MKT 330- Final Exam Flashcards
6 Drivers of globalization
- Market access
- Market opportunities
- Industry standards
- Sourcing
- Products and services
- Technology
8 Benefits of global sourcing
- Cheaper labor
- Better quality
- Better technology
- Local access
- Economies of scale (High quantity of goods with low cost per unit)
- Lower taxes
- Lower logistics costs
- Consistent supply
Produce one product in home country, sell abroad
Ethnocentric
Produce a differentiated product in each country operating in
Polycentric
Produce a differentiated product in each region operating in
Regiocentric
Produce one product in many different countries and sell everywhere
Geocentric
2 Competitive pressures in the global marketplace
- Pressures for cost reductions: force the firm to lower unit costs
- Pressures to be locally responsive: require the firm to adapt its product to meet local demands
Pressures for cost reductions are greatest with… (4)
- Homogenized demand
- Globally active and low-cost competitors
- Powerful consumers with low switching costs
- Persistent excess capacity
Pressures for local responsiveness arise from… (5)
- Differences in customer tastes and preferences
- Differences in traditional practices and infrastructure
- Value of personalized customer service
- Differences in distribution channels
- Host government demands
4 strategies for cost and responsiveness
- global
- multi-domestic
- regional
- transnational
Global:
_____ ____ and profit growth by reaping the cost reductions from ___, ___, and ____
___ pressure to lower cost; ___ pressure for local responsiveness
Increase profitability; economies of scale, learning effects, and location economies.
high; low
Multi-domestic:
Increase profitability by _____ so that they match the________ in different national markets
___ pressure for local responsiveness; ___ pressure to lower cost
customizing goods or services; tastes and preferences
High; low
The difference between what you pay and what you would pay: higher cost, higher price, higher …
Net customer value
Regional:
___ are formulated for ___
___ pressure to reduce cost; ___ pressure to be locally responsive
Different strategies; each region;
low; low
Transnational:
Achieve low costs through _____, _____, & _____, and differentiate products across ____ ___ to account for local differences
___ pressure to reduce cost; ___ pressure to be locally responsive
location economies, economies of scale, and learning effects; geographic markets
high; high
Criteria for selecting a market entry strategy
- Size and financial resources of the company
- Existing foreign market involvement
- Nature and power of the competition
- nature of trade barriers & the product itself
4 market entry methods
- direct investment
- co-operative
- contractual exporting
- exporting
Company acquisition, wholly owned subsidiary, assembly operations
direct investment
(market entry methods)
Joint venture, strategic alliance
co-operative
(market entry methods)
Management contracts, sub-contracting, licensing, franchising
contractual exporting
(market entry methods)
Indirect Exporting
Foreign organization purchases the product for export to another country; smaller companies sell goods through larger trading companies
positive and negative of indirect exporting
Positive: Gives access to and limited knowledge of the international market
Negative: Little control over market entered
Direct Exporting
Exporting goods to foreign market
direct exporting positive & negatives
Positive: requires fewer resources, has little effect on existing operations, involved low investment and risk, organizations learn more from their buyers on what to produce, Most popular form of market entry
Negative: May be lower-cost alternative local manufacturers, high transport costs, tariffs and other trade barriers
Contractual exporting
Franchising
A type of business where a trademark is licensed, the system for operating the business, or the appearance of the location
franchising positive and negatives
Positive: Low risk, low cost, no trade barriers, no local costs
Negative: little control over franchisee
Contractual exporting:
Licensing
No direct investment where a part of the company is licensed for manufacturing overseas
Direct Investment: Greenfield Strategy
(better when firms needs to transfer organizationally embedded skills, routines, and culture)
Build a subsidiary from the ground up
Direct Investment:
Acquisition
Buy a subsidiary; buy their customers, management, and brand value
Co-operative strategies:
Joint Venture
Establish another business by joining with another company
Joint Venture Positive and Negatives
Positive: Countries may restrict foreign ownership, increases speed of entry, global R+D, costs & risks are shared
Negative: Differences in aims and objectives, one-sided, sharing profits
Co-operative strategies:
Strategic Alliance
Competitors join together
Strategic Alliance positive and negatives
Positive: Spreads costs, increase innovation, shared risk, government cooperation, market access
Negative: Differences in objectives & strategies, culture clash, commitment levels
Activities that provide some combination of time, location, form, or psychological value
Services
4 characteristics of services
- intangibility
- perishability
- heterogeneity
- inseparability
Services include both tangible and intangible elements
Intangibility
Services cannot be stored
Perishability
Services are rarely the same because they often involve interactions between different people with different expectations
Heterogeneity
The service is produced and the experience consumed simultaneously
Inseparability
3 additional p’s for services
People - Customers and staff
Process - The designed delivery process to provide a total customer experience
Physical aspects - Product displays, layout of store, logos, etc.
