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Global Marketing and R&D Chapter 17 : 

© McGraw Hill Companies, Inc., 2000 Global Marketing and R&D Chapter 17

Globalization and Markets : 

© McGraw Hill Companies, Inc., 2000 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 - 17-2

Market Segmentation : 

© McGraw Hill Companies, Inc., 2000 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. 17-3

Product Attributes : 

© McGraw Hill Companies, Inc., 2000 Product Attributes Cultural differences. Economic differences. Product and technical standards. 17-4

Cultural Differences : 

© McGraw Hill Companies, Inc., 2000 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). 17-5

Economic Differences : 

© McGraw Hill Companies, Inc., 2000 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. 17-7

Product and Technical Standards : 

© McGraw Hill Companies, Inc., 2000 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. 17-8

Distribution Strategy : 

© McGraw Hill Companies, Inc., 2000 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. Concentrated Fragmented Short Long Channel No Outsiders 17-9

Communications Strategy : 

© McGraw Hill Companies, Inc., 2000 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. 17-12

Push versus Pull : 

© McGraw Hill Companies, Inc., 2000 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 Push Pull 17-14

Global Advertising : 

© McGraw Hill Companies, Inc., 2000 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. 17-15

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© McGraw Hill Companies, Inc., 2000

Marketing Laws : 

© McGraw Hill Companies, Inc., 2000 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. 17-17

Pricing Strategy : 

© McGraw Hill Companies, Inc., 2000 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. Ford in UK and Belgium Using Arbitrage 17-18

Strategic Pricing : 

© McGraw Hill Companies, Inc., 2000 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. 17-22

Regulatory Influences on Prices : 

© McGraw Hill Companies, Inc., 2000 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. 17-23

Dumping: GATT and the U.S. : 

© McGraw Hill Companies, Inc., 2000 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. 17-24

The Location of R&D : 

© McGraw Hill Companies, Inc., 2000 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. 17-26

The Need to Integrate R&D, Marketing and Production : 

© McGraw Hill Companies, Inc., 2000 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 cost-effectively. 17-27