Quiz 4
sponsorship
- a company pays a fee to be associated with an event, team, athletic association or sports facility - combines elements of PR and sales promotion, draws media attention
the product
- a good, service, or idea - consumer or industrial goods - warranty, labelling, aesthetics
global retailing strategies: franchise
- appropriate strategy when barriers to entry are low yet the market is culturally distant in terms of consumer behaviour or retailing structures
foreign consumer culture positioning
- associates the brand's users, use occasions, or product origins with a foreign country or culture
conventional wisdom
- assumes heterogeneity between countries - assumes homogeneity within a country - focuses on macro level of cultural differences - relies on clustering of national markets
time utility
- availability of a product or service when desired by a customer
form utility
- availability of a product processed, prepared, in proper condition and ready to use
information utility
- availability of answers to questions and general communication about useful product features and benefits
hedging
- balancing the risk of loss in one country with a corresponding gain in another country
brand extension
- brands that act as an umbrella for new products - example: the virgin group
adaptation
- changing elements of design, function, and packaging according to needs of different country markets
domestic rivalry
- domestic rivalry in a single national market is a powerful influence on competitive advantage - absence of rivalry can lead to complacency in the home firms and eventually cause them to become noncompetitive in the world markets
litigation
- final step if all else fails to settle a dispute
global pricing objectives and strategies
- managers should determine the unit sales, market share, the return on investment - they should determine which strategy to use: penetration pricing or market skimming
private market
- market capitalism
countertrade
- occurs when payment is made in some from other than money - barter, offset, switch trading, etc
advantages of licensing
- provides additional profitability with little initial investment - provides method of circumventing tariffs, quotas, and other export barriers - low costs to implement - license agreements should have cross-technology agreements to share developments and create competitive advantage for each party
task of global marketers
- study and understand the cultures of countries in which they will be doing business - understand that their own personal beliefs in reference to their own cultural values may influence their perception of the new market - incorporate this understanding into the marketing process
selling proposition
- the promise or claim that captures the reason for buying the product or the benefit that ownership confers
style aesthetics
- various degrees of complexity, for example, are perceived differently around the world
critical questions regarding global retailing
- what advantages do we have relative to the local competition
The Eclectic Paradigm [WHY, WHERE, HOW]
-Attempts to interpret all stages of international expansion, from exporting till FDI -Different combinations of the three variables determine the models, industries and geographical distribution of MNC's international ownership
types of market entry strategies
-exporting -contractual partnerships -joint venture -foreign direct investment
Uncontrollable Elements
Factors in the business environment over which the international marketer has no control or influence; may include competition, legal restraints, government controls, weather, consumer preferences and behavior, political events
Dual Adaptation
Using this, the company must adapt the product as well as the marketing communication to the foreign market
geographical dimension
as distance increases, transportation cost increases, the greater the distance the less likely countries are to invest overseas
ownership advantage
competitive advantages over other companies
All of the following are options that might be followed if the firm wished to lower its export price on a product EXCEPT:
expand the warranty categories to give incentive for higher quality.
Countertrade transactions include the following options EXCEPT:
geo trading.
single country marketing strategy
marketing mix: - product - price - place - promotion
paris convention covers what
patents
configuration
where and how activities will be located (design, manufacturing)
______________ costs change with sales volume.
Variable
All of the alternatives listed below are ways to safeguard against inflation EXCEPT:
lengthen credit terms.
Global Brand
•Available in most countries in the world •Have a similar positioning in all markets. Similar pricing Similar target market Marketing mix can vary slightly (ex: promotions) •Carry one brand name and/or logo. •Sometimes product will be the same but brand will differ (Example: Unilever Ice cream)
creating competitive advantage: building layers of advantage
- a company faces less risk if it has a wide portfolio of advantages - successful companies build portfolios by establishing layers of advantage on top of one another (evolutionary process) - illustrates how a company can move along the value chain to strengthen competitive advantage
global strategic partnerships
- collaborative agreements - strategic alliances - strategic international alliances - global strategic partnerships
corporate taxation
- companies attempt to limit tax liability by shifting location of income/profits (Ireland example = low tax rate)
franchising
- contract between a parent company-franchisor and a franchisee that allows the franchisee to operate a business developed by the franchisor in return for a free and adherence to franchise-wide policies - example in class where the Quebec dog food isn't worth anything in Winnipeg so franchising isn't the best idea
narrow market strategies
- cost focus: low price - focused differentiation: premium price
sustaining technologies
- defined as incremental or radical innovations that improve product performance - most new technologies developed by established companies are sustaining in nature - the vast majority of innovations are sustaining in nature
global retailing
- department stores - specialty retailers - supermarkets - convenience stores - discount stores and warehouse clubs
confiscation
- form of expropriation but with no compensation given
GATT
- general agreement on tariffs and trade - handled trade disputes - replaced by the world trade organization in 1995
government taxation policies
- high taxation can lead to black market growth and cross-border shopping
innovation
- important for reaching mass markets in less industrialized nations and certain segments in industrialized countries - example: hand cranked radios for areas with no electricity
common market
- includes elimination of internal barriers (free trade area) - establishes common external barriers to trade (customs union) - allows for the free movement of factors of production, such as labour, capital, and information
high context cultures
- information resides in context - emphasis on background, basic values, societal status - less emphasis on legal paperwork - focus on personal reputation - example: Saudi Arabia and Japan
low context culture
- messages are explicit and specific - words carry all information - reliance on legal paperwork - focus on non-personal documentation of credibility - example: Switzerland, the US, Germany
affluent materialists
- status conscious - many of whom are business professionals, up and comers - use conspicuous consumption to communicate their success to others - example: buying a BMW to show others how well you've done
3 political strategies to formulate & implement responses to political risk
1. relative bargaining power analysis 2. integrative, protective, and defensive techniques 3. proactive political strategies
Cultural Elective
A business custom to which adaptation is helpful but not necessary
Monroe Doctrine
A cornerstone of US foreign policy as enunciated by president James Monroe, it proclaimed three basic dicta: no further European colonization in the New World, abstention of the United States from European political affairs, and non-intervention of European governments of the western hemisphere.
value proposition
perceived value to the customer the firms promise to the customer
madrid arrangement covers what
trademarks
With respect to currency quotation when preparing for buying and selling transactions, buyers and sellers generally prefer to quote in:
their own currency.
U.S. Foreign Corrupt Practices Act (FCPA)
prohibits American companies from making improper payments to foreign officials for the purpose of obtaining or retaining business
operational risks
medium risk, govt policies that constrain management
high income countries
- also known as advanced, developed, and industrialized countries - sustained economic growth through disciplined innovation - intellectual over machine technology, scientists and professionals overs engineers and semiskilled workers
buyer orientation
- amount of export expended, level of risk and involvement - framework: convenience, preference, shopping, specialty
rigid cost plus pricing
- companies set prices without regard to the eight pricing considerations
economic freedom
- free - mostly free - mostly un-free - repressed
quality defined
- the market perceived quality of the product or service - what is the product or service capable of - quality perceptions vary across markets - consumer perception of a quality product had more to do with market perceived quality - a product that exceeds expectations is also of 'poor' quality, since by definition, its does not deliver what is being asked
difficulty of global advertising
- the message may not get through - the message reaches the target audience but is not understood - the message is received and understood, by may not cause for the recipient to take action like the sender wants - effectiveness of the message can be impaired by noise
International marketing involvement: the last 3 types
involve strategic planning & decisions about international marketing -Regular foreign marketing -International marketing -global marketing
ethnocentrism
people in one's own company, culture or country now best how to do things
Weights of Political Risk Service (PRS)
economic (33 points) Politics (50 points) Society (17 Points)
quality and price
- continuum from high price/quality and high price to good value
PRS: Societal factors
-urbanization -islamic fundamentalism -corruption -youth population
location advantage
locate activities based on abroad resources
Counterfeit
goods that pretend to be the real thing, bearing a designer brand's label or signature symbol
Operational equivalence
how constructs are operationalised to make measurements (HH income is difficult to compare across countries because differences in tax structure)
Inflation in an economy is an example of a(n) ________________ impact on pricing decisions
indirect
utility patent
inventions -ex: IPod, chemical fertilizer -protection lasts for 20 years from the date of filing regular patent application
There are two ways to deal with the price escalation phenomenon. One of these methods is to cut the export price. The other is to:
position the product as a (super) premium brand.
In the area of price coordination, the following considerations matter EXCEPT:
role of the World Bank.
When sales take place between related entities of the same company, ___________ is often used.
transfer pricing
trademark
words, symbols, logos, designs, slogans -protection lasts as long as trademark is in use
physical culture
- clothing - tools - decorative art - body adornment - homes
cultural imperatives
- the business customs and expectations that must be met and conformed to or avoided if relationships are to be successful - example: the Chinese guanxi, the Japanese ningen kankei which both emphasize the significance of establishing friendship, human relations, or attaining a level of trust to be successful
Market characteristics (the host country) [external] country and industry data
-Potential sales -Strategic importance -Strengths of local competitors -Cultural differences -Country restrictions -L-T regional expansion
Product Adaptation-Communications Extension
Adapt the product to local use but the message stays the same
GATT
General Agreement on Tariffs and Trade; a trade agreement signed by the US and 22 other countries shortly after WWII. The original agreement provided a process to reduce tariffs and created an agency to patrol world trade; the treaty and subsequent meetings have produced agreements significantly reducing tariffs
________________ is the only marketing mix instrument that creates revenues.
Price
Confiscation
The sizing of a company's assets without payment. Prominent examples involving US companies occurred in Cuba and Iran
Fill in the blanks with the word or phrase from the drop-down list that best completes each passage. a. _______ trade laws require sellers to maintain ______ prices for ______ merchandise. b. Deceptive business practices, including deceptive pricing schemes, are prevented by the _____
a. unfair, minimum, comparable b. federal trade commission
Psychic Distance
the factors preventing or disturbing firms from learning about and understanding of a foreign market
international dispute resolution
- conciliation - arbitration - litigation
Voluntary Export Restraints (VERs)
Agreements, similar to quotas, between an importing country and an exporting country for a restriction on the volume of exports.
Taiping Rebellion
The most costly civil war in human history in China during 1851-1864. Some estimates have the death toll at between 20-40 million
host country nationals
advantages - economical - superior market knowledge - language skills - superior cultural knowledge fast implementation disadvantages - needs product training - may be held in low esteem - language skills may not be important - difficult to ensure loyalty
You are the head of sales for an industrial machinery company. The approach you use to organizing your sales force is similar to that of many other B2B firms. This approach is: a. territory specialization b. channel specialization c. product category specialization d. geographic specialization
c. product category specialization
All of the following are considered to be exporter strategies when the domestic currency is strong EXCEPT:
conduct conventional cash-for-goods trade.
Berne convention covers what
copyrights
There are a series of key drivers behind transfer pricing decisions. The most important of these drivers is thought to be:
market conditions in the foreign country.
Once brand loyalty has been established, price will play less of a role as a purchase criterion, and the firm may be able to institute a ________________ strategy.
premium pricing
controllable elements of marketing
product, price, promotion, can be altered in long run and short run to adjust to changing market
One of the ways that a weakening of the U.S. dollar relative to the Japanese yen may not necessarily be a benefit to a U.S. firm is that:
Japanese parts might become more expensive and when imported for inclusion into an exported product, prices might actually rise.
If a firm decide to penetrate the Japanese consumer market through direct marketing (such as catalog or telemarketing sales). Which of the following strategies best describes this option for lowering the price of an exported product?
rearrange the distribution channel.
exchange rate fluctuations
- since currencies are floating freely relative to one another, no one is quite sure of the future value of any currency
Operational Risks
-Government policies and procedures that directly constrain management and performance of local operations -poses medium level of risk
Support Services Component
-instructions, installation, repair & maintenance Often customized for international markets
Skimming
a method of pricing, generally used for foreign markets, in which a company seeks to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received; may be used to sell a new or innovative product to maximize profits until a competitor forces a lower price.
global retailing strategies: chain acquisition
- a market entry strategy that emails purchasing a company with multiple existing outlets in a foreign country
disadvantages of licensing
- limited participation/control - licensee may become competitor - licensee may exploit company resources
Nationalism
An intense feeling of national pride and unity; an awakening of a nation's people to pride in their county. Nationalism can take on anti foreign business bias
Self-Reference Criterion (SRC)
An unconscious reference to one's own cultural values, experiences, and knowledge as a basis for a decision
global consumer culture positioning
- identifies the brand as a symbol of a particular global culture or segment
government programs that support exports
- tax incentives - subsidies - governmental assistance - free trade zones ***
Benefits of Standardization
-Cost Reduction: Economies of scale in R&D, production, marketing, managerial and organizational processes -Global Image: Strong corporate image -Easier Planning and Control: Development and implementation of strategies -Diffusion of Innovation: Quick ROI favors spread of product innovation
Ownership Control Risks
-Government policies or actions that inhibit ownership or control of local operations -most risky
PRS Economic Factors
-falling GDP/ per capita -high inflation -raw materials as a percentage of exports
Geographic Distance
-physical remoteness -lack of a common border -lack of sea or river access -size of country -time zone differences -weak transportation or communication links -differences in climates -number pf paved roads -urban/rural dichotomy -Logistics Performance Index
examples of operational risks
-price controls -export commitments -taxes -local sourcing requirements
Global Product Planning: Strategic Alternatives
1.) Dual Extension 2.) Product Extension Communication Adaption 3.) Product Adaption Communication Extension 4.) Dual Adaption 5.) Product Invention
Sustainable Development
An approach toward economic growth that has been described as a cooperative effort among businesses, environmentalists, another to seek growth with "wise resource management, equitable distribution of benefits, and reduction of negative efforts on people and the environment form the process of economic growth"
In the area of transfer pricing, experts suggest to set transfer prices that are as close as possible to the _________________________________.
Basic Arm's Length Standard
___________________ simply adds a mark-up to the cost of the goods.
Cost-based pricing
Political and Social Activists (PSAs)
Individuals who participate in efforts to change practices and behaviors of corporations and governments with tactics that can range from peaceful protest to terrorism
Islamic Law
The Shari'ah; the legal system based on interpretation of the Koran. Islamic Law encompasses religious duties and obligations as well as the secular aspect of law regulating human acts. Among its provisions is a prohibition of the payment of interest.
