With the rapidly growing globalization, the distinction between marketing within an organization’s home country and marketing within external markets is disappearing very quickly. Keeping this in mind, organizations are modifying their marketing strategies to meet the challenges of the global marketplace while trying to sustain their competitiveness within home markets.
The four Ps of marketing—product, price, placement, and promotion—are all affected as a company moves through the different phases to become and maintain dominance as a global company.
Global Marketing Mix: Product Plus Promotion
For multinational corporations (MNCs), Product and Promotion is important because it can enable a company to make minor adjustments to a product and its promotion strategy rather than totally revamping it. Coca-Cola is a strong example of this. The product packaging in every country incorporates Coca-Cola’s contour bottle design and signature style in some shape or form. However, the bottle can also include the country’s native language and appear in identical sizes as other beverage bottles or cans in that country’s market.
Before launching, global companies must first define their target markets and determine the products that will be synonymous the most with those consumers and businesses. This research can help to decide —localization versus standardization strategy—as they learn more about the target market’s reciprocity to their goods and services. Promotional tactics for world-wide audiences can range from television commercials to social-media marketing on Facebook or YouTube. It is the job of marketers to create and place promotional efforts in settings where local consumers will be most receptive on those messages. Consumers in each target market have different media habits and preferences, and understanding these behaviors is important for selecting the right promotional mix.
After product research, development, and creation, promotion is important in a global company’s marketing budget. Integrated marketing can significantly increase efficiency and reduce promotional costs, as messages across multiple channels exponentially grows. For organizations that pursue a standardized approach to promoting products and building brands, promotion is the crucial component of the mix that enables a company to send the same message worldwide using relevant, engaging, and cost-effective techniques Ex: Diet-Coke.
Marketers must also be prepared for the challenge of responding to differences in consumer response to marketing mix.
Global Marketing Mix: Promotion
It is virtually impossible for a company to communicate one identical message in a unified voice to global markets unless a company holds the same position against its competition in all markets (e.g., market leader, low cost, etc.).
Global marketer must balance four potentially competing business objectives when developing worldwide advertising: 1) speaking with one voice, 2) developing economies of scale, 3) maximizing local effectiveness of advertisements, and 4) company’s speed of implementation.
To successfully implement these approaches, marketers must ensure that their promotional campaigns take into account how consumer behavior is shaped by internal conditions (e.g., demographics, knowledge, attitude, beliefs) and external influences (e.g., culture, ethnicity, family, lifestyle) in local markets.
Language: Language differences have caused many problems for marketers in designing advertising campaigns and product labels. Consider the British terms “flat” (apartment in U.S. English), “pants” (underwear in U.S. English), and “lift” (elevator in U.S. English). Marketing messaging and materials could easily go wrong if they are not adjusted to fit in-country dialect and usage. Language becomes even more significant if a country’s population speaks several languages. India, with its burgeoning economy, literacy rates can differ widely between men and women too.
Colors: Colors may have different meanings in different cultures. For example, green is a sacred color in the Muslim faith, and it is not considered appropriate for packaging and branding purposes in Middle Eastern countries. Purple is associated with death in some Hispanic nations.
Values: An individual’s values come from his or her education, moral or religious beliefs. For example, Americans place a very high value on material well-being and are much more likely to purchase status symbols than people in India. Chinese consumers highly value the sense of honor, dignity, and pride, and in some situations, they will pay price premiums to “save face” by spending more.
Business norms: The norms of conducting business also vary from one country to the next. In France, for example, wholesalers do not like to promote products Ex: Professor’s Cousin in a cake shop and the bag fiasco/brawl.
Religious beliefs and holidays: In addition to their values, a person’s religious beliefs can affect shopping patterns and products purchased. In the United States and other Christian nations, the Christmas holiday season is a major sales period. In China, the Chinese New Year bring out the shoppers. In India, a string of Hindu festivals including Dussehra and Diwali mark a holiday season that extends over multiple months.
Many other factors, including a country’s political or legal environment, economic status, and technological environment, can impact a brand’s promotional mix.
Global Marketing Mix: Price
Pricing is determined by what a company will receive in exchange for its products. Many pricing considerations in global marketing are similar to domestic marketing. As marketers develop pricing strategy, they should keep the following goals in mind:
Achieve the financial goals of the company and generate profits
Match the marketplace and consumer buying trends
Make it consistent with other elements of the marketing mix, product, promotion and placement
In the global marketing mix, factors that affect pricing include manufacturing cost, distribution channels, marketplace, competition, market conditions, and quality of product.
Pricing considerations become more complicated in the global context when it comes to factors affecting global trade. Multinational companies must operate with different currencies, exchange rates, and interest rates. Pricing needs to account for risk like fluctuations in the value of different currencies in the markets where businesses operate. When the dollar is strong against a foreign currency, for example, imported American goods are more expensive relative to the local competition, so local sales may decrease. When a weak dollar makes product imports more expensive, the final good must carry a higher price tag to cover production costs.
Pricing can be affected by the cost of production (locally or internationally), natural resources (product ingredients or components), and the cost of delivery (e.g., the availability of fuel).
Global marketers must be also prepared to deal with other localized factors affecting pricing. Cultural expectations may dictate what consumers are willing to pay for some products and brands.
Global Marketing Mix: Place (Distribution)
Placement determines the channels used to distribute a product across different countries, taking in factors such as competition and similar brands are being offered to the target market, regardless of its size or visibility, a global brand must adjust its country strategies to take into account placement and distribution in the marketing mix.
Global marketing presents more challenges around distribution, compared to domestic or local marketing. A country’s transportation and economic infrastructure, customs, marketplace conditions, and the competitive landscape can all factor into strategic decisions around distribution.
A global luxury brand would not want to be distributed via a discount chain in the United States. Conversely, low-end shoemakers would likely be ignored by shoppers browsing in an Indian boutique store.
When launching global advertising, public relations, or sales campaigns, global companies test promotional ideas using marketing research systems that provide results comparable across countries. These systems help marketers achieve economies of scale in marketing, since they unravel which messaging or creative elements contribute to a product’s market success.
The same goes with, how to research and understand a target market in domestic settings apply to global settings. Marketing research is essential for marketers to build their understanding of which promotional tactics will be successful in any country or region. Experimentation and trial and error are also good teachers. Once marketers and brand managers discover what works (and what doesn’t) in the promotional mix, they can import this knowledge to inject creative ideas into other markets. Likewise, companies can use this intelligence to modify various elements in their promotional mix that are receiving unfavorable response from global consumers.