Marketing 406
Repositioning Brands: Reasons
- Respond to legal challenges EX: story of KFC licensing dispute with the state of Kentucky
Global Brand Trends
- Rise of Chinese brands in the global economy, with high growth rates for companies like Alibaba, but newer companies as well - Brand Finance claims "since 2008, China's shared of global brand value has increased form 3% to 15%, growing 888% to US $911.5 billion in 2018" - European luxury brands are becoming more adept to social media, which is increasing their worldwide brand image
Types of Products and Services
- Search product and services: associated with the *least amount of uncertainty* and can be identified through *inspection before purchase* -Search attributes tend to be common for *tangible offerings*, tend to be about products - *Experience products and services*: greater uncertainty and revealed by *consuming them* - *Credence products and services: greatest amount of uncertainty * and quality may not be revealed even after consumption - Credence attributes tend to common for experiences and for services - *Ex: Toothpaste* - Size of toothpaste is a search attribute - Taste is an experience attribute - Cavity prevention is a credence attribute
Chain Method
- Start with a rough estimate for market size, then use percentages ( from research) to fin tune it - Ex: for Lego, 50% of potential market for toys ins the start (girls) then fine tune it
Trade Barriers
- Tariffs are usually the most salient but not the only trade barriers - Customs ( bureaucracy) - Local and cultural practices
Products and Service Decisions
- * Performance*: has to do with attributes, deciding what level of attributes will be optimal for target customers, the company, and its collaborators - * Consistency*: in-kind products and services need to be identical and consistent with the specification, particularly for services ( which tend to be more variable) - *Reliability*: probability that a product or service will operate according to its specifications and not malfunction for its projected life cycle -*Durability*: expected length of the life cycle. Usually it is an important consideration for consumers (but more durable goods need to be purchased less often) -*Compatibility*: offering should be consistent to existing standards and complementary products. Even more important for products in neworks (or that have network effects) Important also for multipart pricing (razor and razor blades pricing) -*Ease of Use*: greater number of features doesn't always lead to better customer satisfaction EX: BMW introduced the 2003 iDrive - 700 functions with just 1 knob (included audio system, climate and navigation controls) -*Technological Design*: Product Innovation (substantive functional changes) vs Product Variation (minor variation in functionality such as colors, flavors, tastes, packaging variations) -*Degree of Customization*: *Mass Production* (offering the same products and services to all customers) vs. *One-to-One Customization* (for each customer a different product). Another option is to have segment based customization -*Form*: usually has to do with the design of the product (but can also be about packaging) EX: Tylenol has fifty different sku's: regular, extra strength, children's dosage, normal and extend relief, tablets, caplets, get caps, liquid, all in a variety of sizes -*Style*: important for goods that reflect hedonic or self-expression functions (luxury cars, designer goods) EX: Apple products are useful, powerful computing value but also easy to use and pleasing looking EX: *Method Products*: (cleaning so very utilitarian) has managed to differentiate its products through its innovation and futuristic looking style for the containers
Trade Pyramid
- *Economic Union* ( at the top): abolish tariffs, CETS and factor movement, economic and political harmonization -* Common Market*: abolish tariffs, CETs and factor movement- labor and capital - *Customs Union*: abolish tariffs and common external tariffs - *Free Trade area*: abolish tariff barriers
Cultures: high vs low context
- *Low context cultures*: messages are clear, short, explicit and rely on words (US) - *High context cultures*: the non-verbal part of the communication has more impact than the verbal part - High context cultures tend to rely on a person's values, social standing and trustworthiness (less so on contract and paperwork) - Contingencies tend to not be specified ( legal consequences are also not clearly defined) - A person's word (and reputation) will matter more than a specification sheet or resume
Repositioning Brands: Reasons
- *React to changing needs of target customers* ( even in the local market) -EX: P&G changed Oil of Olay to fit the needs and image of younger customers. Dropped oil out of the name (it is now associated with grease and avoided), streamlined the logo, cleaned up the packaging design
Intellectual Property (IP) and Ecommerce
