The role of Marketing and R&D in international business

1. GMResearch and Development
Global MARKETING
and R&D
PRESENTED BY : AWOT K/TSION

2. GMRESARCH AND DEVELOPMENT
 Introduction
 N e w p ro d u c t D e v e l o p m e n t
 L o c a t i o n o f R & D
Out Lines
 Global Marketing
 G l o b a l i z a t i o n a n d M a r k e t
 M a r k e t S e g m e n t a t i o n
 M a r k e t m i x
 Product Attributes
 Distribution
 communication
 Pricing
 Global R&D

3. Introduction
• In Economics and international trade, the process of
globalization assumed a good deal of significance through
the operation of multinational enterprises(MNEs).
• The role of Marketing and R&D in international business is
– when products 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.
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GLO BA L MA R KE TING A ND R &D

4. FR
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Globalization and Markets
 “A powerful force drives the world toward a converging commonality, and that force is technology”
(Levitt, 1983)
 “Converging commonality” may not have happened universally
 Globalization of market can be divide into two:
 Globalization of production
 Globalization of markets
 Globalization of markets refer to the process of integrating and merging of the distinct world
markets into a single market.
 The process involves the identification of some common norm, value, taste, preference and
convenience and slowly enables the cultural shift towards the use of common product or service.
 The current consensus is that while the world is moving towards global markets, cultural and
economic differences among nations limit any trend toward global consumer tastes and preferences.
 In addition, trade barriers and differences in product and technical standards also limit a firm’s
ability to sell a standardized product to a global market
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R&D

5. FR
Market Segmentation
• Marketing segmentation involves identifying distinct groups of consumers whose
purchasing behavior differs from others in important ways.
• Market can be segmented through:
 geography
 Demography
 Social-cultural factors.
 Psychological factors.
• Marketing Mix Variables:
product-price-place(distribution)-promotion
• Market mix adjusted to reflect differing purchasing patters in segments.
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R&D

6. FR
What is the marketing mix
• The marketing mix (the choice the firm offers to its targeted market )is compressed of
Product attributes
Distribution strategy
Communication strategy
Pricing strategy
Theodore Lavitt argued that world markets were becoming increasingly similar making it unnecessary to
localize the marketing mix
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R&D

7. FR
A. Product attributes
 A product is like a bundle of attributes
 If consumer needs were the same everywhere, a firm could sell the same
products world wide But, consumer needs vary from country to country
depending on:
I. Cultural differences
II. Level of economic development
III. Product and technical standards
IV. Distribution strategy
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R&D

8. FR
I. Cultural differences
• Cultural differences along a rang of cultural
dimensions including
Tradition
language,
Religion,
Education
• While there is some cultural convergence among
nations Levitt’s vision of global markets is still a
long way off
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R&D

9. FR
II. Level of economic development
A country level of economic development has
important marketing implications
Consumers in highly developed countries tend to have
extra performance attributes in their products.
Consumers in less developed countries tend not to
demand these extra performance attributes.
Cars: no air-conditioning, power steering, power windows,
radios and cassette players.
Product reliability is more important.
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R&D

10. FR
III. Product and technical standards
 National differences can forces firms to customize the marketing mix
 Government standards can prevent the introduction of global products.
 Different technical standards impede global markets, as well.
 Come from idiosyncratic(odd habit) decisions made long ago.
 Different television signal frequencies.
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R&D

11. FR
IV. Distribution strategy
Means 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 options
of selling to an important agent
• Three different distribution systems:
1. Retail consideration.
2. Channel length.
3. Channel exclusivity.
4. Channel quality
• Choice of channel:
• Cost/benefit of each alternative vary from country to country.
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R&D

12. FR
A Typical Distribution System
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R&D

13. FRCommunication strategy
• Communication is a critical element in the marketing mix. The
firm communicates with customers depends on the choice of
channels
• Those communication channels available to firms include
DIRECT SELLING
SALES PROMOTION
DIRECT MARKETING
ADVERTISING
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R&D

