In this chapter, you will learn how globalization affects international marketing activities. You will also: Explore how firms develop their international product strategies. understand how companies blend product and promotional strategies for international markets, and examine the elements that influence international distribution and pricing strategies.
14 Developing and Marketing Products Copyright © 2014 Pearson Education, Inc Chapter Objectives • Explain the impact globalization is having on international marketing activities • Describe the types of things managers must consider when developing international product strategies • Discuss the factors that influence international promotional strategies and the blending of product and promotional strategies • Explain the elements that managers must take into account when designing international distribution strategies • Discuss the elements that influence international pricing strategies Copyright © 2014 Pearson Education, Inc 14 - Red Bull • Identical product is sold worldwide • Promotes brand on college campuses • Sponsors extreme sporting events Copyright © 2014 Pearson Education, Inc 14 - Globalization and Marketing Standardized product and promotion Adapted product and/or marketing •• Consistent Consistent image/message image/message•• Respond Respond to to local local needs needs •• Contain Contain costs costs Copyright â 2014 Pearson Education, Inc Exploit Exploit unique unique image image 14 - National Business Environments Cultural differences Laws and regulations National image Counterfeit goods Copyright © 2014 Pearson Education, Inc 14 - Brand and Product Names Brand name Competitive advantage Consistent image Consider connotation Copyright © 2014 Pearson Education, Inc Product name Select carefully Respect cultures Obey local laws 14 - Product Life Cycles Consecutive market introductions Technology and travel make obsolete New product development efforts Result is shorter product life cycles Copyright © 2014 Pearson Education, Inc 14 - Discussion Question What elements in the national business environment influence decisions about whether to standardize or adapt international marketing efforts? Copyright © 2014 Pearson Education, Inc 14 - Answer to Discussion Question Laws and regulations can force product alteration Cultural differences can force adaptations to better suit local preferences National image can influence perception of quality Counterfeit goods can damage a brand’s image And shortened product life cycles result from rapid new product development Copyright © 2014 Pearson Education, Inc 14 - Push and Pull Strategies Push Strategy Pull Strategy Pressure channel members to carry a product and promote it to Copyright © 2014 Pearson Education, Inc final users Create buyer demand that will encourage channel members to stock a product 14 - 10 Discussion Question A company that creates buyer demand that will encourage channel members to stock a product is using a a Push strategy b Pull strategy c Stock strategy Copyright © 2014 Pearson Education, Inc 14 - 19 Answer to Discussion Question A company that creates buyer demand that will encourage channel members to stock a product is using a a Push strategy b Pull strategy c Stock strategy Copyright © 2014 Pearson Education, Inc 14 - 20 Distribution Strategy Planning, implementing, and controlling the physical flow of a product from origin to consumption Physical goods Consulting services News providers Copyright © 2014 Pearson Education, Inc 14 - 21 Distribution Channels Degree of exposure Exclusive channel • One / few resellers Intensive channel Many resellers Copyright â 2014 Pearson Education, Inc Channel length Number of intermediaries Cost implications 14 - 22 Product Characteristics Value density Copyright © 2014 Pearson Education, Inc Product’s value relative to its weight and volume The lower a product’s value density, the more localized is its distribution system 14 - 23 Distribution Problems Lack of market understanding Theft and corruption Copyright © 2014 Pearson Education, Inc Financial loss Strategic impact 14 - 24 Discussion Question In what ways exclusive and intensive channels of distribution differ? Copyright © 2014 Pearson Education, Inc 14 - 25 Answer to Discussion Question An exclusive channel is one in which a manufacturer grants rights to sell a product to one or a limited number of resellers, as in automobiles An intensive channel is one in which a producer grants the right to sell a product to many resellers, as in general office supplies Copyright © 2014 Pearson Education, Inc 14 - 26 Pricing Strategy Must match overall firm strategy Copyright © 2014 Pearson Education, Inc • Low-cost leadership • Differentiation • Focus 14 - 27 Worldwide Pricing Single selling price for all international markets Difficulties Copyright â 2014 Pearson Education, Inc Local production cost • Export / distribution cost • Local purchasing power • Exchange rates 14 - 28 Dual Pricing Different selling price abroad than at home • Price escalation • Lower local price Separate international from domestic buyers • If not, arbitrage possible Copyright © 2014 Pearson Education, Inc 14 - 29 Pricing Issues Transfer price Intra-company transfer Arm’s length price Free-market price Price controls Upper or lower limits Dumping Unfairly low export price Copyright © 2014 Pearson Education, Inc 14 - 30 Discussion Question A pricing strategy in which a company must keep its domestic and international buyers separate is called a Dual pricing b Worldwide pricing c Arm’s length pricing Copyright © 2014 Pearson Education, Inc 14 - 31 Answer to Discussion Question A pricing strategy in which a company must keep its domestic and international buyers separate is called a Dual pricing b Worldwide pricing c Arm’s length pricing Copyright © 2014 Pearson Education, Inc 14 - 32 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America Copyright © 2014 Pearson Education, Inc 14 - 33 ... sporting events Copyright © 2014 Pearson Education, Inc 14 - Globalization and Marketing Standardized product and promotion Adapted product and/ or marketing •• Consistent Consistent image/message image/message••... image 14 - National Business Environments Cultural differences Laws and regulations National image Counterfeit goods Copyright © 2014 Pearson Education, Inc 14 - Brand and Product Names Brand name.. .Chapter Objectives • Explain the impact globalization is having on international marketing activities • Describe the types of things managers must consider when developing international