International Marketing Midterm 2 (not this 1)
Standardized Global Marketing (or Undifferentiated Target Marketing
...is analogous (comparable in certain respects) to mass marketing in a single country. It involves creating the same marketing mix for a broad mass market of potential buyers. It is based on the premise that a mass market exists around the world.
Investment via Equity Stake of Full Ownership
(3) 1) Start-up of new operations, like a greenfield investment (no idea what it is) 2) Merger with an existing enterprise 3) Acquisition of an existing enterprise
Other Duties and Import Charges
-) Anti-Dumping Duties: Anti-dumping duties are almost invariably applied to products that are also manufactured or grown in the importing country. -) Countervailing Duties: Are additional duties levied to offset subsidies granted in the exporting country -) Variable Import Levies: Apply to certain categories of imported agricultural products. If prices of imported products would undercut those of domestic products, the effect of these levies would be to raise the price of imported products to the domestic price level. Applies to agriculture. -) Temporary Surcharges: Have been introduced from time to time by certain countries to provide additional protection for local industry and, in particular, in response to balance-of-payments deficits.
Consumer Channels
-Manufacturer-Owned Stores -Independent Franchise -Independent Retailer
Branding Strategies (4)
1) Multi-branding 2) Multi-Product (Brand extension) 3) Combination or tiered branding 4) Co-Branding
Working with Channel Intermediaries (7) "Harvard professor David Arnold offers seven specific guidelines to help prevent such problems from arising."
1) Select Distributors - don't let them select you 2) Look for distributors capable of developing markets 3) Treat local distributors as long-term partners 4) Support market entry by committing money, managers, and proven marketing ideas 5) Maintain control over marketing strategy 6) Make sure distributors provide you with detailed market and financial performance data 7) Build links among national distributors at the earliest opportunity
Attribute or Benefit
A frequently used positioning strategy exploits a particular product attribute, benefit, or feature. Economy, reliability, and durability are frequently used attribute/benefit positions.
Use and User
A positioning strategy that represents how a product is used or associates the brand with a user or class of users.
Agent
An intermediary who negotiates transactions between two or more parties but does not take title to the goods being purchased or sold
Channel of Distribution
An organized network of agencies and institutions that, in combination, perform all the activities required to link producers with users to accomplish the task.
Demographic Segmentation
Based on measurable characteristics of populations, such as income, population, age distribution, gender, education, and occupation. A number of global demographic trends - fewer married couples, smaller family size, changing roles of women, higher incomes and living standards, for example - have contributed to the emergence of global market segments.
Local Brands
Brands that have achieved success in a single national Market
Market Penetration Pricing Strategy
Calls for setting price levels that are low enough to quickly build market share.
Business-to-Consumer Marketing
Consumer channels are designed to put products in the hands of peopole for their own use
Packaging
Consumer packaged goods: Are a variety of products whose packaging protects or contains the product from production to the end user
Export Selling vs. Export Manufacturing
Export Selling involves selling the same product, at the same price, with the same promotional tools in a different place. Does not involve tailoring the product, the price, or the promotional material to suit the requirements of global markets. The only marketing mix element that differs is the "place;" that is, the country where the product is sold. This selling approach may work for some products or services; for unique products with little or no international competition, such an approach is possible. Similarly, companies new to exporting may initially experience success with selling. Export marketing tailors the marketing mix to international customers. It targets the customer in the context of the total market environment. The export marketer does not simply take the domestic product "as is" and sell it to international customers. To the export marketer, the product offered in the home market represents a starting point. It is modified as needed to meet the preferences of international target markets. Companies tend to start as export sellers, then turn to export marketing when they make enough capital, have enough background and experience. Why do countries want to invest so much in exporting products? It creates jobs, and those jobs generate taxes.
Types of Segmentation Methods
Geographic Segmentation Demographic Segmentation •Ethnic Segmentation Psycho-graphic Segmentation Behavior Segmentation Benefit Segmentation
Law of one price
In a true global market, the law of one price would prevail: All customers in the market could get the best product available for the best price.
Peer-to-Peer Marketing
Individual consumers market products to other individuals. (kijiji or eBay)
Global Retailing
Is any retailing activity that crosses national boundaries
Distribution
Is the physical flow of goods through channels
Which strategy should be used?
