Part IV (Ch 14 + 15) Flashcards
What are the 3 p’s?
- Participants (People)
- Physical evidence
- Process
What does participants encapture?
Human actors who play a part in service delivery (employees and customers who buy the service / other customers in the environment)
What does physical evidence encapture?
Tangible clues offered to customers to asses the quality of the service provided (physical environment)
What does process encapture?
The process involved in providing a service to the customer; procedures, mechanism, and flow of activities by which a service is acquired and delivered
What is market standardization?
The undifferentiated use of the marketing mix for all countries
What is market adaption?
Adapting the marketing mix to fit the different countries?
What are three factors that provide vast opportunities for marketing standardization?
- Globalization of markets
- Globalization of industries
- Globalization of competition
The standardized marketing concept can be characterized by two features, which two?
- standardized decision-making process
* individual elements of the 4ps that can be unified
What are factors favoring standardization? (6)
- Economies of scale in research and development, production and marketing
- Global competition
- Convergence of tastes and consumer needs
- Centralized management of international operations
- A standardized concept is used by competitors
- High degree of transferability of competitive advantages from market to market
What are factors favoring adaption? (6)
- Local environment-induced adaption: sociocultural, economic, and political differences
- Local competition
- Variation in consumer needs
- Fragmented and decentralized management with independent country subsidiaries
- An adapted concept is used by competitors
- Low degree of transferability by competitive advantages from market to market
What are the 3 levels of a product?
- Support services
- Product attributes
- Core product benefits
Which of the 3 levels of a product is the easiest to standardize?
Core product benefits
What 4 features are services characterized by?
- Intangibility
- Perishability
- Heterogeneity
- Inseparability
What does intangibility mean?
Buyers of services can not claim ownership of anything tangible in the traditional sense
What does perishability mean?
Services cannot be stored for future use
What does heterogeneity mean?
Services are rarely the same because they involve interaction between people
What does inseparability mean?
Time of production is very close to or even simultaneous with the time of consumption
What does a service-dominant logic represent?
It represents a broader perspective of markets compared with traditional perspectives of markets that focus on the exchange of goods
What are the 3 categories of service?
- People processing
- Possession processing
- Information based services
What are the characteristics and examples of people processing?
Customers become part of the production process. The service firm needs to maintain local geographic presence
e.g. education, passenger transport, healthcare, food service, lodging service (hotel)
What are the characteristics and examples of possession processing?
Involves tangible actions to physical objects to improve their value to customers. The object needs to be involved in the production process, but the owner of the object does not. A local geographic presence is required.
e.g. car repair, freight transport, equipment installation, laundry service
What are the characteristics and examples of information-based services?
Collecting, manipulating, interpreting, and transmitting data to create value. Minimal tangibility. Minimal customer involvement in the production process.
e.g. telecommunication services, banking, news, market analysis, internet services
What are e-services?
a business activity of value exchanges that is accessible through electronic networks, which include the internet and mobile networks. It involves distributing and personalizing resources in real-time over the internet.
What is cloud computing?
A general term for anything that involves delivering hosted services over the internet. In cloud computing, the word cloud is used as a metaphor for ‘the internet’
What does PLC stand for?
Product Life Cycle
What is a PLC?
It concerns the life of a product in the market with respect to business/commercial costs and sales measures. It is a theory in which products or brands follow a sequence of stages
What are the stages of the product life cycle?
Introduction
Growth
Maturity
Decline
What is the time to market?
The time it takes from the concept of an idea until it is available for sale
What are the 3 reasons that a fast time to market is important?
- Competitive advantage
- Premium prices
- Faster break-even and lower financial risk
What are the limitations of the product life cycle?
- Misleading strategy prescriptions
- Fads (trends that peak quickly and decline quickly)
- Unpredictability
- Levels of PLC (you can look at the PLC on different levels)
What is product life cycle recycling exist out of?
