International Marketing Final Exam
Range of product policy decisions (lecture):
-Product policy decisions are cornerstone of a global marketing mix program a-What new products should be developed for what markets? b-What brand names should be used? c-How should the product be packaged and serviced?
Problems with data collection for international marketing purposes
-cultural and economic barriers to obtaining an unbiased sample -Ability to communicate opinions and meaning across language barriers(context, meaning/problems with translation, cultural habits) -Willingness to respond (non-response bias, courtesy bias, yea or nay saying, social desirability bias, income and gener-related questions may be taboo)
Problems with secondary data in international marketing research
-research -Availability -Reliability -Comparability -Validation
Steps in conducting marketing research.
1) Define the research problem and establish research objectives 2) Determine the sources of information to fulfill the research objectives 3) Consider the costs and benefits of the research effort 4) Gather the relevant data from secondary or primary sources, or both 5) Analyze, interpret, and summarize the results 6) Effectively communicate the results to decision makers
The 4 categories of employees
1) Expatriates - person working abroad, best choice for highly technical products, or when selling requires an extensive background of information and applications 2) Virtual expatriates - advances in communications and technology (good cause less travel costs but bummer cause different time zones) 3) Local nationals - locals have experience with that location, but disadvantages include lack of respect, availability (people in U.S. often go to work for competitors, but people in countries such as Japan are much more loyal to their companies) 4) Third country nationals - expatriates from their own countries working for a foreign company in a third country (ex: a German working in Argentina for a U.S. company)
Communications model (see lecture slide and textbook: message sender, receiver, encoding, etc)
1) Information source: an IM executive with a product message to communicate 2) Encoding: message from the source converted into effective symbolism for transmission to a receiver 3)Message channel: sales force and/or advertising media that convey the encoded message to the intended receiver 4) Decoding: the interpretation by the receiver of the symbolism transmitted from the information source 5) Receiver: consumer action by those who receive the message and are the target for the thought transmitted 6) Feedback: information about the effectiveness of the message that flows from the receiver (intended target) back to the information source for evaluation of effectiveness of the process Noise: uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process and affect any or all of the other six steps
Process of selecting a target market
1)Select indicators and collect data 2) Determine importance of country indicator 3) Rate the countries on each indicator 4) Computer overall score for each country (table on doc = example)
Export restrictions in the U.S.: know the terms EAR=Export Administration Regulation, ECCN=Export control Classification Number; CCL= Commerce Control List; CCC - Country Commercial Chart
All ECCN's are contained in the CCL -Consult the CCC to determine if I need a special lisence to export or not (X or no X)
Articles: "What the Chinese Want", McDonald's and Obesity
Chisese: -Products that are consumed publicly command huge price premiums relative to goods used in private -Benefits of a product should be external, not internal -Products must address the need to stand out while fitting in Case: McDonald's and Obesity: -fear that mcd's is advertising to kids and causing obesity -regulations put on them
Large-Scale Retail Store Act (Daitenho) as an example of non-tariff barriers and differences in distribution structures (Japan).
Designed to protect small retailers from large intruders into their markets Any store larger than 5,283 square feet must have approval from the prefecture govt. To be "built, expanded, stay open later in the evening, or change the days of the month they must remain closed"
Distribution (definition and the functions it performs):
Distribution- includes the physical handling and distribution of goods, the passage of ownership (title) and the business interactions between manufacturers, middlemen, and customers
Research needs of companies
Foreign market research is broader than domestic, can be divided into 3 types based on info needs 1) General information about the country, area, and/or market 2) Information necessary to forecast future marketing requirements by anticipating social, economic, consumer, and industry trends within specific markets or countries 3) Specific market information used to make product, promotion, distribution, and price decisions to develop marketing plans
FTZ - what it is and how it can be used to lower the export prices.
Free Trade Zones -Use of FTZ's can lower cost -Typically lower tariffs for unassembled vs. assembled goods -Labor costs might be lower in FTZ -Unassembled goods take less space - save on ocean freight -Local content laws
general and validated licenses.