Culture
The human made part of human environment- the sum total of knowledge, beliefs, arts, morals, laws, customs, and other capabilities and habits acquired by humans as members of society
Sovereignty
The powers exercised by a state in relation to other countries, as well as the supreme powers or a state as exercised over its own inahabitants
Prior Use
The principle, observed in the United States and other common law nations, that ownership of intellectual property rights usually goes to who can establish first use
Balance of Payments
The system of accounts that records a nation's international financial transactions
self-reliance criterion
The unconscious reference to one's own cultural values, experiences, and knowledge
Opium Wars
Two wars fought between China and Britain over the British run Opium trade in China during the middle 1800s. The British navy attacked Chinese ports in retribution for a Chinese ban on the drug, and the Treaty of Nanjing signed in 1842 allowed greater European access to Chines ports generally, a resumption of the opium trade and a ceding of Hong Kong to British control
Usage Equivalence
Whether the conditions of product use are the same in a new market?
Purchasing Power Equivalence
Whether the consumers in the new market have the ability to buy the product?
Functional Equivalence
Whether the product function or the need satisfied is the same or different in a new market?
An example of nonprice competition that is faced in some markets is:
advertising
Dumping
an export practice, generally prohibited by laws and subject to penalties and fines, defined by some as the selling of products in foreign markets below the cost of production and by others as the selling of products at below the prices of the same goods in the home market.
Cultural Distance
attributes of a society sustained by interactions among people
The vice president of marketing of a large grocery chain has determined to deemphasize the prices of the company's products and to concentrate marketing efforts on other factors such as the products' benefits and features. Which strategy is the vice president most likely to use? a. Market-minus pricing b. Competitive pricing strategy c. Penetration pricing d. Market-plus pricing e. Skimming
b. Competitive pricing strategy
When making pricing decisions, ______________ set(s) the floor.
costs
According to a recent research, all of the following are examples of important pricing objectives EXCEPT:
drive competition out of business.
economic risk factors
failing GDP, high inflation, capital flight, decline in productivity
Economic Freedom
people have the right to work, produce, consume, save, and invest the way they prefer
regular foreign marketing
the firm has permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets, products may be adapted to meet needs of foreign markets
3 types of political risks
transfer, operational, ownership
Penetration pricing policy
used to stimulate market and sales growth by deliberately offering products at low prices
concentrated global marketing
- niche marketing - single segment of global market - look for global depth rather than national breadth - example: Chanel, Estee Lauder
infrequent foreign marketing
Temporary surpluses in inventory caused by variations in production level or demand may cause companies to sell their excess product in overseas markets Sales to foreign markets are made as goods become available - uncommon
Expropriation
The seizure of an investment by a government in which some reimbursement is made to the investment owner; often the seized investment becomes nationalized.
You work in the marketing department of a household cleaning products manufacturer. When the CEO found that online purchase of consumer-packaged goods had reached only 1 percent of the $666 billion in sales in 2013, he or she charged your team with devising a plan to change that picture. Your research has shown that home delivery of cleaning supplies becomes economically feasible only when the total price hits $20 to $30. Which of the following pricing objectives should the team use for its action plan? a. Profitability objectives b. Volume objectives c. Prestige objectives d. Meeting competition objectives
b. Volume objectives
us/ Canada Intellectual property
common-law (USA, Canada) "first to invent" for patents patent application secret
uncontrollable elements of marketing
competition, politics, laws, consumer behaviours, level of technology, marketer must evaluate and adapt
Which of the following are exporter strategies when the domestic currency is strong?
engage in nonprice competition by improving quality, delivery, and aftersale service.
Which of the following is not among the three foundations of pricing strategy? a. margin b. competition c. potential demand d. costs
a. margin
The promotional mix must be tailored not only to a product's characteristics but also to its stage in the product lifecycle. Fill in the blanks with the terms from the drop-down list that would best complete each sentence. a. As a new product grows and matures, __________ gains in importance relative to other promotional tools. A product in early decline will typically experience reductions in ____. When newly introduced, a product can benefit from both personal selling and _____ types of promotion.
a. advertising b. advertising and sales promotionals c. nonpersonal
If a company that is threatened with price controls diversifies into product lines that are relatively free of price controls, the firm would be following which of the following strategies?
adapt the product line.
Price escalation
the pricing disparity in which goods are priced higher in a foreign market than in the home market; caused by the added costs involved in exporting products from one country to another.
global localization
to adapt: - minimize standardization and customization - minimize cost while maximizing satisfaction - think globally, act locally - essence of segmentation
_________________ costs do not vary with sales volume changes.
Fixed
Customers' _________________ is a key consideration in pricing decisions.
buying power
In the international marketplace, _________________ pricing adds international costs and a mark-up to the domestic manufacturing cost.
export price
Sales tax rates, tariffs, and price controls are all examples of _______________ that can have a direct or indirect impact on the pricing policies of a firm in the international marketplace.
government policies
Martin has opened a new, trendy restaurant in the downtown section of a large city. There are, however, many competing restaurants in the neighborhood, and Martin knows that many of them have large customer followings. In order to obtain a relatively fast rate of market acceptance, Martin decides to offer two-for-one coupons to all patrons during the restaurant's opening weeks. After that limited time, Martin plans to withdraw the two-for-one offers and begin charging regular market prices. Fill in the blank with the word from the drop-down list that best completes the sentence. Martin is using a ______ pricing strategy.
penetration
A retailer is facing difficult times: Sales are down and there has been a decrease in the number of customers visiting the store. The retailer decides to lower the prices on a few items, hoping this strategy will draw more customers who will not only purchase the discounted items but will also linger in the store and buy additional items. Which type of pricing policy is the retailer using? a. Promotional pricing b. Product line pricing c. Psychological pricing d. Price flexibility
a. Promotional pricing
You are employed as a marketing assistant at a major retail firm. You are asked to review how various factors are likely to influence the elasticity of demand for the firm's products. Fill in the blanks with the word from the drop-down list that best completes each sentence. Words may be used more than once. a. The availability of substitutes is likely to _____ elasticity of demand for your products. b. The availability of complements is likely to _____ elasticity of demand for your products. c. The more buyers purchase retail goods online, the _____ the elasticity of demand for your products is likely to be. d. Demand for your line of luxury evening wraps is likely to be ____ elastic than for your line of budget raincoats.
a. increase b. increase c. higher d. more
Differences in the competitive situation across countries will usually lead to:
cross-border price differentials.
A company's pricing policy is a highly ____________________ process based on inputs from various departments.
cross-functional
As a restaurant marketer, you are responsible for setting prices on each menu item. Your new appetizer is a fruit-and-nut salad, with a total ingredient cost of $5. The industry's standard markup is 25 percent. What should you charge for this appetizer? a. $6.50 b. $5.25 c. $6.00 d. $6.25 e. $5.75
d. $6.25
Firms faced with price controls can take any of the following strategies EXCEPT:
have the home government bring pressure on the host government.
Countries with low per-capita income are more __________________ than in developed countries.
price sensitive
All of the following are reasons that competitive situations vary from country to country (with respect to the competitive environment) EXCEPT:
the presence of gray markets.
When developing a pricing strategy for its global markets, one of the first steps that a company must go through is to decide:
what it wants to accomplish with its strategy.
economic union
- same as free trade area, customs union, common market, AND coordinates and harmonizes economic and social policy within the union - creation of unified single bank - use of single currency - would lead to a central government in time
global products and brands
- same products are offered in all world regions - global brands have the same name and similar image and positioning throughout the world - example: BMW, GE, Harley-Davidson
environmental factors of global retailing
- saturation in the home country market - recession or other economic factors - strict regulation on store development - high operating costs
creating competitive advantage: searching for loose bricks
- searching for opportunities in the defensive walls of a competitor whose attention is narrowly focuses - focused on a market segment or focused on a geographic area to the exclusion of others
transformationalists
- seek a deeper meaning about the how and why, the consequences in order to better understand globalization to eliminate negative aspects - do not fear a world dominated by elites - globalization is a change in the existing social order
market expansion strategies
- seeking new markets in existing countries - seeking new country markets for already identified and served market segments
direct sensory perception
- sensory experience: using the senses to find out firsthand what is going on in a particular country
current issues in competitive advantage
- short product life cycles - short product design cycles - new technologies - globalization - competition unfolds in a series of dynamic strategic interactions in four areas: cost vs. quality, timing and know-how, and barriers to entry - the role of marketing is innovation and the creation of new markets
innovators dilemma
- staying committed to a current, profitable, technology - still being responsive to the needs of established customers - but to avoid...failing to provide adequate levels of investment to new and possibly risky technologies
export marketing
- tailors the marketing mix to international consumers - must have an understanding of the target market environment - the use of market research and identification of the market potential - decisions regarding product design, packaging, pricing, distribution channels, advertising, promoting, etc.
government actions to discourage imports and block market access
- tariffs - import controls - nontariff barriers: - quotas, restrictive custom procedures, arbitrary monetary policies - restrictive regulations
assessing market potential
- tendency to overstate the size and short-term attractiveness of individual country markets - the company does not want to 'miss out' on a strategic opportunity - management's network of contacts will emerge as a primary criterion for targeting
product saturation levels
- the % of homes who own a product
brand equity
- the added value to the product as a result of investments in the marketing of the brand, which results in: - greater loyalty - less vulnerability to market actions - larger margins - more inelastic/elastic response to price change
political risk
- the change in political environment or government policy that would adversely affect a company's ability to operate effectively and profitably - if political risk is high in a country, they will have trouble finding foreign investment from other countries
economic exposure
- the impact of currency fluctuations on the present value of the company's financial performance - occurs when sales are in a foreign country (Nestle generates 98% of sales outside home country)
adoption process
- the mental stages through which an individual passes from the time of his or her knowledge of an innovation to the time of product adoption or purchase - awareness, interest, evaluation, trial, adoption
mistaken assumptions
- the poor have no money - the poor will not waste money on non-essential goods - entering developing markets is fruitless because goods in that market are too cheap to make a profit - people in the bottom of the pyramid cannot use technology - would be seen as exploiting the poor if doing business in these countries who are under developed
transfer pricing
- the pricing of goods, services, or any intangible property bought and sold by operating units or divisions of a company doing business with an affiliate in another jurisdiction - cost based transfer pricing - market based transfer pricing - negotiated transfer pricing
targeting
- the process of evaluation segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond
aesthetics
- the sense of what is beautiful and not beautiful - what represents good taste as opposed to tastelessness or even obscenity
global retailing strategies: joint venture
- this strategy is advisable when culturally distant, difficult to enter markets are targeted
positioning
- to differentiate the product or brand in the target market
forward contracts
- to set the price of the exchange rate at some point in the future to eliminate some risk
visible comparisons within economic freedom
- trade/tax policies - foreign investment - banking policy - wage and price controls - property rights
gray market goods
- trademarked products that are exported from one country to another where they are sold by a third party - issues: dilution of exclusivity, free riding, damage to channel relationships, undermining segmented pricing schemes, reputation and legal liability
emotional approach strategy for advertising
- tugs at the heart strings or uses humour
Benefits of Adaptation
-Motivation of Local Managers: Stimulates creativity -Higher satisfaction of local consumers: Increases company's competitive potential -Legal issues and differences in technical standards: E.g. video game standards
Product Extension-Communications Adaptation
-Products may serve the same or different needs in different markets (ref: functional equivalence) -No product changes reduce expense -Costs in market research advertising, sales promotion, point-of-sale material
Economic Distance
-Rich-Poor differences -Natural resources, financial resources, human resources, -infrastructure or knowledge -Economic size -Low per-capita income -Rising GDP -Economic Freedom
Benefits of Adaptation
-Stimulates Creativity Higher satisfaction of local consumers -Increases company's competitive potential (E.g., video game standards)
The Internationalization Model (Transactional Costs) [HOW]
-arises through the cost-efficient coordination of transactions of the MNC across borders -If transaction costs are estimated to be low, then arms-length arrangements (contractual agreements; licencing, franchising, joint ventures) are more preferable (trade-off between risks and returns) -High transaction costs=FDI
major problems w/ secondary data
-availability -comparability (lack of current data/ historical data) -reliability (who, what, how, consistenency) -validation
PRS: Political factors
-bad neighbors -authoritarianism -staleness -generals in power
Administrative and Political Distance
-colonial ties -shared regional trading bloc -political hostility -closed economy -membership in international organizations -corruption
examples of ownership risks
-confiscation -expropriation -nationalization -repeal or abolition of a law, right, or agreement regarding proprietary rights (ownership rights)
Cultural (CAGE)
(attributes of a society sustained by interactions among people) Greater cultural differences = lower amount of international trade Examples: Language Ethnicity Religion Different values, norms and dispositions
80/20 rule or law of disproportionality (Pareto's law)
- 80% of a company's revenue are accounted for by 20% of the customers
Product Adaptation-Communications Extension
- Adapt the product to local use but the message stays the same ex: Oreos in China failed until they were reformulated to be less sweet and expensive
Product Invention
- Demanding but potentially rewarding strategy for reaching mass markets in underdeveloped markets - Product quality is essential but must be supported with imaginative, value-creating advertising and marketing communication
Dual Extension
- May be very profitable - Almost no adaptation - Same advertising and promotional appeals - Used with B2B or industrial products (ex: Natura)
trade financing and methods of payment
- documentary credits - documentary collections (bill of exchange) - cash in advance - sales on an open account
global brand development
- does the move fit the company and its markets? - will anticipated scale economies materialize? - how difficult will it be to develop a global brand team? - can a single brand be imposed on all markets successfully?
polycentric orientation
- each country is unique - each subsidiary develops its own unique business and marketing strategies - multinational - leads to localized/adaption approach, where assumption is made that products must be adapted to local market conditions
full cost pricing
- each unit must bear its full share of the total fixed and variable cost
attribute or benefit
- economy - reliability - durability
visual aesthetics
- embodied in the colour of shape of a product, label, or package
value
- enduring belief or feeling that a specific mode of conduct is personally or socially preferable to another mode of conduct
flexible cost plus pricing
- ensures that prices are competitive in the contest of the particular market environment
geocentric orientation
- entire world is a potential market - strives for integrated global strategies - known as global/transnational company - retains an association with the headquarters country - leads to combination of extension and adaption elements
joint ventures
- entry strategy for a single target country in which the partners share ownership of a newly-created business entity - builds upon each partners strengths (no point in doing it if you both have similar abilities)
customs union
- evolution of free trade area - includes elimination of internal barriers to trade - establishes common external barriers - examples: the EU, Turkey
leveraging
- experience transfers - scale economies - resource utilization - global strategy - global brand equity
benefit segmentation
- focuses on the value equation: value=benefits/price - based on understanding the problem a product solves, the benefit it offers, and/or the issue it addresses
key export participants
- foreign purchasing agents - export brokers - export merchants - export management companies - cooperative exporter - manufacturers export representatives
the world trade organization
- forum for trade related negotiations among 153 members - based in Geneva - dispute mediator through trade - can impose sanctions - not mandatory to join
value network
- found in every industry - defined as the cost structure that dictates the margins needed to achieve profitability - boundaries are defined by the unique rank ordering of the importance of various product attributes - each network has its own metrics of value
skeptics
- globalization is nothing more than an overblown aspect of our economic, cultural, and political economy - trends have come and gone as before, and so will globalization
door to door selling
- going door to door to market products
expropriation
- governmental action to dispossess a foreign company or investor - compensation should be provided in prompt, effective, and an adequate manner - the issue being, who defines the asset value?