- Product improvement
- Reposition of the product
- Reach of new users
- Promote more frequent use of the product
- Promote new uses of the product
What are the two approaches for expanding the PLC to international markets?
- The international PLC (production takes place in innovative countries and moves to advanced and less advanced countries)
- PLC’s across countries (due to different economic levels in different countries, a specific product can be in different PLC stages in different countries)
What is crowd-sourcing?
A company or institution that takes a function once performed by employees and outsources it to an undefined and large community of people in the from of an open call
What are the 5 communication/promotion modes for products?
- Straight extension
- Promotion adaption
- Product adaption
- Dual adaption
- Product invention
What is straight extension?
Involves introducing a standardized product with the same promotions strategy throughout the world market. Can make major savings on market research and product development
What is promotion adaption?
Leaving a product unchanged but fine-tuning promotional activity to take cultural differences between markets into account
What is product adaption?
Modifying only the product, maintaining core product functions in different markets (e.g. electrical appliances are modified to cope with different voltages in different countries)
What is dual adaption?
Adapting both the product and the promotion for each market
What is product invention?
Products are specifically developed to meet the needs of individual markets. Usually adopted by firms from advanced nations, supplying to less-developed countries
What is the country of origin effect?
The country where the product has been made has a considerable influence on the quality perception of the product
What are the 4 functions of branding?
- To distinguish a company’s offering and differentiate the product from competitor’s
- To create identification and brand awareness
- To guarantee a certain level of quality and satisfaction
- To help with promotion of the product
What is the goal of branding?
to create new sales and customer loyalty
What is a private label?
this is the retailer’s own brand and is becoming more important and slowly becoming a brand of its own.
Private labels have undergone a deep transformation evolving from a low-price/low-quality image to competing in some categories with strongest brands in the market
What is co-branding?
Form of cooperation between two or more brands which can create synergies that create value for both participants, above the value they would expect to generate on their own
What is ingredient branding?
The supplier delivers an important key component to the final marketer
What is multiple branding?
Market several brands in a single market. Based on assumption that the market is heterogeneous and consists of several agreements
What is a long tail strategy?
Refers to a graph that shows that not many units of a specific product are sold but there are a lot of different kinds of products eventually also resulting in profit
Which factors influence international pricing decisions?
- Firm-level factors
- Product factors
- Environmental factors
- Market factors
What are examples of firm-level factors that influence the international pricing decision? (3)
- International pricing is influenced by past and current corporate philosophy
- Country of origin
- Pricing power, the ability to charge a higher price than the competitor without losing demand
What are examples of product factors that influence the international pricing decision? (3)
- Unique and innovaitve feautures
- Availability of substitutes
- Stage of PLC
What is price escalation?
All cost factors in the distribution channel add up and lead to price escalation. The longer the distribution channel, the higher the final price in the foreign market
What are 4 things you can do to counter price escalation?
- Rationalizing the distribution process
- Lowering export price from factory
- Establishing local production of the product
- Pressurizing channel members to accept lower profit margin
What are examples of environmental factors that influence the international pricing decision? (3)
- Government controls: tariffs, quota
- Government price controls on specific products related to health, education, food, and other essential items
- Exchange rate fluctuation
What is an oligopoly?
A market structure characterized by a small number of sellers who control the market
What is a monopoly?
The market only has one seller that has control over the entire market
What 3 international pricing strategies are there?
Skimming
Market Pricing
Penetration pricing
Which of the 3 pricing strategies leads to the lowest price?
Penetration pricing
What is price skimming?
Achieving the highest possible contribution in a short time
What is market pricing?
Used when similar products already exist in the target market, you match your price to that of the competitor
What is a retrograde calculation?
When the firm uses a reversed price escalation to calculate backward (from market price) to the necessary net price
What is penetration pricing?
Lowering your price so much so there is a big boom in your sales
What is experience curve pricing?
Combination of the experience curve with typical market price development in an industry
Price changes follow changes in the PLC
What is a loss leader?
