies
• Flexible

Analyze the information:

Quantitative studies
What software can you use?
Before you start : explore your data!
Check and prepare your database
Explore your data
Prepare your database
How do you deal with multi-item variables?

Summated scale:
3 requirements:
1. All questions need to be measured on the same scale (e.g., Likert scale from 1 to 5)
2. All questions need to be scaled in the same direction (! Reverse items!)
3. The new variable should contain only variables that measure the same construct

Summated scale: reliability analysis

Internal consistency reliability = a measure that indicates whether several items that
propose to measure the same general construct produce similar scores

Rule of thumb
• α≥0.9:excellent
• 0.8≤α<0.9:verygood
• 0.7≤α<0.8:good
• 0.6≤α<0.7:acceptable
• 0.5≤α<0.6:poor
• α<0.5:unacceptable

Warning!
• Items should logically match according to interpretation (garbage in, garbage out)
• If only marginal difference, choose for more items
• Min.3items
• Max.10items (α increases as amount of items increase)

The standard error: If our “data” are the various sample means  the SD of these sample
means tells us how widely spread (how representative) sample means are around their
average = Standard Error (SE)
A small SE (relative to the sample mean) = the sample is likely to be an accurate reflection of
the population
A big SE (relative to the sample mean) = the sample might not be representative of the
population

Before starting your analysis, classify the type of data.

ANALYSES FOR NOMINAL DATA: Frequency table, crosstabs, and Chi-Square

ANALYSES FOR METRIC DATA

Comparing two means: You NEED to do a statistical t-test, to make sure that the difference
observed is not due to chance!!!

• With metric variables, you are mainly focusing on the MEAN

• different types of analysis, depending on the objective:
• Describe the sample/population
Descriptive analysis (= basic statistics analysis)
• Compare the sample mean to some other value
One-sample t-test
• Compare two (or more) independent sample meanss
T-test or ANOVA
• Compare two dependant sample means
Paired t-test
Session 5: Global Marketing Strategy
Part 2: Building a marketing strategy

1. Understanding the international environment and buying behavior

2. Global marketing strategy: 1. Segmentation
2. Target
3. Value proposition

Strategic target marketing:

1 International market segmentation:

Building a model for international market selection:

Market-screening model:
Step 1 & 2 Defining criteria and developing segments:

Step3:
Diffusion Theory: Adopter Categories

Asian Hierarchy

Step4:
Global Market Segmentation:
• The process of dividing the world market into distinct subsets of customers that have
similar needs (for example, country groups or individual interest groups).
• Pluralization of Consumption or segment simultaneity
Most common types of micro-segmentation methods:
• Geographic segmentation
• Dividing the world into geographic subgroups
• The advantage of geography is proximity
• However, just because people are in close proximity does not mean they are
similar
• Demographic segmentation
• Based on measurable population characteristics: • Age
• Income
• Gender
• Age distribution
• Education
• Occupation
• Generally, national income is the most important variable
• Psychographic segmentation
• Based on attitudes, values and lifestyle
• Behavior segmentation
• usage rate
• occasion based
• Benefit segmentation
• Ethnic segmentation
• The population of many countries includes ethnic groups of significant size

2 Target:
3 value proposition
Positioning
• Locating a brand in consumers’ minds over and against competitors in terms of attributes
and benefits that the brand does and does not offer
• Attribute or Benefit
• Quality and Price
• Use or User
• Competition

 Value proposition: what value does my product/service provide that differentiates

from competition?

What is value?
-Value : key to long-term success
-Consumers’ value evaluation occurs at various stages of purchase process, including the
pre-purchase stage
-Value = consumer’s overall assessment of the utility of a product (or service) based on
perceptions of what is received and what is given

What value do companies deliver ?

