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Global Marketing 5th Edition Johny K Johansson - Solutions
6. Prepare external documentation.
5. Prepare internal documentation.
4. Make sure senior management understands the transfer pricing audit process, issues, and exposure.
3. Prepare a financial model to test the method agreed on.
2. Compare third party (arm’s-length) transactions with“related-party” transactions. Adjust prices.
1. Before the beginning of the annual business cycle, meet with outside advisers and agree on a game plan.
5. Formulate a global pricing strategy that still pays attention to basic issues such as competition, price–quality relationships, and stage of the product life cycle.
4. Evaluate whether countertrade, including barter, is an acceptable pricing option in countries with a lack of hard currency, especially when global financial turmoil puts domestic currencies under pressure.
3. Explain how transfer prices between a global company’s plants in different countries can be used to motivate subsidiaries and measure performance, while remaining supportable to local tax authorities.
2 Keep prices in different countries within a narrow band or “corridor” in order to discourage gray trade, which attempts to take advantage of currency exchange shifts and local price differentials.
1. Help develop coordinated price policies by regions or trading areas, and know why it is necessary to do so.
5. Examine one or more of your branded possessions. How could you know that it is not a counterfeit?Could it be a gray good?
4. How can a global brand (such as McDonald’s, for example) protect itself against antiglobalization forces?
3. Analyze the reasons why some local products (such as local beers) might have an enhanced potential when standardized global brands enter the market.
2. Are you or your peers influenced by brand names? For which products? Why, or why not?
1. Use store visits, the Internet, and so on to try to identify whether a particular brand that you like is global or local—or regional.
“Double-branding,” in which both names are reproduced faithfully to their old logos and simply placed next to each other. This can be somewhat confusing but avoids losing loyal customers and channel members. Both the Whirlpool and Philips names appeared on appliances when Whirlpool took over
“Endorsement branding,” with one brand introducing the new brand. Messages such as “From the makers of…” or “From the folks who brought you…” or simply“From…” or “By…” establish the connection and the legitimacy of the new brand.Mars, the American-based confectionery
5. Should the growth be limited to the creation of a regional brand? Even if the brand portfolio has a direct global competitor, or if some local brands cannot be changed, the possibility of creating a regional brand should be considered. A regional brand can be a stiff competitor for the global
4. Does the brand complement other global brands in the portfolio or compete directly against them? Because of resource demands and the threat of cannibalization, it is seldom justifiable to keep two directly competing global brand names, which is one reason Sony decided to drop the Columbia record
3. Is the name available legally in many countries? Philips, the Dutch electronics giant, has been hampered continuously in the North American market because the Phillips oil company was the first to register its similar brand name there.
2. If the name suggests a country association, is the effect positive? Is the source country a leading market or a follower? The name of GM’s German subsidiary (“Opel”)may be preferable to “Chevrolet” with its American heritage.
1. Does the brand name make sense outside of the source country? What does it mean?What associations are generated? Nokia from Finland, a leading company in mobile phones, is not unaware of the fact that its name sounds vaguely Japanese: The Finnish and Japanese languages come from the same roots.
Brands of Six Multinational Companies in 67 Countries Source: Betsy V. Boze and Charles R. Patton,“The Future of Consumer Branding as Seen from the Picture Today,” Journal of Consumer Marketing 12, no. 4 (1995), p. 22 Brands Found in Brands Marketed Total Number 50% or More in Only One Company
2. Which local brands should be chosen for the changeover? Can the local managers be persuaded to drop one or more of their brands? The local brand to be changed has to offer a product line that matches the globalizing brand’s product line. Furthermore, it should preferably not be a very strong
1. Should one brand be globalized by simply changing other local brand names? If the corporation already has local brands in the product category, those might need to be changed to the globalizing name. In the drive to globalize the Nokia name, the Finnish company used its name for all the
Other factors to consider include the fact that consumers typically associate global brands with positive attributes, including higher esteem, good quality, and a sense of aspiration
The branding strategy needs also to take into account the likely shift in the local marketplace when a new brand enters. This was also discussed in Chapter 11. Market research before entry might indicate a positive (or negative) reception for an entering global brand, but things can of course
Pro-domestic sentiment, where strong, is also a factor that favors the use of a local brand
Antiglobalization and related sentiments (such as anti-Americanism) are also factors to consider. Where strong, a global brand strategy is less desirable.
Do other global competitors use global brands? Competitors may be global, but their brands are mainly local. This suggests a preference on the part of the customers for local brands, again favoring local brands.
Is the competition global? If yes, a global brand would be better equipped to handle competitive pressures. In markets with strong local competition, it might be better to attempt to acquire a local brand—or stay out of the market completely.
Is the market/product category global? If it is, a global brand is likely to be preferable.By contrast, in multidomestic markets local fit and identity matter, favoring a local brand.
3. A global brand is an easy target for antiglobalizers and other activists
2. Local subsidiary managers lose motivation.
1. Capturing the scale economies require skillful top-down coordination.
3. Global brands are less unique than local brands
2. Global brands are perceived as dominating local brands and threatening local culture.
1. Global brands are not adapted to local conditions and preferences.
8. The total brand equity is the sum of brand value NPVs in each market
7. Compute the NPV (net present value) of the projected future earnings attributable to the brand, using adjusted earnings in step 4 and the applicable discount rate from step 6.
