Mba 508 Chapter 17

PART VI
INTERNATIONAL BUSINESS
OPERATIONS
CHAPTER 17
GLOBAL MARKETING AND RESEARCH

& DEVELOPMENT
OBJECTIVES:
EXPLAIN WHY IT MIGHT MAKE SENSE TO VARY THE ATTRIBUTES OF A PRODUCT

FROM COUNTRY TO COUNTRY
ARTICULATE WHY AND HOW A FIRM’S DISTRIBUTION STRATEGY MIGHT VARY

AMONG COUNTRIES
IDENTIFY WHY AND HOW ADVERTISING AND PROMOTIONAL STRATEGIES MIGHT

VARY AMONG COUNTRIES
EXPLAIN WHY AND HOW A FIRM’S PRICING STRATEGY MIGHT VARY AMONG
COUNTRIES
DISCUSS HOW THE GLOBALIZATION OF THE WORLD ECONOMY IS AFFECTING

NEW PRODUCT DEVELOPMENT WITHIN THE INTERNATIONAL BUSINESS FIRM
GLOBAL MARKET ?
The market in which goods and services of one country are

traded (purchased or sold) to people of other counties.
Refers to the process and activity of purchasing or selling products

and services across all nations in the world. The activity can also be
conducted through the network and digital means reaching
target markets.
IMPORTANCE OF GLOBAL MARKET
Global marketing is essential for modern businesses. In an era

where businesses (both large and small) can sell and ship their products
and services to consumers across the globe within a matter of days, it
can be easy to forget how markets functioned before the digital age and
the innovations in transportation.
handles all sales and trading activities on the primary and

secondary markets (rates, credit, foreign exchange, fixed-income,
securitization and treasury) for products designed for corporates,
financial institutions and large issuers.
EXPLAIN WHY IT MIGHT MAKE SENSE TO VARY THE
ATTRIBUTES OF A PRODUCT FROM COUNTRY TO COUNTRY
PRODUCT ATTRIBUTES
Make up a car include power, design,

quality, performance, fuel consumption,
and comfort
Attributes of a hamburger include taste,

texture, and size
Hotel’s attributes include atmosphere,

quality, comfort, and service
3 Varies:
CULTURAL DIFFERENCES
Our culture is highly significant when it comes to our

differences in tastes and preferences. These must be taken into
consideration when making product attributes.
3 Varies:
ECONOMIC DEVELOPMENT
High economic development → extra performance attributes.
Slow economic development → more basic attributes and focus

on product reliability.
3 Varies:
PRODUCT AND TECHNICAL STANDARDS
Differences in technical standards constrain the

globalization of markets.
ARTICULATE WHY AND HOW A FIRM’S DISTRIBUTION
STRATEGY MIGHT VARY AMONG COUNTRIES
Why and how does a firm's distribution strategy vary

among countries?
Distribution Strategy
Means it chooses for delivering the product to the consumer.
The way the product is delivered is determined by the firm’s

entry strategy.
Manufacturer Manufacturer
Inside the Outside the
Country Country
Import Agent
Wholesale
Distributor
Real Distributor
Final Customer
TYPICAL DISTRIBUTION SYSTEM

Differences Between Countries
Retail concentration
Concentrated system → few retailers supply most of the market.

This system is more common in developed countries due to the use of
cars, shared households with higher income and ownerships of fridges
and freezers.
Fragmented system → many retailers supply the market, none

with major a market share.
Channel Length
Short channel length → concentrated system
Cheaper since firms don't have as many retailers to make
contact with.
Long channel length → fragmented system
More expensive as the amount of retailers to contact increases.
Channel Exclusivity
Refers to how difficult in is for a foreign firm to access a

market. The main reason for high channel exclusivity is
because retailers prefer to promote and sell products of
established firms with whom they often have a long history.
Channel Quality
Refers to the expertise, competencies, and skills of established

retailers in a nation and their ability to sell and support the products
of international businesses. Lack of a high quality channel may
impede market entry.
A choice of distribution strategy determines which channel the firm

will use to reach potential consumers.
Should the firm try to sell directly

to the consumer?
or should it go through retailers?
Should it go through wholesaler?
Should it use an import agent?
Should it invest in establishing its

own channel?
The optimal strategy is determined by the relative costs and benefits

of each alternative, which varies from country to country, depending
on the 4 factors mentioned earlier.
Longer channel → greater aggregate markup (percentage of total

cost) → higher price which consumers will be charged for the final
product.
The benefits may outweigh this

drawback since the benefit for longer
channels is that they cut selling costs
when the retail sector is very fragmented
and the ability to enter an exclusive
channel is low.
IDENTIFY WHY AND HOW ADVERTISING AND PROMOTIONAL
STRATEGIES MIGHT VARY AMONG COUNTRIES
Why and how might advertising and promotional

strategies vary among countries?
Communication Strategy:
Critical Element - > marketing mix is

communicating the attributes of the product to
prospective customers.
Available to:
firm Direct marketing