- A big portion of IP is now in the electronic form - Easy to copy and recreate- this discourages creation and value added - Companies can try to protect: encryption, digital signatures, hardware, software, etc - It is important to create a system to allow a market for content - More recently used solutions: subscriptions and memberships - customers want reliable, high quality content also
Standardization of Products
- A uniform product offering for a region ( or overall) - Based on similarity of human needs which are the basis for all customer needs - Preferred as costs can be kept low - Prices achieved through standardization can also be Lower
Customization of Products
- Adapts each product to a specific market or customer needs in that market - May need to be done to respond to a local legal requirements ( safety for cars, non-GMO ban for EU) - Comes with higher costs ( no economies of scale, more labor and design costs) - May result in better products as a response to customer needs
Brand Dynamics
- Brands evolve over time - Brands repositioning - Brand extensions
Data Types (primary, secondary data) - Primary Data
- Collected to answer a specific problem - Controlled and analyzed by the company/associated research firm -Many ways to collect primary data -Can be performed by the company in-house -Should use a local team for better results -Can also be performed by a market research/consulting company (choose wisely)
Process to Define Market Research (examples: Lego, mall closings)
- Define a problem - Decide on a research design that is appropriate - Determine information needs - Find the sources of information - Find all relevant data (primary and secondary) - Analyze the data, interpret the results and summarize the findings - Apply the findings to the problem: key decisions makers
Social and Cultural Marketing Behaviors
- Dynamic Pricing and local pricing customs - Advertising for local culture
Other Uses for Market Data
- Entry and Exit decisions - Forecasting demand - Forecasting seasonal demand peaks
Bribery and Local Customs
- Ethical and unethical practices vary - Us firms are bound by US rules ( but there are exceptions depending on the same, and form) - In some parts of the world, bribery is the "usual" way of doing business- not without drawbacks - laws tend to last, whereas relationships based on bribes solely need upkeep - In the US, they are considered unethical and not desirable. You should be aware of local culture, but avoid being unethical, and follow the law
Trade Area: EFTA
- European Trade Association
- The world is Usually Classified : How to Classify * GNI
- GNI( gross national income): low-income countries, lower-middle income countries, upper-middle income countries, and high income countries
Free Trade Area
- High level of integration (more so than a loosely formed regional cooperation) with the goal to reduce customs duties and non-tariff barriers - It only applies to countries that are part of the free trade area - IT also for goods to come into a low tariff country then be distributed in the free trade area ( with no tariffs) - Usually have law on Local Content Laws, which means that a portion of the precut has to be created in the FTA for the product to not be subject to tariffs
Single Country Market Research
- If planning to focus on one country only look at: - Market size and potential growth - Customer characteristics and needs - Competitive landscape or potential entrants -Business models (can we extend home country model into new country)
Market Research Techniques: Surveys
- In person, mail, phone, online - Choose the method based on your country and target market - US landline tend to be fewer than cell phones, customers are wary of answering phone surveys -Different types of customers will opt-in -Disney uses in-person customer satisfaction surveys successfully -In other countries, women are wary of talking to strangers - may miss an opportunity to reach them if they design the survey to be in person or on the phone
Government Procurement
- In some countries major role for government - Rules about how much of a product has to be locally made, or price ceilings, bidding rules - Trade Law (Can be tariffs Can be rules/regulation on quality (for cars for example these differ widely across countries) Embargoes/sanctions (EX: Cuba - travel and economic sanctions )
- Reclassifications and Exemptions - Brands and marketing in the presence of trade barriers
- International markets for local cars: GM cars - Brand has high status in China! And very high growth for GM lately ( especially compared to the US market) - However: - Prices are higher due to tariffs - Brand may suffer (or not! If consumers consider it a status good harder to attain) - Exposure to other brands- opportunity for entry for other companies - Uncertainty hurts the marketing efforts
Short term changes if Tariffs are Uncertain
