Chp 17: global marketing Flashcards
LO1: define globalization
refers to the increased flow of goods, services, people, tech, capital, info and ideas around the world. Has economic, political, social, cultural, and environmental impacts
LO1: 2 points to global markets assessment
1) Analysis of 4 factors offers marketers a more complete picture of a country’s potential as a market for products and services
2) Consider the factors together and often firms make trade offs between these factors
LO1: 4 components of global markets assessment
1) political environment
2) economic environment
3) sociocultural analysis
4) tech and infrastructure
LO1: 2 points to political environment
1) Policies that restrict trade and global marketing are protectionist policies. Policies that encourage global trade and marketing are trade liberalization policies.
2) Need to weigh likelihood of these things taking place over period of time - political risk analysis
LO1: 6 things in political environment
1) tariff (duty)
2) quota
3) boycott
4) exchange control
5) trade agreement
6) trade sanctions
LO1: define tariff(duty)
tax levied on a good imported into a country
LO1: define dumping
selling a good in a foreign market at a price lower than its domestic price or below its cost
LO1: 1 point to tariff (duty)
Intended to make imported goods more expensive and less competitive with domestic products or to penalize a country for unfair trade practices (like dumping)
LO1: define quota
designates maximum quantity of product that may be brought into a country during specific time period
LO1: 1 point to quota
Reduce availability of imported goods to benefit domestic goods
LO1: define boycott
group’s refusal to deal commercially with some org to protest against its policies
LO1: 1 point to boycott
May be imposed by government or non governmental org like human rights groups
LO1: define exchange control
refers to regulation of country’s currency exchange rate
LO1: define exchange rate
measure of how much one currency is worth in relation to another
LO1: 1 point to exchange control
When currency is low, cost of doing business in another country is high but that other country can get cheap goods
LO1: define trade agreement
intergovernmental agreement designed to manage and promote trade activities for specific regions
LO1: define trading bloc
consists of those countries that have signed a particular trade agreement
LO1: define trade sanctions
penalties or restrictions imposed on one country over another country for importing and exporting goods, services and investments
LO1: 1 point to trade sanctions
An embargo is a form of trade sanction that prohibits trading with certain country or trading in specific goods (like oil embargo) by other signatory countries
LO1: 3 parts of economic environment
1) general economic environment
2) market size and population growth rate
3) real income
LO1:1 point to general economic environment
Healthy economies provide better opportunities
LO1: economic: 5 measures of health
1) trade deficit
2) trade surplus
3) gross domestic product
4) purchasing power parity
5) human development index
LO1: define trade deficit
results when country imports more than it exports
LO1: define trade surplus
results when country exports more goods than it imports
LO1: 1 point to trade surplus
Want to manufacture in these countries to export more products
LO1: define GDP
market value of goods/services produced by country in a year, standardized measure of output
LO1: 1 point to GDP
Country is expanding - greater opportunities
LO1: define purchasing power parity
theory that if exchange rates of 2 countries are in equilibrium, a product purchase in one will cost the same in the other, expressed in the same currency
LO1: 1 point to purchasing power parity
Country with low PPP means exporting to country is expensive and that country exporting to other countries is cheap so they have trade advantage
LO1: define human development index
composite measure of 3 indicators of quality of life in different countries: life expectancy at birth, educational attainment, whether avg incomes are sufficient to meet basic needs of life
LO1: 2 points to market size and population growth rate
1) BRIC countries likely source for most market growth
2) Stagnated growth not very attractive market opportunities
LO1: 3 points to real income
1) Use simplified product to set price low for impoverished populations
2) Make pricing adjustments for different wealths
LO1: explain sociocultural analysis
1) Culture exists on visible artifacts and underlying values. Need to adjust marketing strategies to both.
2) 5 dimensions cultures differ
LO1: list 5 dimensions culture differs
1) power distance
2) uncertainty avoidance
3) individualism
4) masculinity
5) time orientation
LO1: explain power distance
willingness to accept social inequality as natural
LO1: explain uncertainty avoidance
extent to which society relies on orderliness, consistency, structure, formalized procedures to address situations arise in daily life
LO1: explain individualism
perceived obligation to and dependence on groups
LO1: explain masculinity
extent to which dominant values are male oriented
LO1: explain time orientation
extent to which society allows for gratification of fun and enjoyment needs or else suppresses and regulates such pursuits
LO1: define infrastructure
basic facilities, services, installations needed for a community or society to function, examples listed
LO1: explain tech
Technical sophistication of workforce means higher product design, development, marketing activities can be decentralized to foreign country
LO1: 4 parts of infrastructure (and tech)
1) transportation
2) distribution channels
3) commercialization
4) commerce
LO1: explain transportation
must be system to transport goods to consumers and markets
LO1: explain distribution channels
must exist to deliver goods in timely manner and at reasonable cost
LO1: explain commercialization
media access especially must be sufficient to allow consumers to find info about products available in marketplace
LO1: explain commerce
legal, banking, regulatory systems to allow a market to function
LO2: explain marketing opportunities in BRIC
Changes in tech, specifically communications, driving force for growth, more connectedness
LO2: what are BRIC countries
1) Brazil
2) Russia
3) India
4) China
LO3: explain global market entry strategies
Low risk and low control to high risk and high control: exporting -> franchising -> strategic alliance -> joint venture -> direct investment
LO3: define exporting
producing goods in one country and selling them in another
LO3: 1 point to exporting
Least financial risk but limited return to exporting firm. Difficult to achieve economies of scale when you need to ship things internationally.
