Term
| Types of Strategic Alliances |
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Definition
-Licensing - Global Licensing Interview
-Franchising -
-Joint Venture - Staples-UPS China JV
OEM
-Distribution Alliance
-Manufacturing Alliance |
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Term
| Strategic considerations for manufacturing in country |
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Definition
-FSAs
-Resources
-Market Conditions
-Appetite for Risk/Strategic posturing |
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Term
| Trade-offs that help guide entry modes |
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Definition
Control Posture – global expansion in the context of jeopardizing firm-specific advantages.
-Incremental
-Protected
-Control |
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Term
| Stages of Internationalization |
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Definition
-Indirect Exporting/ Licensing*
-Direct Exporting
-Establishing foreign sales subsidiary
-Joint Venture/Licensing/Strategic Partnerships
-Local Assembly
-Foreign Production through Aquisition
-Foreign Production (FDI) through “Greenfield” |
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Term
| Overall Globalization Strategy |
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Definition
Waterfall – after success in its home market, firm moves gradually into culturally close markets and high growth markets, then eventually into less-developed markets.
-Orderly expansion
-Allows time for learning and adjustment
-Lessens impact on resources required for expansion
-Requires great discipline
Sprinkler – exposes a company to the maximum number of markets as rapidly as possible.
-Faster market penetration across the globe, first mover advantage
-Requires large investment in managerial, financial and other resources to manage growth and risk
What types of industries/firms would be suitable for above strategies? |
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Term
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Definition
-Environmental factors and cultural factors result in needs and preferences that vary considerably
-Local marketing manager, i.e. "country manager" or subsidiary CMO
-Applies same marketing concepts - adjusting for the unique characteristics of the market |
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Term
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Definition
-How information is processed
-How external forces shape decision making
-Individual's perception of value
-Individual's perception of risk |
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Term
| Buyer Behavior model aka the decision making process |
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Definition
-Problem Recognition
-Information Search
-Evaluations of alternatives
-Choice
-Outcomes |
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Term
| Buyer Behavior model assumption |
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Definition
| Assumes that buyers are goal oriented - meaning there is a link between behavior and desired results |
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Term
| Applying Marketing efforts to shape behavior |
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Definition
External influences
-Culture
-Economic
-Technology
-Politics
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Model's of Man
-Buyer characteristics
-Buyer decision process
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(Local marketing effort squeezes in here)
-Buyer Choices
-Product choice
-Brand choice
-Store choice
-Supplier choice |
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Term
Fishbein model
Evaluation of alternatives |
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Definition
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Term
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Definition
Newly Industrialized Economies (NIE)
-Latin America
-Asian countries (ASEAN in particular)
-India |
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Term
| General Characteristics of new growth markets |
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Definition
Emergence of a middle class – more even wealth distribution
Economic strength is enhanced through participation in regional trading blocks
-Incentivizes foreign direct investment (FDI); by providing market access to a region as opposed to a stand-alone country |
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Term
| Marketing in Latin America |
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Definition
560 million people
Predominantly Spanish speaking
Relatively low income - Per capital GDP $5K to $13K (PPP)
-PPP is the exchange rate that equates the price of a basket of identical traded goods and services in two countries.
-In practice PPP take into account national differences in product and service prices (input costs, rents and other local costs are major factors)
Economically stratified society
Affluent consumers range between 10 to 20% of population |
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Term
| Latin American Trade Agreements |
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Definition
ANCOM – Andean Common Market – Bolivia, Colombia, Ecuador, and Venezuela
Mercosur – Argentina, Brazil, Paraguay, Uruguay
NAFTA – Canada, U.S. and Mexico
-Reduced or zero tariffs for movement of goods between markets, common external trade policies |
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Term
| Market Segmentation in Latin America |
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Definition
Pay attention to
-Physical distance – bogota is a long way from Sao Paulo
-Cultural Distance – San Salvador has a much different population than Santa Catarina, although in the same country
-Old rivalries – particularly soccer
Contrast between urban and rural
-80% of purchasing power is in urban vs. 20% in rural
-Urbanites tend to be style conscious with large population under 25; living with parents and degree of disposable income
-Rural customers are more traditional with a generally “fatalistic” view of the world. |
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Term
| Marketing Mix for Latin America |
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Definition
-Product localization – beyond language, localization need is limited
-Pricing – foreign products should focus on high end (and mid range) in urban markets and leave low end for domestic producers
-Distribution- weak infrastructure, locked down channels – suggest joint ventures and other strategic distribution arrangements
-Promotion – consumers/buyers want detailed product information; traditional themes, in rural areas – issues with illiteracy. Common language, religion and emphasis on traditional values provide a platform for Pan-Regional marketing efforts. |
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Term
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Definition
Southeast Asia, Taiwan and Korea
700 million people
High degree of acceptance of global brands, welcome foreign investment (Japan, Europe and U.S.)