- Rerouting supply routes- not necessarily internal - Increase national demand (for aluminum example) lead to stockout, delivery problems, quality uncertainty and general supply chain problems - Higher consumer prices - Requests to reclassify items (particularly away from tariffs, particularly form medium and big companies) - Increase risk for companies who cannot hold inventory or hedge risk in other markets - Wait and see attitude on investment, new products and new components (innovation)
Global Consumes: E-commerce shift
- Internet and commerce can unify markets - Many brands are using online as only distribution channel (and information) - Brick-and- mortar stores used online venues as platforms for communication - Integrated platforms (for example) "The way customers shop for clothes has evolved" Jamie Nordstrom, the retailer's head of stores and forder lead of its Nordstrom Direct digital business, told Fortune. "How do we take all the information that's available to customers while they're sitting on the couch at home browsing and add that to the dressing rooms, so it's the best of both worlds?" Brick-and-mortar spaces that scream "put me online" EX: Ice cream museum in Miami (temporary exhibit)
Cultures: high vs low context
- Low context cultures: messages are clear, short, explicit and rely on words (US) - High context cultures: the non-verbal part of the communication has more impact than the verbal part - High context cultures tend to rely on a person's values, social standing and trustworthiness (less so on contract and paperwork) - Contingencies tend to not be specified ( legal consequences are also not clearly defined) - A person's word (and reputation) will matter more than a specification sheet or resume
We live in a connected world economy
- Many companies, products, and brands exist in most of the world - Sourcing and supply chains encompass the globe (as companies look to become and stay competitive) - Consumers have a larger set of options to choose from ( in addition to local markets)
Government Roles
- National Security - Incentives and government backed programs Ex: Green cars in CA (Rebates (at the state and federal level) for electric vehicles Stickers for HOV lane for hybrids or EV (in California) Ex: Attract Foreign companies (1985 Nissan moves to create vehicles in Tennessee "The state government spent $12 million for new roads to the Nissan plant $7 million to help train plant employees. Rutherford Country, site of the plant, gave a $10 million tax break" 2005 Nissan moves to Tennessee (from Gardena, CA because of local real estate taxes and business taxes) and pushes EV and charging grid in addition to large local investments )
Tariffs can affect Unexpected Products
- On final goods, they can dissuade imports and encourage local production - But... if the supply chain is already global, the effects can be unintended - Ex: Ball bearings-encourage local production - *Small Margins*: how fast can they be made all nationally, how quickly can medium and small companies adapt to source locally ( if other products are coming in as imports), how costly is it in terms of demand lost to increase the price because of such small component -EX: Fish - caught in the US, processed in China, and then imported back into the US For the last 2 decades, most of the fish caught in the US is locally processed minimally then processed in China. Tariffs could affect the prices for salmon burgers (for example) However, local fish doesn't account for all the fish eaten in the US. Can tariffs put pressure on better fishing and growing standards for fish grown in China and exported to the US?
Regression Analysis
- Pick a set of countries similar and a set of variables that may affect demand - Then apply regression and you should be able to predict demand ( need to know were to estimate)
Analogy Method
- Pick similar country (stage of development), which you know something about ( market size) - Assume the new product and a product that is correlated will follow the same pattern - Problems: consumption patterns may vary across countries, competition is different, technology may have changed ( if using different time periods)
Branding in a new market
- Possible startegies 1) *One global brand*: can still have different products for different markets Ex; Coke 2) *Many brands*: umbrella branding with local brands- either acquired or created Depends on: - Consumer Preferences (food, consumer packaged goods) - Price levels - Competitors (local mainly) - Internal set-up of parent company and its brand history
4PS
- Product, Price, Place, Promotion - need to understand competition: global and local - need to consider consumer needs: global and local
Tariffs and companies for different types of products
- Proposed tariffs are supposed to help the national producers be more competitive - However, the economy is already global: even local producers rely on international sourcing - How about consumers? what do you think will happen with prices for goods affected by tariffs?
