How can marketing and R&D be performed so they reduce the costs of value creation and add value by better serving customer needs?
The marketing mix (the choices the firm offers to its targeted market)
The marketing mix is comprised of:
Product attributes
Distribution strategy
Communication strategy
Pricing strategy
Levitt
suggested world markets were becoming increasingly similar making it unnecessary to localize the marketing mix
Market segmentation
identifying distinct groups of consumers whose purchasing behavior differs from others in important ways
Consumer needs vary from country to country depending on:
Culture
Levels of economic development
Countries differ along cultural dimensions:
Tradition
Social structure
Language
Religion
Education
How does a country's level of economic development influence marketing?
Consumers in highly developed countries tend to demand a lot of extra performance attributes in their products
Consumers in less developed nations tend to prefer more basic products
How do differences in product and technical standards impact marketing decisions?
National differences in product and technological standards force firms to customize the marketing mix:
Government mandated product standards can make mass production difficult
Idiosyncratic decisions made in the past on technical standards can influence
The main differences between distribution systems are:
Retail concentration
Channel length
Channel exclusivity
Channel quality
Retail Concentration
In some countries the retail system is very concentrated, while in other countries it is fragmented
In a concentrated system
a few retailers supply most of the market
In a fragmented system
there are many retailers, no one of which has a major share of the market
Channel length
refers to the number of intermediaries between the producer and the consumer
Channel Exclusivity
An exclusive distribution channel is one that is difficult for outsiders to access
Channel Quality
refers to the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses
Which distribution strategy should a firm choose?
The choice depends on the relative costs and benefits of each alternative
Communication channels available to a firm include:
Direct selling
Sales promotion
Direct marketing
Advertising
International Communication occurs
whenever a firm uses a marketing message to sell its products in another country
The effectiveness of the communication can be affected by:
Cultural barriers
Source and country of origin effects
Noise levels
Cultural Barriers
can make it difficult to communicate messages across cultures
Source effects
occur when the receiver of the message evaluates the message on the basis of status or image of the sender
Country of origin effects
the extent to which the place of manufacturing influences product evaluations
Noise Levels
refer to the amount of other messages competing for a potential consumer's attention
Push Strategy
emphasizes personnel selling
Pull Strategy
emphasizes mass media advertising
The choice between the push and pull strategies depends upon:
Product type and consumer sophistication
Channel length
Media availability
Product Type and Consumer Sophistication
Consumer goods firms trying to sell to a large segment of the market tend to prefer a pull strategy
Industrial products firms or makers of other complex products favor a push strategy
Channel Length
The longer the channel, the more intermediaries involved
Can be expensive to use direct selling to push a product through many layers of a distribution channel
A firm may try to pull its product through the channels by using mass advertising to create con
Media Availability
A pull strategy relies on access to advertising media
A push strategy is more attractive when there is limited access to mass media
Push strategies are common:
For industrial products and/or complex new products
When distribution channels are short
When few print or electronic media are available
Pull strategies tend are common:
For consumer goods products
When distribution channels are long
When sufficient print and electronic media are available to carry the marketing message
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
Brand names are global
Standardized advertising is not appropriate when:
Cultural differences among nations are significant
Country differences in advertising regulations block the implementation of standardized advertising
How should a firm price its product or service in foreign markets?
Firms must consider:
Price discrimination
Strategic pricing
Government-mandated price controls
Should a firm charge the same price everywhere, or price its product on a market- by-market basis?
Firms can maximize profits through price discrimination - charging consumers in different countries different prices for the same product
For price discrimination to work:
The firm must be able to keep national markets separate
Different price elasticizes of demand must exist in different countries
Price elasticity of demand
measure of the responsiveness of demand to changes in price
Demand is elastic when
a small change in price produces a large change in demand
Demand is inelastic when
a large change in price produces only a small change in demand
Strategic pricing has three aspects:
Predatory pricing
Multi-point pricing
Experience curve pricing
Predatory pricing
the profit gained in one market is used to support aggressive pricing designed to drive competitors out in another market
Multi-point pricing
a firm's pricing strategy in one market may have an impact on a rival's pricing strategy in another market
Experience curve pricing
pricing low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially
New product ideas come from
the interactions of scientific research, demand conditions, and competitive conditions
New-product development is greater when:
More is spent on basic and applied research and development
Demand is strong
Consumers are affluent
Competition is intense
Effective cross functional teams should:
Be led by a heavyweight project manager with status in the organization
Have members from all the critical functional areas
Have members located together
Have clear goals
Have an effective conflict resolution process
How should a firm build global R&D capabilities?
R&D and marketing need to be integrated to adequately commercialize new technologies