Marketing Internationally

LECTURE 11
BUILDING THE GLOBAL BRAND
Course Outline

Week Content
1 Scope and Framework for International Marketing Analysis of
2 The Role of the International Environment Foreign
Environment
3 The Role of Culture in International Marketing
4 International Consumer Research Market
5 International Market Selection and Mode of Entry Selection
Mid semester break and
Entry
6 International Marketing Strategy and Competitive Advantage
7 International Product Strategy
International
8 Marketing Services Overseas Marketing
9 International Marketing Communication Strategy Mix Strategy
10 Pricing for International Markets and Country of Origin
11 International Channels of Distribution
12 Building the Global Brand Globalisation
Review for Final Assignment and Emerging
13
Themes
Learning Objectives of Lecture 11

 Overview of the drivers and barriers of

globalization.

 Analyze the characteristics of a global brand

and the implications for marketers
Prada plans more stores
(Inside Retail 29/05/12)

 Italian luxury label Prada plans 100 new stores worldwide this year - and 80
more annually for the next two years.
 Emerging markets with growing demand including the Middle East, Brazil and
China are the main target of the expansion. China will get an additional 12 to
15 new stores this year and Prada also plans to enter the Indian market.
 “We currently do not have any shops in India, but we are looking to open a
first store, maybe in a luxury hotel in Mumbai or New Delhi soon,” said CEO
Patrizio Bertelli.
 Sales in the Asia Pacific region are expected to surge 40 % this year
and in 2013 - after a 30 % per cent increase last year.
 Prada is also looking to expand in Dubai, Morocco, Beirut, Istanbul and Qatar.
 Milan-based Prada currently has 388 directly operated stores and 26 franchised
stores. With another 260 coming within the next two years, the store count is
on track to increase to 674 by 2014-2015.
Bata plans big expansion in
India (Inside Retail 01/06/12)

 Footwear manufacturer and retailer Bata India plans 100 new stores this
year, added to its current portfolio of 1250 stores in more than 500 Indian
cities.
 Bata India says will invest Rs. 700 million (US$14 million) into new stores
and more into modernising its manufacturing facilities in Bangalore, Patna
and Batanagar.
 The modernisation is expected to increase Bata India's production
by 15 to 20 per cent, says Rajeev Gopalakrishnan, MD of Bata India.
 The company also plans to expand its portfolio of international footwear
brands as the Indian government loosens its restrictions on international
retailers.
 "If multi-brand retailing opens up in India, we may look into the
opportunity," said Gopalakrishnan
RadioShack builds in
SE Asia (Planet Retail 09/05/12)

 US-based retailer RadioShack has signed a development agreement

that expands its global operations to 10 Southeast Asian countries.
 Berjaya Retail, a Malaysian retail group with a diverse portfolio of
franchised brands, is expected to open at least 1000 franchised stores
across Southeast Asia nations within the next 10 years. Its subsidiary
in Malaysia, Berjaya RS, expects to open its first RadioShack locations
later this year in Kuala Lumpur.
 The Berjaya relationship represents RadioShack's single largest franchise
expansion to date and offers the potential to nearly double the number of
RadioShack's total dealer-franchise locations worldwide, eventually
increasing the company's global footprint to 39 countries.
 "Our franchising objective is to offer the RadioShack small-format
consumer electronics retailing experience internationally in
association with local experts.
Louis Vuitton to open China
Maison (Retail Planet 09/06/12)

 Louis Vuitton will celebrate its 20th year in China by opening its first
maison there on July 21 at Plaza 66 in Shanghai, marking Louis
Vuitton's 16th maison worlwide. It will house ready-to-wear for men and
women, leather goods, watches, luggage, jewellery, footwear and made-
to-order items.
 The maison will also display a five metre pagoda sculpture and
commisioned artworks by Chinese and international artists.
 The maison will be much larger and will offer full range of products and
services than its regular stores.
 Louis Vuitton's other maisons are located in Singapore, Milan,
Rome, Vancouver, Sydney, London and Taipei.
 The luxury brand has also just opened its first dedicated jewellery
store in Vendome, Paris.
Coca-Cola: king of the brands
(Inside Retail 03/05/14)

 Coca-Cola leads the Kantar Worldpanel's Brand Footprint - the world's most chosen
brand, being chosen 5.3 billion times a year by consumers worldwide. The brand
earned number one spot by combining a high penetration of 44% with the highest
global frequency of purchase (chosen 5.3 billion times a year.
 Kantar Worldpanel's Brand Footprint Ranking reveals the strength of brands in 32
countries around the world, across the food, beverage, health and beauty, and
homecare sectors.
 The strongest brands in the ranking have demonstrated their ability to understand
and respond to local needs and reach the most remote consumers in rural areas of
emerging markets by building larger distribution networks. However, all of the
brands still have plenty of room to recruit more shoppers in new geographies, new
targets, new segments, or on new occasions.
 According to the ranking, three Chinese brands - Master Kong, Mengniu and Yili -
have been chosen by local consumers more than 1 billion times a year.
 Kantar Worldpanel noted that availability in emerging markets like China remains a
challenge for global brands, which is why some manufacturers, such as Heinz and
Nestle, chose to acquire local brands.
Globalization

 World is becoming increasingly globally linked in terms of

Production; Technology; Capital; People; Information; Business
 Globalization:
 The process by which firms operate on a global basis,
organizing their structure, capabilities, resources, and people
in such a way as to address the word as one market
 Objectives:
 Serve the world as one market
 No nationality bias
 e.g., Baileys (Ireland), Heineken (Netherlands),
Nestle (Switzerland).
 Global competitive advantage
Global Strategy
 Companies compete in all markets rather Domestic
than on a country-by-country basis. Firm
 Firm needs to consider that
globalization:
 Requires integration of activities and

communication between managers International/

in different countries Multinational
 Different buyer behaviour of Firm
consumers
 Ability to adapt to business cultures

