marketing quiz

Globalization - Where do you stand?

• raises overall welfare

• cultural and educational links, migration networks, and business ties can deepen alliances and create constituencies for cooperation

• reduces poverty

• predictable rules lower uncertainty and retaliations

• interdependency reduces the prospect of conflicts

• can export higher ethical standards into weaker regulatory environments

• rapid economic and demographic change can outpace institutions ability to integrate groups, increasing social frictions

Globalism must prove:

• it can deliver widely shared gains and not just higher GDP’s

• it can build resilience without creating dangerous dependencies

• it can be governed credibly when it comes to tax, labor, environment, and corporate power and responsibility as well as accountability

Turning inward must prove:

• higher costs will not crush living standards especially for low-income households

• industrial policy will not be captured by special interests

• reduced openness will not slow innovation and weaken alliances

World Trade

Refers to the flow of goods and services among different countries - the value of all the exports and imports of the world’s nations

• not all countries participate equally

• requires flexibility in order to serve needs of remote markets

• non-convertible currency

• countertrade

• unsafe products

Steps in the Decision Process to Enter Global Markets

1. Whether to go global

2. which market(s) to enter

3. level of commitment

4. how to adapt marketing mix strategies (localize and standardize)

Should we go global? consider:

• both domestic and global market conditions and opportunities

• is there room to grow domestically?

• will your competitive advantage succeed against local firms with a home-court advantage

• will what makes the company successful domestically translate into a new foreign market?

Initiatives in internal regulation and cooperation help trade

• General Agreement on Tariffs and Trade (GATT)

• World Trade Organization (WTO)

• World Bank

• International Monetary Fund (IMF)

Protectionism restrics trade

Quotas, embargoes, tariffs

Analyze the External Marketing Environment

• understanding external environment is essential for marketing in your home country or on a global stage

• when entering foreign markets, knowledge of local conditions is critical (helps you figure our where to go and what strategies are likely to be most effective)

Economic Environment

• indicators of economic health

• level of economic development

• business cycle

Competitive Environment

• competition in the microenvironment

• competition in the macroenvironment

Political/Legal Environment

• National laws of commerce

• international regulations

• regional agreements

• political stability

• regulatory issues

• human rights issues

Sociocultural Environment

• demographics

• values

• social norms

• xenocentrism

• ethnocentrism

Elements of the External Environment

• Economic

• Competitivy

• technological

• political/legal

• sociocultural

Decisions in the Global Market

• what market(s) to enter

• level of commitment

• how to adapt to marketing strategies

Decisions in the Domestic Market

• target market

• product decisions

• price decisions

• promotion decisions

• distribution decisions

The Economic Environment

Marketers need to understand the state of the economy from different perspectives

• overall economic health (ex: GDP)

• level of economic development

• current stage of the business cycle

Indicators of economic health

Gross Domestic Product (GDP) -the total money value of all final goods and services produced within a country during a specific time period

Foreign Exchange Rates (Forex)

Levels of Economic Development

Least Developed Country (LDC)

• economic base is often agricultural

• includes bottom of the pyramid (BOP) countries

Developing Countries

• economy shifts emphasis from agriculture to industry

• includes BRICS countries

Developed Countries

• offer wide range of opportunities for international marketers

• includes group of seven (G7)

World Bank Income Classification

• high-income economies

• upper-middle-income economies

• lower-middle-income economies

• low-income economies

Bottom of Pyramid Marketers (BOP)

BOP markets present big opportunities and challenges

• 4 billion+ consumers living on less than $2 a day

• $5 billion+ in collective spending power

BRICS Counties

Brazil, Russia, India, China, and South Africa

• 41% of world’s population

• 22% of world’s GDP

Group of 7 (G7) Countries

France, Germany, Italy, Japan, United Kingdom, Canada, and the US

• Russia was a member until 2014, when it was removed because of involvement in Crimean crisis

G20 Countries

• INdia

• Canada

• China

• Italy

• France

• Germany

• Indonesia

• UK

• Turkey

• Russia

• USA

• Mexico

• Argentina

• South Africa

• Brazil

• Australia

• Japan

• EU

• Saudi Arabia

• South Korea

The Business Cycle

Describes the overall pattern of changes or fluctuations in an economy

• prosperity

• recession

• recovery

• depression (a serious recession)

• inflation

Competitive Intelligence

• The process of gathering and analyzing publicly available information about rivals

• competition in the macro and micro environments

Competition in the Microenvironment

Involves consumer decision-making at three levels:

• discretionary income

• product competition

• brand competition

Competition in the Macroenvironment

Marketers also need to understand the big picture - the overall structure of their industry

• Monopoly (a market where one single company or person is the only supplier of a particular good or service)

• Oligopoly (a market where a few big companies control most of the sales)

• Monopolistic Competition (a market structure where many companies sell products that are similar to one another, but not exact substitutes)

• Perfect Competition ( is a theoretical market structure where many small firms sell identical products, and no single buyer or seller has the power to control the market price.)

