MKTG FINAL EXAM ch. 8 and ch. 12

everyday low pricing (EDLP)

Setting a low price for products on a consistent basis benefits from reduced promotional costs, reduced losses from frequent markdowns, and more stable sales. Studies show that when customers are uncertain about store prices, they are more likely to choose a retail establishment with an EDLP strategy over a retailer that offers large discounts infrequently.

Mexico

With a per capita GDP of $19,900, Mexico's more than 125 million consumers are less affluent than Canadian consumers. However, the United States is Mexico's largest trading partner, and Mexico is the third-largest trading partner of the United States. The United States receives imports totaling $339.8 billion from Mexico

status quo pricing

a pricing objective that maintains existing prices or meets the competition's prices -can reduce a firm's risks by helping to stabilize demand for products. A firm that chooses status quo pricing objectives risks minimizing pricing as a competitive tool, which could lead to a climate of nonprice competition. Professionals such as accountants and attorneys often operate in such an environment.

Trans-Pacific Partnership (TPP)

a trade agreement that was proposed among Singapore, Brunei, Chile, New Zealand, Vietnam, Malaysia, Japan, Peru, the United States, Canada, Mexico, and Australia. The agreement would have created standards for state-owned enterprises, labor, international property, and the environment. Without the United States, the remaining 11 countries signed a deal to eliminate trade barriers under a new name: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (also known as CPTPP or TPP-11). After all countries in the trading bloc ratify the agreement, CPTPP will represent 495 million people and 13.5 percent of the world's GDP.

buyers mindset

can influence product adoption and use. Consumers that have a global orientation tend to have a positive attitude toward purchasing global brands. On the other hand, when consumers think local and are ethnocentric, they are more negative toward global brands GOOD mindset-- When people are unfamiliar with products from another country, their perceptions of the country as a whole may affect their attitude toward the product and influence whether they will buy it. If a country has a reputation for producing quality products and therefore has a positive image in consumers' minds, marketers of products from that country will want to make the country of origin well known. BMW is a respected German brand that manufactures many of its vehicles in the United States, Mexico, and South Africa BAD mindset-- Traditionally, Chinese brands have been viewed as being of low quality. However, the global success of companies such as Lenovo, Xiaomi, and Alibaba are not only increasing China's brand reputation but are also challenging top competitors such as Hewlett-Packard, Apple, and Amazon.

the global customer

customers who travel the globe expect to be able to buy the same product in most of the world's more than 200 countries, but they also expect that the product they buy in their local store in Miami will have the same features as similar products sold in London or even in Beijing.

international trade system (economic stability of the nation)

differences in standards of living, credit, buying power, income distribution, national resources, exchange rates, and the like—dictate many of the adjustments firms must make in marketing internationally. Country-specific factors such as economic wealth and national culture have a direct influence on the success of a new product in specific countries

nontariff barriers

difficult for U.S. companies to export their products. For instance, the collectivistic nature of Japanese culture and the high-context nature of Japanese communication make some types of direct marketing messages used to sell products through television and print less effective and may predispose many Japanese to support greater regulation of direct marketing practices

political forces

influence of political and legal institutions on people and organizations are indirect and often not clearly known in all countries. For example, McDonald's sources ingredients locally for its restaurants in Russia due to the tension between Russia and the United States IN CHINA-- 1/3 of businesses are government funded. State-backed companies do not have as many competitors because the government is supporting them. Unless state-owned firms work hard to remain competitive, costs for these companies will most likely increase

Franchising

is a form of licensing in which a company (the franchisor) grants a franchisee the right to market its product, using its name, logo, methods of operation, advertising, products, and other elements associated with the franchisor's business, in return for a financial commitment and an agreement to conduct business in accordance with the franchisor's standard of operations. This arrangement allows franchisors to minimize the risks of international marketing in four ways: -the franchisor does not have to put up a large capital investment; -the franchisor's revenue stream is fairly consistent because franchisees pay a fixed fee and royalties; -the franchisor retains control of its name and increases global penetration of its product; and -franchise agreements ensure a certain standard of behavior from franchisees, which protects the franchise name.

