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International Marketing

Strategy and Decision


Making
Professor John Kuada
kuada@business.aau.dk

Your First Job


1. Supporting executives with analysis
and ideas
2. Implementing strategic decisions
taken by executives
You Require
Insight into executive decision
making
Analytical Tools
Skills for implementation of decision

Decision Making Objectives and


Environment

Fundamental Management Tasks

Efficiency /Effectiveness matrix


Exploitation /Exploration matrix

Efficiency/Effectiveness
Matrix
Efficiency
Effectiveness

High

Low

High

Low

Efficiency/Effectiveness &
Organizational Development
Efficiency
Within
departments

Organizationwide adoption

Effectiveness

O r g a n iz a tio n a l C a p a c ity M a tr ix
E ffe c tiv e n e s s

Low

E ffic ie n c y

H ig h

H ig h

L o w

C o n s is te n t ly h ig h p e r f o r m in g
o r g a n is a tio n s :
- in n o v a tiv e
- a d a p tiv e
e tc .

O r g a n is a t io n s c h a r a c t e r is e d
b y r o le s , a u th o r ity s tr u c tu r e s
a n d r o u tin e s .

E n tr e p r e n e u r ia l a n d
id e o lo g ic a lly c o m m it t e d
o r g a n is a tio n s .

C o n s is t e n t ly lo w p e r f o r m in g
o r g a n is a tio n s
- la c k in g d ir e c t io n a n d
v is io n
- la c k in g s k ills a n d
m o t iv a tio n

E ffic ie n c y =

D o in g th in g s in th e

E ffe c tiv e n e s s =

D o in g

th e

r ig h t w a y - s k illf u ln e s s , e t c .

r ig h t t h in g s - in n o v a t iv e n e s s , c r e a t iv it y , e t c .

EXPLOITATION
High

E
X
P
L
O
R
A
T
I
O
N

H
I
G
H

Highgoalattainment

Dynamic

Growth

Motivatedworkers

Visionary

L
O
w

Shorttermgrowth
Highvulnerability
Fearofchange

Low
Dynamic

Wasteof
resources

Turbulence

Uncertainty

Stagnation
De-motivated
workers

Wasteof
resources

Leadership roles

Top
management

Effectiveness

Middle level
management

Bottom level
management

Efficiency

The Environmental
Characteristics
1.Fully Certain Environment
2.Risky Environment

3.Fully uncertain

Executive Decision-Making
Styles

Figure6.2:KotlerandKellers4Ps

Marketing Programmes and


Costs
NewMarketing
Mix

People
Employees
Consumers

Process
Creativity
Discipline
Relationships

Programmes
Products/services
Price

Promotion

Place

12

Performance
Profitability
Growth
Marketshare
Socialgoals

Marketing
Strategy

Internal vs. Externally-oriented


marketing
Internal Marketing
Customer-orientation
Top-management market orientation
market orientation as an
organizational culture
External Marketing
Perception and relationship with
customers and other stakeholders
14

Two Types of Marketing


Strategies
Market-Driving Strategies
Blue Ocean companies
Market-Driven Strategies

Kim and Mauborgnes


Blue Ocean Strategy
Do not compete in existing market space instead
you should create uncontested market space.
Do not beat the competition instead you should
make the competition irrelevant.
Do not exploit existing demand instead you
should create and capture new demand.
Do not make the value/cost trade-off instead you
should break the value/cost trade-off.
Do not align the whole system of a company's
activities with its strategic choice of differentiation
or low cost instead you should align the whole
system of a company's activities in pursuit of both
differentiation and low cost

Market-driven
Perspective

Narver/Slaters Definition
Customer orientation - i.e. gaining intimate
insight into customers needs and market service
requirements,
Competitor orientation - i.e. gaining
understanding of competitors' capabilities and
market response patterns,
Interfunctional co-ordination

Kohli/Jaworskis Definition
Company-wide generation of market intelligence,
Dissemination of this intelligence
Company-wide response /strategies

Determinants of Successful
Market-driven strategies

1. Top Management Commitment


2. Managements Attitude to Risk
3. Inter-Departmental Conflict and
Connectedness
4. Organizational Structure
5. Reward System

