Marketing Final

5 market entry strategies

Licensing, Investment, global partnerships, joint ventures, exporting

Licensing

Agreement where 1 company makes an asset available to another country in exchange for royalties or fees

Advantages of licensing

Overcome export barriers & autonomy for adapting to local tastes

Disadvantages of licensing

Limited market control & agreement may be short

Foreign direct investment

Partial or full ownership of operations outside of home company. Forms include joint ventures, minority/majority equity stakes, outright aquisition

Joint ventures

Single target country where partners share ownership of a new business. They build on each other’s strengths. Ex: GM & Toyota. May be only way to enter market given barriers, but must share rewards as well as risks

Equity via stake or full ownership

Minority, full ownership, or majority. Globalization is driving acquisitions, ownership overcomes tariff & quota barriers

Strategic alliances

Partners remain independent, share benefits, relationship is reciprocal, two or more companies develop a long-term strategy aimed at world leadership. (Mission, strategy, governance, culture, organization, management)

Western company issues (strategic alliance)

Partners had different goals, each must contribute/depend, no corporate memory, differences in management

Market expansion strategies

Country & market concentration, country concentration & market diversification, country diversification & market concentration, country & market diversification

Brand

Bundle of images & experiences in customer’s mind. Promise about a product. Differentiation b/t competing products. Ex: APPLE

Brand equity

Value that accrues to a product as a result of investments in marketing. Created by brand vs. customer over time. (Logos, packaging) Ex: Nike swoosh

Co-branding

Two or more company or product brands (NutraSweet & Coca-Cola)

Maslow’s hierarchy

Helps marketers understand how & why local products go beyond the home-country. McDonald’s understands.

Country of origin

Perception about countries extend to products & brands known to come from them. Like French = Chic

Market skimming

Charging a premium price, introduction of product

Penetration pricing

Low price to enter market quickly, appropriate to saturate market prior to imitation by competitors

Captive pricing

Products whose sale is dependent upon the sale of primary product (Video games & controller)

Cost-plus pricing & export price escalation

Total cost depends on destination, mode of transport, tariffs, fees, charges, documentation. Cost-plus pricing is based on analysis of internal & external cost. Export price is increase in final selling price of goods.

Incoterms

Activities when goods cross borders. Licesnse, permit, packing, transport, customs, freight, etc.

Three global pricing policy alternatives

extension or ethnocentric pricing, Adaptation/polycentric pricing, geocentric pricing

Extension or ethnocentric pricing

Per-unit price of an item is the same no matter where buyer is located. Importer absorbs duties

Adaptation/polycentric pricing

Permits managers/distributers to establish price as they feel is desirable. Sensitive to market conditions

Geocentric pricing

Immediate course of action, recognizes several factors are relevant to pricing (local costs, income levels, competition)

Categories of channel utility

Place utility, time utility, form utility, information utility,

Types of retail operations

Department stores, specialty retailers, supermarkets, convenience stores, full-line discounters, warehouse clubs, dollar stores, hard discounters, supercenters, superstores, hypermarkets, malls, outlet stores

Retail trends

Outdoor lifestyle centers w/ food courts & entertainment, environmental factors (saturation in home-country market, recession), convienence stores located in malls, airports, offices.

Global retail expansion strategies

Organic growth (own resources to open a store), franchising (when barriers are low yet market is culturally distant), chain aquisition (buying multiple outlets of a company), joint ventures (culturally distant, hard to enter)

Integrated marketing communication

More popular b/c of challenges of communicating across borders. It aligns advertising, public relations, and digital marketing to create a consistent brand experience

Advertising appeals

Rational (logic, speaks to customer’s intellect, pharmacy) emotional (tugs at heartstrings, humor)

Selling proposition

Reason for buying

Creative execution

Way an appeal or proposition is presented

Public relations

Fosters goodwill & understanding, creates favorable publicity (earned media). New releases, media kits, press conferences, tours of facilities. Growing post recession, builds trust, harmony, resolves disputes.

Advocacy advertising

Presents the company’s point of view on a particular social, environmental, or cultural issue

Convergence

The coming together of previously separate industries & product categories

Disruptive technologies

Redefine performance, new entrants, enable something to be done that wasn’t possible, enables new markets to emerge

Sustaining technologies

Incremental/radical innovations that improve product performance, most new tech made by companies are sustaining, vast majority of innovations are

Innovator’s dilemma

Staying committed to a current technology, focused on established customers, fails to provide adequate levels of investment to new & risky tech

5 forces model

Threat of new entrants, barriers to entry, threat of substitutes, power of buyers, power of suppliers, competiton

Competitive advantage

Achieved when there is a match b/t a firm’s competencies & factors critical success within its industry. to achieve, generic strategies, strategic intent

Generic strategies

Broad market (cost leadership, low price, product differentiation), narrow market (cost focus, low price, focused differentiation)

Strategic intent

Continuous improvement principles, layers of advantage, searching for loose bricks, changing rules of engagement, collaborating

Factor conditions

Human resources (wages, workers), physical resources (land, water, natural stuff), knowledge resources (scientific, technical), capital (amount, cost), infrastructure (healthcare, banking, transport), demand (how firms respond to buyer needs)

Red oceans

Existing markets where players understand the rules

Blue oceans

Markets or industries that don’t exist. better to avoid red ocean of cost cutting & imitation and create a new space