Global marketing and r&d assignment

In 2003, Unilever shifted its strategy to develop a more globally standardized approach for Dove. The company now uses a basic message for the brand, and allows some customization at the local level. Discussion of the case can begin with the following questions: QUESTION 1: How would you describe Unilever’s approach to international markets prior to 2003? What were the advantages of this strategy? What were the drawbacks of this approach? ANSWER 1: Prior to 2003, Unilever more or less approached each market individually. The company often developed entirely different products and marketing campaigns for each market.

In India for example, the company developed a shampoo designed to clean hair that had been oiled. But it also developed entirely different products for both Hong Kong and China. This strategy of customizing products, packaging, and messages to individual markets while allowing the firm to cater to the individual needs of customers also led to high costs, complexity, and confusion within the organization. QUESTION 2: In 2003, Unilever adopted its Real Beauty strategy. Explain how this new strategy differed from its traditional approach to foreign markets? How should this new approach help Unilever’s international sales?

C) For a segment to transcend national borders, consumers in that segment must have some compelling similarities that lead to similarities in purchasing behavior. D) Where such similarities do not exist, there must be some customization if the firm is to maximize performance in the market. This customization may be in the product, the packaging, or simply the way in which the product is marketed. E) Global market segments are much more likely to exist in industrial products (e. g. , memory chips, chemical products, and corporate bonds) than in consumer products.

Management Focus: Marketing to Black Brazil Summary This feature explores how companies are marketing to Brazil’s black population. Although Brazil is home to a sizable racial minority, to date companies have essentially ignored the market segment. Now however, companies are beginning to target the group using products and promotions specifically developed for the market. Discussion of the feature can begin with the following questions: Suggested Discussion Questions 1. Describe the differences between the black population in the United States and the black population in Brazil.

Product and Technical Standards D) Notwithstanding the forces that are creating some convergence of consumer tastes and preferences, Levitt’s vision of global markets may still be a long way off due to national differences in product and technological standards. DISTRIBUTION STRATEGY A) A critical element of a firm’s marketing mix is its distribution strategy, the means it chooses for delivering the product to the consumer. B) Figure 15. 1 in the text illustrates a typical distribution system consisting of a channel that includes a wholesale distributor and a retailer.

If the firm manufactures it product in the particular country, it can sell directly to the consumer, to the retailer, or to the wholesaler. The same options are available to a firm that manufacturers outside the country. Differences between Countries C) The four main differences between distribution systems are retail concentration, channel length, channel exclusivity, and channel quality. Retail Concentration D) In some countries the retail system is very concentrated, whereas in other countries it is fragmented. In a concentrated retail system, a few retailers supply most of the market.

Source and Country of Origin Effects E) Source effects occur when the receiver of the message (the potential consumer) evaluates the message based upon the status or image of the sender. Source effects can be either positive or negative. A subset of source effects is referred to as country of origin effects (the extent to which the place of manufacturing influences product evaluations). Lecture Note: The class can be stimulated to think of some positive and negative source effects (German autos vs. German wine, Italian cuisine vs. British cuisine). Noise Levels F) Noise tends to reduce the chance of effective communication.

In this context, noise refers to the amount of other messages that are competing for a potential consumer’s attention. Management Focus: Overcoming Cultural Barriers to Selling Tampons Summary This feature examines Procter & Gamble’s (P) efforts to bring tampons to the world. After purchasing Tambrands in 1997, P found that marketing strategies that were successful in the United States failed to generate sales in many other parts of the world. P, in an effort to reach new customers, has developed a new marketing strategy that is based on direct selling and relationship marketing.

Still, the company has managed to succeed thanks to its efforts to customize its marketing strategy to the local market. Discussion of the feature can begin with the following questions: ? Suggested Discussion Questions 1. Discuss the effects of India’s culture on each of the components of Unilever’s marketing strategy. What can Unilever learn from its experiences in India? Discussion Points: In India, Unilever faces numerous challenges to its marketing strategy. Income levels are low, consumers are unsophisticated and illiterate, the retail distribution system is fragmented, and the road system is poor.

However, by adapting to the environment, Unilever has built a small, but successful business in the country. Because most consumers do not have access to television, the company posts advertisements in common meeting areas such as village wells and marketplaces. The company also takes part in weekly markets where it not only sells its products, but it also gives away free samples. Unilever has also made a strong effort to fit in with the country’s retail system, and stocks its products in small size packages in about 3 million stores, many of which are very tiny. 2.

H) The concept of multi-point pricing refers to the fact a firm’s pricing strategy in one market may have an impact on their rival’s pricing strategy in another market. In particular, aggressive pricing in one market may elicit a competitive response from a rival in another market that is important to the firm. I) The managerial message in all of this is that pricing decisions around the world need to be centrally monitored. Experience Curve Pricing

J) Many firms pursuing an experience curve pricing strategy on an international scale price low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially. Firms using experience curve pricing believe that several years in the future, when they have moved down the experience curve, they will be making substantial profits and, moreover, have a cost advantage over less aggressive competitors. Regulatory Influences on Prices K) Firms’ abilities to engage in either price discrimination or strategic pricing may be limited by national or international regulations.

