EFFECTS OF GLOBALISATION TO INTERNATIONAL MARKETING STRATEGIES
INTRODUCTION
Globalisation is a term frequently used by many but is vaguely defined. One finds trouble in even finding two authors who defines globalisation in the same, exact way. But even that being the case, there is no denying that global markets, in particular emerging ones, offer attractive potential. For many organisations it is the only approach for growth as existing markets mature with few chances for profitable opportunities. As global markets open through the increasing use of the Internet and with improved supply chains, it is likely that there are many untapped segments around the world that would open to a multinational company, regardless of the industry. More and more, the world is becoming an available global market place. To stop marketing activities at one’s home-base borders is not only arbitrary, but also short-sighted. International marketing is often defined largely in terms of the level of involvement of the company in the global marketplace, and export, multinational and global marketing are most widely considered. Multinational enterprises (MNEs) develop international marketing strategies in order to improve corporate performance though growth and strengthening their competitive advantage. However, MNEs differ in their approach to international marketing strategy development and the speed and the progress they make in achieving an international presence. This paper focuses on the effects of globalisation to international marketing strategies with reference to PepsiCo, the parent company of Pepsi-Cola and Frito Lay.
GLOBALISATION AND INTERNATIONAL MARKETING
The different strategies in different markets helped the company have an initial feel of the different markets. The different strategies also helped the company have a better understanding of how the market works. The different markets help in introducing to the company the cultures and characteristics of the markets thus it became educated with how to adjust in the different setting. Lastly the different strategies helped in making sure that the company encounters lesser problems while starting up a new market. By using different strategies the company has not committed anything that will give it more problems. In developed countries it is somewhat easier to enter because they usually have fully developed communications, distribution and transportation systems, to name but a few facilitating factors. In contrast, developing countries require a more flexible approach, since they tend to be more jealous of their national prerogatives and less advanced in their infrastructure. But their sales potential is, nevertheless, quite substantial. It can be tapped successfully, if the MNE is willing to adapt.
According to (2006), the most successful global businesses are aggressively building their global strategies around these themes: (1) increased market access because of the opening up of markets in China, Central and Eastern Europe; (2) increased market opportunities because of the deregulation of many markets, such as the financial market and privatisation of state-owed utilities; (3) greater uniformity pf industry standards, encouraged, for example, by the European Union; (4) sourcing of products and components initially, but more recently services, too, from a wider range of countries, particularly those emerging markets with a high ratio of skills to cost; (5) more globally standardised products and services, particularly in areas of new technology, but increasingly in more culturally sensitive product areas, such as food; (6) common technology used in many more markets, particularly in areas of information technology, when there is a high cost of research and development that must be recovered through sales in many countries; (7) similar customer requirements leading to transnational customer segments, resulting from increased communication and travel; (8) competition from the same organisations in each major market and thus interdependence of markets; (9) global organisation strategies that increasingly treat the world as one market, among several other themes.
Marketing is a universal activity that is widely applicable, regardless of the political, social and economic systems of a country. However does it nor mean that consumers in all parts of the world must or should be satisfied in exactly the same way (). This is largely the effect of globalisation to the formulation of international marketing strategies, the insertion of the adaptation of such strategies to the particular country in which the MNE operates. Consumers from various countries are significantly different due to varying culture, income, level of economic development, and so on. Therefore, consumers may use the same product without having the same need or motive, and in turn may use different products to satisfy the same need. () addressed the issue of globalisation suggesting that the quality of management processes explains why some global marketing strategies fail while others succeed, contrary to conventional wisdom that management processes for global marketing should not be highly centralised and standardised since not enough attention is paid to the inputs of local management and the learning process across the different markets. Some studies investigate the linkages between standardisation of marketing and other functions such as sourcing, manufacturing, research and development, and find such linkages to be important. The ability to carry out global marketing strategies also depend upon comparative management attributes.