Repositioning Brands: Reasons
- Reach a new target market Ex: Pedialyte for adults
Repositioning Brands: Reasons
- Reach to a.change in the competitor's positioning Ex: the popularity of the Energizer Bunny in the US forced Duracell to not use its mascot in the US
Market Forecasting for Entry
- There is no one right way to estimate- use all available methods, - Estimates will vary a lot. These are starting points when NO OTHER data is available
Classification of countries By development level
- Underdeveloped: low income, civil strife, flat income, tend to be dangerous for residents - least- developed countries - Industrialized or Developing countries - Developed countries
Brand Extensions
- Used to leverage a good brand name for a new offering
Horizontal Brand Extensions
- applying the brand to a different category of products -Ex: Timberland uses the brand for boots to outwear and travel gear - The downside can be dilution of the brand
What is a brand?
- brands add value to the product beyond functional aspects of the product-service combination - *Anything that the customer associate with your product*: image, logo, celebrity endorsements, attitudes, PR, marketing communications - The connection between your company and the customers- a relationship over time, repeated interaction with your company
Multi Country Market Research
- compare countries - extrapolate if one is already known
Small Businesses are affected
- increase in local business - more demand from consumers (perhaps marketing can help) -Supply Chain Problems (WSJ- not enough inputs can be sourced shore and medium term) - Less margin of error( Or cash to offset unexpected costs) - Less flexible sourcing ( with little bargaining power) - Mistrust - some producers may raise prices in anticipation of tariffs, but not lower them again - However, competitors all face the same problems - Niche markets are less vulnerable and may be less affected ( or even get more work than standard products)
International brands
- may have different associations abroad than the home market - not all international companies can be successful everywhere Ex: Dacia Logan Renault mid 2005- not widely sold but a strong local market where it is retailed -some products have surprising international appeal, and some are meant to be local
Trade Related Aspects of Intellectual Property Rights (TRIPS)
- not an international patent system - Meant to give all countries the same right to intellectual property protection as a country would for its own nationals - Hot issues: licensing for pharmaceuticals if a country has no manufacturing capability
Classification of countries by poverty level
- poverty level for residents these vary - need to adapt products and entry to local markets
WTO (World Trade Organization)
- replaced general agreements on Tariffs and Trade (GATT) - Any reduction in tariffs would have to be extended to all countries inside the organization (GATT), but it did not take into account other non-trade barriers ( quotas, customs, procedures, bureaucracy)
WTO: problems, and other functions
- small countries/developing have little negotiation power, farm subsidies, non-dumping agreements can be favorable to some countries while others are pressured to open up markets, protectionism ( Ex: US Steel industry tariffs) - cal also arbitrate ( mediate) conflicts ( long-term success is an ongoing problem) - Preferential Trade Agreements ( PTA): can exist and countries notify WTO
Products tailored to customer taste
- smaller fridge - appliances with symbols - washer/ drier don't dry
Ex: Lego Not Just for Boys
-$7.6 Billion brand (unchanged since 2017) novelty: each year, 25 percent to 30 percent of sales come from new products. -"As a chief marketing officer you really need to understand how the whole process works, how you can accelerate it, how you can bring things to market faster, how you problem solve around it, but also how you inspire innovation," Goldin told CNBC. -2010 $ 1 billion Sales (dominated by market for boys) -Rigorous research to reach girls: Friends line in Belleville Very popular (tripled revenue from 300 mill in 2014 to 900 mill in 2015-estimates)
Quality Controls
-*International Standards Organization* (Geneva, Switzerland) - ISO 900,000- common standard of quality - Voluntary, but a strong marketing tool for companies (in addition to actual usefulness) - Adopted by EU - *Standardized Procedures* for: management responsibility, document control, design control, inspection and testing, storage, packaging, product identification, and tracking
Home vs. Host Country
-Laws and unspoken rules in both will affect your business (as well as international laws!) -Outside major conflicts, companies adapt to host country laws (local team) -Major conflicts or the end of closed economies/countries is a big opportunity but also fraught with danger
Observational Research EX: Lego
-2005 Lego "anthropologists" studied how children used the blocks around the world: Japanese children make distinction between "play time" and "learning time," while Western cultures better embrace "learning through play. -2011 introduced the Friends line: based on research (and yes, sounds stereotypical) -Girls want to role-play (include names and stories with the toys), like to role play while assembling (while boys tend to play after the set is ready), look for accessories for the toys (so bigger minifigures were made, with more details, who could have purses and brushes etc). -The same demographic that values "American Girl" Dolls - large market
