Marketing

What are the main advantages and disadvantages of pursuing a hierarchical entry mode strategy into foreign markets?

Hierarchical entry modes, like setting up a subsidiary, offer full control over operations, ensuring brand consistency and direct market knowledge. However, they require significant investment and carry high risks, including dealing with foreign regulations and cultural differences. Additionally, the company is fully responsible for any operational challenges and must navigate complex market dynamics independently.

Structure of the distribution channel

Market Coverage: Intensive: Like Coca-Cola available in most stores. Selective: A brand like Apple selling through selected electronics stores. Exclusive: Luxury brands like Rolex sold in exclusive boutiques. Channel Coverage: How well the distribution channels (like retailers, wholesalers) cover the market. For example, a health food brand might use health food stores and online platforms to cover its market. Channel Length: Short Channel: Selling directly online, like Dell selling computers through its website. Long Channel: A clothing brand using wholesalers, retailers, and online stores to reach customers.

International pricing strategies

Skimming Pricing: Start with high prices for a new, cool product, then lower them later. It's like when a new gaming console is really expensive at first and then gets cheaper. Market-Based Pricing: Set prices based on what people in each place can afford and what other similar products cost there. Like how a cup of coffee might be more expensive in New York than in a small town. Penetration Pricing: Begin with really low prices to attract lots of customers quickly, then raise them later. It's like when a new app gives you the first month free or at a very low cost to get you to sign up

Competitive triangle

The Competitive Triangle is a simple concept used to understand the competitive dynamics in a market. It involves three key players: Your Company, your Competitors and Customers. In this triangle, each point influences the others. Your strategies should be based on understanding your competitors' moves and your customers' needs and preferences. This helps in making informed decisions to stay competitive and appealing to customers. Example: A coffee shop (Your Company) needs to understand how other local cafes (Competitors) are attracting customers and what kind of coffee experience the local people (Customers) are looking for.

Product decision

The product decision is among the first decisions that a marketing manager makes in order to develop a global marketing mix. The three levels of a product 1. Core product benefits - Features, performance, image, technology 2. Product Attributes - Brand name, quality, design, size, price 3. Support Services - Delivery, Installation, guarantees, after-sales service.

Internationalization Theories

· The Uppsala internationalization model · The transaction cost analysis (TCA) model · The network model · Born global

Branding

Branding is the process of creating a unique name, design, symbol, or a combination of these, to create an identity for a product or company. Functions of branding: · Creating awareness of the product · Differentiating your product from the competitors · Assuring a certain level of quality and satisfaction

De-internationalization

De-internationalization is when a company reduces or eliminates its international activities. This can be due to high costs, cultural challenges, or unsuccessful ventures. For example, a US retailer closing its stores in Europe due to persistent losses.

Multiple channel strategy

A product/service is available to the market through two or more channels of distribution. Multiple channels may include the internet, sales force, distributors, call centres, retail stores and direct mail. For example, a clothing brand might sell its clothes in its own stores, on its website, and also through online marketplaces like Amazon

What are the main advantages and disadvantages of pursuing a export entry mode strategy into foreign markets?

Advantages: Low Risk: Exporting involves lower risk compared to other entry modes, as it requires less investment in terms of capital and infrastructure in the foreign market. Flexibility: It allows businesses to test foreign markets without the commitment of significant resources. If the market isn't profitable, it's easier to withdraw. Economies of Scale: Companies can achieve economies of scale in production by catering to larger markets. Leveraging Existing Resources: Businesses can use their current production, distribution, and resources without significant alterations. Disadvantages: Limited Market Control: Exporters have less control over marketing and distribution in the target market, often relying on local agents or distributors. Trade Barriers: Exporting is subject to trade barriers like tariffs and quotas, which can affect competitiveness and profitability. Transportation Costs and Risks: Shipping products to a foreign country involves logistical costs and risks, including damage during transit or delays. Cultural and Language Barriers: Without a local presence, understanding and adapting to local consumer preferences, culture, and language can be challenging.