14. FRBarriers to International Communication
I. Cultural Barriers – It can be difficult to communicate messages across
cultures
A message of one country quite different on the other countries
To overcome cultural barriers, firms need to develop cross-cultural literacy, and use local input
when developing marketing messages
II. Source and country of origin effects
Source effects occur when the receiver of the message evaluates the message on the bases of
status or image of the sender
Firms can counter negative source effects by deemphasizing their origins
III. Noise levels
 Noises refers to the amount of other messages competing for a potential consumer’s attention.
 In highly developed countries, noise is very high
 In developing countries, noise levels tend to be lower
The effectiveness of firm’s international communication can be challenged by:
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R&D

15. FR
PULL – Selling a large market segments
Push – selling complex products
Pull – Long distribution channels
Push – Short distribution channels
Pull – Access to advertising media
Push - When sufficient print and
electronic media are available to carry
the marketing message
The choice between the strategies
depends upon:
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Push vs pull strategies GM
R&D
Media availability
Product type and
consumer sophistication
Channel length
Factors
• Firms have to choose between PUSH and PULL types of communication strategies

16. FR
Global Advertising
• Standardizing advertising worldwide has both pros and
cons
• Standardized advertising makes sense when:
o It has significant economic advantages
o Brand names are global
o Creative talent is scarce
• Standardized advertising doesn’t makes sense when:
o Cultural difference's among nations are significant
o Country difference's in advertising regulations lock
implementation of standardized advertising
o Some features of a campaign are standardized while others are
customized to local markets
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R&D

17. FRprice strategy
• International pricing is an important element in the marketing mix
• There are three issues to consider:
1) The case for discrimination
2) Strategic pricing
3) Regulations that affect pricing decisions
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R&D
• Price discrimination occur when firms charge consumers in deferent
prices for the same product
• For price discrimination to work
• Must be able to keep national markets separate
• Countries must have different price elasticity of demand
• Demand is elastic when a small change in price produces a large change
in demand. Typically, price elasticity is grater in countries with lower
income levels and larger numbers of competitors.
1. Price Discrimination Inelastic
Demand Curve
Elastic
Demand Curve

18. FR2. Strategic pricing
Predatory(quick share-of-market focus):
Lower prices to drive competitors out, then raise prices
Multipoint pricing:
Pricing in one market may have an impact in another market; subsidize low pricing in one
market from profits in another
Experience curve:
Use aggressive pricing to build volume and move firm down experience curve(lower marginal
costs)
A firms ability to set its own prices may be limited by:
◦ Antidumping regulations
◦ Dumping occur when a firm sells a product for less than the cost of producing
◦ Antidumping rules set a floor under export prices and limit a firm ability to pursue strategic pricing
◦ Competition policy
◦ Most nations regulations design to promote competition and restrict monopoly pratices
◦ The regulation can be used to limit the prices that a firm can charge
3. Regulatory Influences on Prices
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R&D

19. FR
Differences here
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Configuring Marketing MIX
Communication Strategy
Product Attribution
Distribution strategy
Pricing Strategy
Culture Economy Competition
Standard Distribution Gov’t Regs
Require
variation
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R&D

20. FR
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R&D In GLOBAL Context
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R&D

21. FR
 New product development is much about
High risk / high return
Technological innovation
Creative destruction
Location of R&D is based on
Disperse R&D to trend / technology leading markets
 High investment on basic and applied research
 Strong underlying demand; affluent consumers
 Intense competition
Why new product development important?
Where should R&D be located?
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R&D

22. FR
How can R&D, Marketing and Production be Integrated?
• Integrate R&D , marketing and production ensures:
• Customer needs drive product development
• New product can be manufactured efficiently / effectively
• Development costs are kept in check
• Time to market is minimized
• Plan clearly : goals ,milestones, budgets
Cross-functional teams
• Cross-functional integration is facilitated by cross-functional product development
teams.
• Effective teams should :
• Be led by heavyweight project manger with status in the organization
• Include members from all the critical functional areas
• Have members located together
• Establish clear goals
• Develop an effective conflict resolution process
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R&D

23. Conclusion
 Building Global R&D Capabilities brings:
The need to integrate R&D and marketing to adequately
Commercialize new technologies poses special problems in the
international business b/c :
To adequately commercialize new technologies, firms need to
integrate R&D and marketing
The Commercialization of new technologies may require firms to
develop different version for different countries
Global marketing R&D is extremely important in global organization
because of :
 Understanding new markets and cultures.
Global market R&D important for decision making to reduce the risk
imposed by unknown market factors

24. Research and Development
Thank You.
Professor Pandian
All classmates
GM