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Global
Marketing
and R&D
Chapter 18

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No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
 Learning Objectives
18-1 Understand the importance of business analytics and international market
research.

18-2 Explain why it might make sense to vary the attributes of a product from
country to country.

18-3 Recognize why and how a firm’s distribution strategy might vary among
countries. 

18-4 Identify why and how advertising and promotional strategies might vary
among countries.

18-5 Explain why and how a firm’s pricing strategy might vary among
countries.

18-6 Understand how to configure the marketing mix globally.

18-7 Describe how globalization is affecting product development.

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 Introduction
Mass producing a standardized output:
• Allows a firm to realize substantial unit cost reductions
from experience curve effects and other economies of
scale.
• However, ignoring country differences in consumer tastes
and preferences can lead to failure.
Link between marketing, analytics and R&D.
• Marketing mix: product, price, promotion, and place.

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 Globalization of Markets and Brands
Theodore Levitt’s HBR article:
• Importance of technology in globalization.
• Fewer differences in national and regional preferences.
• Global corporations sell the same things the same way.
• Leads to standardization of products, manufacturing, trade
and commerce.

Is Levitt right?

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 Market Segmentation 1

Market segmentation involves identifying groups of

consumers whose purchasing behavior differs from
others in important ways.
• Markets are segmented by:
• Geography.
• Demography.
• Sociocultural factors.
• Psychological factors.

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 Market Segmentation 2

Issues for marketing managers:

• Differences between countries in the structure of market
segments.
• Existence of segments that transcend national borders.
• Intermarket segment: segment of customers that spans multiple
countries, transcending national borders.
• Enhances the ability of an international business to view the global
marketplace as a single entity and pursue a global strategy.

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 Business Analytics 1

Focusing on Global Marketplace

• Three core applications of business analytics.
• Descriptive.
• Predictive.
• Prescriptive.

• “Small data” and “big data” both used to better understand

company’s current products and services in the global
marketplace.

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 Business Analytics 2

International Marketing Research

• International market research involves systematic collection,
recording, analysis, and interpretation of data to provide
knowledge useful for decision making in a global company.
• All the issues of domestic marketing research.

• Translation of questionnaires/reports into appropriate foreign languages.

• Accounting for cultural and environmental differences in data collection.

• Global companies often have an in-house department.

• Also conducted by customer-satisfaction companies and international
market research firms.

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 Business Analytics 3

International Marketing Research continued

• Basic data collected:

• Data on the country and potential market segments (geography,
demography, sociocultural factors, and psychological factors).
• Data to forecast customer demands within specific country or world
region (social, economic, consumer, and industry trends).
• Data to make marketing mix decisions (product, distribution,
communication, and price).

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 Business Analytics 4

International Marketing Research continued

• Process:
1. Defining the research objectives.
2. Determining the data sources.
3. Assessing the costs and benefits of the research.
4. Collecting the data.
5. Analyzing and interpreting the research.
6. Reporting the research findings.

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 Figure 18.1 International market research steps

Access the text alternative for slide images.

© McGraw Hill Source: Charles W. L. Hill and G. Tomas M. Hult, Global Business Today (New York: McGraw-Hill, 2020).
 Business Analytics 5

International Marketing Research continued

• Defining the Research Objectives.

• Defining the research problem.

• Setting objectives for the international market research.

• Determining the Data Sources.

• Primary data.
• Secondary data.

• Assessing Costs and Benefits.

• Primary data is more costly.

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 Business Analytics 6

International Marketing Research continued

• Collecting the Data.

• Primary or secondary methods.
• Quantitative: experiments, clinical trials, observing and recording
events, and administering surveys with closed-end questions.
• Qualitative: in-depth interviews, observation methods, and document
reviews.

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 Business Analytics 7

International Marketing Research continued

• Analyzing and Interpreting the Research.

• Requires statistical and cultural knowledge.
• Often uses specialized software.

• Reporting the Research Findings.

• May include information on customers, competitors, countries, the
industry, and the environment.

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 Product Attributes 1

Cultural Differences
• Consumer needs vary from country to country.
• Social structure, language, religion, education, others.
• Tastes and preferences are becoming more cosmopolitan.

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 Product Attributes 2

Economic Development
• Consumer behavior is influenced by the level of economic
development of a country.
• Consumers in the most developed countries are often not
willing to sacrifice their preferred attributes for lower
prices.
• Consumers in the most advanced countries are willing to
pay more for products that have additional features and
attributes customized to their tastes and preferences.

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 Product Attributes 3

Product and Technical Standards

• Regional trade agreements may influence certain regional
markets to become more globalized.
• Differing government-mandated product standards can
often result in companies ruling out mass production and
marketing of a fully global and standardized product.
• Differences in technical standards also constrain the
globalization of markets.

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 Distribution Strategy 1

Typical Distribution System

• Channel with a wholesale distributor and a retailer.
• Firm may also sell directly to the consumer, to the retailer,
or to the wholesaler.
• Firm may sell to an import agent who then deals with the
wholesale distributor, the retailer, or the consumer.