LO3: 2 forms of exporting
indirect or direct
LO3: explain indirect exporting
Indirect is when exporting firms sells goods in host country through intermediary. Used when company has limited contacts in foreign country.
LO3: explain direct exporting
Direct: exporting company sells products in host country without intermediaries. More risk than indirect but greater returns.
LO3: 3 points to franchising
1) Franchisee operates business using name and format developed and supported by franchisor
2) Low risk and less investment than opening units wholly owned by firm
3) firms have limited control over market operations in foreign country and potential profit reduced because it must be split with franchisee
LO3: define strategic alliance
collaborative relationship between independent firms, though partnering firms do not create equity relationship (do not invest in one another)
LO3: 1 point to strategic alliance
Help members in individual brand building efforts by creating value through membership (Create value for consumer by offering rewards for membership firm purchases)
LO3: define joint venture
formed when firm entering new market pools its resources with those of a local firm to form a new company in which ownership, control and profits are shared
LO3: 2 points to joint venture
1) Local partner offers foreign entrant greater understanding of market and access to resources like vendors and real estate
2) Problems can arise if partners disagree, objectives/responsibilities not defined from outset
LO3: 2 variants of joint venture
contract manufacturing and management contracting
LO3: explain contract manufacturing
foreign firm contracts with local firm in host market to manufacture product
LO3: explain management contracting
domestic firm provides management consulting and advice to foreign firm
LO3: define direct investment
firm maintains 100% ownership of plants, operating facilities, offices in foreign country, often through formation of wholly owned subsidiaries
LO3: 2 points to direct investment
1) Highest level of investment, significant risks including loss of its operating or initial investments
2) None of the profits need to be shared with other firms and offers firm complete control of operations in foreign country
LO4: 2 components of global marketing strategy
Global marketing strategy has 2 components: determining target market and developing marketing mix that will sustain competitive advantage over time
LO4: explain choosing target market for global marketing
1) segmentation, targeting, positioning
2) Need to understand cultural nuances of different countries, subcultures, and products and role as consumers in different countries
3) Positioning may need to be different
LO4: 4 global marketing mix
1) product
2) pricing
3) distribution
4) communication
LO4: 3 product global strategies
1) sell same product or service in both home and host country
2) sell product/service similar to that sold in home country with minor adaptions
3) sell new product/service
LO4: 2 points to global product strategies
1) Depends on needs, wants of target market
2) glocalization
LO4: define glocalization
when firms offer standardizes product globally and change promotional campaigns geared to global markets
LO4: 2 points to global pricing strategies
1) Laws may dictate the number of promotional sales, don’t want it to threaten competitive positioning (like walmart as lowest cost provider in market)
2) Changes prices to reflect market and competitive landscape (like mid priced vehicle needs to be adjusted)
LO4: 2 points to global distribution strategies
1) Adding intermediaries increases cost and final purchase price for consumer
2) May need to reach small geographically dispersed retail stores as consumers don’t drive and only walk, but this may be too costly to have so many intermediaries
LO4: 2 points to communication strategies
1) Identify elements that will be effective in market
2) Like language, advertising guidelines, media availability (may only be state controlled)
LO5: 3 ethical concerns with global marketing
1) environmental
2) global labour issues
3) impact on host country culture
LO5: define environmental concerns
includes excessive use of natural resources and energy, refuse from manufacturing process, excess trash from consumer goods packages, hard to dispose of items like tires, electronics
LO5: define global labour issues
concerns about working conditions and wages paid to factory workers in developing countries
LO5: define cultural imperialism
belief that one’s own culture is superior to that of other nations, can take the form of active formal policy or subtle general attitude
LO5: 2 point to impact on host country culture
1) cultural imperialism
2) Ensure business practices, products do not create offence/conflict in host country
