Global Marketing

1
Global Marketing RDCH 15

• Role of Marketing RD in international
  business - when product standardization is
  appropriate when it is not
• Link to R D is identifying gaps in market so
  new products can be developed to fill gaps
• Market segmentation the marketing mix

2
Globalization of Markets Brands

• Levitt (HBR) provacativebut
• Modern transportation and communication
  technologies are facilitating a convergence of
  the tastes and preferences of consumers in the
  more advanced countries of the world.
• Trade barriers differences in product
  technical standards constrain a firms ability to
  sell a standardized product to a global marketing
  using a standardized marketing strategy
• Marketing Mix
• Set of choices the firm offers to targeted
  markets
• Elements product attributes, distribution
  strategy, communication strategy pricing
  strategy
• Varies from country to country depending on
  differences in culture, economic development,
  product standards, distribution channels, etc.

3
Market Segmentation

• Identifying distinct groups of consumers whose
  purchasing behavior differs from others in
  important ways (geography, demography,
  social-cultural factors, psychological factors)
• Can vary design of product, pricing strategy,
  distribution channel communication strategy
  from segment to segment
• Maximize sales by optimizing fit between the
  purchasing behavior of consumers in a given
  segment the marketing mix
• Structure of market segments in a country may
  have no parallel in home country
  (African-Brazilian, Chinese 45-55)
• Market segments that transcend national borders
  compelling similarities along dimensions of age,
  value, lifestyles, etc. -gt ability to view global
  marketplace as single entity pursue global
  strategy ( global youth segment)

4
Product Attributes

• Product bundle of attributes
• Car power, design, quality, performance, fuel
  consumption comfort Hotel atmosphere,
  quality, comfort service
• Products sell well when attributes match consumer
  needs are priced appropriately
• Influence on product attributes
• Cultural Differences tradition (food)
• Economic Development developed vs developing
• Product Technical Standards (video equipment)

5
Distribution Strategy

• Means chosen for delivering product to consumer
• Retail Concentration
• Concentrated few retailers (US malls)
• Fragmented many w/no major share (Japan)
• Channel Length
• Number of intermediaries between producer
  consumer
• Fragmented retail systems promote growth of
  wholesalers lengthen the channel (Japan, India,
  China)
• Internet helps shorten the channel
• Channel Exclusivity
• Exclusive difficult for outsiders to access
  (shelf space in supermarkets)
• Often based on long term relationships (PG Japan)

6
Choosing a Distribution Strategy

• Optimal strategy is determined by relative costs
  benefits depends on retail concentration,
  channel length channel exclusivity
• Critical link between channel length, final
  selling price firms profit margin (markup -gt
  higher price or less margin)
• Longer channels cut selling costs when retail
  sector is very fragmented
• Longer channels can influence market access with
  long term relationships (Apple Computer
  Japanese firms)

7
Communication Strategy

• Communicating product attributes to prospective
  customers
• Communication channels direct selling, sales
  promotion, direct marketing, advertising
• Communication strategy is partly defined by
  choice of channel

8
Barriers to International Communication

• Cultural Barriers
• A message in one country can mean something else
  in another (PG, Benneton)
• Overcome by developing cross-cultural literacy
• Source Country of Origin Effect
• Source Effects Receiver of the message
  (consumer) evaluates the message based on the
  status or image of the sender (Honda)
• Country of Origin Extent to which place of
  manufacturing influences product evaluation
  (Hyundai cars, German cars, French wine)
• Noise Levels
• Amount of other messages competing for a
  potential consumers attention (US high)

9
Push vs Pull Strategies

• Push
• Personal selling rather than mass media
  advertising relatively costly
• Product type industrial product or complex new
  products educate the customer about features
• Channel length short
• Media few print or electronic media available
  (or limited by law)

• Pull
• Mass media advertising to communicate the
  marketing message to a large segment
• Product type consumer goods
• Channel length long, more intermediaries need
  consumer to pull product through channel
• Sufficient print electronic media to carry the
  marketing message

10
Global Advertising

• For Standard Advertising
• Significant economic advantages lowers the cost
  of value creation by spreading cost over many
  countries
• Creative talent is scarce so one large effort
  better than 40-50 small
• Justification many brand names are global
  project single brand image

• Against Standard Advertising
• Cultural differences are such that a message that
  works in one nation can fail in another
• Advertising regulations can block implementation
  of standardized advertising (Kellogg cornflakes)
• Hybrid select some features to include in
  advertising campaigns localize other features
  -gt build international brand recognition yet
  customize ads to different cultures

11
Pricing Strategy

• Price Discrimination - Charging different prices
  for the same product in different countries
• Firm must be able to keep national markets
  separate or will have arbitrage (cars in Europe)
• Different price elasticities of demand in
  different countries measure of the
  responsiveness of demand for a product to changes
  in prices
• Income Level - Consumers with limited incomes
  tend to be very price conscious
• Competitive conditions Many competitors cause
  high elasticity of demand (firm raises prices -gt
  consumers will switch)

12
Pricing Strategy

• Strategic Pricing
• Predatory Pricing
• Use of price as a competitive weapon to drive
  weaker competitors out of a national market
• Once the competitors have left market , firm can
  raise prices enjoy high profits. Usually
  subsidized by another markets profits
• Multipoint Pricing
• Two international businesses compete against each
  other in two or more national markets. Firms
  pricing strategy in one market may have an impact
  on its rivals pricing strategy in another market
  (Kodak Fuji)
• Experience Curve Pricing
• Firm will price low worldwide in attempting to
  build global sales volume as rapidly as possible
  thus moving production down the experience curve

13
Regulatory Influence on Prices

• Anti-Dumping Regulations
• Dumping is whenever a firm sells a product for a
  price that is less than the cost of producing it
• Sets a floor under export prices limits a
  firms ability to pursue strategic pricing
• Competition Policy
• Nations have regulations to promote competition
  restrict monopoly practices
• Regulations can be used to limit the prices a
  firm can charge in a given country
  (Hoffman-LaRoche)

14
New Product Development

• Competition is as much about technological
  innovation as anything else firm must stay on
  leading edge of technology
• Technological innovation is both creative
  destructive (computer/typewriter)
• Build close links between RD, marketing
  production

15
Location of RD

• Ideas for new products are stimulated by
  interactions of scientific research, demand
  conditions competitive conditions
• Rate of new product development is greater where
  (centers in Japan, Europe, US)
• More is spent on basic/applied RD
• Underlying demand is strong
• Consumers are affluent
• Competition is intense

16
Integrating RD, Marketing Production

• Failure 80
• Development of technology for which demand is
  limited
• Failure to adequately commercialize promising
  technology
• Inability to manufacture a new product cost
  effectively
• Cross functional integration
• Product development projects are driven by
  customer needs
• New products are designed for ease of manufacture
• Development costs are kept in check
• Time to market is minimized
• Cross-Functional Team
• Composed of representatives of RD, marketing
  production
• Take product development from initial concept to
  market introduction
• Project manager who can get resources for team to
  succeed