Ebook The SAGE handbook of international marketing: Part 2

www.downloadslide.com SECTION 4 Global Strategy www.downloadslide.com www.downloadslide.com 13 Global Competitive Marketing Strategy Michael Grund, Oliver Heil, and Mark Elsner INTRODUCTION There is little doubt that increasingly glob-alized markets have lead to a fundamental rearrangement of the determinants of firms’ competitive marketing strategy. Over two bil-lion persons have been added to the world’s economies that are largely driven by market structures and, thus, competition. The persons have been added as consumers and competi-tors and, oftentimes, as winners and losers of global competitive interplay. Certainly, global competition has already changed the lives of hundreds of millions of persons. Not surprisingly, globalization has come to be one of the most controversial discussed issues of our times with a multitude of facets that are frequently misunderstood. As a result, widespread biased perceptions about what world-spanning markets really mean and what they can accomplish for all participants exist. However, it seems safe to state that a global culture based on competitive interplay is on the rise. Importantly, one has to keep in mind that an emerging global culture will be influenced and formed to a high degree by communica-tion. Here, the technical development of the past decades – in particular the rapid diffu-sion of the Internet – has obviously paved the way for cultures and societies to become globalized. Consequently, this development forces businesses into rethinking and reassess-ing their competitive advantages. This moti-vated us to discuss the internet explicitly as a catalyst for global competition. Naturally, the issue of competitive advantage needs to be examined in detail. In particular the competitive advantages of countries or regions have become more and more impor-tant for marketing strategy at firm level, as those developments are about to reshape the environment in which the businesses are playing to a great extent. Thus, to develop a global competitive marketing strategy, several pillars of the market economy need to be examined. Further, issues of globalization that pertain to global competition need to be identified and translated into meaningful managerial issues. Today’s meaning of strategy – e.g., as concepts such as product life cycle (PLC) or established competitive arenas are undergo-ing fundamental change – needs to be clari-fied and contrasted with other strategic and tactical company activities. Consequently, www.downloadslide.com 264 THE SAGE HANDBOOK OF INTERNATIONAL MARKETING we will examine issues pertaining to compe-tition, globalization at the country, company and consumer levels and link them to a firm’s global competitive strategy. Competition, global competition and global competitive strategy Competition is viewed as the heart of our market economies. It is the ingenious con-nection of consumers’and producers’selfish-ness that makes competition so precise, fast and dynamic. As a result, all stakeholders of society can benefit. More precisely, a pro-ducer’s selfish desire to maximize profits typically translates into better products as consumers tend to be willing to pay higher prices for such products.1 However, today’s competition is getting more intense than ever and often arises from rather unlikely sources. It is not a new idea that the utility a product fulfills should be considered as the origin of competition. And the basically identical utility may arise out of very different products. For example, should the airline industry start to look at potential substitutes for business travelers? In some cases this might be sophisticated video-conferencing technology instead of flying to the next meeting in another city. Additionally, competition is increasingly viewed as the culprit for seemingly undesir-able outcomes of the market and marketing process. Among such outcomes are products that are seemingly too cheap, income distri-butions in Asia that are too heterogeneous, child labor that contradicts beliefs held in Europe and Northern America, wage-limits in Europe that surprise Americans and make Asians wonder, etc. In short, global competi-tion is facing fundamental challenges – and opportunities – resulting in a need to update global strategies. At the same time global competition is heat-ing up as more and more companies and coun-tries enter the world’s markets. While entry by companies is considered ‘normal’, such entry by countries is somewhat new. For example, China and Russia enter markets largely as ‘countries’, while their govern-ments are holding the respective companies more or less closely. At this time of changing competition, perception and attitudes toward global mar-kets and global competition are changing rapidly. Many citizens in Western countries, for example, call for ever more domestic pro-tection, while at the same time they generally enjoy the cheap products made elsewhere, e.g., in Asia. This is especially noteworthy as many European countries are doing very well on the scale of competitive competence and in many studies are seen as the temporary winners of globalization. Notably