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CHAPTER. 13. Global Marketing and R&D. Slide 13-1. Key Issues. Why and how should a firm adapt to different country-markets Product/service attributes? Advertising and promotion strategy? Distribution strategy? Pricing strategy?

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  1. CHAPTER 13 Global Marketing and R&D

  2. Slide 13-1 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?

  3. Slide 13-2 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

  4. Slide 13-3 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)

  5. Slide 13-4 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

  6. Slide 13-5 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

  7. Slide 13-6 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

  8. Slide 13-7 International Marketing Mix: Place • 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

  9. Slide 13-8 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)

  10. Slide 13-9 International Marketing Mix: Promotion • 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

  11. Slide 13-10 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

  12. Slide 13-11 New Product Development • New product development • High risk / high return • Technological innovation • Creative destruction • Locate R&D in trend/technology leading markets • High investment on basic and applied research • Strong underlying demand; affluent consumers • Intense competition • Integrate R&D, marketing and Production • Product development driven by customer needs • New products can be manufactured efficiently and effectively • Time to market is minimized

  13. Slide 13-12 New Product Development 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

  14. Slide 13-13 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

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