International Marketing Final: Chapters 10-13, 15, 16, and 18

80

% of U.S. Gross Domestic Product that is contributions of services industries

Six C's of Channel Strategy

- Cost (investment and maintaining) - Capital (investment) - Control - Coverage - Character (fit brand) - Continuity (longevity)

Middlemen Selection Criteria

- Reputation - Creditworthiness - Markets served - Products carried - Number of stores - Store size - Contractual agreement

Factors affecting Channel Choice

- identify specific target markets within and across countries - specify marketing goals in terms of volume, market share, and profit margin requirements - specify financial and personnel commitments to the development of international distribution - identify control, length of channels, terms of sale and channel ownership

The key factors that influence success of franchising approaches are:

- monitoring costs - the principal's international experience - the brand equity in the new market

Government-Affiliated Middlemen

- products, services, and commodities for the governments own use are always procured through government purchasing offices at federal, regional, and local levels

Factors that determine product adoption

-Conformity with buyer's conventions and principles -Conformity with buyers' conduct -Physical characteristics and functions of the product

Linguistic Limitations

-Different languages, dialects, nuances, accent -translation challenges -low literacy impedes communications/creativity -multiple languages within a country

Advertising Strategy and Goals

-Establish a new brand -introduce a product-line extension -increase quality perceptions The balance between standardization of advertising themes and customization

brand

-bundle of images and experiences in the customer's mind *represents a promise made by a particular company about a particular product *a quality certification *differentiation between competing products

Types of price escalation

-inflation -deflation -varying currency values (strong or weak home currency) -middlemen and transportation costs -exchange rate fluctuations

legal constraints

-laws controlling comparative advertising -regulation on advertising of specific products -control of advertising on television -accessibility to broadcast media -limitations on length & number of commercials -special taxes that apply to advertising

Foreign Country Middlemen

-manufacturers representatives -foreign distributors *Dealing with these middlemen allows for shorter channels. *These middlemen are in constant contact with the market

Distribution Process

-physical handling of goods -the passage of ownership title, and especially important from marketing -the buying and selling negotiations between the producers and middlemen -the buying and selling negotiations between the middlemen and customers

Product Component Model: core component

-product platform -design features -functional features

Regional Segmentation

-to push the balance toward more standardized promotional efforts. -Companies strive for harmony in brand names, advertising, and promotions across Europe

Planning for Global Markets

1. A systematized way of relating to the future 2. An attempt to manage the effects of external, uncontrollable factors on the firm's strengths, weaknesses, objectives, and goals to attain a desired end 3. A commitment of resources to a country market to achieve specific goals 4. The job of making things happen that might not otherwise occur

The International Communication Process

1. An information source: Product message to communicate 2. Encoding 3. A message channel: Media that conveys the encoded message 4. Decoding: The interpretation 5. Receiver *6. Feedback: Information about the effectiveness of the message *7. Noise: Uncontrollable and unpredictable influences

The Three Structures of Planning

1. Corporate Planning 2. Strategic Planning 3. Tactical Planning

Benefits of Global Marketing

1. Economies of scale in production and marketing 2. transference of experience and know-how 3. access to the toughest customers. 4. financial benefits.

7 Steps in an Advertising

1. Perform marketing research. 2. Specify the goals of the communication. 3. Develop the most effective message(s) for the market segments selected. 4. Select effective media. 5. Compose and secure a budget based on what is required to meet goals. 6. Execute the campaign. 7. Evaluate the campaign relative to the goals specified

Barriers to Entering Global Markets for Consumer Services

1. Protectionism 2. Restrictions on transborder data flow 3. Protection of intellectual property 4. Cultural barriers and adaptation

global marketing and advertising advantages

1. economies of scale in production, distribution 2. lower costs with less in planning and control 3. lower advertising production costs 4. ability to exploit good ideas worldwide 5. ability to introduce products quickly, worldwide 6. consistent international brand, company image 7 simplification of coordination and control

Alternative Market-Entry Strategies

1. exporting 2. contractual agreements 3. strategic alliances 4. direct foreign investment --The amount of equity required by the company to use different modes affects the risk, return, and control that it will have in each mode.