PEPSICO
PepsiCo Inc. is a major producer of carbonated soft drinks, other beverages, and snack foods. Its beverage division, Pepsi-Cola Company, bottles and markets several popular brands of soft drinks in the United States and throughout the world. PepsiCo also owns Frito-Lay Company, the leading snack-food maker in the United States. PepsiCo is based in Purchase, New York. PepsiCo’s soft drink products include Pepsi, Diet Pepsi, and Mountain Dew. Other beverages include Lipton Brisk and Lipton’s Brew iced teas, All Sport athletic drink, and Aquafina bottled water. Frito-Lay products include Lay’s and Ruffles Potato Chips, Fritos and Doritos Corn Chips, Chee-tos Cheese Snacks, Tostitos Tortilla Chips, Rold Gold Pretzels, and Grandma’s Cookies (2001).
PepsiCo’s leading soft drink, Pepsi-Cola, and its chief rival, Coke, have dominated the soft-drink market for decades, although Pepsi has traditionally remained behind Coke. In 1950 Coke outsold Pepsi by 500 percent worldwide. But Pepsi’s aggressive advertising campaigns aimed at young consumers and major bottling and marketing deals made Pepsi a close rival to Coke by the 1980s. PepsiCo has also enjoyed great success with its canned and bottled Lipton brand iced teas, earning higher sales than the Coca-Cola Company’s Nestea products. Also, in the United States, Pepsi had virtually an even market share with Coke in the mid-1980s, when the Coca-Cola Company changed the formula for Coke. However, as Coke regained popularity worldwide in the late 1980s and into the 1990s, it again became the global soft-drink leader. In 1996 Pepsi-Cola International, PepsiCo’s international beverage production and marketing division, suffered difficulties in Latin America, one of its most important markets. The company was particularly hurt by the loss of a bottling plant to the Coca-Cola Company in Venezuela (2001).
Market Entry
Just three decades ago, the competitive environment of the carbonated soft drink (CSD) industry was based on a recognition of and implicit acquiescence to the dominance of The Coca-Cola Company. Beginning in the 1960s, however, Coca-Cola’s dominance has been increasingly challenged, particularly by Pepsi-Cola. The new competitive environment is well publicised and intense. The Cola Wars were declared and the battle continues. Pepsi-Cola and Coca-Cola are widely recognised as being two of the premier marketing companies in the world. A great variety of new products and package types have been introduced. Celebrity advertising has been raised to a new level. Coca-Cola even changed the formula for Coke. These and other developments in the CSD industry came about from major changes in strategy by Pepsi-Cola and Coca-Cola. To some extent these strategic changes arose from Pepsi’s challenge to Coke’s dominance of the industry. In addition, several factors external and internal to the industry have been important catalysts for these changes. Rather than simply reacting to a changing competitive environment, PepsiCo and The Coca-Cola Company have created and implemented strategies that turned the new environment to their advantage (1993).
The above-mentioned standing of the PepsiCo firm in the current globalisation trend implicates several things. One, that PepsiCo has already shown ability to adapt to the changes that globalisation demands from a major MNE, and their recent marketing strategies lay evidence to that. Second, that even though it is the case, PepsiCo has yet to see further development in the formulation of their global marketing strategies in the face of increasingly stiffening competition in the industry. International marketing strategy programmes, in order to fully serve the needs of the MNE under reference, should have the sensitivity to adapt their marketing to the respective countries that it is operating in.
Marketing Mix of PEPSI CO. FOR HOME COUNTRY MARKET (4Ps)
Part of a marketing strategy is the utilisation of the marketing mix. The marketing mix principles is controllable variable that is why it can be adjusted on a frequent basis to meet the changing needs of the target market and other dynamics of marketing environment (McCarthy, 2004). In relation to marketing plan, marketing mix includes both short term and long term strategies makes for a more profitable marketing mix. Long term strategies build brand/company responsiveness and give sales returns a permanent, gradual increase. Short term strategies generate a fleeting, instantaneous returns increase by giving buyers a spur to purchase. By employing both long and short term strategies, the company can attend to direct sales goals while creating business reputation and goodwill ( 2004).
