This document discusses factors that influence global marketing and R&D strategies. It notes that product attributes, distribution, advertising, and pricing may vary across countries due to differences in consumer preferences, economic development, and regulations. It also discusses how globalization and technology can drive standardization of products and markets while differences remain. The challenges of developing global marketing strategies that balance standardization with local adaptation are explored.

1. Global Marketing, R & D

2. Global Marketing and R&D
 Among different countries, why and how:
– It makes sense to vary the attributes of products
– Distribution strategy may vary
– Advertising and promotion strategies may vary
– Pricing strategy may vary
 How globalization affects new-product
development

3. Levitt, 1983
“A powerful force drives the world
toward a converging commonality,
and that force is technology”
(Prof. Ted Levitt, HBS)

4. Globalization of Markets?
 Levitt’s“Converging commonality” has
not happened universally
 Consumer product tastes converged less
than industrial product specifications
 Media, communications means have
– made consumers world-wide more aware of
their mutual preferences
– have contributed to creation of world brands
– have caused market segments to emerge
across some national markets--inter-market
segments

5. Market Segmentation
 The process of identifying groups of consumers whose
purchasing behavior is unique in important ways
– Is based on demography, geography, social-cultural
factors, psychological factors
– Allows firms to adjust marketing mix to meet the needs of
separate market segments
 Marketing mix variables:
product-price-place (distribution)-promotion

6. Market Segmentation Across
National Markets
 Standardization: companies may
– Offer same products
– Adjust balance of marketing mix to market
segments with similar needs across countries
 Adaptation: companies may
– Offer different products
– Adjust balance of marketing mix to market
segments with differing needs across countries

7. Marketing Strategy
 Standardization (Global Integration Pressures)
– Efficiencies through integrated R&D, production,
marketing
– Control implications
 Adaptation (Local Responsiveness Pressures)
– Buyer behavior (cultural, economic influence,
brand perception--country of origin idea)
– Laws, regulations
– Local environment needs
– Responsiveness to local condition shifts
 Implications on marketing mix

8. International Marketing Mix: Product
 Product: a bundle of attributes
– Hamburger: meat type, taste, texture, size
– Automobile: power, design, quality,
performance, comfort, size/capacity
 Attributesneed to be adapted to a greater or
lesser extent to satisfy
– Consumer preferences/tastes due to culture
– Economic development levels affect consumer
behavior
– National product/technical standards state
mandated

9. International Marketing Mix: Place
 Optimal channel a company chooses
to deliver the product
 The most locally responsive element
of marketing mix because
distribution channels vary
dramatically across countries
– Retail system: concentrated-
fragmented
– Channel length: long, short
– Channel exclusivity

11. International Marketing Mix: Promotion
 How firm communicates the product
attributes / benefits to customers
 Barriers to international communication
– Cultural barriers
– Source effects (country of origin effects)
– Noise levels
 Standardized advertising strategy
possible; standardized advertising strategy
execution more difficult (culture, laws)

12. International Marketing Mix:
Promotion
 Push vs pull strategies
– Push strategy: personal selling emphasis
 Industrial products; complex new products
 Short distribution channels
 Few print or electronic media
– Pull strategy: mass media advertising
emphasis
 Consumer goods
 Long distribution channels
 Marketing message may be carried via print /
electronic media

13. International Marketing Mix: Price
Price discrimination: demand elasticity
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)
Regulatory issues:
antidumping, monopoly restriction

15. New Product Development
New product development
– High risk / high return
– Technological innovation
– Creative destruction
Location of R&D
– Disperse R&D to trend/technology leading
markets
High investment on basic and applied research
Strong underlying demand; affluent consumers
Intense competition

16. New Product Development
 Integrate R&D, marketing and Production
 Ensure:
– Product development driven by customer needs
– New products can be manufactured
efficiently/effectively
– Time to market is minimized
 Plan clearly: goals, milestones, budgets

17. New Product Development
 Use cross-functional, multinationally diverse teams
 Span: initial concept development to market
introduction
 Team composition critical
– Assign heavyweight project manager
 High status in organization; high power and authority
 Dedicated to fullest possible extent to project
– Team should have representative from each function
 Physical co-location
– When appropriate?
– Build team culture
– Communication and conflict resolution processes

18. Strategic Analysis
Why do organizations decide to enter
international business? Passive entry:
 Follow customers overseas
 Respond to enquiries from overseas
 Competition is in overseas markets
 Seek profitable growth
 Sell capacity “as is”

19. Strategic Analysis
 Eventually one or more of key distributors become
a candidate for acquisition (FDI)
 Foreign regional development organizations
actively recruit FDI
 Competitive pressures force examination of local
assembly or production nearer to key international
markets
 Major international customers demand local
support

20. Strategic Analysis
 Organization acquires companies that are
complimentary to existing businesses
 Continued growth requires regional
management, development, distribution,
technical and customer support

21. Strategic Analysis
 Issues involved in conducting international
business become “significant”
 Demands for organization’s resources
increases:
 Management
 Cash
 Product adaptation or unique development
 Customer support

22. Strategic Analysis
 Eventually, these demands force the
active planning of international business by
the organization – Active strategy

23. Strategic Analysis
 SWOT
 Strengthand Weaknesses – decisions made
and controlled by management
 Opportunities
and Threats – business
environment – events that are likely to
occur

24. Marketing Mix (4 Ps)
 Product
 Promotion
 Pricing
 Place (Distribution) – the most important
for international business entry

25. Marketing Mix (4 Ps)
 Place (Distribution) – the most important
for international business entry:
 Incoterms determine where title to goods
changes
 Transportation to international freight carrier,
freight, insurance, documentation, customs
clearance, local transportation, logistic
management “in the market”, currency risk

26. Marketing Mix (4 Ps)
 Product – usually controlled by the
exporter, initially the least impacted
element of the marketing mix
 However, “localization” often required:
 approvals and certificates
 packaging & labeling
 measures, etc

27. Marketing Mix (4 Ps)
 Promotion – success at home leads to
interest from potential importers, licensors,
joint venture partners
 Local knowledge essential on initial entries:
 Integrated market communication
 Trade and consumer sales promotion
 Sales management
 Trade shows

28. Marketing Mix (4 Ps)
 Pricing : What tasks need to be performed
to get the product from place of
manufacture to foreign customers?
 The remainder of the marketing mix needs
to be determined in order to set prices

29. Export Pricing Policy Issues
 Channel length: longer channels than domestic
markets, may drive up end user prices
 Price influence: distribution partners negotiate
for the lowest possible “landed cost”
 Price-setting authority: How much pricing
authority should be given to distributors or to
subsidiaries?

30. Dumping
 WTO: Sale of an imported product at ‘less
than fair value’ and causes ‘material injury to
a domestic industry’.
 US: An unfair trade practice that results in
injury, destruction, or the prevention of the
establishment of an American industry.
 US considers dumping when price is >5%
below home market price or,
 Price is below cost of production

31. Grey Marketing
 Grey (or parallel marketing)
 Products are imported outside of the
established distribution channel –
undercutting the authorized channel pricing
 Usually results from high imported prices