The 5 characteristics of innovation

1. relative advantage 2. compatibility 3. complexity 4. trialability 5. observability

media planning and analysis - tactical considerations

1. television and radio 2. newspapers and magazines 3. Satellite and Cable TV 4. Direct Mail and the Internet 5. Social Media 6. Apps 7. cinema 8. billboards

advertising and personal selling

2 major components of integrated marketing communications (IMC)

Strategic International Alliances (SIA)

A business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective

Market-Perceived Quality

A dimension of quality -the customer's perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives - Ex: airlines, shoes, sports cars *Increasingly important because of customer knowledge

Performance Quality

A dimension of quality the level at which the product's primary characteristics operate *The firm's perception of quality *Customers expect this level of quality; It is a given.

Contractual Agreements: Licensing

A means of establishing a foothold in foreign markets without large capital outlays Company grants: - patent rights, trademark rights, rights to use technological processes Granted for: - production processes, used of a trade name, distribution of imported products. least profitable way of entering a market, the risks and headaches are less than those for direct investments. It is a legitimate means of capitalizing on intellectual property in a foreign market, and such agreements can also benefit the economies of target countries.

International Joint Ventures

A partnership of two or more participating companies that have joined forces to create a separate legal entity

Parallel Imports

A pricing policy when price differences are greater than the cost of transportation between two markets -develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer's regular distribution system. Also known as "Gray Markets" *Major problem for pharmaceutical companies

physical and psychological

A product is the sum of its satisfactions it provides the user: its _________ & __________ attributes

Product Component Model

A tool for characterizing how a product may be adapted to a new market by separating the product's many dimensions into three components: support services, packaging, and core component

Licensing Advantages and Disadvantages

Advantageous when: - capital is scarce - import restrictions forbid other means of entry - a country is sensitive to foreign ownership - patents and trademarks must be protected against cancellation for nonuse Disadvantages include: - choosing the wrong partner; quality and other production problems - payment problems - contract enforcement - loss of marketing control

International Planning Process Phase 4 Implementation and Control

All marketing plans require coordination and control during the period of implementation. An evaluation and control system requires performance-objective action. Utilizing a planning process and system: - encourages the decision maker to consider all variables that affect the success of a company's plan - provides the basis for viewing all country markets and their interrelationships as an integrated global unit

Administered pricing

An attempt to establish prices for an entire market. Such prices may be arranged through the cooperation of competitors, through national, state, or local governments, or by international agreement *Goal is to reduce the impact of competition or eliminate it

Manufacturer's Export Agent (MEA)

An individual agent middleman or an agent middleman firm providing a selling service for manufacturers

Innovation

Any idea perceived as new by a group of people

homogenize and diversify

As global markets continue to ________ and ________ simultaneously, the best companies will avoid the trap of focusing on country as the primary segmentation variable.

International Planning Process Phase 3 Developing the Marketing Plan

Begins with a situation analysis Culminates in: - the selection of an entry mode - a specific action program for the market Establishes: -what is to be done -by whom -how it is to be done -when Includes budgets and sales and profit expectations

Ethnocentrism

Belief in the superiority of one's nation or ethnic group.

Provenance Paradox

Below are 5 strategies to combat __________________. 1. Stick to colonial history 2. build a brand for the long haul 3. flaunt your country of origin 4. downplay your country of origin 5. hide behind a front country

Who holds marketplace power?

Consumers due to the invention of the smartphone

International Planning Process Phase 2 Defining Target Markets and Adapting the Marketing Mix Accordingly

Decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements Determine possibilities for applying marketing tactics across national markets Answer three major questions: 1. Are there identifiable market segments that allow for common marketing mix tactics across countries? 2. Which cultural/environmental adaptations are necessary for successful acceptance of the marketing mix? 3. Will adaptation costs allow profitable market entry?

Consortia

Developed to pool financial and managerial resources and to lessen risks. Similar to joint ventures except for 2 characteristics: -involves a large number of participants -frequently operate in a country or market in which none of the participants is currently active ex: Often, huge construction projects are built under a consortium arrangement in which major contractors with different specialties form a separate company specifically to negotiate for and produce one job

Decoding Problems

Errors at the receiver end due to: -incorrect knowledge of use patterns -Poor encoding -Poor media selection -Inaccurate decoding -Bad luck

International Planning Process Phase 1 Preliminary Analysis and Screening—Matching Company and Country Needs

Evaluate market potential: -new to international marketing or heavily involved Analyze and screen countries to eliminate those that do not offer sufficient potential for further consideration Analyze the environment within which a company plans to operate [company's strengths and weaknesses, products, philosophies, modes of operation, and objectives must be matched with a country's constraining factors and market potential]

Merchant Middlemen

Foreign located intermediary who take title to domestic manufacturer of product. Manufacturers have less control over these middlemen than agents.