It depends on... -) Vision -) Attitude toward risk -) Available investment capital -) How much control is desired
Global Pricing Objectives and Strategies
Managers must determine the objectives for pricing decisions -Unit Sales -Market Share -Return on investment They must then develop strategies to achieve those objectives -Penetration Pricing -Market Skimming
Organized Retail
Modern, branded chain stores
Products and Brands 3 categories
Products and brands can be broken down into three different categories. These are local, international, and global.
International Brands
Products and brands offered in several markets in a particular region
Differentiated Global Marketing (or Multi-Segment Targeting)
Represents a more ambitious approach than concentrated target marketing. This approach entails targeting two or more distinct market segments with multiple marketing mix offering. This strategy allows a company to achieve a wider market coverage.
Market Segmentation
Represents an effort to identify and categorize groups of customers and countries according to common characteristics.
Place Utility
The availability of a product or service in a location that is convenient to a potential customer
Basic Pricing Concepts
The global manager must develop systems and policies that address... -Price Floor: Min Price -Price Ceiling: Max Price -Optimum Prices: Function of Demand Must be consistent with global opportunities and constraints.
How are target costs calculated?
Think of debits and credits in accounting: Because the target cost is fixed, additional funds allocated to one sub-assembly team for improving a particular function must come from another sub-assembly team.
Distributor
Wholesale intermediary that typically carries product lines or brands on a selective basis
Pricing Factors for Goods that cross Borders (8)
1) Does the price reflect the product's quality? 2) Is the price competitive given local market conditions? 3) Should the firm pursue market penetration, market skimming, or some other pricing objective? 4) What type of discount (trade, cash, quantity) and allowance (advertising, trade-off) should the firm offer its international customers? 5) Should prices differ with market segment? 6) What pricing options are available if the firm's costs increase or decrease? Is demand in the international market elastic or inelastic? 7) Are the firm's prices likely to be viewed by the host-country government as reasonable or exploitative? 8) Do the foreign country's dumping laws pose a problem?
Product Types
(2) Main types 1 - Industrial Goods 2 - Consumer Goods Types of consumer goods are Convenience Goods: Ex is Pack of gum, doesn't really matter where you buy it or which kind, price doesn't vary much either. Unsought Goods: Products you don't go shopping around for to get the best deals, you only buy or research them when you need them. Example could be a new windshield, or windshield wipers when yours break Shopping Goods: Shop around for them, example would be a car. Specialty Goods: Example could be a sports car, buy it for the symbol/status (I believe). 3 Layers of Products (Mentioned in class, can't find definitions, Know the above points more) 1) Core Product 2) Actual Product 3) Augmented Product
Product-Market Decisions
-) Review current and potential products for best match for country markets or segments -) Create a matrix with countries and products to help with analysis
Investment
-Partial or full ownership of operations outside of home country An examples can be Foreign Direct Investment (FDI): FDI figures reflect investment flows out of the home country as companies invest in or acquire plants, equipment, or other assets. Foreign direct investment allows companies to produce, sell, and compete locally in key markets. There are 3 motivations behind FDI 1) Resource Seeker: Companies primary motivation is to get access to resources not available in host country 2) Market Seekers: Invest to gain access to foreign markets 3) Efficiency Seekers: Investing in order to create cost efficiencies in the production of their products Some Forms of investment are joint ventures, minority or majority equity stakes, and outright acquisition.
Key Export Participants (8)
1) Foreign Purchasing Agents: Are variously referred to as buyer for export, export commission house, or export confirming house. They operate on behalf of, and are compensated by, an overseas customer known as a principal. They generally seek out a manufacturer whose price and quality match the specifications of their principal. Foreign purchasing agents often represent governments, utilities, railroads, and other large users of materials. Foreign purchasing agents do not offer the manufacturer or exporter stable volume except when long-term supply contracts are agreed upon. 2) Export Brokers: Receives a fee for bringing together the seller and the overseas buyer. The fee is usually paid by the seller, but sometimes the buyer pays it. 3) Export Merchants: Sometimes referred to as jobbers. These are marketing intermediaries that identify market opportunities in one country or region and make purchases in other countries to fill these needs. An export merchant typically buyer unbranded products directly from the producer or manufacturer. The export mechant then brands the goods and sells them? (It cut off at the end lol) 4) Export Management Companies: Independent marketing intermediary that acts as the export department for two or more manufacturers (principals) whose product lines do not compete with each other. The EMC usually operates in the name of its principals for export markets, but it may operate in its own name. It may act as an independent distributor, purchasing and reselling goods at an established price or profit margin. Alternatively, it may act as a commissioned representative, taking no title and bearing no financial risks in the sale. It performs all other marketing activities, including distribution. 5) Manufacturer's Export Agent: Much Like an EMC, the MEA can act as an export distributor or as an export commission representative. However, the MEA does not perform the functions of an export department, and the scope of market activities is usually limited to a few countries. 6) Export Commission Representative: Assumes no financial risk. The manufacturer assigns some or all foreign markets to the commission representative. The manufacturer carries all accounts, although the representative often provides credit checks and arranges financing. 7) Cooperative Exporter: Sometimes called a mother hen, a piggyback exporter, or an export vendor, is an export organization of a manufacturing company retained by other independent manufacturers to sell their products in foreign markets. Cooperative exporters usually operate as export distributors for other manufacturers, but in special cases they operate as export commission representatives. They are regarded as a form of export management company. 8) Freight Forwarders: Are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules; simply put, they can be thought of as travel agents for freight.