SRC (Self-Reference Criterion)

is the unconscious reference to one's own cultural values, experiences, and knowledge. When confronted with a situation, we react on the basis of knowledge we have accumulated over a lifetime, which is usually grounded in our culture of origin. Our reactions are based on meanings, values, and symbols that relate to our culture but may not have the same relevance to people of other cultures.

Foreign Corupt Practices Act

it is illegal for U.S. firms to attempt to make large payments or bribes to influence policy decisions of foreign governments. facilitating payments, or small payments to support the performance of standard tasks, are often acceptable. The Foreign Corrupt Practices Act also subjects all publicly held U.S. corporations to rigorous internal controls and record-keeping requirements for their overseas operations.

political, legal, and regulatory forces in the economy

legislation is enacted, legal decisions are interpreted, and regulatory agencies are operated by elected or appointed officials. A country's legal and regulatory infrastructure is a direct reflection of the political climate in the country

Interactive web systems, instant messaging, and podcast downloads (along with the traditional vehicles of voice mail, email, and smartphones)

make international marketing activities more affordable and convenient. Internet use and social networking activities have accelerated dramatically within the United States and abroad. In Japan, 116 million have internet access, and more than 108 million Russians, 374 million Indians, and 730 million Chinese are logging on to the internet

multinational enterprise

multinational corporation, refers to a firm that has operations or subsidiaries in many countries. the parent company is based in one country and carries on production, management, and marketing activities in other countries

competition

often viewed as a staple of the global marketplace. Customers thrive on the choices offered by competition, and firms constantly seek opportunities to outmaneuver their competition to gain customers' loyalty.

blockchain software

provides a distributed network that provides "blocks" or ledgers of data over time to trace transactions and product movements. Carrefour traces the egg in a store to the chicken, types of feed, and location. Traceability is important in food safety.

price elasticity of demand

provides a measure of the sensitivity of consumer demand for a product or product category to changes in price. Elasticity is formally defined as the percentage change in quantity demanded relative to a given percentage change in price inelastic-- gas and utilities-- results in a change in the same direction as total revenue: an increase in price will increase total revenue, and a decrease in price will decrease total revenue elastic-- nonessential things--a shift in price causes an opposite change in total revenue: an increase in price will decrease total revenue, and a decrease in price will increase total revenue.

United States-Mexico-Canada Agreement (USMCA)

replaced NAFTA 2020 and includes comprehensive updates related to intellectual property protections, digital trade, financial services, currency, labor policies, and environmental standards.

secondary-market pricing

setting one price for the primary target market and a different price for another market

Each country has unique competitive aspects—often founded in the other environmental forces

sociocultural, technological, political, legal, regulatory, and economic forces)—that are often independent of the competitors in that market.

For international marketers, cultural differences have implications for product development, pricing, advertising, and packaging

the Middle East represents a lucrative market for personal-care firms, but they must formulate their products to adhere to Middle Eastern laws and customs. To be allowed under Islamic law, cosmetics cannot contain alcohol or pork by-products this has not deterred personal-care firms such as German consumer-goods maker Henkel. Henkel markets its Gliss shampoo as the first such product to address problems Middle Eastern women have due to lack of ventilation for their veiled hair.

Business for Social Responsibility (BSR)

tracks emerging issues and trends, provides information on corporate leadership and best practices, conducts educational workshops and training, and assists organizations in developing practical business ethics tools. It addresses such issues as community investment, corporate social responsibility, the environment, governance, and accountability.

Demand curve and prestige products...

