Download - Bec doms ppt @ global marketing
Global Marketing
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
“A powerful force drives the world
toward a converging commonality,
and that force is technology”
(Prof. Ted Levitt, HBS)
Levitt, 1983
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
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
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
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
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
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
International Marketing Mix: Place
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)
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
International Marketing Mix: Price
Price discrimination: demand elasticityStrategic 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
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
marketsHigh investment on basic and applied researchStrong underlying demand; affluent consumersIntense competition
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
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
New Product Development
Strategic Analysis
Why do organizations decide to enter international business? Passive entry:
Follow customers overseas Respond to enquiries from overseas Competition is in overseas markets Seek profitable growth Sell capacity “as is”
Strategic Analysis
Eventually one or more of key distributors become a candidate for acquisition (FDI)
Foreign regional development organizations actively recruit FDI
Competitive pressures force examination of local assembly or production nearer to key international markets
Major international customers demand local support
Strategic Analysis
Organization acquires companies that are complimentary to existing businesses
Continued growth requires regional management, development, distribution, technical and customer support
Strategic Analysis
Issues involved in conducting international business become “significant”
Demands for organization’s resources increases: Management Cash Product adaptation or unique development Customer support
Strategic Analysis
Eventually, these demands force the active planning of international business by the organization – Active strategy
Strategic Analysis
SWOT
Strength and Weaknesses – decisions made and controlled by management
Opportunities and Threats – business environment – events that are likely to occur
Marketing Mix (4 Ps)
Product Promotion Pricing Place (Distribution) – the most important for
international business entry
Marketing Mix (4 Ps)
Place (Distribution) – the most important for international business entry: Incoterms determine where title to goods changes Transportation to international freight carrier,
freight, insurance, documentation, customs clearance, local transportation, logistic management “in the market”, currency risk
Marketing Mix (4 Ps)
Product – usually controlled by the exporter, initially the least impacted element of the marketing mix
However, “localization” often required: approvals and certificates packaging & labeling measures, etc
Marketing Mix (4 Ps)
Promotion – success at home leads to interest from potential importers, licensors, joint venture partners
Local knowledge essential on initial entries: Integrated market communication Trade and consumer sales promotion Sales management Trade shows
Marketing Mix (4 Ps)
Pricing : What tasks need to be performed to get the product from place of manufacture to foreign customers?
The remainder of the marketing mix needs to be determined in order to set prices
Export Pricing Policy Issues
Channel length: longer channels than domestic markets, may drive up end user prices
Price influence: distribution partners negotiate
for the lowest possible “landed cost” Price-setting authority: How much pricing
authority should be given to distributors or to subsidiaries?
Dumping
WTO: 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.
US considers dumping when price is >5% below home market price or,
Price is below cost of production
Grey Marketing
Grey (or parallel marketing) Products are imported outside of the
established distribution channel – undercutting the authorized channel pricing
Usually results from high imported prices