-“China +1” Strategy
-“Asian Pivot”
-Diversified industries – electronics, mining, agribusiness, travel & tourism |
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Term
| Asian Foreign Trade Agreements |
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Definition
ASEAN – Association of South East Asian Nations
-Tariff rates of 0-5% between member nations
-Reduction of non-tariff barriers
-Common external tariff rate
-Common market by 2015 – that more fully standardizes regulations and other issues across the whole region. |
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Term
| Market Segmentation in Asia |
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Definition
Affluent + Sizeable middle class “have somes”
Most of these countries are ethnically diverse
Urban centers are prime market areas – Bangkok, Seoul, Manila, Jakarta
THAILAND
-Thailand GDP per capita is $10,000, with an unemployment rate of less than 2% upward pressure on wages and price
-One of the largest tourism markets in the world, with a diverse economy (food, electronics, raw materials, banking and professional services)
-Large regional differences – Bangkok, the center of commerce, Phuket and Chiang Mai – centers of tourism
-Different ethnic groups: Malays, Mon (border with Burma), Karen (northern border), Chinese Thais (centered in BKK), Khmer (along Cambodian border), Muslim (particularly in the South) |
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Term
| Product Positioning in Asia |
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Definition
Established premium/luxury market
Introduction of branded “global products” is followed localization to leverage branding at lower end of market |
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Term
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Definition
Product – design issues to accommodate for lifestyle issues.
-Pricing – skimming strategy, followed by a penetration pricing strategy is common, concern for “grey trade”
-Distribution – Infrastructure in urban areas well developed – rural areas underdeveloped (islands, and other geologic/geographic barriers add to distribution costs/effort)
-Promotion – efforts minimally adapted, advertising is increasingly localized, underground economy, extended family relationships across multiple and diverse businesses present significant leveraging opportunities |
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Term
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Definition
Proximity of markets –
Chinese, Korean, Japanese and Indian Diaspora are present throughout Asia and SE Asia – these “bamboo financing networks” and extended family businesses provide a platform that can span several markets simultaneously.
ASEAN trade agreement underpinnings |
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Term
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Definition
-Newly Democratized
-Developing Countries
-Chin & Hong Kong |
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Term
| Newly Democratized Countries (NDCs) |
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Definition
Characteristics
Previous Communist Countries – Soviet Union, Eastern Europe
-Basic needs satisfied
-Strong education & social control
-Moving from limited choice to plethora of choice – a perplexing shift for many consumers
Market Segments
-Income, rural/urban
-Importance of ethnic minority segments – former Soviet Union satellite countries; Balkans, etc.
Product Positioning and Tactics
-Imported products carry cache
-Penetration pricing is becoming increasingly popular as product categories are more and more crowded
-Promotional Strategies – Importance of training “middlemen” to facilitate educating buyers and providing sales support services |
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Term
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Definition
Low –income
Much of Africa, Central and South Asia, Central America
Lack of macro economic infrastructure and considerable market risk
-Lack of consumer and business credit
-Instable or weak institutions
-Transportation and communications infrastructure is poor or less developed
Distortion of Markets: Presence of NGOs (non-governmental organizations) and MDB – multilateral development banks- “the Aid”
Marketing infrastructure is poor
-Lack of secondary market data increases costs of market assessment
-Distribution channels, communication and media is not well developed or accessible
-“Bankable” population is relatively small
-Lack of cold storage lines |
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Term
| Market Segmentation in Developing countries |
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Definition
Income level is main segmentation criterion, because of uneven income distribution
Profiting from serving the poor – Bottom of the Pyramid
Government, NGO and multilateral development bank segments
-OPIC – Overseas private investment corporation www.opic.gov
-ADB – Asian Development Bank
World Bank
-IADB – InterAmerican Development Bank
-African Development Bank
-USAID
-United Nations |
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Term
| Marketing Mix in developing countries |
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Definition
Product Positioning:
-Basic and standardized products are a good initial fit to be able to sell through low-service outlets
Pricing
-Premium (skimming price) for the upper echelon
-Value and economy pricing for the broader population and other segments
-Innovative financing methods – Mohamed Younus
Distribution
-Weak infrastructure and lack of multi-modal make national distribution and access difficult (theft, loss and damage are endemic)
Promotion
-Sales force, location and number of selling points are keys to success for initial branding and market access (adjusted for product/service) |
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Term
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Definition
Large regional differences – three main economic centers are Guangdong, Shanghai, and Beijing (with SEZs in Shenzhen, Zhuhai, Pudong and others)
Imports tend to be factors of production – to feed export oriented sectors
Rapidly growing per capita income – on PPP basis quickly approaching western standard of living in large urban areas |
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Term
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Definition
Over 150 years as the gateway to greater China
First major investors in China – the Hong’s of HKG – Hutchison Whampoa, Swire, Jardine Matheson, etc.