Government Programs that Support Exports (4)
1) Tax Incentives: Treat earnings from export activities preferentially either by applying a lower rate to earnings from these activities or by refunding taxes already paid on income associated with exporting. The tax benefits offered by export-conscious governments include varying degrees of tax exemption or tax deferral on export income, accelerated depreciation of export-related assets, and generous tax treatment of overseas market development activities. 2) Subsidies: Governments also support export performance by providing outright subsidies, which are direct or indirect financial contributions that benefit producers. Subsidies can severely distort trade patterns when less competitive but subsidized producers displace competitive producers in world markets. 3) Governmental Assistance: Companies can avail themselves of a great deal of government information concerning the location of markets and credit risks. Assistance may also be oriented toward export promotion. 4) Free Trade Zones: In an effort to facilitate exports, countries are designating certain areas as free trade zones (FTZ) or Special economic zones (SEZ). Theses are geographic entities that offer manufacturers simplified customs procedures, operational flexibility, and a general environment of relaxed regulations.
Global Pricing: Three Policy Alternatives
1. Extension or Ethnocentric Pricing: This pricing calls for the per-unit price of an item to be the same no matter where in the world the buyer is located. 2. Adaptation or Polycentric Pricing: Permits subsidiary or affiliate managers or independent distributors to establish whatever price they feel is most appropriate in their market environment. 3. Geocentric Pricing: More dynamic and proactive than the other two. A company using geocentric pricing neither fixes a single price worldwide, nor allows subsidiaries or local distributors to make independent pricing decisions. Instead, the geocentric approach represents an intermediate course of action. Geocentric pricing is based on the realization that unique local market factors should be recognized when arriving at pricing decisions.
Brand
A brand is a complex bundle of images and experiences in the customer's mind. Brands perform two important functions 1) Identifier:It serves as an Identifier 2) Promise of Quality: It helps reassure customers or potential customers that the product has a certain quality. Brand Equity: Is the total value that accrues to a product as a result of investments in the marketing of the brand Brand Equity Benefits -Greater loyalty -Less vulnerability to marketing actions and crises -Larger margins -More inelastic consumer response to price increases (customers won't mind as much) -More elastic consumer response to price decreases (customers will appreciate the decrease more) -Increased marketing communication effectiveness
Licensing
A contractual agreement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. Special Licensing Arrangements are contract manufacturing and franchising. Contract Manufacturing: Companies that use contract manufacturing provide technical specifications to a subcontractor or local manufacturer. The subcontractor then oversees production. Franchising: A franchise is a contract between a parent company/franchiser and a franchisee that allows the franchisee to operate a business developed by the franchiser in return for a fee and adherence to franchise-wide policies and practices. Advantages to Licensing -Requires little initial investment -Method of circumventing tariffs and other barriers -Attractive ROI -Licensees have autonomy to adapt products Disadvantages to Licensing -Limited market control -Returns may be lost -The agreement may be short-lived -Licensee may become competitior -Licensee may exploit company resources
Establishing Channels
A global company expanding across national boundaries must utilize existing distribution channels or build its own. Channel obstacles are often encountered when a company enters a competitive market where brands and supply relationships are already established. Channel strategy must fit the company's competitive position and marketing objectives within each national market First issue is whether an organziation should use a direct or indirect channel Direct Involvement: The company establishes its own sales force or operates its own retail stores. Indirect Involvement: Utilizing independent agents, distributors, and retailers.