A graph of the quantity of products a firm expects to sell at various prices if other factors remain constant - high demand, high price, low demand, low price Prestige products, for example some cosmetics, tend to sell better at higher prices than at lower ones. Prestige products are desirable partly because their expense makes buyers feel elite. If the price fell drastically, making the products affordable for a large number of people, they would lose some of their appeal

quota

A limit on the amount of goods an importing country will accept for certain product categories in a specific period of time example: The United States maintains tariff-rate quotas on imported raw cane sugar, refined and specialty sugar, and sugar-containing products. The goal is to allow countries to export specific products to the United States at a relatively low tariff while acknowledging higher tariffs above predetermined quantities.

joint venture

A partnership between a domestic firm and a foreign firm or government -popular in industries that require large investments, such as natural resources extraction or automobile manufacturing -provide legitimacy in the eyes of the host country's citizens. Local partners have firsthand knowledge of the economic and sociopolitical environment and the workings of available distribution networks, and they may have privileged access to local resources (raw materials, labor management, and so on).

strategic alliance

A partnership that is formed to create a competitive advantage on a worldwide basis -typically represented by an agreement to work together (which can ultimately mean more involvement than a joint venture). often retain their distinct identities, with each partner bringing a core competency to the union.

licensing

An alternative to direct investment that requires a licensee to pay commissions or royalties on sales or supplies used in manufacturing The licensee (the owner of the foreign operation) pays commissions or royalties on sales or supplies used in manufacturing. The licensee may also pay an initial down payment or fee when the licensing agreement is signed. attractive alternative when resources are unavailable for direct investment or when the core competencies of the firm or organization are not related to the product being sold (such as in the case of Olympics merchandise).

differential pricing

Charging different prices to different buyers for the same quality and quantity of product can occur in several ways, including negotiated pricing, secondary-market pricing, periodic discounting, and random discounting.

price skimming

Charging the highest possible price that buyers who most desire the product will pay a skimming policy may hold down demand for the product in instances where the firm's production capacity is limited during the introduction stage. A danger is that a price skimming strategy may make the product appear more lucrative than it actually is to potential competitors. A firm also risks misjudging demand and facing insufficient sales at the high price.

China

China is a manufacturing powerhouse; however, its high growth rate has decreased in recent years to 6.4 percent. Many foreign companies, including Nike, Samsung, and Adidas, have factories in China to take advantage of its low labor costs, and China has become a major global producer in virtually every product category. China has emerged as the world's largest economy in purchasing-power terms. This means China is becoming a source of demand and investment to other countries in the Asia-Pacific region

fixed costs average fixed costs

Costs that do not vary with changes in the number of units produced or sold is the fixed cost per unit produced and is calculated by dividing fixed costs by the number of units produced.

variable costs average variable costs

Costs that vary directly with changes in the number of units produced or sold; usually held constant per unit variable cost per unit produced, is calculated by dividing the variable costs by the number of units produced.

odd number pricing

The strategy of setting prices using odd numbers that are slightly below whole-dollar amounts

Globalization

The development of marketing strategies that treat the entire world (or its major regions) as a single entity a globalized firm markets standardized products in the same way everywhere. - nike and adidas, technology products

born global marketing firms

typically small, technology-based firms earning as much as 70 percent of their sales outside the domestic/home market—export their products almost immediately after being established in market niches in which they compete with larger, more established firms - ebay, google, logictech

global marketing analytics

use advanced analytics to target markets, develop social media, track products in the supply chain, and enable robots and drones to perform tasks that provide customer service. - valued at more than $2.1 billion and growing.

A nation's political system, laws, regulatory bodies, special-interest groups, and courts all have a great impact on international marketing

A government's policies toward public and private enterprises, consumers, and foreign firms influence marketing across national boundaries.

World Trade Organization (WTO)

An entity that promotes free trade among 164 member nations by eliminating trade barriers and educating individuals, companies, and governments about trade rules around the world

F.O.B. origin pricing

"free on board at the point of origin," which means that the price does not include freight charges. It requires the buyer to pay the delivery costs, which include transportation from the seller's warehouse to the buyer's place of business.

instability in the market

*United States and the European Union are more stable economically than many other regions of the world* COVID 19-- resulting in high unemployment, corporate bankruptcies, and supply chain disruptions. The U.S., which had been nearing a 50-year low in unemployment, suddenly experienced the worst unemployment rate since the Great Depression. According to World Bank, COVID-19 plunged the global economy into the deepest recession since World War II. Areas where the pandemic hit the hardest, such as the eurozone, saw the greatest imPact

direct ownership

A situation in which a company owns subsidiaries or other facilities overseas

trading company

A company that links buyers and sellers in different countries but is not involved in manufacturing and does not own assets related to manufacturing

discount

A deduction from the price of an item Producers and sellers offer a wide variety of discounts to their customers, including trade, quantity, cash, and seasonal discounts as well as allowances

import tariff

A duty levied by a nation on goods bought outside its borders and brought into the country Because they raise the prices of foreign goods, tariffs impede free trade between nations. Tariffs are usually designed either to raise revenue for a country or to protect domestic products.

