ESCP Marketing Course Notes PDF

Marie Michèle HELLE - ESCP Marketing ESCP MARKETING COURSE Session 1 - 13.01.2025 - Introduction. ​ What decisions have to be made? When? Why? Based on what data? ​ What are our options, and their pros and cons ​ W...

Marie Michèle HELLE - ESCP Marketing ESCP MARKETING COURSE Session 1 - 13.01.2025 - Introduction. ​ What decisions have to be made? When? Why? Based on what data? ​ What are our options, and their pros and cons ​ What are the risks and how can they be mitigated? International marketing decisions are: -​ executed in a large diversity of business contexts -​ taken in steps to penetrate, develop, and finally animate foreign markets for sustained business performance. Internationalization. Steps: 1.​ Measuring the attractiveness of a country 2.​ Measuring the assets of a company. Session 2 - 20.01.2025 - Researching international consumers and markets. What are the pitfalls and protocols in international market research? Difference in international marketing research - 3 research types: -​ general macro-environment information about a country (example: population, income distribution, education level, urbanised population). An example is the GDP, that doesn’t take into account the grey market, informal economy. Issue of the developing countries: making the grey economy formal, like many people do not have bank accounts, especially for women. -​ consumption-related data (example: penetration of digital media, digital penetration, sustainability issues, habits). Example: digital banking started in Kenya, using GSM network (2G). It was one initiative to break the digital divide, pushed by the World Bank, public organizations and the government to equip Kenyans, especially farmers, with a means to trade. All transactions were being done on a very simple GSM telephone, the first wide scale development of online banking. -​ specific information directly applicable / useful to develop 4P decisions (example: local distributors in a specific category, price consciousness). 1.​ Risk of ethnocentrism: way that people behave, think and consider as “normal”. Example with the case of Unilever in Brazil, that had to adapt to the conditions on the field (no running water, no electricity nor washing machines, etc). 2.​ Time and cost: Europe has vast discrepancies. Example: You can’t use the same development strategy in Spain and in the Netherlands. Europe is not a single market. Same applies for the US. If you use the internet for your research, you become dependent on the internet penetration among the population in the country. 1 Marie Michèle HELLE - ESCP Marketing There are some supply driven markets (motorway, m obile network), where people use the service / goods when it is offered to them. Before that, they do not see the need for it so when you ask the population if they need it, they will reply “no”. Gapminder game → Check some beliefs and facts. Because of our education and background, we are more fed with negative information, as positive content / news do not make headlines. Human nature makes us more sensitive to negative than to positive information. There is also a feeling of being privileged (with access to education / infrastructures etc). We are biased and it influences our perception of the world. We introduce the bias in the process and in the questions. Acknowledging that we don’t know certain things is important. 10 reasons (“dramatic instincts”) we’re wrong 10 factfulness commands about the world 1 Gap Locate the majority 2 Negativity Expect negative news 3 Straight Imagine non straight lines 4 Fears Control your fears 5 Size Check proportions 6 Generalization Question your categories 7 Destiny Notice slow changes 8 Single Use multiple tools 9 Blame Resist blaming 10 Urgency Take small steps Pitfall #1: Research problem formulation across country markets. P&G example with Ace detergent research in Mexico. Wrong question at first: What about Mexican washing machines? Right question: How do Mexicans wash their clothes? What are their habits / customs? Possible solution: decentering method. The problem is called “Self-Reference Criterion” (SRC). It refers to (refers to managers’ unconscious tendency to resort to their own cultural experience and value systems to interpret a given business situation). Pitfall: The digital divides are still very significant. As of 2024, internet penetration rates vary significantly across major regions of the world. The mobile penetration rate varies significantly across major regions of the world. 2 Marie Michèle HELLE - ESCP Marketing Pitfall: Problems with secondary data research. Poor accuracy of data linked to: ​ Various definitions of some indicators (e.g. social class) ​ Poor quality of data collection processes (e.g. international statistics do not consider cross-border smuggling) ​ Political sensitivity of data (e.g. GDP in China). Age of Data: ​ Frequency is much less outside of Triad markets. ​ Some important data (e.g., frequency of census taking) are not always available easily. Reliability over time: ​ Changes in definitions of economic indicators. Example: statistics of unemployment, of inflation. Comparability of data: ​ For cross-country comparisons, it is important to check the conceptual equivalence and functional equivalence of products. ​ Various biases in international market research (e.g., response style, questions, scales, samples). Lumping of data: ​ Statistics grouped in too broad categories for interpretation by international marketers. Pitfall: Respondents’ cultural norms creating research biases. These biases will impact the comparability of data collected. 3 Marie Michèle HELLE - ESCP Marketing How to identify international consumer segments? Market clustering: 2 methods. Market clustering: ▪ Statistical procedure for dividing countries into groups (clusters). ▪ Countries belonging to the same group are very similar to one another but quite distinct from members of other groups. ▪ The most popular technique is to use some type of distance measure. ▪ Squared distances are computed for each pair of countries in the set. 1.​ Macro-segmentation of countries. Geographical segmentation on macro variables to identify geographic segments (regions, countries, etc.) with homogeneous characteristics that are attractive to the company. → Leads to clusters of countries. 2.