BUS 381 Exam 1
E7 nations
- China - India - Brazil - Mexico - Russia - Indonesia - Turkey
Counterfeiting
- Counterfeiting and piracy are particularly important in industries such as motion pictures, recorded music, computer software, and textbook publishing. - Companies in these industries produce products that can be easily duplicated and distributed on a mass basis. Examples: - Louis Vuitton bags - "Uncle Martian" -> copy of Under Armour - Hallstatt town in Austria has a copy in China as an amusement park
Globalization (standardization) as a strategy
- Developing standardized products marketed worldwide with a standardized marketing mix - Essence of mass marketing
Global localization (adaptation) as a strategy
- Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction - Essence of segmentation - Think globally, act locally
Patent
- no one else can copy unless you pay the person - exclusive right to make, use, and sell for x time
Physical culture
-Clothing -Tools -Decorative art -Body adornment -Homes
Abstract culture
-Religion -Perceptions -Attitudes -Beliefs -Values
What are the 5 dimensions? (Hofstede's 5 Dimensions of National Culture)
1. Individualistic vs. Collectivistic 2. High-power distance vs. Low-power distance 3. High uncertainty avoidance vs. Low uncertainty avoidance 4. Achievement vs. Nurturing 5. Long-term orientation vs. Short-term orientation
Mistaken assumptions of Low income countries
1. The poor have no money. 2. The poor will not "waste" money on non-essential goods. 3. Entering developing markets is fruitless because goods there are too cheap to make a profit. 4. People in BOP (bottom of the pyramid) countries cannot use technology. 5. Global companies doing business in BOP countries will be seen as exploiting the poor.
Diff. between single country vs. global marketing strategy
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Differences of Preferential Trade Agreements
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Achievement vs. Nurturing (Hofstede)
Achievement: Assertiveness, acquiring $$ and goods, and competition; "masculine" culture - ex: US, Japan, Mexico Nurturing: Relationships and concern for others; "feminine" culture - ex: France, Sweden
How are the market development stages determined?
Determined by: - infrastructure - # of people working in agriculture - birth/mortality rate - literacy rate - industrialization?
Example of Self reference criterion
Euro Disney
market penetration (product/market mix)
Existing products in existing markets Ex: Starbucks is building on its loyalty card and rewards program in the United States with a smartphone app that enables customers to pay for purchases electronically
market development (product/market mix)
Existing products in new markets Ex: Starbucks's expansion into India via an alliance with the Tata Group. SB will source coffee beans in India and sell worldwide then open cafes in Tata's upscale Taj hotels in India.
What is a FTA?
Free Trade Area (FTA) • FTA is formed when 2+ countries agree to eliminate tariffs, barriers that restrict trade. • Continue independent trade policies with countries outside agreement • Rules of origin requirements restrict transshipment of goods from the country with the lowest tariff to another
Low-Income (market development)
GNI per capita: $1,045 or less Characteristics: • Limited industrialization • High percentage of population in farming • High birth rates • Low literacy rates • Heavy reliance on foreign aid • Political instability and unrest • Concentrated in Sub-Saharan Africa *Includes 13 % of the world population
Lower-Middle-Income (market development)
GNI per capita: $1,046 to $4,125 Characteristics: • Rapidly expanding consumer markets • Cheap motivated labor • Mature, standardized, labor-intensive industries like footwear, textiles and toys *India is the only E7 nation as lower-middle income nation
High-Income (market development)
GNI per capita: $12,476 or more Characteristics: • Sustained economic growth through disciplined innovation • Ascendancy of knowledge over capital, intellectual over machine technology, scientists and professionals over engineers and semiskilled workers • Future oriented • Importance of interpersonal relationships • Service sector is more than 50% of GNI • Households have high ownership levels of basic products •Importance of information processing and exchange *Also known as advanced, developed, industrialized, or postindustrial countries
Upper-Middle-Income (market development)