Product
As cited in company background, the main product of the PepsiCo are softdrinks and beverages which was distributed to their home market (i.e. USA). These products are available for customers. Through Diversification, PepsiCo is able to cover all food and beverage alternatives.
Pricing
In US, one of the advantages of PespsiCo is when it comes to its pricing tactic. In order to be known into the market place, the company provides its target market with an affordable cost while providing them a high quality products and services. The company gives the customer and client a price that is enough and matches the quality of their products.
Placement/Distribution
To be known in the market place, the product was distributed directly to its clients and consumers. Basically, PepsiCo products are all available in any convenient stores, supermarkets and food stores in USA. Customers can also avail PepsiCo products through vending machines and outlets in USA.
Promotion/Communication
To promote the company and its product, the company uses TV/video advertisements, print advertisements and the concept of e-marketing. Mall and event tours were also imposed by the company to reach their local consumers. These promotion and communication strategy will tend to meet the consumers form different places everywhere in USA, especially those target markets or the consumers in the working place.
Marketing Mix of PEPSI CO. TO HOST COUNTRIES (4Ps)
Product
As previously discussed, the main product of the PepsiCo are softdrinks and beverages which was distributed worldwide. These products will be available for the customers anywhere to host countries (i.e. China, India and Europe). Through Diversification, PepsiCo is able to cover all food and beverage alternatives. Its beverages alone are not limited to carbonated drinks but also, ready to drink teas, orange and fruit juices, mineral water and through the recent acquisition of Quaker Oats, isotonic drinks. Once, it had only catered to salty snack foods, but today, it also caters to sweet snack foods through ready to eat popcorn and healthy alternatives through Quaker Oats. This provides a wide variation of choices for consumers who may opt for a tasty food or healthy food lifestyle. PepsiCo also began acquiring quick fast-food restaurants and services such as Pizza Hut, Kentucky Fried Chicken and Taco Bell (all of which remain dominant in each respective market). These restaurants were also used as a means to capture customers into drinking PepsiCo’s beverages. At the same time, PepsiCo continues to acquire products such as 7UP, Lipton, Aquafina and Mug, and restaurants such as California Pizza Kitchen, East Side Mario’s, and Chevys Mexican Restaurants. Celebrities such as Michael Jackson, Ray Charles, Billy Crystal, Shaquille O’Neal, Andre Agassi and Madonna appeared in their many advertising campaigns, boosting sales.
The products are different in other competition in a way that the company maximises quality but minimise the cost to be affordable for all types of consumers. Through the use of demographics and psychographics, all needs and demands of target market will be known by the company in order to provide the customers in the utmost time. The products are available at the stores worldwide.
Pricing
Similar to their local strategy, the advantage of the company is when it comes to its pricing tactic. In order to be known into the market place, the company provides its target market with an affordable cost while providing them a high quality products and services. The company gives the customer and client a price that is enough and matches the quality of their products.
Placement/Distribution
To be known internationally, one of the strategies that the product utilises is on a joint venture with distinguished distributor of beverages and food services. The company also utilises the so-called e-marketing to be known globally.
Promotion/Communication
To promote the company and its product, the company uses video advertisements, print advertisements and the concept of e-marketing. These promotion and communication strategy will tend to meet the consumers form different places everywhere, especially those target markets or the consumers in the working place.