Provide access to global capital markets to fund Chinese businesses and operations
Bridge between East and West |
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Term
| Market Segmentation in China/Hong Kong |
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Definition
By region
Urban/ rural – huge income differences
Global youth |
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Term
| Marketing Mix China/Hong Kong |
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Definition
Products – western goods are status symbol, but for most consumers; localization is critical
Pricing – depends on product positioning – for luxury products low price elasticity, for everyday products – plethora of choice and competition drive down prices
Distribution – urban infrastructure has drastically improved – major rail, new airports and surface transportation has had huge investments – foreign entities – FedEX, DHL, and UPS now have extensive operations in China.
Promotion – Outdoor print is ubiquitous, TV and radio are state controlled – high population density provides for more personal selling and location based promotion. |
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Term
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Definition
Grouping of countries with similarities in socio-economic and cultural characteristics, hence the “cluster”
Clustering Analysis – use of broad indicators
-Two dimensional, or multidimensional
-Market oriented clustering
--Dependent, seekers, climbers, luxury & leisure, rocking chairs
-Think (left-brain reasoning) and feel (right-brain – emotional/excitement) clustering |
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Term
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Definition
focuses on potential customers in each of the countries belonging to the cluster
Behavioral & benefits segmentation – each element can be broken down into individual segments
-usage rates - heavy, regular, and occasional and non-users
-shopping patterns – place (department store, convenience store, kiosk, internet, MLM), amount, payment method
-price sensitivity
-Communication channels and modes |
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Term
| Global Marketing Orientation |
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Definition
marketing activities coordinated and integrated across multiple country markets.
-“selling orientation” vs. “customer orientation”
-Market Planning and resource allocation
--Different stages in product life cycle, competitiveness and other factors (BCG Growth Share Matrix)
--Resources required for various marketing mix elements
---Percentage of previous sales (sound familiar?)
---Samsung’s M-Net system – projecting sales, estimating costs, then calculating marketing profit = challenges with spillover effects |
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Term
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Definition
designing a portfolio of addressing different clusters in different markets.
An advantage of this strategy would be provides protection against the risk of large losses
harder to identify and track cost effectiveness
a disadvantage could be the potential for a firm o overextend itself. |
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Term
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Definition
designing a portfolio that addresses a few similar markets in the same cluster(s)
Advantage of this strategy would be that markets can be given more attention and market positions fortified
Disadvantage is becoming too dependent on a few single markets
easier to identify and track cost effectiveness |
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Term
| Global product positioning |
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Definition
Uniform – product ranges, brand names, market communications, distribution are similar across markets to take advantage of spillover and cost efficiencies
Keegan’s Positioning Strategies
-Product –communications extension – applying the same product line and advertising
-Product-extension communication adaptation – repositioning of a global product to fit local conditions and perceptions
-Product adaptation communications extension – same marketing message, slightly different product
-Dual adaptation – product localization and communications adaptation |
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Term
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Definition
| standardized with uniform features in all markets, either core, and |
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Term
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Definition
| designed to meet local needs, but “latently” global – Ford Focus…Pan-European standardization or Pan Asian standardization |
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Term
| Advantages of standardization |
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Definition
cost reduction through scale economies and cope economies
Improved functional quality of the product or service
Enhanced customer preference
Global customers
Global segments |
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Term
| Disadvantages of standardization |
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Definition
likely to miss the exact target in terms of customer preferences in any one country, unless needs and wants across countries are homogeneous and we determine this through global segmentation.
