International

Business
9e
By Charles W.L. Hill
McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 18

Global Marketing
and R&D

What Is The Marketing

Mix?
The marketing mix is comprised of
1.
2.
3.
4.

Product attributes
Distribution strategy
Communication strategy
Pricing strategy

18-3

Should The Marketing Mix

Be Changed For Each
Market?
Question: Are markets
and brands becoming
global?

Theodore Levitt argued that world markets were

becoming increasingly similar making it unnecessary
to localize the marketing mix

Question: Is Levitt right? Probably not!

The current consensus is that while the world is
moving towards global markets, global
standardization is not possible because of cultural
and economic differences among nations, trade
barriers, and differences in product and technical
standards
18-4

What Is Market
Segmentation?
Market segmentation - identifying distinct groups
of consumers whose purchasing behavior differs
from others in important ways
can be segmented by geography, demography, sociocultural factors, and psychological factors

When there are differences between countries in

the structure of market segments a unique
marketing mix to appeal to a certain segment in
a given country may be necessary
When segments that transcend national borders
exist a global strategy is possible

18-5

1.
2.

3.

How Do Product
Attributes Influence
Marketing
Strategy?
A product
is like a bundle of
attributes - products sell

well when their attributes match consumer needs

Consumer needs depend on
Culture - tradition, social structure, language, religion,
education
Level of economic development - consumers in highly
developed countries tend to demand a lot of extra
performance attributes, while consumers in less
developed nations tend to prefer more basic products
Product and technical standards - national differences
can force firms to customize the marketing mix

18-6

How Does Distribution

Influence Marketing
Strategy?
Distribution strategy
- the means the firm
chooses for delivering the product to the
consumer
How a product is delivered depends on the firms
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 option of selling to an import agent

18-7

How Do Distribution
Systems Differ?

There are four main differences in distribution systems

1. Retail concentration concentrated or

fragmented
2. Channel length - the number of intermediaries
between the producer and the consumer
3. Channel exclusivity how difficult it is for
outsiders to access
4. Channel quality - the expertise, competencies,
and skills of established retailers in a nation,
and their ability to sell and support the
products of international businesses
18-8

Which Distribution
Strategy Should A Firm
Choose?
The optimal strategy
depends on the relative
costs and benefits of each alternative
When price is important, a shorter channel is
better
each intermediary in a channel adds its own markup
to the product

When the retail sector is very fragmented, a long

channel can be beneficial
economizes on selling costs
can offer access to exclusive channels
18-9

Why Is Communication
Strategy Important?
Communicating product attributes to prospective
customers is a critical element in the marketing
mix
How a firm communicates with customers
depends partly on the choice of channel
Communication channels available to a firm
include
direct selling
sales promotion
direct marketing
advertising

18-10

What Are The Barriers to

International
Communication?
The effectiveness
of a firm's international
communication can be jeopardized by
1. Cultural barriers - it can be difficult to communicate
messages across cultures
2. Source and country of origin effects
3. Noise levels - the amount of other messages
competing for a potential consumers attention

There are two types of communication

strategies
1. A push strategy emphasizes personnel selling
2. A pull strategy emphasizes mass media advertising
18-11

Which Is Better
Push Versus Pull?
The choice between strategies depends on
1. Product type and consumer sophistication
a pull strategy works well for firms in consumer
goods selling to a large market segment
a push strategy works well for industrial products

2. Channel length
a pull strategy works better with longer distribution
channels

3. Media availability
a pull strategy relies on access to advertising media
a push strategy may be better when media is not
easily available
18-12

Should A Firm Use

Standardized Advertising?
Standardized advertising makes sense when
it has significant economic advantages
creative talent is scarce and one large effort to
develop a campaign will be more successful than
numerous smaller efforts
brand names are global

Standardized advertising does not make sense

when
cultural differences among nations are significant
advertising regulations limit standardized advertising
18-13

What Pricing Strategy

Should Firms Use?
Firms need to consider
1. Price discrimination
price elasticity of demand

2. Strategic pricing
1. predatory pricing
2. multi-point pricing
3. experience curve pricing

3. Regulations that affect pricing decisions

antidumping regulations
competition policy
18-14

How Should Firms

Configure The Marketing
Mix?
Standardization versus customization is
not an all or nothing concept
most firms standardize some things and
customize others

Firms should consider the costs and

benefits of standardizing and customizing
each element of the marketing mix

18-15

Why Is New Product

Development Important?
Product innovation should be a strategic priority
today, competition is as much about technological
innovation as anything else

Technological change is shortening product life

cycles short
new innovations can make existing products obsolete,
but, open the door to new opportunities

The rate of new product development is greater

in countries where more money is spent on
basic and applied research and development,
demand is strong, consumers are affluent,
competition is intense
18-16

How Can R&D, Marketing,

And Production Be
Integrated?
To adequately commercialize new technologies,
firms need to integrate R&D, marketing, and
production
Integration will ensure that

customer needs drive product development

new products are designed for ease of manufacture
development costs are kept in check
time to market is minimized

Cross-functional integration is facilitated by

cross-functional product development teams
18-17