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 Figure 18.2 A typical distribution system

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© McGraw Hill Source: Charles W. L. Hill and G. Tomas M. Hult, Global Business Today (New York: McGraw-Hill, 2020).
 Distribution Strategy 2

Differences Between Countries

• Retail Concentration.
• Concentrated retail system: few retailers supply most of market.
• Greater in developed countries because of car ownership, number of households
with refrigerators and freezers, and number of two-income households.

• Fragmented retail system: many retailers, none with a major share.

• More common in developing countries because of geography and road conditions.

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 Distribution Strategy 3

Differences Between Countries continued

• Channel Length.
• Refers to the number of intermediaries between the producer (or
manufacturer) and the consumer.
• Producer to consumer = short channel.
• Producer sells through import agent, wholesaler, and retailer = long
channel.
• Countries with fragmented retail systems also tend to have long
channels of distribution.
• Large discount superstores shorten channel length.

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 Distribution Strategy 4

Differences Between Countries continued

• Channel Exclusivity.
• Distribution channel that is difficult for outsiders to access.
• Varies among countries; for example, Japan is very exclusive.

• Channel Quality.
• Not consistent in emerging markets and less developed nations.
• May impede market entry.

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 Distribution Strategy 5

Choosing a Distribution Strategy

• Determined by relative costs and benefits of retail
concentration, channel length, channel exclusivity, and
channel quality.
• Link between channel length, final selling price, and profit
margin.
• A longer channel cuts selling costs when the retail sector
is very fragmented and provides access to an exclusive
channel.

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 Communication Strategy 1

Barriers to International Communication

• Cultural Barriers:
• Can make it difficult to communicate messages.
• Need to develop cross-cultural literacy.
• Use local input in developing the marketing message.

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 Communication Strategy 2

Barriers to International Communication continued

• Source and Country of Origin Effects:

• Source effects can be damaging when there is bias against foreign
firms. Occurs when receiver of message evaluates message on
basis of status or image of the sender.
• Country of origin effects:
• Consumer may use country of origin as a cue when evaluating a product.

• Use promotional messages that stress positive performance attributes of product.

• Not always negative.

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 Communication Strategy 3

Barriers to International Communication continued

• Noise Levels.
• Refers to the number of other messages competing for a potential
consumer’s attention; this varies across countries.
• High in highly developed countries.
• Lower in developing countries because there are fewer firms
competing for attention.

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 Communication Strategy 4

Push versus Pull Strategies

• Push strategy emphasizes personal selling; costly.
• Pull strategy depends more spending on mass media
advertising.
• Choice is determined by:
• Consumer sophistication.
• Channel length.
• Media availability.

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 Communication Strategy 5

Push versus Pull Strategies continued

• Product Type and Consumer Sophistication

• Consumer goods usually use pull strategy, except in nations with
poor literacy rates.
• Industrial products or complex products favor a push strategy.
• Customer education may be important when consumers have less
sophistication toward the product, in advanced nations when a new
complex product is being introduced, or where high-quality channels
are absent or scarce.

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 Communication Strategy 6

Push versus Pull Strategies continued

• Channel Length.
• The longer the distribution channel, the more intermediaries.
• Can lead to inertia in the channel

• Direct selling can be expensive.

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 Communication Strategy 7

Push versus Pull Strategies continued

• Media Availability.
• A pull strategy relies on access to advertising media.
• In developed countries, advertising is focused.
• In developing countries, there are fewer forms of mass media.
• Use of pull strategy is limited.

• Media availability may be limited by law.

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 Communication Strategy 8

Push versus Pull Strategies continued

• The Push-Pull Mix.

• Push strategies:
• For industrial products or complex new products.

• When distribution channels are short.

• When few print or social media are available.

• Pull strategies:
• For consumer goods.

• When distribution channels are long.

• When sufficient print and social media available to carry marketing message.

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 Communication Strategy 9

Global Advertising
• For Standardized Advertising.
• Economic advantages.
• Shortage of creative talent.
• Global brand names.

• Against Standardized Advertising.

• Cultural differences.
• Advertising regulations.

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 Communication Strategy 10

Global Advertising continued

• Dealing with Country Differences.

• A firm may select some features to include in all its advertising
campaigns and localize other features.

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 Pricing Strategy 1

Price Discrimination
• Charging what the market will bear.
• Helps maximize profits.
• National markets must be kept separate.
• Price elasticity of demand is a measure of responsiveness
of demand for a product to change in price.
• Elasticity is greater in countries with low income levels and where
there is more competition.
• Inelastic demand means large change in price produces small
change in demand.

