Transcript Global Marketing and R&D

International Business
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 18
Global Marketing
and R&D
What Is The Marketing Mix?
 The marketing mix is comprised of
1.
2.
3.
4.
Product attributes
Distribution strategy
Communication strategy
Pricing strategy
18-3
Should The Marketing Mix Be
Changed For Each Market?
 Question: Are markets and brands becoming
global?
 Theodore Levitt argued that world markets were
becoming increasingly similar making it unnecessary
to localize the marketing mix
 Question: Is Levitt right? Probably not!
 The current consensus is that while the world is
moving towards global markets, global
standardization is not possible because of cultural
and economic differences among nations, trade
barriers, and differences in product and technical
standards
18-4
What Is Market Segmentation?
 Market segmentation - identifying distinct groups
of consumers whose purchasing behavior differs
from others in important ways
 can be segmented by geography, demography,
socio-cultural factors, and psychological factors
 When there are differences between countries in
the structure of market segments a unique
marketing mix to appeal to a certain segment in
a given country may be necessary
 When segments that transcend national borders
exist a global strategy is possible
18-5
How Do Product Attributes
Influence Marketing Strategy?


1.
2.
3.
A product is like a bundle of attributes - products sell
well when their attributes match consumer needs
Consumer needs depend on
Culture - tradition, social structure, language, religion,
education
Level of economic development - consumers in highly
developed countries tend to demand a lot of extra
performance attributes, while consumers in less
developed nations tend to prefer more basic products
Product and technical standards - national differences
can force firms to customize the marketing mix
18-6
How Does Distribution
Influence Marketing Strategy?
 Distribution strategy - the means the firm
chooses for delivering the product to the
consumer
 How a product is delivered depends on the firm’s
market entry strategy
 firms that produce locally can sell directly to the
consumer, to the retailer, or to the wholesaler
 firms that produce outside the country have the same
options plus the option of selling to an import agent
18-7
How Do Distribution
Systems Differ?

There are four main differences in distribution systems
1. Retail concentration – concentrated or
fragmented
2. Channel length - the number of intermediaries
between the producer and the consumer
3. Channel exclusivity – how difficult it is for
outsiders to access
4. Channel quality - the expertise, competencies,
and skills of established retailers in a nation,
and their ability to sell and support the
products of international businesses
18-8
Which Distribution Strategy
Should A Firm Choose?
 The optimal strategy depends on the relative
costs and benefits of each alternative
 When price is important, a shorter channel is
better
 each intermediary in a channel adds its own markup
to the product
 When the retail sector is very fragmented, a long
channel can be beneficial
 economizes on selling costs
 can offer access to exclusive channels
18-9
Why Is Communication
Strategy Important?
 Communicating product attributes to prospective
customers is a critical element in the marketing
mix
 How a firm communicates with customers
depends partly on the choice of channel
 Communication channels available to a firm
include
 direct selling
 sales promotion
 direct marketing
 advertising
18-10
What Are The Barriers to
International Communication?
 The effectiveness of a firm's international
communication can be jeopardized by
1. Cultural barriers - it can be difficult to communicate
messages across cultures
2. Source and country of origin effects
3. Noise levels - the amount of other messages
competing for a potential consumer’s attention
 There are two types of communication
strategies
1. A push strategy emphasizes personnel selling
2. A pull strategy emphasizes mass media advertising
18-11
Which Is Better –
Push Versus Pull?
 The choice between strategies depends on
1. Product type and consumer sophistication
 a pull strategy works well for firms in consumer
goods selling to a large market segment
 a push strategy works well for industrial products
2. Channel length
 a pull strategy works better with longer distribution
channels
3. Media availability
 a pull strategy relies on access to advertising media
 a push strategy may be better when media is not
easily available
18-12
Should A Firm Use
Standardized Advertising?
 Standardized advertising makes sense when
 it has significant economic advantages
 creative talent is scarce and one large effort to
develop a campaign will be more successful than
numerous smaller efforts
 brand names are global
 Standardized advertising does not make sense
when
 cultural differences among nations are significant
 advertising regulations limit standardized advertising
18-13
What Pricing Strategy
Should Firms Use?
 Firms need to consider
1. Price discrimination
 price elasticity of demand
2. Strategic pricing
1. predatory pricing
2. multi-point pricing
3. experience curve pricing
3. Regulations that affect pricing decisions
 antidumping regulations
 competition policy
18-14
How Should Firms Configure
The Marketing Mix?
Standardization versus customization is
not an all or nothing concept
most firms standardize some things and
customize others
Firms should consider the costs and
benefits of standardizing and customizing
each element of the marketing mix
18-15
Why Is New Product
Development Important?
 Product innovation should be a strategic priority
 today, competition is as much about technological
innovation as anything else
 Technological change is shortening product life
cycles short
 new innovations can make existing products obsolete,
but, open the door to new opportunities
 The rate of new product development is greater
in countries where more money is spent on
basic and applied research and development,
demand is strong, consumers are affluent,
competition is intense
18-16