• Emotional value (I enjoy)
the utility derived from the feelings or affective states that a product generates
• Social value
the utility derived from the product’s ability to enhance social self-concept
• Functional value (price/value for money):
the utility derived from the product due to the reduction of its perceived short term
and longer term costs
• Functional value (performance/quality)
the utility derived from the perceived quality and expected performance of the
product

Positioning strategies:
• Global consumer culture positioning
• Identifies the brand as a symbol of a particular global culture or segment
• High-touch and high-tech products
• Foreign consumer culture positioning
• Associates the brand’s users, use occasions, or product origins with a foreign
country or culture
• Local consumer culture positioning
• Identifies with local cultural meanings
• Consumed by local people
• Locally produced for local people
• Used frequently for food, personal, and household nondurables
Session 6: Global Product Decisions
PART III: The Global Marketing Mix

1. Brand and product decisions in Global Marketing

2. Pricing Decisions
3. Global Marketing Channels and Physical Distribution
4. Global Marketing Communications

Basic Product Concepts:

• A product is a good, service, or idea
• Tangible Attributes
• Intangible Attributes
• Product types
• Consumer goods
• Industrial goods

Product differentiation: • Product warranties

• Packaging
• Labeling
• Aesthetics
• Branding

Product warranties:
• An Express Warranty is a written guarantee that assures the buyer is getting what he or
she paid for or provides a remedy in case of a product failure
• Warranties can be used as a competitive tool

Packaging:
• Consumer Packaged Goods are a variety of products whose packaging protects or contains
the product from production to the end user
• Eco-packaging addresses environmental issues like recycling, biodegradability, &
sustainable forestry
• Must engage the senses, make an emotional connection, & enhance the brand experience

Labeling:
• Provides consumers with various types of information
• Regulations differ by country regarding various products
– Health warnings on tobacco products
– American Automobile Labeling Act clarifies the country of origin, and final assembly
point
– European Union requires labels on all food products that include ingredients from
genetically modified crops

Aesthetics:
• Global marketers must understand the importance of visual aesthetics
• Aesthetic styles (degree of complexity found on a label) differ around the world
Branding
Basic Brand Concepts
• Bundle of images and experiences in the customer’s mind
• A promise made by a particular company about a particular product
• A quality certification
• Differentiation between competing products
• The sum of impressions about a brand is the Brand Image (what is received by the market)

Brand Equity
• The total value that accrues to a product as a result of investments in the marketing of the
brand
• An asset that represents the value created by the relationship between the brand and
customer over time

Brand Equity Benefits

• Greater loyalty
• Less vulnerability to marketing actions
• Less vulnerability to marketing crises
• Larger margins
• More inelastic consumer response to price increases
• More elastic consumer response to price decreases
• Increased marketing communication effectiveness

Branding in a global environment: • Local branding

• International branding
•Global branding

Local Products and Brands

• Brands that have achieved success in a single national market

International Products and Brands

• Products and brands offered in several markets in a particular region: e.g.,‘Euro-brands’

Global Products and Brands

• Global products: meet the wants and needs of a global market and are offered in all world
regions
• Global brands : same name and similar image and positioning throughout the world

“A multinational has operations in different countries. A global company views the world as
a single country. We know Argentina and France are different, but we treat them the same.
We sell them the same products, we use the same production methods, we have the same
corporate policies. We even use the same advertising—in a different language, of course.”
Global Brand Development
• Global Brand Leadership
– Using organizational structures, processes, and cultures to allocate brand-building
resources globally, to create global synergies, and to develop a global brand strategy
that coordinates and leverages country brand strategies
• Country of Origin as Brand Element
– Perceptions about and attitudes toward particular countries often extend to
products and brands known to originate in those countries
• Brand Extension
– Brand acts as an umbrella for new products

Product/Brand Matrix

Strategic Alternatives in Global Product Planning:

Strategy 1: Dual Extension

• Same product sold with virtually no adaptation • Same advertising & promo approach
• May be very profitable
• Key for a successful dual extension strategy:
• Advertiser’s message to be understood across different cultures
=> More frequently used with industrial/high tech/high touch goods

Strategy 2: Product Extension-Communications Adaptation

• Products may serve the same or different needs in different markets
• No product changes reduce expense
• Costs in market research advertising, sales promotion, point-of-sale material

Strategy 3: Product Adaptation-Communications Extension

• Adapt the product to local use but the message stays the same
• Cadillac BTS in Sweden is 6” shorter that the CTS; available in diesel
Strategy 4: Product- Communications Adaptation
• Dual Adaptation
• Both may need to change for legal, cultural or other environmental reasons
• Regional managers may simply act independently
Session 7: Global Marketing Channels
1. Why are marketing channels used?
2. Channel distribution strategies
3. Establishing channels in a global environment
4. Global retailing
5. Omnichannel strategies

Distribution channels:
A marketing channel is a set of interdependent organizations involved in the process of
making a product or a service available for consumption or use by consumers or industrial
users

1. Why are marketing channels used?

1. Create utility for consumers
2. Functions of marketing channels for the manufacturer

Channel objectives and Utility:

• Marketing channels exist to create utility for customers
– Place utility – availability of a product or service in a location that is
convenient to a potential customer
– Time utility – availability of a product or service when desired by a customer
– Form utility – availability of the product processed, prepared, in proper condition
and/or ready to use
– Information utility – availability of answers to questions and general
communication about useful product features and benefits

Why do manufacturers use distribution channels ?

