Current issues in Marketing Practice

Globalisation
– world becoming more globally-linked.
– greater market similarity, more technological uniformity and higher convergence of consumer needs, tastes and preferences
International Marketing
• Production
◦ e.g. China – factories —> cost of labour is lower
• Technology
◦ e.g. call company to resolve issue, speaking with call centre offshore
• Capital
• People
• Information
• Business

Increasing int’l competition in most industries
• competition between local retailers and online retailers from all around the world
Additional opportunities of Australian businesses to go abroad

Major decisions in Int’l Marketing
o Looking at global marketing environment
o Deciding whether to go international
o Deciding which markets to enter
o Deciding how to enter the market
o Deciding on the global marketing program
Global marketing environment
• need to understand trends in macro-environment

political/legal
e.g. some countries might be going through political instability
dangerous for companies to enter the markets

– economic
turmoil —> customer have less spending power

– social/cultural
meet ability to service
e.g. food producer —> muslim —> halal meat
marketers need to understand their targeted markets

– technological
e.g. access to internet
driving force to sell to customers

Deciding whether to go int’l
• Not necessary for all companies
e.g. small local business such as a restaurant
dealing with local markets, who live and work in that area

• In global industries, organization may not have a choice
car manufacturing
ford & toyota manufactured cheaper in other countries
retail
competition with internet retailers

IT-based industries
e.g. buying software, organization can be located anywhere in the world
india – cost of labour cheaper and expertise in computer is high

Deciding which markets to enter
• Aligning with organization’s overall objectives
• How many countries?
• Type of countries?
• High level strategic decisions
• incremental
choosing 1 market, one step at a time
•or simultaneous entry
e.g. launching in many different countries at the same time
not enough resources – financial/human
• concentrated – specific market
• diversified – globally?
Deciding how to enter market
• Exporting
◦ non-physical presence

• Manufacturing-based
◦ joint venturing
setting up with a company that is already based in its country
◦ acquiring
“buy-out” company that already has manufacturing facilities
◦greenfield operation
building manufacturing facilities from scratch

• Relationship-based
◦ contract manufacturing
e.g. foxconn manufacture product for apple such as iPhones/Ipads
◦ strategic alliances

Deciding on global marketing program
• Global strategy
◦ treat world as one big market
mass marketing on global sale

• Multinational strategy
◦ world as a portfolio of national opportunities
diff of countries affect buyers, consumers
segment approach, unique marketing mix
e.g. special products, diff pricing levels

• “Glocal” strategy
◦ standardises some core elements, and localises other elements
standard product in different countries, change elements for each country
e.g. advertising campaign, pricing pains

Standardisation or Adapt
1. Environment factors
2. Market characterisitics
3. Customer issues
4. Competition
5. Product and industry
6. Organisational factors
7. Managerial factors
Environmental factors
consists of broad spectrum of economic, sociocultural, political-legal, and physical forces which have an influence, either direct/indirect on int’l business
Market characterisitc
◦ factors that determine the level of sophistication and development of a particular foreign market, including:
▪ marketing infrastructure
▪ advertising media availability
▪ distribution structure
▪ market size
◦ larger the market —> more adaptation required
Customer issues
◦ focuses on characteristics/behaviour, tastes/preferences and usage patterns of customers in overseas markets
◦ more similarity in customer profiles across countries —> greater standardisation of marketing strategy
Competition
◦ include structure vs. nature and intensity of competition in foreign target markers
◦ significantly and positively associated with both product and promotion adaptation
▪ customise specific requirements of foreign market to gain advantage over rivals
Product and Industry
◦ refers to type of product, technology orientation of product
◦ stage of product life cycle
Organizational factors
◦ focus on internal company characteristics and consist of four items:
▪ nationality of parent company
▪ the nature of company ownership
▪ firm’s int’l experience
▪ foreign market share position
Managerial factors
◦ Refers to managerial attitude toward int’l opeations
◦ Include degree of centralisation of decision-making and corporate orientation
Promotion and Product
1. Straight extension
• don’t change product
• don’t change promotion

e.g. existing product sell to another country

2. Communication adaptation
• don’t change product
• adapt promotion

e.g. mobile phones, in diff country, recognize diff needs usage pattern, cultural social issue —> different advertising campaign

3. Product adaptation
o don’t change promotion
o adapt product

e.g. Coca cola, sweetness of product varies, advertisement remain the same

4. Dual adaptation
• adapt promotion
• adapt product

e.g. research and analysis of current market, customer needs new promotion and product