Product
A product is a good, service, or idea with both tangible and intangible attributes that collectively create value for a buyer or user. A products tangible attributes can be assessed in physical terms such as weight, dimensions, or materials used. Intangible product attributes, including status associated with product ownership, a manufacturer's service commitment, and a brand's overall reputation are also important.
Maslow's Needs Hierarchy
A staple of sociology and psychology course, provides a useful framework for understanding how and why local products and brands can be extended beyond home-country borders. Maslow proposed that people's desires can be arranged into a hierarchy of five needs. As an individual fulfills needs at each level, he or she progresses to higher levels.
Co-Branding
A variation on combination branding in which two or more different company product brands are featured prominently on product packaging or in advertising.
Express Waranty
A written guarantee that assures the buyer that he or she is getting what he or she has paid for or that provides recourse in case a product's performance falls short of expectations
Target Market Strategy Options
After evaluating the identified segments in terms of the three criteria presented - segment size and growth rate, potential competition, and feasibility - a decision is made whether to pursue a particular opportunity. These are Standardized global marketing, concentrated global marketing, and differentiated global marketing.
Assessing Market Potential
After segmenting the market by one or more of the criteria just discussed, the next step is to assess the attractiveness of the identified segments. This part of the process is especially important when sizing up emerging country markets as potential targets. It is at this stage that global markets should be mindful of several potential pitfalls associated with the market segmentation process. 3 things to watch out for 1) Tendency to overstate the size and short-term attractiveness of individual country markets. 2) The company does not want to 'miss out' on a strategic opportunity. 3) Management's network of contacts will emerge as a primary criterion for targeting. With these pitfalls in mind, marketers can utilize three basic criteria for assessing opportunity in global target markets (3) 1) Current size of the segment and anticipated growth potential 2) Potential competition 3) Compatibility with the company's overall objectives and the feasibility of successfully reaching the target audience
Cherry Picking
Agents do this. The practice of accepting orders only from manufacturers with established demand for certain products and brands. Types of Global Retailing -Department Stores -Specialty Retailers -Supermarkets -Convenience Stores -Discount Stores and Warehouse Clubs -Supercenters -Category Killers -Outlet Stores -Shopping Malls
Joint Ventures
An entry strategy for a single target country in which the partners share ownership of a newly created business entity. 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 be the only way to enter a market 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
Marketing Model Drivers
Are key elements or factors required for a business to take root and grow in a particular country market environment.
Enabling Conditions
Are structural marker characteristics whose presence or absence can determine whether the marketing model can succeed.
Segmentation and Targeting
Are two separate but closely related go-to-market activities. Together, they serve as the link between market needs and wants and tactical decisions by managers to develop marketing programs and value propositions that meet the specific needs of one or more segments.
Foreign Consumer Culture Positioning
Associates the brand's users, use occasions, or product origins with a foreign country or culture.
Global Markets can be segmented according to...
Buyer category (e.g. consumer, enterprise, government), age, gender, income, and a number of other criteria.
Channels
Channels are made up of a coordinated group of individuals or firms that perform functions that add utility to a product or service.
Cost-Based Pricing
Cost-based pricing is based on an analysis of internal and external costs -Per-unit product costs are the sum of all direct and indirect manufacturing and overhead costs -Must include additional costs and expense when goods cross national borders Rigid Cost-Plus Pricing: Companies using rigid cost-plus pricing set prices without regard to the eight considerations for pricing goods crossing borders. They make no adjustments to reflect market conditions outside the home country. Advantage: Simplicity. Disadvantage: Ignores demand and competitive conditions in target markets; aka prices will be too high or too low. Flexible Cost-Plus Pricing: Is used to ensure that prices are competitive in the context of the particular market environment.
Other International Pricing Issues
Dumping: The sale of an imported product at a price lower than that normally charged in a domestic market or country of origin. Price Fixing: Representatives of two or more companies to secretly set similar prices for their products. Transfer Pricing: Refers to the pricing of goods, services, and intangible property bought and sold by operating units or divisions of the same company. A market-based transfer price is derived from the price required to be competitive in the global marketplace. Cost-based transfer pricing uses an internal cost as the staring point in determining price. Negotiated transfer pricing: Allow the organization's affiliated to determine negotiated transfer prices among themselves. Countertrade: In a counter trade transaction, a sale results in product flowing in one direction to a buyer; a separate stream of products and services, often flowing in the opposite direction, is also created -Priority attached to the import, value of the transaction, and availability of products from other suppliers affect the probability that some form of countertrade will be used.
