Chapter 14- Marketing

Question 1

What are the four stages in the process for screening and analyzing new markets?

Answer 1

1) Preliminary screening
2) Estimating market potential
3) Estimating sales potential
4) Identifying segments in target market

Question 2

What is involved in preliminary screening?

Answer 2

Using primarily secondary data to get a general understanding of the market conditions in that area, like buying power, gross national product (total and per capita). Also qualitative data describing the cultural conditions and receptivity to foreign products.

Question 3

What are 5 ways to estimate market potential? Describe them.

Answer 3

1) Income Elasticity of Demand- how does the demand of a product change as the income of consumers changes.
2) Market audit- a method of estimating market size by adding together local production and imports and then subtracting exports.
3) Analogy- if data is not available to perform a market audit, you can use analogy which is using the market audit of a similar product.
4) Longitudinal analysis- is used when a time lag in the demand of the product exists and involves repeated observations of a product over a long period of time. See what the trends in the demand and success of a product are (related to economy, state of technology?)
5) Gap Analysis- the difference between the predicted and actual sales. Why didn’t the actual sales meet the predicted sales? Or why did it exceed them? The difference can be because of usage (not all potential users use the product, or do not use it enough), distribution (coverage problems), or product line gaps (latent/induced demand).

Question 4

What is sales potential and how do you estimate it?

Answer 4

Sales potential is the share of the market potential that the firm can reasonably expect over the long run. In order to estimate sales potential, marketers need to gather data on competition, market barriers to entry, consumers’ willingness to buy their product, products’ degree of relative advantage, triability, communicability (observability), and compatability.

Question 5

What are the differences between a concentration strategy versus a diversification strategy?

Answer 5

A concentration strategy focuses on a select few markets. Smaller firms with more specialized products and markets more often use this strategy. A diversification strategy focuses on a widespread marketing campaign that targets a relatively large number of markets. Typical for larger customer-oriented firms that have broad coverage. The more standardization that occurs in the marketing mix, the more a diversification expansion strategy is employed.

Question 6

What are the differences between a multi-domestic approach versus a globalization approach?

Answer 6

A multi-domestic approach focuses on creating a unique marketing campaign in each area of focus, while a globalization approach creates an international marketing strategy, allowing for local differences in implementation.

Question 7

What are some factors that encourage standardization?

Answer 7

Reaching economies of scale– marketing, production, R&D. Have more control over the marketing campaigns. “Shrinking” of world marketplace.

Question 8

What are some factors that encourage adaptation?

Answer 8

government and regulatory influences that may change how you market in that country. each territory may have different wants and needs that can be satisfied differently. their buying motivation, how they use the product, how they perceive the product may vary greatly and require more specific marketing campaigns. i.e. diet coke marketed very different in Japan than it is in the USA. Stage of economic development in countries may be very different.

Question 9

What is positioning?

Answer 9

The perception of a company’s product in relation to its competitors (diet coke example)

Question 10

What is reverse innovation?

Answer 10

When products start out in developing countries before spreading to the industrialized world.

Question 11

What are the three main implications to consider when going global?

Answer 11

1) Don’t hide globality: lot of potential for a global company– more capital, strong reputation. lots of room for creativity in marketing.
2) Tackle the home-country bias: “being local on a global scale”- make the product feel comfortable and familiar to the consumer– instead of something foreign.
3) Satisfy the basics- global brands signal high quality, and consistency. Make sure you create differentiation from competitors. But first make sure you are meeting the needed margins to be profitable.

Question 12

What are global brands?

Answer 12

reach the world’s mega markets and are perceived as the same brand by consumers and internal constituents.

Question 13

What is product counterfeiting and how does it harm the firm?

Answer 13

any goods bearing unauthorized representations of trademark or patent licensing that is legally protected in the country where it is marketed. In the short run it can hurt the company’s sales, in the long run, it can diminish the country’s reputation.

Question 14

What are the four general categories of pricing?

Answer 14

1) Export pricing
2) Foreign market pricing
3) Price coordination
4) Transfer pricing

Question 15

What is standard world-wide pricing?

Answer 15

price of product it based on average units’ fixed, variable, and export-related costs.

Question 16

What is dual-pricing? And what are the 2 methods by which it can be used?

Answer 16

When the domestic product is priced differently from the exported product.

1) cost-plus method: full allocation of domestic and export costs to the product (more flexible)
2) Marginal-cost method: considers the direct cost of producing and selling the product for export and uses it as a floor for which the price cannot be set below

Question 17

What is market-differentiated pricing?

Answer 17

price-setting based on demand rather than cost.

Question 18

What is price escalating and what are some contributing factors?

Answer 18

Price escalation is when a good for export is priced much higher than the domestic product due to the long distribution channel and the frequent markups. This is because there are many more costs associated with exporting, like adjusting the product to be suitable for the foreign country, entering the country costs.

Question 19

What is Foreign Market Pricing?

Answer 19

Pricing of products is determined by local market conditions. The consumer behavior, local costs, corporate objectives and market conditions will effect the pricing of the product.

Question 20

What is Price coordination?

Answer 20

A standard worldwide price. This can be used to discourage cross-border purchases. A pricing corridor should be set that will establish a minimum and maximum price. This range will allow for differences in local markets to maximize their sales and profits, while being narrow enough to prevent cross-border purchases. With increasing economic integration, price coordination is even more important.

Question 21

What is a gray market?

Answer 21

parallel importation–> marketing of products through unauthorized channels. Companies sell their products in local markets and a lower price than charged to distributors.

Question 22

What is transfer pricing?

Answer 22

transfer pricing is the pricing of products within a company. Segments of companies can price their products to different segments by different methods: direct cost, direct cost plus additional expenses.

Question 23

What is the arms-length price?

Answer 23

It is the price that unrelated companies would have arrived to…being charged intracompany.

Question 24

What are some of the factors (11 C’s) that contribute to to the distribution channel length and width (channel design)?

Answer 24

1) Customer-What do the customers want? Psychographic and demographic characteristics.
2) Culture- what are the existing distribution channels. How does the local culture do it?
3) Competition- what channels do your competitors use? If you must use the same method, how do you use it more efficiently and effectively? Or is it worth it to invest in developing your own distribution channel?
4) company objectives- management goals may conflict with the best way to distribute your good.
5) Character- What are the characteristics of your good? This will effect your distribution channel.
6) Capital-what are the financial requirements of setting up a distribution channel? The more financially well-off a company is, the more options and flexibility it has.
7) Cost- after it is set up, how much does it cost to maintain the distribution channel?
8) Coverage- number of areas and quality of representation.
9) control- how many intermediaries do you have and how much power do they have? the use of intermediaries will inevitably diminish your control over the marketing of your product.
10) continuity- it is the marketers job the make sure that the distribution channel is a long-term set up, because many distributors may see it as a short term arrangement.
11) Communication- important for marketers to convey their message clearly to their distributors.

Question 25

What is e-commerce?

Answer 25

the ability to offer goods and services over the web. important to understand the local delivery protocols and customs-handling expertise.

Question 26

What is m-commerce?

Answer 26

any transaction involving the transfer of ownership or rights to use goods and services, which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device.

Question 27

What is a media strategy?

Answer 27

strategy applied to the selection of media vehicles and the development of a media schedule.

Question 28

What is gap analysis?

Answer 28

The difference between the predicted and actual sales. Why didn’t the actual sales meet the predicted sales? Or why did it exceed them? The difference can be because of usage (not all potential users use the product, or do not use it enough), distribution (coverage problems), or product line gaps (latent/induced demand).