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131 Cards in this Set
- Front
- Back
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International Marketing definition
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The performance of business activities to plan, price, promote and direct the flow of a company's good's and services to consumers or users in more than one nation for profit
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Lead-lag analysis
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An assumption for demand forecast. Market penetration curve in a region will have the same parameters of demand and rate of diffusion as another similar region, being time the only difference between them.
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Phases in internationalization
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1. Internationalize?
2. Target markets 3. How to enter them 4. Program design 5. Implementation of of the global marketing programme |
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Advantages and disavantages of primary data
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Advantages: timelessness
Disavantages: money and time costs |
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Advantages and disavantages of secondary data
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Advantages:Money and time costs
Disavantages: possibly outdated, frame used may not fit the marketing situation properly, possibly intentional bias, impossiblity of verifiying the experiment |
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Methods of market estimation
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-Lead-lag analysis
-Expert opinion -Approximation -Analogy |
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Analogy
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A comparison with a similar market is used for estimation. The factor used for analogy is called correlation factor, which is believed to be proportional in relation to a variable in both markets
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Approximation
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Market is estimated by:
Production + Imports -Exports - Current inventory levels = Consumption |
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Political Risks
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-Confiscation
-Expropriation (Confiscation + partial refund) -Domestication (Statization) |
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Lessening political vulnerability
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The relationship with the government must be positive. Some ways to do this:
- Use national manpower - Improve exports/ Reduce imports (import substitution) - Use locally produced resources - Transfer capital, technology, skills - Make tax contributions |
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Which is the best way to contract an agency to do the research?
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Contract an international agency in your home country which has subsidiaries in the target country. This way, all studies will be conducted by the same institution, assuring comparability, prices can be reduced and controlled, due to the contract for many studies at once, and there's assurance of quality, once one knows the agencies in his or her home country.
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Trade Barriers
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Exchange rate
Tariffs Quotas Voluntary export restraints Import restrictions (raw materials for foreign enterprises) Boycotts and embargoes Monetary barriers Standards Local-content laws (a portion of products sold in the country must have local content) Price controls Antidumping penalties |
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Monetary barriers
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Blocked currency
Differential exchange Government approval |
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Current dynamic of population trends in most markets
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Population decline in more-developed countries
Population aging Rural/urban migration |
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Culture
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The sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people,from generation to generation.
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Ways by which individuals learn culture
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-Socialization (growing up and having social contact)
-Acculturation (adjusting to a new culture) |
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Consequences of culture
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-Management style
-Consumption behavior |
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Origins of culture
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-Geography
-History -Techonology and political economy -Social institutions -Media -Religion |
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Elements of culture
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-Cultural values
-Rituals -Symbols -Beliefs -Though processes |
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Hofstede's 5 cultural dimensions
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-Long-term orientation
-Masculinity -Power distance -Individualism -Uncertainity avoidance |
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Key to sucessful international marketing
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Adaptation to the environmental differences from one country to another
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Primary obstacles in international marketing
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-Ethnocentrism
-Self-reference criterion |
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Factual knowledge vs interpretive knowledge
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Factual: raw facts and data
Interpretive : meaning of such facts within each culture, peculiarities and nuances |
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Cultural imperatives, electives, and exclusives
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Concepts regarding behaviors in relation to a cultural alien
Imperatives: must adopt Electives: has the possibility to adopt Exclusives: must not adopt |
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Three typical authority patterns
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-Top-level
-Decentralized -Comitee or group decisions |
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Monochronic and polychronic use of time
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Monychronic - One thing at a time
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Layer of culture (EDIT)
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-National
-Business/industry -Company -National |
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Determinants in the firm of the firm's choice of foreign markets
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Degree of internationalization
Size/amount of resources Type of industry/nature of business Internationalization goals Existing networks of relationships |
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Determinants in the market of the firm's choice of foreign markets
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International industry structure
Degree of internationalization of the market Host country:Market potential/Competition/Distance/Market similarity |
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International Marketing segmentation
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1- Segmentation criteria
2-development of segments 3-Screeening of segmenta 4-Microsegmentation |
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criteria for an effective segmentation
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Measurability
Accessibility Substantiality/profitability Actionability |
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Relationship between relevance and Measuribility, Acessibility and actionability in market segmentation
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The greater the relevance, the lower the Measuribility, Acessibility and Actionability
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Actionability
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actionability expresses the notion that the segment targeted must be of an appropriate size for the company's resources to handle
