How To Create A Global Marketing Strategy
As the world becomes more interconnected, it's important for businesses to have a global marketing strategy. By definition, global marketing is "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals."
Core Components of Global Marketing
In order to create a global marketing strategy, businesses need to understand the following key areas:
- The global marketplace: Businesses need to have a clear understanding of the global marketplace, including the different cultures that make up the marketplace, as well as the different economic and political factors that can impact business.
- The customer: It's also important to understand who the customer is and what they want, including their needs, wants, and values.
- The competition: In order to be successful, businesses need to understand who their competition is and what they're doing, including their strengths and weaknesses, as well as their marketing strategies.
Once businesses have a clear understanding of these elements, they can start to develop a global marketing strategy. Market research is a crucial aspect before businesses can develop their approach.
Types of International Strategies
A firm that has operations in more than one country is known as a multinational corporation (MNC). Multinationals have chosen an international strategy to guide their efforts across various countries. There are three main international strategies available:
1. Multidomestic Strategy
A firm using a multidomestic strategy sacrifices efficiency in favor of emphasizing responsiveness to local requirements within each of its markets. Rather than trying to force all of its American-made shows on viewers around the globe, MTV customizes the programming that is shown on its channels within dozens of countries. Similarly, food company H. J. Heinz adapts its products to match local preferences.
2. Global Strategy
A firm using a global strategy sacrifices responsiveness to local requirements within each of its markets in favor of emphasizing efficiency. This strategy stresses the need to gain economies of scale by offering essentially the same products or services in each market. Microsoft, for example, offers the same software programs around the world but adjusts the programs to match local languages.
3. Transnational Strategy
A firm using a transnational strategy seeks a middle ground between a multidomestic strategy and a global strategy. Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. Large fast-food chains such as McDonald’s and KFC rely on the same brand names and the same core menu items around the world while making adjustments where necessary.
The following table summarizes the primary differences between these strategic approaches:
| Strategy Type | Primary Focus | Key Characteristics |
|---|---|---|
| Multidomestic | Local Responsiveness | Sacrifices efficiency to emphasize local requirements; heavy customization. |
| Global | Efficiency | Sacrifices local responsiveness for economies of scale; standardized products. |
| Transnational | Balance | Seeks a middle ground; balances efficiency with local preference adjustments. |
International Pricing Strategy
Pricing strategy forms another cornerstone of a global marketing program–it represents one of the most critical and complex issues in global marketing due to economic, financial, and mathematical implications. Price is the only marketing mix element that generates revenues; all other elements entail costs. A company’s global pricing policy may make or break its overseas expansion efforts.
Common Pricing Methods
- Price skimming: High prices are set to meet the high demand, intended to reach an interested segment with high associated value.
- Market penetration: A low price is established with the main objective of attracting and stimulating demand.
- Price based on cost: Fixed and variable costs are calculated and the price is established by a predefined margin.
- Bundle or Packaging: The hotel or business proposes to sell two or more services together in a package with a single price.
- Psychological price: The price is established considering the psychological influence of numbers, such as those ending in 9 or 99.
Challenges in Global Marketing
Firms face significant challenges in coordinating their strategies across various countries. One vexing problem is Parallel Importation or Gray Markets. Parallel imports develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer’s regular distribution system. The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets. Additionally, firms face price escalation due to exchange rate fluctuations and higher costs like tariffs and distribution expenses.
Global Positioning Strategy
Global positioning strategy is a type of global expansion strategy used by companies to gain cost leadership through low differentiation, efficiency, and centralized operations. When price is the most important consideration and companies have little to gain from customizing to a local market, global strategies are often the best choice for the organization. This helps growing companies improve efficiency and reduce costs while exporting their reputation internationally.