GNP per capita: $4,126 to $12,745 Characteristics: • Rapidly industrializing, less agricultural employment • Increasing urbanization • Rising wages • High literacy rates and advanced education • Lower wage costs than advanced countries *Also called industrializing or developing economies: • BRICS: Brazil, China, South Africa • Other countries: Malaysia, Chile, Venezuela
Global marketing strategy
Global Market Participation - Marketing Mix Development • 4 P's: Adapt or Standardize? - Concentration of Marketing Activities - Coordination of Marketing Activities - Integration of Competitive Moves
High power distance vs. low power distance (Hofstede)
High power distance: respect to high authority (not going to be friends w/ your boss) - ex: Mexico, Singapore, France Low power distance: plays down inequalities; not afraid to approach nor are in awe of the boss - ex: US, Sweden
High uncertainty avoidance vs. low uncertainty avoidance (Hofstede)
High: avoid it; threatened with ambiguity and experience high levels of anxiety - ex: Italy, Mexico, France Low: Comfy with risks, tolerant of diff. behavior and opinions; if you fail, try again - ex: US, Canada, Singapore
Individualistic vs. Collectivistic (Hofstede)
Individualistic: People look after their own and family interests; care about themselves vs. group as whole - ex: US, Canada, Australia Collectivistic: People expect the group to look after and protect them - ex: Thailand, Mexico
Characteristics of of Innovations (Diffusion theory)
Innovation is something new; five factors that affect the rate at which innovations are adopted include: -Relative advantage : How the product compares with existing ones -Compatibility: The extent to which a product is consistent with existing values and past experiences of adopters -Complexity: The degree to which an innovation or new product is difficult to understand and use. -Divisibility: The ability of a product to be tried and used on a limited basis -Communicability: The degree to which benefits of an innovation or the value of a product may be communicated to a potential market
Long-term orientation vs. short-term orientation (Hofstede)
Long: People look to the future and value thrift and persistence - ex: China, Taiwan, Japan Short: Value tradition and the past - ex: Australia, US, Canada
Are Low income countries interesting?
Many low-income countries have such serious economic, social, and political problems that they represent extremely limited opportunities for investment and operations. • Some are no-growth economies, such as Burundi and Rwanda, with a high percentage of the population living at the national poverty line. • The result is an unstable environment characterized by civil strife, flat income, and considerable danger to residents. Countries embroiled in civil wars are dangerous areas; most companies find it prudent to avoid them.
GCCP (Global consumer culture positioning )
Marketing tool to address consumers all over the world & if they'll consume the product no matter where they're located - products are usually tech... - ex of subculture -> credit cards - fast ford culture: it's everywhere, defined by consumption - coffee culture: coffee shops everywhere you go
diversification (product/market mix)
New Products in New Markets Ex: Starbucks dropped the word "Coffee" in its logo. It recently acquired a juice maker, Evolution Fresh; the Bay Bread bakery, and tea retailer Teavana Holdings
product development (product/market mix)
New products in existing markets Ex: Starbucks created a brand of instant coffee, Via, to enable its customers to enjoy coffee at the office and other locations where brewed coffee is not available.
Single country marketing strategy
Target Market Strategy - Marketing Mix (4 Ps)
Diffusion theory
The Adoption Process The mental stages through which an individual passes from the time of his or her first knowledge of an innovation to the time of product adoption or purchase: • Awareness • Interest • Evaluation • Trial • Adoption
GNI (Gross National Income)
The World Bank has defined four categories of development using Gross National Income (GNI) as a base • Low-Income • Lower-Middle-Income • Upper-Middle-Income • High-Income **YOU USE THIS TO DETERMINE IF THEY CAN USE YOUR PRODUCT OR NOT
What is global marketing?
The scope of activities outside the home market (Marketing but on a global scale)
What are the 5 social institutions
These institutions reinforce the culture norms • Family • Education • Religion • Government • Business
G7
U.S. Japan Germany France Britain Canada Italy
What is culture? (differences between values, beliefs, attitudes, etc.)