What are the main advantages and disadvantages of pursuing a intermediate entry mode strategy into foreign markets?

Advantages: Reduced Risk and Investment: Compared to establishing a wholly-owned subsidiary, intermediate modes require less financial and resource commitment, reducing the risk if the venture doesn't succeed. Market Knowledge: Partnering with local firms (as in joint ventures) or allowing local entrepreneurs to use your brand (as in franchising) can provide valuable insights into the local market, consumer behavior, and regulations. Rapid Market Entry: These strategies can be quicker ways to enter a market, especially in regions where establishing a new operation from scratch is time-consuming due to regulatory hurdles. Flexibility: Intermediate modes offer more flexibility than wholly-owned ventures, allowing companies to adjust their involvement based on market performance. Disadvantages: Less Control: Companies have less control over their operations and brand management compared to a wholly-owned subsidiary, which can lead to inconsistencies in brand representation or quality. Dependency on Local Partners: Success can heavily depend on the reliability and capability of the local partner, which can vary significantly. Sharing of Profits and Knowledge: Companies have to share profits with their partners. In joint ventures or licensing agreements, there's also the risk of transferring knowledge to the partner, who could become a competitor in the future. Legal and Cultural Differences: Navigating legal agreements and understanding cultural differences can be challenging and require careful management.

Communication decisions

Communication is the fourth and final decision to be made about the global marketing programme The purpose is to provide information of interest to the customers and to persuade the customer to buy a product - at present or in the future. Six main communication tools : Advertising: Using paid channels to promote a product or brand. Example: A soda company running commercials on TV. Public Relations (PR): Building a positive image and handling the flow of information to the public. Example: A tech company hosting a press event to launch a new product. Sales Promotion: Short-term incentives to encourage buying. Example: A clothing store offering free deal. Direct Marketing: Communicating directly with targeted customers through email, mail, or phone. Example: An insurance company sending personalized email offers to potential clients. Personal Selling: One-on-one interaction with customers to persuade them to make a purchase. Example: A car salesperson talking to a customer at a dealership. Social Media Marketing: Using social media platforms to connect with and market to customers. Example: A beauty brand using Instagram influencers to promote their products.

The product communication mix

Companies use various tools like advertising, sales promotions, public relations, personal selling, direct marketing, digital/online marketing, packaging, and branding. Promotion Standard - a standardized promotional strategy where a company uses the same promotional tactics and messages across all markets by maintaining consistency (Coca Cola). Promotion Adapt - adapting or customizing promotional strategies to suit the specific cultural, social or market differences in various countries. (MCdonald)[NF1] [NF1]In the slides there are 5 different approaches

Competitive benchmarking

Competitive benchmarking is like measuring your performance against your competitors to see where you stand and how you can improve. It's about looking at what others in your industry are doing well and trying to match or exceed it. This process helps businesses identify areas where they are falling behind and need to improve. Example: A restaurant could look at the menu variety, pricing, and customer service of the top restaurants in the area to understand how to attract more customers.

Joint Venture Risks in China

Cultural Differences: Misunderstandings due to different business cultures can lead to conflicts. Western and Chinese business practices often vary significantly. Legal and Regulatory Challenges: Navigating China's complex and evolving legal system can be difficult, especially regarding business operations and joint venture regulations. Control and Decision-Making Conflicts: Disagreements between partners over business decisions can arise, especially if there's a lack of clear agreement or unequal power dynamics. Market Understanding: Foreign companies might lack deep understanding of the local market, relying heavily on their Chinese partners, which can lead to strategic misalignments. Political Risks: Changes in government policies or political climate can impact joint ventures, especially in industries sensitive to national interests.

