Global Marketing and R&D

Chapter 17

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 Procter & Gamble in Japan

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 Globalization and Markets
Globalization seems to be the exception
rather than the rule in many consumer
goods markets and industrial markets;
and,
Procter and Gamble still customizes the
final product offering and market strategy to
the conditions that pertain in individual
national markets. - Charles W. Hill -
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 Market Segmentation
Identifying distinct groups of consumers
whose purchasing behavior differs
from others in important ways.
Segmented markets:
Sex, age, income, race, education.
Social-cultural factors.
Psychological factors.

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 Product Attributes
Cultural differences.
Economic differences.
Product and technical
standards.

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 Cultural Differences
Most important - the impact of tradition.
Impact is greatest in foodstuffs and beverages.
Scent preferences differ from country to country.
Some tastes and preferences becoming
cosmopolitan:
Coffee (Japan).
American-style frozen
dinners (Europe).
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Campbells International

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 Economic Differences
Consumer behavior is influenced by
economic development.
Consumers in highly developed countries tend
to have extra performance attributes in their
products.
Consumers in less developed countries tend not
to demand these extra performance attributes.
Cars: no air-conditioning, power steering, power
windows, radios and cassette players.
Product reliability is more important.

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 Product and Technical Standards
Government standards can prevent the
introduction of global products.
Different technical standards impede global
markets, as well.
Come from idiosyncratic decisions
made long ago.
Different television signal
frequencies.

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 Distribution Strategy
Three different distribution systems:
Retail consideration.
Channel length.
Channel exclusivity.
Choice of channel:
Cost/benefit of each
alternative vary from country
to country.
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 A Typical Distribution System
Manufacturer Manufacturer
Inside the Outside the
Country Country Import
Agent
Wholesale
Distributor

Retail
Distributor

Final
Customer

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 Distribution Can Be A Problem

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 Communications Strategy
Effectiveness of international communications
can be impacted by:
Cultural barriers.
Need to develop cross-cultural literacy.
Source effects.
Emphasize/De-emphasize foreign origin.
Noise levels.
Developed countries - high.
Less developed countries - low.

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 Foreign vs Domestic Products

Depends on perception.
Hide
Emphasize Country Influence on Purchase

Premium pricing Age Percentage Influenced

18 -30 19
French wines 31 - 45 35
46 - 60 29
61+ 50

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 Push versus Pull
For industrial products and/or
complex new products.
Short distribution channels. Push
Few print/electronic media
available
For consumer goods.
Long distribution channels.
Pull
Sufficient print/electronic
media to carry message

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 Global Advertising

Standardized:
Significant economic advantages.
Scarce creative talent.
Many global brand names.
Non-standardized:
Messages in one country may fail in another.
Advertising regulations can be a restriction.

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 Advertising in New Delhi

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 Marketing Laws
Premiums:
No in Austria and France and Germany. Yes in
Finland.
Product comparisons:
Germany - competitor can take you to court to
prove claims made about product.
Canada - no puffery, use the
credulous person standard.
United States - puffery is ok.

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 Pricing Strategy
Price discrimination:
Must keep national markets separate.
Different price elasticities
Arbitrage:Charging different prices in different
countries for same product.
Doesnt always work.
Using
Ford in Germany and Belgium
Arbitrage
Sometimes it does.
Ford in UK and Belgium

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Determinants of Demand Elasticity

Income level and competitive conditions

determine elasticity.
Elasticity tends to be be greater in countries with
low income levels.
Elasticity tends to be greater in countries where
there are many competitors.

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 Elastic and Inelastic Demand
Curves
Inelastic
Demand Curve

$
Elastic
Demand Curve

Figure 17.2

Output
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 Price Discrimination
Revenue Revenue Revenue
and Costs and Costs and Costs
110 - 110 - 110 -
100 - 100 - 100 -
90 -
Japan 90 -
United 90 -
World
80 - 80 -
States 80 -
70 - 70 - 70 -
60 - 60 - 60 -
50 - 50 - 50 -
43.58 D
40 - 40 - 40 -
+
30 - D 30 - 30 - u
20 - 20 - 20 -
MC
D MR
10 - MR 10 -
MR 10 -

+
40 -

40 -

20 -
20 -
30 -

50 -

20 -
30 -

50 -

30 -
40 -
50 -
60 -
70 -
0 0 0
10 -

10 -

10 -

u
Output Output Output
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Figure 17.3
 Strategic Pricing
Predatory pricing:
Using price as a competitive weapon.
Multipoint pricing strategy:
When two or more international firms compete against each
other in two or more national markets.
A firms pricing strategy in one market may impact a rival in
another market.
Experience curve pricing:
Firms price low worldwide to build market share. Incurred
losses are made up as company moves down experience
curve.
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 Regulatory Influences on Prices
Antidumping regulations:
Selling a product for a price that is less than
the cost of producing it.
Antidumping rules place a floor under export
prices and limit a firms ability to pursue
strategic pricing.

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 Dumping: GATT and the U.S.
GATT:Sale of an imported product at less
than fair value and causes material injury
to a domestic industry.
US: An unfair trade practice that results in
injury, destruction, or the prevention of the
establishment of an American industry.

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 Configuring the Marketing Mix

Differences
Here

Culture

Requires
Variation
Here

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 The Location of R&D
New product development is greater
where:
More money spent on R&D.
Underlying demand is strong.
Consumers are affluent.
Competition is intense.

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 The Need to Integrate R&D,
Marketing and Production
High failure rate ratio between new
products development and profit goals.
Reasons for failure:
Limited product demand.
Failure to adequately commercialize product.
Inability to manufacture product cost-
effectively.

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 Cross-Functional Integration
Integrating R&D, production and marketing
ensures:
Project development is driven by customer
need.
New products are designed for ease of
manufacture.
Development costs are kept in check.
Time to market is minimized.
Use cross-functional development teams.
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