chapter 18 Flashcards
global industry
competitors’ strategic positions in major geographic or national markets are affected by their overall global positions.
global firm
operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages not available to purely domestic competitors.
factors that draw companies to the international arena
- international markets can present better profit opportunities
- a firm may need a larger customer base to achieve economies of scale
- wants to reduce its dependence on one market
typical entry strategies
- the waterfall approach
- the sprinkler approach
the waterfall approach
gradually entering countries in sequence.
the sprinkler approach
entering many countries simultaneously.
born global
firms that market to the entire world from the start. increasing amount of especially technology intensive firms or online ventures do this.
risks of going abroad
- the company might not understand foreign preferences and could fail to offer a competitively attractive product
- the company might not understand the foreign country’s business culture or how to deal effectively with foreign regulations.
- the company might lack managers with international experience
- the other country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate foreign property.
cultural distance
companies often choose neighbouring countries because they understand them better and can control costs more effectively. however, it may lead to overlooking potentially better markets and only superficially analysing differences that could put them at a disadvantage.
regional economic integration
the creation of trading agreements between blocs of countries. this has intensified in recent years and means that companies are more likely to enter entire regions at the same time.
broad choices in entering a market
- indirect and direct export
- licensing
- joint ventures
- direct investments
indirect and direct export
companies often start in indirect export, work through independent intermediaries, and may move into direct export later. this order of entry requires less investment and risk.
licensing
the licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty. the licensor gains entry at little risk; the licensee gains production expertise or a well-known product name.
joint ventures
foreign investors may join local investors in a joint venture company in which they share ownership and control, sometimes desirable for political or economic reasons.
direct investment
the foreign company can buy part or full interest in a local company or build its own manufacturing or service facilities.
standardised marketing program
using the same marketing program worldwide. this promises the lowest costs. standardised and adapted marketing programs form the two extremes.
adapted marketing program
the company, consistent with the marketing concept, believes consumer needs vary and tailor marketing to each target group.
standardised marketing program advantages
- economies of scale in production and distribution
- lower marketing costs
- power and scope
- consistency in brand image
- ability to leverage good ideas quickly and efficiently
- uniformity of marketing practices
standardised marketing program disadvantages
ignores differences in…
1. consumer needs, wants, and usage patterns
2. consumer response to marketing programs and activities
3. brand and product development and the competitive environment
4. legal environment
5. marketing institutions
6. administrative procedures
straight extension
introduces the product in foreign market without any change, a successful strategy for eg. consumer electronics.
product adaptation
alters the product to meet local conditions or preferences, developing a regional version of its product, a country version, a city version, or different retailer versions.
product invention
creates something new. it has two forms:
1. backward invention: reintroducing earlier product forms well adapted to a foreign country’s needs
2. forward invention: creating a new product to meet a need in another country
communication adaptation
the process of changing marketing communications for each local market.
dual adaptation
both adapting the product and the communications.
price escalation
raising the price to cover the added cost of transportation, tariffs, middleman margins, and the risk of currency fluctuations so it can earn the same profit.
gray market
diverts branded products from authorised distribution channels either in-country or across international borders. dealers in the low-price country buy and ship the goods to another country to take advantage of price differences.
internal marketing
requires that everyone in the organisation accepts the concept and goals of marketing and engages in identifying and communicating customer value. all employees need to realise their job is to create, serve, and satisfy customers, because due to the networked enterprise, every functional area in the firm can interact with customers. so, only when this is the case, the firm is an effective marketer.
country-of-origin perceptions
the mental associations and beliefs triggered by a country.
breaking bulk
the process of dividing a large shipment of goods into smaller units or lots for distribution or further transportation. remains an important function of intermediaries and helps perpetuate long channels of distribution, a major obstacle to the expansion of large-scale retailing in developing countries.
organisation of modern marketing departments
- functional organisation
- geographic organisation
- product- or brand-management organisation
- market-management organisation
- matrix-management organisation
functional organisation
functional specialists report to a marketing vice president who coordinates the activities.
geographic organisation
a company selling in a national market often organises its sales force along geographic lines. the national sales manager may supervise sales managers, who supervise district sales managers, who supervise salespeople.
product- or brand-management organisation
companies producing a variety of products and brands often establish a product-management organisation. this does not replace functional organisations but serves as another layer of management. other alternatives are product teams, assigning two or more minor products to one manager, and category management.
category management
focusing on product categories to build the firm’s brands.
market-management organisation
when customers fall into different groups, a market management organisation is desirable. 1. market-centred organisation 2. customer-management organisation
market-centred organisation
when a company reorganises along market lines.
customer-management organisation
deals with individual customers rather than the mass market or even market segments.
matrix-management organisation
companies that produce many products for many markets may adopt a matrix-management organisation employing both product and market managers. however, this is costly and can create conflict about authority and responsibility.
true market-driven company requirements
under the marketing concept, all departments need to “think customer” and work together to satisfy customer needs and expectations.
1. developing a company-wide passion for customers
2. organising around customer segments instead of products
3. understanding customers through qualitative and quantitative research
three-pronged attack for raising the level of socially responsible marketing
- legal behaviour
- ethical behaviour
- socially responsible behaviour
legal behaviour
organisations must ensure that every employee knows and observes relevant laws.
sustainability
the ability to meet humanity’s need without harming future generations. major corporations outline in great detail how they are trying to improve the long-term impact of their actions on communities and environment.
cause-related marketing
links the firm’s contributions toward a designated cause to customers’ engaging directly or indirectly in revenue-producing transactions with the firm. cause marketing is part of corporate societal marketing (CSM). it can:
1. build brand awareness
2. enhance brand image
3. establish brand equity
4. evoke brand feelings
5. create a sense of brand community
6. elicit brand engagement
social marketing
furthers a cause such as “say no to drugs”. planning process:
1. where are we?
2. where do we want to go?
3. how will we get there?
4. how will we stay on course?