EPRG Framework (Perlmutter)

EPRG Framework: Classifies four different international management orientations Ethnocentric (E): This is a "home country" orientation. In this approach, a company believes that what works best in the home country will also work well in other countries. They use the same strategies and practices everywhere because they think their way is the best. Example: A U.S. fast-food chain opens outlets in Asia but doesn't change its menu, assuming American tastes will be universally popular. They use the same marketing strategies they use in the U.S., believing that what works at home will work abroad. Polycentric (P): This is a "host country" orientation. Here, a company understands that each country is different and allows its branches in different countries to operate independently. Each branch develops its own unique business and marketing strategies that suit the local market. Example: A German car manufacturer allows its Indian subsidiary to design cars specifically for the Indian market, understanding that local needs and preferences are different from those in Germany. Regiocentric (R): The company tries to integrate and coordinate its marketing programme within regions. Example: A European cosmetics company groups its operations in France, Italy, and Spain together, using a similar marketing strategy across these Mediterranean countries, as they share similar beauty trends and preferences. Geocentric (G): This is a "world-oriented" view. In this approach, a company tries to integrate a global systems approach to decision-making. They look for the best practices and ideas from around the world and try to apply them across all countries where they operate. Example: A multinational tech company combines the best practices from its offices worldwide to create a universal marketing strategy.

What are the firm's major motives in deciding to establish fully owned subsidiaries in foreign countries?

Firms decide to establish fully owned subsidiaries in foreign countries for several major motives: · Full Control: Having a wholly-owned subsidiary allows a company to have complete control over its operations, including decision-making, quality control, and adherence to company policies and standards. · Maximizing Profits: By owning the subsidiary fully, the company retains all the profits generated from its operations in the foreign market, without needing to share them with local partners or licensors. · Strategic Alignment: A fully owned subsidiary ensures that the foreign operations are completely aligned with the company's global strategy, branding, and business practices. · Market Knowledge and Presence: Establishing a presence in the market through a fully owned subsidiary can provide deeper insights into local consumer behavior, market trends, and competitive dynamics. · Long-term Commitment: It demonstrates a long-term commitment to the foreign market, which can be beneficial in building relationships with customers, suppliers, and local authorities. · Global Integration: Helps in integrating global operations, ensuring uniformity in processes, and leveraging global supply chains more effectively. While offering these benefits, fully owned subsidiaries also come with higher risks and investment requirements compared to other entry modes, necessitating careful consideration and strategic planning

Global experiential marketing (B2C and B2B)

Global experiential marketing, especially in a B2C (Business-to-Consumer) context, is about creating memorable and engaging experiences for consumers around the world. There are four categories of experience based on two dimensions: the level of customer involvement (passive or active participation) and the level of connection or engagement (absorption or immersion). These categories help businesses understand how to design experiences that resonate deeply with consumers. Entertainment : Here, consumers are passively involved but highly engaged. They absorb the experience without actively participating in it. Examples include watching movies, concerts, or online streaming content. Educational : Consumers are actively involved and absorbing information. This involves experiences where consumers learn something new or acquire skills. Workshops, classes, or interactive webinars are examples Escapist : In these experiences, consumers are actively participating and are fully immersed in an environment or activity. Examples include virtual reality experiences, theme parks, or escape rooms. Aesthetic: Consumers are passively involved but deeply immersed in the environment. They soak in the experience without influencing it. Examples include visiting art galleries or beautiful natural landscapes. In B2B global experiential marketing, businesses engage clients through memorable, interactive experiences like trade shows, workshops, product demos, and networking events. These tailored experiences aim to build relationships, showcase expertise, and foster trust, focusing more on long-term partnerships and value demonstration than immediate sales in a professional, globally connected context.

Global-pricing contracts

Global pricing contracts are agreements where a company sets a standard price for its products or services across different countries. Advantages: Simplicity: Easier to manage because the price is the same everywhere. Like a software company charging the same rate for its product in all countries. Consistency: Helps maintain a consistent brand image globally. Think of a famous smartphone brand with similar pricing worldwide. Prevents Market Conflict: Reduces the risk of customers buying from a cheaper market to resell in a more expensive one. Disadvantages: Lack of Flexibility: Can't adjust prices for local market conditions, like different levels of income or competition. Exchange Rate Fluctuations: The same price might become too expensive or too cheap if currency values change. Regulatory Challenges: Some countries might have rules that make a single global price difficult to implement.