​ Micro-segmentation of countries. Segmentation on the micro level, on the level of customers in the selected countries. ​ Classical segmentation in the country level ​ Research for transnational segments → Leads to clusters of consumers. Top-down: In practice, managers start by a macro-segmentation, helping them to create regions (for example, Scandinavia; Middle East). Then they try to identify segments across countries and local segments in each country thanks to micro-segmentation. From macro to micro. Bottom up: Sometimes (e.g., in “universal” product categories such as sport shoes), segments are identified on the consumer level and then aggregated to country clusters of similar consumer segment structures. From micro to macro. Classic country-level micro segmentation - 4 classical segmentation criteria. Demographics Age of buyers, education, income, area of living. Socio-economics Housing, travelling, home equipment. Behavior-based Preferred brand, product penetration, spending per capita in the category. Psychographics Attitudes, opinions, beliefs, intentions, liking, lifestyle, values, cultural habits. Advantage: tailored to the local market for multi-local marketing. You can get a tight market segmentation. Limits: More complex and costly; specific STP strategy and 4Ps for each country. Example of segmentation: VOX Cinema segmentation in the UAE using the criteria of « experience sought » (Who? Why-When? What?) Different offers at different places for the different segments they want to serve. 4 Marie Michèle HELLE - ESCP Marketing Session 3 - 27.01.2025 - International product & branding decision. The conceptual equivalence of products: meaning of products. The functional equivalence of products: usages of product. Key learning points: 1.​ There are important advantages of standardization and adaptation in developing international product strategies. 2.​ Especially MNCs must be aware of them and optimize the standard (global) and the unique (local) on each attribute of the products (physical, symbolic and service): this leads to many hybrid forms of “international products”. 3.​ Economies of scale imperatives make it impossible to reach compromise between customized products and large-scale manufacturing operations. 4.​ Managing Country-of-Origin effects is important for many product categories / brand names origins. 5.​ International branding strategies range from (many) local to (few) regional and (very few) “global” brands. MNCs have to manage such portfolio and ensure international brand architecture. Case application: Coffee. -​ What is the occasion? for pleasure, for a break, alone or is it a social function? -​ Which content? Small or large cup, bowl, disposable cup etc -​ At what time of the day? -​ Can instant coffee be considered real coffee? -​ Different ways of making coffee depending on the country etc… Level 1: Deciding for physical attributes. Compulsory adaptations: climate, usual sizes and packaging in local markets, technical standards, hygiene regulations, basic differences in consumer taste. ​ The trend towards international standardization (CEN, CENELEC, ETSI and ISO...) ​ New production methods allow for a better compromise between customized products and large-scale manufacturing operations: different products based on common parts mass customization lagged differentiation international product design 5 Marie Michèle HELLE - ESCP Marketing Level 2: Deciding for A-S of symbolic attributes. ​ Symbolic associations related to physical attributes (color of a product, its shape, etc.). Colors have a different meaning depending on the country. ​ Meanings Related To The Brand Name (product /corporate name). When translated, brand name can be inappropriate for a country. ​ Consumer perceptions of the origin of the product provided that: 1) they are searching for such information, 2) it is available, and 3) they take origins into account: i.e. are exposed to “Country of Origin” effects (COO). Cultural risk on symbolic attributes, with the example of Henkel in Russia with the blue and yellow WC product, exactly like the Ukrainian flag, or the example of Puma with the shoes having the colors of the flag in UAE. Level 3: Deciding for A-S of service attributes. It is difficult to standardize service attributes: ​ Local differences in service delivery conditions ▪ Limited potential for pure economies of scale ​ Cross-cultural variation in service expectations: Style of personnel in contact and attitudes in key interactions with customers Culture and waiting time: pre-, in- and post-process Contents of service provided (eg. smartphone Apps) 6 Marie Michèle HELLE - ESCP Marketing Session 4 - 03.02.2025 - Product and branding decisions. Case study - wine Rhone Valley Pull strategy = FMCG where the customer is aware of the product and asks for it. The product has to be simple. Product is being bought. Push strategy = you try to convey the product to the customers, through specific intermediaries who drive awareness of the product to the customer. It is more for complex products, like the Rhone wine. For Rhone wine, it is a push strategy → create awareness / environment around the wine. It requires a lot of training and technique to sell the product. Product is being sold. For this Rhone wine case, it is necessary to take a B2B approach, with a push strategy. 1.​ Functions of a channel The core function of the distribution channel: exchange efficiency (lower transaction costs). ​ Distribution: transporting and storing the goods (eg: physically moving products from manufacturer to store) ​ Contact: finding and communicating with potential buyers (eg: setting up stores in strategic locations) ​ Promotion: developing and distributing information about an offer (eg: sending weekly leaflets highlighting special offers) ​ Matching: fitting the offer to the buyer’s needs (eg: selling a single can of Coke instead of a whole pallet) ​ Negotiation: reaching an agreement on price and other terms and conditions (eg: matching supply and demand in an online auction process) ​ Financing: acquiring and using funds to cover costs of channel work (eg: offering buy-now-pay-later deals) ​ Risk taking: assuming the risks of carrying out the channel work (eg: paying the supplier before goods are sold to end-consumers) ​ Information: providing information about market actors and trends (eg: providing market share data based on checkout information) 2.​ Process of value delivery —--- 3.​ Distribution system See the slide. Flow between manufacturer, distributor and customer. Distribution system: the unit of analysis in distribution channels is not the single firm, but the system of firms that perform the distribution function / the value delivery process. 1.​ Marketing channel: emphasis on the transactions, power, and social exchange relationships. 2.​ Supply chain: emphasis on the coordination and integration of operations. 7 Marie Michèle HELLE - ESCP Marketing Degree of control of the distribution: -​ ownership with 100% control (Zara, Walmart) -​ international franchising which requires transfer of know-how to local partners to specific countries (McDonald’s) -​ exclusive dealers with marketing relationships with distributors (Lamborghini) 4.​ Channel flows 5.​ Channel actors EXAM: QUESTIONS ABOUT PRICING → READ THE SLIDES. 8