Purple Ocean Strategies


Concurrent Market Driving
and Market Driven Strategies
(See Exploitation /Exploration
Concept

Key Definitions of Strategy


A:Strategyisaplan,adirectionintothefuture

B:Strategyiswhatemergesfromactionsrather
thansomethingplanned
A:Strategyisanintendedcourseofaction
B:Strategymayprovideanoverachingdirection,
butdoesnotspecifyactions

DIVERGENT PERSPECTIVES
IN STRATEGY
Strategic Planning
Rational (Professional) Decision Maker

Strategic Management
Incrementalism
ContinuousOrganizationalLearning

Strategic Thinking and Action


Intuition
Individual-based

CONVENTIONAL WISDOM ON STRATEGIC


Organizations
will succeed if they understand
PLANNING
the causes of excellent performance of other
organizations Best Practices
Success depends on the formulation of long
term plans using known analytical criteria
Prediction and forecasting are essential for
successful
strategic planning
Stability, regularity and predictability are key
determinants of success

The Strategic Process


Planned or deliberate strategies
Unplanned or emergent strategies
Tactics
Reflections and feed forward

IntendedandEmergentStrategies

ARationalApproachtoStrategy
Formulation

A General Marketing
Decision Model (Kuada Lecture
slides, 2015)
Competitive
Competitive
Intensity
Intensity

Markting
Markting
Objectives
Objectives

Choiceof
Choiceof
Analytical
Analytical
Tools
Tools

Analysis
Analysis

Strategic
Strategic
Decision
Decision

The Strategic Process Model


ExternalAnalysis
Macroenvironment
Operatingenvironment

Past&current
strategicprofiles

Strategicvision&
objectives

InternalAnalysis
Structures
Vision
Values
Resources
Etc

EmergingExternal
conditions

Analysisof
specific/relevant
conditions

Chosenstrategy

Realized
strategy

EmergingInternal
conditions

An Executive Decision Making


Framework
Problem Awareness & Context

Problem Definition
& Decision Objectives

Analysis

Decision & Time Frame

Execution
Review

Typical Characteristics
The SMART formula
Specific
Measurable
Agreed & Assignable
Realistic
Time-oriented

A Typical Strategy Formulation Process

Step1:Specifystrategicobjectives
Step2:Undertakeinternalanalysis(RBV)
Step3:Undertakeexternalanalysis
Step4:Formulatebusinessstrategy(aroadmap)
Step5:Specifyactionplan(e.g.usingcriticalpath
method)
Step6:Specifymilestonesanddeliverables/outputs
Step7:Assignpeopleandresources
Step8:Monitor/evaluateprogressandtakecorrective
actions

The SOSTAC Formula (Smith,


1999)
Situation Analysis
Objectives
Strategy
Tactics
Actions
Control

Target Marketing Approach


to Strategy Formulation (1)
Segmentation
Which criteria should we use to identify
potential customers?
Targeting
Which market segments are likely to help us
fulfil our marketing objectives?
development of existing customers ?
acquisition of new customers?
Positioning
What benefits should we offer our target
customers?

Target Marketing Approach


to Strategy Formulation (2)
Decisions on marketing efforts - The
new 4 Ps
People, Process, Programme,
Performance
Decision on Distributors role in
marketing strategy implementation
Decision on marketing budget
Decision on performance evaluation
criteria

Market Gap Analysis


Reasons for Market Gaps
1.Incomplete product line served on the market
2.Incomplete coverage of the market due to
poor distribution
3.Limited usage of the product within the
market segments served
4.The strength of the competitive forces on the
market.

Performing Market Gap


Analysis

1.
2.
3.
4.

Analysis of product line gap


Analysis of distribution gap
Analysis of usage gap
Analysis of competitive gap.

KOTLER'SATTACKSTRATEGIES
Frontalattack
Attacking strengths rather than weaknesses

Flankattack
Attacking weak spots

Encirclementattack
Attacking from all sides at the same time

By-passattack
Diversification into new markets, unrelated
products etc.