A product priced below cost to attract consumers who may then make additional purchases
What is the buy-in/follow-on strategy?
This is the case when two products are linked together. the original product item is priced very low in order to get customers in and try the product and the follow-up product is priced a lot higher
What is freemium pricing?
Here a product or service is provided free of charge but money is charged afterward for more advanced features or better functionality
What is product-service bundle pricing
Bundling products and services together in a system-solution product.
Two different ways of pricing across countries are?
- Price standardization
* Price differentiation
What is subscription-based pricing
Refers to an e-business that provides periodic delivery of a customized box of merchandise or services directly to the customer’s home for a subscription gee or sometimes it is also for digital services
What are the 5 subscription pricing strategies?
- Attract customers through freemium strategy
- Create a transparent multiple edition strategy
- Upsell/upgrade the subscription strategy
- Pay-for-use strategy
- Base-line strategy
What are the 4 prototypes of international strategic behavior?
- The local price follower firm
- The global price follower firm
- The multi-local price setter firm
- The global price leader firm
What is the local price follower firm prototype?
Here a firm has limited experience and the local export intermediate will serve as a key informant. Intermediate may mislead exporter and exporter will follow a pricing procedure based on internal cost information
What is the global price follower firm prototype?
The firm has limited preparedness for internationalization but is motivated in expanding their market, as they are ‘pushed’ by global market. Firms are compelled to adopt the price level set by global market leaders and are under pressure from more global experienced companies to adjust their prices
What is the multi-local price setter firm prototype?
Well-prepared international firms with well-entered positions and a deep understanding of the local markets. They are the pricing leaders that base their pricing strategy on local market conditions in each market.
What is the global price leader firm prototype?
Firms have a strong position in the world market and compete against a limited number of competitors. They maintain relatively high price levels in their markets.
What is a global-pricing contract?
Here the customer requires one global price from the supplier for all its foreign strategic business units and subsidiaries
What is transfer pricing?
Prices are charged for the intra-company movement of goods and services. While transfer prices are internal to the company they are important externally for cross-border taxation purposes
What are 3 basis approaches to transfer pricing?
- Transfer at cost
- Transfer at arm’s lenght
- Transfer at cost plus
What does transfer at cost mean?
Transfer price is set at the level of the production costs and the international division is credited with the entire profit that the firm makes
What does transfer at arm’s length mean?
The price that subsidiary has to pay under the condition of perfect competition
What does transfer at cost plus mean?
Profits are split between production and international divisions
What is dynamic and time based pricing?
Offers deals tailored for individual customers, test and change prices over time based on customer preferences
Which 3 ways of implementing price strategies are there?
- Fixed price mechanism
- Auction mechanism
- Negotiated price mechanism
What does the letter of credit term of payment mean?
The bank agrees to pay a specified amount of money on the presentation of documents stipulated in the letter of credit (e.g. bill of lading, invoice, description of goods)
What do documents against payment mean?
The buyer must make a payment for the face value of the draft before receiving documents conveying the title to the merchandise
What do documents against acceptance mean?
Credit is extended to the buyer based on the buyer’s acceptance of the draft calling for payment within a specified time and place
What is an open account?
An exporter ships goods without documents calling for payment other than the invoice. The buyer can pick up the goods without having to make payment first
What is consignment?
Exporter retains title of goods until the importer sells them. Great financial burden and risk of exporter
What are commercial banks?
Overdraft facilities with the exporter’s own bank
What is export credit insurance?
Insurance for political and commercial risks through governmental export credit agencies or private insurers
What is factoring?
Selling export debts for immediate cash; exporter shifts problem of collecting payment over to organizations that specialize in export credit management and finance
What is bonding?
written agreement issued to an overseas buyer by an acceptable third party
What is leasing?
Exporter receives prompt payment for goods directly from the leasing company
What is counter-trade?
Seller provides buyer with goods and agrees to reciprocal purchasing obligation with buyer in terms of an agree percentage
