Chapter 18 – Global Marketing and R&D
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Global Marketing and R&D
Learning objectives
• Recognize why and how a
firm’s distribution strategy
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.
The focus of this chapter is on how
marketing and R&D can be
performed so they will reduce the
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
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
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.
The opening case explores Marvel Studios’ global brand
strategy for marketing the superhero films Iron Man and
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OUTLINE OF CHAPTER 18: GLOBAL MARKETING AND R&D
Opening Case: Global Branding of Avengers and Iron Man
Introduction
Globalization of Markets and Brands
Distribution Strategy
Differences between Countries
Choosing a Distribution Strategy
Communication Strategy
Barriers to International Communication
Pricing Strategy
Price Discrimination
Strategic Pricing
Regulatory Influences on Prices
Configuring the Marketing Mix
Management Focus: Levi Strauss Goes Local
Chapter 18 – Global Marketing and R&D
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
OPENING CASE: Global Branding of Avengers and Iron Man
Summary
The opening case explores how Marvel movie studios capitalized on the popularity of
lead character Tony Stark (and the actor that plays him) in branding its Avengers and Iron
Man franchises. The company also coordinated with parent company Walt Disney
Studios to generate an effective global marketing plan. Discussion of the case can begin
with the following questions.
QUESTION 1: What is behind Marvel’s global brand strategy for its movie franchises?
What is the company hoping to accomplish with this strategy?
ANSWER 1: Marvel pursues a “pull strategy” based on high brand recognition and mass
media advertising by hiring actors and directors with significant international appeal to
QUESTION 2: How does Marvel’s relationship with the Walt Disney Company affect its
global branding strategy?
ANSWER 2: The Walt Disney Company reinforces Marvel’s high-visibility approach to
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QUESTION 3: How does Marvel’s global branding strategy benefit from interest in
characters created over 50 years ago?
ANSWER 3: Marvel recognizes that there are several market segments that may be
interested in its film franchises for different reasons. Comic book readers may not
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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.
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.
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
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Slide 18-15 Choosing a Distribution Strategy
The optimal strategy depends on the relative costs and benefits of each alternative.
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.
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.
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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 18-32 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.
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,
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
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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.
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Slide 18-41 Building Global R&D Capabilities
To adequately commercialize new technologies, firms need to integrate R&D and
marketing.
CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: Imagine you are the marketing manager for a U.S. manufacturer of
disposable diapers. Your firm is considering entering the Brazilian market. Your CEO
believes the advertising message that has been effective in the United States will suffice
in Brazil. Outline the possible objections to this. Your CEO also believes that the pricing
decisions in Brazil can be left to local managers. Why might she be wrong?
ANSWER 1: While babies’ behinds serve the same function in all cultures, and the
product’s technical standards may be similar, sensitivity to bodily functions does vary
QUESTION 2: Within 20 years, we will have seen the emergence of enormous global
markets for standardized consumer products. Do you agree with this statement? Justify
your answer.
ANSWER 2: One could either choose to agree or disagree, while the best answer would
likely hedge it somewhere in the middle. There are already enormous global markets for
QUESTION 3: You are the marketing manager of a food products company that is
considering entering the Indian market. The retail system in India tends to be very
fragmented. Also, retailers and wholesalers tend to have long-term ties with Indian food
companies; these ties make access to distribution channels difficult. What distribution
strategy would you advise the company to pursue? Why?
ANSWER 3: The firm should sell to either wholesalers or import agents. Because the
retail system in India is very fragmented, it would be very expensive for the firm to make
contact with each individual retailer. As a result, it would be more economical for the
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QUESTION 4: Price discrimination is indistinguishable from dumping. Discuss the
accuracy of this statement.
ANSWER 4: In some specific instances this statement is correct, but as a general rule it is
not. When a firm is pricing lower in a foreign country than it is in its domestic market, it
QUESTION 5: You work for a company that designs and manufactures personal
computers. Your company’s R&D center is in North Dakota. The computers are
manufactured under contract in Taiwan. Marketing strategy is delegated to the heads of
three regional groups: a North American group (based in Chicago), a European group
(based in Paris), and an Asian group (based in Singapore). Each regional group develops
the marketing approach within its region. In order of importance, the largest markets for
your products are North America, Germany, Great Britain, China, and Australia. Your
company is experiencing problems in its product development and commercialization
process. Products are late to market, the manufacturing quality is poor, costs are higher
than projected, and market acceptance of new products is less than hoped for. What might
be the source of these problems? How would you fix them?
ANSWER 5: The dispersion of activities makes sense—products are produced in the
lowest cost location and marketed by people familiar with local conditions. (The R&D in
QUESTION 6: Reread the Management Focus on Levi Strauss, and then answer the
following questions:
a. What marketing strategy was Levi Strauss using until the early 2000s? Why did this
strategy appear to work for decades? Why was it not working by 2004?
b. How would you characterize Levi Strauss’s current strategy? What elements of the
marketing mix are now changed from nation to nation?
c. What are the benefits of the company’s new marketing strategy? Is there a downside?
d. What does the Levi Strauss story tell you about the “globalization of markets”?
ANSWER 6:
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a. Levi Strauss was highly successful in the 1990s with its iconic 501 jeans—a global
symbol of the baby boomer generation. By 2004, however, the company was viewed as
CLOSING CASE: Domino’s Worldwide
Summary
The closing case describes how Domino’s Pizza expanded its business globally and what
steps it took in various countries to ensure success. The following questions can be
helpful in directing the discussion.
QUESTION 1: Do you think it is wise for Domino’s to stick to its traditional “home
delivery” business model, even when that is not the norm in a country and when its
international rivals have changed their format?
ANSWER 1: Domino’s decided to maintain its home delivery business model because it
QUESTION 2: What do you think Domino’s does from an organizational perspective to
make sure that it accommodates local differences in consumer tastes and preferences?
ANSWER 2: Domino’s pays attention to the taste of local consumers and varies pizza
QUESTION 3: How does the marketing mix for Domino’s Pizza in Japan differ from that
in the United States? How does that in India differ from the U.S. marketing mix?
ANSWER 3: In Japan, pizza is viewed as up-scale fare and the toppings on Domino’s
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QUESTION 4: What lessons can we draw from the Domino’s case study that might be
useful for other international businesses selling consumer goods?
ANSWER 4: Businesses must learn the culture of any country in which they want to do
MHE INTERNATIONAL BUSINESS VIDEO LIBRARY
updated on a monthly basis. While there, be sure to “like” the clips that work well for
you, and add notes that might be helpful to your colleagues.
INCORPORATING globalEDGE™ EXERCISES
Exercise 1
The consumer purchase of specific brands is an indication of the relationship that
develops over time between a company and its customers. Locate and retrieve the most
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Exercise 1 Answer
Search phrase: best global brands
Exercise 2
Part of developing a long-term R&D strategy is to locate facilities in countries that are
widely known to be competitive. Your company seeks to develop R&D facilities in Asia
to counter recent competitor responses. A publication which evaluates economies based
drawbacks for the top five Asian economies listed.
Exercise 2 Answer
Search phrase: Global Competitiveness Report
Resource Name: World Economic Forum: Global Competitiveness Report