government influences
- governments may establish margins, set price floors and ceilings, restrict price changes, compete in the market, grant subsidies, and act as its own purchasing or selling monopoly - may also influence prices by permitting, or even encouraging business to collude in setting manipulative prices
local consumer culture positioning
- identifies with local cultural meanings - locally produced for local people
inflation and deflation
- in countries with rapid inflation goods are often sold below their cost of replacement - deflation results in decreasing prices and creates a positive result for consumers, but it puts pressure on everyone in the supply chain to lower costs
Latin America: SICA, Andean community, Mercosur, CARICOM
- includes the Caribbean, Central, and south America - history of: no growth, debt, protectionism, open economies, and deregulation - concern for further growth in the eye of North America
demographic segmentation
- income - population - age distribution - gender - education
five principles of disruptive innovations
- innovations are both customer-driven and prospect-sourced. - small markets don't solve the growth needs of large companies - markets that don't exist can't be analyzed - an organizations capabilities defines its disabilities - technology supply may not equal market demand
arbitration
- involves selecting a disinterested and informed third party as a referee to determine the merits of the case
export selling
- involves selling the same product, at the same price, with the same promotional tools in a different place
foreign direct investment (FDI)
- joint ventures - minority or majority equity stakes - outright acquisition
4 responses to institutional voids
-exploit what your good at/ already have in your favor (global brand) -acquire new capabilities to neutralize institutional voids -change market context -emphasize opportunities elsewhere
protecting intellectual property
-international convention for the protection of industrial property (honours by 100 countries) - patent cooperation treaty - European patent convention
problems w/ primary data
-language diversity -ability to communicate opinions -biases (non-response, yea or nay saying, social desirability bias, income & gender related questions) -willingness to respond -personal referrals needed
attitude
-learned tendency to respond in a consistent way to a given object or entity
Different Types of Institutional Voids
-legal systems -social and political systems -product market systems -financial systems
4 institutional voids
-legal systems -social and political systems -product market systems -financial systems
International Marketing Involvement
-no direct foreign marketing -infrequent foreign marketing -regular foreign marketing
design pattent
-not functional designs -ex: unique shape of electric guitar -protection lasts for 14 years
Silent Languages
Term used by Edward T. Hall for the non-spoken and symbolic meanings of time, space, things, friendships, and agreements, and how they vary across cultures; from Hall's seminal article "the Silent language of business"
Confucian Philosophy
The 2,500 year old teachings of Chinese philosopher Confucius, still strongly influences cultures in East Asia today. Primary among his teachings were a deep respect for elders, rulers, and husbands.
Controllable Elements
The aspects of trade over which a company has control and influence; they include marketing decisions covering product, price, promotion, distribution, research, and advertising
Common Law
The body of law based on tradition, past practices, and legal precedents set by courts through interpretations of statues, legal legislation, and past rulings. Common law which used in all states in the United States except Louisiana, uses past decisions to interpret statues and apply them to present situations. Also known as English Law.
Subornation
The giving of large sums of money, frequently not fully accounted for designed to entice an official to commit an illegal act on behalf of the one offering the money
Social Institutions
The methods and systems, including family, religion, school, the media, government and corporations, that affect the ways in which people relate to one another, teach acceptable behavior to succeeding generations and govern themselves
World Trade Organization (WTO)
The organization formed in 1994 that encompasses the GATT structure and extends it to new areas that had not been adequately covered previously. The WTO adjudicates trade disputes. All member countries have equal representation.
International Marketing
The performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit.
Current Account
The portion of a balance of payments statement that shows a record of all merchandise exports, imports, and services, plus unilateral transfers of funds
Registration
The principle, observed in the United States and other common law nations, that ownership of intellectual property rights usually goes to who can establish first use
Political Risk
The probability that a set of unwanted events may occur
Litigation
The process in which a dispute between parties is contested in a formal judicial setting; commonly instigated by a lawsuit asserting one party's version of the facts
Marxist-Socialist Tenets
The set of views in which law is subordinate to prevailing economic conditions. Marxist-Socialist tenets influenced the legal systems of Russia and other republics of the former Soviet Union as well as China, forcing these nations to revamp their commercial legal code as they become involved with non-Marxist countries
Cultural Values
The system of beliefs and customs held by a population in a given culture. A book by Geert Hofstede describes a study of 66 nations and divides the cultural values of those nations into four primary dimensions: the Individualized/Collectivism Index, the Power Distance Index, The Uncertainty Avoidance Index, and the Masculinity/femininity Index (which is not considered as useful as the other three)
Protectionism
The use by nations of legal barriers, exchange barriers, and psychological barriers to restrain entry of goods from other countries
Lubrication
The use of funds to expedite actions of public employees and government officials. The payments made to minor officials may or may not be illegal and are usually of inconsequential amounts
Bribery
The use of funds, usually illegally, to influence decisions made by public employees and government officials. Such payments often range into the millions of dollars in international commerce.
value chain
marketing along with all other functional business areas that create value for the customer
internationalisation advantage
maybe more advantage to go overseas than stay local
___________________ is an umbrella term used to describe unconventional trade- financing transactions that involve some form of noncash compensation.
Countertrade
Economic Adaptation
Countries in Africa: Poor people often share their phones prompted Nokia to make handsets with multiple address books
conceptual equivalence
how the same concept is treated/reacted to in different countries (tan skin in china vs. US)
scalar equivalence
if other types of equivalences have been obtained, two people with the same values should have the same answers if tested
bargaining power of buyers
- buyers are manufactures and retailers, not just consumer - buyers seek to pay the lowest possible price - buyers have leverage over suppliers when: - they purchase in large quantities - buyer forces, and the supplier accepts backward integration
private command
- centrally planned capitalism
marketing opportunities
- characterized by a shortage of goods and services - look beyond GDP per capita - find a solution to the fix the problem - consider the first move advantage when entering a new market - set realistic deadlines
market penetration (non financial objective)
- charging a low price in order to penetrate market quickly - appropriate to saturate market prior to imitation by competitors
market skimming (financial objective)
- charging a premium price at introduction stage of product life cycle - luxury goods marketers use price to differentiate products
website design
- choosing domain names - cybersquatting - arrangement payment - credit card usage rate, fraud, postal money order or bank cheque - localizing sites will reflect local culture, language, aesthetics - addressing privacy issues - EU laws more stringent - setting up distribution - local sales tax issues
Company Objective and Resources
-Defining objectives clarifies the orientation of the domestic and international divisions, permitting consistent policies -Foreign market opportunities do not always parallel corporate objectives and resources
no direct foreign marketing
A company in this stage does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets.
infrequent foreign marketing
A company with temporary surpluses caused by variations in production levels or demand may send their products for marketing overseas
ethnocentric orientation
- home country is viewed as superior to others - sees only similarities in other countries (not the same exactly) - assumes products and practices that work at home will work elsewhere (not true) - leads to standardized/extension approach
cultural considerations
- images of male/female intimacy - wedding rings are worn on the right hand in some countries - European men kiss the hands of married women, not single women - in some countries, a man enters a door before a woman
Product Attributes
(determine which product attributes can be standardized and which must be adapted) The following have to be analyzed: -Regulations and standards -Style and design, color, and product quality -Packaging -Branding -Country of origin -Service attributes
Product Extension-Communications Adaptation
- Products may serve the same or different needs in different markets (ref: functional equivalence) - No product changes reduce expense - Costs in market research advertising, sales promotion, point-of-sale material ex: Ben& Jerry's changed packaging color in the U.K
Packaging Component
- The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package. - Packaging components frequently require both discretionary and mandatory changes.
the triad
- US, Western Europe, and Japan - represents 75% of the worlds income - extended triad includes all of North America and most of Eastern Europe - global economies should be equally strong in each part
incipient market
- a market that will exist when certain economic, demographic, political, or socio-cultural trends continue - example: autos in China
conciliation
- a nonbinding agreement to resolve disputes by asking a third party to mediate differences
contract manufacturing
- company provides technical specifications to a subcontractor or local manufacturer - allows company to specialize in product design while contractors accept responsibility for manufacturing facilities
economic dualism
- the coexistence of modern and traditional sectors within the economy - although two sectors may be close geographically, they are centuries apart in production and consumption - the dual economy greats two distinct economies and marketing levels
variable cost pricing
- the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets - such firms assume that any return over their variable cost makes a contribution to net profit - could be subject to charges of dumping
ethnic segmentation
- the population of many countries includes includes ethnic groups of significant size
Global Awareness
A frame of references, important to the success of a businessperson, that embodies tolerance of cultural differences and knowledge of cultures, history, world market potential, and global economic, social, and political trends
International Monetary Fund (IMF)
A global institution that along with the world ban group, was created to assist nations in becoming and remaining economically viable
Conciliation
A nonbinding agreement between parties to resolve disputed by asking a third party to mediate differences. Also known as mediation
Arbitration
A procedure, used as an alternative to litigation, in which parties may select a disinterested third party or parties as referee to determine the merits of the case and make a judgment that both parties agree to honor
Domestication
A process by which a host country gradually transfers foreign investments to national control and ownership through a series of government decrees mandating local ownership and greater national involvement in company management
Polychronic Time (P-Time)
A view of time, as held in "high-context" cultures in which the completion of human transaction is more important than holding to schedules. P-Time is characterized by the simultaneous occurrence of many things
Cultural Sensitivity
An awareness of the nuances of culture so that a culture can be viewed objectively, evaluated, and appreciated; an important part of foreign marketing
Monochronic Time (M-Time)
Describes a view of time typical to most North Americans, Swiss, Germans, and Scandinavians, as something that is linear and can be saved, wasted, spent, and lost. M-Cultures tend to concentrate on one thing at a time and value promptness
___________________ reflect how much one currency is worth in terms of another currency.
Exchange rates
Global Marketing
Firms start viewing the world, including home market as one market
Non-Governmental Organizations (NGOs)
Large advocacy organization, usually not for profit, often multinational and run by citizens rather than companies or governments. Prominent examples are Green Peace, Amnesty International, and the Red Cross
Administrative refers to (CAGE)
Laws, policies, gov. run organization, international organizations, treaties the other country either supported or has created
Proactive Political Strategies for Political Risk
Lobbying, campaign financing, advocacy and other political interventions designed to shape and influence the political decisions prior to their impact on the firm; -Formal lobbying -Campaign financing -Seeking advocacy through the embassy and consulates of the home country -Formal public relations and public affairs activities such as grassroots campaigning and advertising
Cyber Squatters (CSQs)
Persons or businesses that buy, usually for a nominal fee, and register as website names descriptive nouns, celebrity names, variations on company trademarks, geographic and ethnic group names, and pharmaceutical and other descriptors and them hold them until they can be sold at an inflated price.
Linguistic Distance
The measure of difference between languages; an important factor in determining the amount of trade between nations
Manifest Destiny
The notion that Americans were a chosen people ordained by God to create a model society; it was accepted as the basis for U.S. policy during much of the 19th and 20th centuries as the nation expanded its territory
International Marketing
The performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for profit
Cultural Borrowing
The phenomenon by which societies learn from other cultures' ways and borrow ideas to solve problems or improve conditions
You work for a food-processing plant that manufactures corn tortillas. You have been asked to review the activities of upstream management to determine if costs can be cut in that area. Which activities listed below will be your concern? a. Contacting the farming cooperative to negotiate the price of corn for your upcoming contract. b. Investigating the possibility of diversifying into producing not only corn tortillas but flour tortillas as well. c. Decreasing the cost resulting from returns due to improper handling and packaging of corn tortillas. d. Checking the feasibility of raising the price at which corn tortillas are sold to your business customers.
a. Contacting the farming cooperative to negotiate the price of corn for your upcoming contract.
Fill in the blanks with the word or phrase from the drop-down list that best completes each passage. a. Many online retailers, such as Amazon, use ______ distribution centers that accept large, consolidated shipments to be divided into smaller ones. b. Logistics managers must control the movement of goods _____ plants, warehouses, and transportation terminals. c. _______ involves combining as many packages as possible into each load moved within a facility. d. ______ is the process of combining several unitized loads into a single well-protected load for shipment.
a. break-bulk b. inside c. unitizing d. containerizing
Ads based on fear, humor, or sex can be effective, but also face distinctive challenges. All of the following accurately describe these challenges except: a. People may tune out fear-based ads that seem implausible. b. Selective perception may be a problem for humorous ads. c. Humor in an ad may distract consumers' attention from the brand. d. Sex-based ads are tricky when used in culturally diverse markets.
b. Selective perception may be a problem for humorous ads.
You have noticed that the most profitable diners at your restaurant are repeat customers, so you've developed a program to reward their loyalty. On every fifth visit, they will receive a free dessert and specialty coffee. Which of the following statements about this reward program is accurate? a. It is likely to stimulate primary demand. b. Its promotional objective is to create awareness of your restaurant. c. Advertising could be used to further the same promotional objective. d. Advertising could not be used to further the same promotional objective.
c. Advertising could be used to further the same promotional objective.