Guerrilaattack

Other Military-inspired
Strategies
Deterrence Strategies- convince the competitor
that it would be prudent to keep out of your markets.
Pre-emptive strike- Attack before you are attacked.
Position Defense- The erection of fortifications.
Mobile defense- Constantly changing positions.
Counter-offensive- When you are under attack,
launch a counter-offensive at the attackers weak
point.
Strategic withdrawal- Retreat and regroup so you
can live to fight another day.
Leapfrog strategy- Avoid confrontation by
bypassing enemy or competitive forces.

Managing the strategy


process
Sequential Strategies- A strategy that consists
of a series of sub-strategies that must all be
successfully carried out in the right order.
Concurrent Strategies - A strategy that
consists of a series of sub-strategies that must all
be successfully carried out at the same time
Alliance Strategies- The use of alliances and
partnerships to build strength and stabilize
situations.

Product-Market Strategy
1.
2.
3.
4.

A product specialisation strategy


Segment specialisation strategy
A selective strategy
Single product-segment

ANon-RationalApproachtoStrategy
Formulation

Heuristic & Intuition


Definition
A heuristic is a strategy that ignores part of the
information, with the goal of making decisions more
quickly, frugally, and/or accurately than more complex
methods.
Experience-based approach to problem solving
Non-optimal, but satisfactory given circumstances &
resources.

Related Concepts

Bounded rationality
Proceduralization e.g. looking around
Risk-orientation (i.e. attitude to risk)
pattern-recognition process
Qualified consensus

Dangers to be aware of
1.Cognitive biases
2. Memory distortion
3.Judgment biases
4.Confirmation bias
5.Illusory correlation
6.In-group bias

Comparing Rational & Non-Rational


Approaches to Strategic Decisions
Dimensions

Rational
Approach

Non-Rational
Approach

Situation Analysis

Based on objective
data

Based on
experience,
impressions etc.

Objectives

Specific &
Measurable

Specific &
Measurable

Strategy

Planned

Logically
Incremental

Tactics

Deliberate, with
anticipated
outcomes

Trial & error

Actions

Planned

Situation-specific

Control

Rule-based

On-the-spot
verficication

The Emic and Etic


Debate
Emic (Inside-Out)
Pros
Knowledge of company objective, decision
making procedures, culture
Assess to company database and data
preferences
Greater commitment
Cons
Routinised behaviour, single-loop learning,

Etic (Outside-In)
Pros
Greater chances for novel ideas,
triggering organisational change
Cons
Irrelevant data; may be costly to
collect
Data may be collected to legitimize
top management decision

Relationship Marketing in
an International Context

A Paradigm Shift?

Some Academic Observations


Christian Grnroos: From Marketing Mix to Relationship
Marketing: Towards a Paradigm Shift in Marketing
Management Decision Vol 32 No. 2 1994
Philip Kotler (1991) Marketing Science Review Spring
1991
" What I think we are witnessing today is a movement
away from a focus on exchange - in the narrow sense
of transaction - and towards a focus on building valueladen relationships and marketing networks....."
" We start thinking mostly about how to hold on to our
existing customers.... Our thinking is therefore moving
from a marketing mix focus to a relationship focus
Note: Relationship is a continuum; it is present in
all economic transactions

Levels of Relationship
Basic
Pre-sales and/or sales activities but no or
minimal
follow-up
Reactive
Post-sales activities limited to response to
complaints
from customers
Accountable Periodic checks on customers satisfaction
levels and
suggestions for product
improvements
Proactive
Offering customers information about new
products and
suggestions about improved
product usage
Partnership Working continuously with customers to
improve ways
of delivering better value to
them

Three Theoretical
Perspectives
Transactional Costs Economics
Systems network approach
Uppsala version (IPM) - Strategic
partnership
Global/International Value Chain
Version
Social netowrk theory
Granovetter and the concept of
embeddedness

Relationship Marketing
Marketing is a continuous activity
involving the entire organization of
the vendor firm
Customer retention is a goal in itself
Unique (i.e. non-imitable) superior
customer value is created through
relationships
Trust and commitment are key
strategic variables in marketing