Also some segments of the market are not targeted correctly
There's a lack of uniqueness in the product or service
Vulnerability to trade barriers . Open trade regimes are necessary to reap the benefits of standardization
Some local competitors may be stronger than you, offering customization or some sort of special service
may be difficult to figure out which features to standardize, as, in practice, 100% standardization is rare |
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Term
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Definition
the foundation of a product, especially in regards to standardization
Features are added to the core product to complete the marketed product
Ex. for an automobiles
-it would be the "platform" chassis |
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Term
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Definition
Standardization technique where various features are prepackaged as modules that can then be assembled in different combinations to target different markets.
Flexibility created by this also means companies can offer slightly different models in different countries without losing standardization advantages
ex. nondigital cameras assembled from a few modular components
-lenses
-film winder
-body casing
-flash unit
-telescope motor
-etc. |
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Term
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Definition
changes required for a product or service to function in a new country.
*adaptation is the change or changes made to a product made to match customer tastes or preferences.
localization may be necessary whereas adaptation is usually aimed to target some special segment or segments
Localization avoids having potential customers reject the product out of hand, whereas adaptation gives customers a positive reason for choosing it.
*You wouldn't buy a TV that didn't use the same wattage as the country you live in. The TV is localized with a power adapter or transformer so it will function in your country. |
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Term
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Definition
The rate at which a new product gains acceptance in the marketplace. (production/introduction framework)
-Relative advantage: is it better?
-Compatibility: does it work with our system/in our country?
-Complexity: Is it easy to use?
-Trialability/Ability to sample: how easy it to try out the product and know what I'm buying into before actually making the purchase?
-Observability: what really gives the product its credibility? What indicates that it can be trusted as a high quality product/service |
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Term
| Trading services instead of just products |
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Definition
U.S. maintains a surplus in services trade as opposed to large deficit in merchandise trade, and it is growing.
-Major services traded include:
-Transportation
-Telecommunications
-Financial services
-Education & training
-Royalty and licensing
-Management services
-Engineering, Architecture and Design
-Real Estate
-Legal |
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Term
| Characteristics of a service in contrast to those of a product |
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Definition
Intangibility - You cannot easily touch a service
Heterogeneity: difficult to standardize because they are not exactly the same each time
Inseperability: Services are produced at the same time they are consumed
Perishability: You cannot store a service |
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Term
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Definition
What the customer sees, and how they "experience" the service (critical incident)
-Assessment: identification of customer desires and needs
-Delivery: provision of the service
-Environment: the surroundings or place
-Responsiveness: troubleshooting and resolving service failures
-Perceived service performance: desired; expected, adequate, unacceptable (zone of tolerance and performance gap) |
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Term
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Definition
| The back office operations and processes that make the service possible to offer at a specific location at a specific price |
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Term
| Advantages and disadvantages of a global brand |
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Definition
Advantages
-Demand spillover
-Global Cusomters
-Scale Economies
Disadvantages
(in the marketplace)
1. global brands are not adapted to local conditions and preferences
2. global brands are perceived as dominating local brands and threatening local culture
3. global brands are less unique than local brands
(for the firm)
1. capturing scale economies require skillful to-down coordination
2. local subsidiary managers lose motivation
3. a global brand is an easy target for antiglobalizers and other activists |
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Term
| Advantages of Local brands |
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Definition
Advantages
1. Customization
2. Iconic status
3. Differing regulations
4. Trust |
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Term
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Definition
1. Risk avoidance and trust : When a brand like Mcdonald's becomes a cue to the quality of the brand and the consumers learn what to expect from the brand
2. Longevity and Familiarity: Consumers understanding that if the brand is able to remain in the market, it cannot be all bad because clever advertising is good in the short run, but the actual product/service will win out in the long run
3. Iconic and Experiential: brands provide a unique experience for the user and offer more than just the physical product
-i.e. Harley Davidson brand signifies more a lifestyle than the just the motorcycle.
Emotional drivers: Since functional product differentiation is hard to sustain as a competitive advantage due to benchmarking and "me too" products, brands can offer emotional satisfaction over and above the functional requirements of a product or service. A strong brand can offer peer group approval, heightened self-esteem, and possibly status and prestige.
-This varies by hedonic versus utiliatarian products |
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