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Segment screening process
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1-Preliminary screening - Environmental risks/ (BERI)
2-Fine-grain screening - market Attractiveness |
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BERI and its criteria
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Business Environmental Risk Intelligence
Political stability Economic growth Currency convertibility Labour cost/ productivity Short-term credit Long-term loans/venture capital Attitudes Nationalization Monetary inflation Balance of payments Enforceability of contracts Bureaucratic delays Communications Local management Professional services |
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Dimensions of market/country attractiveness
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Market size
Market growth Buying power of customers Market seasons Average industry margin Competitive conditions Market prohibitive conditions Government regulations Infrastructure Economic and political stability Psychic distance |
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Criteria for developing subsegments
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Demographics
Life style/Psychographics Consumer motivations Buyer behavior |
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Clusters
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Regions which bring a similar response to any marketing-mix strategy
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Balance of payments
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Nation's history of financial transactions
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Importance of the GATT
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Paved the way for the first effective worldwide tariff agreement
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World Trade Organization
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An institution, not an agreement as was GATT (153 members)
Provides a panel of experts to hear and rule on trade disputes between members All member countries will have equal representation For the first time, member countries undertake obligations to open their markets and to be bound by the rules of the multilateral trading system |
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Areas which provide opportunities in International Marketing
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Multinational Market regions
Emerging Markets and Developing countries |
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Multinational market region
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A group of countries
that seek mutual economic benefitfrom reducing trade and tariff barriers |
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Free trade areas
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Reduce or eliminate customs duties and nontariff trade barriers among partner countries
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Customs union
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Free trade area + a common external tariff
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Levels of mutinational cooperation
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Regional Cooperation Group (RCD)
Free Trade Area (FTA) Customs union Common market (mobility of labour, capital and technology) Political union |
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Market potentials should be viewed in the context of
regions of the world rather than country by country.Why? |
Globalization of markets
Worldwide trend toward economic cooperation Enhanced global competition |
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Stages of economic development, according to Roston
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The traditional society
The preconditions for takeoff The takeoff The drive to maturity The age of high mass consumption |
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Stages of economic development, according to the United Nations
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MDCs (more-developed countries)
LDCs (less-developed countries) LLDCs (least-developed countries) |
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NIC's
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Countries that are experiencing rapid economic expansion
and industrialization and do not exactly fit as LDCs or MDCs |
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Factors that comprehend the concept of Global Awareness
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Objectivity
Tolerance of cultural differences Knowledge |
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Cultural adjustments
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Be able to interpret effectively the influence and impact of the culture in which you hope to do business
Avoid measuring and assessing markets against the fixed values and assumptions of your own culture |
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Proactive motives for internationalization
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Profit and growth goals
Managerial urge Technology competence Foreign market opportunities Economies of scale Tax benefits |
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Reactive motives for internationalization
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Competitive pressures
Domestic market saturated Overproduction Unsolicited foreign orders (foreign market becomes aware of the product and shows interest on it) Extend sales of seasonal products Proximity to international customers |
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Internal triggers for Internationalization
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Internal triggers
Perceptive management Specific internal event Importing as inward internationalization |
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External triggers for internationalization
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External triggers
Market demand Competing firms Trade associations Outside experts(Banks, Governments, Export agents, Chambers of commerce) |
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Barriers hindering export initiation
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Insufficient finances
Insufficient knowledge Lack of foreign market connections Lack of export commitment Lack of capital Lack of productive capacity Lack of foreign channels of distribution Management emphasis on developing domestic markets Cost escalation |
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General Market risks
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Competition from other firms, Differences in product usage , Language and cultural differences, Difficulties in finding the right distributor, Differences in product specifications, Complexity of shipping services
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Commercial risks
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Exchange rate fluctuations ; Failure of export customers to pay due to contract disputes, bankruptcy, refusal to accept product, or fraud; Delays and/or damage in the export shipment and distribution process ; Difficulties in obtaining export financing
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Political risks
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Foreign government restrictions ; National export policy ; Foreign exchange controls imposed by host governments ; Lack of governmental assistance in overcoming export barriers Lack of tax incentives ; High value of domestic currency relative to export markets ; High foreign tariffs on imported products ; Confusing foreign import regulations and procedures ; Complexity of trade documentation ; Enforcement of national legal codes regulating exports ; Civil strife, revolution, and wars disrupting foreign markets
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Risk-management strategies
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Avoid exporting to high-risk markets
Diversify overseas markets Insure risks when possible Structure export business so that buyer bears more risk |
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The Competitive Triangle
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Consists of a customer, the firm, and a competitor. The winning of the customer’s favour depends upon the perceived value offered compared to the relative costs between the firm and the competitor.