Antitrust laws: US
-Affect US and foreign businesses, in US and foreign territories
Brand Power
-Brand power influences brand equity but is not the same concept -It has to do with *how strong the brand is perceived by the customers* -Brand power can be measured as the *response by customers to a product that is a particular brand as compared to an unbranded product*: price premium, customer loyalty, enhanced perception of product performance, greater licensing, merchandising, brand extension opportunities
Secondary Data
-Collected by other agencies/governments -Collected historically by the company (sales data) -Syndicated datasets (Nielsen): retail or consumer panels -Easy and quick to obtain -Cheap (free if government is the source), relatively cheap even for entire industries (Nielsen) -However -Not specific to your problem -Not customized for a customer segment, local market, or a product (usually) -Accuracy can be questionable (if reported by industry then aggregated, even government) -May be outdated or overly broad (NAICS codes) -May not be reliable over time (different meanings of what's included) -Comparability across countries (product function may be different, conceptual equivalence)
Successful Surveys
-Design a simple questionnaire, have a clear plan to end it, clear randomization algorithm - International survey: translation problems - * Back- translation*: can be used (English-> New Language-> back to English, check problems, repeat) - *Parallel Translation*: several translators, check problems, repeat - " Translate the Scale": as well. Likert scales are used in the US (1bad, 10 good) but *EU tends to inverse* them (1 good, 10 bad) - Interpret results carefully within the *cultural context*: -In the Us we tend to cluster around *end points* - *Asian* cultures tend to cluster around *midpoint* - Also do a small test with your local partners first - Do a small scale pretest with customers then roll out
International Agreements and Local Legal Environment
-Free trade agreements have many messy details are usually negotiated over time -Goal is to open a new market for US products (and many other products that will then be needed to support that market -*Rules of origin* - how much of a product needs to be made locally
Political Ideology
-Governments can range from communism and socialism to capitalism -Government roles range from complete control over the economy to running sectors where the free market would be inefficient or cannot provide enough services (For US: defense, infrastructure like highways, pollution control and related, public services ) -EX: after 1990, most Eastern Europe countries started to move toward capitalism and free markets (with growing pains along the way, even 30 years later) China - communism but an opening for some markets (strict controls overall)
What is the value of a Brand? Different ways to value brands
-How far you can extend this brand across products or across markets -Actual financial value (estimated) to be associated with your brand - * What is means to the customer*
Time planning horizon for businesses across the world
-In the US, several mandatory fillings: we tend to plan for the short term (especially for public companies or those that require investor funds) -Long-term planning - more common in Asian countries -Just-in-Time relies on long term planning, trust, vetting of suppliers (not so much on formal contracts and achieving short term targets in themselves, though those are very important milestones for learning)
Hofstede's Cultural Dimensions (know intuitively but no need to memorize)
-Individualistic (family and own interest) --- -Collectivistic (group will look after your interests) -High power distance (accept wide differences in power, respect for authority) --- -Low power distance (tend to seek equality, managers and bosses are approachable) -High uncertainty avoidance (ambiguity is not tolerated) --- -Low uncertainty avoidance (risk taking, tolerant of different opinions and beliefs) -Achievement (acquiring money, competition is good) --- Nurturing (relationships are more important, helping others to succeed is important) -Long-term orientation (planning for the future, persistence and saving) --- -----Short-term orientation (present is important)
Financial and Investment Regulations
-Ownership controls - some countries require joint operations with a local party -Macroeconomic policies - important to get right, uncertainty can dampen investment -Access to capital for businesses -Tax plans that help long term planning of investment -Manipulate the money supply (even print money) in some situations -Fixed currency exchange rates
Google and the EU
