IB Function

Global Marketing and RnD

Bayu Arie Fianto Ph.D
CULTURAL DIFFERENCES
❖ Countries differ along a whole range ❖ Products sell well when their
of dimensions, including social attributes match consumer needs
structure, language, religion, and (and when their prices are
education. appropriate).
❖ These differences have important ❖ consumer needs vary from country
implications for marketing strategy. to country, depending on culture and
❖ The most important aspect of the level of economic development.
cultural differences is probably the ❖ A firm’s ability to sell the same
impact of tradition. Tradition is product worldwide is further
particularly important in foodstuffs constrained by countries’ differing
and beverages. product standards.
ECONOMIC DEVELOPMENT
❖ Differences in culture are differences in the level of economic
development.
❖ Consumer behavior is influenced by the level of
economic development of a country. Firms based in highly developed
countries such as the united states tend to build a lot of extra
performance attributes into their products.
❖ Consumers in the most developed countries are often not willing to
sacrifice their preferred attributes for lower prices.
❖ Consumers in the most advanced countries often shun globally
standardized products that have been developed with the lowest
common denominator in mind.
❖ They are willing to pay more for products that have additional
features and attributes customized to their tastes and preferences.
PRODUCT AND TECHNICAL
STANDARDS
❖ 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.
❖ Some of these differences result from idiosyncratic decisions
made long ago, rather than from government actions, but their
long-term effects are profound.
❑ Barriers to international communication include cultural differences,
source effects, and noise levels.
❑ A communication strategy is either a push strategy or a pull strategy.
✓ A push strategy emphasizes personal selling, and a pull strategy
emphasizes mass media advertising.
✓ Whether a push strategy or a pull strategy is optimal depends on
the type of product, consumer sophistication, channel length,
and media availability.
❑ Globally standardized advertising campaign, which uses the same
marketing message all over the world, has economic advantages,
but it fails to account for differences in culture and advertising
regulations.
 PRICE DISCRIMINATION
➢ Price discrimination exists when consumers in different countries are
charged different prices for the same product.
➢ Price discrimination can help a firm maximize its profits.

❖ Price discrimination is different price elasticities of

demand in different countries.
❖ The price elasticity of demand is a measure of
the responsiveness of demand for a product to
change in price.
❖ Demand is said to be elastic when a small change
in price produces a large change in demand;
❖ it is said to be inelastic when a large change in
price produces only a small change in demand.
STRATEGIC PRICING
➢ Predatory pricing is the use of profit gained in one market to
support aggressive pricing in another market to drive competitors
out of that market.
➢ Multipoint pricing refers to the fact that a firm’s pricing strategy in
one market may affect rivals’ pricing strategies in another market.
Aggressive pricing in one market may elicit a competitive
response from a rival in another market that is important to the
firm.
➢ Experience curve pricing is the use of aggressive pricing to build
accumulated volume as rapidly as possible to quickly move the
firm down the experience curve.
REGULATORY INFLUENCES ON PRICES
Antidumping Regulations Competition Policy
➢ Antidumping rules set a floor ➢ Most developed nations
under export prices and limit have regulations designed
firms’ ability to pursue to promote competition
strategic pricing. and to restrict monopoly
➢ The rather vague terminology practices.
used in most antidumping ➢ These regulations can be
actions suggests that a firm’s used to limit the prices a
ability to engage in price firm can charge in a given
discrimination also may be country.
challenged under
antidumping legislation.
✓ International market research is defined as the systematic
collection, recording, analysis, and interpretation of data to provide
knowledge that is useful for decision making in a global company.
✓ Compared with market research that is domestic only, international
market research involves additional issues such as (1) translation of
questionnaires and reports into appropriate foreign languages and
(2) accounting for cultural and environmental differences in data
collection.
✓ The process of International market research steps, however, is
somewhat universal across both domestic and international settings.
 THE LOCATION OF R&D
❑ Ideas for new products are stimulated ❖ New-product development is a high-
by the interactions of scientific risk, potentially high-return activity.
research, demand conditions, and ❖ To build a competency in new-product
competitive conditions. development, an international business
❑ Other things being equal, the rate of must do two things: disperse R&D
new-product development seems to activities to those countries where new
be greater in countries where products are being pioneered and
❖ More money is spent on basic and integrate R&D with marketing and
applied research and manufacturing.
development. ❖ Achieving tight integration among R&D,
❖ Underlying demand is strong. marketing, and manufacturing requires
the use of cross-functional teams.
❖ Consumers are affluent.
❖ Competition is intense
 INTEGRATING R&D, MARKETING,
AND PRODUCTION

❖ Although a firm that is successful at developing new ❖ Tight cross-functional

products may earn enormous returns, new-product integration among R&D,
development has a high failure rate. production, and marketing can
❖ The reasons for such high failure rates are various help a company ensure that
and include development of a technology for which ➢ Product development
demand is limited, failure to adequately projects are driven by
commercialize promising technology, and inability to customer needs.
manufacture a new product cost effectively. ➢ New products are designed
❖ Firms can reduce the probability of making such for ease of manufacture.
mistakes by insisting on tight cross-functional ➢ Development costs are
coordination and integration among three core kept in check.
functions involved in the development of new
➢ Time to market is
products: R&D, marketing, and production.
minimized.
CROSS-FUNCTIONAL TEAMS

❖ One way to achieve cross-functional integration is to establish cross-

functional product development teams composed of representatives
from R&D, marketing, and production.
❖ Because these functions may be located in different countries, the team
will sometimes have a multinational membership.
❖ The objective of a team should be to take a product development
project from the initial concept development to market introduction.
❖ A number of attributes seem to be important for a product development
team to function effectively and meet all its development milestones
BUILDING GLOBAL R&D CAPABILITIES

❑ The need to integrate R&D and marketing to adequately

commercialize new technologies poses special problems in the
international business because commercialization may require
different versions of a new product to be produced for various
countries.
❑ To do this, the firm must build close links between its R&D centers
and its various country operations.
❑ A similar argument applies to the need to integrate R&D and
production, particularly in those international businesses that have
dispersed production activities to different locations around the globe
in consideration of relative factor costs and the like.