Your sister recently opened a swanky three-floor cheese market, Fromagerie, which is quickly gaining attention from locals, the press, and restaurateurs in the area. Located near a college town, Fromagerie specializes in rare international cheeses; and on the top floor, there is a bistro where patrons can take cooking lessons, meet new people, dine, and sample some of the world's most savory cheeses before they make a purchase decision. The bistro element of the Fromagerie is primarily an example of your sister's retail strategy in the area of: a. merchandising b. atmospherics c. customer service d. promotion e. location
c. customer service
When the price of Product A is raised by 1 percent, its sales drop by 0.06 percent. When the price of Product B is raised by 1 percent, its sales drop by 1.5 percent. This means that demand for Product A is _______, while demand for Product B is ________. a. partially elastic, inelastic b. unelastic, inelastic c. inelastic, elastic d. elastic, partially elastic e. elastic, inelastic
c. inelastic, elastic
Your temporary placement service needs to place personal selling personnel who use different communication channels according to the products they are contracted to sell. You presently have several positions to fill that require personnel experienced in various communication channels. You want to categorize the type of experience needed before you start calling your employees. Choose the statement that inaccurately categorizes its job description to the type of personal selling communication channel it utilizes. a. An insurance company needs sales representatives to place phone calls to prospective clients to sell renters' insurance over the phone. These sales representatives will use telemarketing. b. A retail outlet needs someone to sell auto repair supplies and parts to businesses and directly to customers. This outlet uses over-the-counter selling. c. Sales representatives are needed to support technicians and purchasers on a continuous basis by phone, mail, and e-mail. They will utilize inside selling. d. A soft drink distributor needs bilingual representatives to take product orders when customers call. This involves field selling.
d. A soft drink distributor needs bilingual representatives to take product orders when customers call. This involves field selling.
Marisol's online jewelry store originally sold only earrings and necklaces for women. After adding men's rings and cuff links, profits doubled. Given that success, Marisol may soon expand her product line to include unisex watches. Which of the following is a dimension of merchandising strategy that Marisol should consider? a. what type of repair service to offer b. when to open a brick-and-mortar outlet c. how to advertise the store d. the profitability of unisex watches
d. the profitability of unisex watches
Protective and Defensive Techniques for Political Risk
discouraged the host government from interfering in operations; -Doing as little local manufacturing as possible and conducting all research and development outside the country -Limiting the responsibility of local personnel and hiring only those who are vital to the operation -Raising capital from local banks and the host government as well as outside sources -Diversifying production of the product among a number of countries
One alternative for successful marketing to the price sensitive low per-capita income market is to produce a ________________ product or lower product quality.
downsized
One of the risks of dynamic incremental pricing (in the case where the export list price is far below the domestic price) that ______________ can be triggered in the export market.
dumping charges or accusations
In the international marketplace, ________________ pricing arrives at a price after removing domestic fixed costs. Only variable export costs generated by the exporting effort and a portion of the overhead load should be recuperated by the pricing effort (according to this method).
dynamic incremental pricing
Two major issues confronting international marketers result from currency movement. The first of these is in which currency do we quote our prices? The second is:
how much of the loss or gain (because of pass through) should be passed to consumers?
All of the following are exporter strategies when the domestic currency is weak EXCEPT:
engage in nonprice competition by improving quality, delivery, and aftersale service.
Letters of credit
financing devices that, when opened by a buyer of goods, allow the seller to draw a draft against the bank issuing the credit and receive dollars by presenting proper shipping document. Except for cash in advance, this affords the seller the greatest degree of protection.
trade secret
formulas, methods, devices, or compilations of information which is confidential & gives a business an advantage - coca cola formula - new invention for patent which hasn't been registered -protection lasts as long as information remains confidential and functions as a trade secret
In international marketing, purchasers often demand _____________________ from their suppliers.
global-pricing contracts
Knockoff
good that imitate the overall look of designer originals, but don't use the words or symbols of a designer brand label to deceive consumers. Much of the legitimate fashion industry consists of knockoffs of designer styles
When considering the currency pass-through phenomenon, all of the following factors give an indication as to the appropriate action EXCEPT:
government actions.
In many countries, multinationals' pricing decisions are impacted by:
government policies
Examples of exporting-related ____________________ include manufacturing costs, shipping expenses, insurance, and overseas promotional costs.
incremental costs
Huge government deficits are examples of a(n) ________________ impact on pricing decisions.
indirect
what institutional void
lack of knowledge/ information, especially in underdeveloped countries
transfer risk
least risky, govt policies that limit transfer in and out of the country
institutional voids
legal systems, social and political systems, product market systems, and financial systems
According to lessons learned in Brazil's hyperinflationary economy, McDonald's will deal with Russia's runaway inflation by using all of the following tools EXCEPT:
make loans to local franchise investors to bring them past hard times.
Geographic (CAGE)
o Physical remoteness o Lack of a common border o Lack of sea or river access o Size of country o Time zone differences o Weak transportation or communication links o Differences in climates o Number of paved roads o Urban/rural dichotomy o Logistics Performance Index
Parallel markets
occurs whenever price differences are greater than the cost of transportation between two markets.
LEGO, the Danish toymaker, rather than worrying about finding ways to lower the price of its product in foreign markets has chosen (most LEGO sets are sold from $6-$223) to adopt a __________________ strategy position.
premium pricing
To combat hyperinflation, many governments occasionally impose ______________ controls.
price
To cover the incremental costs (such as shipping), the final foreign retail price will often be much higher than the domestic retail price. This phenomenon is known as ______________________.
price escalation.
When an exporter uses the _______________________ method, the effect can be negative. Frequent adjustments of prices in response to currency movements will distress local channels and customers.
pricing-to-market (PTM)
When exporters lower their mark-ups in a more price-conscious export market than in a price-sensitive market, with respect to exchange rate movements this is called ______________________.
pricing-to-market (PTM)
Which of the following would be a good option to follow if lowering the export price were the firm's objective?
rearrange the distribution channel.
customer perceived value
to create value for customers by improving benefits or reduce the cost of the product - improve the product - find new distribution channels - create better communications - cut monetary and non monetary costs
globalization
to standardize: - develop standardized products marketed worldwide - essence of mass marketing
global marketing
treat the world as one market, market segmentation is no longer focused on counts but on income level, usage patterns, etc..
Timing of Product Introductions in Foreign Markets
waterfall strategy: product is introduced into foreign markets one at a time sprinkler strategy: simultaneous introduction of the product in multiple markets
what happens when you lose right to trademark
you pay royalties
the globalization of products
- products such as beer and coffee - Starbucks in the coffee culture, Irish pubs in the US, German style beer halls in Japan
disruptive technologies
- proven innovation that redefines performance - often are new entrants to an industry - they enable something to be done that was previously deemed impossible - they enable new markets to emerge
low-middle income countries
- rapidly expanding consumer markets - cheap labour - mature, standardized, labour-intensive industries like footwear, textiles, and toys
upper-middle income countries
- rapidly industrializing - less agriculture - increasing urbanization - rising wages - high literacy rates and advanced education - lower wage costs - called industrializing or developing companies - Brazil, China, Russia, South Africa, Mexico, Malaysia
balance of payments
- record of all economic transactions between the residents of a country and the rest of the world - current account: record of all recurring trade in merchandise and services - capital account: record of all long-term direct investment, portfolio investment, and capital flows
lessening price escalation effects
- reduce the manufacturing cost per unit - reduce the quality or accessories - classify products into different and lower classifications - lower distribution costs by designing a channel that has fewer intermediaries, which reduces or eliminates mark ups, could potentially lower overall taxes - varying trade zone duty rates: tariffs may be lower because duties are typically assessed at a lower rate for un-assembled vs assembled goods
rivalry among competitors
- refers to all actions taken by firms in the industry to improve their positions and gain advantage over each other: - price competition - advertising battles - product positioning - differentiation
creating competitive advantage: changing the rules of engagement
- refuse to play the rules set by industry leaders - example: xerox and canon
selling model
- relationship strategy: a long term plan for establishing and maintaining high quality relationships - product strategy: a plan that selects and positions products to satisfy customer needs - customer strategy: a plan that ensures maximum responsive to customer needs - presentation strategy: to design a presentation plan that meets the objectives of each sales call
characteristics of innovations (think consumer behaviour)
- relative advantage - compatibility - complexity - divisibility - communicability
abstract culture (think deep level of the ice berg)
- religion - perceptions - attitude - beliefs - values
segmentation
- represents an effort to identify and categorize groups of customers and countries according to common characteristics
joint venture disadvantages
- requires more investment than a licensing agreement - must share rewards as well as risks - requires strong coordination - potential for conflict among partners - partner may become a competitor
dumping
- sale of an imported product at a price lower than what was charged normally in a domestic market or country of origin - to prove this, price discrimination and injury must be shown
Dual Extension: Product-Communication Extension
-May be very profitable -Almost no adaptation -Same advertising and promotional appeals -Used with B2B or industrial products
Cultural Exclusive
A business custom in which an outsider must not participate
Cultural Imperative
A business custom that must be recognized and accommodated
Tariff
A fee or tax that countries impose on imported goods, often to protect a country's markets from intrusion from foreign countries
Code Law
A legal system based on an all inclusive system of written rules, or codes, of law; generally divided into three separate codes: commercial, civil, and criminal. In the United States, Louisiana is the one state to use code law.
Planned Change
A marketing strategy in which a company deliberately sets out to change those aspects of a foreign culture resistant to predetermined marketing goals
Cultural Congruence
A marketing strategy in which products are marketed in a way similar to the marketing of products already in the market in a manner as congruent as possible with existing cultural norms
When choosing a pricing strategy, marketers must consider the foundational elements of costs, potential demand, and competition. Many factors can affect these elements. Fill in the blanks with the word or phrase from the drop-down list that best completes the passage. The relationship between price and demand _______ overtime. Some companies choose to sell a product below its production price. This strategy is ________. Competition _______ affects a firm's pricing strategy more than cost.
A. varies B. unsustainable C. sometimes
All of the following are drivers that govern global pricing decisions EXCEPT:
controls
Product Component Model
core component packaging component support services component
Public relations refers to a firm's communications and relationships with its various publics, including customers, suppliers, the government, employees, and stakeholders. The publicity that a company garners involves unpaid placement of significant news about the company in a published medium or through favorable presentations on the radio, Internet, or television. Why are consumers more likely to believe information that stems from the marketing aspect of public relations than they are to believe claims in advertising? a. Because many consumers appreciate when news comes directly from marketers instead of being filtered through a media organization. b. Because published information typically reflects bad news about companies, products, executives, and ideas. c. Because this information tends to be nonelectronic. d. Because many consumers consider news more credible when it comes from a media organization than when it comes directly from a marketer.
d. Because many consumers consider news more credible when it comes from a media organization than when it comes directly from a marketer.
You are a sales manager for a luxury automobile dealership where you have been employed since graduating from college. Your neighbor, who teaches a community college course on marketing, has asked you to make a presentation to his or her class as a guest speaker. After your lively presentation, you ask the students what they think is the main focus of personal selling. Which of the student answers below demonstrates an understanding of the goals of this promotional tool relative to others? a. Providing entry-level jobs to college graduates who will move on to other marketing jobs. b. Being the face of the company's brand. c. Making a profit for the company. d. Building relationships with customers that encourage them to come back.
d. Building relationships with customers that encourage them to come back.
You work for a weight loss company that is advertising a new weight loss smoothie. Here is a transcript of the first commercial to be aired on a local food network channel: "Do you have tenor more pounds of excess weight to shed? If so, you should be drinking Blast Berry before every meal! Blast Berry is a weight-loss supplement, and the first of its kind to be approved by the Food and Drug Administration. In a random controlled study, 75 percent of the research participants who used Blast Berry along with exercise dropped an average of 23 pounds within two months of following the program. Blast Berry costs $19.99 for a month's supply and works for those who stick to the plan. Drink one serving before each of the three major meals of the day, and see the weight come off!" Which of the following basic tasks of effective messaging does this message fail to accomplish? a. Achieving understanding by both the receiver and sender b. Stimulating the receiver's needs and suggesting an appropriate way to satisfy those needs c. Gaining the receiver's attention d. Communicating competitive advantage and positioning
d. Communicating competitive advantage and positioning
In 2014, the Golden Gate Bridge toll fee rose from $6 to $7. Beginning in 2015, the toll fee will go up by a quarter for each of the next four years. Administrators explained that fees were not keeping up with inflation because "toll revenues have remained flat." What situation are administrators counting on? Choose the correct answer. a. Crossing the bridge will remain an elastic demand. b. Crossing the bridge will change to an elastic demand. c. Crossing the bridge will change to an inelastic demand. d. Crossing the bridge will remain an inelastic demand.
d. Crossing the bridge will remain an inelastic demand.
global industries
determined by: - ratio of cross border investment to total capital investment - ratio of cross border trade to worldwide production - proportion of industry revenue generated by all companies that compete in key world regions
Unlike wholesalers and manufacturers, retailers represent the distribution channel to most consumers. Which of the following is not a reason for this consumer perception? a. Consumers rely on retailers to obtain a wide array of merchandise. b. Retailers determine merchandise selections. c. Retailers determine shopping hours and locations. d. Consumers have little contact with wholesalers and manufacturers. e. Retailers have little contact with wholesalers and manufacturers.
e. Retailers have little contact with wholesalers and manufacturers.
After working in retail for about a decade, Lynette decided to open her own shop. For years, she had been interested in learning about handbags and collected vintage purses. Naturally, Lynette was going to open a handbag shop. Because she knows just how expensive designer bags could be, she also decided to find ways to cut the costs associated with running a store so she could increase customer bargains. Lynette's store is open five days a week from 12 noon to 6 p.m. Which of the following types of retailers accurately reflect Lynette's store? a. Department store b. Chain store c. Convenience retailer d. Mass merchandiser e. Specialty store
e. Specialty store
The following statements link various changing circumstances (causes) with effects on the breakeven point. Which of these statements is inaccurate? a. A price increase results in a breakeven point decrease. b. Hiring extra staff causes breakeven point to increase. c. When a price war forces a price cut, breakeven point increases. d. When automation replaces workers, fixed cost increases while variable cost decreases; the effect on breakeven point varies. e. When a recession cuts demand, breakeven point increases.
e. When a recession cuts demand, breakeven point increases.