Levels of Involvement in Global Marketing

1. Globalized Marketing 2. Regional Marketing 3. Multinational Marketing 4. Limited Exporting 5. Domestic Marketing

a global presence generates five opportunities for creating value:

1. to adapt to local market differences; 2. to exploit economies of global scale; 3. to exploit economies of global scope; 4. to mine optimal locations for activities and resources; 5. to maximize the transfer of knowledge across locations

embargo

A government's suspension of trade in a particular product or with a given country Embargoes are generally directed at specific goods or countries and are established for political, health, or religious reasons. An embargo may be used to suspend the purchase of a commodity like oil from a country that is involved in questionable conduct, such as human rights violations or terrorism. The United States has had an embargo on Cuban imports and exports for over 50 years, costing the country an estimated $130 billion according to the United Nations.

cost-based pricing

Adding a dollar amount or a percentage of the cost to the cost of the product to establish the price does not necessarily take into account the economic aspects of supply and demand, nor must it relate to just one pricing strategy or pricing objective. It is a straightforward and easy-to-implement method.

cost-plus pricing

Adding a percentage of the manufacturer's total cost to that total cost to establish the price of a custom-made product When production costs are difficult to predict, cost-plus pricing is appropriate. Projects involving custom-made equipment and commercial construction are often priced using this technique popular, especially when the producer must use raw materials that frequently fluctuate in price.

markup pricing

Adding to the cost of the product a predetermined percentage of that cost the same percentage is often used to determine the prices on items within a single product category, and the percentage markup may be largely standardized across an industry at the retail level. Using a rigid percentage markup for a specific product category reduces pricing to a routine task that can be performed quickly.

special event pricing

Advertised sales or price cutting linked to a holiday, season, or event To increase sales volume, many organizations coordinate price with advertising or sales promotions for seasonal or special situations

GDP and GPD per capita examples

Although Switzerland's GDP is much smaller than the United States' GDP, its GDP per capita is slightly higher at $61,400. Even Canada, which is comparable in geographic size to the United States, has a lower GDP and GDP per capita.

General Agreement on Tariffs and Trade (GATT)

An agreement among nations to reduce worldwide tariffs and increase international trade originally signed by 23 nations Rounds of GATT negotiations reduced trade barriers for most products and established rules to guide international commerce, such as rules to prevent dumping, (the selling of products at unfairly low prices.)

Asia-Pacific Economic Cooperation (APEC)

An alliance that promotes open trade and economic and technical cooperation among member nations throughout the world est. 1989 Australia, Brunei Darussalam, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States, China, Hong Kong, Taiwan, Mexico, Papua New Guinea, Chile, Peru, Russia, and Vietnam. - represents approximately 39 percent of the world's population, -60 percent of the world's GDP, -nearly 47 percent of global trade.

Association of Southeast Asian Nations (ASEAN)

An alliance that promotes trade and economic integration among member nations in Southeast Asia est 1967 Malaysia, the Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Laos, Myanmar, Indonesia, and Cambodia. With its motto, "One Vision, One Identity, One Community," member nations have expressed the goal of encouraging free trade, peace, and collaboration among member countries. three pillars are the ASEAN Political-Security Community (APSC), the ASEAN Economic Community (AEC), and the ASEAN Socio-Cultural Community (ASCC). The AEC attempts to unite the regional economy

Competition internationally

Be aware of the competitive forces in the countries they target. Identify the interdependence of countries and the global competitors in those markets. Be mindful of a new breed of customer: the global customer.