-Regulation can be different across countries -*Google has been recently regulated under EU laws for antitrust practices* -Fines 2.4 billion euros for favoring its shopping over others in search results -"EU antitrust rules apply to all companies that operate in Europe's Economic Area, no matter where they're based," Vestager said. "The purpose is to ensure competition and innovation for the benefit of European consumers. Google has come up with many innovative products, and many innovative services, that have made a difference in our lives — and that's a good thing." -EU antitrust just declared a 4.34 billion euro fine -Antitrust finding: the Android OS is preinstalled and there are incentives for phone manufacturers to pre-install Google apps Chrome and Search in a bundle with its app store, Play (simplified version!) -Apple also pre-installed apps on its phone -Apps for free, but ad revenue higher because used more
Country of Origin Effects
-Research suggests consumers have associations with entire countries - *assess quality based on country of origin* -Associations can be positive or negative (and are not necessarily correlated with the country the customer comes from, though there is evidence that home countries are favored overall) -"Made in USA" has positive association in both the US and abroad (Buick is the high end brand from cars for example) -Associations will also depend on the products and industries -They also depend on brand history of failures or defective products (Japanese cameras, flat screen TVs, cars)
Ex: Mall closings in the US
-Retail industry is taking a hit from online commerce -Predicted to close 300 out of the close to 1,100 malls still around -Changing online shopping habits are usually blamed -Existing malls change to experience based shopping: more food options, movie theaters, services, small specialty stores, bowling alley, summer concert series
International Laws
-Similar to national laws, but regulate how states have to behave (and the recourse) -*Customs*: EX - resources in offshore shelves belong to a nation -*Treaties*: agreements about how to govern a mutual relationship between nations -*International Court Decisions*: arbitration is sometimes used, court decisions also used
Observational Research
-Sometimes called "ethnographic" as you observe the customer using your product -Can study everyday life by following the customer around (to see customer needs) =Can include recordings to be later studied
Interviews, Focus Groups and the Rest
-Talking to the customer is very important -Focus group - a group interview -Choose an experienced moderator, from your local team -Prepare questions, allow for room to adjust -Plan to take into consideration the culture, in addition to the usual caveats about focus groups
Brand Equity
-This represents the *financial value of the brand*. -It determines the premium that should be placed on the company's valuation due to owning that particular brand -*A key driver of brand equity is brand power*
Local Social and Cultural Marketing
-Use the knowledge from past/home market -Do market research with local consumers - and listen to their voices -Use local talent along with your management team to optimize your marketing basics -Branding is crucial - but be mindful of social and cultural local expectations
Brand Hierarchy Individual Branding
-creating a *separate brand for each product or product line* -Enables a company to serve different segments with diverse products (and product categories). -Each brand tends to be clearly defined more easily -However, new brands take time and money to create without an established brand name EX: Tide, Cheer, Bold and Era are all laundry detergents by P&G
European Antitrust Laws
-focus on consumer welfare, but can be stringent ( don't need to prove harm directly) - Apply to EU members and any companies that do business in EU member states - A company would have to satisfy US rules and also EU rules ( to operate in both and get approval)
Brand Hierarchy Umbrella Branding
-using a *single brand for all the company's products* -Enables a company to leverage an established brand for a new product. -Quality is important! -Any extension to a bad product will hurt the other products EX: General Electric, Heinz, Virgin, Costco -Umbrella branding sometimes includes sub-brands like: Courtyard by Marriott, Residence Inn by Marriott, Fairfield Inn by Marriott, and Springfield Suites by Marriott
Vertical Brand Extensions
-usually include a *different tier of prices* for the product or brand - For *upscale brands* the existence of *lower priced branded products hurts* the new product, so this is rarely seen - Instead, we *see many downscale brand extensions* (still be careful not to devalue current offering)
How to estimate brand equity Financial Approach
1. Estimate companys FCF's 2. Estimate the contributor of the brand to these cash flows 3. Adjust the CFs using a risk factor to reflect the volatility of the earning associated with the brand - this is quite hard to do
Trade Area: Mercosur (Common Market of the South)
Argentina, Brazil, Paraguay, Uruguay
Importance of International Marketing Research International Market Research
Importance IMR - Compare outcomes of market research project in different countries - Make decisions using information on research that is country specific - Change product decisions to fit customer research in a country IMR - Identify similarities and differences between countries - Identify new markets to enter ( or decide against a launch) - Get support from the local team for implementation ( or identify problems before launch)
What is international marketing?
