Exam 1 Review

Know the difference between ethnocentrism and polycentrism.

Ethnocentrism- tendency to prefer products or people of one's own culture Polycentrism- Marketers "adapt" goods in other countries

Official 2013 definition of Marketing.

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Know the difference between standardization and localization.

Standardization: when the same strategy used in the home market is applied in the same way abroad. Localization: when you need to adjust the marketing mix elements in each target market.

Know the term Strategic Business Unit (SBU).

are individual lines of business within large firms that operate like separate businesses. A distinct mission and specific target market Its own management that sets its own goals & objectives Control over its resources Its own competitors Independent of other SBUs (each SBU operates like a separate business).

Marketing concept.

constantly seek information about current or changing needs from current and potential customers using company initiated research efforts.

Know the term countertrade.

exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money.

Corporate social responsibility.

is a business's concern for society's welfare. Ex: reusable bag program saves consumers $7 million/annually

Concept of exchange.

when one party gives up something in return for receiving something else.

Know the criticisms of marketing

- marketing encourages hedonism (pleasures) and addictions -foster materialism among consumers -promises miracles and manipulates consumers

Know the following regulatory agencies: Food and Drug Administration, Consumer Product Safety Commission, and Federal Trade Commission.

Food and Drug Administration: Avoids harmful practices in production of food and drugs Consumer Product Safety Commission: to monitor and recall unsafe products Federal Trade Commission: Created the Federal Trade Commission to monitor unfair practices

Know the six dimensions of Hofstede's framework (i.e., power distance, individualism, etc.).

Power Distance Individualism Feminine/Masculine Uncertainty Avoidance Long-term Orientation Restraint/Indulgence (PIFULR)

Know the five ethical theories (i.e., Deontology, Utilitarianism, Casuist, Moral Relativist, and Virtue Ethics).

Deontology - not concerned with welfare of others (protect individual rights). They feel a sense of duty and follow rules. Utilitarianism - greatest benefit to most people (best for society). They focus on consequence and results not action. Casuist - compare current situation with similar situations previously. They examine each case separately. Moral Relativists - ethics is dependent on culture, value and morals. There is no global standard for right and wrong. Virtue Ethics - honorable qualities are considered ethical

Know the term: ethics, code of ethics, and sustainability.

ETHICS: the moral principles or cultural values that generally govern the conduct of an individual. CODE OF ETHICS: is a written standard to which everyone in the organization must subscribe. SUSTAINABILITY: when a company focuses social and environmental investments as a marketing strategy

Know the various external environmental factors when going global (i.e., economic, competition, technology, legal, political, and sociocultural).

Economic Competition Technology Legal Political Sociocultural

Know the difference between economic sanctions, nationalism, and expropriation.

Economic sanctions - prohibit trade with another country and cut off access to markets Nationalization occurs when a domestic government takes over the businesses and facilities of a foreign entity doing business within it's borders, and reimburses the foreign company Expropriation is when a domestic government seizes a foreign company's assets without any reimbursement.

Difference between form utility, place utility, time utility, and possession utility.

Form utility: benefit provided by marketing when raw materials are transformed into finished goods (Oats into Oatmeal) Place utility: benefit provided when marketing makes goods available where customers want them (Internet vs Retail store) Time utility: benefit provided by marketing when products are stored (or inventoried) until they are needed (wholesalers) Possession utility: benefit marketing provides by allowing the consumer to enjoy, use, and own the product (renting vs leasing vs buying a car).

Know the following terms: free trade zones, gray market goods, and dumping.

Free Trade Zone are where foreign companies can warehouse goods w/o paying taxes until they move the goods into the marketplace. Gray Market Goods items that imported w/o the consent of the the trademark holder (set too high) Dumping is when a company prices its product lower than it offers at home (set too low)

Know about major cooperative agreements that facilitate trade (i.e., GATT, WTO, NAFTA, EU)

GATT: general agreement on tariffs and trade, signed by 23 nations to LOWER tariffs and other trade barriers WTO: World Trade Organization replaced GATT, consist of 164 nations and accounts for 97% of world trade. NAFTA is Canada, USA, and Mexico EU: is the European countries

Know the three levels of development (i.e., LDC, developing, and developed).