Globalization, localization, glocalization

Globalization: This is like making the whole world into one big market. Companies sell the same products and use the same strategies everywhere, ignoring local differences. Example: A smartphone company sells the same model with identical features and advertising campaigns in countries around the world, from the U.S. to Japan to Brazil. Localization: This is like customizing products and strategies to fit each local market, respecting the unique preferences and needs of each place. Example: A fast-food chain modifies its menu in India, offering vegetarian burgers and spicy snacks. Glocalization: This is a mix of globalization and localization. Companies use a global brand but adapt their products and strategies to suit local tastes and cultures. It's like having a global brand with a local touch. Example: A global coffee shop chain keeps its recognizable brand and style but offers unique flavors in different countries

Internationalization and motives of it

Internationalization refers to the process where businesses expand their operations beyond their home country to enter foreign markets. The motives for internationalization can be broadly categorized into proactive and reactive reasons: Proactive Motives: · Market Seeking: Companies go international to explore new markets, increase sales, and gain new customers. · Resource Seeking: To access resources not available or more expensive in the home country, like raw materials or skilled labor. · Diversification: Spreading business across different markets for risk management and stability. · Knowledge and Innovation: Seeking advanced technology, innovation, and expertise to stay competitive. · Competitive Advantage: Establishing a global presence to strengthen the brand and compete more effectively. Reactive Motives: · Market Saturation: The domestic market is saturated, so the company looks abroad for growth opportunities. · Competition: Increasing competition in the home market pushes companies to explore less competitive markets. · Regulatory Changes: Changes in home country regulations may encourage companies to seek friendlier business environments abroad. · Customer Following: Following domestic customers who are expanding internationally. · Trade Barriers: Overcoming trade barriers by setting up operations in countries where access to markets is easier.

Internationalization triggers

Internationalization triggers are factors that prompt a business to expand internationally. They can be internal or external: Internal Triggers: -Desire for growth and expansion. -Unique product or service offerings. -Strong financial resources. -Leadership vision and ambition. External Triggers: -Market saturation in the home country. -Increasing global demand for products or services. -Competitive pressures. -Favorable trade policies or economic conditions abroad.

Internationalization barriers and risks

Internationalization, while offering numerous opportunities, also comes with its share of barriers and risks. Understanding these is crucial for businesses planning to expand globally: Barriers: · Cultural Differences: Misunderstanding local customs, language barriers, and different business practices can lead to miscommunication and business blunders. · Legal and Regulatory Challenges: Navigating different legal systems, compliance requirements, and bureaucratic hurdles in each country. · Market Knowledge: Lack of understanding of the local market, consumer behaviour, and preferences. · Resource Limitations: High costs of establishing and operating in foreign markets, along with the need for specialized local talent. · Economic Factors: Unfavourable economic conditions, such as inflation, recession, or currency fluctuations in the target market. Risks: · Political Risks: Instability, changes in government policies, and trade restrictions can impact business operations. · Economic Risks: Economic downturns or financial crises in the target market can affect profitability. · Competitive Risks: Facing unfamiliar and potentially stronger local competition, or underestimating the competition. · Operational Risks: Difficulties in managing overseas operations, supply chain complexities, and logistical challenges. · Reputation Risks: Potential negative impact on the brand if the international venture fails or encounters problems.

Explain the three market entry modes

Market entry modes are strategies used by businesses to enter international markets. These modes vary based on the level of investment and control a company wants to have. Export Modes: This is the simplest and least risky way to enter a foreign market. Businesses send their products to a foreign country to sell them there. This can be done directly, by selling to customers in the other country, or indirectly, through intermediaries like local distributors. Example: A U.S. winery selling its wines in Europe through a local distributor. Intermediate Modes: These involve more commitment than just exporting but less than fully owning operations in the foreign market. It includes strategies like licensing (allowing a company in the foreign market to use your product, brand, or process), franchising (giving rights to someone to open a business under your brand), or forming joint ventures (partnering with a local company). Example: An American fast-food chain granting a franchise in India, where the local franchisee operates the restaurants. Hierarchical Modes: These are the most committed and riskiest modes of entry. It involves a company setting up its own operations in the foreign market, like a subsidiary or branch. This gives the company full control but also means full responsibility for the setup and management of the foreign operation. Example: A Japanese car manufacturer establishing its own manufacturing plant in the United States.

