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, All Rights
 CHAPTER
13
Global Marketing and
R&D

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Slide

Key Issues
13-1

• Why and how should a firm adapt to

different country-markets
– Product/service attributes?
– Advertising and promotion strategy?
– Distribution strategy?
– Pricing strategy?
• How does globalization affect the way new-
product development is approached by
international businesses?

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Slide
13-2

Globalization of Markets?
• “A powerful force drives the world toward a converging
commonality, and that force is technology” (Levitt, 1983)
• “Converging commonality” may not have happened
universally
• Consumer product tastes may have converged less than
industrial product specifications
• Media, communications means have
– made consumers world-wide more aware of their mutual
preferences and
– contributed to creation of world brands
– caused certain market segments to emerge across national market
that have indeed converged--inter-market segments

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Slide

Market Segmentation
13-3

• The process of identifying distinct groups of

consumers whose purchasing behavior differs
from other groups in important ways
– Demography, geography, social-cultural factors,
psychological factors
– Firms adjust their marketing mix to meet the particular
needs of different market segments
• Marketing mix variables:
– Product (physical goods and/or services)
– Price
– place (distribution)
– Promotion (advertising and promotion)
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Slide

International Market Segmentation

13-4

• Across national markets, companies may

Offer the same products
– and marginally adapt the balance of the marketing
mix to appeal to market segments with similar needs
across markets
– Market segments that transcend national borders --
intermarket segments -- allow companies to offer
standardized products
Adapt their products
– and adapt the balance of the product mix to appeal to
market segments with differing needs across markets
– Market segments that have materially different needs
force companies to customize -- adapt -- their products

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Slide

International Marketing
13-5

• Marketing Strategy
– Standardization (Global Integration Pressures)
• intermarket segments
• efficiencies through integrated R&D, Production, Marketing
• control implications
– Adaptation (Local Responsiveness Pressures)
• buyer behavior (cultural, economic influence, brand
perception--country of origin idea)
• laws regulations
• local environment needs/development
• responsive to local condition shifts
• Standardization-adaptation implications on
marketing mix: Product-Pricing-Promotion-Place
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Slide

International Marketing Mix:

13-6

Product
• Product: a bundle of attributes
– Hamburger: meat type, taste, texture, size
– Automobile: power, design, quality, performance,
comfort, 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 mandated by
state

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Slide
13-7

International Marketing Mix:

Place
• Optimal channel a company chooses to
deliver the product
• Most locally responsive element of
marketing mix because distribution
channels vary dramatically across countries
– retail system: concentrated-fragmented
– channel length: long, short
– Channel exclusivity

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Slide
13-8
International Marketing Mix:
Promotion
• How firm communicates the product
attributes / benefits to customers
• Barriers to international communication
– Cultural barriers
– Source effects (country of origin effects)
– Noise levels
• Standardized advertising strategy possible;
standardized advertising strategy execution
more difficult (culture, laws)

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 International Marketing Mix:
Slide
13-9

Promotion
• Determinants of push/pull strategies
– Product type and consumer sophistication
– Channel length
– Media availability
• 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
• Consumer goods
• Long distribution channels
• Marketing message can be carried via print/electronic media
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Slide
13-10

International Marketing Mix:

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

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Slide

New Product Development

13-11

• New product development

– High risk / high return
– Technological innovation
– Creative destruction
• Locate R&D in trend/technology leading markets
– High investment on basic and applied research
– Strong underlying demand; affluent consumers
– Intense competition
• Integrate R&D, marketing and Production
– Product development driven by customer needs
– New products can be manufactured efficiently and
effectively
– Time to market is minimized
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Slide
13-12
New Product Development
Use of cross-functional, nationally and culturally
diverse teams
•Span: initial concept development to market
introduction
•Team composition critical
– Assign heavyweight project manager
• High status in organization; high power and authority
• Dedicated to fullest possible extent to project
– Team should have representative from each function
– Physical co-location to build team culture,
communication and conflict resolution processes
•Clear plan, goals, milestones, budgets
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Slide
13-13
Marketing Research Issues
• Functional Equivalence
– Similar observable phenomena/activities may have
different function across cultures
(shopping: Japan also a social event; US mostly a chore)
• Conceptual Equivalence
– Non-observable assumptions/concepts/ideas/constructs
may not have the same meaning across cultures
• Instrument Equivalence
– must use measures that correctly measure the same
phenomenon in each culture; language key
– measurement equivalence: “summer” in Australia vs UK,
“middle-aged” in Somalia (life expectancy 45 - 50 yrs) vs
Scandinavia (life expectancy 80-85yrs)
– metric equivalence: weights and measures
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