Organizational Export Activities (7)
Exporting is becoming increasingly important as companies in all parts of the world step up their efforts to supply and service markets outside their national boundaries. Research has shown that exporting is essentially a developmental process that can be divided into the following distinct stages. 1) The firm in unwilling to export 2) The firm fills unsolicited export orders (export seller) 3) The firm explores the feasibility of exporting 4) The firms exports to one or more markets on a trial basis 5) The firm in an experienced exporter to one or more markets 6) The firm pursues country - or region - focused marketing 7) The firm evaluated global market potential for the "best" target markets
Benefit Segmentation
Focuses on the numerator of the value equation - the B in 'V = B/P'. This approach is based on markets' superior understanding of the problem a product solves, the benefit it offers, or the issue it addresses, regardless of geography.
Behavior Segmentation
Focuses on whether people buy and use a product, as well as how often and how much they use or consume. Consumers can be categorized in terms of usage rates and user status.
Global Brand Leadership
Global brand leadership means using organizational structures, processes, and cultures to allocate brand-building resources globally, to create global synergies, and to develop a global brand strategy that coordinates and leverages country brand strategies. (6) guidelines can assist marketing managers in their efforts to establish global brand leadership 1) Create a compelling value proposition for customers in every market entered, beginning with the home-country market. 2) Before taking a brand across borders, think about all elements of brand identity and select names, marks, and symbols that have the potential for globalization. Give special attention to the Triad and BRICS nations 3) Develop a company-wide communication system to share and leverage knowledge and information about marketing programs and customers in different countries. 4) Develop a consistent planning process across markets and products. Make a process template available to all managers in all markets. 5) Assign specific responsibility for managing branding issues to ensure that local brand managers accept global best practices. This can take a variety of forms, ranging from a business management team or a brand champion (led by senior executives) to a global brand manager or brand management team (led by middle managers). 6) Execute brand-building strategies that leverage global strengths and respond to relevant local differences.
Global Brands
Have the same name and similar image and positioning throughout the world Worldwide, consumers, corporate buyers, governments, activists, and other groups associate global brands with three characteristics; consumers use these characteristics as a guide when making purchase decisions. 1) Quality Signal 2) Global Myth 3) Social Responsibility
Global Consumer Culture Positioning
Identifies the brand as a symbol of a particular global culture or segment
Local Consumer Culture Positioning
Identifies with local cultural meanings.
Framework for Selecting Target Markets
If a market segment is judged to be large enough, and if strong competitors are either absent or deemed to be vulnerable, then the final consideration is whether a company can and should target that market. The feasibility of targeting a particular segment can be negatively impacted by various factors. For example, significant regulatory hurdles may be present that limit market access. This issue is especially important to China today.
Compeititon
Implicit or explicit reference to competitors can provide the basis for an effective positioning strategy.
Concentrated Global Marketing (or Niche Marketing)
Involves devising a marketing mix to reach a niche. A niche is simply a single segment of the global market. Concentrated targeting is also the strategy employed by the hidden champions of global marketing: companies unknown to most people that have succeeded by serving a niche market that exists in many countries.
Psycho-graphic Segmentation
Involves grouping people in terms of their attitudes, values, and lifestyles.
Business-to-Business Marketing
Involves industrial channels that deliver products to manufacturers or other organizations that then use them as inputs in the production process or in day-to-day operations.
What Roles does packaging serve? Labeling
Labeling provides consumers with various types of information: Regulations differ by country regarding various products -Global marketers must understand the importance of visual aesthetics
How to choose a strategy?
Managers face 2 types of errors -"NIH" Not invented Here -Ethnocentrism The product itself The market Adaptation and manufacturing costs the company will incur ^^^Slides seems kinda useless.
Feasibility and Compatibility
Managers must decide how well a company's product or business model fits the country market in question - or, as noted, if the company does not currently offer a suitable product, can it develop one? To make this decision, a marketer must consider several criteria. -) Will adaptation be required? If so, is this economically justifiable in terms of expected sales? -) Will import restrictions, high tariffs, or a strong home country currency drive up the price of the product in the target market currency and effectively dampen demand? -) Is it advisable to source locally? In many cases, reaching global market segments requires considerable expenditures for distribution and travel by company personnel. Would it make sense to source products in the country for export elsewhere in the region?