Ways of living, built up by a group of human beings, that are transmitted from one generation to another. - can't be easily changed - both physical (clothing and tools) and nonphysical (religion, attitudes, beliefs, and values) - unconscious and concious values, ideas, attitudes, and symbols - "Collective programming of the mind" - Hofstede - acted out in social institutions
Asian vs. Western adoption process
Western: Perfect bell curve (even distribution) Asian: Majority of people fall in the "early majority" category (Maturity happens later?)
microenvironemnt
closer to a business and YOU CAN change how it affects you - the company - suppliers - marketing intermediaries - customers - competitors - publics
trademark
distinctive mark, logo to distinguish from other competitors
What is GMS?
full service online marketing company specializing in search engine optimization, pay-per-click management, online reputation management, affiliate-program consulting, social media management, email marketing, conversion optimization and website development...
brand equity
how you perceive as product ex: Louis Vuitton -> people are willing to spend $$$$$$$ on their bags over an unbranded one
copyright
ownership of written, recorded, performed, or filmed creative work ex: Champagne "masquerading as champagne... might be legal, but isn't fair" Ex: Kleenex, bandaid, chapstick, Google, Xerox
GDP
the monetary value of all the finished goods and services produced within a country's borders in a specific time period
piracy
unauthorized publication of reproduction
macroenvironent
you CAN'T change how it affects you - natural forces - Ex: running out of raw materials - tech. forces (advancement) - ex: booking tickets online vs. in person - ex: apple vs. samsung case (constant need to be up to date; data protection, etc.) - political - economic - ex: Euro Disney case (how much customers are willing to spend when they vacation, they want to spend less/long vacation>short, expensive one)
infringement of intellectual property
• Counterfeiting-unauthorized copying and production of a product • Associative Counterfeit/Imitation-product name differs slightly from a well-known brand • Piracy-unauthorized publication or reproduction of copyrighted work
Marketing Implications of Cultural/social environment
• Cultural factors must be considered when marketing consumer and industrial products • Environmental sensitivity reflects the extent to which products must be adapted to the culture-specific needs of different national markets
Common law
• Disputes are decided by reliance on the authority of past judicial decisions • Companies are legally incorporated by state authority • Code law is used in only a few areas; the U.S. Uniform Commercial Code fully adopted by 49 states, Louisiana still influenced by French civil law • U.S. law is rooted in English common law.
Examples of FTAs
• European Economic Union plus Norway, Liechtenstein, and Iceland • The Group of Three (G3)—Colombia, Mexico, and Venezuela • The Closer Economic Partnership Agreement— China and Hong Kong • U.S. and South Korea, Panama and Colombia
intellectual property
• Intellectual property must be REGISTERED in EACH COUNTRY where business is conducted. • Patent-gives an inventor exclusive right to make, use, and sell an invention for a specified period of time • Trademark-distinctive mark, motto, device, or emblem used to distinguish it from competing products (™ or ®) • Copyright-establishes ownership of a written, recorded, performed, or filmed creative work Examples: - Budweiser in Budweis, Czech vs. America - champagne isn't considered champagne unless made in Champagne, France - Kleenex, Bandaid, Google, Xerox, etc.
international court of justice
• Judicial arm of the United Nations founded in 1947 • Settles disputes between nations • Offers advice on legal issues submitted by various international agencies
Civic Law
• Legal system reflects the structural concepts and principles of the Roman Empire • Companies are formed by contract between two or more parties who are fully liable for the actions of the company • The Napoleonic Code of 1804 drew on the Roman legal system and is the basis for continental European law today. Code law is also known as civil law.
Preferential trade agreements
• Many countries seek to lower barriers to trade within their regions • PTAs give partners special treatment and may discriminate against others • Over 300 PTAs have been notified to the WTO
international law
• The rules and principles that nation-states consider binding among themselves • Pertains to property, trade, immigration and other areas • Disputes between nations are issues of public international law • World Court or International Court of Justice (ICJ); Judicial arm of the United Nations
Marketing's Impact on Culture
• Universal aspects of the cultural environment represent opportunities to standardize elements of a marketing program • Increasing travel and improved communications have contributed to a convergence of tastes and preferences in a number of product categories
Self reference criterion
•Unconscious reference to one's own cultural values; creates cultural myopia; ethnocentrism How to Reduce Cultural Myopia: 1. Define the problem or goal in terms of home country cultural traits 2. Define the problem in terms of host-country cultural traits; make no value judgments 3. Isolate the SRC influence and examine it 4. Redefine the problem without the SRC influence and solve for the host country situation
