Global Marketing and R&D
Chapter 17
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Procter & Gamble in Japan
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17-1
Globalization and Markets
 “Globalization seems to be the exception
rather than the rule in many consumer
goods markets and industrial markets;
and,
 Procter and Gamble …still customizes the
final product offering and market strategy to
the conditions that pertain in individual
national markets.” - Charles W. Hill © McGraw Hill Companies, Inc., 2000
17-2
Market Segmentation
Identifying distinct groups of consumers
whose purchasing behavior differs
from others in important ways.
Segmented markets:
Sex, age, income, race, education.
Social-cultural factors.
Psychological factors.
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Product Attributes
Cultural differences.
Economic differences.
Product and technical
standards.
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Cultural Differences
Most important - the impact of tradition.
• Impact is greatest in foodstuffs and beverages.
• Scent preferences differ from country to country.
Some tastes and preferences becoming
cosmopolitan:
• Coffee (Japan).
• American-style frozen
dinners (Europe).
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Campbell’s International
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Economic Differences
Consumer behavior is influenced by
economic development.
Consumers in highly developed countries tend
to have extra performance attributes in their
products.
Consumers in less developed countries tend not
to demand these extra performance attributes.
• Cars: no air-conditioning, power steering, power
windows, radios and cassette players.
• Product reliability is more important.
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Product and Technical Standards
Government standards can prevent the
introduction of global products.
Different technical standards impede global
markets, as well.
Come from idiosyncratic decisions
made long ago.
• Different television signal
frequencies.
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Distribution Strategy
Three different distribution systems:
Retail consideration.
Channel length.
Channel exclusivity.
Choice of channel:
Cost/benefit of each
alternative vary from country
to country.
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A Typical Distribution System
Manufacturer
Inside the
Country
Manufacturer
Outside the
Country
Import
Agent
Wholesale
Distributor
Retail
Distributor
Final
Customer
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Figure 17.1
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Distribution Can Be A Problem
17-11
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Communications Strategy
Effectiveness of international communications
can be impacted by:
Cultural barriers.
• Need to develop cross-cultural literacy.
Source effects.
• Emphasize/De-emphasize foreign origin.
Noise levels.
• Developed countries - high.
• Less developed countries - low.
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Foreign vs Domestic Products
Depends on perception.
Hide
Emphasize
Premium pricing
French wines
Country Influence on Purchase
Age
Percentage Influenced
18 -30
19
31 - 45
35
46 - 60
29
61+
50
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Push versus Pull
For industrial products and/or
complex new products.
Short distribution channels.
Few print/electronic media
available
For consumer goods.
Long distribution channels.
Sufficient print/electronic
media to carry message
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Push
Pull
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Global Advertising
Standardized:
Significant economic advantages.
Scarce creative talent.
Many global brand names.
Non-standardized:
Messages in one country may fail in another.
Advertising regulations can be a restriction.
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Advertising in New Delhi
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Marketing Laws
Premiums:
No in Austria and France and Germany. Yes in
Finland.
Product comparisons:
Germany - competitor can take you to court to
prove claims made about product.
Canada - no ‘puffery’, use the
credulous person standard.
United States - ‘puffery’ is ok.
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Pricing Strategy
Price discrimination:
Must keep national markets separate.
Different price elasticities
Arbitrage:Charging different prices in different
countries for same product.
Doesn’t always work.
• Ford in Germany and Belgium
Sometimes it does.
Using
Arbitrage
• Ford in UK and Belgium
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Determinants of Demand Elasticity
Income level and competitive conditions
determine elasticity.
Elasticity tends to be be greater in countries with
low income levels.
Elasticity tends to be greater in countries where
there are many competitors.
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Elastic and Inelastic Demand
Curves
Inelastic
Demand Curve
$
Elastic
Demand Curve
Figure 17.2
Output
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Price Discrimination
Revenue
and Costs
Revenue
and Costs
Revenue
and Costs
110 -
110 -
100 -
100 -
100 -
80 -
70 -
70 -
70 -
60 -
60 -
60 -
50 -
50 -
50 -
40 -
40 20 -
20 -
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Figure 17.3
Output
10 0
50 -


MC
MR
40 -
0
MR
D
+
u
30 -
10 -
50 -

30 -
40 -
Output
40 -
30 -
20 -
10 -
0
50 -
MR
10 -
30 -
30 -

40 -
20 -
20 -
D
43.58
10 -
D
80 -
Output
17-21
+
u
70 -
80 -
30 -
World
90 -
60 -
United
States
90 -
20 -
Japan
90 -
10 -
110 -
Strategic Pricing
Predatory pricing:
Using price as a competitive weapon.
Multipoint pricing strategy:
When 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.
Experience curve pricing:
Firms price low worldwide to build market share. Incurred
losses are made up as company moves down experience
curve.
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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 place a floor under export
prices and limit a firm’s ability to pursue
strategic pricing.
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Dumping: GATT and the U.S.
GATT:Sale of an imported product at ‘less
than fair value’ and causes ‘material injury
to a domestic industry’.
US: An unfair trade practice that results in
injury, destruction, or the prevention of the
establishment of an American industry.
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Configuring the Marketing Mix
Differences
Here
Culture
Requires
Variation
Here
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The Location of R&D
New product development is greater
where:
More money spent on R&D.
Underlying demand is strong.
Consumers are affluent.
Competition is intense.
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The Need to Integrate R&D,
Marketing and Production
High failure rate ratio between new
products development and profit goals.
Reasons for failure:
Limited product demand.
Failure to adequately commercialize product.
Inability to manufacture product costeffectively.
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Cross-Functional Integration
Integrating R&D, production and marketing
ensures:
Project development is driven by customer
need.
New products are designed for ease of
manufacture.
Development costs are kept in check.
Time to market is minimized.
Use cross-functional development teams.
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