CHAPTER 10: INTERNATIONAL MARKETING AND R & D STRATEGY

peng and Meyer chapter 17 take it as an essential reading for this chapter

Example:

- Tencent is positioned at 7 in the world because of the app creation of TikTok.

- Google uses data preferences due to targeted marketing.
- brand value is the perception of the value of good.
- communicating the brand value to the customer is marketing.

STRATEGY:

- coordination of resources for a long-term goal. (chandler)

- core competencies are the basic business processes.
- competitive advantage.
- don’t memorize the definition, make your own based on all three.
- creation of an efficient plan and use of resources accordingly.

MARKET:

three core competencies

- create
- develop and defend market
- satisfy needs.
- a function of cultivating a marketing

MARKET STRATEGY

MARKET SEGMENTATION:

demand the purchasing behaviour ability and willingness to purchase a product.

- education level - textbooks, khan academy,

- -Age
- gender

INTERNATIONAL MARKET SEGMENTATION (context matters)

B2C

Geography -population

sunscreen, surfboards

Psychographic

--> social class

- mass market, market as a whole

 - emerging mass, low priced, Samsung phone.
- mass affluent, upper middle income. eg, perfumes
- affluent, high-income earners, eg. alcohol
- super affluent,

--> Lifestyle, swimmers

--> personality, introverted books

Demography

Socio-cultural factors

TARGET MARKET:' a specific group of people that a market target specifically

Market segmentation issues

1. the differences between geographic borders under the structure of market segments

2. the existence of segments that transcend national borders, the segments that are uniform across
national borders. for example, the size of the car for a family, water bottles, and industrial products are
more uniform than consumer products.

- hedonic value is the value of the brand that gives the customer the value of using and
purchasing the product even if the product is the same.
- the prestige that the brand brings its consumers.

--> Key issues of marketers (look at these as these are the core issues that the examiners pull questions
from important)

ANSOFF MATRIX (use it a strategy to determine the product factor in the marketing mix)

Market penetration - existing market and existing product Eg, the market for dairy and the kik cola as an
example.

- Increasing the market share with current products,

HOW?

 increasing usage of existing customers.

 Win customers from competitors.
 convert non-users to users.

Product development- existing market, new product eg, Dyson bladeless fan.

HOW?
--> research and development.

--> eg, coke zero

Market development- existing products, new market, new products this aspect is when moving to
another country.

HOW?

--> extend the life of the product.

--> Eg, SPOTIFY the use of a regional pricing scheme. This is an example that used a bit of product
development.

Diversification- new market and new product, eg, digital business cards, NFC E-cards by CAPIT.

Drivers --> Exploiting economic scope, EOS, after diversifying.

--> Stretch the corporate management.

PRICE
Price discrimination

Because of the differences between macro and micro factors price discrimination is incurred due to
regional differences. Depends on the cost of production.

MSRP – the maximum price that can be charged for a good, where businesses cannot discriminate prices
locally. Eg: Sri Lanka, to ensure the protection of consumers.

For example, Vehicles

PED, the responsiveness of quantity demanded a change in price.

Factors that affect PED

- Income, demand for essentials inelastic, demand for luxury inelastic.

- Number of competitors, the more competitors the more the bargaining power of consumers
making PED elastic.

Strategic pricing -

1. Predatory pricing, setting low prices to drive out competitors and then setting a higher price,
this pricing strategy can be used mostly by big conglomerates, rather than small domestic
businesses due to EOS and low cost of production. This strategy disrupts the local economy and
trade deficits where imports > exports and internalization must be considered.
Solutions for this pricing strategy, the use of subsidies for small businesses and protectionist
policies enforced for large businesses in the form of taxes.

2. Multipoint pricing, a pricing strategy that is affected by the competitors in the market, price
matching with rivals or increasing or decreasing the prices to maintain competition also known
as setting multiple prices in multiple markets. Can be also cross market pricing,

3. Experience curve pricing or penetration pricing, banking on the fact that prices are kept low in
the beginning anticipating overtime after settling in the market due to low-cost production –due
to higher efficiency  EOS, therefore, profits will increase even though the price is low, this
happens over time and experience, is a form of organic growth.

Ways in which predatory pricing

1. Anti-dumping regulations
2. Competition policy, limits competition for small local businesses to be self-sufficient as an
economy.
- Subsidies
- Taxation
 PROMOTION
Raising influence for the product or brand to sell or increases sales.
Targeting advertising is a modern form of advertising that is more personalized,
Examples are Google ads, influencer promotions, use of cookies that the website track
preferences.

1. Cultural barriers, uniformed advertising doesn’t work in different parts of the world.
For example, the thumbs-up signal is seen as a rude gesture in Greece if an Indian company like
“Thumbs Up” enters it would convey a different meaning, the USA advertises drugs and
medicines and their culture is less conservative than countries like Sri Lanka or India, where
nudity and sexual content will have a negative view and against social norms.

Market Cohesion, alignment of all the different platforms of promoting your business to the
same strategy, which helps to keep things consistent and provides a better return on
investment. “CONSISTENCY”
Multi-channel Market cohesion, for example, Mc McDonald's “I'm loving it”
“Wendy’s on Twitter” where it broke market cohesion
Solution...! Hire local employees or a local advertising agency.