Wide gaps in the price sensitivity between countries for the same product may create conditions that promote _________________ markets.
gray
Interactive Techniques for Political Risk
helps the overseas operation become a part of the host country's infrastructure; -Developing good relations with the host government and other local political groups -Producing as much of the product locally as possible with the use of in-country suppliers and subcontractors -Creating joint ventures and hiring local people to manage and run the operation -Doing as much local research and development as possible -Developing effective labor-management relations
ownership control risks
high risk, govt policies that prohibit ownership
category equivalence
if products that are essentially the same can be used in two countries (coke vs other beverages, Mecca Cola)
functional equivalence
if the same product has the same function in two countries (warm milk before bed vs at breakfast)
When McDonald's first opened their restaurants in Russia in 1990, the Big Mac meal cost 6 rubles. Three years later, the same meal cost 1,100 rubles. This would be an example of how:
inflation can damage a market.
administrative dimension
laws, policies, government run institutions, international organisations, treaties
The most drastic reaction to government-imposed price controls is to:
leave the country.
the presentation plan
the approach - initial contact with the customer - must completely understand the role of the participant - do your research the presentation - the prospects needs have been assess and are then matched to the coimpanys products - the style and message of the presentation must be tailored to the audience (cultural consideration) the demonstration - to prove that the product can meet the customers needs the negotiation - ensures that the customer and the salesperson come away from the presentation winners (emphasis on the customer winning) the close - ask for the sale; cultural research tells you when to do this servicing the sale - provide what was offered and agreed to - establish a customer-service program
Administered pricing
the attempt to establish prices for an entire market through the cooperation of competitors, through national, state, or local governments, or by international agreement. Its legality differs from country to country and from time to time.
Transfer pricing decisions in an international context need to balance off the interests of a broad range of stakeholders. All of the following would be examples of those stakeholders EXCEPT:
the competition.
society risk factor
urbanisation, corruption, ethnic tension, youth population
One of the main reasons for staying in a country that has government-imposed price controls to deal with hyperinflation is:
you gain experience for other markets with similar problems.
Economic (CAGE)
· Rich-poor differences · Natural resources, financial resources, human resources, infrastructure, information or knowledge · Economic size · Low per-capita income · Rising GDP · Economic freedom
Core Component
•Consists of the physical product and all its design and functional features. •Product variations can be added or deleted to satisfy local differences on the product platform; a change in the platform can affect product processes and requires additional capital investment. •Alterations in design, functional features, flavors, color can be made to adapt the product to cultural variations.
Country of Origin Perceptions
•In general, consumers hold stereotyped images of both foreign countries and their own •The extent of consumer preferences for domestic versus foreign goods vary by origin and destination country •Both the country of design and the country of manufacture/ assembly play a role •Demographics make a difference (consumer ethnocentrism) •Consumers are likely to use the COO cue when they are unfamiliar with the brand name carried by the product •Country-of-origin perceptions are not static •The relative importance of origin cues differs according to the buying situations and product categories
According to textbook, ________________ by and large charges the same price worldwide.
Starbucks
establishing channels
- direct involvement: the company establishes its own sales force or operates its own retail stores - indirect involvement: the company utilizes independent agents, distributors, and wholesalers
positioning
- placing a brand in consumers minds that is superior against competitors in terms of attributes and benefits - quality and price, use or user, competition
competitive influences and the cartels
- a cartel exists when various companies producing similar products or services work together to control their markets - the cartel association may use formal agreements to set prices, establish levels of production and sales for the participating companies, allocate market territories, and even redistribute profits - the legality of cartels is not clearly defined - domestic: illegal in North America and the EU
regiocentric orientation
- a region is the relevant geographic unit - some companies serve markets throughout the world but on a regional basis - example being general motors having four regions
the competitive advantage
- achieved when there is a match between a firms distinctive competencies and the factors critical for success within its industry
joint venture advantages
- allows for risk sharing, financial and political - provides opportunity to learn new environment - provides opportunity to achieve synergy by combining strengths of partners - may by the only way to enter market given barriers to entry
administered pricing
- an attempt to establish prices for an entire market through the cooperation of competitors, or by national, provincial, or state, or local governments; or by international agreement
belief
- an organized pattern of knowledge that an individual holds to be true about the world
latent market
- an undiscovered segment that will emerge when a product is introduced - first mover advantage is key - example: minivans in the US
branding country image questions
- are we competitive? - are we dealing internationally? - are we educated for the task? - do we have the global savvy?
cultural electives
- areas of behaviour or customs that one may wish to conform to or participate in but are not required - a symbolic attempt to participate in electives may help to establish rapport - a cultural elective in one country may be an imperative in another
unconventional wisdom
- assumes emergence of segments that transcend national boundaries - recognizes within country differences - emphasized micro level cultural differences
place utility
- availability of a product or service in a location that is convenient to a potential customer
threat of substitute products
- availability of substitute products places limits on the prices market leaders can charge - high prices induce buyers to switch to the substitute
cultural exclusives
- behaviour patterns reserved exclusively for the loavs and from which the foreigner is barred - issue usually focuses on politics or religion
polychronic time and people
- being involved with many things at once - allows interruptions - considers time value - committed to people - easily alters plans - emphasizes promptness bases on relationships - long-term business relationships
local products and brands
- brands that have achieved success in a single national market - represent the lifeblood of domestic companies
state command
- centrally planned socialism
bases for legal systems
- common law: tradition, best practices, and legal precedents where reasons decided by a judge become common law - civil/code law: all inclusive system based on rules that have been codified, that is, written into text by designated jurists - Islamic law: encompasses religious duties and obligations as well as the secular aspect of law regulating human acts (basis of the Koran) *** laws governing intellectual property: - by user under common law - by registration under code law
sources of market information: personal sources
- company executives based abroad who have contact with the distributors, consumers, suppliers, and government officials - friends, acquaintances, professional colleagues, consultants, and prospective employees
global retailing strategies: organic growth
- company uses its own resources to open a store on a greenfield site or acquire one or more existing retail facilities
comfortable belongers
- conservative - most comfortable with the familiar - content with the comfort of home, family, friends, community, etc
successful idealists
- consists of persons who have achieved professional and material success while maintaining commitment to abstract or socially responsible ideals
broad market strategies
- cost leadership: low price - product differentiation: premium price
how to reduce cultural myopia
- define the problem or goal in terms of the home country's cultural traits - make no value judgment when doing so - isolate the self-reference criterion (SRC) influence and examine it - redfine the problem without the SRC
creative execution
- defined as the way an appeal or proposition is presented - straight sell - scientific evidence - demonstration - comparison - slice of life - animation - fantasy - dramatization
rational approach strategy for advertising
- depend on logic, and speak to the consumer's intellect; based on the consumers need for information
product packaging
- designed to protect the product during shipping, at retail, or point of use - communicates information that promotes the purchase
creation
- developing new products for the world market
associative counterfeit/limitation
- product name differs slightly from a well-known brand
strategies for reducing political vulnerability
- joint ventures: to minimize anti-foreign feelings, allows you to operate under a respected name - expanding the investment base: include investors and banks from the host country - licensing: eliminates most risk to conduct business in a foreign country (also helps to have host nationals work there) - planned domestication: when host countries demand local participation - political contribution: to pay those in power to lessen political risks - insurance
disaffected survivors
- lack power and affluence - have little hope for upward mobility - tend to be either resentful or resigned - concentrated in high-crime urban inner city areas - attitudes tend to affect the rest of the society (think Detroit?)
low income countries
- limited industrialization - high % of population in farming - high birth rates - low literacy rates - heavy reliance on foreign aid - sub-Saharan Africa
creeping expropriation, or domestication
- limits economic activities of a foreign firm - may include: - limits on profits, dividends, or royalties - technical assistance fees - increased local content laws - price controls - quotas for hiring local nationals - discriminatory tariff and nontariff barriers - discriminatory laws on patents and trademarks
newly industrializing economies (NIEs)
- lower middle and upper income economies with the highest sustained rates of economic growth - greater industrial output than developing economies - exports of manufactured and refined products - Egypt, Indonesia, the Philippines, Mexico, Turkey
factors that affect sourcing
- management vision - factor costs and conditions - customer needs - logistics - country infrastructure - political risk - exchange rate - availability of money
preferential trade agreements
- many countries seek to lower barriers to trade within their regions - gives partners special treatment and may discriminate against others
state market
- market socialism
standardized global marketing
- mass marketing on a global scale - standardized marketing mix - minimal product adaptation - intensive distribution - lower production/marketing costs
success factors of alliances
- mission: create win-win situations, where participants pursue objectives on the basis of mutual need or advantage - strategy: must be thought out up front to avoid conflicts - governance: partners must be viewed as equals where rules are established upfront (50/50 or 49/51) - culture: personal chemistry with corporate culture is important - organization: innovative structure will be needed to address multi-country management (who makes the decisions), clear lines of authority will need to be established and accepted by both parties
pro-globalists
- modern world is experiencing rapid change in preferences and tastes and we should embrace this - global business have evolved into integrated supply-demand chains that satisfy customer needs better than ever before
differential global marketing
- multi segment targeting - two or more distinct markets - wider market coverage - Old Spice, Hugo Boss, etc
forces affecting global integration and global marketing
- multilateral trade agreements - converging markets needs and wants (information revolution) - transportation and communication improvements - world economic trends, such as movement to free markets
anti-globalists
- multinational corporations supported by government act only for their own benefit and do not truly reflect the will of the governed - globalization only serves the interests of the powerful and wealthy, and in turn should be stopped
sourcing
- must emphasize the benefit of sourcing from another country instead of using what the home country has - must assess vision and values of company leadership - advantages can be gained by: concentrating some of the marketing activities in a single location, leveraging companies knowledge and experience, and tapping opportunities for research and product development
extension
- offering product virtually unchanged in markets outside of home country
licensing
- patent - trade secret - brand name - production formulations
monochronic time and people
- paying attention to and doing only one thing at a time - concentrate on one job - never alters plans - emphasizes promptness based on schedules - short term business relationships
extension or ethnocentric
- per unit price of an item is the same no matter where in the world the buyer is located - fails to respond to each national market
country of origin as a brand element
- perceptions about and attitudes toward particular counters often extend to products and brands known to originate in those countries
adaptation or polycentric
- permits affiliate managers or independent distributors to establish price as they feel is most desirable in their circumstances
peer to peer marketing
- person to person marketing, word of mouth in a sense - the internet and related media dramatically alter distribution
global consumer cultures
- persons who share meaningful sets of consumption related symbols - pub culture, coffee culture, fast food culture, credit card culture
customer relationship management
- philosophy that values two-way communication between company and customer - every point of contact with a consumer is an opportunity to collect data - can make employees more productive and enhance corporate profitability
five attributes of true global strategic partnerships
- two or more companies develop a joint long-term strategy - relationship is reciprocal - partners' vision and efforts are global - relationship is organized along horizontal lines - when competing in markets not covered by alliance, participants retain national and ideological identities
free trade area
- two or more countries agree to abolish tariffs and other barriers to trade amongst themselves - rules of origin: restrict transshipment of good from the country with the lowest tariff to another
counterfeiting
- unauthorized copying and production of a product
piracy
- unauthorized publication or reproduction of copyrighted work
zeroing in on economic systems
- understand the type of economy: industrial state, emerging, developing, etc - understand the type of government: monarchy, dictatorship, democracy, etc. - understand the trade flow: tree trade, part of trading, currency exchange, etc. - understand the institutions: standards, absence of corruption, etc - understand the market: entrepreneurial high risk/high reward, socialized market, government dominated, etc
creating competitive advantage: collaborating
- use the knowledge developed by other companies - utilize licensing agreements, joint ventures, or partnerships
ASEAN
- variety of countries including Cambodia, Indonesia, Thailand, etc. - trading partners with the US, Japan, EU, and China - geographically close but historically divided - China/ASEAN FTA established in 2010 removed 90% of tariffs on traded goods
causes for political risk
- war - social unrest, fractionalized by language, ethnic/religious groups - politically motivated violence - corruption, nepotism - labour costs - tax discrimination, exchange controls, tariff barriers
price fixing
- when representatives of two or more competitors secretly set similar prices for their products - horizontal price fixing: competitors within in an industry - vertical price fixing: manufacturer and wholesalers ensuring certain retail prices
bargain power of suppliers
- when suppliers have leverage, they can raise prices high enough to affect the profitability of their customers - leverage accrues when: - suppliers are large and few in number - suppliers products are critical inputs, or are highly differentiated, or carry switching costs - few substitutes exist
nationalization
- where the government takes control of some or all of the enterprises in an entire industry - acceptable if: satisfied public purpose, includes compensation
Territoriality
-All intellectual property law is passed on the principle of this -Each state or country determines for its own territory, what is to be protected, who should benefit from such protection and for how long, and how the protection should be enforced
The CAGE model
-Cultural Distance -Administrative and Political Distance -Geographic Distance -Economic Distance
Major Decisions Regarding Internationalization
-Deciding to go abroad -Deciding which markets -Deciding how to enter markets -Deciding on marketing programs -Deciding on marketing organizations
Product Invention
-Demanding but potentially rewarding strategy for reaching mass markets in underdeveloped markets -Product quality is essential but must be supported with imaginative, value-creating advertising and marketing communication
The Uppsala Internationalization Model [WHERE]
-Distinguishes 4 stages on international expansion (the establishment chain): --Weak export activity --Permanent exporting activity through representatives --Establishment of sales divisions abroad --Production abroad -Host countries are selected primarily according to their proximity with regard to "psychic distance"
Copyrights
-Gives ownership to "original works of authorship", such as literary works, painting, and video games -in the Us and EU, copyrights registered for the life of the author, plus 70 years -copyrights extend to other countries if they are part of an international copyright treaty, convention or organization
Transfer Risks
-Government policies that limit the transfer of capital, payments, production, people, and technology in and out of country -considered the least risky
Prior Use vs. Registration
-In the United States, a common-law country, ownership of intellectual property rights is established by prior use -In many code-law countries, ownership is established by registration rather than by prior use
OLI Paradigm: Internationalization Advantages
-It might be more profitable for MNCs to exploit their O&L advantages through internalization rather than by using arm's-length market arrangements (occasional transactions often without a long-term orientation; licensing, franchising, joint venture) -On the other hand, if transaction costs are estimated to be low, then arm's-length arrangement may prove more promising
OLI Paradigm: Location Advantages
-It might be more profitable for MNCs to exploit their ownership advantages by combining them with others pertaining to the exploitation of resources located outside the home country. This provides the incentive to locate some part of their activities abroad -Otherwise, MNCs could either import or outsource these inputs locally, and then serve overseas markets via exports -Location possible assets: low cost and high quality of transportation, favorable host government policy, access to raw materials, technology and human capital
OLI Paradigm: Ownership Advantages
-MNCs have to possess some firm-specific competitive advantages over local firms in serving particular national markets -Ownership, or firm-specific advantages, arise from the monopoly control of tangible and intangible assets by MNCs -Examples: core competencies, patents and trademarks, technology, brand names
Company capabilities and characteristics [internal]
-Market knowledge -Marketing involvement -Management commitment
Characteristics of Global Companies
-playing big in major markets -standardization of core products (manufacturing efficiencies) -concentrating the value chain in a few key countries (mainly the upper value chain activities) [manufacturing efficiencies] -adopting a uniform marketing positioning and marketing mix (global segments of customers) [marketing efficiencies]
Formulating and Implementing Responses to Political Risk
-relative bargaining power analysis -integrative, protective, and defensive techniques -proactive political strategies
examples transfer risks
-tariffs on exports & imports -restrictions on imports -capital repatriation (exchange of $ in/out)
Intellectual Property Issues
-territoriality -prior use vs. registration -copyright
Researching Foreign Markets: A 3 Step Approach
1. Preliminary screening 2. analysis of industry potential 3. analysis of company sales potential
assessing market potential: three basic criteria
1. current size of the segment and anticipated growth potential 2. potential competition 3. compatibility with company's overall objectives and the feasibility of successfully reaching the target audience
steps in the research process
1. identify the information requirement: what and why do I need this 2. define the problem 3. choose a unit to analyze (region): global, country, province, state, city 4. examine readily available data: company records, trade journals 5. assess value of research: worth vs. cost 6. research design, how are you going to collect the data and how will it be measured: consumer panels, observations, focus groups... Likert scale, scalar equivalence 7. analyze the data 8. interpret the data and present
working with intermediaries
1. select distributors 2. look for ones capable of developing markets rather than those with a few good customer contacts 3. treat local distributors as long term partners 4. support market for entry with commitment 5. control the marketing strategy 6. ensure distributors provide detailed market and financial performance data 7. build links among national distributors
porters five forces on competition
1. threat of new entrants 2. threat of substitute products 3. bargaining power of buyers 4. bargaining power of suppliers 5. rivalry among competitors
9 questions for creating a product-market profile
1. who buys our product 2. who does not buy it 3. what need or function does it serve 4. is there a market need that is not being met by current product/brand offerings 5. what problem does our product solve 6. what are customers buying to satisfy the need for which our product is targeted 7. what price are they paying 8. when is the product purchased 9. where is it purchased
franchising questions
1. will local consumers buy your product 2. how tough is the local competition 3. can your profits be easily repatriated 4. can you buy all the supplies you need locally 5. is commercial space available and are rents affordable 6. are your local partners financially sound and do they understand the basics of franchising
Roosevelt Corollary
An extension of the US policy applied to the Monroe Doctrine by President Theodore Roosevelt, stating that the United States would not only prohibit non-American intervention in Latin American affairs but would also police Latin America and guarantee that all Latin Americans would meet their international obligations
__________________ (as a form of market-based pricing) basically dictates that the company charges the price that any buyer outside the company would pay (as if the transaction occurred between two unrelated entities).
