Chapter 15
Global Marketing
R&D
15 - 3
Global Marketing and R&D
• Among different countries, why and how:
- It makes sense to vary the attributes of products
- Distribution strategy may vary
- Advertising and promotion strategies may vary
- Pricing strategy may vary
• How globalization affects new-product development
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Levitt, 1983
“A powerful force drives the world toward
a converging commonality, and that force
is technology”
(Levitt, 1983)
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Globalization of Markets?
• Levitt’s “Converging commonality” has not
happened universally
• Consumer product tastes converged less than
industrial product specifications
• Media, communications means have
- made consumers world-wide more aware of their
mutual preferences
- have contributed to creation of world brands
- have caused market segments to emerge across
some national markets--inter-market segments
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Market Segmentation
• The process of identifying groups of consumers whose
purchasing behavior is unique in important ways
- Is based on demography, geography, social-cultural
factors, psychological factors
- Allows firms to adjust marketing mix to meet the needs
of separate market segments
• Marketing mix variables:
product-price-place (distribution)-promotion
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Market Segmentation Across
National Markets
• Standardization: companies may
- Offer same products
- Adjust balance of marketing mix to market
segments with similar needs across countries
• Adaptation: companies may
- Offer different products
- Adjust balance of marketing mix to market
segments with differing needs across countries
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Marketing Strategy
• Standardization (Global Integration Pressures)
- 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
- Responsiveness to local condition shifts
• Implications on marketing mix
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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 state mandated
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International Marketing Mix:
Place
•
•
Optimal channel a company chooses to deliver
the product
The 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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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:
Promotion
• 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 emphasis
• Consumer goods
• Long distribution channels
• Marketing message may be carried via print /
electronic media
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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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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
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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
• Plan clearly: goals, milestones, budgets
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New Product Development
• Use 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
- When appropriate?
- Build team culture
- Communication and conflict resolution processes
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