Chapters 7,8,9 Flashcards
What is the definition of global market segmentation?
The process of dividing the world market into distinct subsets of customers that behave in the same way or have similar needs.
What are the 6 segmentation criteria that can be used?
Geography, demographics, pyschographics, behavior, benefit, and ethnicity
What are the pros and cons of the geographic segmentation?
Pro: Proximity
Con: countries differences may overwhelm their similarities
What are the measurable characteristics of populations in the demographic segmentation?
Income, population, age, gender, education, and occupation
What is necessary to determine for income?
The purchasing power of the local currency
What demographic segmentation’s variable involves low per-unit costs and economy of scale?
Population
Which segmentation is based on attitudes, values, and lifestyles?
Psychographics
What does the VALS framework consist of?
Innovators at the top with high innovation and resources, survivors at the bottom with low innovation and resources
What are the 4 euroconsumer segments from idealists to survivors?
Successful idealists, Affluent materialists, comfortable belongers, disaffected survivors
What are the 5 segments of Porsche buyers?
Top Guns, Elitists, Proud Patrons, Bon Vivants, Fantastics
What are the 3 focuses of behavior segmentation?
Whether people buy and use (User status: potential users, nonusers, ex-users), How often used (user occasions: regulars, first-timers), How much use (usage rates: heavy, medium, light)
Which segmentation focuses on the value equation?
Benefit Segmentation
What is the value equation?
Value= Benefits/Price
What is the process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond?
Targeting
What are the 3 criteria in assessing marketing potential?
1) Size and Growth, 2) competition, 3) feasibility and compatibility
What questions should you ask in evaluating the current size and potential growth?
Is the country large enough to make profit? Does it have high potential growth so in the long run the company can make profit.
What questions should a company ask in terms of feasibility and compatibility?
Does the company have the resources? Is the company able to sell to the country (luxury car in a poor market)
What are the two framework options in selecting target markets?
Top-Down Approach (country-market level)
Bottom-up Approach (Product-market level)
What is the top-down approach?
Market potential= market size*competitive advantage
Take the product and multiply by terms of access=market potential
What are some key drivers and enabling conditions in the bottom-up approach?
Drivers: brand sensitivity, intensive distribution, qualified salesperson
Enabling Conditions: structural characteristics of the market (refrigerators not in India so can’t sell dairy)
What are the three global target market strategies?
Standardized (mass), concentrated(niche), and differentiated(multiple)
What is the act of differentiating a brand in consumers’ minds in relation to competitors?
Positioning
What are the 5 positioning strategies?
1) Attribute or benefit, 2)Quality and price, 3)use or user, 4)competition, 5) Global/foreign/local consumer culture
What is the difference between high-tech and high-touch products?
High-tech products are evaluated on performance (cars phones)
High-touch products are evaluated on feeling
What do you want to encourage and discourage between imports and exports?
Encourage Exports and discourage imports
What are characteristics of export selling?
Only Place is the subject, price promotion and product are same, Unique products for companies with little international experience
What is the organizational export activities?
Unwilling to export, export seller, explore feasibility of exporting, trial, experienced exporter, country-focused marketing, global marketing strategy for exporting
What are some national policies that support exports?
Tax incentives, subsidies, governmental assistance (trade shows, help in finding market), Free trade zones
What are some national policies governing import restrictions?
Tariffs, Quotas, discriminatory procurement policies, restrictive customs procedures, discriminatory exchange rate policies, restrictive administration and technical regulations (anti-dumping, product size, safety and health)
What does the discriminatory procurement policy do?
Makes every US company buy from another US company
What is the purpose of restrictive customs procedures?
If it becomes to difficult to comply, people will give up (customs clearance)
What is the difference between Schedule B and Harmonized Tariff System?
Schedule B is for USA to export, Harmonized is a uniform 6 digits around the world to export
What are the 3R’s in tariffs?
Rule+rate+regulations
What are the ways to calculate tariffs?
Custom value: transaction value (CIF), customs duties+taxes (VAT)+Others
What is included in the transaction value (CIF)?
cost of product, insurance, and freight
What are countervailing duties?
Offset subsidies by governments
What are Ad valorem duties?
% of transaction value
What is the difference between in-house and external export service providers?
External export service providers have agents (charge on commission) and merchants (own it; take and sell product)
What is the different between direct market representative and independent intermediaries?
Direct market reps control and communicate (you hire them)
Ind. Intermediaries work for their own interest and have low sales volumes
What are the 5 methods of payment when exporting?
Consignment, open account, documentary collections (Drafts), documentary credits, cash in advance
When does a consignment contract pay?
after goods are actually sold
When does an open account contract pay?
after goods are delivered
What is the initial export order form called?
Proforma invoice
What questions should a company ask themselves when deciding to source?
Should they make or buy, and where if sourcing?
What are the 7 factors that affect sourcing decisions?
Management vision, factor costs and conditions, customer needs, logistics, country infrastructure, political risk, foreign exchange rates
What are the 3 modes of entry and what increases as you move to full ownership?
Export based, contract-based, equity-based; commitment/control/risk increase
What are the pros and cons of using export-based?
Pros: Lowest risk, easy market entry or exit
Cons: Tariffs and quotas, high transportation costs
Deciding which mode of entry strategy to use depends on?
Vision
What are the 3 contract-based options?
Licensing, franchising, and contract manufacturing
What are the pros and cons of Licensing?
Pros: Fast market access, bypass regulations and tariffs
Cons: Less control over market and revenues, create potential competitors
What are the 3 equity based options?
Joint ventures, minority or majority equity stakes, and full ownership by: acquisition, merger, or start-up
What is the entry strategy for a single target country in which the partners share ownership of a newly created business entity?
Joint Venture
What are the pros and cons to a joint venture?
Pros: Gain Knowledge of local markets from partners, shared risks, synergy from combing strengths of partners
Cons: Cost associated w/ control and coordination between partners, potential for conflicts between partners, and partner can evolve into a competitor
What are the 4 market expansion strategies?
Narrow focus, country focus, country diversification, and global diversification