New products for the international market

Newness to the Market: This means the product is something the market has never seen before. It's a brand new idea or invention for everyone, like the first electric car in a market used to only gasoline cars. Newness to the Company: This is when the product is new for the company but not for the market. It's like if a company that usually makes computers starts making smartphones. The company is new to smartphones, but smartphones are not new to the market.

Porter's diamond

Porter's Diamond is a model with four points, each representing a factor that can lead a country to be good at a specific industry: Factor Conditions: This refers to a country's resources, like skilled labor, infrastructure, and technology. For example, Germany's strong engineering skills and infrastructure make it good at car manufacturing. Demand Conditions: This is about the home market's demand for certain products, which can drive innovation and quality. For example, Japan's demanding consumers have pushed its companies to innovate in electronics and cars. Related and Supporting Industries: When a country has strong suppliers or related industries, it can boost an industry's competitiveness. For instance, Italy's leather industry benefits from its strong fashion and design sectors. Firm Strategy, Structure, and Rivalry: How companies are organized and the nature of competition in the home market can affect an industry's competitiveness. Intense domestic competition, like in the U.S. technology sector, can drive innovation and global competitiveness. These four points interact with each other, creating an environment where industries can compete globally.

Porter's five forces model

Porter's Five Forces Model is a tool that helps analyze how competitive an industry is. It looks at five key factors: Competitive Rivalry: This is about how intense the competition is in an industry. For example, in the fast-food industry, there are many strong competitors like McDonald's, Burger King, and KFC, making it highly competitive. Threat of New Entrants: This considers how easy it is for new companies to start competing in an industry. If it's easy, competition increases. For instance, the tech industry sees frequent new entrants due to rapidly evolving technology. Bargaining Power of Suppliers: This looks at how much power suppliers have to set prices. If there are few suppliers, they have more power. In the smartphone industry, for example, a few companies control key components, giving them significant power. Bargaining Power of Buyers: Buyers are the customers who purchase products or services from the industry. Their power can influence prices, quality expectations, and other factors. For example: In the airline industry, travellers (buyers) have some power when there are multiple airlines offering similar routes. They can compare prices, services, and schedules, giving them leverage in choosing the best option. Threat of Substitute Products or Services: This considers whether there are alternative products that can replace what an industry offers. For example, in the transportation industry, the threat of substitutes is high with options like cars, trains, buses, and bikes.

Pricing decisions

Pricing decisions in a business context involve determining the right price for a product or service. These decisions are influenced by both internal and external factors: Internal Factors: Costs: Includes production, distribution, and marketing costs. The price needs to cover these costs for the business to be profitable. Company Objectives: The business's overall goals, such as maximizing profit, increasing market share, or achieving a target return on investment, influence pricing. Product Positioning: How a company positions its product in the market (luxury, budget, etc.) affects its pricing strategy. Product Lifecycle: Prices may vary depending on the stage of the product lifecycle (introduction, growth, maturity, decline). External Factors: Market Demand: The level of demand for the product in the market can dictate pricing. Higher demand can allow for higher prices. Competition: Prices of similar products offered by competitors can heavily influence pricing decisions. Economic Conditions: Broader economic factors like inflation, recession, or consumer purchasing power impact pricing. Government Regulations: In some industries, government regulations may set price limits or impose taxes that affect pricing.

Branding Decision

Private Label Branding: This is when retailers sell products under their own brand name (For example, supermarket chains like Walmart or Tesco often have their own private label products ranging from food items to clothing. ) Co-Branding: This is a partnership between two or more brands to create a product or service that leverages the strength of each brand. (An example is the co-branded credit card from Starbucks and Visa, combining Starbucks' loyalty program with Visa's payment network.) Ingredient Branding: This is when a component or ingredient of a product is branded separately. ("Intel Inside" campaign, where the brand of the computer processor is promoted alongside the main product, like a laptop) Sensory Branding: This is about using things you can see, hear, smell, or feel to make you remember a brand. (when you walk into a bakery and the smell makes you think of fresh bread)

Global Marketing Programme

Product Decisions Pricing Decisions Distribution Decisions Communication Decisions (Promotion Strategies)

Explain product value chain and the service value chain and how a combination of them can create further customer value.