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 Figure 18.3 Elastic and inelastic demand curves

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© McGraw Hill Source: Charles W. L. Hill and G. Tomas M. Hult, Global Business Today (New York: McGraw-Hill, 2020).
 Pricing Strategy 2

Strategic Pricing
• Predatory Pricing.
• Use aggressive pricing to drive out competitors and then raise prices
and operate in a monopoly position.
• Requires the firms to have a profitable position in another market to
subsidize the aggressive pricing process.

• Multipoint Pricing Strategy.

• Two or more international businesses compete against each other in
two or more national markets. 
• Pricing can be aggressive, eliciting a competitive response.

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 Pricing Strategy 3

Strategic Pricing continued

• Experience Curve Pricing.

• Aggressive pricing designed to increase volume and help the firm
realize experience curve economies.
• Price low worldwide in attempt to build global sales volume as
rapidly as possible, even at a loss.
• Take profits later after moving down the experience curve.

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 Pricing Strategy 4

Regulatory Influences on Prices

• Antidumping Regulations.
• Ambiguity in definition of dumping.
• Set a floor under export prices and limit firms’ ability to pursue
strategic pricing.

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 Pricing Strategy 5

Regulatory Influences on Prices continued

• Competition Policy:
• Designed to promote competition and to restrict monopoly practices.
• Can be used to limit the prices a firm can charge in a given country.

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 Configuring the Marketing Mix
Marketing mix may vary according to:
• Local differences in culture.
• Economic conditions.
• Competitive conditions.
• Product and technical standards.
• Distribution systems.
• Government regulations, etc.

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 Table 18.1 Questions to address to configure the marketing mix
1

Sample Questions to Address

• Product Strategy:

Product core Do the customers have similar product needs across

international market segments?
Product adoption How is the product bought by customers in the
international market segments targeted?
Product How are established products versus new products
management managed for customers in the international market
segments?
Product branding What is the perception of the product brand by customers
in the international market segments?

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 Table 18.1 Questions to address to configure the marketing
mix 2

Sample Questions to Address continued

• Distribution Strategy:

Distribution channels Where is the product typically bought by customers in

the international market segments?
Wholesale What is the role of wholesalers for the international
distribution market segments targeted?
Retail distribution What is the availability of different types of retail stores
in the international markets for the customer segments
targeted?

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 Table 18.1 Questions to address to configure the marketing
mix 3

Sample Questions to Address continued

• Communication Strategy:
Advertising How is product awareness created for a product to reach customers in
the international market segments targeted?
Publicity What role does publicity (e.g., public relations) play among customers
in the international market segments targeted?
Mass media What role do various media (e.g., TV, radio, newspapers, magazines,
billboards) have in reaching customers in the international market
segments targeted?
Social media What role do various social media (e.g., Facebook, Twitter, blogs,
virtual communities), mainly focused on user-generated content, have
in communicating with customers in the international market segments
targeted?
Sales Are rebates, coupons, and other sale offers a widespread activity to
promotion motivate customers in the international market segments targeted to
buy a company’s products?

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 Table 18.1 Questions to address to configure the marketing
mix 4

Sample Questions to Address continued

• Pricing Strategy:

Value Is the price of a product critical to the customer’s understanding (or

perception) of the value of the product itself among customers in the
international market segments?
Demand Is the demand for the product among customers in the international
market segments targeted similar to domestic demands?
Costs Are the fixed and variable costs of the product the same when targeting
customers in the international market segments (e.g., are there variable
costs that change significantly when going international)?
Retail Price Are there trade tariffs, nontariff barriers, and/or other regulatory
influences on price that will influence the pricing equation used to
determine the retail price to customers in the international market
segments?

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 Product Development and R&D 1

New product success interplay among:

• International marketing.
• R&D.
• Manufacturing.
• Technological innovation.
• Pace of change accelerating.
• Shorter product life cycles.
• Creative destruction.

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 Product Development and R&D 2

The Location of R&D

• Rate of new-product development is greatest in countries
where:
• More money is spent on basic and applied research and
development.
• Underlying demand is strong.
• Consumers are affluent.
• Competition is intense.

• U.S. is no longer the lead market.

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 Product Development and R&D 3

Integrating R&D, Marketing, and Production

• New-product development has a high failure rate.
• Development of a technology for which demand is limited.

• Failure to adequately commercialize promising technology.

• Inability to manufacture a new product cost effectively.

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 Product Development and R&D 4

• Integrating R&D, production, and marketing can help a

company ensure that:
• Product development projects are driven by customer needs.
• New products are designed for ease of manufacture.

• Development costs are kept in check.

• Time to market is minimized.

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 Product Development and R&D 5

Cross-Functional Teams
• Objective: take a product development project from the
initial concept development to market introduction.
• “Heavyweight” project manager.
• At least one member from each key function.
• Physically in one location if possible.
• Clear plan and goals.
• Processes for communication and conflict resolution.

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 Product Development and R&D 6

Building Global R&D Capabilities

• Commercialization may require different versions of a new
product to be produced for various countries.
• Global networks of R&D centers.

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No reproduction or further distribution permitted without the prior written consent of McGraw Hill.