Global Marketing (Lecture #21) Flashcards
What are the four major trends that have had significant impact on global marketing?
- decline of Economic Protectionism.
- The Rise of Economic Integration
- A New Reality: Global Competition among Global Companies for Global Customers.
- Emergence of Networked Global Marketplace
describe decline of economic protectionism
creation of world trade organization (WTO) helped regulate trade
def. protectionism
shielding one or more industries from foreign competition through the use of tariffs and quotas.
def. tariff
: An entry tax on goods and services entering the country serve to raise prices of imported goods and services
def. quota
A quantitative restriction placed on the amount of products allowed to enter a country
describe the rise of economic integration
Economic integration has increased as countries have attempted to promote free trade and enhance their individual countries
-ex. EU, NAFTA, ASEANd
describe : Global Competition among Global Companies for Global Customers
global competition occurs when firms produce, and market their products and services worldwide
-different international entry modes, different strategies
def. strategic alliances
Refers to agreements amongst two or more firms cooperating for the purpose of achieving common goals such as competitive advantage or higher customer value creation
what does marketing competition take the form of with global companies?
- Global Marketing Strategy
- Multi-domestic Strategy
def. global marketing strategy
refers to the practice of standardizing, or adapting, activities when there are cultural similarities and adapting when they are dissimilar.
def. multi-domestic strategy
refers to firm’s marketing strategy adapted for each country-market (i.e., many different program variation, brand names, and advertising programs in countries, in which a firm does business in their markets)
What are the components of international cost structure
- logistics cost (come from supply chain and firm)
- exit costs (come from international channels)
- international distribution regulations and costs (international channels)
- entry requirements and cost of compliance (international channels)
- competitive and local marketing costs (from host country)
describe the distribution channel in global marketing
- seller
- seller’s international marketing headquarters
- channels between nations
- channels within foreign nations
- final consumer
What are the four broad international entry options?
- exporting
- licensing
- joint venture
- direct investment
def. exporting
when a company produces products in one country and is selling and marketing them in another country
(low risk, low commitment, short time, low to no capital required, low info)
def. indirect exporting
ideal for small firms with no overseas contacts but wants to market abroad
very quick, low profit, low info
def. licensing
is a contractual agreement, by which a firm allows another firm to use its brand name, patent, trade secret, or other properties for a royalty fee
(low control, medium risk, no to low capital)
E.g., Tim Hortons, Starbucks, McDonalds.
def. joint venture
an arrangement through which a foreign company and a local firm invest jointly together to create a local business, sharing ownership, control, and profits of the new company
Sharing % of capital and control, profits and risks
def, direct investment
when a domestic firm invests and owns a foreign subsidiary or division in another country
full $, risk, profits
What four categories do advantages and disadvantages of entry modes fall into?
1) Resource requirements (or Commitments),
2) Risks levels,
3) Controls
4) Returns (profits)
adv/disadv of exporting
the most flexible and least risky
adv/disadv Licensing and Franchising’s
risk exposures, controls and resource requirements are moderate
adv/disadv Joint ventures (JVs),
resource requirements, risks and controls (and profits) are shared – minority and Majority positions (less, equal or more than 50%).
adv/disadv Foreign Direct Investments (FDI)
will require the highest resources, provides full control and highest risks, controls and profits.
adv/disadv Collaborative Arrangements
may or may not involve investments
In order of least profit potential to highest profit potential, list the global market-entry strategies
- exporting
- licensing
- joint venture
- direct investment
in order of least amount of firm’s financial commitment, risk, and marketing control, list the gobnal market-entry strategies
- exporting
- licensing
- joint venture
- direct investment
def. global brand
when the same brand marketed – the same name – in multiple country-markets with similar and centrally coordinated marketing program
def. global consumers
refer to groups of consumers living in different markets with similar needs and wants and seeking similar benefits
describe emergence of networked global marketplace
Internet technologies are tools for exchanging goods, services and information on a global scale. More than two billion users are using the Internet and more than 10% of world trade is involved.
the increasingly global marketing serve customers that are _________, __________, and _________
serve customers that are everywhere, need to be served any time, and at lower costs
what do global companies strategies for matching their products and promotion efforts to global markets focus on?
whether a company EXTENDS or ADAPTS its product and promotion message for consumers in different countries
describe product extension
virtually the same products in other countries
– e.g., Razors, Motorcycles, Cell phones).
