Week 9 Flashcards
More stable and predictable in demand
Basic products
Higher stock keeping units (SKUs), between 60-80%
Basic products
More competition
Lower profit margin
Less forecast error
Less likely to become obsolete quickly
Basic products
Less stable and unpredictable in demand
Fashion products
Lower stock keeping units (SKUs), between 20-40%
Fashion products
Less competition
Higher profit margin
More forecast error
More likely to become obsolete quickly
Fashion products
Higher overstock or out-of-stock situations
Higher markdown towards end of season
Fashion products
The ‘old’ version of luxury: exclusive, expensive, best quality, self-indulgent, conspicuous, tangible, overt
Materialism
Emphasis on quality of life, experiential, personal, authentic, subtle/convert materialism
Enrichment
The value of relaxing and destressing from the pace of everyday life, focus on self-development and quality of life, intangible, non-material
Time
Concept becoming increasingly fragmented and individual. Now more experiential rather than being rooted in materialism. Customers increasingly choose these items.
The massification of luxury
As this concept changes, the role of price becomes less clear and time and experience become more important factors. The challenge is to connect emotionally with customers and emphasize the experience they will have.
The massification of luxury
Assessing products and foreign markets: choosing the target product and market
Element of International Market Entry Strategy
Setting objectives and goals
Element of International Market Entry Strategy
Choosing the entry mode: export, contractual arrangement, or investment
Element of International Market Entry Strategy
Designing the marketing plan: price, promotion, distribution, etc.
Element of International Market Entry Strategy
Control system: monitoring operations/revising entry strategy
Element of International Market Entry Strategy
Target country market factors
Target country environmental factors
Target country production factors
Home country factors
External Factors in the Entry Mode Decision
Company product factors
Company resource/commitment factors
Internal Factors int he Entry Mode Decision
Direct exporting
Indirect exporting
Intra corporate transfer
Non-Equity Mode Exporting
Manufacturers export agents
Export commissions agent
Export merchants
Indirect Exporting
Piggybacking
Wholly-Owned Subsidiaries
Exporting: Turnkey Project
Licensing and Franchising (Non-Equity Mode)
Wholly-Owned Subsidiaries
Joint Ventures
Mergers and Acquisitions
Strategic Alliances
Equity Based Mode of Entry
Pooling alliances
Trading alliances
Strategic Alliances
Similarity and integration
Pooling Alliances
The contribution of dissimilar resources
Trading Alliances
Collective and distinctive knowledge and skills an organization has.
Core competencies
An organization’s ability to integrate a variety of specific technologies and skills in the development of new products and services.
Core competencies
The skills that enable a business to deliver a fundamental customer benefit.
Core competencies
Core competencies manifest in core __________ that serve as a link between the competencies and the end product.
Core products
Once a company has successful core _________, it can expand the number of uses in order to gain a cost advantage via economies of scale and economies of scope.
Core products
Financial (profit, balance of equity, return of capital, economic value added)
Measure of Performance
Customer (satisfaction, retention, profitability, market share, acquisition)
Measure of Performance
Internal Business Process (quality, response time, cost, new product launch time)
Measure of Performance
Organizational Learning and Growth (employee satisfaction, worker productivity)
Measure of Performance
Strategy:
Product customized for each market
Decentralized control- local decision making
Effective when large differences exist between countries
Multi-Domestic Strategy
Strategy: Product differentiation, local responsiveness, minimized political risk, minimized exchange rate risk
Advantages of Multi-Domestic Strategy
Strategy:
Product is the same in all countries
Centralized control- little decision-making authority on the local level
Effective when differences between countries are small
Global Strategy
Strategy: Cost, coordinated activities, faster product development
Advantages of Global Strategy
Strategy:
Products available before competition
Strong applied research capability needed
Can set high price to skim market or set lower price to gain market share
First-to-Market Strategy
Strategy:
Quick imitation of first-to-market companies
Less emphasis on applied research and more emphasis on development
Learn from first-to-markets mistakes
Second-to-Market Strategy
Strategy:
Wait until market becomes standardized and large volume demanded
Compete on basis of costs instead of product features
Research efforts focus on process development versus product development
Late-to-Market Strategy (Cost Minimization)
Use domestic approach worldwide.
