Designing Global Marketing Programs – Assignment Example

Running head: GLOBAL MARKETING PROGRAM Global Marketing Program Introduction One of the primary marketing decisions in the international business arena is deciding on marketing program. This entails making a choice between the creating a global product and developing a product that suits the needs of consumers in the target market. Adapting products to local markets is one of the major focuses of multinational corporations. While keeping this in focus, transnational corporations usually strive to keep operation costs as low as possible. This paper seeks to develop a marketing program for Coca-Cola Co. USA products in Mexico. Cost factors that are likely to affect the pricing of the company’s products and how this would change if the products were exported to Mexico. One of the major determinants of pricing is the manufacturing cost of products. It is unusual to price products below their actual manufacturing costs. The actual cost price of a product is the sum of total production cost and taxation on units produced. Research and development costs, transportation costs and employee support are some of the costs that will determine the final price of any given product (Mühlbacher, et al., 2006). When exporting the product to the target market, the company will incur additional costs because of longer distribution channels, taxations on imported products and currency fluctuation risks. The company will only be in a position to control the landed price of the product. Mexico imposes additional taxes on imported soft drinks that use other sweeteners other than cane sugar (World Trade Organization, 2005). Market factors that would affect the price of the products in Mexico The market factors that are likely to influence the price of the products in Mexico include: the income level of consumers in the market, intensity of competition, country-specific distribution structure and the power of buyers, which will dictate the level of pricing. High bargaining power of buyers is likely to push down the prices of the products. Do sales of the company’s products require countertrade in Mexico? The Coca-Cola Company will not require to countertrade in Mexico because the country has a convertible currency and thus there would be no need for barter-like trade with the government of Mexico. How Mexican government interferes with pricing of products and how this affects the company’s products Governments usually interfere with pricing of products by companies. The government of Mexico could interfere with the pricing of Coca-cola products through price fixation, where they cup prices of products. The government can also issue unfair subsidies to local producers. These actions by the government would result into prices far much different from that which would have been set by the market itself under free trade conditions. Price ceilings limit the prices that can be paid on products. Impact of the country’s infrastructure on product distribution activities The nature of infrastructure in a country greatly influences the distribution process of products to the market. Distribution encompasses transportation, storage, packaging and all other activities that the product undergoes before it reaches its final destination. How the retail environment impacts distribution activities in Mexico Mexico has one of the largest populated cities in the world. In recent years, the retail trading has improved to a considerable extent. The performance of the retail sector is highly dependent on the country’s economic status. However, the retail market is relatively smaller with low levels of income. The country had suffered economic downturns and is forecasted to perform poorly in the next trading periods because of the financial crisis in the USA, which is the main destination for the country’s exports. What is the recommended distribution channel for the company’s product in Mexico? The most preferred channel of distribution for the products would be through wholesale distribution and establishing sales center in strategic places to handle distribution in major cities. Selective distribution channel would be used as this would shorten the distribution channel and hence keep the prices of the product low (McCalley, 1996; McCalley, 1992; Mühlbacher, Leihs, & Dahringer, 2006; Rosenbloom, 2011; Stone & McCall, 2004). Selection of distribution partners for the product A company can select a suitable product distribution channels by conducting extensive research to establish the best performing outlets in the country (wholesalers & retailers). This ensures that the products are delivered to the market at the right time and price. Distribution Channels: Manufacturer Retailers Consumer Manufacturer wholesaler Retailers Consumers Manufacturer Sales Center Retailers consumers How should a company motivate channel participants in Mexico? The members of the marketing channel will be motivated by giving fair remunerations for their services and non-financial rewards (Gillespie, Jeannet & Hennessey, 2010; Ingene & Parry, 2004; Koekemoer & Bird, 2004). They will be compensated for transportation expenses, higher margins will also be given to them (Saxena, 2009). Could smuggling/black markets be a problem for your product in your target market? The black market is not much of a threat to the company’s products because they are unique and highly differentiated. References Gillespie, K. Jeannet, J. H. & Hennessey, D. (2010). Global Marketing. Mason, OH: South-Western Cengage Learning. Ingene, C. A. & Parry, M. E. (2004). Mathematical Models Of Distribution Channels. New York: Kluwer Academic Publishers. Koekemoer, L. & Bird, S. (2004). Marketing Communications. Lansdowne, South Africa: Juta Academic. McCalley, R. W.(1996). Marketing Channel Management: People, Products, Programs, and Markets. Westport, Conn.: Greenwood Publishing Group. Pride, W. M. & Ferrell, O. C. (2011). Marketing. Mason, Ohio: South-Western Cengage Learning. McCalley, R. W. (1992).Marketing Channel Development and Management. Westport, Conn.: Quorum Books. Mühlbacher, H., Leihs, H. & Dahringer, L. (2006). International Marketing: A Global Perspective. London: Thomson Learning. Rosenbloom, B. (2011). Marketing Channels. Mason, OH: Cengage Learning. Saxena, (2009).Marketing Management 4E.New Delhi: Tata McGraw-Hill. Stone, M. A. & McCall, J. B. (2004). International Strategic Marketing: A[n] European Perspective. New York, NY: Routledge. WORLD TRADE ORGANIZATION, (2005).MEXICO – TAX MEASURES ON SOFT DRINKS AND OTHER BEVERAGES. Retrieved on April 16, 2012 from http://www.wto.org/english/tratop_e/dispu_e/308r-0_e.pdf