From the capabilities of PepsiCo, they should launch a new commercial that focuses on the new “PEPSI FOOD GOOD: I LOVE IT EVEN MORE!” theme. It should show visuals and verbal encouragement in making the customer knew the quality of the Pepsi products for them to love it even more. The trick here is that the commercial should look like it favours the new features of Pepsi products more than the products of the competitors. In addition, Pepsi products must also employ its traditional advertisement strategy which includes famous celebrities and athletes to be involved in the commercial like the Pepsi commercial with no less than Beyonce Knowles to endorse Pepsi products (PepsiCo Inc. 1996). The key is to emphasise the product options and then let the public decide. The new advertisement should be more focused in encouraging the customers, specifically youth and adults. Here, a joint advertisement of all the Pepsi products in one commercial would be more interesting. The advertisements should be distributed through flyers, or should be featured in newspapers, magasines and through the websites. Television commercials should be shown on teen shows and adult shows. While radio advertisements should be aired on general radio stations and not on stations specialising on a certain genre. Poster on the new advertisements should also be placed in different areas, specifically stores and roads through bulletin boards where it can be easily seen. There should also be distributors of the flyers on selected public areas.
Although, these promotional tools that is use to promote the Pepsi brands can be considered as one of the strength of the company, the marketing department is still aware that they must used other promotional or communication tools to sustain their competitive position. In addition, the market nowadays has been greatly influenced by the modern technology such as the internet (1993). With this, the marketers must be able to adapt with these changes and utilise another marketing technique or communication tools which is adjusted to the changes and trends in the market place, i.e. the Integrated Marketing Communication.
In terms of sponsorship, this can also be integrated with the internet for enhanced efficacy. For this purpose, the internet may serve as a vehicle to support or create the company and augment the involvement of its core audience. Retail can also be improved through the internet by means of certain online features which caters to product stock availability or locations of store outlets or branches. In this case, retail experience is enhanced by increasing customer coverage as well as reducing stress and frustration involved in retail shopping.
Forces of Globalisation of Markets
The several macro factors, which affect the global market and the business organisations are important to assess and examine for they can largely determine the success of the business organisation in the market. Pepsi Co must be able to have skills in developing new products and innovating new technologies to cope with the changes happening in the society today. Along with developing new products, Pepsi Co must also produce effective marketing strategies to provide solutions to the challenges that they face. In addition, it will also be necessary to anticipate problems and plan, in case a specific problem comes their way. This would help the company prepare and come up with alternative solutions for easy implementation of plans.
PESTLE ANALYSIS
Just three decades ago, the competitive environment of the carbonated soft drink (CSD) industry was based on a recognition of and implicit acquiescence to the dominance of The Coca-Cola Company. Beginning in the 1960s, however, Coca-Cola’s dominance has been increasingly challenged, particularly by Pepsi-Cola. The new competitive environment is well publicised and intense. The Cola Wars were declared and the battle continues. Pepsi-Cola and Coca-Cola are widely recognised as being two of the premier marketing companies in the world. A great variety of new products and package types have been introduced. Celebrity advertising has been raised to a new level. Coca-Cola even changed the formula for Coke. These and other developments in the CSD industry came about from major changes in strategy by Pepsi-Cola and Coca-Cola. To some extent these strategic changes arose from Pepsi’s challenge to Coke’s dominance of the industry. In addition, several factors external and internal to the industry have been important catalysts for these changes. Rather than simply reacting to a changing competitive environment, PepsiCo and The Coca-Cola Company have created and implemented strategies that turned the new environment to their advantage (1993).
Although Pepsi Cola attacked Coca-Cola’s dominance and achieved near parity with Coke in bottled soft drinks, both Coke and Pepsi have benefited from fighting the Cola Wars because the battle between them has stimulated continuing growth in an industry regularly pronounced by the experts for many years to be on the verge of maturity (1993). As the industry existed in the early 1970s, the reasons for predictions of impending maturity were not difficult to see. The apparent limits of the human stomach argued strongly against further significant growth of per capita consumption of soft drinks. Certainly, substantial growth in sales of the limited number of products offered by Pepsi and Coke appeared unlikely (1993). The competitive advantages of the two industry leaders were built on delivering a few unchanging, high-quality products through a distribution system that, although complicated, was effective. In the face of the predicted maturation of their domestic market, the prudent course appeared to be a holding action in the United States, with attention and resources shifted to offshore markets and diversification a classic cash cow strategy.