General License - These are licenses, authorized by the Bureau of Export Administration, that permit the export of goods and technology to specified countries without the need for a validated license Validated- take another step and need verification and validation
Types and functions of the middlemen:
Manufacturer's retail stores Global retailers Export management companies Trading companies (U.S. and foreign) Complementary marketers Manufacturer's export agents Selling groups (e.g., Webb-Pomerene export associations) Foreign-sales corporation
Performance vs. market-perceived product quality (see textbook, lecture).
Quality = deciding factor in world markets (used as a competitive tool) Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality if viewed internally from a firm's perspective(performance quality), an airline has achieved quality conformance with a safe flight and landing. But because consumers expect this, quality to a consumer is more than that (consumers consider cost, timely service, frequency of flights, comfortable seating, and performance of airline personnel
Articles: "P&G Made Diaper Mess," "Smaller Packets in India," "Apple Scrap"
P&G Diaper: - Pampers are missing the boat in China -they sold high quality when demand was for cheap, and then sold cheap when the demand was for high quality Apple Scrap: -Apple attempting to gain market share in India over Samsung and local manufactures
penetration vs. skimming pricing strategy - understand these concepts.
Pen: stimulate market and sales growth by deliberately offering products at low prices Helps acquire share of market as competitive maneuver, good for markets with big growing middle class Skim: objective is to reach a segment of that market that is relatively price insensitive and thus willing to pay a premium price for value recieved Use if limited supply, or if you have a new or innovative product, skim to maximize profit until competition catches up, or if costs don't permit a price that attracts mass market
Primary vs. secondary data.
Primary - data collected specifically for the particular research project at hand Secondary - data from any source, must be checked and interpreted carefully
Product homologation vs. product adaptation.
Product Homologation- changes mandated by local product or service standards. E.g., voltage requirements, multilingual labels, enhanced dust filters, etc. Product Adaptation- Adaptation to legal, cultural, economic, or climatic environment, when products are changed to match consumer tastes, sensitivities, or preferences. E.g., Diet Coke sales in Japan, Shiseido cosmetics in the U.S.
Qualitative vs. quantitative research
Qualitative - qualities Quantitative - numbers
Campaign execution, advertising regulations (pp. 500-504), methods of setting global advertising budgets (see lecture slides).
Regulations: Comparative advertising is heavily regulated (asia ran an ad showing a monkey picking pepsi over coke - banned from satellite TV) -Advertising pharmaceuticals, toys, tobacco, and liquor is restricted in many countries Execution: Setting Budgets:
Articles: "Retailers Conform to Saudi Rules," "Retail Does not Cross Borders," "Ford's Plan to Import"
Retail Borders: The Pressure to Globalize a quest for greater economies of scale and scope a need to diversify risks a desire to attract fresh talent and create new opportunities for existing leaders a need to make up for constraints imposed by regulatory agencies when a retailer becomes too big for its home market Retailers face many barriers to entry in foreign markets Returns accrue only over time Strong local incumbents Retailers Conform to Saudi Rules: - retailers such as Zara and Marks&Spencer have adapted their retail experiences in Saudi Arabia to fit its strict religoius laws -Some firms such as Ike have faced backlash from westerners "Ford's Plan to Import"):
Definition of marketing research
Systematic gathering, recording, analyzing of data to provide information useful to decision making
Role of BIS = Bureau of Industry and Security
The Bureau of Industry and Security (BIS) is an agency of the United States Department of Commerce that deals with issues involving national security and high technology. A principal goal for the bureau is helping stop proliferation of weapons of mass destruction, while furthering the growth of United States exports.
The interplay of price sensitivity and regulatory environment (retail rules, import duties) leading to importers' challenges in India (Apple).
Under investment restrictions, foreign-owned single-brand retailers like Apple were required to source around 30% of their products locally in order to open their own shops. Apple was rejected when it pushed for that restriction to be waived. New Delhi later said companies could be given three years to reach the requirement, according to government officials. Apple was also refused permission to import used iPhones to be refurbished and sold in India, said one Trade Ministry official who asked not to be named.
