External environmental factors affecting business organization such as, political and economic instability have in the recent past hindered the possibilities for standardization of the market mix that enables companies to improve sales proportion. The important elements for standardization of the marketing mix are price, distribution, and promotion, which are also essential for cost cutting and profit maximization (Akhter, & Laczniak, 2009).
In a case study of Slovenian market, the strategic control excised on distribution and promotion was identified as set back towards standardization of the marketing mix. In the same case study, standardization of products by firms also emerged as separate factor for standardization. Global marketing is more complicated than domestic due to incidence of complex variables. These complicated variables include; difficulty in getting timely data, diversity of geographical places, and diversity in environmental factors such as political and financial processes (Akhter, & Laczniak, 2009).
In analyzing the case study, the statistical application called SAS was applied to analyze the data. Pearson coefficients were calculated among the variables and it indicated that certain responses were correlated. Component analysis together with orthogonal rotations was applied to examine the correlation and investigate the factors involved in the standardization of marketing mixes (Akhter, & Laczniak, 2009).
After the analysis, the standardization of price also known as the STPRICE emerged as the most readily standardized mix of the marketing mix in the Slovakian market. It was the variable price, which had the highest mean value on the scale and therefore could be statistically proved as the most readily standardized marketing mix of the components considered in the factor. The result was similar to the outcomes of Seifert and Ford (1989) that showed that the U.S exporters used standardized pricing for overseas products.
Price standardization and consideration could be related to the activities of the Slovenian government shipment of majority of produce to the European Union market which operates as single market, and is amenable to higher price standardization (Achumba, Harvey, & Rothe, 2010).
Pricing standardization is valuable in international market and certain domestic markets like Hungary, but non valuable in Bulgaria. As prices gains uniformity in European Union market, so does the increase in promotional expenditures (Seifert, & Ford, 2008).
Of the four P’s, which are the most important for global headquarters to dictate?
According to the case study of the Slovenian domestic and global market, the marketing mix that could be dictated by global headquarters is price. By following overall cost leadership strategy, global headquarters can keep prices and distribution costs as low as possible low (Seifert, & Ford, 2008).
According to the study, it was found that price is not strongly related to other market mixes such as distribution and product and therefore could easily be controlled by headquarters. Standardization of one of other mixes a part from price is likely causes standardization of the remaining pair. Hence it is the price that can be dictated by the international headquarters without interfering with the product and place as marketing mix (Seifert, & Ford, 2008).
Which should fall more under the control of national subsidiaries?
Promotion as marketing mix should be under the control of national subsidiaries. Promotion consists of all the aspect of advertising, provision of brochures, packaging of the products, salespeople and the sales methodology used. The question of hoe to promote, advertise and sell the product at the stated price and the palace for sale is task that needs government intervention (Ayal, 2009).
The process of process of promotion should be jointly undertaken by the national government and the firms themselves. In undertaking promotion, the nation gets to creates awareness of its produce with the aim of increasing exports in the international market. Without government’s intervention a nation may lack adequate market for its produce (Ayal, 2009).
Promotion in the international market as marketing mix requires good diplomatic relations between nations and therefore government intervention is important for efficient and effective promotion (Achumba, Harvey, & Rothe, 2010).
Government involvement in promotion as well would make other nations aware of the illegal products in its territory and those which are regulated before importation in to the country (Ayal, 2009).
Which of the globalization drivers would be useful in answering the questions above for any particular industry?
Political stability is globalization driver that promotes standardization of prices. Political developments have effect on both domestic and foreign business operation especially when coupled with strategic factors of the marketing mix like profit (Wild, & Han, 2006).
Political factors are potentially disintegrating factors of the external environment and a necessary factor to a firm’s behavior especially when it is perceived by the management that it uncertain and considered to be relevant. The political factor is often important in light of the situation in the case of Yugoslavia, where it was hard to market product and maintain a stable price due to civil war (Wild, & Han, 2006).
Taste and preference is another globalization driver that is very important in addressing price standardization. Products made in Slovenia are changing in tandem with continued improved quality of other good thus further complicating efforts to market Slovenian goods at the same price. The Slovenian firms have shifted their focus to other European Union markets with aim of getting competitive marketing strategies based on effective price standardization (Wild, & Han, 2006).
How do sourcing and location affect the four P’s of global marketing?
Global sourcing is the practice of sourcing from the international market for product and services in different geographical locations. It always aims to improve global efficiencies in distribution of the goods and services. These efficiencies are; low cost, skilled labor, low cost raw materials and tax breaks (Achumba, Harvey, & Rothe, 2010).
Sourcing affects the marketing mix by cost reduction. The consumption of cheaper labor and low cost raw materials directly influences the general ledger. In the U.S labor is offered at relatively higher hourly rate, and substantial benefit requirements and costs. In outsourcing the labor, the cost of production is lowered and consequently the price is also lowered (Achumba, Harvey, & Rothe, 2010).
In the global market, the marketing method is similar to the one in the domestic market, but it is transformed in an important way to accommodate the location with the aim of adapting to the marketing efforts that suits the needs of a specific country or geographic location. The changes are categorized into five major areas which include; market assessment, promotion strategies, product strategy, pricing decisions, and distribution strategies (Achumba, Harvey, & Rothe, 2010).
References
Achumba, I.C., Harvey, M.G., Rothe, J.T. (2010).
“Marketing of Nonconsumer Goods in Foreign Markets: The Case of High-Technology Products”. In: Kaynak, E. (ed.), International Marketing Management, New York: Praeger Publishers, pp. 121-138.
Akhter, S.H., Laczniak, G.R. (2009).
“The Future US Business Environment with Strategic Marketing Implications for European Exporters”, European Journal of Marketing, (23), 5: 59-74.
Ayal, I., Zif, J. (2009).
“Market Expansion Strategies in Multinational Marketing”, Journal of Marketing, (43), 2: 84-94.
Seifert, B., Ford, J. (2008).
“Are Exporting Firms Modifying Their Product, Pricing and Promotion Policies, International Marketing Review, (6), 6: 53-68.
Wild, J.J., Wild, L.K., Han, C.Y.J. (2006).
International Business: The Challenges of Globalization.Upper Saddle River: Pearson Prentice Hall.