describe product adaptation
changing the product in some ways to make them more appropriate to other country-markets
– e.g., food flavours, cosmetics for skin cares, etc
describe product invention
designing products to satisfy the unmet, yet common customer needs, or needs of special groups (niches)
describe the 5 product strategies in product emphasis and promotion emphasis
- Product extension strategy (same product, same promotion)
- Communication adaptation strategy (same product, adapt promotion)
- product adaptation strategy (adapt product, same promotion)
- dual adaptation strategy (adapt product, adapt promotion)
- product invention strategy (create new product, either promotional strategy)
describe the communication process/cycle in international marketing
- source (home country)
- encode (home country)
- Channel of message communication/noise (between countries)
- decode (host country)
- receiver (host country)
- response (feedback loop)
- feedback (feedback loop)
who is the sender?
firm with an offering (product or service)
what is the message?
firm’s message translated into ‘market’ language
what is the channel or medium
- mass communication media
- personal selling (word of mouth)
what is the receiver (audience)
potential customer
what is feedback
sales, positive brand recall, etc
what is noise
- competitor communications
- distractions, etc.
what factors influence the communication situation
- language differences
- economic differences
- sociocultural differences
- legal/regulatory differences
- competitive differences
describe distribution strategy in the international market
Distribution includes the availability and quality of retailers and wholesalers as well as transportation, communication, and warehousing, is often determined by a country’s stage of economic development. Distribution is often a serious problem in developing countries.
describe pricing strategy in the international market
is a complex process in global marketing. Pricing too low or too high in global marketing can have dire consequences.
def. dumping
when a firm sells a product in a foreign country below its domestic price or below it actual cost
**illegal mostly
def. grey market
also called parallel importing, is when price disparities lead to unauthorized channels of distribution imports
how can you create understanding between countries?
-creating a common field of experience
What framework can be used to think of the competitive advantage of a nation?
Porter’s National Diamond
What are the four key conditions that affect a nation’s competitive advantage (four parts of the national diamond)?
- Demand Conditions
- Factor conditions
- related supporting industries
- Company strategy, structure, and rivalry
describe demand conditions
refers to the characteristics of a nation’s markets in terms of size and sophistication of the local customers for a product and services, which in turn force the industry to become more competitive
describe factor conditions
refers to a nation’s ability to turn its natural resources into a competitive advantage
describe related supporting industries
industries refers to the cluster of suppliers assisting an industry to achieve world class status
describe company strategy, structure, and rivalry
refers to company governance and industry competitiveness enhance firms’ and industries’ competitiveness
What are the 6 major decisions/tasks in international marketing?
- Examining the global marketing environment
- deciding whether to go international
- deciding which markets to enter
- deciding how to enter the market
- deciding on the global marketing program
- deciding on the global marketing organization
describe how the cultural environment might be different in different countries (general)
Countries have different:
- Folkways
- Norms
- Taboos
describe potential cultural differences in terms of business behaviour
- Personal distance
- Direct vs. diplomatic
- Lack of promotion
- Meeting and greetings
def. cultural diversity
Marketers must be sensitive to the cultural underpinnings of different societies. A necessary first step in this process is cross-cultural analysis
def. cross-cultural analysis
involves the study of similarities and differences among consumers in two or more nations or societies
what does a thorough cross-cultural analysis involve an understanding of?
- values
- customs
- cultural symbols
- language (verbal and non-verbal)
def. values
personally and socially preferable modes of conduct or state of existence that persist
def, customs
norms and expectations about the way people do things in a specific country
cultural symbols
things that represent ideas and concepts
def. back translation
translating back to detect errors.
cultural ethnocentricity
viewing own cultural values favourably
consumer ethnocentrism
to think buying foreign goods is inappropriate
What four things should a scan of the global environment include?
1) a comparative analysis of the economic development in different countries,
2) an assessment of the economic infrastructure in those countries,
3) A measurement of consumer income in different countries, and
4) Recognizing the impact of a country’s currency exchange rates
list different stages of economic development
Developed, Developing – Industrialized and industrializing;
Private Enterprise and infra-structure development
def. economic infrastructure
: Economic, Financial, transportation, Communication, health and welfare infra-structure
deef. consumer income and purchasing power
Per Capita income as indicator
def. microfinance
small loan, collateral free loan
def. political-regulatory climate
Political Stability; Trade Regulations and Restrictions