 Necessary management experience

 Political economy- regulations of Global Firm

foreign environment
Drivers of Globalization

 Market drivers  Government drivers

 Convergence of per  Reduction in trade
nd
capita incomes, lifestyles barriers, regional trade
a tastes, emergencef global
o groupings,
market segments privatisation of
government business

 Cost drivers  Competitive drivers

 Push for economies of  Expansion of world
scale, low cost locations, trade, increasing
advances in levels of foreign
transportation ownership
Countervailing Forces for
Globalisation*
 Cultural differences
 Regionalism/protectionism
 De-globalization trends

14
*Hollensen 2004
Benefits/Drawbacks of
Global Strategy
 Benefits  Drawbacks
 Cost reductions  Standardized
 Improved quality products and needs
of customers
 Enhanced customer
preference
 Competitive
positions across
 Competitive
countries
leverage
 Risks across
countries: political,
competitive
 Management and
coordination costs
Characteristics of the Global Firm

 Business concept vis-a-vis geographic concept

 Holistic and decentralized vs. centralized
 Communication and trust amongst its members in the value chain
 Removes duplication of facilities
 Understanding of worldwide economics
 Good corporate citizenship
A company that is highly successful economically. A company where people are
enthusiastic about going to work. A company that respects the environment and
acts as a global citizen. If L’Oréal is to be a good corporate citizen, we must above
all be irreproachable in our individual and collective behaviour.”
Sir Lindsay Owen-Jones, Chairman Jean-Paul
Agon, Chief Executive Officer
LÓreal
 Company Profile
 A century of expertise in cosmetics
 €20.3 billion consolidated sales in 2011.
 130 countries and 23 global brands
 68.900 employees
 42 factories around the world
 613 patents filed in 2011.

 €600 million dedicated to cosmetic and

dermatological research in 2011
 16 research centres across the world

 Mission
 L’Oréal has set itself the mission of offering all women
and men worldwide the best of cosmetics innovation in
terms of quality, efficacy and safety. It pursues this goal
by meeting the infinite diversity of beauty needs and
desires all over the world. Beauty is universal.
Strategic Choice Dimensions

 Market participation in terms of the choice of country

and level of activity

 Requirements for standardization or differentiation

 Location of value adding activities (value chain)

 Marketing -use of brand names, advertising, sales

strategies

 Competitive moves relate to extent moves in a specific

country form a part of a global competitive strategy
What Drives Performance in Global
Organisation? (Hult et. al.,2007)
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Challenges of Global Marketing

Develop global strategic capability – intelligence

Develop shared vision and internal/corporate
culture
Managing innovation, strategic change, and
coordination of activities
Develop Global Brands
The Best Global Brands 2015*
(Interbrand/ Business Week)
Hermès Creates Chinese
Brand Brandchannel (19/07/11)
 Hermès has revealed that it is creating a brand specifically for China's
wealthy consumers.
 Launching in September, the Shang Xia brand (literally, “up and down” in English),
will remain “completely separate” from the main Hermès line to avoid customer
confusion, reports the Financial Times.
 Considered the world's second-largest market for luxury goods after Japan, Hermès'
move to create a distinct brand for China comes as other luxury brands are
expanding in the market opening stores.
 Hermès' first Shang Xia store, in Shanghai, will initially sell home products
including tableware and furniture with a traditional Chinese theme. Instead of
diluting the flagship luxury brand, its executives believe Shang Xia will
compliment the parent brand.
 Shang Xia is a Chinese brand, developed in China with the Chinese team, based on
Chinese craftsmanship and broadly made in
China.
How do we Build Global Brands?
(Holt et. al., 2004)

 Global brand preference driven by:

 Quality perception (44%)

 The ‘global myth’ (12%)

 Social responsibility (8%)

* Holt, D. , Quelch, J.A., Taylor, E.L. (2004), “How global brands compete”, Harvard Business Review, 82 (9),68-75.
Does Everyone Like a Global Brand?

25
Global Segments
(Holt et. al., 2004)

 Global Citizens (55%):They care how the firm behaves

regarding the environment and other issues.

 Global Dreamers (23%): readily accept the Global Myth

and see themselves as global citizens.

 Anti-Globals (13%): try to avoid buying global products

 Global Agnostic (8%): do not see anything especial .

about a global brand compared with a local one

* Holt, D. , Quelch, J.A., Taylor, E.L. (2004), “How global brands compete”, Harvard Business Review, 82 (9),68-75.
The legend….
27

 In the 19th century, the founder of

Concha y Toro, Don Melchor,
discovered that his vineyard workers
were sampling his greatest wines.
 To discourage this action, Don
Melchor spread the rumor that his
deepest, darkest cellar was the
Casillero del Diablo (Cellar of the
Devil), so that no one would dare go
in there. It worked, and a legend was
born.
 Today, this mysterious and legendary
cellar continues to hold the finest,
estate grown wines of Casillero del
Diablo
Case Study:
Casillero del Diablo
1. How did Casillero del
Diablo become a global
brand in 3 years?
2. What are the main
opportunities of the global
wine marketplace for
Casillero del Diablo?
3. What challenges may
Casillero del Diablo
confront in foreign
markets?
Next Week Lecture 12

 Future Trends and Emerging Topics in

International Marketing

 Review for Final Assignment

 Weekly Student Presentations