• Main function of intermediaries is to convert potential buyers into profitable
customer
• Provide buyer’s payment of their bills
• Provide successive storage and movement of physical products
• Develop and disseminate persuasive information to stimulate purchasing

2. Channel distribution strategies

1. Terminology & structure
2. Market coverage strategies

Terminology and Structure:

• Distributor – wholesale intermediary that typically carries product lines or brands on a
selective basis
• Agent – an intermediary who negotiates transactions between two or more parties but
does not take title to the goods being purchased or sold
• Distribution is the physical flow of goods through channels
• Channels are made up of a coordinated group of individuals or firms
that perform functions that add utility to a product or service

Market coverage strategies:

Strategies for market coverage

3. Establishing channels in a global environment

1. Direct vs indirect involvement
2. Working with channel intermediaries

Distribution strategies: establishing channels

• Direct involvement – the company establishes its own sales force or operates its own retail
stores
• Indirect involvement – the company utilizes independent agents, distributors, and/or
wholesalers
• Channel strategy must fit the company’s competitive position and marketing
objectives within each national market

Working with channel intermediaries:

1. Select distributors – don’t let them select you
2. Look for distributors capable of developing markets, rather than those with a few good
customer contacts
3. Treat local distributors as long-term partners, not temporary market-entry vehicles
4. Support market entry by committing money, managers, and proven marketing ideas
5. From the start, maintain control over marketing strategy
6. Make sure distributors provide you with detailed market and financial performance data
7. Build links among national distributors at the earliest opportunity

Select distributors:
How do manufacturers select distribution channels?
• Geographical coverage
• Target market

4. Global retailing

• Environmental Factors
–Saturation in the home country market
–Recession or other economic factors
–Strict regulation on store development
–High operating costs
• Critical Question
–What advantages do we have relative to the local competition?

1. Types of retail
2. How to enter a global market in terms of retailing?

Global retailing is any retailing activity that crosses national boundaries.

• Department stores
• Specialty retailers
• Supermarkets
• Convenience stores
• Discount stores and warehouse clubs
•Hypermarkets
•Supercenters
•Category killers
•Outlet stores

• European retailers spread to colonies in the 19th, early 20th centuries

• Global retailers serve developing nations with more products & better
prices
• Organized retail refers to modern, branded chain stores

Types of retailers:
• Department stores have a product mix under one roof
• Expansion outside of the home market is usually limited to a few countries
• Specialty Retailers
• Less variety than department stores
 • Offer merchandise depth & high levels of service
• Supermarkets
• Between 50,000 & 60,000 sq. ft.

•Convenience stores
• High-turnover convenience & impulse goods
• Prices 15-20% higher than grocery stores
• 7-11 world’s largest
• 26,000 locations
• Trend towards locating in malls, airports, office buildings, and college & universities
•Discount Retailers
• Full-line discounters
• Wide variety of merchandise; Ex. Walmart
• Warehouse clubs
• Memberships fees; Ex. Sam’s Costco
• Dollar stores
• Sell at a single low price; Ex. in U.S. Family Dollar, Dollar Tree,
Internationally, My Dollarstore has rapid growth
• Hard discounters
• Limited assortment, rock bottom prices
• Hypermarkets are hybrid retailers combining the discounter, supermarket & warehouse
club; 20,000-30,000 sq. ft.
• Superstores or Category Killers & Big-Box sell vast assortments of one product category
•Shopping Malls
• Groups of stores in one place
• Enclosed or outdoor
• Leisure destinations offer entertainment & convenience
•Outlet Stores
• Shops that offer excess inventory , out-of-date merchandise or factory seconds
• Popular in the US, expanding into Europe & Asia

Distribution strategies:
• Retailing in Developing Countries
•Door-to-Door Selling
•Peer-to-Peer Marketing
• The Internet and other related media are dramatically altering distribution

How to enter a global market in terms of retailing?

