Chapter 18 - global marketing and R&D Flashcards
mass producing and standardized output
unit cost reductions from experience curve effects and other economies of scale
link between marketing and R&D
(Marketing mix: product, price, promotion and place)
Theodore Levitt’s HBR article
- Importance of technology in globalization
–> Has made work communication, transport and travel
–> Fewer differences in national and regional preferences
Global corporations sell the same things the same way
Ex: Coca-cola, Levi’s jeans etc.
–> Leads to standardization of products, manufacturing, trade and commerce
Market segmentation
Refers to identifying distinct groups of consumers whose needs, wants, and purchasing behaviour differs from others in important ways
- geography
- demography
- sociocultural factors
- psychological factors
issues for marketing managers in foreign countries
- difference in structure segment
- segments part of many countries
(inter-market) - Targeting one country and its multiple potential market segments with multiple marketing mixes allows a company to focus on the cultural characteristics of one country
- targeting multimarket segment focus on the cultural characteristics that are universal for certain customers across countries
Product attributes
Products sell well when their attributes match consumer needs
- cultural differences
- economic development
- product and technical standards
cultural differences
Social structure, language, religion, education and others and tradition
Tastes and preferences are becoming more cosmopolitan
economic development
highly developed countries = a lot of extra performance attributes into their products
- -> not usually demanded by consumers in less developed nations, where the preference is for more basic products
- -> Consumer in the most advanced countries are willing to pay more
typical distribution channel
Channel with a wholesale distributor and a retailer
Firm may also sell directly to the consumer, to the retailer or to the wholesaler
or an import agent who takes charge
Differences between countries
- retail concentration
- channel length
- channel exclusivity
exclusive distribution channel
one that is difficult for outsiders to access
Ex: In Japan, relationships among manufacturers, wholesalers and retailers goes back decades
channel quality
Refers to the expertise, competencies, and skills of established retailers in a nation and their ability to sell and support the products of international businesses
choosing a distribution channel
Determined by the relative costs and benefits of retail concentration, channel length, channel exclusivity and channel quality
A longer channel = cuts selling costs
Communication strategy
Direct selling
Sales promotion
Direct marketing
advertising
barriers to international communication
- Cultural barriers
- Source and country of origin effects
- noise levels
Cultural barriers
Make it difficult to communicate messages
Need to develop cross-cultural literacy
Use local input in developing the marketing message
Source effects
occur when the receiver of the message evaluates the message on the basis of status or image of the sender
-can be damaging when there is bias against foreign firms
Country of origin effect
The extent to which the place of manufacturing influences product evaluation: Consumer may use country of origin as a cue when evaluating a product
noise levels
Refers to the number of other messages competing for a potential consumer’s attention
Push strategy
emphasize personal selling
->Effective, but requires intensive use of sales force and is costly
Pull strategy
mass media advertising
choice of push vs pull
- consumer sophistication
- channel length
- media availability
Consumer sophistication
large segment of market = pull strategy except when illiterate
complex products = push strategy to educate clients
channel length
The longer the distribution channel, the more intermediaries
Can lead to inertia in the channel
Direct selling can be expensive
Mass advertising can break down channel resistance
media availability
A pull strategy relies on access to advertising media
Print media (magazines, newspaper)
Broadcasting media (television, radio)
Internet (social media)
Push-Pull mix
The optimal mix between push and pull strategy depends on product type, consumer sophistication, channel length and media sophistication
use push strategies when
- For industrial products or complex new products
- When distribution channels are short
- When few print or electronic media are available
use pull strategies when
- For consumer goods
- When distribution channels are long
- When sufficient print and electronic media are available to carry the marketing message
For standardized advertising
- economic advantages (lower cost of value creation by taking one ad and bringing it international)
- shortage of creative talent (one big campaign better than many small)
- global brand names (single brand image)
against standardized advertising
- cultural differences (message successful in one country could fail in another)
- advertising regulations (could block them)
price discrimination
Exists whenever consumers in different countries are charged different prices for the same product or for slightly different variations of the product
- ->Charging what the market will bear.
- ->Helps maximize profits.
2 conditions for price discrimination
- national markets be kept separate
- Different price elasticities in different countries
Elasticity is greater in countries with low income levels and where there is more competition.
Strategic pricing
- predatory pricing
- multipoint pricing strategy
- experience curve pricing
Predatory pricing
price as competitive weapon to drive weaker competitors out of a national market
aggressive pricing to drive out competitors and then raise prices and operate in a monopoly position.
Requires the firms to have a profitable position in another market to subsidize the aggressive pricing process
Multipoint pricing
a firm’s pricing strategy in one market may have an impact on its rivals’ pricing strategy in another market
Aggressive pricing in one market may elicit a competitive response from a rival in another market
experience curve pricing
Firms pursuing an experience curve pricing strategy on an international scale will price low world wide in attempting to build global sales volume as rapidly as possible, even if this means taking large losses initially
Ambiguity in the definition of dumping.
Regulatory influence on prices
antidumping regulations competition policy (promote competition, reduce monopoly)
Questions to address marketing mix
Product strategy
Distribution strategy
Communication strategy
Pricing strategy
Product strategy question
- Product core: Do the customers have similar product needs across international market segments?
- Product adoption: How is the product bought by customers in the international market segments targeted?
- Product management: How are established products versus new products managed for customers in the international market segments?
- Product branding: What is the perception of the product brand by customers in the international market segments?
Distribution strategy question
- Distribution channels: Where is the product typically bought by customers in the international market segments?
- Wholesale distribution: What is the role of wholesalers for the international market segments targeted?
- Retail distribution: What is the availability of different types of retail stores in the international markets for the customer segments targeted?
Communication strategy question
- Advertising: How is product awareness created for a product to reach customers in the international market segments targeted?
- Publicity: What role does publicity (e.g., public relations) play among customers in the international market segments targeted?
- Mass media: What role do various media (e.g., TV, radio, newspapers, magazines, billboards) have i reaching customers in the international market segments targeted?
- Social media: What role do various social media (e.g., Facebook, Twitter, blogs, virtual communities), mainly focused on user-generated content, have in communicating with customers in the international market segments targeted?
- Sales promotion: Are rebates, coupons, and other sale offers a widespread activity to motivate customers in the international market segments targeted to buy a company’s products?
pricing strategy question
- Value: Is the price of a product critical to the customer’s understanding (or perception) of the value of the product itself among customers in the international market segments?
- Demand: Is the demand for the product among customers in the international market segments targeted similar to domestic demands?
- Costs: Are the fixed and variable costs of the product the same when targeting customers in the international market segments (e.g., are there variable costs that change significantly when going international)?
- Retail price: Are there trade tariffs, nontariff barriers, and/or other regulatory influences on price that will influence the pricing equation used to determine the retail price to customers in the international market segments?
international market research
defined as the systematic collection, recording, analysis and interpretation of data to provide knowledge that is useful for decision making in a global company
Product development
New product success is a product of:
- International marketing.
- R&D.
- Manufacturing.
- Technological innovation
A typical distribution system
- From a manufacturer inside the country, goods flow to a wholesale distributor, a retail distributor, and the final customer.
- From a manufacturer outside the country, goods flow to a retail distributor and the final customer; but they may also go first to an import agent who sends them to a wholesale distributor, a retail distributor, and the final customer.
Most international market research conduct for
- data on country and potential market segments
- data to forecast future consumer demands
- data to make marketing mix decisions
International market research steps
- Defining the research objectives
- determining data sources
- assessing the costs and benefits of the research
- collecting the data
- analyze and interpret data
- report the research findings
