Part 3 (New material) Chapters 8-12 Flashcards
Define globalization in a business context
• The process by which goods, services, capital, people, information, and ideas flow across national borders
What are three major economic factors that marketers use to assess global markets?
• GDP, PPP, per capita income
Define trade deficit and trade surplus.
- Trade Deficit: the country imports more than it exports
* Trade Surplus: the country exports more than it imports
What is GDP and why can it be an important metric for firms when considering global expansion?
Gross domestic product; the market value of the goods and services produced by a country in a year
What is per capita income and why can it be an important metric for firms when considering global expansion?
• Per capita income: the overall income of a population divided by the number of people included in the population
What is the Big Mac index and why is it useful for companies?
• Local currency under/over valuation against the dollar as a percentage
What is infrastructure, and why is it important for companies to consider it when expanding?
• Infrastructure: the basic facilities, services, and installations needed for a community or society to function; includes transportation, communication systems, water and power lines, and public institutions.
Define the following terms: tariffs, dumping, quotas, boycott, and trade agreements.
• Tariffs (duties): a tax levied on a good imported into a country
o meant to make imported goods more expensive and less competitive with domestic products
• Dumping: when a foreign producer sells its offering in a foreign market at a price less than its production costs to gain market share
• Quotas: designate the maximum quantity of a product that may be brought into a country during a specific time period
o Products and services (in terms of visas)
• Boycott: a group’s refusal to deal commercially with an organization to protect against its policies
• Trade agreements/trading blocks: an intergovernmental agreement designed to manage and promote trade activities for a specific region
List and define each of Hofstede’s cultural dimensions.
• Dimensions along which cultural values could be analyzed
• Power Distance: willingness to accept social inequality as natural
o “The dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us.”
• Uncertainty Avoidance: the extent to which the society relies on orderliness, consistency, structure, and formalized procedures of daily life
o “It has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen?”
• Individualism: perceived obligation to and dependence on groups
o “It has to do with whether people’s self-image is defined in terms of “I” or “we”.”
• Masculinity: the extent to which dominant values are male oriented. Lower = men and women are treated equally, higher = male dominated positions of power
o “A high score (masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the “winner” or “best-in-the-field.”
o “A feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable.”
• Time orientation: short- versus long-term orientation. A country that tends to have a long-term orientation values long-term commitments and is willing to accept a longer time horizon for something to occur
o “Closely related to the teachings of Confucius and can be interpreted as dealing with society’s search for virtue, the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view.”
What are the five global entry strategies we discussed in class? Which are risky, which are not risky? What are some qualities of each strategy?
• Exporting (low risk, low control): producing goods in one country and selling them in another
o Less costly
o Example: A firm receives orders from another country
• Franchising (low-moderate risk, low-moderate control): a contractual agreement between the firm (the franchisor) and another firm or individual (the franchisee). Allows the franchisee to operate a business using the name and business format of the franchisor.
• Strategic Alliance (moderate risk, moderate control): collaborative relationships between independent firms – they do not invest in one another
o Volkswagen and Suzuki – VW to the Asian market
o Cisco and Tata Consulting – expertise in the US and India
• Joint Venture (moderate-high risk, moderate-high control): when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared
• Direct investment (high risk, high control): requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often though the formation of wholly owned subsidiaries
We discussed three global product or service sales strategies. List them.
- Sell the same product or service in both home and foreign markets
- Sell a product or service similar to the one sold in the home market to the foreign market
- Sell totally new products or services
List and define the components of the acronym ‘STP’ (in a marketing context).
- Segmentation – “the who (will you target)”
- Targeting – “the how (will you target them)”
- Positioning – “the where (in the consumer’s mind)”
What are the five steps of the STP process?
- strategy or objectives
- Segmentation Methods
- Evaluate segment attractivness
- Select target market
- Identify and develop positioning strategy
Establish Overall Strategy: Derived from mission statement, SWOT, strategy map position
o Coca Cola’s objective is to increase sales in a mature industry
• Weakness: lack of successful product lines in emerging markets
• Identifying emerging markets leads to opportunities
• 2. Segmentation Methods: Separate the market into segments
o Find groups that are similar and dissimilar
o Example: carbonated beverage market
• Caffeinated
• Decaffeinated
• Regular (with sugar)
• Diet
• Cola
• Non-cola
o Each segment represents the benefits that consumers derive from the products
• 3. Evaluate Segment Attractiveness
• 4. Select Target Market
• 5. Identify and Develop Positioning Strategy
Define and provide an example of each of these methods for describing market segments: geographic, demographic, psychographic, geodemographic, benefits, behavioral.
• Geographic: organizes customers into groups on the basis of where they live
o Region (northeast, southeast)
o Areas within a region (urban, suburban, rural, state, city, zip code)
• Demographic: group consumers according to easily measured, objective characteristics such as age, gender, income, and education
o Kellogg’s cereal
• Cocoa Krispies and Froot Loops = children
• Special K and All-Bran = adults
• Psychographic: separates consumers by how they describe themselves; how people self-select based on the characteristics of how they choose to occupy their time (behavior) and what underlying psychological reasons determine those choices.
o A person has a strong need for inclusion or belonging
o A person considers themselves an innovator in a product category
o A person “marches to the beat of their own drummer”, and does not seek out approval of others
o Self-values: are goals for life, overriding desires that drive how a person wants to live their lives
o Self-respect, self-fulfillment
o Self-concept: the image people ideally have of themselves
o “Marketers market self-concept through communications that show their products being used by groups of laughing people who are having a good time”
o Lifestyles: the way we live, how we live our lives to achieve goals
o VALS: Value and Lifestyle Survey; most widely used psychographic tool
o Customers are classified into eight segments based on answers to a questionnaire
• Geodemographic: uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers
o “Birds of a feather flock together”
o PRIZM (Potential Rating Index by Zip Market) by Nielsen Claritas
o Tapestry by ESRI
o PRIZM – 66 geodemographic segments or neighborhoods, sorted on 60 characteristics
• Benefit: groups consumers on the basis of the benefits they derive from products or services
o Dividing the market into segments whose needs and wants are best satisfied by the product benefits
o Starwood (hotel and leisure):
• W Hotel: world class restaurants, bars and lounges, sparsely furnished rooms
• Element: appeals to clients requiring extended stay accommodations
• Behavioral: divides customers into groups based on how they use the product or service
o Occasion segmentation: based on when a product is purchased or consumed