In addition, Vietnam was one of places visited by soccer star David Beckham as part of a global marketing campaign for the company. Students will probably argue that given the lack of alternatives, Castrol Oil has done well with its communications strategy in Vietnam. 2. Would you describe Castrol Oil’s communications strategy in Vietnam as a push or a pull strategy? Explain your answer. Discussion Points: Students will note that a pull strategy generally relies on access to advertising media such as newspapers, magazines, television, radio, and the Internet.

Because mass media options are limited in Vietnam, Unilever has turned to alternate communications methods such as stickers, billboards, and gas station signs. Accordingly, students will probably conclude that Castrol Oil is using a push strategy in Vietnam. ? 3. Castrol Oil emphasizes a premium pricing strategy. What elements of the company’s communications and distributions strategies support this premium pricing strategy? Discussion Points: Castrol Oil has priced its product at about three times the cost of cheaper imports from Taiwan and Thailand.

Building Global R&D Capabilities F) 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. G) Integrating R&D, marketing, and production in an international business may require R&D centers in North America, Asia, and Europe that are closely linked by formal and informal integrating mechanisms with marketing operations in each country in their regions, and with the various manufacturing facilities.

H) Some companies allocate product development responsibilities using a global network of R&D centers that develop the basic technologies for new products which are then picked up by R&D units attached to global product divisions and used to generate new products to serve the global marketplace. Critical Thinking and Discussion Questions 1. Imagine you are the marketing manager for a US manufacturer of disposable diapers. Your firm is considering entering the Brazilian market. Your CEO believes the advertising message that has been effective in the United States will suffice in Brazil.

Answer: The firm should sell to either wholesalers or import agents. Because the retail system in India is very fragmented, it would be very expensive for the firm to make contact with each individual retailer. As a result, it would be more economical for the firm to sell to wholesalers or import agents. Import agents may have long-term relationships with wholesalers, retailers, and/or other import agents. Similarly, wholesalers may have long-standing relationships with retailers and, therefore, be better able to persuade them to carry the firm’s product than the firm itself would. 4. Price discrimination in indistinguishable from dumping.

Discuss the accuracy of this statement? Answer: In some specific instances this statement is correct, but as a general rule it is not. When a firm is pricing lower in a foreign country than it is in its domestic market, it can be difficult to distinguish dumping from price discrimination unless it is clear that the firm is selling at below cost in the foreign market. Yet when costs are reasonably well known and all prices are above these, or if the firm is pricing lower in its domestic market than in foreign markets, it can be reasonably concluded that price discrimination rather than dumping is occurring. . You work for a company that designs and manufactures personal computers. Your company’s R center is in North Dakota. The computers are manufactured under contract in Taiwan. Marketing strategy is delegated to the heads of three regional groups: a North American group (based in Chicago), a European group (based in Paris), and an Asian group (based in Singapore). Each regional group develops the marketing approach within its region. In order of importance, the largest markets for your products are North America, Germany, Britain, China, and Australia.

Finally, the company decentralized its marketing to local managers giving them flexibility to adapt to local market requirements. As part of the new strategy, new styles were introduced to meet differing style preferences. In addition, the company also revamped its promotion to reflect regional differences. Price and distribution were also changed. Pricing is now done on a market-by-market basis according to the competition in each market. QUESTION 3: What are the benefits of Levi’s new marketing strategy? Is there a downside? ANSWER 3: The changes Levi Strauss made to its strategy seem to be working.

Growth is expected to be especially strong in developing markets. Most students will probably note that the decision to give national managers more autonomy meant that while the company lost the benefits of economies of scale in advertising and production that it had previously had, consumers’ demands were better met. However, some students may point out that the new strategy means that differences between national markets became are now more pronounced??? a change that could be an issue further down the road. QUESTION 4: What does the Levi Strauss story tell you about the “ globalization of markets”?

What factors could prevent the development of such a product? Consider issues related to culture, distribution, a country’s level of economic development, and so on. ??? Finally, consider mistakes foreign automakers could make when designing their cars for foreign customers. How could the presence of a joint venture partner help the company avoid these mistakes? This exercise can be used as a summary discussion for this chapter, or it can be broken down into segments. For example, the second question of this exercise works well as an introduction to international marketing.

The first question can be addressed after discussing the notion of standardization of the marketing mix, and at this point, you might also revisit the second question. Finally, the third question allows you incorporate previous discussion of the benefits of a joint venture to international marketing. globalEDGE Exercises Use the globalEDGE Resource Desk {http://globalEDGE. msu. edu/ResourceDesk/} to complete the following exercises. Exercise 1 You are the marketing manager of a diversified food and beverage company. Preliminary market research indicates that Peru holds significant opportunities for your products.