Slide global business today chap013 global marketing and rd

Globalization of Markets?• “A powerful force drives the world toward a converging commonality, and that force is technology” Levitt, 1983 • “Converging commonality” may not have happened

Global Marketing and

R&D

Global Marketing and

R&D

13

Key Issues

• Why and how should a firm adapt to different country-markets

– Product/service attributes?

– Advertising and promotion strategy?

– Distribution strategy?

– Pricing strategy?

• How does globalization affect the way new-product development is approached by

international businesses?

Globalization of 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

• Consumer product tastes may have converged less than

industrial product specifications

• Media, communications means have

– made consumers world-wide more aware of their mutual preferences and

– contributed to creation of world brands – caused certain market segments to emerge across national market that have indeed converged inter-market segments

Market Segmentation

• The process of identifying distinct groups of

consumers whose purchasing behavior differs from other groups in important ways

– Demography, geography, social-cultural factors, psychological factors

– Firms adjust their marketing mix to meet the particular needs of different market segments

• Marketing mix variables:

– Product (physical goods and/or services) – Price

– place (distribution) – Promotion (advertising and promotion)

International Market Segmentation

• Across national markets, companies may

Offer the same products

– and marginally adapt the balance of the marketing mix to appeal to market segments with similar needs across markets

– Market segments that transcend national borders intermarket segments allow companies to offer standardized products

Adapt their products

– and adapt the balance of the product mix to appeal to market segments with differing needs across markets – Market segments that have materially different needs force companies to customize adapt their products

International Marketing

• Marketing Strategy

– Standardization (Global Integration Pressures)

• intermarket segments

• 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/development

• responsive to local condition shifts

• Standardization-adaptation implications on

marketing mix: Product-Pricing-Promotion-Place

International Marketing Mix:

Product

• Product: a bundle of attributes

– Hamburger: meat type, taste, texture, size

– Automobile: power, design, quality, performance, comfort, size/capacity

• Attributes need 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 mandated by state

• Optimal channel a company chooses to deliver the product

• Most locally responsive element of marketing mix because distribution channels vary dramatically across countries

– retail system: concentrated-fragmented – channel length: long, short

– Channel exclusivity

International Marketing Mix:

Place

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)

• Determinants of push/pull strategies

– Product type and consumer sophistication – Channel length

– Media availability

• 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

• Consumer goods

• Long distribution channels

• Marketing message can be carried via print/electronic media

International Marketing Mix:

Pricing

• 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

New Product Development

• New product development

• Locate R&D in trend/technology leading markets

• Integrate R&D, marketing and Production

effectively

Use of cross-functional, nationally and culturally 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 to build team culture,

communication and conflict resolution processes

Clear plan, goals, milestones, budgets

New Product Development

Marketing Research Issues

• Functional Equivalence

– Similar observable phenomena/activities may have different function across cultures

(shopping: Japan also a social event; US mostly a chore)

• Conceptual Equivalence

– Non-observable assumptions/concepts/ideas/constructs may not have the same meaning across cultures

• Instrument Equivalence

– must use measures that correctly measure the same phenomenon in each culture; language key

– measurement equivalence: “summer” in Australia vs UK,

“middle-aged” in Somalia (life expectancy 45 - 50 yrs) vs Scandinavia (life expectancy 80-85yrs)

– metric equivalence: weights and measures