3.3.1 Responding to Global demand

Question 1

Glocalisation

Answer 1

when a business adapts its products/marketing plans to suit individual countries or market segments

Question 2

ethnocentric

Answer 2

Look primarily from domestic culture

Question 3

geocentric

Answer 3

World is a potential market and there are similarities and differences between domestic and foreign markets

Question 4

polycentric

Answer 4

Sees each host country as unique and develops business strategies off of this

Question 5

what is a global marketing strategy

Answer 5

• large scale production of standardised products
• allows for economies of scale
• reduced research development and marketing costs
• some segments may not be catered for so some sales will be lost

Question 6

why is a global marketing strategy ideal

Answer 6

Works well when their markets have similar expectations wherever they are
- Producing on a large scale is cheaper, designs can be standardised and there may be economies of scale
- Product range can be smaller
- Same marketing campaign can be used everywhere
- Less time has to be spent on researching individual markets
- Less time is spent on developing many individual markets products

Question 7

why is a global marketing strategy not ideal

Answer 7

• Some sales will be lost if not all segments are catered for
• Turnover and profits may then not be maximised
• Marketing tactics and/or products may cause negative reactions from soem segments of the market
• For most firms a GMS will nto be effective and some local adaptation will be needed
• Varied types of competition in markets will require a different response

Question 8

glocalisation

Answer 8

• Market segments vary in nature, reflecting culture fashions and individuals tastes → must factor in consumer tastes etc
• Promotion must fit in with local media availability → potential consumers need ti be identified and then promotion mustr focus on the media to which those customers have access
• Global localisation: business operates globally but may adapt/change products and marketing plans to suit individual countries/market segments → solutions will vary depending on the product, market and strategty

Question 9

why is glocalisation good

Answer 9

• Sales are likely to increase as each market is specifically targeted
• Product features are tailored to customer needs, preferences and incomes
• Promotion reflects local media facilities
• Turnover and profits are maximised
• Marketing tactics and or products are ideally suited to the local situation
• Allows businesses in market segments, cultures, fashions etc
• Sales increase as markets specifically targeted, specialised products appeal to consumers, revenue and profits increase

Question 10

why is glocalisation not good

Answer 10

• Business cannot fully exploit economies of scale
• Researching each market and adapting/developing products takes time and is costly
• Wider product ranges and multiple marketing campaigns are harder to manage + are more expensive
• Average costs are likely to be higher

Question 11

ethnocentric models

Answer 11

Good when in lower income countries
- Consumers are more price sensitive
- Can afford lower prices to increase market share

Success in home market will be the same abroad
- Easily recognised, strong branding, memorable so sales increase
- Higher output so marketing costs spread out, ,lower marketing cost per unit, Less money spent on marketing, average fixed costs go down
- No adaptation of product and marketing tactics to suit local preferences and tastes: uniform approach world-wide
- Works for product oriented firms, not market oriented firms (high market research and prod development costs, reduced profits)

Question 12

geocentric model

Answer 12

Developed integrated strategies
- Some adaptations of productr and marketing tactics to suit local preferences and tastes

Question 13

polycentric model

Answer 13

• Each country seen as unique so business develops strategies
• All products and marketing are adapted to suit local preferences and tastes

Question 14

how will the marketing mix change in a new market

Answer 14

• Price may need to be lower if economy is lower income
• Conventional avenues may not be available for stores etc
• Product may need be adapted to local needs
• Promotion has to appeal to local tastes and culture

Question 15

price and global demand

Answer 15

• EE: disposable income is lower than in developed E
• Econ development may be incompatible with western pricing tactics
• Luxury goods may need to keep a premium price for reputation of firm and its consumer (prestige pricing strategy)
• Some luxury prices may need to keep prices high to maintain status/reputation → reselling for cheaper makes brand be seen as non exclusive, marketing goes to waste

Question 16

product and global demand

Answer 16

• Industries with high prod development costs and rapidly changing tech need globally standardised products and services (electronics)
• Large markets can recover developing costs
• Food and drink need to be adapted due to diff tastes (kosher, halal, lack of beef)
  tech/saftey regulations may be different
• Climate ge needing air conditioning in hot country

Question 17

backward innovation

Answer 17

• Backward innovation - making cheaper, simpler products for developing markets
• Reduce luxury products to still profit in lower income countries
• Depends on whether luxury brands want to keep an exclusive reputation
• Backward innovation → cheaper simpler versions of a product that would be out of reach for those with a lower income (eg iphone SE)

Question 18

promotion and global demand

Answer 18

• Consumer culture and background
  Sense of humor/taboos
• Promotion needs to fit with local media development and cultural expectations
• Accurate lang translation and appropriate images to not offend religions/cultures
• Celebrities that are local
  Needs effective promotion strategy → important

Question 19

place and global demand

Answer 19

• Traditional distribution networks may not work (remote etc)
• Sales incentives: creates distribution network of local agents develop new infrastructure
• EE: consumers are distant from shops
• Fast developing economies → luxuries sold in shopping malls
• Some countries have lower internet use and reduces scope for online retailing
• Distribution of perishable goods can be a problem in hot countries with poor infrastructure
• Poor infrastructure can mean supply chains are unreliable

Question 20

branding and differentiation in global markets

Answer 20

• Brand recognition is key
• Will be successful if product is obviously better at quality/performance etc
• Brands add value to product → Emerging economies MNCs etc reliable features provide a quality guarantee → will not be unreliable like domestic firms
• Brands and differentiation provide buyers with visible status symbols