New strategies, such as joining the parade of product modifications and introductions of other food manufacturers, and bringing what had long been a very effective independent distribution system in-house, required basic major modifications of the competitive advantages of Pepsi-Cola and Coca-Cola (1993). Such strategies appeared to be bet-the-ranch propositions. Nonetheless, Pepsi-Cola and Coca-Cola took the bets. Each escalated the Cola Wars to new forms of pricing and promotion, and each launched a great number of new products, including new versions of their flagship brands. Finally, each company undertook a fundamental change in its distribution system from networks of independent bottlers to company-owned bottling systems. The result of these and other new strategies has been a continued, rapid expansion of Pepsi’s and Coke’s domestic sales. The limits of the human stomach have not yet been found, and all other liquids, from coffee to water, face continued competitive pressure from Pepsi and Coke (1993).
IMPACT OF GLOBALISATION TO INTERNATIONAL MARKETING STRATEGY OF PEPSI CO.
Globalisation plays significant role and effect to International Businesses. Pepsi has company extensive promise to milieu in providing secure and vigorous environment for the employees and for the community. Actually, Pepsi is devoted to scheming, creating, upholding and operating amenities that guard the people in terms of physical resources. As part of globalisation changes and international approach of the company, Pepsi is committed in reducing the crashing of business in environment through protection and recycle ways and use of energy programs in promoting dirt free air also water and decrease landfill squander as stated in universal system of conduct as based on subsequent environmental philosophy such as the following:
Ø The business industry is mannered by fulfilling the appropriate laws and system and provide secure and vigorous milieu
Ø minimise the collision of Pepsi business on situation through techniques that are publicly accountable and systematically base and efficiently thud like for example materials recycle ways and maintenance
Ø mounting program that encourage dirt free air as well as water and power conservation and the decrease of land wastes
Ø through sustaining programs that inform and educate as well as motivate Pepsi employees to help preserve good atmosphere
Ø By assisting together with diverse business organisation in finding answers for diminishing pollution problems and the back-up process applied to ecological policies
Pepsi is able to offer service required by the customers and the employees are motivated to optimise input and obtain practice in diverse areas of operation like for instance, if Pepsi decided to surmount the international market so there can be options the company will come across and it is important that the management of Pepsi should choose marketing strategy that is suitable for their products and services being offered for the Pepsi company to be more competitive as there can be stabilisation of political as well as economic power as there is the providing of needed environment encouraging to marketing activities as well as overseas investments. Likewise, culture is imperative feature in understanding Pepsi’s market status as the company operate effectively for universal position as to how business culture will pressure Pepsi’s market efficiency for their success and or failure. Furthermore, in terms of promoting the Pepsi’s services and products, Pepsi Company can use certain media advertisements like TV or print and be open to concepts of e-marketing as Pepsi’s strategy will be inclined to assemble consumer preferences of the services being offered and products provided.
Henceforth, today’s international market is being characterised by extremely spirited business organisations as they are all vying for customer loyalty. MNC’s has faced with the challenges in maintaining very own competitive perimeter and be able to live on and be successful in the global market like Pepsi. Thus, marketing strategies for the company are to be cautiously designed and executed and be able to augment the decisive goal which is company development. Despite economic as well as technological situation in terms of making it possible sometimes for Pepsi to make a pivotal shift as there is the ideal indication in encouraging strong product brands and services within a large consumer market as it must be considered for Pepsi company business to attain an easy step to realise the value of the targeted market by looking into the personality and lifestyle of people in strengthening Pepsi’s profit and sales for a stable hold-up of global marketing as the huge capacity of Pepsi’s market can possibly sham certain obstruction in acquiring winning marketing strategy from within its market niche’.