6. Calculate the appropriate discount rate as a function of the brand viability score—stronger brands have lower discount rates.
5. Estimate the future potential of the brand by deriving a “viability score,” which indicates the long-term competitiveness of the brand.
4. Multiply the intangible earnings in step 2 by the branding percentage in step 3 to get a corrected value of brand earnings due to the brand itself.
7. Legal protection (5 percent)—Problems with protecting the name in different markets (a negative).
6. Support (10 percent)—The consistency of marketing support (a positive).
5. Trend (10 percent)—The upward (or downward) trajectory of the brand.
4. Reach (25 percent)—The geographic spread of the sales(a positive gain the more global the brand).
3. Market volatility (10 percent)—The risk of new technology, low entry barriers (a negative).
2. Stability (15 percent)—How long the brand has been established(a positive).
1. Leadership (25 percent)—The brand’s ability to dominate a market (a positive).
3. Assess the role of the brand in intangible earnings to get a measure of “brand strength.” To do this, identify first the true demand drivers (e.g., price, advertising), then what role the brand itself plays in the effectiveness of these drivers (e.g., a strong brand should lower the price
2. Estimate intangible earnings in each market as brand revenue less operating costs, taxes, and cost of capital employed. These are the net earnings that could potentially be due to the brand itself.
1. Identify the relevant markets or market segments where the brand is sold.
3. As a social statement, offering recognition among peers. Brands are social statements, especially in terms of conspicuous consumption.
2. As an icon in its own right, with emotional impact that affirms affinity and selfperception.This is the emotional aspect of a brand, creating an association between the consumers and “their own” brands.
1. As a guide to evaluating the product or service. This is the traditional economic function.
2. Benchmarking and “me-too” products have made functional product differentiation hard to sustain as a competitive advantage. We discussed this development in the preceding chapter. Many consumers cannot distinguish competing products without checking the brand logo. If you see a new car, a
1. Many markets are often in the mature and saturation stages. This means that customers’needs are more emotional than physical. Brands can offer such emotional satisfaction over and above the functional requirements of a product or service. Beyond familiarity and trust, a strong brand can offer
5. Help protect a global brand against counterfeits.
4. Assess when an acquired local brand should be kept instead of converted to the global brand.
3. Identify which local brands would be good candidates for globalization and what strategy to use to globalize them.
2. Evaluate what it takes to build a strong brand and why globalization helps build brand equity.
1. Understand why branding has become so important in today’s competitive markets.
5. Why are most personal services not easily globalized? Give some examples that show how a service has to be standardized before going global—and how standardized personal service is almost always impersonal.
4. Check out the Web sites of some service companies (for example hotels, brokerage firms, auto dealers), and analyze how they try to translate their offering to the new medium. Are services more or less adaptable to online shopping than products?
3. Discuss how culture influences one’s perception of what would be considered good service in a restaurant. Do the same for a store visit. (Use cultures with which you have some personal experience.)
2. Access the Web site for one of the auto companies and see whether the company invites ideas for car design (by asking you to design your ideal car, for example). To what extent do they offer feedback?How will you know whether ideas were listened to?
1. Analyze the extent to which a particular multinational (such as Benetton, Procter & Gamble, or Nokia) offers the same product line in different countries by comparing the company Web site entries for different countries.
5. Observability. So, how much faster does it connect to the Internet?
4. Trialability. Is it easy to try the new product? (No wonder they gave me a free trial month—it takes that long to hook everything up.)
3. Complexity. Is the new product easy to use? (How do I use broadband?)
2. Compatibility. Can the product be used locally without any problem, either in terms of infrastructure or customs? (Is cable available and does my computer have enough megabytes?)
1. Relative advantage. This is the same factor that is the leading cause of new product success. (Is a broadband connection much faster than a phone modem?)
5. Marketing synergy with company know-how.
4. Company market orientation.
3. Innovativeness of new product.
2. Technological synergy with company know-how.
1. New product superiority.
5. Rigid implementation
4. Narrow vision.
3. Poor follow-up.
2. Overstandardization.
1. Insufficient market research.
5. Identify the entry mode for a global service expansion that will best preserve the FSAs of the service.
4. Judge the diffusion rate of a new product or service and whether it should follow a waterfall or sprinkler strategy.
3. Evaluate which features of a product or service can be standardized across markets, and which need to be adapted to local markets.
2. Assess which products and services in the line are the best candidates for global standardization.
1. Understand the benefits and drawbacks of product and service standardization for global companies.
21. Hassan and Craft, 2005.
20. See Agarwal, 2003.
19. This case is adapted from Steenkamp and Ter Hofstede, 2002.
18. See Piercy, 1982, and also Lee, 1987.
17. See Ayal and Zif, 1979.
16. From Johansson, 1982.
15. See Zandpour and Harich, 1996.
14. See Helsen et al., 1993.
13. See Cavusgil, 1990.
12. A compact and accessible treatment of both factor and cluster analysis can be found in Churchill and Iacobucci, 2005.
11. As research on trade patterns has shown, the trade within such regions tends to dominate the trade between the regions (see, for example, Rugman, 2001).
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