Lecture 6-7 (Marketing)

Question 1

Adaptation

Answer 1

Adaptation refers to firm efforts to modify elements of the international marketing program to accommodate specific customer requirements in a particular market.

Question 2

Standardization

Answer 2

Standardization refers to firm efforts to make the marketing program elements uniform, with a view to targeting entire regions of countries, or even the global marketplace, with a similar product or service.

Question 3

brand

Answer 3

A brand is a name, sign, symbol, or design intended to identify the firm’s product and differentiate it from those of competitors.

Question 4

Rigid cost-plus pricing

Answer 4

Rigid cost-plus pricing: setting a fixed price for all export markets. Management simply adds a flat percentage to the domestic price to compensate for the added costs of doing business abroad. The export customer’s final price includes a mark-up to cover transporting, as well as profit margins for intermediaries and the manufacturer.

Question 5

flexible cost-plus pricing

Answer 5

flexible cost-plus pricing: Management includes any added costs of doing business abroad in its final price. Prices are adjusted to accommodate local market and competitive conditions, such as customer purchasing power, demand, and competitor prices.

Question 6

incremental pricing

Answer 6

In highly competitive markets, the firm may set prices to cover only its variable costs, not its fixed costs. This is known as incremental pricing. Management assumes that fixed costs are already paid from sales of the product in the firm’s home country.

Question 7

International price escalation

Answer 7

International price escalation refers to the problem of end-user prices reaching exorbitant levels in the export market caused by multi-layered distribution channels, intermediary margins, tariffs, and other international customer costs.

International price escalation may mean that the retail price in the export market may be two or three times the domestic price, creating a competitive disadvantage for the exporter.

Question 8

Transfer pricing

Answer 8

Transfer pricing refers to the practice of pricing intermediate or finished products exchanged among the subsidiaries and affiliates of the same corporate family located in different countries.

When Ford’s factory in South Africa sells parts and components to the Ford manufacturing plant in Spain, it charges a transfer price for this intra-corporate transaction.

Question 9

profit repatriation

Answer 9

bringing earnings back to home country

Question 10

Global Ad Agencies

Answer 10

global ad agency also has offices in the target market.

vs. home-country-based agency with international expertise, a local agency based in the target market

Question 11

Global account management (GAM)

Answer 11

Global account management – servicing a key global customer in a consistent and standardized manner, regardless of where in the world it operates.