Product Value Chain: This is about how a company turns raw materials into a finished product. It includes steps like designing, manufacturing, and delivering the product. For example, in the case of a smartphone, this includes designing the phone, getting the parts, assembling them, and then selling the phone in stores or online. Service Value Chain: This focuses on services rather than physical products. It involves steps like developing a service idea, training staff to provide the service, and delivering the service to customers. For instance, in a restaurant, this would include creating a menu, training chefs and waitstaff, and serving food to customers. When you combine the product and service value chains, you create even more value for the customer. This means not only selling a great product but also offering excellent services related to that product. For example, a car company doesn't just sell cars (product value chain) but also offers maintenance services, warranty services, and customer support (service value chain). This combination provides a complete experience to the customer, increasing satisfaction and loyalty.

Product positioning

Product positioning is about how a product is perceived in the minds of customers relative to competing products. It's the image or identity of a product in the customer's view, based on its key attributes, benefits, and how it differs from competitors. The goal is to create a unique, positive, and memorable impression in the customer's mind. For instance, a luxury car brand might position its cars as symbols of status and premium quality, differentiating them from more affordable, mass-market vehicles.

Blue Ocean Strategy

The Blue Ocean Strategy is a business concept suggesting that instead of competing in overcrowded markets (red oceans full of competitors), companies should create new, unexplored markets (blue oceans). This involves innovating or offering something unique that no one else does, thus making competition irrelevant. Example: Cirque du Soleil created a blue ocean by combining elements of traditional circus with sophisticated theater, targeting a whole new audience that wasn't interested in conventional circuses. The idea is to find or create a space where you are the only player, allowing you to set your own rules and not worry about competing head-to-head with others.

Briefly describe the Hofstede and the GLOBE frameworks of culture and clarify with examples how companies can make use of the frameworks in international business. What are the limitations of using such frameworks?

The Hofstede and GLOBE frameworks are tools used to understand cultural differences in international business. Hofstede's framework outlines six dimensions such as power distance, individualism vs. collectivism, and uncertainty avoidance, helping businesses understand how cultures vary. For example, a company from the U.S., which ranks high on individualism, might change its approach when dealing with a collectivist society like Japan, emphasizing teamwork and group harmony. The GLOBE framework, which is more recent, builds on Hofstede's model and includes nine dimensions. It offers a nuanced view of global cultures. For instance, a European company, used to a low performance orientation, might need to adjust to the high performance orientation culture in the U.S. by introducing more performance-based incentives. Companies use these frameworks to tailor their strategies, improve cross-cultural communication, and adapt HR practices. However, these models have limitations. They can oversimplify and stereotype complex cultures, may not reflect current cultural dynamics, and often overlook intra-country cultural variations. Therefore, while helpful, these frameworks should be used carefully and complemented with current, local insights.

The integration-responsiveness framework

The Integration-Responsiveness Framework is a way businesses think about handling global pressures and local demands. There are two main issues: integration, where companies try to be efficient and consistent globally; and responsiveness, where they adapt to local markets' needs. Companies balance between acting globally (integration) and adapting locally (responsiveness) to be successful in international business. Example: McDonalds offers different products in different countries to fulfil local desires of customers

The product life cycle

The Product Life Cycle is a concept that describes the stages a product goes through from its introduction to the market until its decline. It typically includes four phases: Introduction (the product is launched), Growth (sales increase and the product gains market acceptance), Maturity (sales peak and market saturation begins), and Decline (sales decrease as the product becomes outdated or less popular).

The Value Chain What is a value chain and what is a value chain analysis? How could a company internationalize the value chain? Clarify your answer with examples.