Global Retailing Strategies

Global Retailing Market Entry Strategy Framework
•Organic growth
–Company uses its own resources to open a store on a greenfield site or acquire one
or more existing retail facilities
• Franchise
–Appropriate strategy when barriers to entry are low yet the market is culturally
distant in terms of consumer behavior or retailing structures
• Chain Acquisition
–A market entry strategy that entails purchasing a company with multiple existing
outlets in a foreign country
• Joint Venture
–This strategy is advisable when culturally distant, difficult-to-enter markets are
targeted
Session 8: Global Pricing Decisions

Why is pricing important?

– Only revenue generating variable from the marketing mix (others generate costs)
– Only variable from the marketing mix which can be changed in the short run (but danger of
LT impact) and have ST effects
–A powerful tool: pricing elasticity much higher than advertising elasticity

The challenge: value extraction

Global pricing strategies:

In a true global market....
• Law of One Price
– All customers in the market get the best product for the best price
• Global markets – Diamonds
– Crude oil
– Commercial aircraft
• National markets

• The Global Manager must develop systems and policies that address
–Price Floor: minimum price
–Price Ceiling: maximum price
–Optimum Prices: function of demand

• Managers must determine the objectives for the pricing objectives

– Unit Sales
– Market Share
– Return on investment

• They must then develop strategies to achieve those objectives

 Pricing objectives
Selecting the pricing objective:
1. Market-penetration pricing (maximum market share)
2. Maximum market skimming
3. Product-quality leadership
4. Buy In – Follow On
5. Cost-related objectives: • Survival
• Maximum current profit
• Partial cost recovery

Market-penetration pricing:
Pricing objective where price is set a low level in order to penetrate the market and establish
a loyal customer base
–Appropriate to saturate market prior to imitation by competitors
–Packaged food product makers, with products that do not merit patents, may use
this strategy to get market saturation before competitors copy the product

Maximum market skimming:

Pricing objective where the price is initially set high on merchandise before selling at more
competitive prices

Product quality leadership:

• A company might aim to be the product-quality leader in the market. Many brands strive
to be “affordable luxuries”—products or services characterized by high levels of perceived
quality, taste, and status with a price just high enough not to be out of consumers’ reach.

Buy In Follow on:

• Buy in Follow on (or bait and hook) pricing. Idea: machine is priced low and profits are
made thanks to consumables
– Need to think of LT relationship management (with all the ad hoc tools)
– Strong link between the two products
Not effective in all countries

Cost-related objectives
• Survival: short-run objective
Typical objective of a company faced with intensive competition and not enough customers.
Prices are set to cover variable costs and some fixed costs to ensure the company stays in
business.
• Maximum current profit
They estimate the demand and costs associated with alternative prices and choose the price
that produces maximum current profit,
• Partial cost recovery
A university aims for partial cost recovery, knowing that it must rely on private gifts and
public grants to cover its remaining costs.
Factors influencing pricing: an overview:

International pricing framework:

Competition-based pricing
• Three possible strategies:
• Pricing ABOVE competitors
Need for a clear differentiation on dimensions such as quality, services,
location, opening hours,...
• Pricing AT competitors’ level (going rate pricing)
• Pricing BELOW customers
Every day low price
Cost-plus pricing
Add margin to your costs:

Mark-up calculated on sales:

• Cost-based pricing is based on an analysis of internal and external cost

• Firms using western cost accounting principles use the Full absorption cost method
• Per-unit product costs are the sum of all past or current direct and indirect
manufacturing and overhead costs
• Must include additional costs & expense when goods cross national boarders
• Rigid cost-plus pricing means that companies set prices without regard to the three pricing
considerations
• Flexible cost-plus pricing ensures that prices are competitive in the contest of the
particular market environment
• Export price escalation is the increase in the final
selling price of goods traded across borders.

Target Costing:
• Total costs: Price less desired profit margin
• Used by Japanese companies to control costs, save on production expense, &
create competitively priced global products
• Also called Design to Cost
• Determine the segment(s) to be targeted, as well as the prices that customers in the
segment will be willing to pay.
• Compute overall target costs with the aim of ensuring the company’s future profitability.
• Allocate the target costs to the product’s various functions. Calculate the gap between the
target cost and the estimated actual production cost.
• Obey the cardinal rule: If the design team can’t meet the targets, the product should not
be launched.

