978-1259578113 Chapter 18 Lecture Notes

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Chapter 18 – Global Marketing and R&D

Global Marketing and R&D

Learning objectives

Explain why it makes sense to vary the attributes of a product from country to

country.

Recognize why and how a firm’s distribution strategy might vary among countries.

Identify why and how advertising and promotion strategies might vary among

countries.

Explain why and how a firm’s pricing strategy might vary among countries.

Understand how to configure the marketing mix globally.

Understand the importance of international market research.

Describe how globalization is affecting product development.

The focus of this chapter is on how marketing and R&D can be performed so they will

reduce the costs of value creation and add value by better serving customer needs.

A global marketing strategy that views the world’s consumers as similar in their tastes

and preferences is consistent with the mass production of a standardized output. By

mass-producing a standardized output, the firm can realize substantial unit cost

reductions from experience curve and other scale economies. But ignoring country

differences in consumer tastes and preferences can lead to failure. Thus, an international

business’s marketing function needs to determine when product standardization is

appropriate and when it is not, and adjust the marketing strategy accordingly. Similarly,

the firm’s R&D function needs to develop globally standardized products when

appropriate as well as products that are customized to local requirements.

A critical aspect of the marketing function is identifying gaps in the market so that new

products can be developed to fill those gaps. Developing new products requires R&D;

thus, the linkage between marketing and R&D. Marketing dictates to R&D whether to

produce globally standardized or locally customized products.

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Chapter 18 – Global Marketing and R&D

The opening case explores Marvel Studios’ global brand strategy for marketing the

superhero films Iron Man and Avengers. Hiring recognizable actors and taking advantage

of cross-promotional opportunities made the movie franchises incredibly successful. The

closing case describes the efforts of Domino’s Pizza to capture the market in Japan and

India.

OUTLINE OF CHAPTER 18: GLOBAL MARKETING AND R&D

Opening Case: Global Branding of Avengers and Iron Man

Introduction

Globalization of Markets and Brands

Market Segmentation

Management Focus: Marketing to Black Brazil

Product Attributes

Cultural Differences

Economic Development

Product and Technical Standards

Distribution Strategy

Differences between Countries

Choosing a Distribution Strategy

Communication Strategy

Barriers to International Communication

Push versus Pull Strategies

Management Focus: Unilever—Selling to India’s Poor

Global Advertising

Management Focus: Dove’s Global “Real Beauty” Campaign

Pricing Strategy

Price Discrimination

Strategic Pricing

Regulatory Influences on Prices

Configuring the Marketing Mix

Management Focus: Levi Strauss Goes Local

International Market Research

Product Development

The Location of R&D

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Chapter 18 – Global Marketing and R&D

Integrating R&D, Marketing, and Production

Cross-Functional Teams

Building Global R&D Capabilities

Chapter Summary

Critical Thinking and Discussion Questions

Closing Case: Domino’s Worldwide

CLASSROOM DISCUSSION POINT

Review the passage by Theodore Levitt at the beginning of the chapter with students.

Then, pick a company like McDonald’s, The Gap, or Starbucks and ask students to

discuss whether the company standardizes its marketing mix, or adapt it to the local

market. Ask students to explore the company’s web site, and specifically its international

sites. Next, ask students to identify differences and similarities in the marketing mix

across countries. Finally, ask students to explain their findings using Levitt’s hypothesis.

LECTURE OUTLINE FOR CHAPTER

This lecture outline follows the Power Point Presentation (PPT) provided along with this

instructor’s manual. The PPT slides include additional notes that can be viewed by

clicking on “view,” then on “notes.” The following provides a brief overview of each

Power Point slide along with teaching tips, and additional perspectives.

Slide 18-3 The Marketing Mix

The marketing mix (the choices the firm offers to its targeted market) is comprised of

product attributes, distribution strategy, communication strategy, and pricing strategy.

Slides 18-4 and 18-5 The Globalization of Markets and Brands

Culture and consumer tastes drive the need to localize. Globalization seems to be the

exception rather than the rule in many markets.

Slides 18-6 and 18-7 Market Segmentation

Market segmentation involves identifying distinct groups of consumers whose

purchasing behavior differs from others in important ways. Segments can be based on

geography, demography, socio-cultural factors and psychological factors.

Slides 18-8 and 18-9 Product Attributes

A product is like a bundle of attributes. Products sell well when their attributes match

consumer needs.

While there is some cultural convergence among nations, Levitt’s vision of global

markets is still a long way off.

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Chapter 18 – Global Marketing and R&D

Consumers in highly developed countries tend to demand a lot of extra performance

attributes, while consumers in less developed nations tend to prefer more basic products.