Parallel (gray) imports: know what this means.
when importers buy products from distributors in one country and sell them to another to distributors who are not part of the manufacturer's regular distribution system at a lower price (compared to price of same product sold in regular distribution system) Occurs whenever price differences are greater than the cost of transportation between two markets Depending on country and product, this can be legal or illegal
Integrated marketing communications (definition):
(IMC) are composed of advertising, sales promotions, trade shows, personal selling, direct selling, and public relations
Modes of entry: definitions and advantages and disadvantages
(table on google doc)
Psychological overlap
- effective communication demands the existence of a psychological overlap between the sender and the receiver AKA a message falling outside the receiver's perceptual field may transmit an unintended meaning
Article: How Unilever Reaches (ex. of creative use of direct selling by Unilever in emerging markets)
- growing rural middle-class - use women door-door sales force - use superstores that distribute to mom and pop shops -low cost, low quantity products for poorer consumers
Types of payments in international trade, especially, the letter of credit (what they are, how they are used - for what purpose, main stages in the process).
-Bills of exchange -Cash in advance -Open accounts -Factoring, forfaiting
Forces affecting international pricing: use slide # 2 as an outline for studying Ch. 18.
-Company goals -Company costs of manufacturing and exporting -Customer demand -Competition -Distribution channels -Inflation/deflation -Currency exchange rates -Government policies (taxes and tariffs)
Why global positioning of your brand is not always a possibility (limitations to global branding):
-Economies of scale might be elusive (could be cheaper to manufacture and advertise the brand locally) -Language barriers and cultural differences might hinder the success of global ad campaigns -Might be hard to form a successful brand team -Brand's image might not be the same throughout the world In U.K., where Ford is a leader, Galaxy minivan was positioned as a luxurious "nonvan," in Germany Galaxy is "the clever alternative." Cadbury in U.K. and Milka in Germany, respectively, "own" the milky chocolate positioning
Characteristics of the traditional Japanese distribution/retail systems:
-High density of middlemen -Channel control by manufacturers -Philosophy of loyalty and harmony -The Large Scale Retail Store Law (Daitenho) -The Large Scale Retail Store Location Act (2000) (benefiting the small retailer) Retail Trends: -Transition from traditional to modern distribution channels -Size patterns in retail -Resistance to change
Factors of successful preparation of U.S. personnel for foreign assignments.
-Overcoming reluctance to accept a foreign assignment -Reducing the rate of early returns -Motivating sales personnel -Successful expatriate repatriation
Stages in the process of planning and executing an international marketing campaign:
-Perform marketing research -Specify the goals of the communication -Develop the most effective message(s) for the market segments selected -Select effective media -Compose and secure a budget -Execute the campaign -Evaluate the campaign relative to the goals specified
Article: "Africa Proves a Tough Sell" (things that market research can miss, how should marketing research studies be planned)
-Poor market research example 1. What did retailers misjudge about the African market? Why? Big retailers have slow and expensive logistics, and have trouble securing land African market thrives on very simple product ranges that have little fashion so it can be on the shelves for a while; african market requires a lot of flexibility and no unnecessary frills 2. If you worked for a company that was considering an expansion into a new international market, what are the top three pieces of data or information you would want to have about that market before making a decision whether to enter that market?
Role of pricing in international marketing.
-Price is the only marketing mix instrument that creates revenues. All other elements entail costs -A company's global pricing policy may make or break its overseas expansion efforts
main documents used in exporting (e.g., why bill of lading is important, what is the role of consular invoice, etc.).
A bill of lading is a legal document between the shipper of goods and the carrier detailing the type, quantity and destination of the goods being carried. The bill of lading also serves as a receipt of shipment when the goods are delivered at the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver. A document certifying a shipment of goods and shows information such as the consignor, consignee and value of the shipment. A consular invoice can be obtained through a consular representative of the country you're shipping to. The consular invoice is required by some countries to facilitate customs and collection of taxes.
Price escalation and ways to counter price escalation (lecture and textbook).