Ethnocentric
Customize product to meet needs of local market
Polycentric
Use a standardized approach worldwide
Geocentric
The firm adopts a standard price for its products, regardless of where they are sold.
Standard price policy (Geocentric)
The firm sets one price for domestic sales and a second price for international sales. Often used by firms that are new to international markets.
Two-Tiered Pricing (ethnocentric)
The firm changes the profit-maximizing price in each market, that is, the firm sets:
marginal revenue=marginal cost in each market.
Market Pricing (polycentric)
High rate of new product introduction.
Price cutting as a strategy to maintain or regain market share.
Increased availability of bargain-priced dealer and generic brands.
More efficient and better-informed buyers/customers.
Factors influencing price setting
Profit maximization
Satisfactory profits
Target Return on Investment (ROI)
Profit-Oriented Pricing Objectives
Market Share
Sales Maximization
Sales-Oriented Pricing Objectives
Maintain existing prices
Meet competitions prices
Status Quo Pricing Objectives
Standard Price, two-tier price and market price
International Pricing Strategies
How do you negotiate the best terms of sale? (3)
Discounts
Shipping Charges
Dating and Payment terms
Trade, Quality and Seasonal __________
Discounts
The price the manufacturer or retailer pays or the list price minus the trade discount
Net Price
A per cent of the list price
Discount
Rate x List Price =
Trade Discount
List Price - Trade Discount
Net Price
EOM Terms
End-Of-Month
ROG Terms
Receipt of Goods
A cash discount is allowed when the bill is paid within the specified number of days from the _____________, not from the date of the invoice.
ROG Terms
A payment that does not equal the full amount of the invoice less any cash discount.
Partial Payment
A cash discount applied only to the amount of the partial payment.
Partial Discount
The sum of the partial payment and the partial discount.
Amount Credited
The invoice amount minus the amount credited
Outstanding Balance
Freight on Board or Free on Board
FOB
Two or more independent brands combined into a new joint product or service.
Co-branding
Involves two or more brands, both with significant customer recognition.
Co-branding
All participating brand names are retained.
Medium to long term duration.
Co-branding
The net value creation potential is not large enough to justify developing a new brand and/or joint legal venture.
Co-branding
Reach Awareness
Values Endorsement
Ingredient co-branding
Complementary
Co-branding Format
- Increase sales due to either expansion in current market or access to new geographical or sector markets.
- Enhanced benefits for consumers
- Lend credibility to the other brand
- Share expensive promotional costs with a partner
- Access to cutting edge technology
- Decreased cost of entering new markets
- Limit the risk of entering a new product category in which consumers may question the firms expertise
Advantages of Co-branding
- Trying to combine incompatible corporate personalities
- Overextending a brand to sectors far removed from where the brand’s reputation lies
- The effect of one partner repositioning its original brand
- Financial Difficulties for either partner
- Failure to meet co-branding targets
- The dilution or loss of distinctive features of one of the ingredient brands
Disadvantages of Co-branding
Unlike the traditional character licensing model which deals with a short timescale, this license tends to be for an average term of four to seven years.
Brand Extension
- Intensify the brand image and enhanced the equity in a brand.
- Low investment. The cost for launching a new brand in consumer markets is very high.
Advantages of a Brand Extension
- Risk of diluting the brand image or brand equity
- Rather than adding sales to the total brand, a brand eats into existing sales
- The risk of giving out a negative or confusing message about the original brand
Disadvantages of a Brand Extension
- From consumers to people
- From product to experience
- From honesty to trust
- From quality to preference
- From notoriety to aspiration
- From identity to personality
- From function to feel
- From ubiquity to presence
- From communication to dialogue
- From service to relationship
10 Commandments of Emotional Branding
