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Chapter 16
Global Marketing and
Business Analytics
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© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
Learning Objectives
16-1 Understand the importance of business analytics and international
market research.
16-2 Explain why it might make sense to vary the attributes of a product
from country to country.
16-3 Recognize why and how a firm’s distribution strategy might vary
among countries.
16-4 Identify why and how advertising and promotional strategies might
vary among countries.
16-5 Explain why and how a firm’s pricing strategy might vary among
countries.
16-6 Understand how to configure the marketing mix globally.
16-7 Describe how globalization is affecting product development.
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Opening Case
Share a Coke
Coca-Cola is one of the most recognizable
brands in the world.
• Sold in over 200 countries worldwide.
• Brand emphasis—selling “happiness” in a bottle.
“Share a Coke” campaign developed in
Australia to increase sales to millennials.
• Campaign hugely successful, increased
demand.
Localized “Share a Coke” ads reach over 80
countries in 7 years.
© McGraw Hill Chayut Orapinpatipat/Shutterstock 3
Introduction 1
Global Marketing, Business Analytics, and R&D
Can reduce costs of value creation and add value by better
serving customer needs in the global marketplace.
• Includes distribution strategy.
Mass production of a standardized product can generate unit cost
reductions, but ignoring country differences in consumer tastes
can lead to failure.
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Introduction 2
Marketing Function
Identifies gaps in the market so firm can develop new products to
fill those gaps.
Marketing mix: the choices the firm offers to its targeted market.
• Product attributes.
• Distribution strategy (place).
• Communication strategy (promotion).
• Pricing strategy.
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Globalization of Markets and Brands
Globalization of World Markets
Theodore Levitt: world markets are becoming increasingly similar,
making it unnecessary to localize the marketing mix.
May be true for bulk industrial products, but not necessarily for
consumer products.
• Consumers may prefer local options if they exist.
Trade barriers and differences in product and technical standards
also limit the ability of firms to sell a standardized product to a
global market.
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Market Segmentation 1
Market Segmentation
Identifying distinct groups of consumers whose needs, wants, and
purchasing behavior differs from others in important ways.
• Geography.
• Demography.
• Sociocultural factors.
• Psychological factors.
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Market Segmentation 2
Market Segmentation in Foreign Countries
Firms must:
• Adjust their marketing mix from segment to segment.
• Be aware of differences between countries in the structure of market
segments.
• Consider intermarket segments that transcend national borders.
• Predicted to become more common.
• Global youth segment suggests there are common values among teens
around the world.
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Business Analytics 1
Business Analytics
Knowledge, skills, and technology that allow for exploration of a
company’s international strategies to drive future development and
implementation.
• Begins with a dataset.
• Big data stored on large-scale server.
Three core applications:
• Descriptive analytics.
• Predictive analytics.
• Prescriptive analytics.
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Business Analytics 2
International Marketing Research
International market research: systematic collection, recording,
analysis, and interpretation of data.
All firms want basic data.
• Data on country and potential market segments.
• Data to forecast customer demands within specific area.
• Data to make marketing mix decisions.
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Figure 16.1 International Market
Research Steps
Access the text alternative for slide images.
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Product Attributes 1
Product Attributes
Products can be viewed as a bundle of attributes.
Products sell well when attributes match consumer needs.
Consumer needs vary from country to country.
• Culture.
• Levels of economic development.
Ability to sell the same product worldwide is limited.
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Product Attributes 2
Cultural Differences
• Tradition.
• Social structure.
• Language.
• Religion.
• Education.
Takayama vending machine coffee in Japan.
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Product Attributes 3
Economic Development
• Consumers in highly developed countries tend to demand a lot
of extra performance attributes in their products.
• Consumers in less developed nations tend to prefer more basic
products.
• Contrary to Levitt’s suggestions, consumers in most developed
countries are not willing to sacrifice preferred attributes for lower
prices.
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Product Attributes 4
Product and Technical Standards
• Regional trade agreements may influence certain regional
markets to become more globalized.
• Differing government-mandated standards can force companies
to rule out mass production and constrain globalization of
markets.
• Differing technical standards limit the globalization of markets.
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Figure 16.2 A Typical Distribution
System
Access the text alternative for slide images.
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Distribution Strategy 1
Differences between Countries
Retail Concentration.
• In a concentrated system, a few retailers supply most of the market.
• In a fragmented system, there are many retailers, none of which has
a major share of the market.
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Distribution Strategy 2
Differences between Countries continued
Channel Length.
• The number of intermediaries between the producer and the
consumer.
