Chapter 16 Global marketing

marketing segments

groups of unique individuals that share common characteristics; pricing strategies, distribution channels etc. may look different for every segment

Arguments agains Standardized Advertising

- cultural differences among nations are such that a msg that works in one nation can fail miserably in another -advertising regulations may block implementation of standardized advertising

prominent international market research firms

-Nielsen -Kantar -Ipsos -NPD Group

Customized advantages

-Reflects different conditions of product use -Acknowledges local legal differences -Accounts for differences in buyer behavior patterns -Accounts for other differences in markets

Promotion

-advertising global vs local (message and medium) >can the advertising be the same everywhere or must it be Taylor to each local market standardized advertising: -Always Coca-Cola -Levi 501 jeans -United colors of Benetton localized advertising: -murals/sides of building -personal selling -sales promotion

Place (Distribution)

-direct marketing -direct exporting -using intermediary -FDI principle cumulative attraction-complementary & competing businesses locate near each other bc of bigger draw ex; Burger King and MacDonalds

For Standardized Advertising Justifications

-has significant advantages -concern that creative talent is scarce, so long effort to develop a campaign will produce better results than 40 or 50 smaller efforts -many brand names are global

Standardize advantages

-reduces his marketing cost -facilities centralized control of marketing -promotes efficiency in R&D -results in economies of scale-production -reflects globalization trends -country of origin effect

Issues that Influence Different Product Attributes

1. Cultural Differences -most important aspect is the impact on tradition 2. Economic Development -consumer behavior is influenced by the level of economic development in a country -product reliability may be more important attribute in less developed nations -extra product attributes not demanded by less developed nations 3. Product and Technical Standards -differing gov.-mandated product standards often result in companies ruling out mass production & marketing of a fully global and standardized product

Barriers to International Communication

1. Cultural barriers-one thing can have multiple meanings Way to overcome barrier: firm develop cross-cultural literacy; use local input ex. local ad agency 2. Source and country of origin effects-reliever of the msg evaluates the msg on the basis of status or image of sender country of origin effects-extent to which the place of manufacturing influences product evaluations Way to overcome barrier: promotional msgs that stress the positive performance attributes of its products 3. Noise levels- the # of other msgs competing for a potential consumer's attentions -noise level in DN is higher than in less DN

2 of the most prominent customer-satisfaction measurement companies

1. J.D. Power 2. CFI Group

International Pricing Strategy

1. Price Discrimination: changing prices for the same product in different countries; helps companies maximize profits To be profitable firms must: A. be able to keep its national markets separate B. different price elasticities of demand in different countries; firm can charge higher price in country where demand is inelastic; price elasticity greater in countries with low income levels (price consciousness) 2. Strategic Pricing: A. Predatory Pricing- use of price as competitive weapon to drive weaker competitors out of a national market to then raise prices; firm must have a profitable position B. Multipoint Pricing- the fact that a firm's pricing strategy in one market may have an impact on its rivals' pricing strategy in another market -becomes an issue when 2+ international businesses compete against each other in 2+ markets -2+ global companies focus on particular national markets & launch vigorous price wars in markets in attempt to gain market dominance c. Experience Curve- price low worldwide in attempt to build global sales volume as rapidly as possible -firms farther down the experience curve have a cost advantage -predatory pricing and multipoint pricing may violate antidumping regulations 3. Regulatory Factors: gov.-mandated price controls & antidumping regulations that limit a firm's ability to charge the prices

Factors that determine the relative attractiveness of push & pull strategies

1. Product type relative to consumer sophistication -firms in consumer goods industries trying to sell to a org segment of the market generally favor pull strategy -forms that sell industrial products or other complex products favor push strategy 2. Channel length -firm may try to pull product through channels by using mass advertising to create consumer demand; intermediaries will then feel obliged to carry product 3. Media availability -pull strategy relies on access to advertising media; many countries may not be as technologically advanced as the US; a push strategy may be more favorable

4 main differences between distribution systems worldwide

1. Retail Concentration -retail can be very concentrated or fragmented depending on the country Concentrated Retail System: few retailers supply most of the market -mainly in developed nations bc increase in car ownership, # of households w refrigerators and freezers, and # of 2-income households Fragmented Retail System: one which there are many retailers, none has a major market share 2. Channel Length -# of intermediaries between the producer (or manufacturer) & consumer - short if producers sells straight to consumer -the longer the channel the greater the aggregate markup, and the higher the price consumers are charged for final product -longer channels give the ability to enter exclusive channel Fragmented retail systems= lengthy channels; ex. toothpaste 3. Channel Exclusivity Exclusive Distribution Channel: one that is difficult for outsiders to access ex. Japan's shelf space for brands with national reputation 4. Channel Quality -expertise, competencies, and skills of established retailers in a nation and their ability to sell and support the products of I BUS. -quality of retailers is good in most DN, in emerging markets and less DN, channel quality is variable at best