Technological Environment

Technology:

• provides firms with important competitive advantages

• profoundly affects marketing activities

• can transform industries (Ex: self driving vehicles including 18-wheeler trucks)

Patent:

• legal document giving inventors exclusive rights to produce/sell a particular invention in that country

Political and Legal Environment

• refers to local, state, national, and global laws and regulations that affect business

• american laws generally have 2 purposes: fair competition and consumer protection from unfair practices

Sherman Antitrust Act (1890)

• Developed to eliminate monopolies and to guarantee free competition

• prohibits exclusive territories, price fixing, and predatory pricing

Food and Drug Act (1906)

Prohibits harmful practices in the production of food and drugs

Federal Trade Commission Act (FTC) (1914)

Created the Federal Trade Commission to monitor unfair practices.

Robinson-Patman Act (1936)

Prohibits price discrimination (offering different prices to competing

wholesalers or retailers) unless cost is justified

Wheeler-Lea Amendment to the FTC Act (1938)

Revised the FTC Act. Makes deceptive and misleading advertising

illegal

Consumer Financial Protection Bureau (CFPB)

Responsible for consumer protection in the financial sector.

Consumer Product Safety

Protects the public from potentially hazardous products.

Federal Trade Commission (FTC)

Enforces laws, primarily through fines, against deceptive advertising and product

labelling regulations

Food and Drug Administration (FDA)

Enforces laws and regulations on foods, drugs, cosmetics, and veterinary products.

FDA approval is required before marketers can introduce many products to the

market.

Political Constraints on Trade

Political actions of a government may constrain business

• economic sanctions

• nationalization

• expropriation

Regulatory Constraints on Trade

Regulatory constraints on trade restrict the marketing

• local content rules

Human rights issues may limit foreign countries’ business opportunities

• employ children or prisoners for slave wages

• subject workers to unsafe working conditions

• human slavery - the biggest human rights problem in the world today

The U.S. Generalized System of Preferences (GSP) - a trade program that lets developing countries sell thousands of products to the U.S. without paying import taxes (tariffs).

Sociocultural Environment

refers to characteristics of a society, its people, and its cultural beliefs

• demographics

• cultural values

• social norms

• language

• consumer xenocentrism

• consumer ethnocentrism

Exporting Strategy

Level of risk: low

Level of control: low

Options: sell on its own rely on export merchants

Advantages: low investment, so it presents the lowest risk of financial loss. Can control product quality. Avoids the difficulties of producing some products in other countries.

Disadvantages: May limit growth opportunities. Perceived as a “foreign” product

Contractual Agreements

Level of risk: medium

Level of control: medium

Options: license a local firm to produce the product.

Advantages: avoid barriers to entry. Limit financial investment and thus risk

Disadvantages: Lose control over how the product is produced and marketed, which could tarnish the company and brand image. Potential unauthorized use of formulas, designs, or other intellectual property.

Strategic Alliances

Level of risk: medium

Level of control: medium

Options: joint venture, where the firm and local partner pool their resources

Advantages: easy access to new markets. Preferential treatment by governments and other entities.

Disadvantages: high level of financial risk

Direct Investment

Level of risk: high

Level of control: high

Options: complete ownership, often by buying a local company

Advantages: maximum freedom and control, avoid import restrictions

Disadvantages: highest level of commitment and financial risk. Potential for nationalization or expropriation if the government is unstable.

Exporting

• should the company sell products on its own or rely on local business partners?

• export merchants are intermediaries a firm uses to represent it in other countries (understand local market, know prospective buyers and may be better able to negotiate terms)

Contractual Agreements

In a licensing agreement, one firm (the licensor) gives

another (the licensee) the right to produce and market its

product in a specific country.

• Franchising is a form of licensing in which the franchisee

obtains the right to adopt an entire way of doing business.

