Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
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.
18-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
18
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
18-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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.
18-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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.
18-4
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Chapter 18 - Global Marketing and R&D
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)
18-5
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Chapter 18 - Global Marketing and R&D
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.
18-6
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