The Value Chain concept is a model that helps businesses understand the specific activities through which they can create value and competitive advantage. These activities can include designing, producing, marketing, delivering, and supporting the product. Each step adds value to the product, hence the term "value chain." Value Chain Analysis is when a company looks closely at each step of this process to see how they can make it more efficient or better. They examine how each part of the chain can create more value for the customer and be more cost-effective. Internationalizing the Value Chain means a company spreads these activities across different countries to take advantage of lower costs, new markets, or specific local skills. For example, a smartphone company might develop technology in the U.S., manufacture in China for cost efficiency, handle marketing globally, and offer customer service in each major market they serve. This international approach allows companies to leverage global efficiencies while catering to local needs.

The value net

The Value Net is a model created to understand a company's competitive environment. It's like a map showing how different players in the market are connected. The Value Net has four parts: Customers: People who buy your product or service. (people who come to buy coffee) Suppliers: Businesses that provide you with materials or services you need. (the companies providing coffee beans and milk) Competitors: Other companies offering similar products or services. (other coffee shops nearby) Parrtners: These are businesses whose products or services enhance or complement your own. (bookstore next door that makes people more likely to grab a coffee while they read)

The virtual value chain (Rayport & Sviokla, 1996)

The Virtual Value Chain, introduced by Rayport and Sviokla in 1996, is a concept that applies the traditional value chain model to the virtual or digital world. It's about creating value through information. The idea is that businesses can generate value not just through physical processes (like making and selling products) but also through gathering, organizing, selecting, synthesizing, and distributing information. Gathering: Collecting information relevant to the business or its customers. For example, an online retailer tracking customer browsing and purchase histories. Organizing: Structuring the gathered information in a useful way. This might involve sorting data into categories or databases. Selecting: Choosing the right information for the right purpose. For example, using customer data to personalize marketing emails. Synthesizing: Combining and processing information to create new knowledge or products. An example could be analyzing customer data to predict future buying trends. Distributing: Sharing the processed information where it can add value, like sending personalized recommendations to customers. The integration of the virtual value chain with the physical value chain can greatly enhance customer value. For instance, a clothing retailer not only sells clothes (physical value chain) but also uses customer data (virtual value chain) to offer personalized shopping experiences online. This combination provides a more comprehensive and satisfying experience to the customer, leveraging both tangible products and digital insights.

The network model

This approach is about using business connections to grow internationally. Companies use their contacts like partners and customers to expand abroad. Example : a new tech company quickly reaching global markets by using its founders' business friends in different countries.

The transaction cost analysis (TCA) model

This model says companies go international to reduce costs related to making deals and contracts. Example: a software company in the U.S. setting up its own office in India instead of paying another company to do its software work.

The Uppsala internationalization model

This model suggests that firms internationalize gradually, starting from nearby or familiar markets and then expanding further. They learn and adapt as they grow. Example: A Swedish furniture company first expanding to neighboring Nordic countries before entering markets in the U.S. and Asia.

Born global

This term is for businesses that start operating in many countries right from the beginning. For example, an Australian internet company that starts selling to customers all over the world immediately.

Umbrella/Family Branding

Umbrella or Family Branding is a marketing strategy where a single brand name is used for multiple related products. For example, think of a well-known brand like Samsung. Samsung uses its brand name across a wide range of products, from smartphones and televisions to refrigerators and washing machines. Despite the differences in these products, the Samsung brand name gives customers a familiar and trusted label, suggesting a consistent level of quality and innovation across all these products.

Implications of the Internet for distribution decisions

Wider Reach: Companies can sell globally, not just locally. For example, a small artisan shop can sell its products worldwide through platforms like Etsy. Direct Sales: Manufacturers can sell directly to consumers online, bypassing traditional intermediaries. A good example is how many tech companies now sell their products directly through their websites. Lower Costs: Online sales can reduce the need for physical stores, cutting down on overhead costs. Increased Competition: Easier market entry through the Internet increases competition, compelling businesses to enhance their distribution strategies for better customer service, like offering faster shipping options.