Least Developed Country (LDC) are at the lowest stage of economic development, agricultural. Developing countries Economy shifts from agriculture to industry Strong markets to sell products (Brazil, Russia, India, and China) Developed countries are the most sophisticated markets G8 countries - US, UK, Canada, France, Italy, Germany, Japan and Russia. G20 include G8 + BRIC + EU + Saudi, Korea, S. Africa, etc.

Difference between a market and marketplace.

MARKET consists of all consumers who share a common need that can be satisfied by a specific product, and who have RAW (Resources, Authority, and Willingness) to exchange, while MARKETPLACE is any location or medium used by sellers and buyers to facilitate an exchange.

Know the difference between a monopoly, oligopoly, monopolistic competition, and perfect competition

Monopoly - when one seller controls a market Ex. Entergy Oligopoly - relatively few, but large sellers, each holding substantial market share, in a market with many buyers. Ex: Airlines Industry, cell phone industry, credit monitoring Monopolistic competition - many sellers (both small and large) compete for buyers in a market Ex: Ice-cream, bread, fast food peanut butter, wine, etc. Perfect competition - many sellers, each offering basically the same good/service Ex: Agriculture/commodity market

Difference between the terms: needs and wants

NEED is actual and desired/ideal state, while WANT is desire to satisfy a need in a particular way

Know the positives and negatives of globalization

POSITIVE: expands freedom, cause competition, lowers prices and improve product quality, raise productivity, raise living standards, more access, and checks globalization. NEGATIVES: millions have lost jobs, millions fear losing jobs in future, threat of outsourcing, if workers don't accept pay cuts, and vulnerability to moving offshore

Know the basic elements of the global marketing mix (4 P's)

PRODUCT Straight extension strategy is used when a firm offers the same product in both domestic and foreign markets. Product adaptation strategy occurs when a firm offers a similar (i.e., same core product) but modified product in foreign markets. Product invention variation requires a firm to develop a new product for foreign markets. Backward invention occurs when a firm develops a less advanced product to serve the needs of people living in countries without electricity or other elements of a developed infrastructure. PRICE Free Trade Zone are where foreign companies can warehouse goods w/o paying taxes until they move the goods into the marketplace. Gray Market Goods items that imported w/o the consent of the the trademark holder (set too high) Dumping is when a company prices its product lower than it offers at home (set too low) Promotion marketers must also decide whether it's necessary to modify how they communicate to consumers in a foreign market. Place decisions involves getting your product to consumers in remote locations can be challenging.

Marketing mix variables (4Ps - product, promotion, place, price)

PRODUCT: Tangible goods - burger, Intangible services - cooked, Ideas - quick service PROMOTION: activities marketers undertake to inform, educate, persuade, and remind consumers about their product PLACE: Product availability where (location) and when (time) customers want them Price: what a buyer must give up ($, product) to obtain a product. flexible out of the P's, but most important weapon.

Difference between production, sales, relationship, and triple-bottom-line eras.

Production Era (1900s-1940's): most efficient ways to product and distributive products, consumer needs were thought to be homogeneous Sales Era (1940s-1960s): focus on reducing inventory, emphasis on aggressive promotional activities, focus on customer acquisition rather than customer retention. Relationship Era (1960s-1990s): emphasizes satisfying customers' needs and wants, marketing plays a central role, invented marketing concept and instapreneaur like amazon and eBay. Triple-bottom-line Era (1990's-present): exist to satisfy customers needs and want, but also society long term interest. Ex: Investment firms like BlackRock donate time (volunteer), donate products (books), donate money (1% of profits)

Know issues that restrict trade (i.e., protectionism, import quotas, boycott, exchange control, embargoes, and tariffs).