• When the producer sells directly to the consumer, the channel is very short.
• When the producer sells through an import agent, a wholesaler, and a
retailer, a long channel exists.
• Fragmented retail systems tend to have longer channels.
• Example: Japan.
• Entry of large discount superstores is shortening channel length in some
countries.
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Distribution Strategy 3
Differences between Countries continued
Channel Exclusivity.
• An exclusive distribution channel is one that is difficult for outsiders
to access.
• Retailers usually prefer to carry products from established
manufacturers.
• Japan's system is an example of a very exclusive system.
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Distribution Strategy 4
Differences between Countries continued
Channel Quality.
• The expertise, competencies, and skills of established retailers in a
nation and their ability to sell and support the products of international
businesses.
• The quality of retailers is good in most developed countries but is
variable at best in emerging markets and less developed countries.
• Poor quality channel can impede market entry.
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Distribution Strategy 5
Choosing a Distribution Strategy
The choice depends on the relative costs and benefits of each
alternative.
Each intermediary adds its own markup to the products—there is a
link between channel length, final selling price, and profit margin.
• If price is important, a shorter channel is better.
• If a retail sector is very fragmented, a long channel is better.
Consider less traditional alternatives to gain market access.
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Communication Strategy 1
Communication Channels
• Social media.
• Direct selling.
• Sales promotion.
• Forms of advertising.
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Communication Strategy 2
Barriers to International Communication
1. Cultural Barriers.
• Can make it difficult to communicate messages across cultures.
• Develop cross-cultural literacy to combat this.
2. Source and Country of Origin Effects.
• Source effects: when receiver of message evaluates it based on status or
image of sender.
• Country of origin effects: the extent to which the place of manufacturing
influences product evaluations.
3. Noise Levels.
• Number of other messages competing for potential consumer’s attention.
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Communication Strategy 3
Push versus Pull Strategies
Push strategy emphasizes personal selling.
Pull strategy emphasizes mass media advertising.
Factors that affect this decision:
1. Product type and consumer sophistication.
2. Channel length.
3. Media availability.
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Communication Strategy 4
Push versus Pull Strategies continued
Product Type and Consumer Sophistication.
• Firms that sell consumer goods to a large market segment prefer a pull
strategy for cost advantages.
• Firms that sell industrial products or makers of other complex products
favor a push strategy to educate consumers.
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Communication Strategy 5
Push versus Pull Strategies continued
Channel Length.
• The longer the channel, the more intermediaries are involved.
• Can be expensive to use direct selling to push a product through many
layers of a distribution channel.
• A firm may try to pull its product through the channels by using mass
advertising to create consumer demand.
Media Availability.
• A pull strategy relies on access to advertising media.
• A push strategy is more attractive when there is limited access to mass
media.
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Communication Strategy 6
The Push-Pull Mix
Use push strategies: Use pull strategies:
• For industrial products or • For consumer goods products.
complex new products. • When distribution channels are
• When distribution channels are long.
short. • When sufficient print and
• When few print or electronic electronic media are available
media are available. to carry the marketing
message.
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Communication Strategy 7
Global Advertising
For Standardized Advertising.
• Significant economic advantages.
• Creative talent is scarce—one large effort to develop a campaign will
be more successful than many smaller efforts.
• Brand names are global.
Against Standardized Advertising.
• Cultural differences among nations are significant.
• Country differences in advertising regulations block the implementation
of standardized advertising.
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Communication Strategy 8
Global Advertising continued
Dealing with Country Differences.
• Some features may be in all advertising campaigns while other
features are localized.
• Allows for:
• Cost savings.
• Building of brand recognition.
• Customization to different cultures.
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Pricing Strategy 1
Price Discrimination
Firms can maximize profits through price discrimination.
• Consumers in different countries are charged different prices for the
same product or for slightly different variations of the product.
• The firm must be able to keep national markets separate.
• Different price elasticities of demand must exist in different countries.
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Pricing Strategy 2
Price Discrimination continued
Price elasticity of demand: measures how responsive demand
for a product is to changes in price.
• Demand is elastic when a small change in price produces a large
change in demand.
• Demand is inelastic when a large change in price produces only a
small change in demand.
• Elasticity of demand is determined by income level and competitive
conditions.
• Price elasticities tend to be greater in countries with lower income levels
and more competitors.
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Figure 16.3 Elastic and Inelastic Demand
Curves
Access the text alternative for slide images.
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Pricing Strategy 3
Strategic Pricing
Predatory Pricing.
• Profit gained in one market is used to support aggressive pricing
designed to drive competitors out in another market.
