Financial Implications of Cross Border Marketing
Marketing Beyond National Boundaries
Mwewa Besa – FZIM, MCIM, MBA
“If you are not willing to learn, no one can help you: If you are determined to learn no one can stop you.”
Zig Ziglar
Trivia – A Few things to Remember
“Content builds relationships. Relationships are built on trust. Trust drives revenue.” –
Andrew Davis
Economic
cycle determines the size of demand that is created
The best marketer must understand his customer’s needs
Marketing across borders is risky, but can equally be rewarding – Risk Reward Trade Off
Marketers must understand the opportunity cost of their marketing strategies
Expectations
At the end of this discussion, we expect the participants to;
Establish a common understanding of Marketing
Appreciate the available International marketing strategies
Appreciate the cost implications of International Marketing
Appreciate the significance of numbers in strategy
Understand some financial concepts and how they impact Shareholder Value
Appreciate the potential that Africa presents as a market
understand some cultural nuances that may impact cross border marketing – Case Study
Gain some alignment on the AfCFTA and share some Key Takeaway’s
Africa at A Glance - The Popular Girl Everyone is chasing after
1.52B Population (19 Av. Age)
54 Countries #1 in Mineral Wealth (20% of Land)
Definitions
Domestic Marketing:
Refers to the activities and strategies employed by a company to promote and sell its products or services within the boundaries of its home country.
International Marketing:
Involves marketing products or services beyond national borders. It entails adapting marketing strategies to suit the unique characteristics of different countries and cultures.
Opportunity Cost :
Represents the potential benefits that a business, an investor, or an individual misses out on when choosing one alternative over another.
Return on Investment (ROI)
This is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.
Shareholder Value:
The financial benefit owners of a business receive for owning shares in a particular company. Put more simply, value is created for shareholders when the business increases profits and the opposite is also true.
Income statement:
One of the three financial statements used for reporting a company’s financial performance over a specific accounting period. The other two key statements are the balance sheet and the cash flow statement.
Jaws Ratio : Highlights the growth rate of costs against that of income and it is derived as; (Income Growth Rate) − (Expense Growth Rate). Aspire to have +ve Jaws
International Marketing Strategies
Motivationn for Going Across Boarders -
● Survival - Evolving market (AfCFTA)
● Treaties and Agreements entered into at national, regional or international level
● Competitive Forces
● Capacity utilization – Addressing excess capacity that can not be absorbed locally
● Technology pushed
● Consumer driven preferences
● Economies of Scale
● Infrastructure availability
● Product Life cycle – Lag in one market / evolving trend / excess stock
Four Approaches to International Marketing Orientation
Ethnocentric
Polycentric
Home country is considered superior and thereby seeing similarities in foreign countriesExample is where one sees Africa as a Country and approach it as such.
Each host country is unique and sees differences in foreign countries – Takes local nuances into consideration – Lamb Burger as opposed to Hamburger (Mc Donald story or White Teeth Case)
Regiocentric
Geocentric
Sees similarities and differences in a world region. The region becomes the relevant differentiation basis. NAFTA, EU, COMESA, ECOWAS, etc. This assumes similar attributes in the region.
World view, sees similarities and differences in home and all the host countries
The entire world is seen as a potential market. The company sees itself as a global company. May lead to adaptation challenges – Top Plug
Culture can be a deal breaker in International Marketing – Case Studies
It is considered taboo to give your back to seniors in some societies
In most African societies it is considered rude to look elders directly in the eyes
In some culture it is considered rude to give someone something using the left hand
In some Asian culture you do not put a business card in the back pocket
It is considered rude to speak while eating.
Understanding Cultural Nuances
Ethnocentric – Addressing the Pitfalls and Bringing it Home
Africa as a continent has;
• Between 2000 and 3000 different languages
• A total of 54 independent states that are as diverse as any other country
• The highest resource base known to man
• About 5 key regional trading blocs
• One of the best weather and yet suffers food shortages
• An average age of 19, making it the youngest continent
Geo-centricity Requires Investing in the Brand
Feeding the Brand
Historical Comparison of the Big Spenders
Financial
Implications of International Marketing
• Variability in Tax systems
• Regulatory costs:
- Barclays pull out from Africa –ownership of a controlling BAGL stake
• Tax variability
- Punitive entry barriers in some cases
- Higher licensing fees for example in mobile telephony.
• Customer onboarding journey
• Regulatory costs
• Research costs across different markets
• Policy inconsistency that may prove costly on the part on the
• Failure to meet the set hurdle rate – ROI
• Higher Opportunity costs
Driving Gross Profit Margin / Ratio
A higher GP ratio does not signify effective cost management
Carry out a peer to peer comparison to appreciate your performance
Subtracting COGS from Revenue gives us the Gross Profit from which the GP Margin is calculated.
Increasing price or re-negotiating with suppliers will result in an increase in gross profit
How do You Keep Your Shareholders Happy?
Drive revenue increase while reducing costs. As profits increase so does shareholder value.
Numbers will Put Marketing in The C-Suite - Earning the Place on the Table
What are Africa’s current Challenges?
• Lower Levels of Intra Africa Trade
• Poor infrastructure across the 54 countries
• Policy Inconsistency
• Poor global image that makes the continent be associated with disease and not what is good of it
• Corruption
• Capital limitation
Key Insights to Highlight
Taking it Home
• Intra Africa Trade has potential to increase the continents GDP by an additional USD350 B in the short to medium term
• The Tourism subsector is going to add over 20m jobs and additional revenue of USD168 B by 2030
• Higher internet speeds and the availability of a youthful population should open allow African start ups to set their goals higher
• Digital Payments transactions will increase from $164.90B in 2023 to $314.80B by 2028
• The African Continental Free Trade Area will lead to increased of USD350B by 2035.
Why Do We Need to Understand the Numbers? - Summary
Allows you to direct the effort towards tangible results
We operate in a dynamic business environment
As the world is evolving, we also need to evolve
The C-Suite demands a CMO/CCO who is CEO ready
To help reduce wastage and deliver shareholder value
To help craft strategies that reflect knowledge and understanding
o Cross-border marketing presents both opportunities and challenges from a financial perspective.
o While it requires significant investment in research, compliance, logistics, and tailored marketing, the potential for long-term gains can justify these expenditures.
o Companies must conduct thorough financial analysis and strategic planning to navigate the complexities of international markets successfully, and;
o By understanding and addressing financial implications, businesses can position themselves for successful global expansion and increased profitability while enhancing shareholder value through increased Return on Investment.
Next Steps – Driving Financial Value Through Marketing
Take time to understand the numbers or you will be on the MENU
Financial Models help to explain marketing plans with ease - Show me the numbers!!!
Resist the temptation of presenting wish lists as part of your entry strategy. Have a well thought through plan with clear forecasts
Stress test your financial plans, with at least a 15 to 20% hurdle
Understand your cost drivers and what levers you need to pull to arrest your costs, rather than risk being pushed into cost cutting
Engage with CFO regularly and revised your forecasts if business environment changesRAF.
Always Remember…
Our Call To Action
Let me end by asking that we take some time to reflect on our conversation review your flight path and seek to answer the following questions;
Are you that leader who is going to drive change on the African continent and start pushing for the full actualization of Africa’s worth?
What will it take you to be part of the driver for change that will lead this revolution and avoid relegating that to the next generation?
The next time we meet in Ghana, what story will you bring to the table to demonstrate a change in your trajectory and the actualization of a vision for prosperous AMC and Africa in General?
Join is in rewriting the history of Africa by changing the narrative and building a collaborative network that will stand tall and bold.