Arm's length pricing
no direct foreign marketing
Company does NOT send its products overseas directly, but may become available in other countries through intermediaries or middlemen such as trading companies - product reach foreign markets via wholesalers & distributors who sell abroad w/o producer's knowledge - legit sales done through trading companies or direct contact from firm -product popularity through websites
Benefits of Standardization
Cost reduction: -Economies of scale in R&D, production, marketing, managerial and organizational processes Global image -Strong corporate image (e.g. Nike, Coca Cola) Easier planning and control -Development and implementation of strategies Diffusion of innovation -Quick ROI favors spread of product innovation
Autocratic Leadership
Decline in democracies, limit press freedom and weaken the independence of the judiciary
______________ occurs when imports are being sold at an "unfair" price.
Dumping
Domestic Environment Uncontrollable
Factors in a company's home country over which the company has little or no control or influence. They include political and legal forces, the economic climate, level of technology, competitive forces, and economic forces
Foreign Environment Uncontrollable
Factors in the foreign market which a business operating in its home country has little or no control or influence. May include political and legal forces, economic climate, geography and infrastructure, level of technology, and structure of distribution
Regular foreign marketing
Firm has committed permanent resources towards international marketing and engages in it regularly on a proactive basis May use intermediaries to engage in international marketing
International Product Decision
Functional Equivalence: Whether the product function or the need satisfied is the same or different in a new market Usage Equivalence: Whether the conditions of product use are the same in a new market Purchasing Power Equivalence: Whether the consumers in the new market have the ability to buy the product
___________ inflation also mandates rapid inventory turnarounds.
High
_____________________ is a special form of pricing where mark-ups are adjusted to stabilize prices in the buyer's currency. This method helps to create stability in the local currency.
Local-currency price stability (LCPS)
__________________ uses the market mechanism as a cue for setting transfer prices.
Market-based pricing
define international marketing
Performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit
Aesthetics
Philosophically, the creation and appreciation of beauty; collectively, the arts, including folklore, music, drama, and dance
Non-Tariff Barriers
Restrictions other than tariffs, placed by countries on imported products; they may include quality standards sanitary and health standards, quotas, embargoes, boycotts, and anti-dumping penalties
Greenhouse Gas Emissions
These are gases resulting primarily from the use of fossil fuels that tend to trap heat in the Earth's atmosphere and are causal factors in global climate change. The main problem compounds are carbon dioxide, methane, nitrous oxide, and flourinated gas
Sprinkler Strategy
Useful When: •short product life cycle •high R&D costs in product development •competition is very strong (pre-emption of markets) •firms have existing presence in target countries •homogenized preferences
Waterfall Strategy
Useful When: •lifecycle of product is long •high fixed costs of entry into individual markets •foreign markets are not equally developed •some customization is needed •firms have little foreign experience
Full-cost pricing
a method of pricing based on the view that no unit of a similar product is different from any other unit of a similar product and that each unit must bear its full share of the total fixed and variable cost, whether sold in the home market or abroad.
Variable-cost pricing
a method of pricing goods in foreign markets in which a company is concerned only with the marginal or incremental costs of producing goods for sale in those markets. Firms using this pricing strategy take the view that foreign sales are bonus sales.
Exclusive distribution
a practice in which a company restricts which retailers can carry its product; often used by companies to maintain high retail margins, to maintain the exclusive-quality image of a product, and to encourage retailers to provide extra service to customers.
Countertrade
a type of transaction in which goods are imported and sold by a company from a country in exchange for the right or ability to manufacture and/or sell goods in that country. It can substitute for cash entirely or partially and is used extensively in trade between U.S. firms and the former Soviet bloc, along with other emerging markets.
Janice works as a consultant for a tech company. In the past, the company has relied heavily on its toll-free line to sell new products, as well as its numerous distribution channels. When customers are polled via a customer satisfaction survey, 93 percent of them report that one of the primary reasons they have continued to support the company is because of its quality customer service. Janice has been asked to brainstorm strategies to increase company sales. She suggests that the company employs automatic merchandising to cut costs and boost profits. Why might automatic merchandising be a bad idea for this company? a. Automatic merchandising sales are impersonal. b. It is difficult to develop effective marketing strategies for automatic merchandising. c. Distribution for automatic merchandising is limited. d. Automatic merchandising is archaic. e. It is too costly to maintain automatic merchandising around the clock.
a. Automatic merchandising sales are impersonal.
You are one member of the marketing team for a wine distributor who sells exclusively through your own chain of high-volume shops. Your team wants to explore other available marketing channels, including sales over the Internet and product placement in specialty retailers. In order to come to a consensus, you want to outline some basic questions regarding distribution channels and present them to the team for discussion. The discussion should include all of the following questions except which one? a. How will exploring new distribution channels affect relationships with current intermediaries? b. What restrictions exist for shipping to communities that ban the sale of alcohol? c. How many intermediaries are necessary for adequate market coverage? d. Will selling at other retail outlets diminish control over marketing the product?
a. How will exploring new distribution channels affect relationships with current intermediaries?
Which of the following statements about cross-promotion is inaccurate? a. Its effectiveness is limited to complementary products. b. It may utilize a mix of promotional tools. c. Its importance in the marketing world is likely to increase over time. d. The partners share promotional costs.
a. Its effectiveness is limited to complementary products.
For what main reason is personal selling the single biggest promotion expense in many firms? a. Personal selling depends on direct contact with customers, which is costly as well as time consuming. b. Personal selling is only effective as a follow-up to expensive advertising. c. Advertising has become cheaper than personal selling over time. d. The new technologies of personal selling require big investments in software.
a. Personal selling depends on direct contact with customers, which is costly as well as time consuming.
Paul Lindsay is a logistics manager for a farm equipment manufacturer; he needs to move several tractor-trailers of farm equipment from the Midwest manufacturing plant to the East Coast distribution centers. This heavy equipment must travel a long distance—across country—and then over land to the various wholesalers that distribute them. What intermodal operation will allow Paul to combine long-hauling capacity with overland flexibility? a. Piggyback b. Fishyback c. Birdyback d. Run-through
a. Piggyback
You work for a multinational food corporation that specializes in breakfast foods. For the last ten years, your breakfast bars have dominated the market and been found on the tables of 65 percent of the families in the United States. In the last three quarters, however, your product has not been performing as well; you think the younger generation of parents perceives your bars, incorrectly, as high in sugar and fat and is unaware of their healthy ingredients. Your company develops a series of buy-one-get-one-free promotions and arranges for retailers to hand out samples at their stores. Despite all the resources you invest in this promotional campaign, the product's performance does not improve over time. Why is the approach to marketing described in the scenario ineffective? a. The company's promotional objective was inappropriate given its marketing needs. b. The prices for the product were too high for young families. c. The company chose the wrong target market. d. The goals for the promotional campaign were too broad.
a. The company's promotional objective was inappropriate given its marketing needs.
Company X is enjoying a spurt in sales of the stuffed animals it manufactures. To meet demand, the firm is spending more than ever before on cotton stuffing. However, its marketers note that they are spending less for stuffing per toy than in the past. Based on this information, what is the most likely explanation for the difference between overall spending and per-toy spending? a. The factory is operating more efficiently. b. Competition has decreased. c. Competition has increased. d. The factory is operating less efficiently. e. The firm is importing cotton stuffing from abroad
a. The factory is operating more efficiently.
As a member of the marketing team for a manufacturing company, you need to be familiar with methods that are available to your company to facilitate communication about and movement of your products and goods. Your company is facing some logistics and supply chain challenges and you have been asked to help find solutions for them. Choose the statement that does not accurately identify the best management approach to deal with each management challenge. a. The manufacturing company for which you work wants to consolidate the data from among all the firm's business units. RFID is the best approach. b. The business is growing so quickly that your company needs to reduce the human effort and error involved in tracking inventory and assets. Radio Frequency Identification (RFID) is the best approach. c. The manufacturing company for which you work wants to consolidate the data from among all the firm's business units. An Enterprise Resource Planning (ERP) system is the best approach. d. Your company wants to improve and streamline transportation and warehousing functions, but does not yet possess the specialized knowledge and expertise needed to do that. It should consider outsourcing some of these functions to a specialist firm.
a. The manufacturing company for which you work wants to consolidate the data from among all the firm's business units. RFID is the best approach.
Read the following excerpt from the article, "Lines separating sales channels blur: Manufacturers, direct sellers, retailers, invade each other's turf" by Tom Collinger in Ad Age (March 30, 1998) and then choose the best answer to the question posed below. Conflict in the channels has produced a total blurring of the lines that once separated them. First, there's the blur between manufacturers and retailers. Then, there's the explosion of discount outlet malls, which proudly expose the highest image-oriented brand names to the consumer—direct from the manufacturers.... In addition, because of the proliferation of these malls as legitimate channels, sales for the brands in this channel are in the multimillion-dollar range. Finally, there is the manufacturer and direct-seller blur caused by those manufacturers that recognize the need to gain back some of the control they have lost to retailers.... Some manufacturers have mined niches in the market where they believe direct selling is somehow less objectionable to their retail partners.... Access to the consumer through the Internet will only continue to blur the manufacturer/direct-seller lines, altering the fundamental selling proposition for manufacturers forever (retrieved from http://adage.com/article/news/lines-separating-sales-channels-blur-manufacturers-direct-sellers-retailers-invade-s-turf/66410/). What type of marketing channel conflict is being discussed in the above excerpt? a. Vertical conflict b. Strategic conflict c. Channel cooperation d. Horizontal conflict
a. Vertical conflict
In the fall of 2014, Coca-Cola brought back Surge, its answer to PepsiCo's Mountain Dew. It had first offered Surge for sale in 1996 but had stopped production in 2002. Surge was marketed as a novelty, a revival of the brand for nostalgic consumers. Assuming that buyers would want this specialty, limited-production item quickly in order to show it off to friends, the company also featured next-day delivery, exclusively from Amazon. Which of the following price levels was most likely associated with the Surge revival? a. a prestige item level b. a value pricing level c. a parity level d. a reentry level e. a volume discount level
a. a prestige item level
You are reviewing the various factors that will affect your company's choice between advertising and personal selling as a primary promotional tool. Fill in the blanks with the terms from the drop-down list that would best complete each sentence. a. Personal selling would be the better choice if the company decides to pursue ________ markets. b. Advertising would be the better choice if the company's products are ___________ standardized and ________ in unit value. c. Personal selling would be the better choice if the company's products are ________ or _________ .
a. business b. highly, low c.customized, complex
Sue runs a high-end jewelry boutique. In the past, she provided complementary gift wrapping, but there has been so much demand for this service that she has decided to start charging for it and limiting it to only one wrapped item per customer. Which of the following elements of retailing strategy is Sue about to change? a. customer service b. customer amenities c. pricing d. merchandising e. store atmospherics
a. customer service
Fill in the blanks with the word from the drop-down list that best completes each passage. a. A marketing channel also called a ________is one critical component of a distribution strategy. b. Marketing channels provide the means by which goods and services flow from the ______ to the consumer or business user. c. Most marketing channels involve at least one ____ or middleman, but the simplest marketing channel is a direct channel. d. Reverse channels involve the return of goods to their producers, for example, by ______ or recall
a. distribution channel b. producer c. intermediary d. recycling
As a sales manager, you drive the overall direction of the personal selling effort for your firm. You wear multiple hats as a salesperson yourself and also as an administrator. Fill in the blanks with the word or phrase from the drop-down list that best completes each passage about your basic managerial functions. Each word or phrase may be used more than once. a. You have reviewed quarterly sales figures and are preparing a report on performance. This involves _______ b. You are involved in the decision to make payouts based on the combination of salary and commission. This involves ______ c. As part of your ______ function, you are determining specified sales or profit targets that the firm expects your division salespeople to achieve. d. As part of your ____ function, you are speaking to a group of college graduates about the opportunity for advancement, personal satisfaction, and independence afforded by sales. e. You are part of a managerial meeting to decide the number of retail account representatives who report to first-level sales managers. This involves _____ f. You are assigning sales teams to the company's major accounts, one of the tasks you perform as part of your _______ function. g. u are allowing a new salesperson to shadow you daily for one week, fulfilling your SelectorganizationtrainingsupervisionItem 7 function. h. You are careful to create a positive work environment for your sales team and inspire confidence in them. This involves _______ . i. You are a part of the interview team that follows the application screening process. This involves __________ .
