1. Global Marketing, R & D
This is a test

2. Global Marketing and R&D
Among different countries, why and how:
It makes sense to vary the attributes of products
Distribution strategy may vary
Advertising and promotion strategies may vary
Pricing strategy may vary
How globalization affects new-product development

3. Levitt, 1983
“A powerful force drives the world toward a converging commonality, and that force is technology” (Prof. Ted Levitt, HBS)

4. Globalization of Markets?
Levitt’s “Converging commonality” has not happened universally
Consumer product tastes converged less than industrial product specifications
Media, communications means have
made consumers world-wide more aware of their mutual preferences
have contributed to creation of world brands
have caused market segments to emerge across some national markets--inter-market segments

5. Market Segmentation
The process of identifying groups of consumers whose purchasing behavior is unique in important ways
Is based on demography, geography, social-cultural factors, psychological factors
Allows firms to adjust marketing mix to meet the needs of separate market segments
Marketing mix variables: product-price-place (distribution)-promotion

6. Market Segmentation Across National Markets
Standardization: companies may
Offer same products
Adjust balance of marketing mix to market segments with similar needs across countries
Adaptation: companies may
Offer different products
Adjust balance of marketing mix to market segments with differing needs across countries

7. Marketing Strategy Standardization (Global Integration Pressures)
Efficiencies through integrated R&D, production, marketing
Control implications
Adaptation (Local Responsiveness Pressures)
Buyer behavior (cultural, economic influence, brand perception--country of origin idea)
Laws, regulations
Local environment needs
Responsiveness to local condition shifts
Implications on marketing mix

8. International Marketing Mix: Product
Product: a bundle of attributes
Hamburger: meat type, taste, texture, size
Automobile: power, design, quality, performance, comfort, size/capacity
Attributes need to be adapted to a greater or lesser extent to satisfy
Consumer preferences/tastes due to culture
Economic development levels affect consumer behavior
National product/technical standards state mandated

9. International Marketing Mix: Place
Optimal channel a company chooses to deliver the product
The most locally responsive element of marketing mix because distribution channels vary dramatically across countries
Retail system: concentrated-fragmented
Channel length: long, short
Channel exclusivity

11. International Marketing Mix: Promotion
How firm communicates the product attributes / benefits to customers
Barriers to international communication
Cultural barriers
Source effects (country of origin effects)
Noise levels
Standardized advertising strategy possible; standardized advertising strategy execution more difficult (culture, laws)

12. International Marketing Mix: Promotion
Push vs pull strategies
Push strategy: personal selling emphasis
Industrial products; complex new products
Short distribution channels
Few print or electronic media
Pull strategy: mass media advertising emphasis
Consumer goods
Long distribution channels
Marketing message may be carried via print / electronic media

13. International Marketing Mix: Price
Price discrimination: demand elasticity
Strategic pricing
Predatory (quick share-of-market focus):
lower prices to drive competitors out, then raise prices
Multipoint pricing:
pricing in one market may have an impact in another market; subsidize low pricing in one market from profits in another
Experience curve:
use aggressive pricing to build volume and move firm down experience curve (lower marginal costs)
Regulatory issues:
antidumping, monopoly restriction

15. New Product Development
High risk / high return
Technological innovation
Creative destruction
Location of R&D
Disperse R&D to trend/technology leading markets
High investment on basic and applied research
Strong underlying demand; affluent consumers
Intense competition

16. New Product Development
Integrate R&D, marketing and Production
Ensure:
Product development driven by customer needs
New products can be manufactured efficiently/effectively
Time to market is minimized
Plan clearly: goals, milestones, budgets

17. New Product Development
Use cross-functional, multinationally diverse teams
Span: initial concept development to market introduction
Team composition critical
Assign heavyweight project manager
High status in organization; high power and authority
Dedicated to fullest possible extent to project
Team should have representative from each function
Physical co-location
When appropriate?
Build team culture
Communication and conflict resolution processes

18. Strategic Analysis
Why do organizations decide to enter international business? Passive entry:
Follow customers overseas
Respond to enquiries from overseas
Competition is in overseas markets
Seek profitable growth
Sell capacity “as is”

19. Strategic Analysis
Eventually one or more of key distributors become a candidate for acquisition (FDI)
Foreign regional development organizations actively recruit FDI
Competitive pressures force examination of local assembly or production nearer to key international markets
Major international customers demand local support

20. Strategic Analysis
Organization acquires companies that are complimentary to existing businesses
Continued growth requires regional management, development, distribution, technical and customer support

21. Strategic Analysis
Issues involved in conducting international business become “significant”
Demands for organization’s resources increases:
Management
Cash
Product adaptation or unique development
Customer support

22. Strategic Analysis
Eventually, these demands force the active planning of international business by the organization – Active strategy

23. Strategic Analysis SWOT
Strength and Weaknesses – decisions made and controlled by management
Opportunities and Threats – business environment – events that are likely to occur

24. Marketing Mix (4 Ps) Product Promotion Pricing
Place (Distribution) – the most important for international business entry

25. Marketing Mix (4 Ps)
Place (Distribution) – the most important for international business entry:
Incoterms determine where title to goods changes
Transportation to international freight carrier, freight, insurance, documentation, customs clearance, local transportation, logistic management “in the market”, currency risk

26. Marketing Mix (4 Ps)
Product – usually controlled by the exporter, initially the least impacted element of the marketing mix
However, “localization” often required:
approvals and certificates
packaging & labeling
measures, etc

27. Marketing Mix (4 Ps)
Promotion – success at home leads to interest from potential importers, licensors, joint venture partners
Local knowledge essential on initial entries:
Integrated market communication
Trade and consumer sales promotion
Sales management
Trade shows

28. Marketing Mix (4 Ps)
Pricing : What tasks need to be performed to get the product from place of manufacture to foreign customers?
The remainder of the marketing mix needs to be determined in order to set prices

29. Export Pricing Policy Issues
Channel length: longer channels than domestic markets, may drive up end user prices  
    Price influence: distribution partners negotiate for the lowest possible “landed cost”
    Price-setting authority: How much pricing authority should be given to distributors or to subsidiaries?

30. Dumping
WTO: Sale of an imported product at ‘less than fair value’ and causes ‘material injury to a domestic industry’.
US: An unfair trade practice that results in injury, destruction, or the prevention of the establishment of an American industry.
US considers dumping when price is >5% below home market price or,
Price is below cost of production

31. Grey Marketing Grey (or parallel marketing)
Products are imported outside of the established distribution channel – undercutting the authorized channel pricing
Usually results from high imported prices