Int'l Marketing Exam 2

Front 1

HTS (Harmonized Tariff System)

Back 1

importers and exporters have to determine the correct classification number (number facilitates customs clearance) for a given product or service that will cross borders

Front 2

Discriminatory procurement policies

Back 2

can take the form of government rules, laws, or administrative regulations, as well as formal or informal company policies requiring that goods or services must be purchased from domestic companies/discriminate against foreign suppliers

Front 3

CAP (Common Agricultural Policy)

Back 3

legislation adopted by European countries after WWII to aid and protect the interests of farmers, whose goal is to provide farmers with a reasonable standard of living, consumers with quality food at fair prices, and to preserve rural heritage—combines a direct subsidy payment for crops and land which may be cultivated with price support mechanisms, including guaranteed minimum prices, import tariffs and quotas on certain goods outside of the EU

Front 4

Anti dumping duties

Back 4

special additional import charges equal to the dumping margin; duties are also almost invariably applied to products that are also manufactured or grown in the importing country

Front 5

Countervailing duties

Back 5

additional duties levied to offset subsidies granted in the exporting country, duties imposed to neutralize the negative effects of subsidies—imposed after investigation finds that a foreign country subsidizes its exports, injuring domestic producers in the importing country

Front 6

Outsourcing

Back 6

shifting production jobs or work assignments to another company to cut costs (ie: global outsourcing-locate manufacturing in China and other low-wage countries to lower costs)

Front 7

FDI (Foreign Direct Investment)

Back 7

reflect investment flows out of the home country as companies invest in or acquire plants, equipment, or other assets; allows companies to produce, sell, and compete locally in key markets (ie: Honda built $550 mill assembly plant in Indiana, LG Electronics purchased a 58% stake in Zenith Electronics)

Front 8

Greenfield investment

Back 8

a market entry strategy that entails foreign direct investment in a factory, retail outlet, or some other form of new operations in a target country; no competition

Front 9

GSP (global strategic partnership)

Back 9

reciprocal, cross-border alliances that may involve business partners in a number of different country markets; linkages between companies from different countries to jointly pursue a common goal (ie: joint ventures)

Front 10

Brand Equity

Back 10

represents the total value that accrues to a product as a result of a company’s cumulative investments in the marketing of the brand—grows as a company invests in the brand; an asset representing the value created by the relationship between the brand and customers over time (benefits of strong brand equity: loyalty, less vulnerable to marketing actions and marketing crises, larger margins, more inelastic consumer response to price increases, increased marketing communication effectiveness)

Front 11

Country of Origin Effect

Back 11

perceptions about and attitudes toward particular countries often extend to products and brands known to originate in those countries—countries become part of the brand’s image and contribute to brand equity (ie: Germany-quality engineering, Italy-style) eg: Japanese products made in China are inferior to Japanese products made in Japan

Front 12

Export Price Escalation

Back 12

the increase in the final selling price of goods traded across borders that reflects factors such as the ultimate market destination, the mode of transport, tariffs, various feeds, handling charges, and documentations costs

Front 13

CIF (cost, insurance, freight)

Back 13

a contract requiring the seller to retain responsibility and liability for goods until they have physically passed over the rail of a ship

Front 14

FOB (free on board named port)

Back 14

a contract in which the responsibility and liability of the seller do not end until the goods have actually been placed aboard a ship

Front 15

FAS (free alongside ship named port)

Back 15

a contract that calls for the seller to place goods alongside, or available to, the vessel or other mode of transportation and pay all charges up to that point

Front 16

CFR (cost and freight)

Back 16

a contract in which the seller is not responsible for risk or loss at any point outside the factory

Front 17

Ex-works

Back 17

a transaction in which the buyer takes delivery at the premises of the seller; the buyer bears all risks and expenses from that point on—ex-works affords the buyer maximum control over the cost of transporting the goods

Front 18

DDP (delivered duty paid)

Back 18

the seller has agreed to deliver the goods to the buyer at the place he or she names in the country of import, with all costs, including duties, paid, seller also responsible for obtaining the import license if one is required

Front 19

Grey Markets

Back 19

the trade of a commodity through distribution channels which, while legal, are unofficial/unauthorized/unintended by the original manufacturer (gray market goods-trademarked products that are exported from one country to another where they are sold by unauthorized persons)

Front 20

Dumping

Back 20

sale of merchandise in export markets at unfair prices; results in “injury, destruction, or prevention of the establishment of American industry”—dumping occurs when imports sold in the US market are priced either at levels that represent less than the cost of production plus an 8% profit margin or at levels below those prevailing in the producing country

Front 21

Transfer pricing

Back 21

the pricing of goods, services, and intangible property bought and sold by operating units or divisions of the same company (ie: Toyota subsidiaries both sell to, and buy from each other)

Front 22

IMC (integrated marketing communications)

Back 22

the coordination and integration of all marketing communication tools, avenues, functions and sources within a company into a program that maximizes the impact on consumers and other end users at a minimal cost (one tool is advertising)

Front 23

Sales Promotion

Back 23

any paid customer or trade communication program of limited duration that adds tangible value to a product or brand (ie: price reduction, coupon, mail-in refund)

Front 24

Infomercial

Back 24

a form of paid television programming in which a particular product is demonstrated, explained, and offered for sale to viewers who call a toll-free number shown on the screen

Front 25

CRM (customer relation management)

Back 25

relationship developed with customer, best customers need to be satisfied, treating different customers differently based on their previous purchase history or past interactions with the company

Front 26

Breakeven Point

Back 26

the point at which cost or expenses and revenue are equal—no net loss or gain

Front 27

Logistics

Back 27

the management process that integrates the activities of all companies, both upstream and downstream, to ensure an efficient flow of goods through the supply chain

Front 28

Countertrade

Back 28

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—generally involves a seller from the West and a buyer in a developing country (flourishes when hard currency is scarce and the decreasing ability of developing countries to finance imports through bank loans)

Front 29

Export Selling vs Export Marketing

Back 29

• Export selling: exporting without tailoring the product, the price, or the promotional material to suit individual country requirements (only place)
• Export marketing: exporting using the product offered in the home market as a starting point

Front 30

Trade Shows vs Trade Missions

Back 30

• Trade show: a gathering of company reps organized around a product, a group of products, or an industry, at which company personnel can meet with prospective customers and gather competitor intelligence
• Trade mission: a state or federally sponsored show outside the home country organized around a product, a group of products, or an industry, at which company personnel can learn about new markets and competitors

Front 31

Ad valorem vs specific duties

Back 31

• Ad valorem: a duty that is expressed as a percentage of the value of goods
• Specific duty: expressed as a specific amount of currency per unit of weight, volume, length, or other units of measurement (ie: 50 cents US per pound, $1 US per pair, $25 per square yard)

Front 32

Tariffs vs Quotas

Back 32

• Tariff: rules, rate schedules (duties), and regulations of individual countries
• Quota: 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

Front 33

Export management Company vs Freight Forwarder

Back 33

• Export management company (EMC): an independent marketing intermediary that acts as the export department for 2 or more manufacturers (“principals”) whose product lines do not compete with each other—gathering marketing info, communicating with markets, setting prices, and ensuring parts availability (most important activities for export success)
• Freight forwarder: licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules—seek out the best routing and the best prices for transporting freight and assist exporters in determining and paying feeds and insurance charges

Front 34

Demand-based, Cost-based, and Administered Prices

Back 34

• Demand-based: pricing based on perceived value of consumer demand
• Cost-based: pricing based on an analysis of internal costs (ie: material, labor, etc) and external costs
• Administered: pricing set by legal statute or standard procedure formulated as an official policy

Front 35

Skimming vs Penetration Pricing

Back 35

• Price skimming: marketer sets a relatively high price for a product or service at first, then lowers the price over time—allows firm to recover its sunk costs quickly before competition steps in and lowers the market price; goal is to capture consumer surplus so that no customer will pay less for the product than the maximum than they are willing to pay (ie: high price for iPad on first day, then lower after first day-charge more for people who "need" it on first day)
• Penetration pricing: sets a relatively low initial entry price, often lower than the eventual market price, to attract new customers—works on expectation that customers will switch to the new brand because of the lower price; goal to increase market share or sales volume, rather than make a short-term profit (ie: 2 for 1 deals)

Front 36

Barter vs Offset

Back 36

• Barter: a direct exchange of goods or services between two parties—no money is involved, but both partners construct an approximate shadow price for products flowing in each direction
• Offset: a reciprocal arrangement whereby the government in the importing country seeks to recover large sums of hard currency spent on expensive purchases such as military aircraft of telecommunications systems—government will spend money on other country’s exports if the other country imports products from the host country”

Front 37

Hypermarkets, Supercenters, and Superstores

Back 37

• Hypermarket: a hybrid retailing format combining the discounter, supermarket, and warehouse club approaches under a single roof (huge, covering 200,000-300,000 square feet)
• Supercenters: offer a wide range of aggressively priced grocery items plus general merchandise in a space that occupies about half the size of a hypermarket (ie: Walmart has more than 2600 super centers, including hundreds in Mexico, Argentina, and Brazil where prices are as much as 15% lower than competitors’)
• Superstores: stores that specialize in selling vast assortments of a particular product category in high volumes at low prices (ie: Toys R Us, Home Depot, IKEA)—put pressure on smaller, more traditional competitors and prompt department stores to scale down merchandise sections that are in direct competition

Front 38

Advertising, Personal Selling, Public Relations, and Word of Mouth

Back 38

• Advertising: any sponsored, paid message that is communicated in a nonpersonal way (paid)
• Personal selling: person-to-person communication between a company rep and a prospective buyer—seller’s communication focused on informing and persuading the prospect where the short-term goal is making a sale and long-term goal is building a relationship; two-way, more costly, more effective, desire and action (paid)
• Public relations: the department or function responsible for evaluating public opinion about, and attitudes toward, the organization and its products or brands—responsible for fostering goodwill, understanding, and acceptance among a company’s various constituents and publics (not paid)
• Word of Mouth: opinion leaders-certain people to give info, reference groups

Front 39

Push vs Pull Strategies

Back 39

• Push: offerers/suppliers “push” goods or information toward the consumers—based on forecasted demand
• Pull: the consumer “pulls” the goods or information they demand for their needs—based on actual or consumed demand