Focus on resources the company has and be aware of global opportunities and threats - Plan to expand into an international market outside the home country - Identify a new market and enter with an existing product (maybe modify) - Identify a new market and create a new product or line of products for that market
Trade Area: ASEAN
Indonesia, Malaysia, Philippines, Singapore, Thailand, then later Brunei, Vietnam, Lao PDR, Myanmar, and Cambodia. Informally added: Japan, China, Korea, Australia, New Zealand, and India ( ASEAN plus six)
How to estimate brand equity Market Based Approach
Look at the difference between cash flows generated from the branded product and an equivalent but non-branded product, adjusted for the costs of creating the brand
How to estimate brand equity
No commonly used way to do this easily, there are several alternative methods.
Home vs Host country Ex:Burma (Myanmar)
Recent political changes, humanitarian crisis (and denial of crisis) results in lack of uncertainty for businesses However, Chinese (20 billion dollar investment) and Japanese companies are still actively seeking to invest to reach the middle class "Japanese companies have made some substantial investments -- notably the $560 million investment in 2015 by Kirin Holdings for a 55% stake in Myanmar Brewery, owned by the military-backed Myanmar Economic Holdings -- but are now showing more hesitancy. "People at our headquarters in Tokyo are concerned, but the pressures on Japanese companies are much smaller than Western ones," an executive at a Japanese trading company told Nikkei."
Take Away
Supply chains are already global and changing that will take time, investment, trust and long term planning Tariffs alone increase uncertainty with few benefits for the short and medium term Small and medium businesses are the ones that find it harder to adjust to price wars and tariffs Tariffs and trade wars can affect unexpected products and need to be considered carefully rather than across the board Tariffs are NOT NEW! The global economy is also only relatively new
Trade Areas NAFTA:
US, Canada, and Mexico
International sourcing can lead to surprising supply chains
Why? Price fluctuations locally, currency, big volume, part makers tend to cluster around the assembly factories to reduce shipping costs ( and the assembly lines are close to where the customers are)
Governments
affect business dealings: 1)*directly*: changes in policies, regulations, laws 2) *indirectly*: publicity, protecting some industries over other (competition) Can be a direct business player for major contracts even in countries where traditionally governments don't participate in free markets directly Affect stability of markets - entry and exit, or investment decision are vital
Antitrust laws: US Clayton Act 1914
covers act that were not included in Sherman ( price discrimination, exclusive dealings, mergers and acquisitions)
Antitrust laws: US Robinson-Patman Act (1936)
anti competitive price ( Ex: unfair price discrimination-sellers have to offer the same price) Based on maximizing consumer welfare (and minimizing market power in order to increase welfare)
How to estimate brand equity Cost Based Approach
computes the costs associated if the brand needs to be built from scratch at the time of valuation
Antitrust laws: US Sherman Antitrust Act 1890
no conspiracy to restrict trade(nothing unlawful to restrict trade) or monopolize trade
Antitrust laws: US Federal Trade Commission 1914
unfair or deceptive practices (false advertising, bait-and-switch)