The coordination involved in implementing a GMS unavoidably leads to a certain level of uniformity of branding, of packaging, of promotional appeal, and so on (Zou and Cavusgil, 2002). Cons? Competitive Analysis). Third, the entering product may well be sold at a low price – its scale advantages can allow such a strategy. But there are similar negative effects from gray trade as from counterfeits. Such global segments naturally induce companies to adopt GMS. flashcard set{{course.flashcardSetCoun > 1 ? The classic failure by Euro Disney to transfer its American theme park unchanged to France is a good example of misguided standardization of a service product. A second related option is to break up the product into component modules that can be produced in large series to gain the scale advantages, and then produce different products by different combinations of modules. Honda's 1970s entry into the US car market exemplifies this case, with the car offering both fuel efficiency and sportiness. study Use the link below to share a full-text version of this article with your friends and colleagues. But there are also quality advantages involved. Local competition varies across countries. First‐time buyers in emerging markets rarely view products the same way as buyers in the more mature markets, where preferences are well established. Services. And gray trade complicates global coordination when one country realizes a sudden influx of gray goods. In one notorious instance, Budweiser's sponsorship of the World Cup in Germany in 2006 encountered opposition from German brewers and consumers. For example, the Interbrew (now InBev) company's analysis of the Heineken advantage in profitability draws the conclusion that it is the lack of a global brand that depresses its own bottom‐line performance. credit-by-exam regardless of age or education level. credit by exam that is accepted by over 1,500 colleges and universities. It's typically not a leisure activity, either, as many of China's population bases are located in heavily polluted areas. This is a potential weakness of GMS, and leaves opportunities open for local products and brands. Although in many ways, the agency globalization has been a response to the globalization of the client firms – global managers find it useful to deal with the same agency in different parts of the world – once established, the global agency will naturally want to leverage its global capabilities (as in the Saatchi & Saatchi case). A global marketing strategy (GMS) is a strategy that encompasses countries from several different regions in the world and aims at coordinating a company's marketing efforts in markets in these countries. In the early stages, with preferences still in flux, a strategy based on the positioning in a lead country may not be very effective in a new country. A GMS can also be successful if the firm has managed to change local preferences. But a strong brand not only needs reach across countries, it also needs allegiance from local customers. With increasing globalization and the stress on global brands, the momentum behind global advertising has been sustained despite antiglobalization and prolocalization sentiments around the globe. Although global appeals had been used previously in promotions – IBM's global “Think” slogan appeared as early as the 1920s – global advertising arrived with the advertising agency Saatchi & Saatchi's television commercial “Manhattan Landing” for British Airways in the early 1980s. Not surprisingly, most top brands in terms of financial equity are global. The manufacturing process then becomes a simple assembly process, which can then be done locally, if necessary, to gain lower tariff rates. Such straight “price escalation” does not usually occur except in one-time transactions. While there are good and bad points to each approach, many large companies like … This means the local subsidiary and its advertising agency usually have to do more than merely translate a message. A “regional” marketing strategy is one that coordinates the marketing effort in one region. Consumers now travel much more than before as the lower cost of travel have made for many more tourists, and for business-to-business products, the customers are often multinational companies. Most global companies place strict limits on how their name should be portrayed, including fonts and coloring. {{courseNav.course.mDynamicIntFields.lessonCount}} lessons Often this amounts to selecting a trade bloc, such as the European Union. Starbucks, the American coffee chain, also has recreated and enlarged a mature market in several countries with its new coffee choices, novel store layouts, and wider menu. The strategic implications of global versus multidomestic markets are explored and competitive strengths and weaknesses against local competitors are discussed. A new product entering a local market will usually change preferences to some degree, whether by new features, promotion, or price. In addition, with global communication producing spillovers between countries, local preferences change and allow the penetration of global brands in local markets using standardized appeals. A GMS does not necessarily cover all countries but it should apply across several regions. One can distinguish between supply‐side drivers and demand‐side drivers, as shown in Table 9. In GMS, pricing, and distribution are more closely connected than at home. © copyright 2003-2020 Study.com. You can then go about creating an integrated marketing plan as you grow into your new market. Global marketing helps create a strategy for a similar product in a different market. This also means that a GMS, in some ways, goes counter to a true customer orientation (see Nike has succeeded over the years in presenting its products in a way that resonates with an audience no matter where they're located. Gray trade is not usually illegal. The firms most likely to engage in GMSs are those present in global markets. The BMW Z4 sports car is only produced in South Carolina. International marketing differs from global marketing in that international marketers rely on staff on the ground in each potential market to design a strategy best suited to that region. Linguistic, cultural, and religious differences can prevent standardization of advertising messages and render symbols inappropriate. However, even in countries where one or more of these requirements are not met, a standardized global positioning may still work. “Green” products are naturally targeting global segments, as are the lighter beers, the bottled waters, and the shift to wines. To learn more, visit our Earning Credit Page. Market Definition). Get access risk-free for 30 days, The stage of the life-cycle is also likely to vary across countries, affecting how well a particular position can be transferred. A new product entering a local market will usually change preferences to some degree, whether by new features, promotion, or price. The growth of international tourism has been a strong driver of global brands. In global markets, where often the same global players compete in the major foreign markets, positioning is more likely to remain constant across the mature markets. Market Segmentation and Targeting). Complicating the issue is the fact that even with complete uniformity of the marketing mix, the arrived‐at position may still differ between countries. Finally, there is a possible positive demand effect on customers. For example, the successful Buicks offered to new customers in China offer quite different benefits from those offered Buick customers in the United States, even though the product is largely the same. A GMS should not be confused with a global production strategy. But it is almost impossible to develop a GMS without a strong global brand. The ease of transportation, coupled with differing local prices and currency fluctuations, are what provide the margin that allows for arbitrage opportunities for customers to buy branded products cheaper abroad. lessons in math, English, science, history, and more. In other cases, gray trade involves Western distributors (large European retailers, for example) who acquire goods in a low‐priced country and then sell it at higher prices at home. This is common in automobiles, where the platform involves the chassis on which the body is then fitted. Cell phone makers Nokia, Samsung, and Sony‐Ericsson occupy quite different positions in each market. Recognising this, many global companies not only market their global brand in a country market but might also buy up a successful local brand and retain its brand name – and customers. In the end, companies do not need to offer identical products everywhere in order to gain the scale economies of product standardization. The existing local operations will have to be convinced to adopt the new global strategy. Global strategy. An introduction about the Nike shoes company. In other cases, changes in the environment have affected preferences so as to make standardization possible.
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