A disparity in pricing where goods have higher costs in a foreign market than in the domestic market due to transportation and exporting costs. Price escalation can also refer to the sum of cost factors in the distribution channels which add up to a higher final cost for a product in a foreign market Ways to counter: Lower cost of goods: offshore outsource, product simplification, lower quality, buying local components Lower Tariffs if possible Lower distribution costs (shorter distribution channels- will reduce VAT, or value-added taxes) Use of Free-trade Zones can lower costs Lower tariffs for unassembled vs. assembled goods Unassembled goods take less space- save ocean freight Labor costs lower Local content laws- if you use local content in final product of country you are exporting to in the FTZ, you can usually avoid more tariffs
Types of import tariffs (specific, ad valorem, compound).
A specific duty: is a flat fee per physical unit imported (e.g., $ 0.25 per liter of beer) An ad valorem duty: is imposed as a percentage of the value of good imported (e.g., 15% of the FOB value of a liter of beer) Compound duties: include both a specific and the ad valorem components (e.g., $ 0.25 per liter of beer plus 15% of its FOB value)
schedule B and HTS numbers,
B: The Schedule B is a 6 digit international export code for exporting goods out of the United States. The Schedule B which is administered by the U.S. Census Bureau is used to track the amount of trade goods that are being exported from the U.S. HTS: HS code or HTS code stands for Harmonized System or Harmonized Tariff Schedule. Developed by the World Customs Organization (WCO), the codes are used to classify and define internationally traded goods. ... These codes go from 2-digit chapters and narrow down to a specific 10-digit code.
Advantages of and barriers to standardization in advertising:
Benefits: -Economies of Scale -Consistent Image -Better Creative Talent Barriers: -The goals of advertising vary substantially between country-markets -Cultural and linguistic differences -Competitors pre-emptive brand positioning (e.g., both Milka and Cadbury are "Full of Milk") -Advertising regulations and media availability -"Not-Invented-Here" (NIH) syndrome -Regional segmentation might be the answer, at least at the moment
Consortia, Strategic Alliance, Joint Ventures
Consortia -Developed to pool financial and managerial resources and to lessen risks -They typically involve a large number of participants -They frequently operate in a country or market in which none of the participants are currently active Strategic Alliance (strategic international alliance = SIA) -Business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective Firms enter into SIAs for several reasons: -Opportunities for rapid expansion into new markets -Access to new technology -More efficient production and innovation -Reduced marketing costs -Strategic competitive moves -Access to additional sources of products and capital International joint ventures (IJVs): is a partnership of two or more participating companies that have joined forces to create a separate legal entity Four characteristics define joint ventures: 1)JVs are established, separate, legal entities 2) The acknowledged intent by the partners to share in the management of the JV 3) There are partnerships between legally incorporated entities such as companies, chartered organizations, or governments, and not between individuals 4)Equity positions are held by each of the partners *Drivers behind successful international joint ventures -Pick the right partner -Establish clear objectives from the beginning -Learning on part of all sides -Potentially divisive issues identified and discussed in advance -Bridge cultural gaps -Discussion and consensus as a norm -Personal "chemistry" is important
Country-of-origin effects (COO): what we know about the COO effects (textbook AND the slide information)
Country-of-origin effect- any influence that the country of manufacture, assembly, or design has on a consumer's positive or negative perception of a product. Certain countries are perceived to be the "best" sources of products in certain product categories (e.g., italian leather, Japanese electronics, French perfume, but not French electronics, Japanese perfume) COO effects depend on the product category (e.g., Russians prefer homegrown groceries, but imported manufactured items) COO effects are fairly stable but can change over time (e.g., Japan's transformation from unfavorable to favorable COO) COO effects depend on consumer expertise (experts are less influenced than novices) The country, the type of product, and the image of the company and its brands all influence whether the country of origin will engender a positive or negative reaction Ethnocentrism can have COO effects - feelings of national pride and "buy local" effect
Dumping, countervailing duty, cartels - definitions.
Dumping: if a country dumps products in another country and prices them below their cost of production Considered prejudicial to the economic activity of the importing country, destroys local competition to secure market Countervailing duty: minimum access volume (MAV) restricts amount a country will import, may be imposed on foreign goods benefiting from subsidiaries, whether in production, export, or transportation Must be shown that prices are lower in importing country than the exporting country Cartels: various companies producing similar products or services work together to control markets for types of goods and services they produce May use formal agreement to set prices, or not May also do all the selling and all the distributing of profits Illegal in the US Economic impact is debatable, some people say it eliminates cutthroat competition, but many argue it doesn't benefit consumer
INCOTERMS (you need to understand what INCOTERMS are and what role they play in international trade, but do not need to memorize specific terms, unless you really want to).
