Global marketing

We are surrounded by global products all carrying global brand names. Global branding is the worldwide use of a name, term, symbol or logo to identify the seller’s products.

Businesses are increasingly using global branding for a number of reasons:

1. It can be cost effective because one advertisement can be used in a number of locations.
2. It provides a uniform worldwide image.
3. The successful brand name can be linked to new products being introduced into the market.

Once a business has established its name, it will usually attempt to market the brand globally. Even if the business has to modify the product to suit local conditions, such as when Fuji Xerox changes the language keys on the control panel of their photocopiers or when Ford modifies the steering wheel from left to right hand drive, the companies will not alter the brand name on their products.

A standardised approach is a global marketing strategy that assumes the way the product is used and the needs it satisfies are the same the world over. Therefore, the marketing mix will be the same in all markets

Examples include

Electrical equipment, mobile phones, soft drinks, music, cosmetics, movies and fast foods

Benefits

This strategy has obvious cost savings ($) for businesses. This can be achieved by:

Production runs can be longer, thereby achieving economies of scale; research and development costs are reduced; spare parts and after-sales service are simplified; promotion strategies can be standardised; and any evaluation and modification of the plan is a much simpler task.

Global pricing is how businesses coordinate their pricing policy across different countries.

1. Customised pricing occurs whenever consumers in different countries are charged different prices for the same product.
2. Cost-plus method to cover the added costs of exportation. Such costs include transportation, taxes, warehousing and tariffs. A cost-plus method to pricing products for global markets is usually the most commonly used method because of the added expense associated with exporting.
3. Market-customised pricing sets prices according to local market conditions. To avoid competition from a domestic business, the global business may need to adopt a market-customised pricing strategy that allows marketers to vary the price depending on the level of demand and competition within the overseas market. In a competitive market, for example, the price charged may have to be lower than in a market where the business has a monopoly.

Additionally, the price charged in other countries is also influenced by foreign currency exchange rates

Standard worldwide price

4. Standardised pricing is the practice of charging customers the same price for a product anywhere in the world. It will succeed only if the foreign marketing costs remain low enough not to affect overall costs. Two major risks are associated with this strategy:

• A domestic business may undercut the standardised price.
• Changes in the exchange rate may negatively impact on the exported price.

Competitive positioning relates to how a business will differentiate its products. It centres on how a business will carve out a place in the competitive marketing environment. As in a domestic market, a global business must clearly show how its products are better than the competitors’ products. Without differentiation, it takes more time, money and effort to encourage potential customers to purchase a business’s products. To differentiate successfully, and avoid competing on price only — a difficult situation to sustain over the long term — the business should strive to develop product leadership, positive customer relationships and operational excellence.

2012

Question 23 (12 marks)

XYZ Ltd produces sports shoes which are worn by elite athletes and the general public in North America. XYZ Ltd is keen to expand into Europe and Asia.

(a) What is ONE possible benefit to XYZ Ltd of using global branding as a marketing strategy? 2 marks

(b) Describe TWO physical distribution issues that XYZ Ltd will have to consider as part of their expansion. 4 marks

(c) The management team of XYZ Ltd is deciding whether to use customisation or standardisation as its marketing strategy for the expansion. Analyse how marketing and finance would be linked in XYZ Ltd’s decision to customise or standardise. 6 marks

2014

Q11

An Australian business sells its Bonza Pies in both Australia and China. Bonza Pies sold in China are made to a different recipe. What is this an example of?

(A) Customisation and hedging

(B) Global pricing and standardisation

(C) Customisation and global branding

(D) Global branding and standardisation

2015

Q19 Why might a business adopt a standardised global approach to marketing?

(A) To cater for local tastes

(B) To minimise risk by hedging

(C) To increase market segmentation

(D) To take advantage of economies of scale