Value-based pricing
‘it is the method of setting a price by which a company calculates and tries to earn the
differentiated worth of its product for a particular customer segment when compared to its
competitor’
Economic Value Estimation (EVE® )

Pricing Factors for Goods that Cross Borders:

1. Does the price reflect the product’s quality?
2. Is the price competitive given local market conditions?
3. Should the firm pursue market penetration, market skimming, or some other pricing
objective?
4. What type of discount (trade, cash, quantity) and allowance (advertising, trade-off) should
the firm offer its international customers?
5. Should prices differ with market segment?
6. What pricing options are available if the firm’s costs increase or decrease? Is demand in
the international market elastic or inelastic?
7. Are the firm’s prices likely to be viewed by the host-country government as reasonable or
exploitative?
8. Do the foreign country’s dumping laws pose a problem?

Pricing in a global environment:

Global environmental issues on Pricing Decisions:
Currency issues
• Options for the exporter:
• Foreign currency of the buyer’s country (local currency);
• Currency of the exporter’s country (domestic currency);
• Currency of a third country
• Issues:
• Fluctuating exchange rates
Inflationary Environment
• Defined as a persistent upward change in price levels
• Can be caused by an increase in the money supply
• Can be caused by currency devaluation
• Essential requirement for pricing is the maintenance of operating margins
Government Controls, Subsidies, and Regulations
• Types of policies and regulations that affect pricing decisions are:
– Dumping legislation
– Resale price maintenance
legislation
– Price ceilings
– General reviews of price levels
• Foreign governments may:
– require funds to be noninterest-bearing accounts for a long time
– restrict profits taken out of the country and limit funds paid for imported
material
– Restrict price competition
Competitive Behavior
• If competitors do not adjust their prices in response to rising costs it is difficult to
adjust your pricing to maintain operating margins
• If competitors are manufacturing or sourcing in a lower-cost country, it may be
necessary to cut prices to stay competitive

Global Pricing: Three policy alternatives

• Extension or Ethnocentric
• Adaptation or Polycentric
• Geocentric

Extension Pricing
• Ethnocentric
• Per-unit price of an item is the same no matter where in the world
the buyer is located
• Importer must absorb freight and import duties
• Fails to respond to each national market
Geocentric Pricing
• Intermediate course of action
• Recognizes that several factors are relevant to pricing decision
– Local costs
– Income levels
– Competition
– Local marketing strategy
Adaptation or Polycentric Pricing
• Permits affiliate managers or independent distributors to establish price as they
feel is most desirable in their circumstances
• Sensitive to market conditions but creates potential for gray marketing

Gray Market Goods:

• Trademarked products are exported from one country to another where they are sold by
unauthorized persons or organizations
• Occurs when product is in short supply, when producers use skimming strategies in some
markets, and when goods are subject to substantial mark-ups

Gray Market Issues

• Dilution of exclusivity
• Free riding
• Damage to channel relationships
• Undermining segmented pricing schemes
• Reputation and legal liability

Price fixing:
• Representatives of two or more companies secretly set similar prices for their products
–Illegal act because it is anticompetitive
• Horizontal price fixing occurs when competitors within an industry that
make and market the same product conspire to keep prices high
• Vertical price fixing occurs when a manufacturer conspires with
wholesalers/retailers to ensure certain retail prices are maintained
Semetis presentation: part I

Programmatic Advertising
Is real-time. Is everywhere. It is changing marketing.
Software is used to automate the buying process, using data and algorithms. It is about
driving efficiencies.

Going from a business challenge to the execution of a Digital Marketing Campaign

 Push marketing

Pull marketing

Data is used to derive the insights needed to target the ads to specific users
What data does: ● Things you search for
○ Websites you visit
○ Videos you watch
○ Ads you click on
○ Your location
○ Device information
○ IP address and cookie data
● Things you create
○ Emails you send and receive on Gmail
○ Contacts you add
○ Calendar invites
○ Photos and videos you upload
○ Docs, sheets and slides on drive
● Things that make you “you”
○ Name
○ Email address
○ Birthday
○ Gender
○ Phone Number
○ Country
What is the most common way to collect and share personal data online? COOKIES

The drama of remarketing

Users started to take action with ad blockers ● They want more privacy
● No more ads on the website they visit
● Faster navigation

Technical and legal: GDPR: An EU law on data protection and privacy. GDPR aims to give
control to individuals over their personal data.