International Commerical Terms -The purpose of the Incoterms rules is to provide a set of international rules for the interpretation of the most commonly used terms in foreign trade. -Help divide cost, risks, and obligation/responsibilities between buyer and seller
Full-cost vs. marginal pricing,
Marg: firm is concerned only with marginal or incremental cost of producing goods to be sold in overseas markets Regard foreign sales as bonus sales and assume that any return over their variable cost makes a contribution to net profit Good for companies with high fixed costs and unused production capacity because any contribution to fixed cost after variable costs are converted to profit for the company Must be careful for accidentally dumping Full Cost: insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost Use this approach with high variable costs, relative to fixed costs Prices are set on cost-plus basis, or total cost plus a profit margin
Personal and attitudinal characteristics of marketing personnel selected for overseas job assignments.
Maturity, emotional stability, breadth of knowledge, positive outlook, flexibility, cultural empathy, energetic and enjoy travel
Role of tariffs in decisions on where to locate manufacturing facilities (e.g., Ford's Plan to Import)
More expensive to import from mexico, so import from china.
Differences in salespeople motivations across countries and cultures (see examples in the textbook and in class discussion/slides).
Motivation is hard because a firm is dealing with different cultures, sources, and philosophies Ex: Japanese rated social recognition as more important while most data was similar Individual values for rewards are similar, but social and competitive contexts require different motivational systems Communication is important in maintaining high levels of motivation Make clear opportunities for growth
Communication mix (be able to name and define the methods of marketing communications mentioned in Ch. 16).
Newspapers Magazines Radio and Television Satellite and cable TV Direct Mail The Internet Social Media Mobile phone applications Other media
Density of middlemen (what this term means):
Not unusual for consumer goods to go through three or four intermediaries before reaching the consumer Long channels that serve a high density of customers who make small frequent purchases.
Articles: "Rice Cooker Becomes a Test,", Personal Care Firms, CEO of Heinz
Rice Cookers: -China looking to get away from low end goods ("quantity to quality revolution") -Currently purchasing tons of goods abroad (Japan) Personal Care Firms: - German company discovering new market (veiled hair) often found in Middle East and Africa -Making products specifically for these markets rather than pushing western products CEO of Heinz: -growing sales in developing economies -Applicability: different products used (soy sauce in china) and same products used differently (ketchup on pizza in Korea) -Availability: people dont shop in grocery stores all around the world, so you must adjust accordingly -Affordability: smaller quantities sold in poorer areas
Pricing the products for the poorest consumers (aka, the "bottom of the pyramid" - also, see "Smaller Packets").
Smaller quantities of same product means poorer consumers (Who can't afford to buy in bulk) can buy
Role of critical thinking in managerial practice. Critical thinking: what is it (use lecture material and your experience of working on Critical Thinking (aka, Market Research) papers in preparing this question).
What is it?: Mental process of objectively analyzing a situation by gathering information from all possible sources, and then evaluating both the tangible and intangible aspects, as well as the implications of any course of action -Disciplined act of ensuring that you are using the best thinking you are capable of in any set of circumstances Four recommendations 1) Clarify your thinking (summarize what you learned, state points and give examples 2)Stick to the point (does info directly relate to problem or task?) 3)Question questions (ask powerful questions and question the status quo) 4) Be reasonable (change their mind when given a good reason to, listen to people)
Global (definition and examples):
are brands whose positioning, advertising strategy, personality, look, and feel are in most respects the same from one country to another. (David Aaker and Erich "The Lure of Global Branding")
Regional Brands:
are uniform across a region but different between regions or unique to a region (P&G's Ariel and Vizir in Europe) Local (national) brands: are unique to only one or two markets (e.g., Turca Cola in Turkey) Private label brands :owned by retail chains (e.g., Kroger by Fred Meyer; Sam's choice by WalMart).