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Levels of analysis in international competitiveness and recommended methods for each level
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Macro: national competitiveness - Porter's diamond
Meso: competitiveness inside an industry - Porter's five forces Mirco: value chain analysis - value chain analysis |
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Multicultural research
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Research dealing with cultures with different:
languages, economies, social structures, behavior, attitude patterns |
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Alternative market-entry strategies, from the most externalized to the most internalized
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Exporting
Contractual agreements Strategic Alliances Direct Investment |
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Direct and indirect exporting
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Direct exporting: the company sells to a customer in another country (particularly for high technology and big ticket industrial products).
Indirect exporting: the company sells to a buyer (importer or distributor) in the home country, who in turn exports the product. |
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Contractual agreements and their types
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Long-term, nonequity associations
between a company and another in a foreign market -Licensing: To establish a foothold in foreign markets without large capital outlays. A favorite strategy for small and medium-sized companies. Legitimate means of capitalizing on intellectual property in a foreign market. -Franchising:Expected to be the fastest-growing market-entry strategy. Franchiser provides a standard package of products, systems, and management services, Franchisee provides market knowledge, capital, and personal involvement in management. |
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Strategic International Alliances and their types
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A business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective
A way to increase competitive strengths: Opportunities for rapid expansion into new markets Access to new technology More efficient production and innovation Reduced marketing costs Strategic competitive moves Access to additional sources of products and capital -International Joint Ventures:A partnership of two or more companies that have joined forces to create a separate legal entity. -Consortia:Similar to joint ventures and could be classified as such except for two unique characteristics: large number of participants and the fact that none of the participants in active in the target market. They are used to pool financial and managerial resources and lessen risks |
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Types of world markets
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National
Regional Global “global integration versus local responsiveness” |
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Strategic Orientations of International firms
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Domestic market extension orientation: “Ethnocentric”; seeking markets where demand is similar to home market
Multidomestic market orientation:Separate marketing strategies on a country-by-country basis Global market orientation:Strive for efficiencies of scale (standardized marketing mix applicable across national boundaries) |
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Types of marketing strategies
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Standardization (global)
Adaptation (local) Adaptative standardization (glocal) |
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Advantages of standardization
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Economies of scale (purchasing, R&D, production, logistics)
Communication economies(creation and media) Easier to manage Brand image coherence Similarites in consumption habits |
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Advantages of adaptation
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Clear differences in the Consumptionhabits, needs & desires of consumers
Differences in receptiveness ofcustomers to marketing operations Adaptation to local competition Adaptation to local distribution systems, often heterogeneous depending on country Many media channels strictly national Differences in regulations & administrative procedures |
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Alternatives for organizing for global competition
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Global product divisions - responsible for product sales all around the world
Geographical divisions - responsable for all products and functions within a given geographical area Matrix organization - a combination of global operations and global product management (think global, act local) |
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Levels to consider in a decision to standardize the product
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-support services
-product attributes -core product benefits |
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Factors influencing the acceptance of an innovation
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-Relative advantage
-Compatibility -Complexity -Trialability -Observability |
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Concerns and opportunities in global brands
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Opportunities:
The Internet and other technologies accelerate the pace of the globalization of brands Ideally gives the company a uniform worldwide image Concerns:Balance the risk of losing the benefits of well established country-specific brands Ability to translate |
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Global brand
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the worldwide use of a name, term, sign, symbol, design, or combination thereof
intended to identify goods or services of one seller and to differentiate them from those of competitors. |
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Private brands' competitive advantages
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Provide the retailer with high margins
Receive preferential shelf space and in-store promotion Are quality products at low prices |
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Product/Communication modes
