Chapter 18 ‒ Global Marketing and R&D
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Global Marketing and R&D
Learning objectives
• Explain why it might make 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 promotional 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
is the linkage between marketing and R&D.
Marketing dictates to R&D whether to
produce globally standardized or locally
customized products.
The opening case describes the American
Customer Satisfaction Index which provides
quarterly updates of U.S. customer
satisfaction. Research shows that customer
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satisfaction has a direct relationship with firm
performance. The closing 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.
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OUTLINE OF CHAPTER 18: GLOBAL MARKETING AND R&D
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 among India’s Poor
Global Advertising
Pricing Strategy
Price Discrimination
Product Development
The Location of 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: Global Branding, Marvel Studios, and Walt Disney Company
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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 website—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.
OPENING CASE: ACSI and Satisfying Global Customers
Summary
The opening case describes the American Customer Satisfaction Index (ACSI), an
economic index that provides regular updates on customer satisfaction, and the Global
Customer Satisfaction Index (Global CSI) which provides information on customer
satisfaction in a number of countries. Research shows the importance of ensuring that
global customers are satisfied. Discussion of the case can begin with the following
questions.
QUESTION 1: Research shows that managers of multinational companies typically fail
to fully understand their customers. Why do you think this is the case? How should
multinationals address this situation?
ANSWER 1: The disconnect between what managers think their foreign customers want
and what those customers actually want has a direct impact on the success of the firm.
Many students will probably suggest that cultural differences play a role in the
QUESTION 2: One way of improving customer satisfaction is by developing market-
specific products. What are the drawbacks of this strategy?
ANSWER 2: Developing products for each country market is likely to be prohibitively
QUESTION 3: Based on the information in the case, do you think firms can succeed
selling globally standardized products?
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ANSWER 3: Most students will agree that despite the concerning research indicating a
disconnect between managers’ understanding of their customers and the demands of
Another Perspective: For more information on the ACSI, go to:
{http://www.theacsi.org/}.
Teaching Tip: To extend this discussion, consider International Marketing – Culture
Standards in the International Business Library at http://bit.ly/MHEIBVideo. Click
“Ctrl+F” on your keyboard to search for the video title.
LECTURE OUTLINE FOR CHAPTER
This lecture outline follows the Power Point Presentation (PPT) provided along with this
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 18-4 The Marketing Mix
The marketing mix (the choices the firm offers to its targeted market) is composed of
product attributes, distribution strategy, communication strategy, and pricing strategy.
Slide 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.
Chapter 18 ‒ Global Marketing and R&D
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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 18-11 – 18-16 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
• Concentrated retail system versus fragmented retail system
2. Channel length
3. Channel exclusivity
4. Channel quality
Choosing a Distribution Strategy
The optimal strategy depends on the relative costs and benefits of each alternative.
Slides 18-17 – 18-26 Communication Strategy
Communication channels available to a firm include direct selling, sales promotion,
direct marketing, and advertising via different media.
Another Perspective: The class can be stimulated to think of some positive and negative
source effects (German autos versus German wine, Italian cuisine versus British cuisine).
Push versus Pull Strategy
Firms must choose between two types of communication strategies:
The choice between push and pull strategies depends upon product type and consumer
sophistication, channel length, and media availability.
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.
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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.
Slide 18-25 Pricing Strategy
There are three issues to consider—price discrimination, strategic pricing, and regulatory
influence on prices.
Slides 18-27 – 18-32 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.
Strategic Pricing
Strategic pricing has three aspects:
sales volume as rapidly as possible, even if this means taking large losses initially.
Regulatory Influences on Prices
A firm’s ability to set its own prices may be limited by:
1. Antidumping regulations
2. Competition policy
Slides 18-33 – 18-39 Configuring the Marketing Mix
Differences in culture, economic conditions, competitive conditions, product and
technical standards, distribution systems, government regulations, and the like may