Typology of Relationships

Systematic sought out relationship Proactive


disposition
Emergent relationship evolutionary
Arranged relationship other partners
request it
Strategically unavoidable relationship e.g.
technological change

Relational Characteristics

Weak vs. Strong relationships


Shallow vs. Deep relationships
Equity vs. Non-equity relationships
Positive vs. Negative relationships

Examples in the Literature

Customer (Buyer) Vendor (Seller)


relationships
Supply chain management
Customer Relationship Management
(CRM)
Outsourcing governance

Comparison of Transactional, Relationship and


Network Marketing
Dimensions

Transactional
Marketing

Relational
Marketing

Network
Marketing

Focus

Profitable
transactions

Profitable
relationship

Inter-organizational
links

Players

Buyers and sellers


in an open market

Buyers and sellers


in a relationship

Buyers, sellers, and


others

Communication
patterns

Firm to market

One individual to
another

Inter-organizational

Communication
styles

Arms length

Interpersonal

Multi-personal

Duration

Discrete

Relational/life cycle

Continuous

Formality

Formal

Managed

Interactive

Stages in the development of buyerseller relationships

Pre-relationship stage
Exploratory stage
Development stage
Stable stage
Exit stage

Relationship Process Framework

Culture and International


Marketing Relationships

Learning of Values and Practices

Culture and Relationship


Marketing
Deal focused and Relationship focused
societies
Varieties in relational practices
Culture and trust (four levels of trust)
Societal level trust
institutional trust
inter-organizational trust
personal trust

Social Relationships
High

Low

High
Low

Business Relationships

Optimal relationships

Undersocialized
Relationships

Oversocialized
relationships

Transactional
Exchange

Proactive Approach to
Distributor Relationship
Management

What do experienced
salespeople say?
Pay your distributors on time
Set clear and achievable goals with them and
reward them for goal attainment
Remember that they have other suppliers
Learn what they need from you
Dont blame them directly; work with them to
achieve future goals
Make friends in the company
Support them; train them to understand your
product

How to Build Strategic


Relationships
Define clear goals of the relationship, and develop
action plans for accomplishing them
Prepare a well defined agreement that clearly
describes the expectations, responsibilities, and
obligations of both parties
Monitor and report progress, and evaluate the
results
Determine what is next and develop action
plans for continuous improvement
Meet regularly to voice issues, share customers
needs/concerns, commit to training, discuss
market conditions, and proactively plan and
address various topics -

Possible Meeting Agenda

1. Review of relationship
Let me explain what we've done for you since our last
meeting).

2. Looking forward
What priorities would you like us to engage in during the
months ahead?

3. Emphasis on relational value


Our sales of your product lines are very important to us and
here's why.

4. Synchronizing expectations
Here is what we'd like to see from you in the months ahead.

The Win-Win Scenario for Strategic


Relationships
Prioritization
I win in areas that I consider to be strategically
important to me, you win in areas that you consider
to be strategically important to you.
Sequencing
I win today, you win tomorrow
Transparency
We know, what each other has won
Perception
We are each (individually) satisfied with what we
have won
Organisation/Commitment
Our staff feel part of and committed to the project,
being aware of the benefits and the work involved

Some Questions For Your


Reflection
Does relationship marketing actually constitute a
paradigmatic shift?
Is the marketing mix paradigm dead or dying? What
might such a paradigm shift mean for marketing
strategy in the future?
Do you agree with the notion that the marketing
department is obsolete ? How would firms organise
their marketing activities without a department?
How are global industrial and technological changes
influencing the marketing of services to firms and nonbusiness organizations?
What is the logic underlying the notion that networks
are socially constructed phenomena and networks are
systems of relationships.
What implications do the two perspectives carry for
international industrial marketing strategies?