also, the debate on environmental issues is likely to have much of an effect on global competition and ensuing global strategies. The debate about global warming and global climate issues implies that there is a global responsi-bility for that one, huge world. More and more citizens perceive the world as one entity and, thus, one market. As a result, European and American citizens and consumers expect that all countries (especially BRIC, i.e., Brazil, Russia, India and China) respect the globe as a whole and that they are willing to sacrifice ‘now’ so that things do not worsen ‘later’. This is likely to cause ten-sion for various reasons. For example, BRICs request the same rights to develop – and, if necessary, to pollute – as others have done, e.g., Liverpool in England during the indus-trial revolution. Obviously, major challenges for global competition and global strategies result. Even though competition develops on a global level, it has also become more and more country-specific. Many European firms seem to run out of competitive advantages that rest in their product’s core. Thus, Europeans may be forced to shift competi-tion to new dimensions, for example, her-itage. Chinese firms are often perceived as mainly possessing a cost advantage. India may come out ahead due to her ability to include a heritage dimension due to her European ‘upbringing’, yet being ‘hungry’. www.downloadslide.com GLOBAL COMPETITIVE MARKETING STRATEGY 265 One might ask if this leaves US companies a bit ‘stuck in the middle’? By global competitive strategy we mean a consistent and overarching set of objectives, goals and rules that determine a company’s decisions and actions around the globe. This implies the necessity to pay close attention to the development of markets on a global scale, anticipating transformation and identifying new competitive advan-tages. Accordingly, such a strategy deter-mines a company’s specification of the marketing mix around the globe. The global competitive strategy will determine how to act, how to react, how to provoke, how to appease, how and when to introduce new products, withdraw old ones, enter or exit markets, etc. Often, global competitive strategies result from a multi-stage process (e.g., Yip 1992, 1998). Such a process may entail the identi-fication of a company’s core competitive advantages and the evaluation of the global potential of the company’s competitive advantage. In particular, a global competitive strategy will specify a company’s competi-tive conduct such as its reaction behavior. For example, Porsche maintains a global competitive strategy of not reacting in firm price-cutting, independent of rivals’ price-cutting, even if it hurts sales, revenues and profits. The recent persistence during a time when, for example, BMW and Audi cut prices massively attests to this feature of Porsche’s global competitive strategy. NEW DETERMINANTS OF GLOBAL COMPETITION AND GLOBAL STRATEGY In this section we describe and discuss several new or emerging determinants that are most likely to change the conduct of global compe-tition and the development of global strategy. These determinants include the Internet; new dimensions governing competitive positioning such as humor or heritage; global competitive intelligence; anti-globalization activists and product piracy. The Internet as a catalyst for global competiton The worldwide diffusion of the Internet, and associated with it the ongoing digitalization of certain industries, lead to a fundamentally new model for markets and global market competition. Media and entertainment indus-tries, for example, no longer need to reconsider expected sales or worry about a minimum of marketed items, because virtual shelf space is infinite, variable costs are factually non-existent and access to become markets has become fundamentally easier. In the so-called physical world, this is the main reason for retailers to carry only a limited selection of goods, leading to market structures as we have known them for decades and centuries. In comparison with the above-described ‘Internet’ economy, those structures conflict with the total fulfill-ment of individual preferences as only certain ideal types of products are offered, corresponding with the needs and require-ments of certain segments. But everyone’s preferences are different and even if somewhat sophisticated segments can often be identi-fied, the individual’s taste is bound to diverge from that of the ‘mainstream’ at some point. This is where the unlimited selection of diversified goods of the virtual marketplace – which carries the potential to almost totally fulfill each single consumer’s preferences – drastically changes the market structure. The marketing situation is changing from a world of scarcity to a world of abundance leading to ‘The Long Tail’.2 Importantly, those market structures allow businesses operating under such conditions to achieve significant revenues, even if they are selling only small numbers of certain items. The accumulation of many of those revenues though, may lead to profits that easily outnumber those of the market leaders. Thus, this structure fundamentally affects the ... - tailieumienphi.vn