Global Marketing, R

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• Global Marketing, R D

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Global Marketing and RD

• 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

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Levitt, 1983

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

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Globalization of Markets?

• Levitts 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

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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

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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

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Marketing Strategy

• Standardization (Global Integration Pressures)
• Efficiencies through integrated RD, 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

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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 state
  mandated

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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

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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)

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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

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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

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New Product Development

• New product development
• High risk / high return
• Technological innovation
• Creative destruction
• Location of RD
• Disperse RD to trend/technology leading markets
• High investment on basic and applied research
• Strong underlying demand affluent consumers
• Intense competition

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New Product Development

• Integrate RD, 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

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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

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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

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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

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Strategic Analysis

• Organization acquires companies that are
  complimentary to existing businesses
• Continued growth requires regional management,
  development, distribution, technical and customer
  support

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Strategic Analysis

• Issues involved in conducting international
  business become significant
• Demands for organizations resources increases
• Management
• Cash
• Product adaptation or unique development
• Customer support

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Strategic Analysis

• Eventually, these demands force the active
  planning of international business by the
  organization Active strategy

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Strategic Analysis

• SWOT
• Strength and Weaknesses decisions made and
  controlled by management
• Opportunities and Threats business environment
  events that are likely to occur

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Marketing Mix (4 Ps)

• Product
• Promotion
• Pricing
• Place (Distribution) the most important for
  international business entry

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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

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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

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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

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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

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Export Pricing Policy Issues

• Channel length longer channels than domestic
  markets, may drive up end user prices  
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•     Price influence distribution partners
  negotiate for the lowest possible landed cost
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•     Price-setting authority How much pricing
  authority should be given to distributors or to
  subsidiaries?

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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 gt5 below home
  market price or,
• Price is below cost of production

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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