How are we activating data in programmatic advertising?

● With data we can uncover insights, that in turn can be used to create more
accurate audience segmentations.
● We want to step away from the stereotypes and be more accurate on who we
target
●With data, we can create greater personalization in the creative delivery. This
means we can adapt the message to the audience.
●We want to make our communication more relevant

Uncovering insights is listening. And listening has never been easier than in our current
digital age
How can we see inside the consumer’s head?
Cutting in marketing waste by predicting behaviour

How can we see inside the consumer’s head correctly?

Solution: incorporating Data Science in your Marketing Department

How do we segment audiences from website information? And what can we do with it?
First, implementing a dataLayer to collect search activity on the website. The holiday
house finder is like gems when it comes to harvesting contextual behavior and
profiling data.
Google Trends
Is a useful search trends feature that shows how frequently a given search terms is entered
into Google’s search engine relative to the total search volume over a given period of time.

Conversational Marketing
The technique of talking to consumers. This can be done through live chat, chatbots, voice
assistants or other forms of conversational AI. These experiences can be positioned on
websites, social media channels, paid advertising and even in physical stores or connected
home devices.
Semetis presentation: part II

1. Programmatic advertising
2. Media planning - Customer journey, objectives, channels, audience & messages
3. SEA
4. Introduction to measurement: cookies, tag, web-analytics & Attribution

1. Programmatic advertising

What is programmatic advertising ?

Programmatic Advertising typically refers to the use of technology to purchase
advertising space, as opposed to the traditional process that involves human
negotiations and manual insertion orders.
It’s using machines to buy advertising space, basically. It’s about driving efficiencies in
spend and resources.
How does it work?

➔ Ad Network: An aggregation of ad supply from publishers and matching it with

advertiser’s demand
➔ Ad exchange: A technology platform that facilitates the buying and selling of media from
multiple ad networks
➔ Demand-Side Platform (DSP): The technology platform that allows buyers to manage
multiple ad exchanges through one interface
➔ Supply-Side Platform (SSP): The technology platform that enables publishers to manage
their advertising space inventory

Buying Methods:

Programmatic Still programmatic Not programmatic

Real time bidding Programmatic direct Direct

Feeling Lost? Follow the process

Programmatic advertising
●  Automated way in transacting ad space between advertiser and publisher
●  Automation through an algorithm in real-time
●  Real-time means we can adapt our message each time
We need to decide on
●  What is the objective of our campaign?
●  Who is our target audience?
●  How can we reach them? Any specific variables?
●  Which ad space should we buy?
●  Shall we use the variables as an input to adapt our message?

2. Media planning - Customer journey, objectives, channels, audience & messages

The first marketing principle is understanding the customer journey

The numbers of people who can be reached by our campaigns is gigantic

But not all are obviously interested in our offer...
And even when they are, you still need to communicate the right message to them on the
right channel
This means combining the right choice of [Audience x Media x Message]

... And adapt them in function of where the customer is in the conversion funnel

3. SEA

SEA is a Pull Marketing strategy

Organic vs Paid results

When a user enters a query, Google provides two types of search results:
1. Organic search results (= “natural” search results or SEO)
2. Advertising / Paid search results (=sponsored links or SEA)

How does Google choose who appear first?

Two ways to place a bid:

Automated bidding helps to optimize performances towards your business goals by using
Google Machine learning.

Ad extensions: Purpose
● Give more context to the user = increase relevancy
● Take more space in the search results = increase CTR

4. Introduction to measurement: cookies, tag, web-analytics & Attribution

How can we track what is happening on a website? Via tags... and cookies

A tag - What needs to be tracked and where do we send it?

Tag is a piece of code that will fire if a given condition is met, and that will captures
certain information from the website and transfers it to the respective platform.

Tag vs Cookie?

What are cookies used for in advertising?

Measure website action
Build audiences
Attribute value to the different media channels
Identify unique browsers & avoid spamming
EU adopted a law on cookies - The GDPR
1. Your website must tell people that you are using cookies
2. Your website must give detailed information regarding how that cookie data will be used
3. Your website must provide visitors a mean of accepting or refusing the use of cookies

Without Cookie, we must find solutions for audience & measurement

What is web analytics?

“Web Analytics is the measurement, collection, analysis and reporting of Internet data for
the purposes of understanding and optimizing web usage.”