Exporting via The Internet

IIM: International Internet Marketing

Import-orientated (traditional) structure

Importer controls a fixed supply of goods. Marketing sells limited supply at high prices. Demand exceeds supply. Use of middlemen. Distribution local scope. -Usually found in developing countries -A SELLER'S MARKET

Home-Country Middlemen

In international transactions, the intermediaries, located in the producer's home country, who provide marketing services from a domestic base; also known as domestic middlemen. Home-country middlemen offer advantages for companies with small international sales volume or for those inexperienced in international trade. Examples: -Manufacturers' Retail Stores -Global Retailer's -Export Management Company (EMC) -Trading Companies -Complementary Marketers -Manufacturer's Export Agent

sales promotions

In markets with media limitations, a large percentage of the promotional budget may be allocated to ________ _______.

Home-country middlemen

Intermediaries who provide marketing services from a domestic base. Advantage for companies with small international sales volume

Product

It is a collection of fulfillment that a consumer purchases and it is dependent on the prestige enjoyed by its brand

Characteristics of International Joint Ventures

JVs are established, separate, legal entities. They acknowledge intent by the partners to share in the management of the JV. They are partnerships between legally incorporated entities, not between individuals Equity positions are held by each of the partners.

cultural diversity

Knowledge of ___________________________ must encompass the total advertising project.

Export management company (EMC)

Low-cost, independent marketing department with direct responsibility to the parent firm. Customers often unaware they are dealing with export department Pros: minimum investment & no commitment of personnel Cons: Often can't make the investment needed for deep distribution

International Commitment

Management must: 1. be prepared to make the level of commitment required for successful international operations. -investment and employees 2. be determined to stay in the market long enough to realize a return on investments.

Franchising

Provides an effective blending of skill centralization and operational decentralization

Trading Companies

Put buyers and sellers from different countries together and handle export/import arrangements, documentation and transportation. -either rebrand product or brand products themselves

Early Expatriation

Putting people in international assignments early on when they are younger

Product Component Model: Support Services

Services that include: -repairs & maintenance -instructions -installation -warranties -deliveries -availability of spare parts

Objective of IMC

Successful sale of a product or service

Globalization

The following things help you prepare for ______________. 1) Early expatriation 2) Inpatriation 3) Education

Contractual Agreements: Franchising

The franchiser provides: - a standard package of products, systems, management services The franchisee provides: - market knowledge, capital, personal involvement in management.

cost and quality

The most important criteria by which purchases are made

Diffusion

The process where innovation spreads

Reasons for Direct Foreign Investment

To capitalize on low-cost labor To avoid high import taxes To reduce the high costs of transportation to market To gain access to raw materials and technology As a means of gaining market entry.

intellectual property; research development

U.S. is most innovative because: -it has strong _____________ ____________ laws -spends a lot of money on ________________ and _____________.

global; national

Use __________ brands where possible and ______ brands where necessary.

Exporting via Direct Sales

Used for high-technology and big ticket industrial products

Restrictions on Transborder Data Flows

Users in the EU must be asked for consent before data can be collected from them

luxury

___________ goods marketers use price to differentiate products.

Global marketing management

___________ is about planning and increasing global competition.

countries

___________ should NOT be the primary variable for segmentation! Other segmentation variables are often more important—for example, climate, language group, media habits, age, or income.

market offering

a bundle of satisfactions (or utilities-products, services, information) the buyer receives

Exporting

a common approach for mature international companies with strong marketing and relational capabilities

cartel

a formal organization of producers that agree to coordinate prices and production -companies work together to control markets -eliminates cutthroat competition Examples: OPEC (oil) DeBeers Shipping Companies

skimming pricing

a global pricing strategy where the -charges a premium price for the value -objective is to make a profit -may occur at the introduction stage of the product life cycle

