Ch. 14 Competing on Marketing and Supply Chain Management

the triple A's underpinning supply chains

1) agility 2) adaptability 3) alignment

How the PRODUCT is standardized

How "this" is standardized: Same product design across all international markets Industrial products have a tendency to be standardized (Ex: Walmart, Louis Vouton, Combilift)

Price elasticity

How demand changes when price changes. Basic theory states that when price drops, consumers will buy more and thus generate stronger demand. Firms in turn, are motivated to expand production to meet the increased demand.

Market segmentation

Identifying segments of consumers who differ from others in purchasing behavior. Ex: males vs females, urban dwellers vs rural residents, Africans vs Latin Americans

Issues in market pricing

Issues in "this": Exchange rate stability Exporter may choose to lower price Variations in cost Distribution/Transportation costs Taxes, tariffs Government regulations Differing demand conditions Economic development, ability to pay Pharmaceuticals, textbooks (Toys R Us uses differential "this" and Walmart uses standardized "this")

Key to achieving alignment

Key to achieving "this": 1) power- more powerful players naturally exercise greater bargaining power 2) trust- it is in the best interest of all parties to invest in trust-building mechanisms in order to foster more collaboration.

Global dreamers

May not be able to afford to buy global brands but admire them nevertheless.

Mediums of advertising

Mediums in "this": Medium 1) Language issues, in print or audio/visual 2) Media to reach the public -In rural India, 1/3 own TVs, less than ½ literate....Colgate-Palmolive: video vans 3) Outdoor Advertising 4) Legal restrictions 5) Comparative advertising -Cigarette ads banned in various media -S. Korea bans print ads in publications that target women and children

Global agnostics

Most likely to lead antiglobalization demonstrations.

Product

Offerings that customers purchase.

Adaptability

The ability to change supply chain configurations in response to longer-term changes in the environment and technology. Often enhanced through a series of make-or-buy decisions, which requires firms to continuously monitor major geopolitical, social, and technological trends in the world, make sense of them, and reconfigure the supply chain accordingly. Failing to assess and respond to trends may not lead to immediate, visible damage, but over time could drive a firm out of the market. (Ex: Microsoft)

Agility

The ability to react quickly to unexpected shifts in supply and demand. (Ex: Zara permeates its entire operations through "this")

Make-or-buy decision

The decision on whether to produce in-house ("make") or to outsource ("buy").

Price

The expenditures that customers are willing to pay for a product. Most consumers are "price sensitive."

Marketing mix

The four underlying components of marketing: 1) Product 2) Price 3) Promotion 4) Place

Place

The location where products and services are provided. Also referred to as the distribution channel.

Country-of-origin-effect

The positive or negative perception of firms and products from a certain country.

Distribution channel

The set of firms that facilitates the movement of goods from producers to consumers.

Supply chain

This term has replaced "distribution channel." Also synonymous with "value chain" encompassing both inbound and outbound logistics. Management essentially handles the entire process of value creation, which is the core mission of the firm.

Total cost of ownership

Total cost needed to own a product, consisting of initial purchase cost and follow-up maintenance/service cost. Ex: HP inkjet printers--owners spend more on the ink than the printer itself

Ethnocentric Approach

Adopt the domestic marketing mix for global markets ; STANDARDIZED. The marketing mix locally and projecting that to a global environment. (Ex: Apple, luxury goods)

Alignment

Alignment of interests of various players. In a broad sense, each supply chain is a strategic alliance involving a variety of players, each of which is a profit-maximizing, stand-alone firm. (Ex: Saturn)

Standardized advertising

Examples of this type of advertising: Always Coca-Cola Levi 501 Jeans United Colors of Benetton

Localized advertising

Examples of this type of advertising: T-mobile TV commercial with Chuck Norris

Global citizens

Favor buying global brands that signal prestige and cachet. Majority.

Supply chain

Flow of products, services, finances, and information that passes through a set of entities from a source to the customer.

How the PRODUCT is customized

How "this" is customized: Product localized for each international market Consumer products have a tendency to be customized Rule of Thumb: The closer to the body a product is consumed, the more likely it will need to be customized (Ex: Sunsillk shampoo, McDonald's, Eddie Bauer)

Promotion: Advertising

A component of promotion. Global vs. Local (message and medium) Can the advertising be the same everywhere or must it be tailored to each local market?