5. Product invention
developing a completely new product
• e.g. McDonalds different culture and food

Deciding on global organisation
• Export department
◦ simply shipping out goods

• Int’l division
◦ one or more functions responsible for offshore activities, marketing, manufacturing, research, finance, planning, personnel

• Global organization
◦ worldwide manufacturing facilities
different manufacturing around the world to meet the needs of customers
◦ worldwide marketing approaches
marketing department has people scattered around the world
◦ worldwide financial flows
dollars moving from one office to another
◦ worldwide logistic systems
ship products when and where based on customers needs

Social Media
Interactions among people in which they create, share and exchange info and ideas in virtual communities and networks
Traditional Marketing being sidestepped by consumers
• Resisting push-marketing
◦ blocking ads, do-not-call register

• Favouring new interactive channels
◦ online, support by broadband
e.g. youtube

• Prefer peer recommendations
◦ e.g. when researching online financial products
◦ Info obtained:
47% – family friends
28% – company website
20% – company advertising

Opportunities in Social Media
• Listening
◦ gaining insights from others’ conversations
e.g. customer/competitors

• Talking
◦ engaging in conversation to promote
marketers <—> customers

• Energising
◦ identifying enthusiastic customers and using them to influence others
advocate, giving them free products, good customer service —> positive word of mouth

• Supporting
◦ enabling customers to help each other
fb sites, message boards
e.g. review site for products online

• Managing
◦ providing employees with social media
employees must be equip with social media tools to communicate w/ customers

Ethical issues in Marketing
1. High prices
2. Deceptive practices
3. High pressure selling
4. Unsafe products
5. Planned obsolescence
6. Marketing impact on society
7. Actions to regulate markerting
8. Social responsibility in marketing
9. Maintaining social responsibility
High prices
Marketing systems are often accused of inflating prices due to:
• high costs of distribution
◦intermediaries
▪ profit – consumer paying the costs from manufacturer to end consumer
◦ inefficiencies
▪ limiting places for customers to buy products
• high advertising and promotion costs
◦ expensive campaigns, excessive packaging, etc.
• excessive gross profit margin
◦ fair vs. greedy?
▪ marketers charging higher than they should
Deceptive practices
• Deceptive pricing
e.g. artificially inflated “was price
• Deceptive promotion
e.g. overstating product’s feature or performance
• Deceptive packaging
misleading oversized packs

* Competition and Consumer Act regulates against many deceptive practices

High pressure selling
• Unsought products
e.g. insurance, gym memberships, electricity, charity donations
• Buyer can sometimes be talked into buying something they don’t need or want
• Laws protect consumers in some situations
e.g. mandatory “cooling-off” periods
• Marketers need to consider short term vs. long term benefits
Unsafe products
• poor quality/performance
• products delivering little real benefit
e.g. foods with no nutritional value
• product safety
manufacturer indifference
increased production complexity
e.g. outsourcing – as economic as possible
poorly trained labour
poor quality control
e.g. toys coloured with unsafe paint]
Planned obsolescence
• products become obsolete before they should need replacement
updating styles
e.g. fashion
continually adding new features to make older models obsolete
e.g. electronics industry – iPhone models
using materials that will fail earlier than they should
e.g. lower quality products
Marketing’s Impact on Society
• Marketing accused of many “evils”
false wants and too much materialism (what people own)
too few social goods
e.g. overselling private goods —> increase in demand for public services
cultural pollution
e.g. materialism, sex, power, status
too much political power
lobbying politicians to support an industry’s interests ahead of society
e.g. oil
Actions to regulate marketing
• Laws
• Consumerism
◦ organised movement of consumer whose aim is to improve rights and power of buyers in relation to sellers
• Environmentalism
◦ organized movement of concerned citizens businesses and gov’t agencies seeking to protect and improve people’s living environment
Social responsibility in marketing
Involves campaigns that encourage people to adopt socially beneficial behaviours
e.g. safe driving, eating more nutritious food, improving working conditions of people
4 step pyramid of social responsibility
1. Economic
– Be profitable
– Foundation upon which all others rest

2. Legal
– Obey laws
– Law is society’s systemisation of right and wrong

3. Ethical
– Be ethical
– Obligation to do what is right, just and fair avoid harm

4. Philanthropic
– Be corporate citizen
– Contribute resources to the community; improve quality of life

Maintaining social responsibility
• organisation should make marketing decisions by considering consumers’ wants
• organisation’s requirements
• consumers’ long-run interests and society’s long-run interests