Session 4 (Global Marketing)

Global Marketing
Introduction
The marketing mix (the choices the firm offers to its

targeted market) is comprised of:
product attributes
distribution strategy
communication strategy
pricing strategy
17-2
Global Marketing Mix
Adaptation
Standardization
17-3
Market Segmentation
Market segmentation involves identifying distinct groups

of consumers whose purchasing behavior differs from
others in important ways
Markets can be segmented by:

geography
demography
socio-cultural factors (social class, values, religion,
lifestyle choices)
psychological factors
17-4
Market Segmentation
Firms need to be aware of two key market segmentation

issues:
1. the differences between countries in the structure of
market segments
2. the existence of segments that transcend national
borders
When segments transcend national borders, a global

strategy is possible
17-5
Product Attributes
A product is like a bundle of attributes

Products sell well when their attributes match consumer
needs
If consumer needs were the same everywhere, a firm
could sell the same product worldwide
But, consumer needs vary from country to country
depending on culture and the level of economic
development
17-6
Cultural Differences
Countries differ along a range of cultural dimensions

including:
tradition
social structure
language
religion
education
17-7
Economic Development
A country’s level of economic development has important

marketing implications
Consumers in highly developed countries tend to
demand a lot of extra performance attributes
Consumers in less developed nations tend to prefer
more basic products
17-8
Distribution Strategy
A firm’s distribution strategy (the means it chooses for

delivering the product to the consumer) is a critical element
of the marketing mix
How a product is delivered depends on the firm’s market
entry strategy
Firms that manufacturer the product locally can sell
directly to the consumer, to the retailer, or to the wholesaler
Firms that manufacture outside the country have the
same options plus the option of selling to an import agent
17-9
Distribution Strategy
Figure 17.1: A Typical Distribution System
17-10
Differences Between Countries
There are four main differences in distribution systems:

1. retail concentration
2. channel length
3. channel exclusivity
4. channel quality
17-11
1. Retail Concentration
In a concentrated retail system, a few retailers supply
most of the market
In a fragmented retail system there are many retailers, no
one of which has a major share of the market
Developed countries tend to have greater retail
concentration
While developing countries are more fragmented
17-12
2. Channel Length
Channel length refers to 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
Countries with fragmented retail systems tend to have longer
channels
While countries with concentrated systems have shorter
channels
The Internet is helping to shorten channel length as is the
emergence of large stores like Wal-Mart and Tesco
17-13
3. Channel Exclusivity
An exclusive distribution channel is one that is difficult for
outsiders to access
Japan's system is an example of a very exclusive system
17-14
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
The quality of retailers is good in most developed
countries, but is variable at best in emerging markets and
less developed countries
Firms may find that they have to devote considerable
resources to upgrading channel quality
17-15
Communication Strategy
Communicating product attributes to prospective

customers is a critical element in the marketing mix
How a firm communicates with customers depends partly
on the choice of channel
Communication channels available to a firm include

direct selling
sales promotion
direct marketing
advertising
17-16
Barriers To International Communication
International communication occurs whenever a firm uses

a marketing message to sell its products in another country
The effectiveness of a firm's international communication

can be jeopardized by:
1. cultural barriers
2. source and country of origin effects
3. noise levels
17-17
1. Cultural Barriers – it can be difficult to communicate

messages across cultures
A message that means one thing in one country may
mean something quite different in another
To overcome cultural barriers, firms need to develop
cross-cultural literacy, and use local input when developing
marketing messages
17-18
2. Source and Country of Origin Effects

Source effects occur when the receiver of the message
evaluates the message on the basis of status or image of
the sender
Firms can counter negative source effects by
deemphasizing their foreign origins
Country of origin effects refer to the extent to which the
place of manufacturing influences product evaluations
17-19
Barriers to International Communication
3. Noise Levels
Noise refers to the amount of other messages competing
for a potential consumer’s attention
In highly developed countries, noise is very high
In developing countries, noise levels tend to be lower
17-20
Push versus Pull Strategies
Firms have to choose between two types of communication

strategies:
a push strategy emphasizes personnel selling
a pull strategy emphasizes mass media advertising
The choice between the strategies depends upon:

1. product type and consumer sophistication
2. channel length
3. media availability
17-21
1. Product Type and Consumer Sophistication

Firms in consumer goods industries that are trying to sell
to a large market segment usually use a pull strategy
Firms that sell industrial products typically prefer a push
strategy
2. Channel Length
A pull strategy can work better with longer distribution
channels
17-22
3. Media Availability
A pull strategy relies on access to advertising media
When media is not easily available, a push strategy may
be more attractive
17-23
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
17-24
Global Advertising
Standardizing advertising worldwide has both pros and

cons
Standardized advertising makes sense when:
it has significant economic advantages

creative talent is scarce and one large effort to develop a
campaign will be more successful than numerous smaller
efforts
brand names are global
17-25
Global Advertising
Standardized advertising does not make sense when:
cultural differences among nations are significant

country differences in advertising regulations block the
implementation of standardized advertising
So, some features of a campaign are standardized while

others are customized to local markets
17-26
Pricing Strategy
International pricing is an important element in the

marketing mix
There are three issues to consider:

The case for price discrimination
Predatory pricing
Regulations that affect pricing decisions
For managers, it is important to centrally monitor pricing

decisions around the world
17-27
Price Discrimination
Price discrimination occurs when firms charge consumers

in different countries different prices for the same product
Firms using price discrimination hope it will boost profits
17-28
Regulatory Influences On Prices
The use of either price discrimination or strategic pricing may be limited by
national or international regulations
17-29
Configuring The Marketing Mix
Standardization versus customization is not an all or

nothing concept
Most firms standardize some things and customize
others
Firms should consider the costs and benefits of
standardizing and customizing each element of the
marketing mix
17-30

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Global Marketing

The marketing mix (the choices the firm offers to its

Market segmentation involves identifying distinct groups

Markets can be segmented by:

Firms need to be aware of two key market segmentation

When segments transcend national borders, a global

A product is like a bundle of attributes

Countries differ along a range of cultural dimensions

A country’s level of economic development has important

A firm’s distribution strategy (the means it chooses for

There are four main differences in distribution systems:

Communicating product attributes to prospective

Communication channels available to a firm include

International communication occurs whenever a firm uses

The effectiveness of a firm's international communication

1. Cultural Barriers – it can be difficult to communicate

2. Source and Country of Origin Effects

Firms have to choose between two types of communication

The choice between the strategies depends upon:

1. Product Type and Consumer Sophistication

In general, a push strategy is better:

A pull strategy is better:

Standardizing advertising worldwide has both pros and

Standardized advertising makes sense when:

it has significant economic advantages

Standardized advertising does not make sense when:

cultural differences among nations are significant

So, some features of a campaign are standardized while

International pricing is an important element in the

There are three issues to consider:

For managers, it is important to centrally monitor pricing

Price discrimination occurs when firms charge consumers

Firms using price discrimination hope it will boost profits

The use of either price discrimination or strategic pricing may be limited by

national or international regulations

Standardization versus customization is not an all or

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