Promotion: Personal Selling

A component of promotion. Making sales on the basis of personal contact High-context vs. Low-context cultures Industrial vs. consumer products Direct Marketing (There's a lot of this is Asian countries..also used more for business products)

Promotion: Sales Promotion

A component of promotion. Specialized marketing efforts such as coupons, in-store promotions, sampling, direct mail campaigns, cooperative advertising, and trade fair attendance Ex: International trade fairs; free samples

Relationship orientation

A focus to establish, maintain, and enhance relationships with customers.

Third-party logistics (3PL)

A neutral, third-party intermediary in the supply chain that provides logistics and other support services. They may add value by aligning the interests of all parties.

Market orientation

A philosophy or way of thinking that places the highest priority on the creation of superior customer value in the marketplace. This kind of firm genuinely listens to customer feedback and allocates resources accordingly in order to meet customer expectation.

Global marketing

A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others in a global environment. (This could be a mall, or whatever).

Branding: ModifiedTrademarked Brands

A type of branding where it is modified. Examples: Corona Beer is Coronita in Spain Target retailer in Australia Coca-Cola Light vs. Diet Coke

Branding: New Brand Names

A type of branding where it is new. Examples: Proctor & Gamble's Fairy (Dreft) dishwashing detergent Uniliver's Rexona (Degree) deodorant

Standardized marketing mix

A type of marketing mix. Advantages are: Reduces marketing costs (biggest!) Facilitates centralized control of marketing Promotes efficiency in R&D Results in economies of scale—production Reflects globalization trends Hard to have this approach in a global market

Customized marketing mix

A type of marketing mix. Advantages are: Reflects different conditions of product use Acknowledges local legal differences Accounts for differences in buyer behavior patterns Accounts for other differences in markets

Supply chain management

Activities to plan, organize, lead, and control the supply chain.

Product Design: Economic Development

An aspect of product design to consider. Size: Smaller cars in Europe Location: Costco in Japan In japan, parking is on top of Costco Two companies of smart cars: Mercedes and Squash

Product Design: Infrastructure Needs

An aspect of product design to consider. It includes Electrical current / plug outlets and Side of the road to drive

Product Design: Culture

An aspect of product design to consider. It includes Packaging and Labeling: Frito-Lay (flavors) Paprika-flavored chips: Hungary and Poland Shrimp-flavored chips: South Korea Squid-peanut snack food: SE Asia

Product Design: Legal Requirements

An aspect of product design to consider. It includes Prescription medications Fuel content Labeling requirements Product recycling (potential)

Product Design: Religion

An aspect of product design to consider. It includes Women's Apparel in the Middle East Vegetarian McDonald's in India

Top Global brands

Asia: (1) Samsung, (2) Toyota, (3) Honda, (4) Sony, (5) Canon US: (1) Coca-cola, (2) Apple, (3) IBM, (4) Google, (5) Microsoft Europe: (1) Mercendes, (2) BMW, (3) Louis Viutoon, (4) Nokia, (5) H&M

Promotion

Communications that marketers insert into the marketplace. Includes TV, radio, print, online advertising, coupons, direct mail, billboards, public relations, direct marketing (personal selling), and social media marketing. Marketers face a strategic choice of whether to standardize or localize "this."

Components of Promotion

Components of "this": Advertising Personal Selling Sales Promotion

Components of Place (Distribution)

Components of "this": Direct marketing Direct exporting Using an intermediary FDI

Polycentric Approach

Customize the firm's marketing mix for each market; CUSTOMIZED. whatever market you're in, you customize the product/place/promotion dependent upon where you are (Ex: Proctor and Gamble, McDonald's)

Product Design Considerations

Design considerations for "this": Infrastructure needs Culture Legal requirements Religious customs Economic development level

Marketing

Efforts to create, develop, and defend markets that satisfy the needs and wants of individual and business customers.

Antiglobals

Skeptical about whether global brands deliver higher-quality goods.

Geocentric Approach

Standardize a global marketing mix for global market; STANDARDIZED. You are having a global marketing mix right off the bat. Try to adapt that way from the start in a standardized format that will work for all different markets