International Business (10) Huang Huiping Economic School.Whut

International Business Operations Global R&D Global Production and Logistic Global Marketing International Services International Financial Management International Accounting and Taxation International Human Resource Management

10. Global Marketing and R&D

10. Global Marketing and R&D In this unit: What is Global Marketing? 4Ps: Products, Place, Price, Promotion Marketing mix R&D

Debate 1 Global Marketing Marketing vs. sale Standardization vs. Differentiation The strengths of Standardization / Differentiation?

INTRODUCTION Global Marketing views the world’s consumers as similar in their tastes and preference, and adopts standard marketing strategies. The marketing mix (the set of choices the firm offers to its targeted market) is comprised of: product attributes distribution strategy communication strategy pricing strategy

Debate 2: Global Market vs. Market Segmentation How to segment a global market? How do we define an efficient Market Segmentation? Does a parallel market always exist in another country? Why or why not?

Market Segmentation: Market Segmentation (市场细分）：To Identify groups of consumers whose purchasing behavior differs from others in important ways. Market can be segmented in many ways, By: Geography Demography (sex, age, income, race, education level) Social-cultural factors ( social class; values; religions; life style); Psychological factors (personality) Efficient segmentation: Size, stability, identification, economic, competition intensity .

Debate 3: Product strategy What are the business implications of a product viewed as a bundle of attribute? What issues do we concern when we adopt product strategies?

Product strategy Product Attribute: Implications: A product can be viewed as a bundle of attribute: design, quality, appearance, brand, utility, performance, service etc. Implications: - Product attribute offers more ideas for product strategies! - New product: any innovation in product attribute can led to a new product!

The product strategy issues - Cultural differences; - Economic development; - Laws and regulations / Product and technical standard; - Brand and Product names; - National image; - Counterfeit goods and black markets - Shortened product life cycle.

Debate 4 Distribution/Place concentrated retail system vs. fragmented retail system Long channel vs. short channel Wide channel vs. narrow channel Channel exclusivity vs. market entry (P&G case)

Distribution strategy Distribution strategy: The means a firm chooses for delivering the products to the customers.

A typical distribution system Manufacturer inside the country Manufacturer outside the country Import Agent Wholesale distributor Retail distributor Final consumer

Country Differences in distribution system Retail Concentration Concentrated retail system(集中的零售体系): a few retail supply most of the market. Fragmented retail system(分散的零售体系）: many retails, with no one having a major share of the market. Trends: more concentrated because of shopping habits changing

(2) Channel Length: the number of intermediaries that a product has to go through before it reaches the final consumers. - Trends: shorten length Because of : internet, entry of large discount superstores, (3) Exclusive distribution Channel ：is one that is difficult for outsiders to access. - How to overcome these barriers?

(4) Channel Quality 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 How to upgrade channel quality?

Choosing a distribution strategy Which channel the firm will use to reach the potential consumers: Sell directly vs. Go through retails or wholesaler ? Import agent? The length of distribution channel ? Long channel strategy: In a fragmented system, it is more economical; More convenient to enter a new market; Promoting advantages

Debate 5 Communication/Promotion Cultural barriers vs. source effect vs. noise level Push vs. Pull Standardized advertising vs. different advertising

Communication Strategy The Barriers to international communication Cultural barriers Source and country of original effect Q: How to overcome negative effects? Noise levels: refers to the amount of other messages competing for a potential consumer’s attention

Push vs. Pull Strategy Push strategy: emphasizing personal selling rather than mass media advertising. Pull strategy: emphasizing media advertising as opposed to personal selling. Considerations: Product type and consumer sophistication; Channel length; Media availability; The Push-pull mix. Q: When does pull/push work more effectively?

Push versus Pull Strategies In general, a push strategy is better: for industrial products and/or complex new products when distribution channels are short when few print or electronic media are available A pull strategy is better: for consumer goods products when distribution channels are long when sufficient print and electronic media are available to carry the marketing message Management Focus: Unilever—Selling to India’s Poor Summary This feature explores Unilever’s innovative global marketing strategy. Unilever maintains a substantial presence in many of the world’s poorer nations where low-income levels, unsophisticated consumers, illiteracy, a fragmented retail distribution system, and unpaved roads make marketing difficult. Still, the company has managed to succeed thanks to its efforts to customize its marketing strategy to the local market. Suggested Discussion Questions 1. Discuss the effects of India’s culture on each of the components of Unilever’s marketing strategy. What can Unilever learn from its experiences in India? Discussion Points: In India, Unilever faces numerous challenges to its marketing strategy. Income levels are low, consumers are unsophisticated and illiterate, the retail distribution system is fragmented, and the road system is poor. However, by adapting to the environment, Unilever has built a small, but successful business in the country. Because most consumers do not have access to television, the company posts advertisements in common meeting areas such as village wells and marketplaces. The company also takes part in weekly markets where it not only sells its products, but it also gives away free samples. Unilever has also made a strong effort to fit in with the country’s retail system, and stocks its products in small size packages in about 3 million stores, many of which are very tiny. 2. Is Unilever’s strategy in India a push strategy or a pull strategy? Explain. Discussion Points: Most students will suggest that Unilever’s strategy in India is a push strategy. The country has few mass media options, and the company has been forced to take a unique approach to developing awareness of its products among consumers. Unilever representatives frequently establish a presence in locations where people tend to congregate such as riverbanks where clothes washing takes place, or the village well or marketplace. Another Perspective: As noted earlier, Unilever’s web site is worth a visit. Go to the company’s India site by selecting it from the list available on the homepage {http://www.unilever.com} and compare the company’s marketing efforts there to the strategy used in other countries.

Global Advertising For standard advertising Economic advantages; Concentrating the talent ability; Global brand names. Against standard advertising Country differences; Advertising regulations differ.

Debate 6 Pricing Predatory pricing vs. Multipoint Pricing vs. experience pricing? Price discrimination vs. dumping?

Debate 7 New product vs. R&D Location of R&D Financial aid in basic and applied research Underlying demand is strong Consumers are affluent Competition is intense

How to lower the failure rate of new product development ? ------ Tight cross-functional Integration between R&D, marketing and production can make sure: Product development project are driven by custom needs New products are designed for ease manufacture Development costs are kept in check. Time to market is minimized.

Cross-functional Teams Leader: heavyweight project manager Keep at least one member from every Key function Members should be physically co-located A clear plan Develop one’s own process for communication and conflict resolution.

Building Global R&D Capabilities To adequately commercialize new technologies, firms need to integrate R&D and marketing Commercialization of new technologies may require firms to develop different versions for different countries This may require R&D centers in North America, Asia, and Europe that are closely linked by formal and informal integrating mechanisms with marketing operations in each country in their regions, and with the various manufacturing facilities