International marketing

Developing and performing marketing activities across national boundaries - example: Walmart operates approximately 11,500 stores in 27 countries; Starbucks serves tens of millions of customers a week at more than 24,000 shops in more than 75 countries. - Emirates airline, based in Dubai, has become the world's largest long-haul carrier. Emirates advertises its fully flatbed seats for business class to speak to its upscale flying experience

price competition

Emphasizing price as an issue and matching or beating competitors' prices

negotiated pricing

Establishing a final price through bargaining between seller and customer Customers rarely pay the list price on a car, for instance, because they go to a car dealership expecting to negotiate with the seller until they arrive at a price that is satisfactory to both the customer and the seller

European Union (EU)

European Community or Common Market, was established in 1958; An alliance that promotes trade among its member countries in Europe 2015, the EU included the United Kingdom, Spain, Denmark, Greece, Portugal, Ireland, Austria, Finland, Sweden, Cyprus, Poland, Hungary, the Czech Republic, Slovenia, Estonia, Latvia, Lithuania, Slovakia, Malta, Romania, Bulgaria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, and Croatia

United States, the EU, and Asia have become largely interdependent in trade and investment.

For instance, the United States and the EU have already adopted the "Open Skies" agreement to remove some of the restrictions on transatlantic flights, and the two often collaborate on ways to prevent terrorist attacks, cyber hacking, and other types of crime.

Pricing Objectives

Goals that describe what a firm wants to achieve through pricing survival- sometimes will need to set prices low or even below the margin for survival profit- profit objectives tend to be set at levels that the owners and top-level decision makers view as satisfactory and attainable RIO- A return on investment (ROI) pricing objective generally requires some trial and error, as it is unusual for all required data and inputs to be available when setting prices. Many pharmaceutical companies also use ROI pricing objectives because of their great investment in research and development.

exchange controls

Government restrictions on the amount of a particular currency that can be bought or sold They can force businesspeople to buy and sell foreign products through a central agency, such as a central bank. Developing economies use exchange control to limit speculation against their currencies or to limit foreign investment. example: Greece placed restrictions on how much cash could be withdrawn from banks and restrictions on transfer of capital abroad during a financial crisis

BREXIT

In 2020, the United Kingdom exited the European Union. resulted in the value of the pound falling sharply. There remain many questions about the impact of the exit on trade relationships with other countries

comparison discounting

Setting a price at a specific level and comparing it with a higher price The higher price may be the product's previous price, the price of a competing brand, the product's price at another retail outlet, or a manufacturer's suggested retail price

issues with adaptive marketing strategy

It can be difficult to transfer marketing symbols, trademarks, logos, and even products to international markets, especially if these are associated with objects that have profound religious or cultural significance in a particular culture. - clothing and language are both relative to culture In many parts of Asia, a gift may be considered a necessary introduction before negotiation, whereas in the United States or Canada, a gift may be misconstrued as an illegal bribe.

Adaptive Marketing Strategy

Mcdonald's marketing Local preferences, tastes, and idioms can all prove complicated for international marketers

bundle pricing

Packaging together two or more complementary products and selling them for a single price commonly for banking and travel services, computers, and automobiles with option packages. Bundle pricing can help to increase customer satisfaction. It can also help firms to sell slow-moving inventory and increase revenues by bundling the inventory with products with a higher turnover.

transfer pricing

Prices charged in sales between an organization's units determined by calculating the cost of the product, which can vary depending on the types of costs included in the calculations

reference pricing

Pricing a product at a moderate level and positioning it next to a more expensive model or brand

demand-based pricing

Pricing based on the level of demand for the product dynamic-- UBER. price changes on the night, supply of drivers, traffic, and distance being traveled

competition-based pricing

Pricing influenced primarily by competitor's prices

customary pricing

Pricing on the basis of tradition - gumballs

premium pricing

Pricing the highest-quality or most versatile products higher than other models in the product line beer, dog food for your pet, small kitchen appliances, ice cream

price leader

Products priced below the usual markup, near cost, or below cost Management expects that sales of regularly priced products will more than offset the reduced revenues from the price leaders.

