o Uivrity Categ ottencoed ay Preparedy © Dr. CatalneAtende or NCO TEN Chapter 10: international marketing and R&D strategy 10.1.1 Aimsof the chapter The aims of this chapter are + establish definitions and understanding of the concepts ‘of marketing strategy, market segmentation and the ‘marketing mix of the 4 Ps. + identify the range of approaches possible for product, price, promotion and place strategies. «,felate supply chain management to place strategies and ‘show how firms achieve distribution and logistics, * introduce research and development activities and the criteria by which a firm locates such activities internationally. Chapter 10: international marketing and R&D strategy 10.1.2 Learning outcomes . By the end of this chapter, and having completed the Essential ‘eading and activities, you should be able to: * define and apply marketing strat ‘marketing mix concepts to real-ife exam business. J analyse produc, price and promotion svategies and assess how they can be shaped to speciic country coneltions. + aticulate and apply major concepts in dstibution strategy and supply chain management. the main issues that make R&D important, and that foreign location both atractive and chalenging. Chapter 10: International marketing and R&D strategy 10.1.3 Essential reading M. and K, Meyer International business. and R&D strategy — 10.1.6 Synopsis of chapter conter Defining market strategy and the elements of the marketingPreferences is limited. | +e. McArabia in the Middle East, Croque | Mey i France and @ Mc Veggie in n University Colege of siamatad ff Prepared by Dr. Catalina Atiende for BNCS 1GeE=) marketing mix + International marketing strategy must be ‘ent with the company’s corporate and pusiness strategies. «+ Marketing stretegy focuses on choices ever products/services and markets. + The Ansoff matrix (Ansoff, 1988) helps us here and suggests four strategic choices (see Willcocks, 2023, Figure 7.1). a j 5 j 10.2 Marketing stratégy and the marketing mix. ‘Ansoff Matrix Some examples of Coca Cola Products Prot Delman 10.2 Marketing strategy and the marketing mix Market penetration strategy. + This involves increasing the share of current markets with the current product/service panies go international because this ‘often does not meet its growth needs lyin limited or overcrowded 10.2 Marketing strategy and the marketing mix Market development strategy. «Selling existing products in new markets + Thisstratagy con s06 companies marketing abroad to sew marietta extend thelfeof the oducts and Find opportunities to growrevenuesand profs. newstyingor paclaging). a acting new users (8. extending the we Sra te he store nuamarketing, may require new tegic capabilities and typically involves, 285 management risks, oes University College of Isamabad Prepared by Dr. Catslinaationds ‘or Bucs Faye - jl ‘oplotg eared ofp SG ‘through applying the organisation's existing competencesto new markets orservices. + stretching corporate management competences, ‘leg superior intrl processes ang incmasing market power, 10.2 Marketing strategy and the marketing mix The marketing mix The choices the company offers to its targeted market) is comprised of the ‘4 Ps’: 1. product attributes 2. pricing strategy 3. promotion (i.e. communication strategy) 4. place (i.e. distribution strategy) | | | | 10.2 Marketing strategy and the marketing mix Companies have to decide which elements of the marketing mix can be standardised, and which need to be adapted to the local market. & 10.2 Marketing strategy and the marketing mix ‘Market segmentation involves identifying distinct groups ‘consumers whose purchasing behaviour cifers from inimportant ways. sn segment markets in many ways, for example by come level, education level. Typical ceria for10.2 Marketing strategy and the marketing mix CAGE analysishelps in determining the market segments + Once identified the lust arkedaaied he seaments we can adjust the * ©. Toyota, sels its Lexus line to high-income Consumers, but attracts lower-income buyers with is gonsur ttracts lower-income buyers with I * peed to identify segments that transcend national Ecigersand understand diferences scrors cou i now ths segments are structured. ee University Celie Prepared 9e 8? lsmabad De Catalina stein Yes ie 10.3 Productstrategy 10.3 Product strategy Products sell well when their attributes match consumer needs, * Cultural differences + Level of economic development * Product and technological standards 10.3 Product strategy Cultural differences. What are the cultural differences between countries? Countries differ across a range of cultural dimensions * tradition * social