Global Marketing Management-Exam 1

Front 1

Largest food and beverage company in the world

Back 1

Nestle

Front 2

Two biggest beer companies in the world

Back 2

In-Bev and Sab/Miller

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Top 4 emerging markets

Back 3

Brazil, Russia, India and China (BRIC)

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Global marketing benefits

Back 4

1. Cost reduction
2. Increased competitive advantage on a global basis
3. Improved quality of products and program
4. Enhanced customer preference

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Why Global Marketing is Imperative

Back 5

1. Saturation of domestic markets
2. Emerging markets
3. Global competition
4. Global cooperation
5. Internet Revolution

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1. Saturation of domestic markets

Back 6

-forces companies to look for marketing opportunities beyond their national boundaries
-you can't sell anymore in your own country

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2. Emerging markets

Back 7

-growth opportunities in BRIC (and more)
-has a lot of people with growing economies and a lot of income

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Top 3 largest populations of the world

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1. China 1.3 billion
2. India 1.2 billion (expected to overtake China)
3. USA 310 million (0.3 billion)

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3. Global competition

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-30-40 years ago was automobiles, appliances and textiles
-Now: food, chemicals, and machinery

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4. Global cooperation

Back 10

-global competition brings about global cooperation
-companies merging forces

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5. Internet revolution

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-instant communication
-makes it possible to do things abroad like never before

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International Trade

Back 12

Consists of exports and imports

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International Business

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Includes international trade and foreign production

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Trade surplus

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Company exports more than they import

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Trade deficit

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Company imports more than they export

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3 ways to market products

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1. Export their products from US
2. Invest in their foreign production on their own and manufacture those products abroad for sale there
3. Contract out manufacturing in whole or part to a company in a foreign country (licensing or joint venture agreement)

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Marketing

Back 17

the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers

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Domestic marketing

Back 18

companies focus marketing solely in their own area; they pay little attention to changes in global market

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Export marketing

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unsolicited orders from foreign customer (little effort); no change to product (sold as is)

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International marketing

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after export marketing it seeks new directions and growth for expansion; makes changes/adaptations specifically for the foreign market; countries viewed independently

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Multinational marketing

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company markets products in many countries around the world

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Global marketing

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marketing activities by companies that emphasis: standardization efforts, coordination across markets, global integration

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GDP

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Gross Domestic Product
World GDP-$70 Trillion
US-$16 Trillion (largest)

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Consumer products

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Products purchased by individuals (70% of GDP)

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Fixed (pegged) rate currencies

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conversion rates are fixed

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Floating rate currencies

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Conversion rates change constantly

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Weak dollar positives

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-tourism
-more exports
-declines our imports because we would have to pay more for the items we import

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International monetary system

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-Free floating exchange rates could not work
-A monetary system was needed that would recognize that exchange rates were both a national and international concern
-important because the vast majority of countries have their own unit or currency
-affects companies as well as individuals

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International monetary fund

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created to oversee the international monetary system; promote international monetary cooperation and to facilitate the expansion of trade,

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Purpose of International Monetary Fund

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1. Facilitate expansion and growth of trade
2. Promote exchange stability
3. Establish multilateral system of payments
4. Make resources available for corrections
5. Shorten duration of diequilibrium

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Balance of payments

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summarizes all the transactions that have taken place between its residents and the residents of other countries; Transaction has 3 categories:
1. Current account
2. Capital account
3. Official reserves

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Marketing in the Euro Area

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worlds second largest economic zone; bilateral currency exchange rates; launched a single currency; EuroZone economies rep about 1/3 of world's GDP and 20% of international trade

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Pros and Cons of the Euro

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1. price transparency
2. intensified competitive pressure
3. Streamlined supply chains
4. New opportunities for small and medium-sized companies
5. Adaptation of Internal Organizational Structures
6. EU Regulations crossing national borders

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Culture

Back 34

arts, beliefs and values of an institution of a population passed down from generation to generation

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Elements of Culture

Back 35

1. material life
2. language
3. aesthetics
4. religion
5. education
6. value systems (what's right/wrong)

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Organizational culture

Back 36

leadership in a country (team vs. dictatorship)

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Customer Relationship Management

Back 37

knowing what the customer wants
repeat purchasing
brand loyalty
lifetime value of a customer

Front 38

Internet communication and CRM

Back 38

Customer retention costs go down when you use CRM effectively

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High Context Cultures

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big picture
vague messages
beat around the bush
silent body language

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Low Context Cultures

Back 40

direct and specific
impatient
give me the info now
(US/Canada/Germany)

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Structure of government

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Communism
Capitalism
Socialism

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Communism

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government controls everything (Cuba, North Korea, *China)

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Capitalism

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Capital controlled by individuals/consumers; free market trade (USA, Russia, Canada, Australia, New Zealand, France, most of western Europe)

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Socialism

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mixture of government and consumers (UK, Scandinavian countries, Venezuela); tend to have better education/healthcare

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Political Party: Single party dominant

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1 party per country (China, Cuba, North Korea)

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Political Party: Dual Party dominant

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2 strong parties (USA)

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Political Party: Multiparty dominant

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Countries with multiple parties (the more parties=the more unstable the gov't)

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Incentive and Gov't programs

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most countries use government loans, subsidies or training program to support export activities

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Government Procurement

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encourages their citizens from companies that are in their country (i.e. Buy US)

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Trade Laws

Back 50

-Economic trade controls (tariff and non-tariff barriers) and political trade controls (embargoes and sanctions)
-Tariffs (tax) and embargoes (can't trade with another country period)

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Green marketing

Back 51

-reduction of unnecessary packaging materials
increased recycling
-recyclability of materials used in the products

