Ch8. Global and Relationship Marketing — International Markets and CRM

Global Marketing Entry Strategies

Exporting:
  Indirect export: use export intermediaries
  Direct export:   own export department

Contractual Modes:
  Licensing:        grant intellectual property rights (royalties)
  Franchising:      grant the entire business model
  Contract manufacturing: outsource production to a local manufacturer

Investment Modes:
  Joint Venture (JV): co-ownership with a local partner
  Wholly Owned:       establish or acquire a subsidiary

Low commitment → High commitment:
  Exporting → Licensing → Franchising → JV → Wholly Owned

Standardization vs. Localization

Standardization:
  Same marketing mix worldwide
  Economies of scale, brand consistency
  Examples: Coca-Cola logo, McDonald's Golden Arches

Localization:
  Adapt to local culture and consumers
  Higher cost, but better local reception
  Examples: McDonald's menus vary by market
            (India = vegetarian options; USA = McRib; Philippines = rice meals)

Glocal Strategy:
  Global brand + local adaptation
  Combines the advantages of both approaches

Relationship Marketing and CRM

Relationship Marketing:
  Retaining existing customers is more valuable than acquiring new ones
  One loyal customer > the value of five or more new customers

CRM (Customer Relationship Management):
  Collect and analyze customer data
  Deliver personalized communications
  Maximize value over the entire customer relationship

Customer Lifetime Value (CLV):
  Present value of all profits expected from a customer relationship
  Invest heavily in high-CLV customers

Customer Retention Rate:
  A 5% increase in retention can boost profits by 25–95%
  Analyze reasons for churn and respond proactively

Digital Transformation and Marketing

Marketing 4.0 (Kotler):
  Integration of traditional and digital marketing
  Blurring of online/offline boundaries

5A Customer Journey:
  Aware → Appeal → Ask → Act → Advocate
  Advocate (brand champion) is the ultimate goal after purchase

Data-Driven Marketing:
  Big data and AI-powered insights
  Personalized recommendations
  Real-time targeting

Key Concept Cards

Global Entry Mode Commitment: Export → Contract → Investment ★★★★★ : Commitment, risk, and control all increase as you move from exporting to contractual to investment modes. Memory tip: each step requires more skin in the game

Glocal = Global + Local ★★★★★ : The balance between standardization and localization. Memory tip: think globally, act locally

CLV = Customer Lifetime Value ★★★★☆ : The present value of the total revenue a customer generates over the entire relationship. Memory tip: CLV = a long-term investment in each customer

Practice Quiz

Q. What is the difference between licensing and franchising?

Licensing: grants only intellectual property rights — patents, trademarks, technology. The licensor receives royalties. The licensee is permitted to manufacture a product (e.g., Disney character merchandise licenses). Franchising: grants the entire business model, including operations and standards. Much more comprehensive control. Franchisees operate with the same brand, menu, and training. McDonald’s and Starbucks are classic examples of franchising.

Q. Why does customer retention rate have such a large impact on profitability?

Acquiring a new customer costs 5–7 times more than retaining an existing one. Existing customers have higher repurchase probability, make additional purchases, and generate word-of-mouth. Securing high-CLV customers is the key to long-term growth. Research shows that a 5% reduction in churn can increase profits by 25–95%. This is the theoretical foundation for CRM, membership programs, and loyalty schemes.