International Marketing Midterm

Definition of marketing

Activity, set of institutions, and processes for creating, communicating, delivering, offerings that have value for customers & society at large

Marketing mix

Product, price, promotion, place

Existing market & existing product

Market penetration strategy

Existing market & new product

Product development strategy

New market & existing product

Market development strategy

New market & new product

Diversification strategy

Value equation

Value = benefits/price

Comparative advantage

When a company succeeds in creating more value for customers than its competitors

Driving forces of global integration

Regional economic agreements, converging market needs, transportation & communication improvements, product development costs, quality, world economic trends, leverage, entrepreneurship/innovation

Restraining forces of global integration

Management myopia, organizational culture, national controls, opposition

Impact of globalization

Less poverty, more in middle class, higher wages = higher living standards

Standardization

Implementation of uniform practices ensuring consistency in products. Ex: Big Mac

Adaptation

Adjusting a company’s strategies to respond to changes in an environment

1st stage of market development

Low income countries. GNP p/c of $1,135 or less, low industrialization, high birth rates, low literacy, political instability, Sub-Saharan Africa

2nd stage of market development

Lower-middle income. GNI of $1,136-$4,465, expanding markets, low-cost labor, textiles, 50 bottom ranked countries

3rd stage of market development

Upper-middle income. GNI of $4,466-$13,845, less agriculture, rising wages, high literacy, urbanization

4th stage of market development

High income. GNI of $13,846+, industrialized, economic growth, new products/innovation, intellectual technology

Balance of payments

All economic transactions b/t residents of a country & the world

Current account

Merchandise trade & services trade, + some financial transfers (trade deficits & surplus)

Capital account

All long-term direct investment, portfolio investment, other short & long-term capital flows

BRICS

Brazil, Russia, India, China, South Africa

Before the WTO

General Agreement on Tariffs & Trade (GATT) was a treaty to promote trade among members. It was replaced by the WTO in 1995

The World Trade Organization (WTO)

Trade-related negotiations among 160 members. In Geneva, 60-day negotiation period, can impose sanctions

Preferential trade agreements

Give members special treatment (lower barriers) & discriminate against others

Free Trade Area

2 or more countries agree to abolish tariffs/barriers. Restricts transshipment of goods from the country w/ the lowest tariff to another

3 major trade agreements

Customs union, common market, economic union

Customs union

FTA, establishes common external barriers (CETs). Ex: EU & Turkey, Andean Community, Mercosur

Common market

FTA, CETs, free movement of factors of production (labor, capital, info)

Economic union

FTA, CETs, free movement, coordinates & harmonizes economic & social policy. Full evolution of economic bank (central bank, currency, common policies, political unity)

North America’s trade agreements

NAFTA: US, Mexico, Canada. Canada boasts LuluLemon. Mexico is a great manufacturer. Free trade area

Latin America’s trade agreements

History of no growth, debt, & protectionism has given way to free markets. Customs union seeks to be common market (internal tariffs eliminated, EU is common trading partner)

Asia’s trade agreements

Working toward an economic community. Singapore is the world’s 2nd largest container port (high literacy, no crime). ASEAN is not a customs union

Europe’s trade agreements

Significant income differences, Greece had a major turnaround

European Union

Began with the treaty of Rome. Harmonize national laws, so that goods can move freely. Central bank & currency. Marketing mix implications cause price transparency, rising costs.

The Middle East’s trade agreements

Oil prices drive commerce, Gulf Cooperation Council for the Arab states of the Gulf

Africa’s trade agreements

Arabs in the North differ politically/economically. Marketing issues include agreement on textiles & clothing

Steps of the Market Research process

Info requirements, problem definition, choosing unit of analysis, examining data, assessing value of research, research design, data analysis, interpretation & presentation

Information requirements

Direct perception. What info do i need/why do I need it?

Problem definition

When someone’s home-country influence the assessment of another country

Unit of analysis

Single country, region, global, city/state

Examine data avaliability

Can secondary be used? US Govt resources such as the statistical abstract of the US

Assess value of research

Further studies if no secondary data is avaliable, assess cost vs. info worth

Research design

Problems in getting data, cost. Guidelines include using multiple indicators, conducting comparative assessments, observations of purchasing patterns, other behaviors. Survey research, panels, focus groups

Data analysis

Cleaned & tabulated. Must have independent techniques & dependent

Interpretation & presentation

Report should clearly link to the problem, language needs to be appropriate

Customer relationship management

Two-way communication b/t customer & company. Sales force automation gives routine sales & marketing functions

Culture’s importance to marketers

Must understand the aesthetics, different parts of the world have different aesthetics. Music is trans-cultural, language needs to be understood.

Low-context culture

Messages are explicit & specific, words carry communication power. Things need to be in writing, less trust. Germany, US, Scandinavia

High-context culture

Non-verbal communication, implicit, associations. More trust on what people say. China, Japan, Saudi Arabia

Self-reference criterion

Unconscious tendency to interpret the world in terms of one’s own cultural experience & values

The adoption process

Mental stages someone goes through from first knowledge of an innovation to the time of product adoption

5 stages of the adoption process

Awareness, interest, evaluation, trial, adoption

Adopter categories

Innovators, early adopters, early majority, late majority, laggards

Innovators

2.5%, most wealthy, venturesome

Early adopters

13.5%, influential, critical group, younger, high social status

Late adopters/laggards

All income/social groups, see products through different lenses, help companies improve

Demographic segmentation

Measurable population characteristics (age, income, gender, education). Global teens & elite are influential, share similar tastes

Gender segmentation

Companies may release new lines targeted toward men/women

Psychographic segmentation

Attitudes, values, lifestyle

Behavior & usage segmentation

Whether people will use a product, how they will, how often. Usage rates, 80/20 rule

Benefit segmentation

Value equation. Understanding the problem the product solves

Ethnic segmentation

Each segment can be further divided

5 segmentation variables

What are the key drivers for this marketing model?

Are enabling conditions in place?

What’s the cost of entry?

What’s the cost of waiting?

Is the risk/control trade off appropriate?

Targeting options

Standardized global marketing, concentrated global marketing, differentiated global marketing

Standardized global marketing

Targeting. Premise that a mass market exists globally

Concentrated global marketing

Targeting, niche marketing, single segment

Differentiated global marketing

Targeting, multisegment targeting, 2+ distinct markets, wider coverage

Positioning

A brand in consumers’ minds over against competitors in terms of benefits the other doesn’t offer

Global consumer culture positioning

Brand as a symbol of a culture, high-tech

Foreign consumer culture positioning

Associates brands users with a foreign country/culture

Local consumer culture positioning

Identifies w/ local culture, used by locals, locally produced

Export selling

Exporting w/o tailoring the product, price, promotional material to suit individual country requirements. Used when no competition

Export marketing

Exporting the product using the home market and modifying to meet the preferences of international targets

Preferential tariffs

Reduced tariff rate offered to certain countries

Customs duties

Percentage of goods (ad valorem) or amount per unit (specific duty)

Anti-dumping duty

Duties on products that have too low prices. Prevents sale of merchandise at unfair prices

Quotas

Govt-imposed limit on the number of units a product can be imported. Protects domestic producers

4 activities to support exports

Tax incentives, subsidies, export assistance, free trade zones

3 activities to discourage imports

Tariffs, import controls, non tariff barriers (quotas, procurement policies, customs procedures, etc)