Marketing Principles Quiz #3

Target Marketing Strategy

How marketers divide the market into different segments based on customer characteristics, selecting one or more segments and develop products which meet the needs of those specific segments

Segmentation

• Identifying and describing market segments

• The process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics

Bases for Segmentation

Also called segmentation variables

• Age

• Gender

• Family Life Cycle

• Income and Social Class

• Ethnicity

• Psychographic

• Behavioral

• Geographic

Targeting Strategies

Evaluating and selecting segments

• Concentrated Strategy (Single Segment)

• Differentiated strategy (Multiple segments with different needs)

• Customized strategy

• Mass Marketing (Undifferentiated Strategy)

Concentrated Strategy

Focusing a firm’s efforts on offering one or more products to a single segment

Differentiated Strategy

Developing one or more products for each of several distinct customer groups and ensuring these offerings are kept separate in the marketplace

Customized Strategy

Tailoring specific products and messages about them to individual consumers

• Mass Customization- An approach that modifies a basic good or service to meet the needs of an individual

Mass Marketing

A strategy that presumes there is one undifferentiated market, and that one product will appeal to a broad spectrum of people

• Assumes similar needs… ignores segment differences within market, possibly as it sees very minor differences in segments it has identified

Positioning

• Developing a marketing strategy that aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer (influencing how consumers perceive the brand relative to competition)

• Need to understand the criteria target consumers use to evaluate competing products and convince them they can meet those needs

Stages and Decisions of Positioning

1. Analyse competitor’s positions

2. Define your competitive advantage

3. Finalize the marketing mix

4. Evaluate responses and modify if needed

Perceptual Mapping

• A technique to visually describe where brands are located in consumers’ minds relative to competing brands.

• Plotting consumer perceptions (qualitative research) on a bi-dimensional (or multidimensional) map

• Identify attributes included in map based on research findings

• Provides information on some relevant attributes of a product’s features in consumer perceptions

• Shows which products are perceived as similar in consumers’ mind

• Allows the identification of ‘gaps’ in the market

World Trade

The flow of goods and services among different countries; the total value of all the exports and imports of the world’s nations

Counter Trade

A type of trade in which goods are paid for with other items instead of with cash (e.g. barter)

GATT

General Agreement on Tariffs and Trade; International Treaty established by the U.N. to reduce import tax levels and trade restrictions; set up after WWII

WTO

• World Trade Organization

• Set up in 1955

• Sets the global trade rules for its member nations

• Mediates disputes (through a dispute settlement process-interpreting international treaties) between nations

• 164 members, representing 98% of world trade. Its main function is to “ensure trade flows as smoothly, predictably and freely as possible”

• Provides legal foundations for international trade

Protectionism

• A policy adopted by a government to give domestic companies an advantage

• Done through:

  • Import quotas- Limitations set by governments on the amount of product allowed to enter a country– done to reduce competition for domestic firms. Ultimately makes goods more expensive for locals due to limits on cheaper competition.

  • Embargo- an extreme quota which prohibits commerce and trade with a specific country altogether (e.g. Cuba, N. Korea)

  • Tariff- a tax imposed on imported goods- to reduce pressure and competition for local firms. Makes imported goods more expensive

Economic Communities

• This is when groups of countries come together to promote trade among themselves and to make it easier for member nations to compete elsewhere

• Coordinate trade policies

• Ease restrictions on the flow of goods and capital across borders

Environments to Assess

• Economic

• Competitive

• Technological

• Political and Legal

• Socio-Cultural

Choosing a Market Entry Strategy

• Exporting- firm will decide whether to sell their own products on their own or whether to get an intermediary to sell on their behalf- they understand local market and rules and negotiate these (e.g. An export merchant- intermediaries firm hires to represent them in foreign countries)

• Contractual Agreements- an agreement to conduct some or all of its business in a specific country

• Strategic Alliance- relationship developed between a firm seeking a deeper commitment to a foreign market and a domestic firm in the target country

• Direct Investment- expanding internationally to new markets through ownership- often through buying a business in the host country outright. This is as opposed to starting up from scratch

Standardisation

• The world has become so small our needs and wants are universal

• This approach yields economies of scale by spreading out costs of production and marketing across all its different markets.

• Consistent exposure to brand globally solidifies brand image + message

Localisation

• Must tailor products and promotional messages to local environments

• Cultures are unique and must be catered to

• Product Invention Strategy

Straight Extension Strategy

Firm offers the same product in both domestic and foreign markets

Product Adaptation Strategy

Also called modified localization; firm offers a similar but modified product in foreign markets

Backward Invention

Type of product invention firm develops a less advanced product to serve the needs of people living in countries without electricity or other elements of developed infrastructure

Ethnocentric Pricing

Pricing strategy where the firm sets a single price for a product around the globe

Polycentric Pricing

A pricing strategy where the local partners (e.g. distributors) set the prices for the product in each global market based on their understanding of market conditions- no regard for prices in other markets

Geocentric Pricing

A pricing strategy that establishes a global price floor for a product but recognizes local conditions in setting the price in each market

Free Trade Zones

Designated areas where foreign companies can warehouse goods without paying taxes or customs duties until they move these goods into the marketplace

Grey Market Goods

Items manufactured outside a country and then imported without the consent of the trademark holder- common over the internet. Not authorized by producer; warrantee may not be valid

Dumping

Company attempting to gain an advantage in a foreign market by selling their products internationally at lower prices than it sells them in its domestic market

Ethical Issues for Global Business

• In some less developed countries, salaries are so low, blatant bribery is a daily fact for running one’s business; for others the corruption is at a much higher level

• Bribery- when someone voluntarily offers payment to get an illegal advantage

• Extortion- when someone in authority extracts payment under duress