geographic pricing

Reductions for transportation and other costs related to the physical distance between buyer and seller

penetration pricing

Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly If the low price stimulates sales, the firm may be able to order longer production runs, increasing economies of scale and resulting in decreased production costs per unit. A disadvantage of penetration pricing is that it places a firm in a less-flexible pricing position

Because U.S. trade and corporate policy, as well as U.S. law, prohibits direct involvement in payoffs and bribes, U.S. companies may have a hard time competing with foreign firms that engage in these practices.`

Some U.S. businesses that refuse to make payoffs are forced to hire local consultants, public relations firms, or advertising agencies, which results in indirect payoffs that are also illegal under U.S. law. The ultimate decision about whether to give small tips or gifts where they are customary must be based on a company's code of ethics.

psychological pricing

Strategies that encourage purchases based on consumers' emotional responses, rather than on economically rational ones environments, how customers interpret price fairness, value, and feelings toward prices at a particular store affect their perceptions of the store's price image as well as their repurchase intentions.

periodic discounting

Temporary reduction of prices on a patterned or systematic basis a major problem with periodic discounting is that customers can predict when the reductions will occur and may delay their purchases until they can take advantage of the lower prices.

random discounting

Temporary reduction of prices on an unsystematic basis

Total cost is the sum of the average fixed costs and the average variable costs, multiplied by the quantity produced. Marginal cost (MC) is the extra cost a firm incurs when it produces one additional unit of a product.

The average total cost is the sum of the average fixed cost and the average variable cost.

cultural realitivism

The concept that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures

balance of trade

The difference in value between a nation's exports and its imports When a nation exports more products than it imports, a favorable balance of trade exists because money is flowing into the country. The United States has a negative balance of trade for goods and services of more than $522 billion negative effects-- A negative balance of trade is considered harmful, because it means U.S. dollars are supporting foreign economies at the expense of U.S. companies and workers.

GDP (Gross Domestic Product)

The market value of a nation's total output of goods and services for a given period; an overall measure of economic standing -- does not take into account the concept of GDP in relation to population (GDP per capita). China has the largest gross domestic product in the world with more than $23 trillion, growing at a rate of 6.9 percent annually

outsourcing

The practice of contracting noncore operations with an organization that specializes in that operation ex: The majority of all footwear is now produced in China, regardless of the brand name on the shoe you wear. Services can also be outsourced

offshore outsourcing

The practice of contracting with an organization to perform some or all business functions in a country other than the country in which the product will be sold Today, some clothing manufacturers that previously engaged in offshore outsourcing are moving production back to the United States to maintain quality and tighter inventory control.

contract manufacturing

The practice of hiring a foreign firm to produce a designated volume of the domestic firm's product or a component of it to specification; the final product carries the domestic firm's name Reebok uses Korean contract manufacturers to produce many of its athletic shoes

offshoring

The practice of moving a business process that was done domestically at the local factory to a foreign country, regardless of whether the production accomplished in the foreign country is performed by the local company (e.g., in a wholly owned subsidiary) or a third party (e.g., subcontractor) Typically, the production is moved to reap the advantages of lower cost of operations in the foreign location

importing

The purchase of products from a foreign source

exporting

The sale of products to foreign markets

Multipe-Unit Pricing

The strategy of setting a single price for two or more units such as two cans for 99 cents rather than 50 cents per can. Especially for frequently purchased products, this strategy can increase sales through encouraging consumers to purchase multiple units when they might otherwise have only purchased one at a time.

ethical standards and counterfeit products

Trade in counterfeit goods has been estimated to be anywhere from $200 billion to more than $1.7 trillion worldwide, but the full scope is unknown according to the U.S. Chamber of Commerce.

the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR)

among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States has also been ratified in all those countries. The United States exports $29 billion to the CAFTA-DR countries annually