Including direct
Advertising
selling
Sales promotion
BARRIERS TO INTERNATIONAL COMMUNICATION
Barrier - that prevents or blocks movement from one place to another
International communication occurs

whenever a firm uses a marketing
message to sell its products in another
country.
Regardless of the type of communication: verbal, nonverbal,

written, listening or visual, if we don't communicate effectively, we
put ourselves and others at risk.
Cultural Barriers
A firm needs to develop cross-

cultural literacy to overcome the
cultural differences that may
affect the intake of commercials.
Source and Country of Origin Effects
Source effects occur when potential

consumers evaluate the message on the
basis of status or image of the seller,
meaning the firm.
Noise Levels
The amount of other messages

competing for a potential consumer's
attention, which varies across
countries.
PUSH VERSUS PULL STANDARDS
→ Push strategy emphasizes

personal selling rather than mass
media advertising in the
promotional mix. Personal selling
requires intensive use of sales
force and is quite costly.
→ Pull strategy depends

more on mass media
advertising to communicate
the marketing message to
potential consumers.
Factors that can determine the relative attractiveness of push and pull
strategies the ff:
Product type and Consumer Sophistication
Firms in consumer goods trying to sell to large

segment of market generally favor the pull strategy
as mass communications has cost advantages for
such firms.
Channel Length
The longer the distribution channel, the more intermediates

there are. This can lead to inertia (inaction) in the channel which
can make entry difficult.
EXPLAIN WHY AND HOW A FIRM’S PRICING STRATEGY MIGHT
Media Availability
Cable TV and the internet transformed the ability of firms to do

targeted advertising. The pull strategy is limited in some
countries, such as India, by media availability.
The Push-Pull Mix
Push Strategy Pull Strategy

→ For industrial products or → For consumer goods.
complex new products.
→ When distribution channels → When distribution channels are long.

are short.
→ When sufficient print and
→ When few print or electronic electronic media are available to
media are available. carry the marketing message.
Global Advertising
Standardized global advertising has

many benefits such as significant
economic advantages.
For Standardized Advertising:
lowers the costs of value creation by spreading the fixed costs

of developing the advertisements over many countries.
There is a concern that creative talent is scarce, so one large
effort to develop a campaign will produce better results.
Standardized Advertising:
Threefold:
It has significant economic advantages.
Concern that creative talent is

scare on larger effort campaign.
Many brand names are global.
Against Standardized Advertising:
Two Main Arguments:

Cultural Differences
Advertising regulations may block

implementation
Dealing with Country Differences:
Some firms are experimenting with capturing of global

standardization while recognizing differences in countries’
cultural and legal environments.
International pricing strategy is an important component

of the overall international marketing mix.
3 Sections:
Examine the Price Discrimination

and charging different prices for the
same product in different countries.
Checking for might strategic pricing
Review some regulatory factors

Price Discrimination
Exists when consumers in different countries are charged different

prices for the same product or slightly different versions of it. In
order for this to function, two conditions must be fulfilled:
→ Separate markets, to avoid arbitrage.

→ Different price elasticity of demand in different countries.
Strategic Pricing:
3 Aspects:
Predatory Pricing
The use of price as a competitive
weapon to drive weaker
competitors out of a national
market.
Multipoint Pricing Strategy
Refers to the fact that a

firm's pricing strategy in
one market may have an
impact on its rival's
pricing strategy in
another market.
Experience Curve Pricing
As a firm builds its

accumulated production
volume over time, unit costs
fall due to experience effects.
REGULATORY INFLUENCES ON PRICES
The ability to engage in either prices discrimination or strategic

pricing may be limited by national regulations.
REGULATORY INFLUENCES ON PRICES
The ability to engage in either prices discrimination or strategic

pricing may be limited by national regulations.
Antidumping Regulations
Dumping occurs when a firm sells a product for a (fair) price that
is less than the cost of producing it.
Competition Policy
Most developed nations have regulations designed to promote
competition and to restrict monopoly practices.
DISCUSS HOW THE GLOBALIZATION OF THE WORLD ECONOMY
IS AFFECTING NEW PRODUCT DEVELOPMENT WITHIN THE
INTERNATIONAL BUSINESS FIRM
The increase in technological

innovation has shortened product
life cycles. Technological advances
are both creative and destructive.
An innovation can make a product
obsolete (out of date) overnight, but
it can also make a host of new
products possible
NEW – PRODUCT DEVELOPMENT

