Global Marketing (2.1, 2.2) Flashcards
World Trade
Flow of goods and services around the world
Counter Trade
Goods are paid for by items instead of with cash
Issues to consider when going global
1) Stay or go?
2) If go, where?
3) level of commitment
4) Marketing mix strategies
Should you stay or go considerations.
Domestic Demand and growth in foreign demand.
General Agreement on Tariffs and Trade (GATT)
Established by the U.N. to reduce import tax levels and trade restrictions
World Trade Organization
Provides Legal foundations for international trade
3 types of Protectionism
Quotas, Embargo, Tariff
Import Quotas
Limitations set by the country on the amount of product allowed to enter a country
Embargo
An extreme quota that prohibits commerce trade with a specific country
Tariff
Tax imposed on imported goods
Environment Issues to consider when entering a foreign market. (PEST+C)
Political/Legal, Economic, Technological, Sociocultural, Competitive
Economic Enviornment
Overall health and development as well as the current stage in the business cycle
GDP
Total value of goods and services a country produces within its borders in a year
GNP
Value of all goods and services produces inside or outside its borders in a year
Forex Rate
The price of a nations currency in terms of another.
Least developed
Agricultural, inexpensive, export of raw materials.
Developing
Agricultural to industrial
Developed
Industrial + services
Bottom of Pyramid (BOP)
Living off less than $2 a day
Business Cycle
Prosperity, Recession, Recovery, Depression
Product competition
Different products but same need
Brand competition
Similar products to satisfy needs and wants
Monopoly
One seller controlling all of market
Oligopoly
Small number of sellers control a big market
Monopolistic Competition
Many firms offering slightly different products/benefits with a small share each
Perfect competition
Many sellers offering the same products
Nationalization
When a government seizes private assets without reimbursing foreign firm
Expropriation
When a government seizes private assets but reimburses the owners
Local content rules are a form of?
protectionism
Examples of political and legal environment laws that are relevant to marketers
- Food and drug protection
- False advertising
- Honest labeling
- Consumer warranty protection
- Saftey standards
- Enviornmental
- Child advertising limits
Collectivist Cultures
Cultures where people’s personal goals are formed for the good of the community
Individualist Culture
People’s goals in line with themselves and not the greater community (USA)
Ethnocentrism
The Belief that ones nation is superior
Consumer Ethnocentrism
The belief that products of their own country are superior
Exporting in a foreign market
Using a merchant that knows the market (Low risk)
Contractual Agreement
Ask a firm to produce and market the product. (Lowers barrier to entry but risk of losing control)
Franchising
Partner runs the brand at that location (Risks of inconsistent quality)
Strategic Alliance
Relationship with another company(s) to sell together. (low barrier to entry)
Direct Investment
Buying a company in the host country and taking over with your brand
Standardization
Keeping the product the same due to universal needs
Localization
Tailoring products and promotional messages to local environments
Straight extension strategy
Same product in domestic and foreign (Standardization)
Product Adaptation Strategy (Localization)
Similar but slightly modified for location (sugar content USA vs Asia)
Product Invention Strategy (Localization)
Firm develops a new product for a foreign market
Backward invention (Localization)
Made for a location that needs a less advanced product because of poor infrastructure
Ethnocentric Pricing
Same price around the globe
Polycentric Pricing
Local partner will set the prices based on their market understanding
Geocentric pricing
Creates a global price floor
Free Trade zones
Designated areas where foreign companies can store goods without paying customs or taxes
Grey Market goods
Items made outside a country and then imported without consent of the trademark holder (mostly over internet) (TEMU)
Dumping
Intentionally lowering prices to gain foreign market share.
Ethical Issues for Global Business
Bribery and Extortion