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Straight Extension Strategy (Roll-out) :Introduce the product internationally in the same form and in the same way as in the national market. No additional R&D or manufacturing costs required
Product Adaptation Strategy :Adapt the product to local preferences, without necessarily changing the promotional support. |
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Grey Marketing
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Unauthorized channels
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Pricing strategies
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Skimming: Short-term profit, product reaches only the top segments
Market Pricing: Customer price is based on competitive prices Penetration: Low prices to get high sales |
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Tactics for countering price escalation
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Lowering cost of goods
Lowering the export price from the factory Lowering tariffs (customs re-classification) Lowering distribution costs (shorter channel) Establishing local production of the product Pressurizing channel members to accept lower profit margins Using foreign trade zones to lessen price escalation |
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Types of countertrade
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-Barter
-Compensation deals (goods vs good+ money) Counter purchase ( 2 contracts: in the first, one company buys products in exchange for money, in the other, it sells afterwards the same amount of products or a rate of that amount) |
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Approaches to transfer pricing
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Transfer at cost (rarely used)
Transfer at arm’s length: same prices as quoted to independent customers Transfer at cost plus: local manufacturing cost plus a standard markup |
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Structural factors of standardized versus differentiated pricing
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-Differentiation:
Industry prices Importance of own brands Strengths of local competitors Consumer preferences Sensitivity to price Price awareness -Standardization:Internationalization of competition Internationalization of large retailing organizations |
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Major decisions on a channel
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Structure
Management and control of distribution channels Logistics |
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Structure of a channel subdecisions
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Types of intermediary (alternative distribution channels)
Coverage (intensive, selective or exclusive) Length (number of levels) Control resources Degree of integration |
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Managing & Controlling
distribution channels subdecisions |
Screening and selecting intermediaries
Contracting (distributor agreement) Motivating (rewards to assure they will pursue your objectives as well) Controlling Termination (legal issues) |
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Logistics subdecisions
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Physical movement of goods through the channel systems:
Order handling Transportation Inventory Storage / Warehousing |
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External determinants of a channel
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Final customer's characteristics
Nature of a product Nature of demand Competition Legal regulations/local business practices |
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Factors affecting product perception
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Customer's income
Product experience Product's end use Product's life-cycle position Country's stage of economic development |
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Final customer characteristics
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Size
Geographical distribution Shopping habits Outlet preferences Usage patterns |
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Factors affecting the structure of a channel
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Market coverage
Channel length Control/Cost Degree of integration |
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Types of market coverage
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Intensive coverage: many intermediaries
Extensive coverage: few intermediaries Exclusive coverage: only 1 intermediary |
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Factors influencing channel width
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Product type
Life cycle stage Price Brand Loyalty Purchase frequency Product uniqueness Selling requirement Technical complexity Service requirements |
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Vertical vs conventional marketing systems
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Vertical = integration of each successive stage of the channel (i.e. manufacturer acquires wholesaler)
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Channel lenght
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Number of levels or different types of intermediaries
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Logistics management
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All activities involved in:
Physically moving raw material In-process inventory Finished goods inventory from the point of origin to the point of use or consumption |
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Criteria for evaluating foreign distributors
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Financial and company strengths
Product factors Marketing skills Commitment Facilitating factors |
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A physical distribution system involves
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Physical movement of goods
Location of plants and warehousing Inventory quantities Transportation mode Packing |
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Order cycle time
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Time between the placement of order and the receipt of goods
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Factors affecting transportation mode and warehousing decisions
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Where the firm’s customers are geographically located
The pattern of existing and future demands The customer service level required |
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How one should storage products needing to be delivered quicky?