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Bribery

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Key issue doing business overseas; popular in countries with dictatorship

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Political risk

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violence
labor strikes
political instability

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Per Capita Income (formula)

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=GDP/Population

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Country with highest GDP per capita

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Liechtenstein (US #12)

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Expropriation

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government takes your business but gives you something for it (but falls short of market value)

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Confiscation

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government takes business; stealing; just outright take it

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Nationalization

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give company some compensation but it becomes government property for purpose of making it a government-run industry

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Domestication

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phast out to government over long-term

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Countertrade

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trade without money; trade deal

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Patent

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"first to file"-granted to the first person filing an application for the patent

"first to invent"-granted to first person to invent the product or technology (In US only)

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Copyright

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protect original literary, dramatic, musical, artistic and certain other intellectual works

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Trademark

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word, symbol, or device that identifies the souces of goods and may serve as an index of quality; in US registration not mandatory

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Trade Secret

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protect intellectual proerty and differs from patent, copyright and trandemark in that it is sought without registration

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Sherman Antitrust Act of 1890-

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Restrains free and open trade (Standard Oil case)

They control prices, quality, standard, no incentive to make a better product

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US Foreign Corrupt Practices Act of 1977

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Prohibit bribery to foreign officials

If you are a citizen of the US and bribe someone anywhere in the world, you go to jail; if company participates all executivs can go to jail and pay huge fines

So they hire non-US citizen to do the bribery

Front 67

Secondary data

Back 67

data that already exists

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Primary data

Back 68

original data

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Problems with secondary data

Back 69

accuracy
age of data
reliability over time
comparability
lumping

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Primary data collection

Back 70

1. focus group
2. survey research
3. observational research
4. test markets
5. direct mail
6. interview

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Focus group research

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form of primary data; used to get initial answers to a problem; usually first step; small sample size that isn't projectable

(1 or 2 people will dominate focus group)

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Sample

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portion of the population; small portion of the whole; will not be representative of the whole group

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Survey research

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talk to a larger group of people through questionnaire; representative of the sample; dealing with a larger sample ; randomly selected

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Free Trade Area

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formal agreement among two or more countries to reduce or eliminate customs duties and non-tariff trade barriers.

Front 75

Corporate response to the recession

Back 75

1. pull out
2. emphasize a product's value
3. change the product mix
4. repackage the goods
5. maintain stricter inventory
6. look outside the region for expansion opportunities
7. increase advertising in the region
8. increase local procurement

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Culture and the marketing mix

Back 76

1. Product
2. Place
3. Promotion
4. Product

Front 77

Segmentation

Back 77

taking the whole market and dividing it into pieces (i.e. cable, Netflix); subdividing groups that behave in the same way.

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Targeting

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Picking out which segments you're going to go after

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Positioning

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putting brand/product and customer int a certain way and relating it to the competitors

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Geographical segmentation

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dividing groups by country, climate, etc.

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Demographical segmentation

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dividing groups by age, gender, rage, religion, income, homeownership, marital status, family size, etc.)

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Psychographic segmentation

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dividing groups by lifestyle (what interests you and how you live your life)

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Behavioral segmentation

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dividing groups by behavior (how loyal a customer is)

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80/20 rule

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80% of consumption of products comes from 20@ of users (heavy users)

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Criteria for targeting

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1. current segment size and growth potential
2. competition growth
3. compatibility and feasibility of product
4. large enough existing competition

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Concentrated global marketing

Back 86

reaching a segment worldwide (i.e Chanel --> upscale market)

Front 87

Differentiated marketing

Back 87

different products for different markets

Front 88

Bottled Water positions

Back 88

#1
purest
most expensive
cheapest
imported
green
best tasting
charity/philanthropy
carbonated
packaging
personality
pet
babies
caffeinated
vitamins

Front 89

Types of positioning

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1. high-tech positioning
2. high-touch positioning
3. localized positioning
4. uniform positioning
5. country of origin positioning

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Decision criteria for mode of entry

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1. market size and growth
2. risk
3. government regulations (openness)
4. competitive environment
5. cultural distance
6. local infrastructure
7. company objectives
8. need for control
9. internal resources, assets and capabilities
10. flexibility
11. transaction cost economies (make or buy)
12. resources-based view (

Front 91

Wholly owned subsidiaries

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Wholly owned subsidiaries allow the parent company to retain the greatest amount of control, but also leave the parent with all the costs and risks of full ownership.

Front 92

Indirect exporting

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firm uses a middleman based on its home market to handle the exporting

Front 93

Cooperative exporting

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firm enters into agreement with another company (local or foreign) where the partner will use its distribution network to sell the exporter's goods

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Direct exporting

Back 94

the company sets up its own export organization and relies on a middleman based in a foreign market (foreign distributor)

Front 95

Licensing

Back 95

contractual transaction where the firm offers some proprietary assets to a foreign company in exchange for royalty fees; least risky than franchising

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Agent

Back 96

represents you and sells products for you; gets paid commission

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Merchant

Back 97

takes titles of product and resells them

Front 98

Franchising

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Franchisor gives the franchisee the right to use the franchisor's trade names, trademarks, business models, and/or know-how in a given territory for a specific time period

Front 99

Contract manufacturing (outsourcing)

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company agrranges with a local firm to manufacture or assemble parts of the product or even the entire product

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Cooperative joint venture

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agreement for the partners to collaborate but does not involve any equity investments.

Front 101

strategic alliance

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coalition of two or more organizations to achieve strategically significant goals that are mutually beneficial

Front 102

Exit Strategies

Back 102

1. sustained losses
2. difficulty in cracking the market
3. volatility
4. premature entry
5. ethical reasons
6. intense competition
7. resource allocation