Channel Objectives and Utility
Marketing Channels exist to create utility for customer The goal in channel management is to have the right product (form utility) in the right place (place utility) at the right time (time utility) and with the right information (information utility) so that consumers can make the right decisions.
Global Products
Meet the needs and wants of a global market and are offered in all world regions
9 Question for Creating a Product-Market Profile
One way to determine the marketing model drivers and enabling conditions is to create a product-market profile. The profile should address some or all of the following basic questions (9) 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 offering? 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) When is it purchased?
Country of Origin as a brand element
Perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries. AKA Maple syrup from Canada can be used as a brand element because people see it favorable, vs Maple syrup from USA.
Equity Stake
Simply an investment. If the investor owns fewer than 50 percent of the shares it is a minority stake. If the investor owns more than 50 percent it makes it a majority stake
Positioning
The act of differentiating a brand in customers' minds in relation to competitors in terms of attributes and benefits that the brand does and does not offer. Put differently, positioning is the process of developing strategies for "filling a slot" in the mind of target customers. 4 Positioning Strategies/Attributes that differentiate products/services 1) Attribute or benefit 2) Quality and Price 3) Use or User 4) Competition
Time Utility
The availability of a product or service when desired by a customer
Information Utility
The availability of answers to questions and general communication about useful product features and benefits
Form Utility
The availability of the product processed, prepared, in proper condition, and/or ready to use
Quality and Price
This strategy can be thought of in terms of a continuum from high-fashion/quality and high price to good value (rather than "low quality") at a reasonable price.
Product/Brand Mix
This table shows the four combinations of local and global products and brands in a matrix form. Each represents a different strategy. A global company can use one or more strategies as appropriate.
First-Mover Advantage
The issue of timing is often framed in terms of the quest for first-mover advantage. The conventional wisdom is that the first company to enter a market has the best chance of becoming the market leader.
Targeting
The process of evaluating the segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond.
Global Market Segmentation
The process of identifying specific segments - whether they be country groups or individual consumer groups - of potential customers with homogeneous attributes who are likely to exhibit similar responses to a company's marketing mix. TEXTBOOK The process of dividing the world market into distinct subsets of customers that have similar needs (for example, country groups or individual interest groups). POWERPOINT
Target-Costing Process (Good Long Answer)
The target costing process begins with market mapping and product definition and positioning. The marketing team must do the following. (4) Steps 1) Determine the segment(s) to be targeted 2) Compute overall target costs with the aim of ensuring the company's future profitability 3) Allocate the target costs to the product's various functions. Calculate the gap between the target cost and the estimated actual production cost 4) If the design team can't meet the targets, the product should not be launched
Global Strategic Partnerships
The terminology used to describe the new forms of cooperation strategies varies widely. The terms strategic alliances, strategic international alliances, collaborative agreements, and Global Strategic Partnerships (GSPs) are frequently used to refer to linkages among companies from different countries to jointly pursue a common goal. ^^^ Means: Global Strategic Partnerships can be called - collaborative agreements - strategic alliances - strategic international alliances - or GSPs (Global strategic partnerships) 3 Characteristics of Global Strategic Partnerships 1) Participants remain independent following formation of the alliance 2) Participants share benefits of alliance as well as control over performance of assigned tasks 3) Participants make ongoing contributions in technology, products, and other key strategic areas 5 Attributes of True Global Strategic Partnerships 1 - Two or more companies develop a joint long-term strategy 2 - Relationship is reciprocal 3 - Partners' vision and efforts are global 4 - Relationship is organized along horizontal lines (not vertical) 5 - When competing in markets not covered by alliance, participants retain national and ideological identities
Government controls, subsidies, and regulations
The types of policies and regulations that affect pricing decisions are: -Dumping legislation -Resale price maintenance legislation -Price Ceilings Foreign Governments may: -Require funds to be in noninterest-bearing accounts for a long time -Restrict profits taken out of the country -Restrict price competition
Investment Cost of Marketing Entry Strategies
The various entry mode options form a continuum. As shown on this slide, the level of involvement, risk, and financial reward increases as a company moves from market entry strategies such as licensing to joint ventures and ultimately, various forms of investment. When a global company seeks to enter a developing country market, there is an additional strategy issue to address: Whether to replicate the strategy that served the company well in developed markets without significant adaptation. To the extent that the objective of entering the market is to achieve penetration, executives at global companies are well advised to consider embracing a mass-market mind-set. This may well mandate an adaptation strategy. POWERPOINT Low investment/low cost generally low risk, but also lower profit. Reverse is also true. 3 question they ask about deciding which strategy to use. 1) What method? 2) Standardize or adaptation? (mainly thinking about the product) 3) Do i do the same thing everywhere?