structure + language + religion * education tpanabed ge of 10.3 Product strategy Cultural differences + To identify where standardisation is possible andwhere the marketing mix must be customised, companies ‘need to look for evidence in the selected marketplace + e.g. Nestle, sells frozen food in multiple countries, but offers different menus depending on local preferences. Nestle sels fish fingers n the UK, but cog auvin in France, yet iti able to sell Lean Cuisine dinners in the same way in both Europe and the USA, + Coca-Cola builds on its brand name in Japan by offering 8 tonic drink that appeals to focal consumers in addition to its traditional cola, .ede of fs!amabad 10.3 Product strategy Fconomiedevelopment * Level of economic development. Companies tha are basedin highy-developedrourtres tend to bulla lot of performance features into she'rpredvets €4g, yourcar.Do you have power steering and power windows, maybe a CD player or DVO. ister? ie In contrast, we know that consumers inlss develops countries tend to prefer more basi raducts, but want high product reliability. But think county lke China or India with milion in high incomes and many'morein lower comes University College oftsiamsbad fF Prepared by Dr. Catalina Aliende for BCG TGP) 10.3 Product strategy 10.3 Product strategy Product and technological standards + Companies have to customise their marketing ir marketing mix to ‘meet national differences in product a meet nati Product and technological + Le. aiffrences in technical standards between the UK and the Usa menn ha producers FOND coupe have had to adapt their product to each market. 66/0 6. British Sausage has less than 40% of pork meat so ‘in USA snot possinle to selit as a “meat product, the electric plus is often country speci; some countries. hoonen ioe canes 30 vatage inPoiston, tnt " 10.4 Pricing strategy Economic theories cover pricing theories related to demand, technology and competition in the industry. * Understanding of price from a marketing Perspective. * So how should a company price its product in foreign markets? + Should prices be different in different markets? + Are there any regulations that might influence how a product should be priced? 10.4 Pricing strategy Price discrimination + Consumers in different countries are charged different prices for the same product. + The company charges whatever the market will bear. + company has to be able to keep its national markets separate. + Acar company can price a car similarly in France and Germany (bath left hand) and differently in the UK (right handed).10.5 Promotion strategy + Promotion (i.e. communications strategy). Promotion includes TY, radio, print, online advertising, personal selling, direct mail, public relations, coupons, billboards, etc. 1 Which of these methods is best used to ‘communicate with the target market you are interested in? 10.5 Promotion strategy differences between different types of consumer. When you add in country differences, then you begin to see the limits to mass media, branding and standardised messages, ‘Three important factors to consider: + 1 Cultural barriers + 2Source and Country of origin effects F ‘2.What are the limits of standardised messages Ee and promotion methods? + 3 Noise levels aa 10.5 Promotion strategy + Source and county origin eects Source effects occur whan te recover ofthe mesiage ‘esnge on he bass of ats or mage of he + Courry-torign afc let te sranalsecrig oebetween a push strategy, which = emphasises personal selling, and a pull strategy, which uses mass media advertising. “University Coege ot iamaoad f= Propared by a Dr. Catalina ions for BMG pS) 10.5 Promotion strategy 10.5 Promotion strategy Push or pull strategy _ Which strategy is best? The choice between strategies depends on: Push or pull strategy 2 * Push strategy will be best when the company is selling industrial products or complex new seaman and consumer sophistication 2 pul, products, when distribution channels are short Salina acne asec ampanles In consumer goods and when few print or electronic media are vailable. A push strategy works well for industrial products, arlbe « Channel length ~2 pull strategy works better with rere ay tS bath + Pull strategy will make sense for consumer SE IN seg exis on access 10 products, when distribution channels are long ee pence ees and when there are sufficient print and electronic Media is net easily avaiable, media available to carry the marketing message 10.5 Promotion strategy Standarised advertising Standardised advertising + it has significant10.6 Place — distribution strategy 10.6 Place ~ distribution strategy + How a product is