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Near the customer
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Factors affecting transportation mode decision
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Cost of different transport alternatives
Distance to the location Nature of the product Frequency of the shipment Value of the shipment Availability of transport |
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Factors to consider in export packaging
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Protection against rough handling, climate, pilferage
Effect of gross weight on import fees |
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Which export document protects the seller the most?
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The letter of credit
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Letter of credit
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Financial document issued by a bank at the request of the importer, guaranteeing payment to the exporter if certain terms & conditions surrounding the transaction are met. Usually, the payment is done after the seller presents its bank the bill of lading, which is used for the seller's bank to get the money from the buyer's bank. This, in its turn, gets money from the buyer.
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Why the letter of credit is not a guarantee of payment to the seller?
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Because the payment happens only the seller complies exactly with the term in the letter
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Role of the public relations
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The role of public relations (PR) is
creating good relationships with the media to help companies communicate messages and build an international profile. |
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Possible targets of the public relations
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Employees
Shareholders Suppliers Customers General public Governments Financial markets |
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Goal of communication, in international marketing
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Although the primary function of a product seldom differs from culture to culture, the same cannot be said of the other features or psychological attributes. One must communicate, thus, these features/attributes to each market
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Challenges in message creating
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Language differences
Economic differences Sociocultural differences Legal/regulatory differences Competitive differences |
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Linguistic limitations in messages
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Low literacy in some countries
Different nuances for the same word in two different regions Translation issues Multiples languages and dialects within a country |
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Legal constraints in communication
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Laws that control comparative advertising vary from country to country in Europe.
Advertising of specific products Control of advertising on television Accessibility to broadcast media Limitations on length and number of commercials Special taxes that apply to advertising |
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E-marketing
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The enablement of a business vision
supported by advanced information technology to increase the effectiveness of the business relationships between trading partners |
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E-marketing markets
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B2B
B2C C2C C2B |
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Why does Internet increases customers' power?
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Capability to gather information & purchase more easily than through traditional channels
Pre-purchase & post-sale use of the net is exploding, regardless of where the product is bought Internet: higher repeat-purchase behaviour Increasing consumer disposition to buy on line |
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E-marketing issues in the consumer purchasing decision process
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Problem recognition (marketing problem - customers' needs)
Information search Evaluation of alternatives Choice/Purchase (easy ordering/ payment conditions) Post-purchase behavior |
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Product delivery in B2C
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Download
Shipping Drop Shipping In-store pickup |
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Vertical market places vs horizontal market places
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Vertical: products used in a specific industry sector
Horizontal: products used in many industry sectors |
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C2B
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Consumers offering products to businesses such as:
Advertising links Stock photos Infra-structure such as cars |
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Internet effects on the Global Marketing Strategy
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Global competitive moves
Global market participation Global activity location Global products and services Global market communication |
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Waterfall vs shower approach
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Waterfall -enter marckets incrementally, one at at time, starting by the ones with highest GDP
Shower approach - enter all markets at once |
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Disintermediation and reintermediation in e-marketing context
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In e-marketing, one does not need anymore wholesales, retailers, etc..., so a disinstermediation occurs.
However, if the manufacturer can't sell the products by itself, then a reintermediation occurs, with an e-retailer, such as Amazon.com |
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Types of dynamic global e-marketing
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One-to-many - Information goes only from the business to the customers
Direct targeting - customers communicate their need to sellers One-to-one direct targeting- Highest degree of interaction - example - Amazon.com |
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M-Marketing
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mobile marketing
Use of mobile phones to reach targeted consumers and make them react at any time, wherever they are |
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Means of delivering information and communication in M-Marketing
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Vortals (voice activated portals)
Text applications (SMS) Web-mediated delivery (3G spectrum) |
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Characteristics of M-Marketing vs E-Marketing
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Convenience and accessibility
Personalization (PC often shared) Localization (GPS) |
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Benefits of M-Marketing for Merchants
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Impulse buying
Drive traffic Consumer education Perishable products (plane seats) Drive efficiency Target market |
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Benefits of M-Marketing for customers
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Comparison shopping
Bridge gap between bricks and clicks Opt-in searches (alert when product becomes available) Travel (flexibility) |