a. evaluation and control b. compensation c. evaluation and control d. recruitment and selection e. supervision f. organization g. training h. motivation i. recruitment and selection
As you try to familiarize yourself with the many different types of retailers, you come across some unfamiliar concepts. Your study partner informs you that these are among the generally accepted bases on which retailers can be categorized. Fill in the blanks with the word or phrase from the drop-down list that would best complete each passage. a. There are _____generally accepted bases for categorizing retailers. b. Chain stores are differentiated from independent stores on the basis of __________ c. Specialty and convenience retailers differ based on ________ d. Supermarkets fit into a unique retail category that combines _____ and ______ merchandise.
a. four b. form of ownership c. shopping effort d. specialty, general
Your uncle is a highly successful Ford dealer. Unlike some other dealers, he trains his salespeople to strongly encourage prospects to test drive his cars. In terms of the AIDA concept, your uncle emphasizes: a. generating interest and desire b. securing attention and interest c. handling objections d. initiating action
a. generating interest and desire
A cowboy hat manufacturer was interested in knowing how to price his or her work based on data rather than "gut feelings." He or she found that pricing concepts involve a language of special terms. Fill in the blanks with the word or phrase from the drop-down list that is among these special terms and would best complete each sentence. Words may be used more than once. a. ______ refers to the portion of sales revenue left over after paying the product costs of cowboy hats. b. Target ________ are often based on norms in the hat industry. c. Cost-based pricing for cowboy hats uses the _______ plus a ______ to calculate the sales price. d. Another term for margin is _______.
a. margin b. markup percentages c. product cost, markup percentage d. gross profit
You are trying to determine the best retail strategy for your family firm, a manufacturer of value-priced furniture. Fill in the blanks with the terms from the drop-down list that would best complete the passage. The best retailer would have pricing _____ that are a good fit for your firm's value image. b. The best retailer would offer a homey-looking interior, soft lights, and comfortable customer seating. These ______ elements would complement the brand. c. The availability of home delivery is important to your customers. Any retailer must offer this element as a part of its ______ strategy.
a. objectives b. atmospheric c. customer service
Selena is embarrassed. After explaining to her boss how the company's CVP (cost-volume-profit) relationship affects its pricing strategy, she realizes that she left out a key variable. Reviewing her notes, she sees that she included price, sales volume, and profit margin. What did Selena leave out? a. price sensitivity of consumers b. breakeven margin c. past pricing history d. pricing regulations
a. price sensitivity of consumers
Fill in the blanks with the word or phrase from the drop-down list that best completes the sentence. a. Warehousing is the location of stock and the number of warehouses the firm maintains, while inventory control is the quantity of stock the firm maintains at each _____ b. using _____is a component of handling materials appropriately in the factory, in the warehouse, and in the transport terminals. c. Activities for moving products within plants, warehouses, and transportation terminals comprise the ______ system
a. site b. protective packaging c. materials handling
Companies have many forms of sales promotion to choose from, depending on their target audience and marketing goals. Fill in the blanks with the word or phrase from the drop-down list that best completes each passage about these forms of sales promotion. Each word or phrase may be used more than once. a. The typical firm spends more on _______ sales promotion than on advertising and other sales promotion combined. b. Local businesses, such as realtors or coffee shops, often give away T-shirts or mugs with their logo at community events. This is known as ________, a type of _______ sales promotion. The focus of sales promotion was originally on ____ incentives but has now shifted to _____ objectives.
a. trade-oriented b. specialty advertising; consumer-oriented c. short-term, long-term
When the U.S. levied a 10 percent tax on plus-$30,000 luxury cars, Land Rover changed the weight of Range Rover models so they could be classed as a truck and thereby avoid the luxury status, the company was attempting to follow which of the price strategies listed below for lowering the price of an exported product?
adapt the product to escape tariffs or tax levies.
expatriates
advantages - superior product knowledge - demonstrates commitment to service standards - train for promotion - greater HQ control disadvantages - higher cost - higher turnover - cost for language and cross-cultural training
third country nationals
advantages - cultural sensitivity - language skills - economical - allows regional sales coverage disadvantages - may face identification problems - may be blocked for promotions - income gaps - needs product/company training - loyalty not assured
The most important pricing objectives of companies doing business in the United States (including foreign-based firms) are(is) to:
all of the above.
linguistic equivalence
all translations should be the same from country to country
Countervailing duty
also known as minimum access volume (MAV) restricts the amount a country will import, a fee may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation
cultural dimension
attributes of society sustained by interactions among people, greater cultural differences leads to lower amount of international trade (diff languages, ethnicities, religions, values, norms)
You work for a small tech company that has recently introduced a new mobile application called "Streamline" into the market. The mobile application is aimed at helping individuals keep track of all their social media accounts in one place and streamlining the flow of information from one program to the next. For instance, if you update your Facebook page, your Twitter and Instagram accounts will also update. After identifying the target market and conducting market research, the marketing team decides that its first set of ad campaigns should be Web-based in order to draw appropriate audiences. When Alexa signs into her Facebook page, a banner pops up in the center of her browser advertising Streamline, the new mobile application. After clicking on the ad, Alexa learns that she can control all of her 11 social media accounts from one place. Which of the marketing communications steps is next? a. Channeling b. Feedback c. Encoding d. Decoding
b. Feedback
The seven steps in the personal selling process should be aligned with the AIDA concept, which describes the consumer's buying decision process. Which of the following steps is misaligned with this concept? a. The presentation step generates interest and desire. b. Getting a prospect's attention is the goal of handling objections. c. The closing of a sale brings action. d. The demonstration step generates interest and desire.
b. Getting a prospect's attention is the goal of handling objections.
Sal is currently in the market for a new car. He considers various factors before making his purchase; for example, he considers gas mileage, power-train warranty, safety records, status, price, and convenience. He then makes a final list of six possible vehicles to purchase. However, after thinking about all these things, he dismisses them and decides instead to purchase the highest price vehicle. Based on this information, what is the most likely reason for Sal's decision? a. The list of important features to consider was too long and therefore there were too many comparisons to make easily. b. He assumed that the highest price car must also be the most prestigious and he would like to project a high-status image. c. The highest price vehicle was more effectively promoted than the alternatives. d. He neglected to set prices limits before making his decision.
b. He assumed that the highest price car must also be the most prestigious and he would like to project a high-status image.
Integrated marketing communication (IMC) requires a big-picture view of promotional planning; a total strategy that includes all marketing messages. You work for a multinational beverage company headquartered in Singapore. You have been put in charge of developing comprehensive marketing communication packages and want to ensure that you maximize the benefits for your company. To reach this goal, you work with department heads around the world to ensure that marketing and communications objectives support the corporate mission and strategies, and keep all staff informed about new developments. You also work with external partners, including advertising and PR agencies, to achieve a cohesive message for your brand and products. Which of the following statements is most likely to be true about your IMC effort? a. Developing multinational integrated marketing communication is likely to contribute to the duplication of communication efforts. b. IMC challenges the notion that your advertising, personal selling, direct marketing, and other components of the worldwide promotion mix must stand alone. c. Your target market will be identified after the company has established an IMC strategy. d. Sending a unified positive message about your company is often not a priority.
b. IMC challenges the notion that your advertising, personal selling, direct marketing, and other components of the worldwide promotion mix must stand alone.
For the last ten years, you have been the leading sales representative in your firm. Most of the other sales reps are in awe of you because they say you make personal selling look so easy. You know better, however, because it has not always been easy nor have you always been so successful. You have learned over the years that there are some key rules of personal selling that must be followed consistently for success. One of the rookie sales reps just asked you for some tips on success in personal selling. You told him or her to give you a list of his or her thoughts on what it takes to be successful in personal selling and you will start the discussion there. Select the true statement made by the rookie sales rep about successful personal selling tactics and approaches. a. It's impossible to anticipate a prospect's objections, so you should expect to address them on the fly. b. It's important to make sales presentations relevant and meaningful for the prospect. c. All this talk about pre-call planning is misguided. It's pointless to spend much time on it because it doesn't contribute much to sales success. d. Instead of wasting time trying to get referrals, you should work on becoming a cold calling expert.
b. It's important to make sales presentations relevant and meaningful for the prospect.
According to the Ad Age article "PennWell acquires Oil & Gas Pipeline Conference" (March 21, 2013), "The pipeline and transportation sectors of the industry are experiencing phenomenal growth due to the resurgence of exploration and drilling in North America" (retrieved from http://adage.com/article/btob/pennwell-acquires-oil-gas-pipeline-conference/288678/). Pipelines rank third after railroads and motor carriers in ton-miles transported, but most people do not recognize pipelines as a major mode of transportation. Nevertheless, pipelines are the preferred method used for transporting crude oil, diesel fuel, kerosene, and gasoline in the United States. What are some drawbacks to transporting via pipeline? a. Pipelines move products quickly through a long network. b. Pipelines can only carry liquids. c. Pipelines cannot be carried across the entire United States. d. Pipelines are undependable methods of transportation over time.
b. Pipelines can only carry liquids.
According to the Ad Age article "PennWell acquires Oil & Gas Pipeline Conference" (March 21, 2013), "The pipeline and transportation sectors of the industry are experiencing phenomenal growth due to the resurgence of exploration and drilling in North America" (retrieved from http://adage.com/article/btob/pennwell-acquires-oil-gas-pipeline-conference/288678/). Pipelines rank third after railroads and motor carriers in ton-miles transported, but most people do not recognize pipelines as a major mode of transportation. Nevertheless, pipelines are the preferred method used for transporting crude oil, diesel fuel, kerosene, and gasoline in the United States. Why are pipelines an advantageous method of transport? a. Pipelines provide jobs for consumers because of the resurgence of exploration and drilling in North America. b. Pipelines offer low maintenance and dependable transportation for a narrow but important range of products. c. Pipelines have more locations than water carriers. d. Pipelines are versatile, carrying more ton-miles than any other mode of transport over more than 2 million miles of pipeline.
b. Pipelines offer low maintenance and dependable transportation for a narrow but important range of products.
You work for an organization that wants to use a celebrity spokesperson to advertise its new smoking cessation programs. The company enlists the support of a local music celebrity who is well known and well liked. The celebrity has previously endorsed a local restaurant, is supporting the campaign of a local politician, and is known to partner with a local music program that works with blind children. This celebrity also is known to support awareness for lung cancer initiatives because his or her brother was a pack-a-day smoker for three decades and died of Stage IV lung cancer. Which of the following might be a drawback of working with this particular celebrity on promoting your organization's cause? a. The celebrity's body of professional work is not impressive. b. There is marketplace confusion surrounding this celebrity. c. The celebrity is not a credible source of information. d. This celebrity spokesperson is expensive and probably behaves badly.
b. There is marketplace confusion surrounding this celebrity.
The Ash brothers operate an online retailer that specializes in herbal teas from remote villages across the globe. A direct-response retailer, the Ash brothers' company allows customers to purchase their teas by phone, mail, or via the company's website, and then they ship the order directly to the client. The Ash brothers serve as an intermediary between product manufacturers and customers. Which of the following is an advantage that the Ash brothers have in running this online direct-response retailer? a. They sell the teas to customers at prices that are marked down. b. They are able to reach a wide base of customers and special niche markets because of the Internet. c. They completely bypass retailers and wholesalers. d. Most of their purchase orders come directly through the company's website. e. They generate a large number of inquiries from customers making purchase decisions.
b. They are able to reach a wide base of customers and special niche markets because of the Internet.
You are the marketing manager of a small start-up retail company. You are aware that your company's pricing strategies are an important way to communicate your firm's image to consumers. You also realize that as a start-up your company must make every effort to attract customers. After thoroughly analyzing your competitors' offerings, you decide to set the prices of your company's merchandise at odd, unusual numbers slightly below a round number. For example, instead of pricing an item at $10.00 you price it at $9.95. What is the most likely reason to employ this odd pricing strategy? a. This allows the retailer to inconspicuously change the prices at any time. b. This makes the price seem like $9.00 plus change rather than a full $10.00. c. This allows the retailer to emphasize important characteristics that differentiate product lines at different price points. d. Odd-numbered pricing adds to the perceived prestige of the company on the part of consumers.
b. This makes the price seem like $9.00 plus change rather than a full $10.00.
You are the brand manager of a major grocery store chain and have a meeting planned with your boss. You want to convince him or her to allow you to run a coupon campaign to drive sales across the soup brands you manage. Your boss is not enthusiastic about coupon campaigns, but is willing to listen to a formal presentation from you explaining how and why your coupon campaign should be approved. Select the talking point that you will use in your presentation. a. High-value coupons can overcome the poor image of some of your soup brands. b. Your coupons will encourage short-term purchases of larger quantities of soup. c. As a form of trade promotion, your campaign will help build your relationships with soup wholesalers. d. Your coupons will encourage long-term purchases of larger quantities of soup.
b. Your coupons will encourage short-term purchases of larger quantities of soup.
