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

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

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

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.

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

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.

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.

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

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

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.

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.

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

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.

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.

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

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.

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