Ib Chapter 17

Front 1

What Is The Marketing Mix?

Back 1

The choices the firm offers to its targeted market

Product attributes
Distribution strategy
Communication strategy
Pricing strategy

Front 2

What Is Market Segmentation?

Back 2

identifying distinct groups of consumers whose purchasing behavior differs from others in important ways

Front 3

Markets can be segmented by

Back 3

geography
demography
socio-cultural factors
psychological factors

Front 4

Two key market segmentation issues

Back 4

The differences between countries in the structure of market segments

The existence of segments that transcend national borders
when segments transcend national borders, a global strategy is possible

Front 5

How Do Product Attributes Influence Marketing Strategy?

Back 5

A product is like a bundle of attributes

Products sell well when their attributes match consumer needs

Front 6

consumer needs depend on

Back 6

Culture

Level of economic development

Product and technical standards

Front 7

Distribution strategy

Back 7

the means the firm chooses for delivering the product to the consumer

Front 8

How a product is delivered depends on the firm’s market entry strategy

Back 8

firms that manufacturer the product locally can sell directly to the consumer, to the retailer, or to the wholesaler

firms that manufacture outside the country have the same options plus the option of selling to an import agent

Front 9

There are four main differences in distribution systems

Back 9

Retail concentration
Channel length
Channel exclusivity
Channel quality

Front 10

Retail concentration

Back 10

concentrated or fragmented

in a concentrated retail system, a few retailers supply most of the market – common in developed countries

in a fragmented retail system there are many retailers, no one of which has a major share of the market – common in developing countries

Front 11

Channel length

Back 11

the number of intermediaries between the producer and the consumer

short channel - when the producer sells directly to the consumer – common with concentrated systems

long channel - when the producer sells through an import agent, a wholesaler, and a retailer – common with fragmented retail systems

Front 12

Channel exclusivity

Back 12

how difficult it is for outsiders to access

Front 13

Channel quality

Back 13

the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses

Front 14

Which Distribution Strategy Should A Firm Choose?

Back 14

The optimal strategy depends on the relative costs and benefits of each alternative

When price is important, a shorter channel is better
each intermediary in a channel adds its own markup to the products

When the retail sector is very fragmented, a long channel can be beneficial
economizes on selling costs
can offer access to exclusive channels

Front 15

Why Is Communication Strategy Important?

Back 15

Communicating product attributes to prospective customers is a critical element in the marketing mix

Front 16

What Are The Barriers to International Communication?

Back 16

Cultural barriers
Source and country of origin effects
Noise levels

Front 17

Cultural barriers

Back 17

it can be difficult to communicate messages across cultures
a message that means one thing in one country may mean something quite different in another

Front 18

Source and country of origin effects

Back 18

Source effects occur when the receiver of the message evaluates the message on the basis of status or image of the sender

Front 19

Noise levels

Back 19

the amount of other messages competing for a potential consumer’s attention

in highly developed countries, noise is very high
in developing countries, noise levels tend to be lower

Front 20

Firms have to choose between two types of communication strategies

Back 20

Push strategy - emphasizes personnel selling
Pull strategy - emphasizes mass media advertising

Front 21

Which Is Better – Push Versus Pull?

Back 21

The choice between strategies depends on product type and consumer sophistication

a pull strategy works well for firms in consumer goods selling to a large market segment
a pull strategy works better with longer distribution channels
Media availability
a pull strategy relies on access to advertising media

a push strategy works well for industrial products
Channel length
a push strategy may be better when media is not easily available

Front 22

What Is The Optimal Mix?

In general, a push strategy is better

Back 22

for industrial products and/or complex new products
when distribution channels are short
when few print or electronic media are available

Front 23

A pull strategy is better for..

Back 23

consumer goods products

when distribution channels are long
when sufficient print and electronic media are available to carry the marketing message

Front 24

Should A Firm Use Standardized Advertising?

Back 24

makes sense when it has significant economic advantages
creative talent is scarce and one large effort to develop a campaign will be more successful than numerous smaller efforts

Front 25

In regard to pricing strategy firms need to consider 3 key points..

Back 25

Price discrimination
Strategic pricing
Regulations that affect pricing decisions

Front 26

Price discrimination

Back 26

occurs when firms charge consumers in different countries different prices for the same product

Front 27

For price discrimination to work

Back 27

must be able to keep national markets separate
countries must have different price elasticities of demand - measure of the responsiveness of demand for a product to changes in price

demand is elastic when a small change in price produces a large change in demand
demand is inelastic when a large change in price produces only a small change in demand
Typically, price elasticities are greater in countries with lower income levels and larger numbers of competitors

Front 28

Strategic pricing has three aspects

Back 28

Predatory pricing
Multi-point pricing
Experience curve pricing

Front 29

Predatory pricing

Back 29

use profit gained in one market to support aggressive pricing designed to drive competitors out in another market

Front 30

Multi-point pricing

Back 30

a firm’s pricing strategy in one market may have an impact on a rival’s pricing strategy in another market

Front 31

Experience curve pricing

Back 31

price low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially

Front 32

A firm’s ability to set its own prices may be limited by

Back 32

Antidumping regulations –

Competition policy – regulations designed to promote competition and restrict monopoly practices

Front 33

Where Should R&D Be Located?

Back 33

New product ideas come from the interactions of scientific research, demand conditions, and competitive conditions

The rate of new product development is greater in countries where
more money is spent on basic and applied research and development
demand is strong
consumers are affluent
competition is intense