delivered depends on the In international business, Hill (2010) points out ieee areet antty sratezy. that there are at least four main differences in er set ciracty to consumers, to distribution systems you need to bear in mind: fetallerso 1 wholesalers, regardless of where + 1 Retail concentration einige Fe produced. + 2.Channel length. + Companies that manufacture outside the country + 3 Channel exclusivity hhave the same options plus the option of selling + 4.chan ‘toan import agent Sheoneliausli + Retail concentration Accusation maemcan bar Seino Semana. ervey cent el aaanel — when the produce: sells through an F gent, a wholesaler, and retallor~is common” _with fragmented retail systems. Japan is often associated with long channels. Countries like Germany andthe USA tend to have much ‘shorter channels. University College of stamabad gfe Prepared by ad Channel exclusivity Channel exclusivity. Sometimes comp: eid time breaking into new markets because cannot access the distribution system. ‘Sometimes channels are exclusive because retailers like to carry well-established brands rather than take a chance on sume iting new. e.g. METRO in Fi 1s mainly WINE bronds anid only few local brands. liande for BMCG Hy A 2 Dr. Catalina Allende foreace Heed ce «, 10.6 Place — distribution strategy Channel quality “Channel quality Relates tothe expertise, competences snd sills of fxtablshed retalersina country and te ability fo sel ard suon 3 foreign company's products ‘crannel quality in developed countries is better than in emerging 0: Geveloring economies eg. Apple stores tosellits products Pods. The company belie that produc: knowledge s essential tos success and Vals that reiying ‘on an outside compary could be detrimental tots sacs. ‘pple stores in 16 countries including USA, Uk.China, 62, Japan, ‘strata a ten vwovm apple.com/retall/storelist/ 10.6 Place — distribution strategy How to choose a distribution strategy? + When price is important, a shorter channel is better, because each intermediary ina channel adds its own, mark-up to the products. + When the retall sector is very fragmented, along. channel can be beneficial because this economises on selling costs and can offer access to exclusive channels, + When producer perceives that channel quality is poor + Eg.pk many textile designers have thelr own shops It decides to pen its own retail shops. | luct development or diversification | product innovation. 7 Research and development (R&D) strategy Z + New product development tends more often in countries whiand development (R&D) Strategy + The USA is still a leader, but companies from Asta and Europe have also become strong players n the last 20 years, * Japan is the leader for video games and Europe leads when it comes to wireless telecommunications. So today, rather than simply relegating R&D to the USA. + successful companies see new product development opportunities in multiple locations, ‘mean it will automatically be a comms success. ot + studies show that orly 10-20 per cent of new products ever have commercial success. Commercialisation of new technologies is very costly. + The company has to produce multiple versions of a product to meet the needs of individual markets. University College of tsiamatad Prepared by pk Dr. Cataline Allende for BOS 1 CaPsd) 10.7 Research and develonment (R&D) strategy Since new product development has a high falure rate new product development efforts should involve close coordination between R&D, marketing and productiox Integration will ensure that: + customer needs drive product development + new products are designed for ease of manufacture + development costs are kept in check + time to market is minimised 10.7 Research and development (R&D) strategy + Some companies achieve this type of integration by developing cross functional teams that are led by credible, experienced project managers that have significant status in the company. + Teams should have members from all of the critical functional areas, so that members can be ‘together, develop clear goals and an effective conflict resolution process. 10.7 Research and development (R&D) strategy R&D centersin different regions ofthe world + Tocommerciaise new successful companies may nee to Seren iferent veins for afferent courte: |RED canter in North ames, Ala nd Europe tat ae closely inked by teers io sn tat the coms as to hat are inked by formal and understanding é 1. Canada has a oficial anal the beaver) So Gos Ausra the ‘angwros). es yourcountryhave nol animal? you wee ‘need ads yur country en Rew te market an ail torepretent your county what aml would ou choose and how best would you