Organizational/Institutional
Buying Behaviour
Introduction to the Buygrid Model

Classification of
Organizational
Buyers
Intermediate customers
Manufacturers

Public Sectors

Key Characteristics of
Use other peoples money
Business
to
Business
Professional buyers usually rational
Customers
Collective decison process - buying centre
Key managers are usually involved
Relatively fewer in number
Purchases are usually substantial in volume and
value

International Dimensions of
Business to Business Marketing
Demand
Growing need for cross-national inter-firm
collaborative arrangements
Contract Production
Out-sourcing of inputs
Strategic Alliances
Increasing demand for technology capacity
enhancement packages in the emerging
market economies

Governments and international


organizations as target markets

Buy Grid Model


Task dimensions of the model
Buying situations/tasks,
Buying phases
Buying centre
Non-task dimensions
The individual
The group
Organisation

Task Dimensions
Remember that it has 3 components
Buy Situation
Buying Phases
Buying Centre

Main Types of Buying


Situation
New task
The buyer purchases the product/service for the first
time (E.g. mega-projects; new computer system)

Modified Re-buy
The buyer has prior experience in buying the
product/service; may want to modify specifications,
prices, terms or suppliers (E.g. consulting services,
components)

Straight re-buy
The buyer routinely re-orders product/service
without modifications (E.g. office supplies; generic
drugs for hospitals)

New Task Situation


Higher risks and costs
Larger number of decision participants
Greater information collection efforts
Greater emphasis on quantitative data
Actions!!!
What are the strategic and tactical
challenges of new vendors in such a
buying situation?

Modify Rebuy Situation


Moderate risks and costs
Fairly high information need
Relatively large number of participants
in the decision making process
Actions!!!
What are the strategic and tactical
challenges of new and existing vendors
in such a buying situation?

Straight Rebuy Situation


Decision based on past buying
satisfaction
Suitable for auction purchases or
electronic reordering systems
Few decison makers usually only
the purchaser is involved
Greater focus on price
Actions!!!
What are the strategic and tactical
challenges of new and/or existing
vendors in such a buying situation?

Buying Phases
Problem recognition
General need description
Product/service specification
Supplier search
Proposal solicitation
Supplier selection
Order-routine specification
Performance Review

Role of the Buying Centre


Users
Influencers
Define specifications and provide information for
evaluating alternatives

Deciders
Decide on product requirements and/or on suppliers

Approvers
Authorise proposed action

Buyers
Selects suppliers and arranges terms of purchase

Gatekeepers
Prevents information from reaching members of the
buying centre

Organisational Determinants of
Buying Centre Behaviour
Degree of organisational stability
crisis? Moderately turbulent? Highly stable?
Degree of manpower turnover
Degree of organisational growth/dynamism
Changes in power configuration
Management of organisational knowledge
Single loop/first order learning
Double loop/second order learning
Multiple loop learning
Buying centre decision making as a political
game

Other Useful Points


Buying centre members selectively
participate in purchasing decision processes
They have different choice criteria
They possess different levels of purchase
knowledge
Their degree of involvement shift with the
phases of the buying process
Their influence and authority shift from one
buying activity to the other

International Perspectives
on the Buy Grid Model
Countries differ in terms of their
notions of logic and decision making
procedures
Countries differ in terms of their degree
of uncertainty avoidance
Countries differ in terms of their degree
of individualism and consensus seeking
Countries and organisations differ in
terms of respect for hierarchical
positions

Some Guiding Principles in Buying


Centre Analysis
Buying centre members differ in terms of
their information needs
Information needs change over time and with
respect to buying situations/tasks and phases
Buying decision processes are organizationspecific
Since buying centre composition may change
over time the seller must be flexible/ adaptive
Note status perception differ among countries
and industries

Contribution to Purchase Decisions


by Buying Centre Members
Who originates the initial decision?
Who surveys alternatives and determines the basic
characteristics of the product required?
Who identifies potential suppliers?
Who collects tenders/information from suppliers?
Who evaluates products offered?
Who authorises the purchase?
Who finally chooses the supplier?
Who monitors and evaluates the performance of both the
product and the supplier?
Who is most likely to initiate decisions to change supplier?
Who finally decides on a change in supplier and selects the
new supplier?

Some Strategic
Implications

Influence those whose money is being used


(e.g. voters)
Adoption of customer retention strategies
Customized/Direct Marketing E.g. Internet
Long term marketing strategies
Combination of rational arguments and
persuasive negotiation
Stimulating demand for potential customer
products
Send high powered salespeople