Differences in product and technical standards may require the firm to customize

products.

Slides 18-10 through 18-14 Distribution Strategy

A firm’s distribution strategy (the means it chooses for delivering the product to the

consumer) is a critical element of the marketing mix.

There are four main differences in distribution systems:

1. retail concentration

2. channel length

3. channel exclusivity

4. channel quality

Slide 18-15 Choosing a Distribution Strategy

The optimal strategy depends on the relative costs and benefits of each alternative.

Slide 18-16 Communication Strategy

Communication channels available to a firm include direct selling, sales promotion,

direct marketing, and advertising via different media.

Slides 18-17 through 18-19 Barriers to International Communication

The effectiveness of a firm’s international communication can be jeopardized by cultural

barriers, source and country of origin effects, and noise levels.

Another Perspective: The class can be stimulated to think of some positive and negative

source effects (German autos vs. German wine, Italian cuisine vs. British cuisine).

Slides 18-20 through 18-22 Push versus Pull Strategy

Firms have to choose between two types of communication strategies:

a push strategy emphasizes personnel selling

a pull strategy emphasizes mass media advertising

The choice between push and pull strategies depends upon product type and consumer

sophistication, channel length, and media availability.

Slides 18-23 and 18-24 Global Advertising

Standardized advertising makes sense when it has significant economic advantages,

creative talent is scarce and one large effort to develop a campaign will be more

successful than numerous smaller efforts, and brand names are global.

Standardized advertising does not make sense when cultural differences among nations

are significant, and country differences in advertising regulations block the

implementation of standardized advertising.

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Slide 18-25 Pricing Strategy

There are three issues to consider price discrimination, strategic pricing and regulatory

influence on prices.

Slides 18-26 through 18-28 Price Discrimination

Price discrimination occurs when firms charge consumers in different countries

different prices for the same product. The price elasticity of demand is a measure of the

responsiveness of demand for a product to changes in price.

Slides 18-29 and 18-30 Strategic Pricing

Strategic pricing has three aspects:

1. predatory pricing – involves using the profit gained in one market to support

aggressive pricing designed to drive competitors out in another market.

2. multipoint pricing – a firm’s pricing strategy in one market may have an impact on a

rival’s pricing strategy in another market.

3. experience curve pricing – price low worldwide in an attempt to build global sales

volume as rapidly as possible, even if this means taking large losses initially.

Slide 18-31 Regulatory Influences on Prices

A firm’s ability to set its own prices may be limited by:

1. antidumping regulations

2. competition policy

Slide 18-32 Configuring the Marketing Mix

Differences in culture, economic conditions, competitive conditions, product and

technical standards, distribution systems, government regulations, and the like may

require variation in product attributes, distribution strategy, communications strategy, and

pricing strategy.

Another Perspective: Fun sites to visit with students include Nestle

{http://www.nestle.com} and Kraft {http://www.kraftfoodsgroup.com/home/index.aspx}.

Both companies sell their products in many countries around the world, and by clicking

on the various country locations, students can get a feel for which elements of the

marketing mix have been standardized, and which have not.

Slide 18-33 Think Like a Manager: Adjust the Marketing Mix

Slides 18-34 and 18-35 the Role of International Market Research

International market research is defined as the systematic collection, recording,

analysis, and interpretation of data to provide knowledge that is useful for decision

making in a global company. International market research may be performed in-house or

by external companies.

The basic data that companies want collected in international market research include:

1. Data on the country and potential market segments (geography, demography,

sociocultural factors, and psychological factors)

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2. Data to forecast customer demands within specific country or world region (social,

economic, consumer, and industry trends)

3. Data to make marketing mix decisions (product, distribution, communication, and

price)

Slide 18-36 International Market Research Steps

The process for conducting international market research typically includes defining the

research objectives, determining the data sources, assessing the costs and benefits of the

research, collecting the data, analyzing and interpreting the data, and reporting the

research findings.

Slide 18-37 New Product Development

Firms today need to make product innovation a priority. This requires close links between

R&D, marketing, and manufacturing.

Slide 18-38 The Location of R&D

New product ideas come from the interactions of scientific research, demand conditions,

and competitive conditions.

Slides 18-39 Integrating R&D, Marketing, and Production

A firm’s new product development efforts need to be closely coordinated with the

marketing, production, and materials management functions.

Slide 18-40 Cross-Functional Teams

Effective cross-functional teams should be

led by a heavyweight project manager with status in the organization

include members from all the critical functional areas

have members located together

establish clear goals

develop an effective conflict resolution process

Slide 18-41 Building Global R&D Capabilities

To adequately commercialize new technologies, firms need to integrate R&D and

marketing.

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