MARK 3000 Final-- McManus

Globalization

process by which goods, services, capital, people, info, and ideas flow across national borders

Assessing Global Markets

Economics
Infrastructure and tech
Government actions
sociocultural factors

Economics

GDP, GNI, purchasing power parity, market size and population growth rate

GDP

measuring value of products and services created there

GNI

consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy)

Purchasing power parity

a theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other, if expressed in the same country

Weak dollar

means greater demand for their products in foreign countries because they can sell it at a lower proce

Big Mac Index

purchasing power parity

Market size and population growth rate

there are millions of people and growing, but the population has never been equally dispersed

Infrastructure

the basic facilities, services, and installations needed for a community or society to function, such as transportation and communication systems, water and power lines, and public institutions such as schools, post offices, and prisons

Transportation

trains, roads, refrigeration, airports

Communication systems

media access, must be sufficiently developed to allow consumers to find information about the products and services available in the marketplace

Distribution channels

must exist to deliver products in a timely manner and at a reasonable cost, some are high tech, some load things onto donkey carts

Commerce

legal, banking, and regulatory systems, allows markets to function

Gov't actions

quota
tariff
exchange control
trade agreement
trading bloc
ease in doing business

Quota

designates a minimum or maximum quantity of a product that may be brought into a country during a specified time period
- reduces availability of imported goods

Tariff

a tax levies on a good imposed into a country; also called a duty
- artificially raises prices, makes imported goods and more expensive and less competitive with domestic goods
- lowers demand for imported goods

Quotas and tariffs

both benefit domestically made products because they reduce foreign competition

Exchange control

regulation of a country's currency exchange rate

Trade agreement

intergovernmental agreement designed to manage and promote trade activities for specific regions

Trading bloc

consists of those countries that have signed a particular trade agreement

EU

- 28 member countries
- standardized currency
- regulation
- trade practices

NAFTA

- US, Canada, Mexico
- item produced in any is treated as domestic in all

Ease in doing business

- ownership policies
- political stability
- desire for foreign business

Culture

the shared meanings, beliefs, morals, values, and customs of a group of people, exist on two levels: visible artifacts and underlying values

Power distance

willing to accept social inequality as natural

Uncertainty avoidance

the extend to which the society relies on orderliness, consistency, structure, and formalized procedures to address situations that arts in daily life

Individualism

perceived obligation to and dependence on groups

Masculinity

the extent to which dominant values are male oriented

Low masculinity

men and women are treated equally in all aspects of society; a higher masculinity ranking suggests that men dominate in a all positions of power

Time orientation

short vs long term orientation

Long-term orientation

values long-term commitments and is willing to accept a longer time horizon for the success of a new product introduction

Indulgence

the extent to which society allows for gratification of fun and enjoyment needs or else suppresses and regulates such pursuits

Business Culture

- the common set of practices considered acceptable in a business setting
- significant differences in values, behaviors across countries, regions
- language problems

Exporting

producing goods in one country and selling them in another

Franchising

a contractual agreement between a firm, the franchisor, and another firm, or individual, the franchisee

Strategic Alliances

collaborative relationships between independent firms, though the partnering firms do not create an equity partnership; they do not invest in one another

Joint Venture

formed when a firm entering a market pools its resources with those of a local firm
- ownership, control, and profits are shared
- local partner offers the foreign entrant greater understanding of the market and access to resources
- problems can arise when the partners disagree or if the government places restrictions on the firm's ability to move its profits out of the foreign country and back to its home country

Direct investment

requires a firm to maintain 100% ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries

The global marketing mix: product or service strategies

- sell the same product or service in both markets
- sell similar product with some modification
- sell totally new products or services

Glocalization

the process of firms standardizing their products globally, but using different promotional campaigns to sell them
- soft shell crab pringles

Same product, same message

global market standardization, Gillette Razors looks the same in Canada and US

Change product, same message

product adaptation, McDonald's in India has different version of Big Mac because they don't eat red meat

Same product, change message

message adaptation; Schwann Bicycle: in India used for mobility, in US for fun

Change product, change message

Innovation; Heinz has banana sauce in Philippines called Jufran

Reverse innovation

companies initially develop products for niche or underdeveloped markets and then expand them into their original or home markets

Global distribution strategies

- some global channels are very long and complex
- some consumers shop at small local stores
- infrastructure issues can impact channel

Some global channels are very long and complex

include middlemen, exporters, importers, and different transportation system
- these additional middlemen typically add cost and ultimately increase the final selling price of a product