Multipoint Pricing.
• A firm’s pricing strategy in one market may have an impact on a rival’s
pricing strategy in another market.
• Aggressive pricing in one market can prompt a competitive response
from a rival in another market.
• Central monitoring of pricing decisions around the world is important.
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Pricing Strategy 4
Strategic Pricing continued
Experience Curve Pricing.
• Pricing low worldwide to build global sales volume as rapidly as
possible, even if this means taking large losses initially.
• Firms believe that several years in the future, after moving down the
experience curve, they will be making substantial profits and have a
cost advantage over less aggressive competitors.
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Pricing Strategy 5
Regulatory Influences on Prices
Antidumping Regulations.
• Antidumping rules set a floor under export prices and limit firms’ ability
to pursue strategic pricing.
Competition Policy.
• Most developed nations have regulations promoting competition and
restricting monopoly practices.
• Regulations limit the prices a firm can charge.
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Configuring the Marketing Mix
The Marketing Mix
Today, younger customers are more willing to engage in a “global”
way.
Standardization of marketing mix is the norm in some industries.
• McDonald’s might seem standardized worldwide, but its menu varies
from country to country.
Customization versus standardization is not an all-or-nothing
issue.
A truly “globalized” product is generally an illusion.
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Table 16.1 Questions to Address to
Configure the Marketing Mix 1
Product Strategy Sample Questions to Address
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 management • How are established products versus new products
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 16.1 Questions to Address to
Configure the Marketing Mix 2
Product Strategy Sample Questions to Address
Distribution channels • Where is the product typically bought by customers in
the international market segments?
Wholesale distribution • What is the role of wholesalers for the international
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 16.1 Questions to Address to
Configure the Marketing Mix 3
Product Strategy Sample Questions to Address
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 does publicity (e.g., public relations) play among
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 promotion • Are rebates, coupons, and other sale offers a widespread
activity to motivate customers in the international market
segments targeted to buy a company’s products?
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Table 16.1 Questions to Address to
Configure the Marketing Mix 4
Product Strategy Sample Questions to Address
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
International Marketing, R&D, and Manufacturing
Firms need to develop and market new products.
Technological innovation is important in new product development.
• Technology can make a host of new products available.
• Technology can make established products obsolete overnight.
• Product life cycles are shorter than in the past because technological
innovation generates “creative destruction.”
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Product Development and R&D 2
The Location of R&D
New product ideas come from the interactions of scientific
research, demand conditions, and competitive conditions.
New product development is greater when:
• More is spent on basic and applied research and development.
• Demand is strong.
• Consumers are affluent.
• Competition is intense.
U.S. no longer always considered the lead market.
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Product Development and R&D 3
Integrating R&D, Marketing, and Production
Tight cross-functional integration leads to:
• Product development projects driven by customer needs.
• New products designed for ease of manufacture.
• Development costs kept in check.
• Time to market minimized.
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Product Development and R&D 4
Cross-Functional Teams
• Be led by a heavyweight project manager with status in the
organization.
• Include members from all the critical functional areas.
• Consist of team members located geographically together.
• Have clear plan and goals.
• Develop its own processes for communication and conflict
resolution.
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Product Development and R&D 5
Building Global R&D
Capabilities
R&D and marketing need to be
integrated to adequately
commercialize new technologies.
• Many firms establish a global
network of R&D centers to develop
the basic technologies that will
become new products.
• Technologies are then applied by John Maltabes, research engineer at
Hewlett-Packard, takes out a thin
local R&D groups in regional or
flexible electronic display that has
country units.
etched resistors and uses self-aligned
imprint lithography technology for
testing at Hewlett-Packard
Laboratories.
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360° View: Impact of the Macro
Environment
Trends in the Macro Environment
1. The steady rise of global markets and transnational intermarket
segments.
2. The shift toward economic nationalism in countries like the United
States and the resulting increases in trade barriers may foreshadow a
reaction to globalization.
3. The rise of big data analytics is revolutionizing marketing intelligence
and allowing for better targeting of market segments and greater
personalization of goods and services.
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Summary
In this chapter, we have
• Understood the importance of business analytics and
international market research.
• Explained why it might make sense to vary the attributes of a
product from country to country.
• Recognized why and how a firm’s distribution strategy might
vary among countries.
• Identified why and how advertising and promotional strategies
might vary among countries.
• Explained why and how a firm’s pricing strategy might vary
among countries.
• Understood how to configure the marketing mix globally.
• Described how globalization is affecting product development.
© McGraw Hill 47
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© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
