2 Global Marketing and R&D Chapter 18Global Marketing and R&D
3 What Is The Marketing Mix? The marketing mix is comprised ofProduct attributesDistribution strategyCommunication strategyPricing 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 mixQuestion: 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 standardsLO1: 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 wayscan be segmented by geography, demography, socio-cultural factors, and psychological factorsWhen 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 necessaryWhen 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 needsConsumer needs depend onCulture - tradition, social structure, language, religion, educationLevel 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 productsProduct and technical standards - national differences can force firms to customize the marketing mixLO1: 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 consumerHow a product is delivered depends on the firm’s market entry strategyfirms that produce locally can sell directly to the consumer, to the retailer, or to the wholesalerfirms that produce outside the country have the same options plus the option of selling to an import agentLO2: 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 systemsRetail concentration – concentrated or fragmentedChannel length - the number of intermediaries between the producer and the consumerChannel exclusivity – how difficult it is for outsiders to accessChannel 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 alternativeWhen price is important, a shorter channel is bettereach intermediary in a channel adds its own markup to the productWhen the retail sector is very fragmented, a long channel can be beneficialeconomizes on selling costscan offer access to exclusive channels
10 Why Is Communication Strategy Important? Communicating product attributes to prospective customers is a critical element in the marketing mixHow a firm communicates with customers depends partly on the choice of channelCommunication channels available to a firm includedirect sellingsales promotiondirect marketingadvertisingLO3: 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 byCultural barriers - it can be difficult to communicate messages across culturesSource and country of origin effectsNoise levels - the amount of other messages competing for a potential consumer’s attentionThere are two types of communication strategiesA push strategy emphasizes personnel sellingA pull strategy emphasizes mass media advertisingLO3: Identify why and how advertising and promotional strategies might vary among countries.
12 Which Is Better – Push Versus Pull? The choice between strategies depends onProduct type and consumer sophisticationa pull strategy works well for firms in consumer goods selling to a large market segmenta push strategy works well for industrial productsChannel lengtha pull strategy works better with longer distribution channelsMedia availabilitya pull strategy relies on access to advertising mediaa push strategy may be better when media is not easily available
13 Should A Firm Use Standardized Advertising? Standardized advertising makes sense whenit has significant economic advantagescreative talent is scarce and one large effort to develop a campaign will be more successful than numerous smaller effortsbrand names are globalStandardized advertising does not make sense whencultural differences among nations are significantadvertising regulations limit standardized advertisingLO3: Identify why and how advertising and promotional strategies might vary among countries.
14 What Pricing Strategy Should Firms Use? Firms need to considerPrice discriminationprice elasticity of demandStrategic pricingpredatory pricingmulti-point pricingexperience curve pricingRegulations that affect pricing decisionsantidumping regulationscompetition policyLO4: 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 conceptmost firms standardize some things and customize othersFirms 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 prioritytoday, competition is as much about technological innovation as anything elseTechnological change is shortening product life cycles shortnew innovations can make existing products obsolete, but, open the door to new opportunitiesThe 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 intenseLO5: 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 productionIntegration will ensure thatcustomer needs drive product developmentnew products are designed for ease of manufacturedevelopment costs are kept in checktime to market is minimizedCross-functional integration is facilitated by cross-functional product development teams