The director of marketing at your company has asked you to evaluate the cost-cutting potential of using marketing intermediaries. You point out to his or her that intermediaries will save money in some, but not all, of your marketing activities. In which of the following activities would marketing intermediaries be ineffective in saving money? a. delivering product b. manufacturing product c. warehousing product d. selling to multiple customers e. maintaining inventory
b. manufacturing product
As an industry, retail accounts for how much private-sector employment in the United States? a. more than the US government b. more than any other industry c. less than the advertising industry d. less than the direct selling industry
b. more than any other industry
Mr. Cohen wants to open a hair salon and has to decide on the geographic location of the shop. He is targeting girls and young women aged 13 and older who get their hair done frequently. What sets his shop apart from other beauty salons is that all his beauticians have been trained to employ the most modern techniques and were all in the top 5 percent of their classes in their respective cosmetology schools. He wants to locate the salon within a group of similarly distinctive, upscale retailers, service providers, and department stores with high visibility in the same region. Mr. Cohen's location will be in which of the following types of shopping center? a. designed b. planned c. regional d. multiple e. showroom
b. planned
Which of the following is not typically a fixed cost? a. Wi-Fi access b. raw materials c. equipment leases d. rent e. insurance policies
b. raw materials
political risk factor
bad neighbours, authoritarianism, staleness, illegitimacy
threat of new entrants
barriers of entry - economies of scale: refers to the decline in per unit product costs as the absolute volume of production per period increases - production differentiation: the extent of a product's perceived uniqueness - capital requirements: required investment for manufacturing, R&D, advertising, field sales and service - switching costs: the costs of changing suppliers or products - distribution channels: are there current distribution channels available with capacity? - government policy: are there regulations in place that restrict competitive entry - cost advantages independent of scale economies: is there access to raw materials, large pool of low-cost labour, favourable locations, and government subsidies - competitor response: how will the market react in anticipation of increased competition within a given market
copyright
books, photos, music, fine art, graphic images, videos, films, architecture, computer programs -ex: Michael Jackson's thriller, windows operating system -protection: life of author + 70 years
A customer comes into your rental/retail outlet because he or she wants to purchase a 26-ton hydraulic log splitter. You have some models available for daily rental but they are not the latest model that your customer is looking for. There is a 26-ton model on the floor, but it would be most beneficial to show him or her firsthand the difference between your product and other cheaper models that are on the market. What demonstration options can you consider for your customer? Select the viable demonstration option. a. Describe the splitter's major features and give the customer printed specs to take home with him or her. b. Let the customer know that there is no delivery charge on the log splitter. c. Allow the customer to rent a comparable unit for a day and waive the rental fee upon the return of the splitter on time and in good condition. d. Tell the customer about your in-house financing option, whereby he or she can complete payment in six months with no interest.
c. Allow the customer to rent a comparable unit for a day and waive the rental fee upon the return of the splitter on time and in good condition.
Company A and Company B both raised their prices by 30 percent. While A enjoyed a substantial increase in profits, B's profits plunged downward. Based on this information, which of the following is the most likely explanation for the companies' different outcomes? a. A's product offers better value than B's. b. A's product is higher quality than B's. c. B's customers are more price sensitive than A's customers. d. A has more customers than B. e. A has a history of high prices, while B has only charged low prices.
c. B's customers are more price sensitive than A's customers.
You planned to use trend analysis to forecast sales of the new yogurt being introduced by your dairy products firm. However, the marketing director just informed you that trend analysis is inappropriate for this purpose. Assuming he or she is correct, what is his or her most likely reason? a. Because the product is new, historical data is too expensive to obtain. b. Trend analysis is an outdated forecasting technique. c. Because the product is new, historical data is not available. d. Trend analysis cannot be applied to the dairy products market.
c. Because the product is new, historical data is not available.
Which of the following are considered to be exporter strategies when the domestic currency is weak?
conduct conventional cash-for-goods trade.
Marketers are concerned with distribution intensity, which is how many intermediaries will distribute the goods in a particular market. Select the description of the general categories of market coverage that is incorrect. a. In intensive distribution, items with wide appeal are distributed through as many channels as are available in a trade area. b. In selective distribution, the manufacturer will often provide training and assistance to the limited number of dealers it chooses to distribute its product. c. In controlled distribution, the manufacturer is forced by law to sell its own products. d. In exclusive distribution, a single wholesaler or retailer is granted the right to sell a product in a given area.
c. In controlled distribution, the manufacturer is forced by law to sell its own products.
A new boss just took over the marketing department where you work for a women's swimwear manufacturer. You hope to impress him or her with your knowledge of an important topic in your industry: How prices affect consumer perceptions of quality. You should make all of the following points except: a. Perceptions of quality may be affected by the eco-friendliness of a product. b. Perceptions of quality may be affected by both high and low prices. c. Supply and demand play no role in purchasing patterns when perceptions of quality are driven by price. d. It is common for consumers to define both upper and lower limits within which their quality perceptions vary.
c. Supply and demand play no role in purchasing patterns when perceptions of quality are driven by price.
You work for a local politician who has allegedly been linked to a local scandal. As the head of the politician's communications team, you are strategizing ways to address this issue, especially since it is an election year, and he or she wants to run for national office. You think that the best approach in addressing this problem is employing media marketing, but you still have to figure out which medium is best. You want to use a medium that is credible, flexible, and reaches wide audiences. You are not particularly concerned about cost because you believe that the expense is worth it. Which of the following media can best help you accomplish your goal? a. Billboards b. Newspaper c. Television d. Magazines e. Radio
c. Television
You work for a young grassroots art organization that does not have a lot of funds to invest in marketing efforts but wants to create a name for the company. As a muralist, you have considerable experience beautifying schoolyards and alleys with your paintings, and suggest to your executives that you use graffiti to spread the company's name in certain neighborhoods. Because your company specializes in art, you think this would be the perfect way to market the company and its long-term social mission to fill abandoned park walls with community art and develop community gardens. Your company agrees with the idea, so you partner with other muralists and paint the company's logo in creative ways on abandoned city walls. At first, your company receives bad publicity for the stunt, but it generates a lot of inquiries about your artwork because potential customers are intrigued by your company's level of creativity and innovation. Which of the following statements is true about the scenario described above? a. Buzz marketing like the type described in the scenario is a cheap way to promote a company, but it is usually ineffective because it can offend some people. b. Guerilla marketing enhanced the credibility of the organization and increased its sales. c. This marketing strategy is usually effective because competitors are less likely to be using the same approach. d. This form of advertising is likely to cost about the same as more traditional advertising.
c. This marketing strategy is usually effective because competitors are less likely to be using the same approach.
A banana supplier sells to both supermarket chains and independent food stores in the same region. The supermarket chains always generate more revenue than the independent food stores, because the supermarket chains order bananas more frequently and in bigger volume. To increase his or her profits from the independent food stores, the supplier wants to charge them more per bushel than he or she charges the chains. However, the supplier's director of marketing advises against it. Which of the following is the most likely reason for this advice? a. This pricing policy might violate unfair trade laws. b. This pricing policy could cause a price war. c. This pricing policy might violate the Robinson-Patman Act. d. This pricing policy must be approved by the Federal Trade Commission.
c. This pricing policy might violate the Robinson-Patman Act.
To forecast sales for your firm's new product, you want to use a forecasting technique that is based solely on input from sources internal to the firm. Which of the following groups of techniques meets your criterion? a. survey of buyer intentions, sales force composite, and trend analysis b. test markets, survey of buyer intentions, and sales force composite c. jury of executive opinion, sales force composite, and trend analysis d. Delphi technique, jury of executive opinion, and test markets
c. jury of executive opinion, sales force composite, and trend analysis
You own a mattress store called "Dream Better." Since people routinely compare your products to those offered by Sleepy's and other major competitors before making a purchase, you invest heavily in skilled salespeople and attractive displays. "Dream Better" is best classified as a: a. showroom store b. convenience retailer c. shopping store d. self-service retailer e. sales store
c. shopping store
Japan/ china intellectual property
code law "first to register" for patents patent application public -social sharing - 3 R's (register, record, remedies) -register before product enters china
international marketing
companies are fully committed to and involved in international marketing, seek markets all over the world
Dual Adaptation
company must adapt the product as well as the marketing communication to the foreign market
When New Balance, the U.S.-based maker of high-tech running shoes, sells its shoes in France as haute couture items rather than simply athletic shoes, this is an example of:
company objectives.
Ellie's media company will be introducing a new series of films on nutrition and exercise for adolescent health. Prior to introducing the films into the market, her company executives want to generate a buzz about the new products. So far, two of the five films have won prestigious awards at national film festivals. Ellie's superiors want to target youth-serving organizations in the Pacific Northwestern region of the United States as potential consumers of these films. They are searching for a quick way to distribute information about the products to potential customers, yet they do not want to sacrifice the personalized experiences that customers have come to associate with the company. Ellie's superiors would also like to be able to measure the performance response of whichever marketing strategy they implement. Which of the following should Ellie suggest that her superiors use to market their new products? a. Direct marketing b. Direct retailing c. Direct-response retailing d. Direct mail
d. Direct mail
Your sales work is more of a lifestyle than a job. It often involves complex customer situations and weeks of preparation and problem solving to help find workable solutions for those situations. You enjoy it because it enables you to travel to many places and interact with people continuously. However, much of your work involves careful follow-up after your customer visits. Which personal sales channel have you chosen as a career? a. Telemarketing b. Over-the-counter selling c. Inside selling d. Field selling
d. Field selling
You are contemplating adding direct selling activities to your existing bricks-and-mortar retail business to increase sales. You are concerned, however, that the negative aspects of direct selling outweigh the positive. Which of the following is a negative aspect of direct selling that you must mitigate in some way to be successful? a. Products are presented at convenient locations for customers. b. Customers get personal attention. c. Products are presented at convenient times for customers. d. It may be more expensive and time-consuming than using an intermediary. e. Direct selling is a less expensive form of retailing.
d. It may be more expensive and time-consuming than using an intermediary.
Luca's company is a manufacturer of desk calendars and other office supplies. In the past, he has sold only through his own website; however, as his business has grown, he has decided to add a retail partner. Which of the following is not among the questions Luca should ask when he chooses a partner? a. Which retailers attract buyers for home and commercial offices? b. Which retailers offer the most appropriate atmospherics for selling office supplies? c. Should his products be sold in an office supply specialty store? d. Should his products be sold via direct mail that provides tips about how to run an office?
d. Should his products be sold via direct mail that provides tips about how to run an office?
You have a colleague who swears by using breakeven analyses. He or she has not been on the job long enough to be able to understand the reasons why this tool isn't always reliable. Which of the following reasons should you share with him or her? a. Breakeven analysis is hard to calculate; and it is difficult to explain how the results are derived. b. Not everyone in the company understands or uses breakeven analyses. c. Breakeven analysis is outdated. d. The company's accounting system does not clearly distinguish between fixed and variable costs.
d. The company's accounting system does not clearly distinguish between fixed and variable costs.
The consumer sales promotions your company is offering has increased demand slightly, but you have come to realize that another way of putting your products in front of consumers is to incentivize resellers. You decide to investigate types of trade-oriented promotions to appeal to resellers and other market intermediaries. While these promotions will cost your company money, you believe the additional incentives to resellers will convince them to continue pushing your products. Choose the trade-oriented promotion technique below with the incorrect description. a. You believe that retailers will stock more of your products if you offer them one free case for every dozen cases they order. This is a type of trade allowance. b. You believe that you can showcase your new product line by displaying it and demonstrating it to industry associates, so you plan to use trade shows. c. You believe that if resellers are willing to feature your products prominently at the ends of shopping aisles, they would have a better chance of reaching their target market. You decide to provide resellers with special displays to stimulate sales of the promoted items. This illustrates POP advertising. d. You believe that offering free samples to consumers in the flagship stores of your major resellers will convince these resellers to give your products extra shelf space.
d. You believe that offering free samples to consumers in the flagship stores of your major resellers will convince these resellers to give your products extra shelf space.
Your family owns a commercial bakery that has always partnered with large food distributors that sell and deliver to supermarkets around the United States. You and your sister have recently taken over from the older generation and may consider other distribution options. Your sister is especially interested in shortening the distribution channel. Having more channel strategy experience than her, you explain that moving in this direction could involve all of the following actions except: a. buying delivery trucks with cooling systems to retard spoilage b. hiring a sales force experienced in selling baked goods c. planning a direct selling program to demonstrate the special characteristics of your packaging d. choosing a logistics company experienced in cross-country shipping
d. choosing a logistics company experienced in cross-country shipping
All of the following are categories used to classify retailers except: a. shopping effort b. services provided c. product lines d. form of financing e. form of ownership
d. form of financing
You and a coworker, Liam, are discussing the merits of different media options for placement of your firm's advertising. The options include TV, radio, direct mail, magazines, and outdoor. "I'm concerned about people's limited attention spans," says Liam. "However, its low cost is a big advantage because of our tight budget." "The short lead time for placing ads will be especially helpful, since we often change prices on short notice," you comment. "And it's great for targeting our local market." Which of the following media options are you and Liam discussing? a. TV b. direct mail c. magazines d. radio e. outdoor
d. radio
You want the salespeople on your staff to perform at their best, thus you want to make sure they are properly supervised. In determining span of control—the optimal ratio of sales representatives to sales managers—you will consider all of the following factors except: a. complexity of work b. extent of training c. each manager's ability d. size of bonuses
d. size of bonuses
International marketing involvement first 2 types
more reactive in nature & don't involve careful strategic marketing -no direct foreign marketing -infrequent foreign marketing
Pirate
movies, music, books, or other copyrighted works that have been reproduced without permission from the company, composer, or author that owns the copyright. Pirate products cost legitimate businesses billions in lost profit and drive up prices
To conduct ________________, conflicts between country affiliates are resolved through mutual discussion of the transfer pricing problems.
negotiated pricing
Administrative examples (CAGE)
o Colonial ties o Shared regional trading bloc o Political hostility o Closed economy o Membership in international organizations o Corruption
Large cross-country price gaps open up arbitrage opportunities that lead to _________________ imports from low-price countries to high-price ones.
parallel
According to the text, once brand loyalty has been established, _____________ will play less of a role as a purchase criterion.
price
When demand is highly price sensitive, the company needs to consider how it can _________________ from a global perspective.
reduce costs
coordination
refers to the governance of the activities, how they are linked together throughout a chain which is dispersed geographically among many countries
configuration
refers to where and how activities will be located (e.g. R&D, design, manufacturing) -concentrated in 1 or many countries
global marketing approach
requires the firm to focus its efforts world-wide rather than developing marketing strategies on a country by country basis Objective- coordination and integration of production, marketing, and other functional activities across countries
economic dimension
rich-poor differences, natural resources, financial resources, human resources
To reduce exposure and risk of antidumping actions, the exporter can follow any of the following marketing strategies EXCEPT:
service enhancement
When a manufacturer of breakfast cereals for humans shifts production to a chicken feed product to overcome the effects of price controls, the firm would be following which of the strategies outlined below?
shift target segments or market.
In a(n) _______________, no third party is involved to carry out the transaction.
simple barter
A strengthening of the U.S. dollar relative to the Japanese yen has the effect of:
strengthening the Japanese position in the United States.
A weakening of the U.S. dollar relative to the Japanese yen has the effect of:
strengthening the U.S. position in Japan.
