Lecture International business (9e): Chapter 18 - Charles W.L. Hill

Chapter 18 - Global marketing and R&D. After completing this chapter, students will be able to: Explain why there are differences between domestic and international marketing, explain why international marketing managers may wish to standardize the marketing mix regionally or worldwide, explain why standardizing the marketing mix globally is often impossible,...

9e

By Charles W.L Hill

Global Marketing

and R&D

 The marketing mix is comprised of

1 Product attributes

2 Distribution strategy

3 Communication strategy

4 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

 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

Influence Marketing Strategy?

 A product is like a bundle of attributes - products sell

well when their attributes match consumer needs

 Consumer needs depend on

1 Culture - tradition, social structure, language, religion,

education

2 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

3 Product and technical standards - national differences

can force firms to customize the marketing mix

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

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

 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

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

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

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

1 Channel length

 a pull strategy works better with longer distribution

channels

1 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

Should Firms Use?

 Firms need to consider

1 Price discrimination

 price elasticity of demand

1 Strategic pricing

1 predatory pricing

2 multi-point pricing

3 experience curve pricing

3 Regulations that affect pricing decisions

 antidumping regulations

 competition policy

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

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