C.9 GLOBAL MARKETINGG

Chapter 9: Global Marketing and R&D

9.1 Learning Objectives

• Varying Product Attributes: Understand reasons for variations in product attributes across countries.

• Distribution Strategy Variations: Explore how and why firms' distribution strategies differ internationally.

• Advertising and Promotional Strategies: Identify the variations in advertising and promotional strategies across countries.

• Pricing Strategy Variations: Explain the differences in pricing strategies based on country-specific factors.

• Globalization Effects: Discuss the impact of globalization on new product development in international firms.

9.2 CONTENT

• Key Concepts:

  • Market segmentation

  • Product attributes

  • Distribution strategy

  • Communication strategy

  • Pricing strategy

  • Configuring marketing mix

  • New product development

9.3 Market Segmentation

• Definition: Dividing a market into distinct groups of consumers with different purchasing behaviors.

• Segmentation Criteria:

  • Geography: Location-based segments.

  • Demography: Age, income, race, education.

  • Socio-cultural Factors: Social class, values, religion, lifestyle.

  • Psychological Factors: Personality traits.

• Key Issues:

  1. Differences in market segment structures between countries.

  2. Existence of global segments that transcend national borders, enabling a global strategy.

9.4 Marketing Mix

• Components of Marketing Mix:

  • Product attributes

  • Distribution strategy

  • Communication strategy

  • Pricing strategy

9.5 Product Attributes

• Influence on Marketing Strategy:

  • Consumer Needs Alignment: Successful products meet consumer needs, which vary based on:

    1. Culture

    2. Economic development level

    3. Product and technical standards

• Factors Affecting Needs:

  • Culture: Local traditions, language, and religion influence needs.

  • Economic Development: Developed countries might demand advanced product attributes; lesser-developed countries prefer basics.

  • Technical Standards: National differences can lead to customized marketing mixes.

9.6 Distribution Strategy

• Overview: Determines how a product is delivered to consumers and influenced by market entry strategy.

• Options for Manufacturing Locations:

  • Local Manufacturing: Direct sales to retailers or consumers.

  • International Manufacturing: Options include import agents, wholesalers, and retailers.

• Distribution Systems Differences:

  1. Channel quality: Expertise and skill levels of retailers vary internationally.

  2. Channel exclusivity: Access challenges for outsiders, such as Japan's restrictive systems.

  3. Retail concentration: Differences between concentrated and fragmented retail markets.

  4. Channel length: The number of intermediaries involved in reaching consumers; shorter channels favor concentrated systems.

9.7 Optimal Distribution Strategy

• Considerations: The choice depends on the cost-benefit analysis of channel alternatives.

• Benefits of Short Channels: Cost-effectiveness when price sensitivity is critical.

• Long Channels: Useful in fragmented markets, economizing on selling costs and accessing exclusive sales channels.

9.8 Communication Strategy

• Importance: Essential for conveying product attributes to customers.

• Types of Communication Channels:

  • Direct selling

  • Sales promotion

  • Direct marketing

  • Advertising

• Challenges in International Communication:

  1. Cultural barriers: Messages may carry different meanings across cultures.

  2. Noise levels: More competition for consumer attention in developed markets (high noise) versus developing markets (low noise).

9.9 Push vs. Pull Communication Strategies

• Push Strategy: Relies heavily on personal selling; effective for industrial products.

• Pull Strategy: Emphasizes mass media advertising; better suited for consumer goods and longer distribution channels.

• Optimal Mix:

  • Push strategies work best in short channels and environments with limited media.

  • Pull strategies are more effective in well-connected media environments and with extensive distribution.

9.10 Standardized vs. Customized Advertising

• When to Standardize: Economic efficiency and global brand names justify standardized advertising.

• When to Customize: Necessary when significant cultural differences and legal regulations exist.

9.11 Pricing Strategy

• Key Considerations:

  1. Price discrimination mechanisms.

  2. Strategic pricing including predatory, multi-point, and experience curve strategies.

  3. Regulations impacting pricing decisions like antidumping and competition policies.

9.12 Price Discrimination

• Definition: Charging different prices in different countries based on market conditions.

• Elasticity:

  • Elastic Demand: Sensitive to price changes, common in lower-income markets.

  • Inelastic Demand: Less sensitive to price changes, typical in wealthier markets.

9.13 Strategic Pricing Methods

• Predatory Pricing: Undercutting prices to eliminate competition in new markets.

• Multi-Point Pricing: Pricing strategies in one market influencing another.

• Experience Curve Pricing: Lower prices initially to increase global sales volume, anticipating future cost advantages.

9.14 Regulatory Influences on Pricing

• Antidumping Regulations: Prevent firms from pricing below production cost.

• Competition Policy: Ensure market fairness and prevent monopolistic pricing.

9.15 Configuring Marketing Mix

• Standardization vs Customization: Most firms find a balance between standardized and customized elements within their marketing mix.

9.16 New Product Development

• Importance: Firms must prioritize product innovation and stay ahead in a rapidly changing technological landscape.

• R&D Integration: Close coordination between R&D, marketing, and production is essential for successful new product launches.

9.17 Conclusion and Review Questions

• Review: Questions to assess understanding of key concepts such as marketing mix elements, distribution system differences, and advertising strategies.