Firms that successfully develop and
market new products can earn
enormous returns.
Location of R&D
The rate of new-product

development seems to be greater
in countries where more money
is spent on basic and applied
research and development.
More money is spent on basic and applied research and development
Underlying demand is strong
Consumers are affluent
Competition is intense
INTEGRATING R & D, MARKETING, AND PRODUCTION
New-product development has a high failure rate and the

reason could often be development of technology for which
demand is limited, a failure to properly commercialize
promising technology and the inability to manufacture a new
product cost effectively.
1. Product development projects are driven by customer

needs.
2. New products are designed for ease of manufacture.
3. Development costs are kept in check.
4. Time to market is minimized.

CROSS – FUNCTIONAL TEAMS
The objective is to take a product development project

from the initial concept development to market
introduction.
Development Teams:
Representatives from R & D
Marketing
Production
Attributes for Product Development:
A team should be led b a “heavyweight” project manager
High status of the organization
Has the Power
Authority required to get

financial
Human Resources
Should composed of at least one member from each key function
That has attributes /

skillful
Can contribute
Functional
Expertise
High standing with his /
her function
Willingness to share
responsibilities for the team
Ability for functional national

advocacy
Physically be in one location if possible
Sense of Camaraderie
Facilitate Communication
Clear Path and Clear Goals
Needs to develop its own

process of communication
BUILDING GLOBAL R & D CAPABILITIES
Establishment of a global network of R&D centers → fundamental research

is undertaken at basic research centers around the globe, located in regions
or cities where valuable scientific knowledge is being created and where
there is a pool of skilled labor existing

Mba 508 Chapter 17

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mba 508 Chapter 17

Uploaded by

Copyright:

Available Formats

PART VI

GLOBAL MARKETING AND RESEARCH

EXPLAIN WHY IT MIGHT MAKE SENSE TO VARY THE ATTRIBUTES OF A PRODUCT

ARTICULATE WHY AND HOW A FIRM’S DISTRIBUTION STRATEGY MIGHT VARY

IDENTIFY WHY AND HOW ADVERTISING AND PROMOTIONAL STRATEGIES MIGHT

DISCUSS HOW THE GLOBALIZATION OF THE WORLD ECONOMY IS AFFECTING

The market in which goods and services of one country are

Refers to the process and activity of purchasing or selling products

Global marketing is essential for modern businesses. In an era

handles all sales and trading activities on the primary and

Make up a car include power, design,

Attributes of a hamburger include taste,

Hotel’s attributes include atmosphere,

Our culture is highly significant when it comes to our

High economic development → extra performance attributes.

Slow economic development → more basic attributes and focus

Differences in technical standards constrain the

Why and how does a firm's distribution strategy vary

The way the product is delivered is determined by the firm’s

TYPICAL DISTRIBUTION SYSTEM

Differences Between Countries

Concentrated system → few retailers supply most of the market.

Fragmented system → many retailers supply the market, none

Refers to how difficult in is for a foreign firm to access a

Refers to the expertise, competencies, and skills of established

A choice of distribution strategy determines which channel the firm

Should the firm try to sell directly

Should it go through wholesaler?

Should it use an import agent?

Should it invest in establishing its

The optimal strategy is determined by the relative costs and benefits

Longer channel → greater aggregate markup (percentage of total

The benefits may outweigh this

Why and how might advertising and promotional

Critical Element - > marketing mix is

firm Direct marketing

BARRIERS TO INTERNATIONAL COMMUNICATION

Barrier - that prevents or blocks movement from one place to another

International communication occurs

Regardless of the type of communication: verbal, nonverbal,

A firm needs to develop cross-

Source and Country of Origin Effects

Source effects occur when potential

The amount of other messages

PUSH VERSUS PULL STANDARDS

→ Push strategy emphasizes

→ Pull strategy depends

Product type and Consumer Sophistication

Firms in consumer goods trying to sell to large

The longer the distribution channel, the more intermediates

Cable TV and the internet transformed the ability of firms to do

The Push-Pull Mix

Push Strategy Pull Strategy

→ When distribution channels → When distribution channels are long.

Standardized global advertising has

For Standardized Advertising:

lowers the costs of value creation by spreading the fixed costs

It has significant economic advantages.

Concern that creative talent is

Against Standardized Advertising:

Two Main Arguments:

Advertising regulations may block

Dealing with Country Differences: