International Marketing Exam 1

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International Marketing

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The utilization and adaptation of the best marketing practices for the purposes of conducting commerce in other countries.

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Ethnocentric Management

Back 2

Use home country nationals as employees in home and host countries (ethnocentric bias)

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Polycentric Management

Back 3

Use local nationals as employees in home and host countries

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Regiocentric Management

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Use employees from the region within that region

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Geocentric Management

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Use the best employees globally without a focus on country location

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How can Marketing be defined?

Back 6

discovering and/or ANTICIPATING consumer needs and wants, creating the goods and services products that meet those needs, and then pricing, promoting, and delivering those goods and services

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The Four P's?

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Product
Price
Place (or distribution)
Promotion

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Multinational Corporations (MNCs)

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Businesses that conduct activities in at least one other country that differs from the home country in which the organization is headquartered

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Born-global firms

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Businesses that operate in two or more different countries from inception are born-global firms.

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Market Segmentation

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Grouping consumers based on their needs, attitudes, and interests.

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Target market

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Specific, identifiable market segment that a company seeks to reach.

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Positioning

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Creating a perception in a consumer’s mind about the nature of a company and its products relative to competitors’.

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Four Drivers of Globalization

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Channels of Communication
Lower Transportation Costs
Immigration and Emigration Patterns
Governmental Actions

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Sustainability or sustainable development

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meeting the needs of the current generation in a way that leaves future generations with the ability to also meet their needs.

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Market Economy

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An economy in which most economic decisions are made in the marketplace is a market economy.

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Command Economy

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A central authority makes all key economic decisions in a command economy.

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Mixed Economy

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The marketplace guides part of the economic system and the government runs the other part.

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Stages of Economic Development

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Traditional Society
Preconditions for Take-off
The Drive to Maturity
The Age of Mass Consumption

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Traditional Society

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Subsistence economy
Agricultural primary occupation and means of production
Limited technology and capital

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Preconditions for Takeoff

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Technology begins to develop
Rudimentary transportation to encourage trade

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Takeoff

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Manufacturing industries grow rapidly
Airports, roads, and railways built
A few leading industries support high levels of economic growth

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The Drive to Maturity

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Growth has spread to all parts of the economy and is self-sustaining
Modern transportation systems embedded
Rapid urbanization
Traditional industries may start to decline

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The Age of Mass Consumption

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Rapid rise of tertiary, third-wave support industries
Decline in manufacturing
Citizens enjoy abundance, prosperity, and a variety of purchasing choices

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Emerging Markets

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countries that are moving through the transformation from developing to developed

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Big Emerging Markets (BEMs)

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Brazil, Russia, India, and China

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Newly Industrialized Countries (NICs)

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rapid economic development places them between less- and more-developed stages.
China, Taiwan, South Korea, Mexico, Brazil

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Transition Economies

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Occur in formerly communist countries with centrally planned economies as the country transitions to a free market economy.

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Industry-Level Competitive Advantage

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Threat of new entrants
Threat of substitute products
Bargaining power of suppliers
Bargaining power of consumers
Rivalry among competitors

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Modes of Entry

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Exporting
Licensing
Franchising
Wholly owned Subsidiary
Joint Venture
Strategic Alliance

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Eclectic or OLI Theory

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1. Ownership advantages Why
2. Location advantages Where
3. Internalization advantages How

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Targeted Offerings

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Offering products or services that have been designed to meet the needs of a specific audience clearly communicates that a company is actively reaching out to a community
"you matter"

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Theory of Absolute Advantage

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A country has an advantage when it can produce more of a good or service using the same amount of resources as other countries can produce.

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Theory of Comparative Advantage

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Nations trade with less-developed or least-developed countries that do not hold advantages in any type of production.

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Integration

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the process of using agreements between countries to lower limits on the movements of products, capital, or labor.

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Free trade Area

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a group of countries that have entered into an agreement to reduce tariffs, quotas, and other barriers to the movement of goods and services.

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Custom union members

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agree to remove barriers to the movement of goods and services and consent to a uniform tariff policy toward nonmember countries.

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Common markets

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remove barriers to trade within the market, maintain a common tariff for nonmembers, and allow the free movement of capital and labor within the market.

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Economic union

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members have a harmonized economic policy between members, a common currency, and central bank.

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North American Free Trade Agreement (NAFTA)

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The United States, Canada, and Mexico formed NAFTA on January 1, 1994, leading to the world’s largest free trade area.

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MERCOSUR

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Founded in 1991
Current members include Argentina, Brazil, Paraguay, and Uruguay

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Andean Community

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Founded in 1969
Current members include Bolivia, Colombia, Ecuador, and Peru

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Union of South American Nations (UNASUR)

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Founded 2004
Goals political more than economic

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The Greater Arab Free Trade Area (GFTA)

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founded in 1997, now encompasses all seventeen members of the Arab League plus Algeria.

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Protectionism

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the desire to protect domestic businesses from the exports of foreign firms through governmental policy.

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Demographics

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Demographics are population characteristics, and perceptions/consumption differences related to these characteristics may vary wildly internationally.
Gender
Age
Income
Education
Ethnicity

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Psychographics

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Psychographic profiles emerge from a person’s activities, interests, and opinions.

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Geographic Area

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Marketing appeals can be made to people in a geographic area or region.

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Geodemographic Segmentation

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A hybrid form of geographic segmentation allows companies to enrich geographic approaches to segmentation by adding demographic and psychographic information.

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Cultural Loyalist

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will need basic financial services (checking/savings account). Will need possible wire service transactions and financial literacy for the United States

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Cultural Embracer

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Besides basic products any consumer would need, auto loans and mobile banking become attractive products. Too early to market mortgage products, since these people probably haven’t built up a credit history yet

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Cross-Culturer

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Excellent prospects for mortgages and small business products

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Cultural Integrator

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Part of the general population, targets for all products and services (except wiring funds)

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common law

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relies on legal precedents and usage traditions to form the basis of law.

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civil law

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utilizes statutes based on written words or a legal code.

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Economies of Scope

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producing a variety of similar products, which allows for at least parts of the production process and management activities to apply across the product line.

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Cultural Convergence

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Increased standardization may be the result of cultural convergence, or the growing similarities between global consumers.

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Emotional Factors

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At times reasoning and rational thought do not drive purchase decisions.

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Situational Factors

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Impulse buys are those made on the spot and that lead to emotional benefit
Other situational factors include the consumer’s physical situation, the social setting, the time of day, and the consumer’s mood.

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Profit-based pricing

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examines pricing from the perspective of what consumers are willing to pay rather than the cost of the item.

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Collusion

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In oligopolistic markets, a set of major competitors experiences the temptation to set prices at uniform levels either overtly or covertly through collusion.

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Predatory Pricing

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Involves the direct attempt by a major competitor to drive other companies out of business by setting prices unrealistically low.

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Acceptalbility

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It is accepted as payment by a group of people

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Scarcity

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When a product is scarce, it becomes more valuable and it takes more money to purchase the product, as only a limited supple of money is available

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Durability

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It will not spoil or become damaged

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Divisibility

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It can be divided into smaller units

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Profitability

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It is small enough that people can easily carry it around.