Basic data companies want to collect in international market research include

1. data on country and potential market segments 2. data to forecast customer demands within specific country or world regions 3. data to make marketing mix decisions PROCESS 1. defining research objective 2. determining the data sources evaluated based on: availability, comparability across countries and potential market segments, reliability, validity 3. assessing the costs and benefits of research 4. collecting the data 5. analyzing and interpreting the research 6. reporting the research findings

2 things when looking at marketing segmentation in IBUS

1. difference between countries in the structure market segments 2. existence of segments that transcend national boarders

Product design considerations

1. infrastructure needs -electrical current/plug outlets -side of the road to drive 2. culture -packing &labeling *Frito-Lay (flavors) >paprika-flavored chips- Hungary & Poland >shrimp-flavored chips- South Korea 3. legal requirements -prescriptions medications -fuel content -labeling requirements -product recycling (potential) 4. religious customs -women's apparel in the Middle East -vegetarian McDonald's in India 5. economic development level -size: smaller cars in Europe -location: Costco in Japan -design: Gillette in India branding: modified trademarked brands ex; Corona beer is Coronita in Spain target retailer in Australia Unilever's Rexona (Degree) deodorant

Integrating R&D, Marketing, and Production

Lower chance of product failure through integration of these three (R&D, marketing, and production). Helps ensure that: -Product development is driven by consumer needs -Products are designed for ease of manufacture -Development costs kept reasonable -Minimization of time to market integration of R&D and marketing is crucial if a new product is to be properly commercialized

Competition policy

Regulations designed to promote competition and restrict monopoly practices

Global marketing

Social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others in a global environment

Pricing

Standardize pricing> Walmart differential pricing> Toys "R" Us

product

Standardized: -same product design across all international markets -industrial products have a tendency to be standardized ex; Walmart, Apple products; Music& Movies Customized: -product localized for each international market -consumer products have a tendency to be customized ex; shampoo, Eddie Brown, McDonalds, food products

push strategy

a marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or a retailer to carry and sell particular merchandise; emphasizes personal selling rather than mass media advertising in the promotional mix; may be costly tend do be emphasized: - for industrial products or complex new products -when distribution channels are short -when few print or electronic media are available

Intermarket Segment

a segment of customers that spans multiple countries, transcending national borders consumers in segment must have compelling similarities along dimensions such as- age, values, lifestyle choice- must translate into purchasing behavior, need, and wants

cross-functional team

a team composed of employees from different functional areas of the organization (R&D, marketing and production) 1. team should be led by a "heavyweight" manager who has high status within the organization and who has the power of authority required to get the financial and human resources the team needs 2. team should be composed of at least one member of each key function 3. team members should physically be in one location if possible to create sense of camaraderie and to facilitate communication

pull strategy

depends more on mass media adverting to communicate the marketing msg to potential consumers; a promotion strategy that calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating a demand vacuum that "pulls" the product through the channel tend to be emphasized: -for consumer goods -when distribution channels are long -when sufficient print and electronic media are available to carry marketing message

Communication Channels

direct selling sales promotion direct marketing advertising

Global marketing mix and approaches

product price place&distribution channel promotion ethnocentric approach -adopt the domestic marketing mix for the global markets -standardized ex: companies that are already established that then want to enter country (challenging); save a lot of money polycentric approach -customize the firm's marketing mix for each market -customized ex: meets needs of market but cost a lot geocentric approach -standardize a global marketing mix for global market -standardize ex: for born global companies

The Location of R&D

rate of new-product development seems to be great in countries where... -money is spent on basic & applied research and development -underlying demand is strong -consumers are affluent .-competition is intense Dispersing R&D activités to locations that allow firms to stay close to the center of leading-edge activity to gather scientific and comp. info and draw on local scientific resources

Antidumping Regulations

regulations designed to restrict the sale of goods for less than their fair market price; ambiguity GATT 2 criterias: 1. less than fair value 2. material injury to a domestic industry some argue that selling at lower prices than those in country of origin is dumping

global strategy

selling the same standardized product and using the same basic marketing approach in each national market

International Marketing Research

the systematic design, collection, recording, analysis, interpretation, and reporting of information pertinent to a particular marketing decision facing a company operating internationally involves issues such as... 1. translation of questionnaires and reports into appropriate foreign languages 2. accounting for cultural and environmental differences in data collection