Some consumers shop at small local stores

in most developing countries, manufacturers must go through many types of distribution channels to get their products to end users, who often lack adequate transportation to shop at central shopping areas or large malls; therefore consumers shop near their homes at small, family-owned retail outlets

Global communication strategies

the major challenge in developing a global communication strategy is identifying the elements that need to be adapted to be effective in the global marketplace

Business ethics

moral principles and values that govern actions

Marketing ethics

refers to those ethical problems that are specific to the domain of marketing
- deceptive advertising
- promotion of inferior products

Deceptive advertising

a representation, omission, act, or practice in an advertisement that is likely to mislead consumers acting reasonably under the circumstances

Laws

society's values which are enforceable in court

Ethical but illegal

when a child is hungry and he stole a loaf of bread from a shop to feed
- action is ethical because a child is hungry and he wants something to eat but illegal because stealing is illegal

Unethical and legal

someone works 2 jobs getting minimum wage but still has to collect welfare

Unethical and illegal

wells fargo opening extra accounts

Identify issues

issues may arise in the way data are collected. Are the respondents told about the real purpose of the study?

Gather information and identify stakeholders

gather facts that are important to the ethical issue, including all relevant legal information; to get a complete picture, the firm must identify all individuals and groups that have a stake in how the issue is resolved

Brainstorm and evaluate alternative

all parties relevant to the decision should come together to brainstorm any alternative courses of action

Choose a course of action

weigh the various alternatives and choose a course of action that generates the best solution for the stakeholders. Using ethical practices managers then review and refine these alternatives and choose a course of action

Societal culture and norms

- basic set of values of the society
- ethical decision making metric

Publicity test

would I want to see this action that I am about to take described on the front page of the local paper or national magazine?

Transparency test

could I give a clear explanation for the actions I'm contemplating, including an honest and transparent account of all my motives, that would satisfy a fair and dispassionate moral judge?

Moral mentor

would the person I admire the most engage in this activity?

Admired observer test

would I want the person I admire most to see me doing this?

General business norms

- what is the standard practice in business
- industry standards

Basic business values

- consumer has right to safety, to be informed, to choose, and to be heard
- no longer caveat emptor: may the buyer beware

AMA code of ethics

- generally accepted code in marketing
- flows from general norms of conduct to specific values
- subareas within marketing have their own code of ethics to deal with specific issues

AMA Code of ethics cont

- first, do no harm
- foster trust and consumer confidence in the marketing system
- values of honesty, responsibility, fairness, respect, openness, and citizenship

Company norms

values, rules, controls

Personal norms

family, religion, values

Moral idealism

if any bad occurs, then the action is unethical

Utilitarianism

balance good vs. bad

Golden rule test

will I be on the reaching end of the action and all its potential consequences?

Person in the mirror test

will I be able to look at myself in the mirror and respect the person I see there?

Responsibility of the company

to make a profit; but also is responsible to stockholders, investors, and owners

Profit responsibility

- companies are responsible only to stockholders and investors
- companies have one duty: to maximize profit within the law

Stakeholder responsibility

companies are responsible to owners and to: customers, employees, suppliers

Corporate social responsibility

refers to the voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders

Employees

ensure employees and their families are happy because happy employee families make happy and productive employees

Customers

current and potential

Marketplace

partners and competitors

Society

firms expend considerable amounts of time and energy engaging in activities aimed at improving the overall community and the physical environment

Companies are responsible to owners and stakeholders and to

society in general

Society in general

- cultural diversity
- environmental stewardship
- cause related marketing: supporting/sponsoring a non-profit or charitable organization or activity

Marketing

an organizational function and set of processes for creating, capturing, communicating, and delivering value to customers

4 P's

product, price, place, promotion

Value

the ratio of what is given up for what is obtained

Product

creating value

Price

capturing value

Place

delivering value

Promotion

communicating value

Production orientation

focus on internal capability and technology

Sales orientation

focus on aggressive sales techniques

Marketing concept

make what you can sell rather than selling what you can make
- anticipating needs and wants of the consumer

Why is marketing important?

- satisfies customers needs/wants
- can be entrepreneurial
- expands global presence
- strengthens channel relationships

Marketing strategy

- a firm's target markets
- a related marketing mix
- designed to provide a sustainable competitive advantage
- developed thru marketing planning

Sustainable competitive advantage

an advantage over the competition that is not easily copies and can be maintained over a long period of time

Customer excellence

focuses on retaining loyal customers and excellent customer service