Provenance Paradox

a product's country of origin establishes its authenticity

service

an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything

Noise

any external influence/disturbance that interferes with the transmission of a message, often beyond the control of sender or receiver -Competitive advertising, Other sales personnel, Confusion at the receiving end

country of origin effect (COE)

any influence that the country of manufacture, assembly, or design has on a consumer's positive or negative perception of a product *Certain products categories are associated with certain countries *Ethnocentrism plays a role

national brands

brands owned by manufacturers and distributed within a particular country

Inpatriation

bringing in more people from other countries and other cultures to increase diversity

Trading companies

business entities that accumulate, transport, and distribute goods from many countries

Gray market

buying products in a low price market and reselling in a high price market Another name for parallel imports

Manufacturer's Export Agent

can act as an export distributor or as an export commission representative -similar to EMC but does not sell under the manufacturer's name and only covers 1 to 2 markets

Market Offerings

combination of products, services, information, or experiences offered to a market to satisfy a need or want Examples: Restaraunts, Cellphone, computer/internet

Integrated Marketing Communications (IMC)

composed of advertising, sales promotions, trade shows, personal selling, direct selling, and public relations

Mass Marketing Structure

developing products and promotions to please large groups of people -Used when producers are trying to penetrate the market -highly developed channel structure with a variety of intermediaries at many levels -Usually found in industrialized countries like U.S. -A BUYER'S MARKET

Nestle's underlying strategy

dominate its market

4 unique characteristics of services

intangibility, inseparability, heterogeneity, perishability

Agent Middleman

intermediaries who represent the principal rather than themselves; work on commission and arrange sales -do not own the product themselves

How to Initiate a Direct Foreign Investment

invest in or buy local companies or establish new operations facilities

international public relations

involves creating good relationships with the popular press and other media to help companies communicate messages to their publics, including customers, the general public, and governmental regulators - Encouraging the press to cover positive stories -Managing unfavorable rumors, stories, and events -Google China censorship, suicide at Foxconn Apple

international advertising

involves global mass media which is a powerful tool for cultural change, and as such, it receives continuing scrutiny by a wide variety of institutions

The success of a promotion may depend on

local adaptation -Markets in which the consumer is hard to reach because of media limitations, the budget allocated to sales promotions may have to be increased

sales promotions definition

marketing activities that stimulate consumer purchases and improve retailer or middleman effectiveness and cooperation -short-term efforts directed to the consumer or retailer to achieve specific objectives Examples: -In-Store Efforts -Samples -Coupons -Gifts -Contests -Sponsorship

direct selling

marketing products to ultimate consumers through face-to-face sales presentations at home or in the workplace -Often appropriate in underdeveloped distribution system

Exclusive distribution

practice often used by companies to maintain high retail margins to encourage retailers to provide extra service to customers, to stock large assortments, or to maintain the exclusive quality image of a product

Complementary marketing

process by which companies with excess marketing capacity in different countries or with a desire for a broader product line take on additional lines for international distribution. also known as piggybacking

global segmentation

segmentation that identifies a group of consumers with common needs and wants that spans the entire globe -business buyers/high income consumers -consumer culture

Segmentation Strategies

segmenting a market by demographics, psychographics, geographics, behavior segmentation, and benefit segmentation

consumer culture

segmenting according to attitudes or culture Examples: surfers, bikers, military

dumping

selling products in a foreign country at lower prices than those charged in the producing country

Product Component Model: packaging component

styling, packaging, trademarks, brand name, quality, price, and all other aspects of a product's package (more tangential)

price escalation

the added costs incurred as a result of exporting products from one country to another ultimate prices are raised by -tariffs -taxes -administrative costs

Indirect exporting

the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product

Direct exporting

the company sells to a customer in another country

goods

the physical objects that someone produces "tangible"

Distribution structure

the system, present in every country's market, through which goods pass from producer to user; within the structure are a variety of middlemen

Global Brand

the worldwide use of a name, term, sign, symbol, design *Ideally gives the company a uniform worldwide image *enhances efficiency and cost savings, particularly when introducing new products

Product Homologation

used to describe the changes mandated by local product and service standards

penetration pricing

used to stimulate market and sales growth by deliberately offering products at low prices; -financial objective is to increase market share -saturate the market prior to imitation by competitors Ex: packaged food products without patents

Fundamental Question in Global Marketing Management

whether the global homogenization of consumer tastes allowed global standardization of the marketing mix? -Even today, some companies are calling "global" the way to go. But in many parts of the world, consumers have become pickier, more penny-wise, or a little more nationalistic.