MAR456 Exam 1

used car prices skyrocketed in 2021, car production levels decreased

2 major effects on auto industry during covid

free market and controlled systems

2 types of national economic systems (although not one market is completely one or the other)

current size of the segment and growth potential, potential competition, compatibility and feasibility

3 main criteria for targeting

to confirm (or contradict) assumptions regarding market potential, to gather additional (primary) data, to develop a marketing plan in co-operation with the local agent or distributor

3 main goals in visiting the potential market

difficulties in gaining the data, cost, more time is necessary to gather data

3 main problems associated with primary data

customer value, competitive advantage, focus

3 principles of marketing

existing market, latent market, incipient market

3 types of demand

market allocation, command allocation, mixed system

3 types of economic systems (based on dominant method of resource allocation)

agriculture exports have declined, manufacturing and mining exports have increased, services exports have remained constant

3 ways composition of world trade has changed

culture as "ways of living" (passed on from generation to generation), conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior, culture is learned not innate, cultural fragmentation occurs when population segments diverge in culture

4 basic aspects of society and culture

high income countries, upper-middle income, lower-middle income, low income

4 country income groups (aka stages of market development)

accuracy, availability, timeliness, comparability of data

4 main possible problems associated with secondary data

hofstede's cultural dimensions, project globe, schwartz's cultural value orientations, leung and bond's social axioms

4 standardized cultural classifications

innovators, early adopters, early majority, late majority, laggards

5 adopter categories

domestic, international, multinational, global, transnational

5 alternative strategies: stages of development model

relative advantage, compatibility, complexity, trialability, observability

5 characteristics of innovations (roger's diffusion of innovation factors)

geographic, demographic, psychographic, behavior, benefit

5 criteria for global market segmentation

lawyers, a person's word, time, negotiations, competitive bidding

5 factors in cross-cultural complications

political risk, market access, factor costs (costs of all the factors of production) and conditions, country infrastructure, foreign exchange

5 main decision criteria for international business

must analyze many markets to recognize unique characteristics, devise techniques to study small markets, in developing countries the data may be questionable, comparability, consumer may be hard to reach

5 main issues in global marketing research

identify research problem, develop research plan, collect data, analyze research data, present findings

5 steps of the research process

free, mostly free (3rd most popular), moderately free (2nd most popular), mostly unfree (most popular), repressed

5 variations in index of economic freedom

factor costs and conditions, logistics, source-country infrastructure, political risk, source-market constraints, currency availability, stability, convertibility

6 considerations regarding product sourcing

market potential, market access, shipping costs and time, potential competition, service requirements, product fit

6 main market selection criteria

low per capita income, high inflation, wide income distribution, high levels of taxation and import duties, large black market, inadequate distribution systems

6 marketing challenges in low-income countries

culture, market differences, costs, nationalism, war, management myopia

6 restraining forces affecting global marketing

technology, culture, market needs, cost, free markets, peace, management vision, strategic intent

8 driving forces affecting global marketing

licensing

a contractual arrangement where one company (licensor) provides technology, know-how, patents, or a successful brand to another company (licensee) in exchange for a fee and royalties

franchising

a form of licensing in which a company permits its name, logo, cultural design, and operations to be used in establishing a new firm or store

customs union

a group of countries that abolish all international barriers to trade AND establish common external barriers (ex: Mercosur, Andean Group)

FTA (free trade area)

a group of countries that agree to abolish all international barriers to trade among themselves (ex: European Economic Area, North American Free Trade Agreement)

common market

a group of countries that, in addition to eliminating international barriers and establishing common external barriers, eliminates barriers to the flow of labor and capital within the market (ex: European Union, APEC, CIS, NAFTA)

exogenous shock

a happening outside of the company's control (which might lead to failure) - macroeconomic environment is very important for company's success or failure

global marketing information system

a means for gathering, analyzing, and reporting relevant data to provide managers and other decision makers with a continuous flow of information about markets, customers, competitors, and company operations

capital account

a record of all long-term direct investments, portfolio investment, and other short- and long-term capital flows

balance of payments

a record of all the economic transactions between residents of a country and the rest of the world

current account

a record of all the recurring trade between countries

no interviewer bias, lower cost, faster, accurate

advantages of online research (4)

polycentric management orientation

belief that every country is different, markets differently, known as multinational companies, marketing mix is adapted by autonomous country managers

ethnocentric management orientation

believe that the practices are better in home country (opportunities outside the home market are pursued by extending various elements of marketing mix)

project globe

builds on hofstede, explains cultural effects in organizational structures and processes, 9 culture-level dimensions partially overlapping hofstede

regiocentric (or geocentric) management orientation

closest to glocalization, characteristics of global and transnational companies, marketing opportunities are pursued by both extension and adaptation strategies in global markets

joint venture

company run by two or more partner firms, risk is shared and different value chain strengths are combined, influence depends on degree of ownership, good opportunity to build on local know-how, finds greater acceptance by local authorities

purchasing power parities

comparison of goods and services that can be bought with local currency in different countries

focus

concentration of attention and resources, requirement to create customer value at a competitive advantage

leung and bond's social axioms

conceptualized as generalized expectancies that people hold about life and how it works

