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Global Marketing
Management

International Business

Global Marketing Management

❑ Important to determine when product

standardization is appropriate in an international
market
❑ Firms may need to vary marketing mix in each
different country
❑ Globalization may be the exception rather than the
rule in many consumer goods markets and industrial
markets

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International Business

In this Chapter
Product

Distribution

Communication

Pricing

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Product Attributes
❑ Cultural differences
❖ Differ along dimensions such as social structure, language,
religion, and education
❖ Impact of tradition
❖ Some tastes and preferences becoming cosmopolitan
❑ Economic development
❖ Consumers in highly developed countries Vs. less
developed countries
❖ Extra performance attributes Vs. Basic features & product
reliability
❑ Product and technical standards

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International Business

Distribution Strategy
❑ Depends on
differences
between countries
o Retail
concentration
o Channel length
o Channel exclusivity

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Retail Concentration
❑ Concentrated system
❖ Common in developed countries
❖ Contributing factors: increase in car ownership, number of
households with refrigerators and freezers, and two-
income households
❑ Fragmented system
❖ Common in developing countries
❖ Contributing factors: great population density with large number
of urban centers, e.g. Japan
❖ Uneven or mountainous terrain, e.g. Nepal

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Channel Length
❑ Refers to number of intermediaries between the
producer and the consumer
❑ Determined by degree to which the retail system is
fragmented
❖ Long distribution channel
o Fragmented retail system promotes growth of wholesalers and
retailers
o Firms go through intermediaries such as wholesalers to cut selling
costs
❖ Short distribution channel
o Concentrated retail system
o Firms deal directly with retailers

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Channel Exclusivity
❑ Degree to which it is difficult for outsiders to access
distribution channels
❑ Varies between countries
❖ Japan - exclusive systems because personal relations,
often decades old, play an important role in stocking
products
❖ Difficult for new firm to get shelf space as compared to an
old firm

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Communication Strategy
❑ Defines the process the
firm will use in
communicating the
attributes of its product
to prospective customers

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Barriers to International
Communication
❑ Cultural Barriers
❖ Develop cross-cultural literacy
❖ Firm should use local input such as local advertising
agency and sales force
❑ Source and country of origin effects
❖ Receiver of the message evaluates the message
based on status or image of the sender
❖ Place of manufacturing influences product
evaluations

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Barriers to International
Communication
❑ Noise levels
❖ Amount of other messages competing for a potential
customer’s attention
o Developed countries - high
o Less developed countries - low
❑ Standardized advertising strategy execution more
difficult (culture, laws)

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Advertising
❑ Standardized:
❖ Significant economic advantages
❖ Scarce creative talent
❖ Many global brand names
❑ Non-standardized:
❖ Cultural differences
❖ Advertising regulations can be a restriction

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International Pricing Strategy

❑ Price discrimination
❖ National markets kept separate to prevent arbitrage
❖ Different price elasticities of demand in different countries
o Greater in countries with low income levels and highly competitive
conditions
❑ Strategic pricing
❖ Predatory Pricing
❖ Multipoint Pricing
❖ Experience Curve Pricing
❑ Regulatory influence on prices

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Strategic Pricing
❑ Predatory pricing
❖ Using price as a competitive weapon to drive weaker
competition out of a national market
❖ Firms then raise prices to enjoy high profits
❖ Firms normally have profitable position in another national
market
❑ Multipoint pricing strategy
❖ Two or more international firms compete against each
other in two or more national markets
❖ A firm’s pricing strategy in one market may impact a rival
in another market

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Strategic Pricing
❑ Experience curve pricing
❖ Firms price low worldwide to build market share
❖ Incurred losses are made up as company moves down
experience curve, making substantial profits
❖ Cost advantage over its less-aggressive competitors

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Regulatory Influences on Prices

❑ Antidumping regulations
❖ Selling a product for a price that is less than the cost of
producing it
❖ Antidumping rules vague, but place a floor under export
prices and limit a firm’s ability to pursue strategic pricing
❑ Competition policy
❖ Regulations designed to promote competition and restrict
monopoly practices

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To recap
Firms need to vary marketing mix in each country
❑ Product Attributes
❖ Cultural differences
❖ Economic development
❖ Product and technical standards
❑ Distribution
❖ Retail concentration
o Concentrated system
o Fragmented system
❖ Channel length
o Long Vs. Short
❖ Channel exclusivity
❑ Communication
❖ Barriers to International
Communication
o Cultural Barriers
o Source and country of origin effects
o Noise Levels
❖ Advertising
o Standardised Vs. non-standardised
❑ International Pricing
❖ Price discrimination
❖ Strategic pricing
o Predatory Pricing
o Multipoint Pricing
o Experience Curve Pricing
❖ Regulatory influence on prices
o Anti-dumping regulation
o Competition Policy

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