Developing and Marketing Products 14

Chapter Objectives Explain the impact globalization is having on international marketing activities Describe the types of things managers must consider when developing international product strategies Discuss the factors that influence international promotional strategies and the blending of product and promotional strategies Explain the elements that managers must take into account when designing international distribution strategies Discuss the elements that influence international pricing strategies

McDonalds Localized menus for global expansion Respects both local tastes and religious dietary requirements

Globalization and Marketing Standardized product and promotion Adapted product and/or marketing Consistent image/message Contain costs Consistent image/message Contain costs Respond to local needs Exploit unique image Respond to local needs Exploit unique image

Cultural differences Laws and regulations National image Counterfeit goods National Business Environments

Brand and Product Names Brand name  Competitive advantage  Consistent image  Consider connotation Product name  Select carefully  Respect cultures  Obey local laws

Product Life Cycles New product development efforts  Result is shorter product life cycles Consecutive market introductions  Technology and travel make obsolete

Discussion Question What elements in the national business environment influence decisions about whether to standardize or adapt international marketing efforts?

Answer to Discussion Question Laws and regulations can force product alteration. Cultural differences can force adaptations to better suit local preferences. National image can influence perception of quality. Counterfeit goods can damage a brand’s image. And shortened product life cycles result from rapid new product development.

Push and Pull Strategies Push StrategyPull Strategy Pressure channel members to carry a product and promote it to final users Create buyer demand that will encourage channel members to stock a product

Choosing Push or Pull  Powerful channel members make push difficult  Fewer media outlets in emerging markets makes pull difficult  Brand loyalty makes pull easier

International Advertising Standardize where possible Lessons from the European Union Consider cultural nuances Exploit global advertising outlets

Marketing Communications

Communication Strategy 1 Extend product and communications Simple and profitable Simple and profitable Luxury goods Luxury goods Global strategy Global strategy

Communication Strategy 2 Extend product / adapt communications Different buyer, need, or function Different buyer, need, or function Level of economic development Level of economic development Can help contain costs Can help contain costs

Communication Strategy 3 Adapt product / extend communications Local content laws Local content laws Can be expensive Can be expensive Safety codes, infrastructure Safety codes, infrastructure

Communication Strategy 4 Adapt product and communications Satisfy preferences or needs Satisfy preferences or needs Needs large, profitable segment Needs large, profitable segment Explain product benefits Explain product benefits

Communication Strategy 5 Product invention Low purchasing power Low purchasing power Level of economic development Level of economic development Different infrastructure Different infrastructure

Discussion Question A company that creates buyer demand that will encourage channel members to stock a product is using a __________. a. Push strategy b. Pull strategy c. Stock strategy

Answer to Discussion Question A company that creates buyer demand that will encourage channel members to stock a product is using a __________. a. Push strategy b. Pull strategy c. Stock strategy

Distribution Strategy Planning, implementing, and controlling the physical flow of a product from origin to consumption Physical goods Consulting services News providers

Distribution Channels Cost implications Number of intermediaries Channel length Intensive channel Many resellers Exclusive channel One / few resellers Degree of exposure

Product Characteristics Value density Value density Product’s value relative to its weight and volume Product’s value relative to its weight and volume The lower a product’s value density, the more localized is its distribution system The lower a product’s value density, the more localized is its distribution system

Distribution Problems  Financial loss  Strategic impact  Lack of market understanding  Theft and corruption

Discussion Question In what ways do exclusive and intensive channels of distribution differ?

Answer to Discussion Question An exclusive channel is one in which a manufacturer grants rights to sell a product to one or a limited number of resellers, as in automobiles. An intensive channel is one in which a producer grants the right to sell a product to many resellers, as in general office supplies.

Pricing Strategy Must match overall firm strategy Low-cost leadership Differentiation Focus

Worldwide Pricing Single selling price for all international markets Difficulties Local production cost Export / distribution cost Local purchasing power Exchange rates

Dual Pricing Different selling price abroad than at home Price escalation Lower local price Separate international from domestic buyers If not, arbitrage possible

Pricing Issues Intra-company transfer Free-market price Upper or lower limits Unfairly low export price Transfer price Arm’s length price Price controls Dumping

Discussion Question A pricing strategy in which a company must keep its domestic and international buyers separate is called __________. a. Dual pricing b. Worldwide pricing c. Arm’s length pricing

Answer to Discussion Question A pricing strategy in which a company must keep its domestic and international buyers separate is called __________. a. Dual pricing b. Worldwide pricing c. Arm’s length pricing