1. International Business 9e
By Charles W.L. Hill
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Global Marketing and R&D
Chapter 18
Global Marketing and R&D

3. What Is The Marketing Mix?
The marketing mix is comprised of
Product attributes
Distribution strategy
Communication strategy
Pricing strategy

4. 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
LO1: Explain why it might make sense to vary the attributes of a product from country to country.

5. 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

6. How Do Product Attributes Influence Marketing Strategy?
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
LO1: Explain why it might make sense to vary the attributes of a product from country to country.

7. 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
LO2: Recognize how and why a firm’s distribution strategy might vary among companies.

8. How Do Distribution Systems Differ?
There are four main differences in distribution systems
Retail concentration – concentrated or fragmented
Channel length - the number of intermediaries between the producer and the consumer
Channel exclusivity – how difficult it is for outsiders to access
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

9. 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

10. 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
LO3: Identify why and how advertising and promotional strategies might vary among countries.

11. What Are The Barriers to International Communication?
The effectiveness of a firm's international communication can be jeopardized by
Cultural barriers - it can be difficult to communicate messages across cultures
Source and country of origin effects
Noise levels - the amount of other messages competing for a potential consumer’s attention
There are two types of communication strategies
A push strategy emphasizes personnel selling
A pull strategy emphasizes mass media advertising
LO3: Identify why and how advertising and promotional strategies might vary among countries.

12. Which Is Better – Push Versus Pull?
The choice between strategies depends on
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
Channel length
a pull strategy works better with longer distribution channels
Media availability
a pull strategy relies on access to advertising media
a push strategy may be better when media is not easily available

13. 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
LO3: Identify why and how advertising and promotional strategies might vary among countries.

14. What Pricing Strategy Should Firms Use?
Firms need to consider
Price discrimination
price elasticity of demand
Strategic pricing
predatory pricing
multi-point pricing
experience curve pricing
Regulations that affect pricing decisions
antidumping regulations
competition policy
LO4: Explain why and how a firm’s pricing strategy might vary among countries.

15. 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

16. 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
LO5: Describe how the globalization of the world economy is affecting new product development within the international business firm.

17. How Can R&D, Marketing, And Production Be Integrated?
To adequately commercialize new technologies, firms need to integrate R&D, marketing, and production
Integration will ensure that
customer needs drive product development
new products are designed for ease of manufacture
development costs are kept in check
time to market is minimized
Cross-functional integration is facilitated by cross-functional product development teams