Currency Valuation

an important economic factor in the global business environment floating exchange rate, which allows the currencies of those countries to fluctuate, or float, according to the foreign exchange market (In the last few years, the value of the dollar has been strong relative to other currencies. This means that U.S. exports cost more if purchased with the euro or yen, and imports cost less. A strong dollar makes U.S. products less competitive in foreign markets)

quantity discount

are given to customers who buy in large quantities. Quantity discounts are offered because the seller's per-unit selling cost is usually lower for larger purchases.

cash discount

are incentives offered for prompt payment. A seller may offer a discount of "2/10, net 30," meaning that the buyer may take a 2 percent discount if the bill is paid within 10 days and that the bill must be paid in full within 30 days.

trade discount

are taken off the list prices and are offered to marketing intermediaries, or middlemen

Southern Common Market (MERCOSUR)

established in 1991 under the Treaty of Asunción to unite Argentina, Brazil, Paraguay, and Uruguay as a free trade alliance. An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America Currently, Bolivia, Chile, Colombia, Ecuador, Guyana, Surinam, and Peru are associate members

marginal analysis

examines what happens to a firm's costs and revenues when production (or sales volume) changes by a single unit. Both production costs and revenues must be evaluated. To determine the costs of production, it is necessary to identify several types of potential costs

relationship marketing

has proven to be a highly effective tool in reaching these emerging markets. This is because businesses in these countries value long-term and close interactions with marketers that they can trust - Brazil, Russia, India, China, and South Africa (BRICS) have attracted attention as their economies are rapidly advancing.

North American Free Trade Agreement (NAFTA)

implemented in 1994, effectively merged Canada, Mexico, and the United States into one market of 490 million consumers. NAFTA eliminated virtually all tariffs on goods produced and traded among Canada, Mexico, and the United States to create a free trade area. NAFTA made it easier for U.S. businesses to invest in Mexico and Canada, provided protection for intellectual property (of special interest to high-technology and entertainment industries), expanded trade by requiring equal treatment of U.S. firms in both countries, and simplified country-of-origin rules, hindering China and Japan's use of Mexico as a staging ground for further penetration into U.S. markets

F.O.B. destination

indicates that the product price does include freight charges, and therefore the seller is responsible for these charges.

allowance

is a reduction in price to achieve a desired goal. Trade-in allowances, for example, are price reductions granted for turning in used equipment, like aircraft, when purchasing new equipment.

nonprice competition

is competition based on factors other than price. It is used most effectively when a marketer like Disney can distinguish its product through distinctive product quality, excellent customer service, effective promotion, packaging, or other unique features

price lining

is the strategy of selling goods only at certain predetermined prices that reflect explicit price breaks. example, a shop may sell men's ties only at $22 and $37. This strategy is used widely in clothing and accessory stores. It eliminates minor price differences from the buying decision—both for customers and for managers who buy merchandise to sell in these stores.

encouraging international growth

many countries offer significant practical assistance and valuable benchmarking research that will help their domestic firms become more competitive globally. One example is Export.gov, a website managed by the U.S. Department of Commerce's International Trade Administration. Export.gov collects a variety of resources to help businesses that want to export to other countries.

cultural and social effects on marketing

marketing activities are primarily social in purpose, they are influenced by beliefs and values regarding family, religion, education, health, and recreation

product link pricing

means establishing and adjusting the prices of multiple products within a product line. Product-line pricing can provide marketers with flexibility in setting prices. For example, marketers can set prices so that one product is profitable, whereas another is less profitable but increases market share by virtue of having a low price

Canada

per capita GDP of $48,400. Canada is the second-largest trading partner of the United States, which in turn supports 1.6 million U.S. jobs

cash flow

set price levels to encourage rapid sales; however, this may produce a profit, but will encourage a short life span of the product and competitors will gain more way in the market

captive pricing

the basic product in a product line is priced low, but the price on the items required to operate or enhance it are higher. razor blades, coffee pods, printer ink

Market share

the portion of a market controlled by a particular company or product. The Profit Impact of Market Strategies (PIMS) studies, conducted over the past 50 years, have shown that both market share and product quality influence profitability. Thus, marketers often use an increase in market share as a primary pricing objective.