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Part Five
Chapter
Global Marketing and
Product Development
Competing in a Global Marketplace
Twelve
Slide
12-1
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
 have contributed to creation of world brands
 have caused certain market segments to emerge across national
market that have indeed converged--inter-market segments
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Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-2
Market Segmentation
 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-price-place (distribution)-promotion
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-3
International Market Segmentation
 Across

national markets, companies may try to
Offer the same products and marginally adjust the balance
of the marketing mix to appeal to market segments with
similar needs across markets
 Market
segments that transcend national borders -- also known as
intermarket segments -- allow companies to offer standardized
products

Adapt their products and 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
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-4
International Marketing
 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
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-5
International Marketing Mix: 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

Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-6
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

Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-7
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)
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 12-8
International Marketing Mix: 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
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-9
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,
Irwin/McGraw-Hill
monopoly restriction
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-10
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
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide
12-11

New Product Development
Integrate R&D, marketing and Production; ensure:
 Product
development driven by customer needs
 New products can be manufactured efficiently/effectively
 Time to market is minimized

Use of cross-functional, multinationally 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
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 12-12
Marketing Research Measurement Issues
 Functional

Equivalence
Similar observable phenomena/activities may not have the same
function across cultures (shopping: Japan also a social event; US
mostly a chore)
 Conceptual

Non-observable assumptions/concepts/ideas/constructs may not
have the same meaning across cultures
 Instrument



Equivalence
Equivalence
must use measures that correctly measure the same phenomenon
in each culture; language key
measurement equivalence: “summer” in Australia different from
UK, “middle-aged” in Somalia (life expectancy 45 - 50 yrs) not
same in Scandinavia (life expectancy 80-85yrs)
metric equivalence: weights and measures
Irwin/McGraw-Hill
Copyright  2001 The McGraw-Hill Companies, Inc. All rights reserved.