However, the customers from those countries where the company adopts a higher price may feel that this strategy is not very fare to them. Finally, the last approach is probably the one that fits better the current manufacturing global market trends. Thus, in those countries where is cheap to produce, the products will have a low price and vice-versa.
7. Factors that influence channel structures and strategies available to global marketers
Channels can be organised as networks, hierarchies and markets. Williamson (1991a, b) divided the channels into hierarchies - the companies internalize activities along the value chain - or choose not to do so and let the market to follow its course. The notion of networks was later introduced as an intermediate way between the other two (Thorelli, 1986). The most important factor to influence channel structures and related strategies is the cost incurred for including an extra member along the value chain. The cost refers to the functions performed by the new member. There is also a cost that can be incurred if the extra member is not included, which is actually the opportunity cost of integrating a new member.
One other factor that influence channel structures and related strategies is the customer. This one may need a variety of product assortments, such as tooth paste, shampoo and other products as such within the toiletry category. Also, when products are bought in small volume, the manufacturer may choose to integrate more members along the value chain, rather than sell directly to the customer.
In some instances, the channel structure is changed in situations in which intermediaries have sets of special skills that manufacturers lack and integrating the intermediaries would be cost effective.
However, besides cost consideration, there are time considerations, while choosing a given channel structure. For instance the distribution channels for perishable products are very short and not as cost efficient as for other products. However, making those longer would lead to a lot of product losses until those reach the final customer.
8. Global brands and global advertising campaigns
There are several advantages that companies get for having global brands and running global adverting campaigns, such as:
Economies of scale from, manufacturing, distribution and promotional activities. However, the advertising -related economies of scale may turn out to be tricky, because not all companies benefit if they run the same advertising campaigns in more countries, such as IBM or Visa. In some instances, it may be cheaper to have distinct advertising campaign in each country, than importing one campaign in every place (Aaker & Joachimstaler, 1999).
Lower marketing-related costs. The media reach is becoming larger, especially now that the internet is spreading so fast.
Easier to maintain a brand image. The products tend to be more homogenous than before. However, companies have to take under consideration that as products become more homogenous, individuals become more heterogeneous from the cultural point-of-view, due to emigration/immigration process.
Global brands usually imply global networks. Companies can benefit from knowledge diffusion in while being integrated in global networks (Ernst & Kim, 2002).
Although global advertising campaigns have to take under consideration the cultural and mental characteristics of the different societies that constitute the markets, a global approach may turn out to strengthen the brand. For instance, Benetton is worldwide famous for its controversial campaigns, however, these constitute the company's competitive advantage.
9. Sales promotions for consumer and industrial products
Generally speaking, the role of sales promotion in the marketing mix is the 'active' one that stimulates the consumers to buy the products. Sales promotions can be directed towards the ultimate consumer - 'pull strategy' that encourage buying - or towards the distribution channel - 'push strategy' that encourage channels to stock products.
Ultimate consumers are of two different types: industrial and individual. These two types differentiate themselves from the nature of their markets, the products commercialized and the demand, but also the determinants behind the purchasing decision (Webster, 1978).
Companies that commercialize industrial products have a different approach of sales promotions than those that commercialize consumer products. Studies have suggested that industrial product companies are more focused to have a sales orientation, whereas the consumer product companies are usually building a market orientation (Avlonitis & Gounaris, 1997). Industrial products are usually designed for a small number of customers, whereas consumer products are designed for a wide range of consumers, which determines the consumer product companies to focus...
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