Global Marketing, R & D

Global Marketing and R&D 

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

Levitt, 1983
³A powerful force drives the world toward a converging commonality, and that force is technology´ (Prof. Ted Levitt, HBS)

Globalization of Markets? 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  Levitt¶s ³Converging their mutual preferences ± have contributed to creation of world brands ± have caused market segments to emerge across some national markets--inter-market segments .

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 . geography.Market Segmentation  The process of identifying groups of consumers whose purchasing behavior is unique in important ways ± Is based on demography.

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 .

Marketing Strategy  Standardization (Global Integration Pressures) ± Efficiencies through integrated R&D. marketing ± Control implications  Adaptation (Local Responsiveness Pressures) ± Buyer behavior (cultural. production. economic influence. brand perception--country of origin idea) ± Laws. regulations ± Local environment needs ± Responsiveness to local condition shifts  Implications on marketing mix .

performance. 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 ± . taste.International Marketing Mix: Product  Product: a ± ± bundle of attributes Hamburger: meat type. design. comfort. size Automobile: power. quality. texture.

short ± Channel exclusivity .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.

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laws) .International Marketing Mix: Promotion communicates the product attributes / benefits to customers  Barriers to international communication ± Cultural barriers ± Source effects (country of origin effects) ± Noise levels  How firm  Standardized advertising strategy possible. standardized advertising strategy execution more difficult (culture.

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 .

monopoly .International Marketing Mix: Price Price discrimination: demand Strategic pricing ± Predatory (quick share-of-market focus):  lower prices to drive competitors out. subsidize low pricing in one market from profits in another aggressive pricing to build volume and move firm down experience curve (lower marginal costs) restriction ± Experience curve:  use  Regulatory issues:  antidumping. then raise prices ± Multipoint pricing:  elasticity pricing in one market may have an impact in another market.

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New Product Development New ± product development High risk / high return ± Technological innovation ± Creative destruction Location ± of R&D Disperse R&D to trend/technology leading markets  High investment on basic and applied research  Strong underlying demand. affluent consumers  Intense competition .

 Ensure: ± ± marketing and Production ± Product development driven by customer needs New products can be manufactured efficiently/effectively Time to market is minimized  Plan clearly: goals.New Product Development  Integrate R&D. milestones. budgets .

multinationally diverse teams  Span: initial concept development to market introduction  Team composition critical ± Assign heavyweight project manager High status in organization.New Product Development  Use cross-functional. high power and authority  Dedicated to fullest possible extent to project  ± Team should have representative from each function When appropriate? Build team culture Communication and conflict resolution processes  Physical co-location ± ± ± .

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 ³as is´ .

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 .

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

Strategic Analysis  Issues involved in conducting international business become ³significant´  Demands for organization¶s resources increases:  Management  Cash  Product adaptation or unique development  Customer support .

these demands force the active planning of international business by the organization ± Active strategy .Strategic Analysis  Eventually.

Strategic Analysis  SWOT  Strength and Weaknesses ± decisions made and controlled by management Threats ± business environment ± events that are likely to occur  Opportunities and .

Marketing Mix (4 Ps)  Product  Promotion  Pricing  Place (Distribution) ± the most important for international business entry .

logistic management ³in the market´. freight. insurance.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. currency risk . customs clearance. local transportation. documentation.

Marketing Mix (4 Ps)  Product ± usually controlled by the exporter. initially the least impacted element of the marketing mix ³localization´ often required: approvals and certificates packaging & labeling measures.    . etc  However.

joint venture partners  Local knowledge essential on initial entries:  Integrated market communication  Trade and consumer sales promotion  Sales management  Trade shows .Marketing Mix (4 Ps)  Promotion ± success at home leads to interest from potential importers. licensors.

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 .

Export Pricing Policy Issues  Channel length: longer channels than domestic markets. may drive up end user prices  Price influence: distribution partners negotiate for the lowest possible ³landed cost´ Price-setting authority: How much pricing authority should be given to distributors or to subsidiaries?  .

or the prevention of the establishment of an American industry. Price is below cost of production . US considers dumping when price is >5% below home market price or. US: An unfair trade practice that results in injury.Dumping     WTO: Sale of an imported product at µless than fair value¶ and causes µmaterial injury to a domestic industry¶. destruction.

Grey Marketing (or parallel marketing)  Products are imported outside of the established distribution channel ± undercutting the authorized channel pricing  Usually results from high imported prices  Grey .