Menu
Home
Log in / Register
 
Home arrow Management arrow Strategic Management in the 21st Century. Corporate Strategy

THE FUTURE OF MARKETING STRATEGY IN A GLOBAL ENVIRONMENT

From a corporate strategy perspective, the most important truth that a company should acknowledge is that marketing in the future will require increasingly unique approaches compared to those that proved effective in prior eras. The primary reason for this, as noted earlier, is that the Pandora's box of globalization has been opened. Competitive environments of the future will bear little resemblance to those of the past, and companies must thus develop entirely new methods for competing rather than relying upon proven derivations of past strategies.

Whereas companies have previously competed with domestic rivals with similar strategies, they now clash with firms originating from a variety of different countries. As noted earlier, economic development typically drives the evolution of basic marketing strategies: less-developed economies accommodate primarily MO strategies, developing economies spawn VO strategies, and MVD strategies usually dominate in developed economies. However, as transportation becomes faster and less costly, few markets are likely to remain competitively isolated. As a result, as globalization allows competitors from diverse economies to interact, substantially dissimilar competitive strategies and orientations are likely to be represented across the mix of rivals. This increased diversity of strategic orientations will not only disrupt any competitive equilibrium that may have previously evolved, it will create an environment in which competition is likely to remain both complex and intense, and be characterized by increased risk. This environment will, in turn, call for a larger and more complex repertoire of marketing strategies.

Consumer Confusion in Global Branding

Because of the disparities that exist across the globe in terms of input costs (labor and material), market preferences, economic development, and governmental priorities, new strategic contradictions and dilemmas are likely to appear in global competitive arenas. Just as many industries in developed countries have experienced shakeouts, mergers, competitive turmoil, and other forms of disorder as they evolved toward domestic equilibrium, globalization is now exposing previously sheltered firms to fierce rivalry from new forms of competition. Goods manufactured in the United States rest on retailers' shelves immediately beside those produced overseas, forcing consumers to make careful comparisons of features and quality. Both products and companies are also rapidly losing their national identities, such that consumers rarely know where their products were designed or manufactured.34

According to one study, consumers do not know the home country of even well-known brands or companies.35 For example, most people surveyed believed that Nokia, Hyundai, Motorola, and Samsung were Japanese companies. Adidas, LG, Land Rover, Lego, and Ericsson were similarly most often misidentified as being U.S. companies. Volvo, SAAB, and Heineken were most commonly misidentified as being German companies. The increasing frequency of global mergers no doubt also confuses consumers. The top three "domestic" beer brands in the United States (Budweiser, Miller, and Coors) are now all produced by foreign-owned companies. Further, it is even more likely that few consumers are able to correctly identify the country of manufacture of most branded products, which frequently differs from the producer's home country. For example, many "Japanese" automobiles (such as Toyota, Honda, Subaru, and Nissan) are manufactured in the United States or Canada, and many of the Volkswagens sold in the United States are produced in Mexico. Similarly, most consumer electronics products with Japanese brand names are produced in China. As a result, competition for consumer purchases and loyalty has become more challenging, and prospects for future competitive equilibrium would appear unlikely.

Complexities in Global Partnering

Until recently, many U.S. and European firms viewed globalization as an opportunity to expand markets through exports, and to lower production costs by accessing low-cost foreign labor. These opportunities presented compelling enticements to invest in developing markets.

However, the competitive threats posed by the evolution of these opportunities were often likely discounted or ignored. An example of this tendency to overvalue opportunities and underestimate risks can be seen in the joint ventures that are often required to satisfy foreign government regulations regarding indigenous ownership. Whereas companies from developed nations view "strategic partnerships" as a way to provide market access, enterprises from developing nations view them as a low-risk approach to knowledge transfer and to acquiring proprietary expertise and technology. As the transfer of technology and methods progresses, however, partners from these developing nations (which by now have largely acquired the necessary technology and know-how) will begin to question whether further value can be derived from continued collaboration. Once the perceived relative value of these alliances falls to a certain point, domestic partners will make efforts to dissociate from their mentors and begin independent operations.

Having leveraged foreign expertise and successfully adopted VO strategies in their home markets, the insatiable drive for sales underlying this approach motivates companies in developing economies to turn to exporting as a method for filling expanding production capacity. Following the path of industrial development modeled in the international product life cycle,36 firms in developing countries that once represented export markets for U.S. and European companies evolve into competitors for market share in the home markets of their foreign partners. For example, Mahindra & Mahindra formed a joint venture in 1963 with the U.S.-based International Harvester to build tractors in India for the Indian market.37 Today, Mahindra brand tractors are the top-selling brand of tractors in the world by volume,38 and since 1994 have earned a strong reputation and growing loyalty in the U.S. market.39 As this illustrates, foreign firms that begin collaborations as marketing or manufacturing partners may eventually end up as competitors. The evolution of alliances with foreign partners in developing economies thus represents two potential hazards to those (U.S. and European) firms that initially sought out the alliances: when the partner abandons the alliance to become a competitor in their domestic market (and thus reduces or eliminates a market for the U.S. and European exports), and then by eventually exporting these products to U.S. or European markets.

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Mathematics
Political science
Philosophy
Psychology
Religion
Sociology
Travel