– Top global franchises in 2025:

▪ Taco Bell

▪ KFC

▪ McDonald’s

▪ The UPS Store

▪ Dunkin’

Strategic Alliances

Strategic alliances allow companies to pool resources for

common goals.

– Joint ventures often allow easier access to new

markets.

Direct Investment

Direct investment occurs when a firm expands

internationally through ownership.

• Often when it buys a business in the host country outright.

Marketing Mix Strategies:

Localization Versus Standardization

Questions to ask

2. To what extent will company need to adapt marketing

communications to local market?

3. Will the same product appeal to people there?

4. Will it have to be priced differently?

5. How will the company get the product into people’s

hands?

Marketing Mix Strategies: To “P” or Not to “P?”

Product decisions

– Straight extension

– Product adaptation

– Product invention

– Backward invention

Tweaking the Global Marketing Mix:

Price, Promotion, Place Strategies

Promotion decisions

• Price decisions

– Free trade zones

– Gray markets

– Dumping

• Place/Distribution decisions

Ethics Is Job One in Marketing Planning

Marketing action cannot establish long-term relationships

if it is shown to be unethical.

– Consequences of low ethical standards are visible in

the number of highly publicized corporate scandals.

– Stockholders may lose investment.

– Jobs may be lost.

– Consumers pay for worthless merchandise or

services.

Ethics in Global Business

Business ethics are basic values that guide a firm’s

behavior.

– What constitutes ethical behavior is often different for

different people.

– Ethical philosophies guide how people make such

decisions.

Ethical relativism

What is ethical in one culture is not necessarily the

same in another culture

A code of ethics

a written standard of behavior to

which everyone in the organization must subscribe.

Utilitarian approach

The decision that provides the most good or the

least harm (i.e., the best balance of good and

harm).

Rights approach

The decision that does the best job of protecting

the moral rights of all affected. These include the

following:

• The rights to decide what kind of life to lead

• The right to be told the truth

• The right not to be injured

• The right to privacy

Fairness or justice approach

The decision that treat all human beings equally—

or, if unequally, then fairly based on some standard

that is defensible.

Common good approach

The decision that contributes to the good of all in the community

Virtue approach

he decision is in agreement with certain ideal

virtues. Honesty, courage, compassion,

generosity, tolerance, love, fidelity, integrity,

fairness, self-control, and prudence are all

examples of virtues.

AMA Statement of Ethics: Ethical Norms

• Do no harm

  • Foster trust in the marketing system

  • Embrace ethical values

AMA Statement of Ethics: Ethical Values

• Honesty

  • Responsibility

  • Equity

  • Transparency

  • Citizenship

Is Marketing Unethical?

• Marketing serves the rich and exploits the poor.

• Products are not safe.

• Poor quality products.

• Planned obsolescence.

• Easy consumer credit makes people buy things they don’t

need or can’t afford

When Is a Bribe Not a Bribe? Ethical

Issues for Global Business

• Vast differences in what people around the world consider

ethical business behavior.

– In many LDC s and developing countries, payment in

exchange for “favors” is a way of life.

– U.S. federal law bans payment to influence decisions

by foreign officials to award business contracts.

– The Foreign Corrupt Practices Act of 1977 (FCPA)

Bribery + Extortion

• Bribery occurs when

  someone voluntarily

  offers payment to get an

  illegal advantage.

• Extortion occurs when

  someone in authority

  extracts payment under

  duress.

Sustainability: Marketers Do Well by

Doing Good

Many believe

sustainability is no

longer an option.

– Firms must focus on

the triple bottom line.

– Sustainability is often

sensible business.

Developing a Sustainable Marketing

Mix

• Target marketing strategies

– Green customers

• Product strategies

– Fair trade suppliers

• Price strategies

• Place/Distribution strategies

– Locavorism

• Promotion strategies

– Inform customers of commitment to the planet

Sustainable Customer Behavior

• A sustainability approach doesn’t

end with an improvement in the

manufacturing process.

• Marketers need to motivate

customers.

• Customers can be a part of

sustainable marketing practices.

Brand You: Finding the Right Fit

• Organizational Culture

– The location of the business.

– The personality of key players.

– The management philosophy and style.

– Risk-taking.

– Ethics.

– Social responsibility.

• Differences Among Industries

– Recognize each industry has a different culture.

• Landing a Job Overseas