- Purpose
- Properties; quality
- Benefits; performance
- Positioning
- Consumer segment
- Fit in total market
- Delivery
7 Components of an international product offer
Factors affecting international product and service management
Towards standardization
Markets are becoming more homogenous, more identifiable international consumer segments; increase in number of firms moving towards globalization
Towards standardization
2 Reasons for standardization of the product
Cost - Firms can realize economies of scale and lower production costs
Complexity - Reduces management complexity
5 reasons for adaption of the product
- cultural factors
- usage factors
- legal standards
- product liability
- economic disparity
Difficult to standardize due to differences embedded in the history, religion, and culture of country
(reasons for adaption of the product)
Cultural factors
The same product may be used in different ways in different markets due to cultural, geographical factors such as climate and terrain
(reasons for adaption of the product)
Usage factors
Demands greater caution when introduction standard products based on the home country specification
(reasons for adaption of the product)
Product liability
Poorer economies may not be able to afford or use standard western products
(reasons for adaption of the product)
Economic disparity
Attribute brands
build confidence among customers (in situations where it is difficult for them to evaluate the difference between competitive products) based on your brands quality, specification, and performance
Aspirational brands
Create images in the minds of customers about the type of people who purchase the brand; convey the standards of values that the brand is associated with
Ex. Apple
Experience brands
Focus on a shared philosophy between the customer and brand and on a shared associations and emotions
Ex. Starbucks
Identification - reduces search costs
Quality assurance - reduces perceived risk
Prestige - increases psychological benefits
buyer
Identification - repeat purchases, promotions, loyalty
Differentiation - Premium pricing / higher sales
Coherent message - Segmentation, positioning
seller
Value proposition
A set of benefits that satisfy customer needs
Links between informational nodes and brand node in consumer’s memory; the strength, favorability, and uniqueness of brand associations are important in building brand equity
Brand associations
Country-of-origin effects
Influences that the country of manufacture, assembly, or design has on a consumer’s positive or negative perception of a product
Organizing your marketing into sub-groups:
Geographical
Demographic
Psychographic
Behavioral
Segmentation
Determining which segments to pursue or avoid determining emphasis to give to each segment
Targeting
Designing your offering so that it occupies a distinctive place in the minds of the segment’s customers relative to important needs and wants of these customers
Positioning
Positioning statement
For (target segment), the (concept) is (most important claim) because (single most important support)
6 Marketing Communication methods
- Advertising: Social media, paid, display, native
- Personal selling: Used to gain the first consumers
- Trade Shows: Exhibitions and trade fairs
- Sales promotions: Stimulates consumer purchases and improves retailer effectiveness
- Public relations: Creating a good relationship with the press
- Relationship management: Overall process of building and maintaining profitable customer relationships
- Offline advertising
- TV and radio
- Product placement
- Outdoor
- Direct mail
6 Communication tools
Standardize with internationally well-known principles and adapt when there are high cultural differences between markets
International marketing communications strategy