The marketing plan and strategies for Pepsi is not complete without having attention and consideration to valued and loyal customers as customers will play a crucial factor of marketing planning agenda of the Pepsi company in addressing reasonable sanctions for productivity and development as well as customer preservation as Pepsi company can utilise in gaining critical market strategy advantage over its competitors for the survival of growing spirited environment (1999). Pepsi should evidently recognise the targeted element and stakeholders as to which marketing strategy should be directed (2002). The large span of Pepsi’s market process can pose obstacle for using better marketing strategy as there can be selection of potentialities in relating Pepsi’s sound marketing strategy as worldwide advertising is indescribable as the taking in of technological barriers for its operation in cutting across customers of diverse social status as Pepsi should look for better avenue of executing strategic and effective market campaigns for the its products and services opportunity resulting to favorable business and marketing outcomes and amicably Pepsi will pull towards the interest of target viewers and increase product loyalty as well as the services as made available. (1997).
In addition, Pepsi company are needed to identify dissimilar factors that can affect entrance assumption into global marketplace as Pepsi had emphasised such strategic utilisation of technology and planned administration system as well as well-built and spirited executive structure for the key reason as to why MNC’s have been successful in certain marketing venture of giving value for products and services as crafted internationally (2004) Therefore, Pepsi has build a status name around in the world for their marketing success in soft drink business market as well as in food snacks industry as done by generating healthy environment for customers while keeping its veracity even if Pepsi is facing rigid competition from Coca-Cola but, Pepsi is balanced to give Coke specific encounter for the future that can be possible through a novel branding strategy to be applied by Pepsi in handling in striking exit from marketing gathering as Pepsi products should struggle for consistency in giving out best shot of its market strategy formulation.
CONCLUSION
Over the last few years, the importance of international marketing has increased as globalisation has increased the range of possible opportunities for proactive organisations with aggressive growth strategies. To develop the capabilities of MNEs such as PepsiCo to make effective strategic marketing decisions, they need to have the ability to understand the changing dimensions of the market in which they operate and the impact this has on their competitive advantage. They need to be able to challenge the traditional thinking and develop an innovative culture through learning and knowledge management in order to re-orientate and reformulate competitive strategies, in order to sustain their advantage in the market. They must have the ability to appraise strategic marketing decisions and assess strategic options with regard to the potential return on any investments made. Finally, to sustain competitive advantage over time, companies need to develop innovative marketing solutions that enhance an organisation’s competitive position whilst delivering superior value to the customers and shareholders.
A competitive market system creates incentives for firms to vie for large market shares. Sometimes one firm is so successful in this fight, it acquires a dominant position in a market. From the firm’s point of view, a large market share is good. After all, dominance implies power and control. It creates a real potential to increase profits. From society’s point of view, however, dominance may not be quite so desirable. For the power that goes with dominance can be acquired and used in a number of ways. While some of these ways may promote economic welfare, others might reduce it. If the reductions are large and long-lived, people may want to reconsider whether dominance should be affirmed in all cases ( 1998).The company is expanding its markets on countries it has not yet completely conquered like some parts of Asia. Some parts of Asia is currently controlled by coca cola their rival company. Pepsi Co is continuously doing the best it can to match or exceed their competitors reach. The company is using everything available to reach more markets and outdo their rival. By having different markets more options can be used by the company. PepsiCo’s leading soft drink, Pepsi-Cola, and its chief rival, Coke, have dominated the soft-drink market for decades, although Pepsi has traditionally remained behind Coke. But Pepsi’s aggressive advertising campaigns aimed at young consumers and major bottling and marketing deals made Pepsi a close rival to Coke by the 1980s. The company is continuously reaching places it has not reached before. It is conducting expansions to reach new territories and increase its profitability and clients. The company uses new branches and subsidiaries in different countries to have more territories and reach more people more. These branches have been oriented and trained regarding company policies and procedures. It also uses different expansion techniques so that no problem occurs.
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