Marketing 300 Exam 1 Ch. 3

Competition at the microenvironment occurs at 3 different levels:

Competition at the microenvironment occurs at three different levels: 1) At the broad level, marketers compete for consumer's discretionary income (the money left over after people have paid for necessities). This level of competition includes ALL possible uses - for example, a consumer might choose to make a larger payment on a credit card, spend discretionary funds buying a new cell phone, eating out at a restaurant, or attending a movie. 2) Product competition: Competition at this levels consists of alternate products that satisfy the same consumer's needs/wants. For example, an individual desiring Internet access has the choice of DSL or satellite internet. 3) Brand competition: The most direct form of competition occurs among brands offering similar goods/services (with respect to perceived benefits). DISCUSSION NOTE: Discretionary income competition - could be literally anything Product competition - land-based phone systems, Internet based phone systems (VOIP), email Brand competition - Students should have no trouble listing the brand names of a variety of smart phones

Technological Environment

Technology: Provides firms with important competitive advantages Profoundly affects marketing activities Can transform industries Patent: Legal document giving inventors exclusive rights to produce/sell a particular invention in that country

World Trade

The flow of goods and services among different countries—the value of all the exports and imports of the world's nations

Gross National Product (GNP)

Value of all goods and services produced by a country's citizens or organizations

Elements of the External Environment

1. Economic 2. Competitive 3. Technological 4. Political/Legal 5. Sociocultural

Countertrade

A type of trade in which goods are paid for with other items instead of with cash Barter is common form of countertrade

Steps in the Decision Process for when Deciding to go Global

Entering global markets involves a sequence of decisions. • Step 1. "Go" or "no go"—is it in our best interest to focus exclusively on our home market or should we cast our net elsewhere as well? • Step 2. If the decision is "go," which global markets are most attractive? Which country or countries offer the greatest opportunity for us? • Step 3. What market-entry strategy and thus what level of commitment is best? As we'll see, it's pretty low risk to simply export products to overseas markets, while the commitment and the risk is substantial if the firm decides to build and run manufacturing facilities in other countries (though the payoff may be worth it). • Step 4. How do we develop marketing mix strategies in the foreign markets— should we standardize what we do in other countries, or develop a unique localized marketing strategy for each country?

Competitive Intelligence

Gathering and analyzing publicly available information about rivals to develop superior marketing strategies Collected from news media, the Internet, and publicly available government documents

Initiatives in international regulation and cooperation help trade

General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO)

When Deciding whether or not to go global:

In deciding whether or not to go global, a firm must consider both market conditions in the domestic and global markets, as well their competitive advantage. Typically, many firms decide to go global when domestic demand declines, particularly if demand in foreign markets seems to be growing. Not all competitive advantages "travel well" when marketing products abroad while others offer an even stronger advantage abroad than they do domestically.

All economies go through periods of:

Prosperity Recession Recovery Depression Inflation

Economic Infrastructure

Quality of country's distribution, financial, and communications systems

Protectionism restricts trade:

Quotas, embargoes, and tariffs Governments that enact a policy of protectionism set import quotas (, or use embargoes (trade prohibition with a country), or tariffs (taxes on imported goods) to restrict foreign competition.

The political and legal environment

The political and legal environment refers to the local, state, national, and global laws and regulations that affect businesses. Legal and regulatory controls can be prime motivators for many business decisions, because they often limit the actions that marketers or businesses are allowed to undertake. Global marketers must understand more complex political issues that can affect how they are allowed to do business around the world. However, some American laws such as the Foreign Corrupt Practices Act also restrict business actions of American firms in the global market. For example, a primary provision of the Foreign Corrupt Practices Act is the prohibition of bribery to sell overseas, REGARDLESS of whether or not bribery is a common and accepted practice in a given country. The purpose of American law is two-fold, as shown on this slide. Some laws, such as the Sherman Antitrust Act and the Wheeler-Lea Act, make sure that businesses compete fairly with each other. Others, such as the Food and Drug Act and the Consumer Products Safety Commission Act, protect consumers by making certain that they are not taken advantage of by businesses.

The sociocultural environment

The sociocultural environment refers to the characteristics of the society, the people who live in that society, and the culture that reflects the values and beliefs of the society. Whether at home or in global markets, marketers need to understand and adapt to the customs, characteristics, and practices of its citizens as these factors affect people's responses to products and promotional messages in any market. Demographics: Examining statistics that measure observable aspects of the population, including its size, age, gender, ethnicity, income, education, occupation and family structure is the first step in this process, as it helpful in predicting the size of markets for many products. The use of demographics is discussed in more detail in Chapter 7. Cultural values every society has a set of cultural values, or deeply held beliefs about right and wrong ways to live, that it imparts to its members. Differences in values between one country and another often explains why marketing efforts that are a big hit in the U.S. can flop abroad. For example, One important dimension on which cultures differ is their emphasis on collectivism versus individualism. In collectivist cultures, such as those we find in Venezuela, Pakistan, Taiwan, Greece, and others, people tend to subordinate their personal goals to those of a stable community. In contrast, consumers in individualist cultures, such as the United States, Australia, Great Britain, Canada, and the Netherlands, tend to attach more importance to personal goals than they do to those of the larger community. This difference can be a big deal to marketers who appeal to one extreme or the other—try selling a garment that is "sure to make you stand out" to consumers who would much prefer to "fit in." Social norms are specific rules dictating what is right or wrong, acceptable or unacceptable. Norms flow from values and dictate how people within a country dress, speak, and otherwise behave. For example, beef is taboo in India, while few Americans could even stomach the though of eating dog meat or horsemeat, food which is common elsewhere abroad. Customs are related to norms. In the contest of meals, a custom would dictate when dinner should begin (6 pm or 7 pm in the U.S. vs. 9 pm or later in Europe.) Customs can also relate to things such as eye contact, personal space, and whether giving one kiss or two on the cheek is a proper greeting. Marketers who don't know the local customs when working abroad are at a severe disadvantage in transacting businesses. Language barriers can be very problematic, particularly when slogans or brands names are "literally" translated from one language to another. The textbook discussed several examples of poorly translated phrased that misrepresent the intended message. For example, when Coors Brewing Company put its slogan, "Turn it loose" into Spanish; it was read as "Suffer from diarrhea". Thus it's vital for marketers to work with local people who understand the subtleties of language to avoid confusion. Finally, it's important to understand that ethnocentrism is common. Ethnocentrism is the tendency to prefer products or people of one's own culture. In many countries, the willingness to try goods made in other countries comes slowly.

Gross Domestic Product (GDP)

Total dollar value of goods/services a country produces within its borders in a year