2. Source and country-of-origin effects, perceiving where the brand is coming from, (brand image)
There are negative and positive origin of effects, (Can be seen given the country that specializes
in a particular good), Swiss chocolates, Sri Lankan tea, and the change of brand or company
name while entering into a new country, affects the consumer perception of the brand, even
without consuming it. For example, Tencent renamed Douyin into TikTok and Tencent called it
as Shanghai group.

3. Noise levels, the number of brands trying to get attention with the use of promotion for their
product is known as noise (how many brands compete for attention)
Visual Noise is the use of billboards and posters.
For example, Japanese fast-paced ads
Higher Noice more opportunities for differentiation and high competition.
Lower Noice less competition.

Promotion Strategy

1. Push strategy,
For example, roll call, where companies call customers to advertise a product.
In recent times its target advertising is customization advertisements that are pushed to
customers.

2. Pull strategy, (it’s a numbered strategy) where there’s no targeted advertising but more
towards the number of people who watch it, for example, television ads.
Standard advertising, the same ads that can be used in other countries for example, the use of the same
ads which are made in India can be used in other countries such as Sri Lanka and Maldives because they
share similar features, non-standardized ads Eg: Super Bowl, the more uniformed an ad can be the more
the cost-benefit. One additional idea is better than numeral small efforts when brand names are global
such as Nike, Addidas are more uniformed and standardized.

Does make sense!

1. It has economic advantages.
2. Creative talent is scarce
Doesn’t make sense, when?
1. cultural differences
2. Advertising regulations and advertising laws are different to country to country.

Which strategy is best?

1. Product type and consumer sophistication

Pull strategy more suitable for a mass market advertisement,
Push strategy for well industrial products (for example, the company that maintains sewing
machines look up, B2B) niche products, much more targeted, (socio-technical view on how it has
influenced and influential)
2. Channel length, the steps from manufacturer to the consumer, the chain is known as the
distribution channel. The shorter the channel–push strategy (personally sell), the longer the
channel–pull strategy.
3. Media availability, how many people online high – push strategy, Low–pull strategy.
PLACE- distribution strategy - Where a product or service is provided
For example, coke is on the retailer side,

Distribution strategy is how a company chooses a way to deliver to the customer.

The factors that differentiate in distribution

1. Retail concentration
Retail – business is selling to the final customer.
Concentrated retail system- This means that there are few retailers in the market, for example,
in the UK Tesco and 7-Eleven,
Fragmented retail system - In Japan the use of convenience stores
2. Channel length
The number of intermediaries between producer and consumer. For example, the long
distribution channel of Apple from California to Foxconn, shorter distributions for low costs and
personalized products, and perishable goods follow a sort distribution channel.
3. Channel exclusivity
How hard is it for a new business to get into a distribution system?
Hard to get into new markets because they cannot enter into the distribution system, for
example, if Tesco says no to a new product distribution there will be no distribution for the
particular good, on the other hand, tobacco producers cannot come in due to higher regulations
and the amount of red tape to enter into the distribution system.
The implementation of tariffs and barriers can also limit entering into the distribution system to
protect domestic businesses.
Exclusive Distribution agreements or market segment limitation
For example, Red Bull signed an agreement in keels to exclusively display their goods in
refrigerators than others.
Depending on the type of product and its market segment
Brand control, ensuring that there is brand security of the retailer so that a new product or
another product sold in the same retail system would degrade them.

4. Channel quality
Time to market how long it takes a product to produce for the market.
I hope for the best.
Don’t invest in it.
Take the risk.

How to choose a distribution strategy?

If price is the main factor- short distribution channel length.

The retail system is fragmented into a longer distribution channel.

Research and development strategy is the aid of innovation.
1. Scientific research
2. Demand conditions its also a research and development strategy to look for whether there is
demand for the product with the use of focus groups,
3. Competitive conditions how many competitors and the level of competition, look into what
type of market and product a product is in the Ansoff matrix to make judgments.
4. Technological change
5. Innovation

Taking the market forward and opening the

Innovation – a key factor to exponential growth

1. First mover advantage
2. Higher demand

For example, Tesla usage of subsidies from the government which reduces costs and the higher demand
for it.

Innovation can also be small gaps that fill in a saturated market, for example, the use of biometrics scans
for locks in phones, another example is the gallium nitrate battery replacing lithium batteries. Innovation
can be small incremental changes.

Concentrated in countries that have,

1. Strong demand so that there is a higher market to capture.

2. Affluent consumers buy new expensive products but over time due to experience curve pricing
the cost of production falls, for example, the folding phone for oppo.
3. Intense competition, and a high level of innovation.

For example,

Surveillance stage, the state invests in technology to ensure that activity is recorded

The need to innovate to stay on top of forgotten the brand also will be due to the higher competition in
the markets today.

Integration – the integration of all other aspects and the departments of the business to the product
to come into rationalized decision-making and market research,

this integration will ensure that customers’ needs a product development, for example, the phone that
was promoted as water resistant and but it depends on the type of water that it was resistance to which
led to erosion and other issues to the phone this is because the production team didn’t communicate
well to the marketing team of Samsung, therefore, led to recalling which caused a huge loss. New
products are designed for ease of manufacture, Development costs are kept low, and time to market
is minimized a shorter time to market means a longer first mover advantage.

Low infrastructure costs because of geographical closeness such as Silicon Valley.

How to protect intellectual property? (The intangible good that you own )

 Place R&D activities at home, or where a country offers strong protection.

 Change versions frequently.
 Build complexity into the product.
 Maintain high confidentiality and security.
 Support public policy initiatives to protect IP.

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