Global and Local Strategies Regarding Products and Prices. Communication between Global Brands and Global Markets


Elaboration, 2017
9 Pages, Grade: 1,7

Excerpt

Contents

Part 1:
1. Global, Local and Glocal Strategies Regarding Products
2. Global, Local and Glocal Strategies Regarding Prices

Part 2:
1. Analysis of the Target Market of Haagen Dazs
V. List of Figures
VI. References
VII. Bibliography

PART 1: STRATEGIES

1. Global, Local and Glocal Strategies Regarding Products

According to Keegan and Green (2013), a product is a “[…] good, service, or idea with both, tangible and intangible attributes that collectively create value for a buyer or user”. The management decision, which product and brand strategies should be followed within the global market, is the indispensably crucial core of international marketing (Keegan and Green, 2013). What is understood as a product, covers not only the functional physical object which is sold, but also the packaging and supporting services which together constitute the value brought to and bought by the customer. A product however, is different from the brand. A brand is perceived in the customer’s mind. It is the sum of experiences, expectations, and feelings. The perception of a brand for a certain product, can also have the function of a quality certification which encourages customers to buy. Thus, it is a promise of the company towards the customer, that the products have particular benefits. Moreover, it is a tangible attribute which distinguishes a product from those of the competitors. Since the 1980’s, technology drives the convergence of the global consumer markets (Levitt, 1983). The premise that differences between markets are fading out, challenges management to develop strategies to market products under global brands on local, regional, national and international market levels. The globalisation lead to the product standardisation strategy which was heavily relied on (Keegan and Green, 2013). The standardisation strategy aims to market products in multiple markets, which are essentially the same in respect of the product itself, the sales and promotion activities, the advertising activities and the distribution channels (Johannson, 2007). An excellent example for product standardisation is Coca-Cola. It is sold under the same appearance (packaging and logo design), with minimal differences in several markets. The company tries to establish the same brand image in all markets (Coca-Cola, n.d). Global brands like Coca-Cola usually start as local brands and are expanded globally if the product has proven the potential to correspond to, the aforementioned, converging expectations and tastes of the global market (Hollis, 2008). The advantage of the standardisation strategy is in the achieved synergy effects, reducing costs which are caused by coexisting multiple variations which have to be managed (Keegan and Green, 2013). However, the standardisation has the disadvantage, that the product is not uniquely tailored for the target market. This entails possibly inappropriate products for a certain market and causes unsatisfied customers (Keegan and Green, 2013). In this respect, an example would be the bed size of IKEA beds. Although IKEA’s beds are widely standardised (in respect of design and functionality), a one size fits all bed would cause inconvenience in countries where the average person is significantly smaller or taller than the offered size. In contrast to globalizing markets, where different product needs fade out (Levitt, 1983), some markets demand custom products which can differ. In order to fulfil these requirements, 2 strategies, the localization and the adaptation strategies are a possible approach (Keegan and Green, 2013). Although the 2 strategies sound very similar, Johansson (2009) argues, that localisation involves the necessary change of products to be able to sell in foreign local markets (sockets, adapters, headphone jacks and other national standards), but adaptation is the change of products in order offer a culturally fitted product which corresponds to the tastes and expectations of the foreign local market (Johansson, 2009). For the product adaptation, the cultural differences (Hofstede, 2010) have to be considered. For example, McDonalds offered the Mala Grilled Chicken Sandwich in China only. A McDonalds executive stated the importance of localization and adaptation that McDonalds is aware of and respectful towards cultures they interact with. Moreover, he states, that “We look to develop comfort foods based on local foods, tastes and textures that the consumer wants […] [and that the customer] wants more than just Western tastes” (Feretti, 2010). This response of McDonalds adapting the product towards the local markets, is the proper response of the management. Although generally the markets converge as Levitt (1983) stated, the particularization of certain markets is still extant and even progressing simultaneously. This co-existence of simultaneously converging and diverging market tendencies is called glocalization (Robertson, 2000). The mentioned behaviour of global brands like Coca-Cola and McDonalds is the manifestation of the requirements of glocalization. Therefore, standardising products but also acknowledging cultural differences (Hofstede, 2010) of the target market simultaneously, reflects the philosophy of going global but acting local.

2. Global, Local and Glocal Strategies Regarding Prices

Besides the aforementioned approaches of standardization (Keegan and Green, 2013), adaptation and localization (Johansson, 2009), there are similar strategies for global pricing as explained later. The price is the part of the marketing mix, which is the easiest to change. The underlying of the pricing strategies are the pricing objectives. Different pricing strategies can have different outcomes as will be explained later. Comparing different markets, not only the expectations and requirements towards to product itself varies, but also the money the potential customers have and are willing to pay for getting the product benefits. One of the main issues in global marketing is therefore to determine the right price to charge. In global marketing, there are issues which emerge through the global sales. For example, when exporting a product, transport costs, tariffs and all other added costs need to be considered. Moreover, it is possible that the same product is positioned differently in different markets. For example, Artois beer is a low-priced beer in its domestic market Belgium, but a premium-priced brand in the export markets (Keegan and Green, 2013). Market skimming is one pricing strategy. The market skimming strategy is appropriate for companies which follow a diversification strategy and offer products which have a superior value for the customer, and therefore, the company is able to charge a premium for the product. Objectives which are aimed to achieve with the market skimming strategy are high profitability and rapid recovery of product development costs (Keegan and Green, 2013). A well-known example for the skimming strategy is Apple. Apples innovative products, in particular the IPhone had revolutionary technology, which allowed the company to charge high premiums (Nielson, 2014). If the objective is of non-financial nature, by means that a company is trying to gain or maintain market share, the penetration pricing strategy is used to achieve this objective. However, as products are often sold below cost, first-time exporter are challenged financially to endure this strategy. Moreover, captive pricing is a strategy where 2 or more products are depending on each other. Companies like Sony and Microsoft even could lose money on each game console they sell, however, high pricing of video games ensure high profitability of the industry (Keegan and Green, 2013). Probably, the most known pricing strategy is cost plus pricing. In this approach, the company simply adds a certain absolute or relative amount of margin to the costs which each product unit caused and determines the price in this way. This strategy is often criticized as the company either could charge more for the product, or charged to much for the product or more accurately, the product has features the customers do not need and are not willing to pay for (Keegan and Green, 2013). Therefore, target costing emerged as an approach which does not start within the company, but starts at the needs and expectations of the customers. If the target costing strategy is followed, market researchers try to identify how much a customer is willing to pay for which product attribute. Starting at the customer’s needs, the company can then investigate, if it is able to offer the respective attributes for the price which the potential customers demand. In particular for expensive products like cars, target costing can prove as appropriate as certain features can cause expensed but are not necessary for every segment in which a car is sold (Keegan and Green, 2013). In global pricing, there are three pricing policies which can be followed.

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Details

Title
Global and Local Strategies Regarding Products and Prices. Communication between Global Brands and Global Markets
College
Northumbria University
Grade
1,7
Author
Year
2017
Pages
9
Catalog Number
V376519
ISBN (eBook)
9783668543836
File size
931 KB
Language
English
Notes
The author of this text is not a native English speaker. Please excuse any grammatical errors and other inconsistencies.
Tags
Haagen Dazs, Marketing, Globalization, Glocalization, Strategy, Market Entry, Localization
Quote paper
Ender Gülcan (Author), 2017, Global and Local Strategies Regarding Products and Prices. Communication between Global Brands and Global Markets, Munich, GRIN Verlag, https://www.grin.com/document/376519

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