V = B / P (perceived benefits / price)

customer value equation

researcher cannot explain questions, researcher cannot ask follow-up questions

disadvantages of online research (2)

home, in-country, third country, combination

entry and expansion decisions and alternatives... you can source from these 4 places

athletic sports, body adornment, religious rituals, music, food and cooking, family, love, literature, holidays, leisure time / vacations

examples of cultural universals

latent market

exists but is not found yet / not discovered yet, the potential market is ready for you (it's out there and hungry for your product)

customer value

goal of this is to create customer value that is greater than the value created by competitors

GDP

gross domestic product - measures the goods and services produced within the country's geographical borders, by both US residents and residents of the rest of the world

GNP

gross national product - measures the goods and services produced by ONLY US residents, both domestically and abroad

power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, long-term vs. short-term orientation

hofstede's cultural dimensions (5)

exporting and export sourcing

implicit in any form of exporting is the fact that the firm is supplying the foreign market from domestic or third-country manufacturing facilities

mixed systems

in reality, there are no pure market or command allocation systems among the world's economies (in market economy, command allocation sector is portion of GDP that is taxed)

federal funds rate

interest rate banks charge each other for loans

direct perception

it means seeing, hearing, smelling, or tasting for oneself and gets all the senses involved (the background information or context one gets from observing a situation can help fill in the "big picture")

high-context culture

less information is contained in the verbal part of the message, more information resides in the context of communication (background, associations, basic values of communication) - Japan and Saudi Arabia

global marketing

marketing discipline is universal but markets and customers are quite different, marketing practice must vary region to region and country to country

psychological needs, safety needs, social needs, esteem, self-actualization

maslow's hierarchy of needs (there are 5 from bottom to top)

psychological needs, safety needs, affiliation, admiration, status

maslow's hierarchy of needs - the Asian equivalent (bottom to top)

standardized global marketing

mass marketing, the same marketing mix for a broad market of potential buyers

low-context culture

messages are explicit, words carry most of the information in communication - US, Switzerland, Germany

universal

mode of behavior existing in all cultures (ex: music)

universal aspects

opportunities to standardize some or all elements of a marketing program

high-tech positioning

positioning strategy for products which are purchased on concrete features; buyers typically already possess or wish to acquire considerable technical information (suitable for technical product and special-interest products)

incipient market

potential market not ready yet, even if you find it, it is not ready yet (you have to see if the trend continues into the future)

environmental insensitive products

products that do not require significant adaptation to the environments of global markets (ex: gas, medicine)

environmental sensitive products

products that require specific adaptation to the environments of various global markets

market allocation

relies upon consumers to allocate resources, role of state is to promote competition and ensure customer protection

autonomy vs. embeddedness, egalitarianism vs. hierarchy, mastery vs. harmony

schwartz's cultural value orientations (3)

income

single most important indicator of market potential

lower-middle income country characteristics

stage of market development associated with early stages of industrialization, expanding consumer markets, major competitive advantage in production of mature, standardized, labor-intensive products

low income country characteristics

stage of market development associated with limited industrialization, high birth rates, low literacy rates, heavy reliance on foreign aid, inequality of income distribution, political instability

upper-middle income country characteristics

stage of market development associated with rising wages, high rates of literacy, advanced education, experience rapidly export-driven economic growth, become formidable competitors

high income country characteristics

stage of market development associated with sustained economic growth, post-industrial countries, information-society countries, ascendancy of knowledge over capital (most powerful nations in this group are the G20 and G7)

command allocation

state has broad powers to serve public interest (decides which products to make, decides how to make them), elements of marketing mix are not used as strategic variables

concentrated global marketing

targeted at a single segment of the global market

differentiated global marketing

targeting two or more different segments

targeting

the act of evaluating and comparing the identified groups and selecting one or more as the prospect with the highest potential

awareness, interest, evaluation, trial, adoption

the adoption process aka diffusion theory (5)

high-touch positioning

the emphasis lies more on the product's image; specialized information appears of minor relevance (suitable for products that solve common problem, global village products, products that use universal themes)

environmental sensitivity

the extent to which products must be adapted to the culture-specific needs of different national markets

positioning

the location of a product in the mind of the consumer, partly controlled by the marketer (marketing mix) and partly not, visualized by a "positioning map"

global market segmentation

the process of dividing the world market into distinct subsets of customers that have similar needs (for ex: country groups or individual interest groups)

ownership / investment

the riskiest type of venture where subsidiary is either established through the creation of a new facility or the acquisition of an existing firm, represents the most extensive engagement abroad, company has complete decision power and control, investor achieves greater flexibility (in many countries, majority or 100% ownership by foreign companies is forbidden)

the self-reference criterion (SRC)

the unconscious reference to one's own cultural values, teaches that a vital skill of the global marketer is unbiased perception (the ability to see what is so in a culture)

glocalization

think globally but act locally

standardized cultural classification, ethnographic and other non-survey approaches

two analytical approaches to cultural factors

primary data

type of data used if the original purpose of collecting the data is for a current research project

ethnographic and other non-survey approaches

used when culture constructs many differ across societies or change over time, typically consists of words and images, value gleaned from this method provides rich portraits of people and their societies

ethnographic and other non-survey approaches

using qualitative techniques to classify countries

standardized cultural classification

using standardized measures to classify countries, began use in the 1980s

trade deficit

when imports > exports