Protectionism: govt want to give domestic companies advantage Import quotas: Limits by govt on the amount of product entering a country Boycott: NOT buying certain products from a country Exchange control: Foreign exchange must be sold to the government Embargoes: Completely prohibiting specified goods from entering or leaving the country Tariffs: Tax levied on goods entering a country

Know the following federal regulations: Sherman Act, Clayton Act, FTC Act, Robinson-Patman Act, Wheeler-Lea Act, and the Foreign Corrupt Practices Act.

Sherman Act: eliminate monopolies and guarantee free competition Clayton Act: prohibits tying contracts that require a dealer to take other products in the seller's line. Prohibits exclusive dealing if it restricts competition Robinson-Patman Act: Prohibits price discrimination unless cost justified Wheeler-Lea Act: Revision of FTC act, to make deceptive and misleading advertising illegal Foreign Corrupt Practices Act: to make it illegal for companies and their supervisors to influence foreign officials with any personal payments or rewards.

Know the various steps involved in strategic planning (i.e., mission statement, environmental analysis, SWOT analysis, set SMART objectives, portfolio analysis using BCG Matrix, and develop growth strategies using Ansoff Matrix)

Step 1 Define the mission Step 2 Evaluate the Internal & external Environment Step 3 Set Organization or SBU Objectives Step 4 Establish the Business Portfolio Step 5 Develop Growth Strategies

Know the difference between the three types of business plans (i.e., strategic, functional, and operational)

Strategic: planning done by top-level corporate management (define the mission and purpose) Functional: Planning done by top functional-level management such as the firms CMO (yearly) Operational: Planning done by supervisory managers (day to day) *must be INTEGRATED to succeed*

Know the various stages of the business cycle.

describes the overall pattern (cyclical) of changes or fluctuations in an economy. Prosperity - high levels of demand, employment, and income Recession - falling demand, employment, & income ("cash for clunkers") Recovery - gradual improvement in production, lowering unemployment, and increasing income Depression (severe recession) - a period during which prices fall but there is little demand (high unemployment) Inflation - occurs when prices and the cost of living rise while money loses its purchasing power

Know the difference between the various methods of entering the global marketplace (i.e., exporting, contractual licensing, contract manufacturing, strategic alliance, and direct investment).

exporting: decide whether it will attempt to sell its product on its own or rely on intermediaries contractual licensing: when one firm gives another the right to produce and market its product in a specific country in return for royalties on goods sold. contract manufacturing: manufacturing that contracts with a firm in a foreign country. strategic alliance: type of joint ventures that allows two or more companies (with one or more domestic firms in the target country) to pool resources for common goals direct investment: is when a firm expands internationally through ownership.

Know how value is created using competitive advantage (i.e., either thru cost or differential advantage).

from a set of unique features of a company and its products that are perceived superior to the competition. Ex. Apple. Two Sources: Cost advantage: lower price Differential advantage: providing superior product

How value is created thru the value chain.

is a series of activities involved in designing, producing, marketing, delivering, and supporting any product to create value. Inbound logistics: bringing in materials to make the product Operations: converting the materials into the final product Outbound logistics: shipping out the final product Marketing and sales: promoting, pricing, and selling the final product Service: meeting the customer's needs by providing any additional support required.

Sustainability.

is about creating products that meet present needs while ensuring future generations can have their needs met. Initiatives include: "cradle to cradle philosophy, green marketing, marketing accountability (ROI)

The term Value and how value is created from both the customer's perspective and marketer's perspective.

is benefits received by the consumer from a product relative to total costs. Customer's perspective: value is ratio of benefits (utilities) to perceived costs (price). Value proposition includes the whole bundle of benefits the firm promises to deliver, not just the benefits of the product itself. Marketer's Perspective: Value for the marketer can take many forms including, making a profitable exchange, earning prestige and trust among rivals, taking pride in doing what a company does well (i.e., making excellent products), avoiding unrealistic pricing. Customers are partners