Government Action to Discourage Imports and Block Market Access (3)
These measures are designed to limit the inward flow of goods. 1) Tariffs: Can be thought of as the "three R's" of global business: Rules, rate schedules (duties), and regulations of individual countries. 2) Import Controls (Quotas): A quota is a government-imposed limit or restriction on the number of units or the total value of a particular product or product category that can be imported. Quotas are designed to protect domestic producers. 3) Non-Tariff Barriers (Hidden): A Non-tariff barrier (NTB) is any measure other than a tariff that is a deterrent or obstacle to the sale of products in a foreign market. NTBs are also known as hidden trade barriers.
Extend, Adapt, Create: Strategic Alternatives in Global Marketing
To capitalize on opportunities outside the home country, company managers must devise and implement appropriate marketing programs. Depending on organizational objectives and market needs, a particular program may consist of extension strategies, adaptation strategies, or a combination of the two. 1) Extension Strategy: Offering a product virtually unchanged in markets outside the home country 2) Adaptation Strategy: Involves changing elements of design, function, or packaging in response to needs or conditions in particular country markets. 3) Product Invention: Entails developing new products "from the ground up" with the world market in mind. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ I think these are general categories. These next 4 strategies are the ones on the image. Strategy 1: Product-Communication Extension (Dual Extension) Companies pursuing this strategy sell the same product with virtually no adaptation, using the same advertising and promotional appeals used domestically, in two or more country markets or segments. -Extend product, same marketing/ads Strategy 2: Product Extension-Communication Adaptation The appeal of this strategy is its relatively low cost of implementation. Because the product itself is unchanged, expenditures for R&D, manufacturing setup, and inventory are ignored. -Extend product but change marketing Strategy 3: Product Adaptation - Communication Adaptation -Adapt the product itself but keep the marketing/ads Strategy 4: Product-Communication Adaptation (Dual Adaptation) -Adapt both the product and marketing/ads Strategy 5: NOT IN IMAGE but was included in powerpoint. Innovation
Gray Market Goods
Trademarked products are exported from one country to another where they are sold by unauthorized persons or organizations. This practice, known as parallel importing, occurs when companies employ a polycentric, multinational pricing policy that calls for setting different prices in different county markets. Gray markets can flourish when a product is in short supply, when producers employ skimming strategies in certain markets, or when the goods are subject to substantial markups. Gray markets impose several costs or consequences on global marketers, including the following: -Dilution of exclusivity: Authorized dealers are no longer the sole distributors. The product is available from multiple sources and margins are threatened. -Free Riding: If the manufacturer ignores complaints from authorized channel members, those members may engage in free riding; that is, they may opt to take various actions to offset downward pressure on margins. These options include cutting back on pre-sale service, customer education, and salesperson training. -Damage to channel relationships: Competition from gray market products can lead to channel conflict as authorized distributors attempt to cut costs, complain to manufacturers, and file lawsuits against the gray marketers. -Undermining segmented pricing schemes: A variety of forces - including falling trade barriers, the information explosion on the internet, and modern distribution capabilities - hamper a company's ability to pursue local pricing strategies. -Reputation and legal liability: Not as good as original products, don't have same quality standards or warranty.
Potential Export Problems
Two types of problems, logistics problems and servicing exports problems. Logistics Problems: Arranging transportation, transport rate determination, handling documentation, packaging, obtaining insurance, licensing, contracts, etc... Servicing Exports Problems: Providing parts availability, providing repair service, sales promotion, advertising, sales effort, trade restrictions, competition overseas.
Brand Extensions
Using an established brand name as an umbrella when entering new businesses or developing new product lines that represent new categories to the company.
How are segments Targeted?
Using market research techniques such as conjoint analysis, the team seeks to better understand how customers will perceive product features and functionalities.
Pluralization of Consumption or Segment Simultaneity Theory
Was advanced by Professor Theodore Levitt four decades ago stating that consumers seek variety and new segments will appear in many national markets.
