·         Dumping

o   Sale of products in foreign markets at prices lower than those charged in the home country markets

§  Modify the product for the culture

§  Higher demand due to local adaptation

§  Increase in costs

§  Decrease in quality

·         Sale the same type of product to other countries

·         Economies of scale

o   Mass produce so you can make the fixed prices lower

o   Able to produce product with less cost

·         Improved quality

·         Lower demand

o   Occurs when people assume that whatever is applicable in one culture is also applicable in another culture

o   Basically people make assumptions of another culture based on your culture

o   Example: U.S., France, Germany, U.K.

o   Communications takes place in a straight forward manner

o   More concerned about time

o   High context culture

§  Example: Japan, Pakistan, Saudi Arabia

§  Communications are not straight forward

§  Need to build long term relationships

·         Takes a long time to build, you can’t just have one conversation with them

§  Less concerned about time

o   Example: U.S., France, Germany, U.K.

o   Factual and Interpretative

§  Factual is obtained by observing

§  Interpretative: hidden components

·         You can observe them

o   Culture includes customs, beliefs, values, language and other habits acquired by individuals as members of society

o   Culture

§  Effects every aspect of marketing

o   Political instability

§  Also important in marketing

§  Have to look at the history of how the governments has changed

o   Import controls

o   Exchange controls

§  Some cultures won’t allow you to change the currency to your currency

o   Direct ownership

§  Where a company will completely own operations in the foreign company

§  Don’t really know the culture of country

o   Joint Ventures

§  You partner

§  Example: Euro Disney partnered with France who had 51% stake

§  Risk is shared by both

§  Your partner will have more knowledge about the culture

§  Disadvantage:

·         Loose control of quality positions

·         Governments have restrictions on how much foreign companies can have in terms of stake

·         What if they kick you out?

o   Franchising

§  Example: Disney in Tokyo

§  Share risk with the partner

o   Licensing

§  Granting patent rights, trade mark rights etc.

§  Give permission to produce the products

§  Advantage is that you don’t have to micromanage everything

§  Disadvantage: wondering if they are going to steal your technology and sale it to your competitors

·         Counterfeit

o   Exporting

§  Simplest way to get into international market

·         Advantage:

o   No hassle

o   Don’t have to worry about culture as much

o   Realize economies of scale

o   Get more experience

·         Entry Strategies for Global Marketing (5)

• Exporting
• Licensing
• Direct Ownership
• Franchising
• Joint Ventures

o   Odd-even Pricing:

§  Example: 49cents, $4.95, etc.

o   Prestige Pricing

§  Pricing higher

o   Price Lining:

§  Should a company price brands A,B,C at $200, $220, $450?

o   Price Leader:

§  Sale at cost or slightly below cost

§  Elastic products

§  Easy entry for competition

§  Useful when the competitors entry is easy

§  Good to use when the demand is highly elastic

§  Higher risk is involved

§  Larger firms are in a better position to use

§  Pharmaceutical industry

§  Better for break-even reasons

§  To generate revenues in order to offset costs

§  To lower the risk

§  Useful if the Price quality perceptions are strong

§  Use when the entry of competitors is difficult

·         Breakeven Quantity= Fixed cost/ (Price- Variable Costs)

·         Price Elasticity of Demand equation

o   % change in quantity/ demanded % change in price

o   Pricing Objectives (4)

§  Survival

§  Profit

§  Market Share Maximization

§  Quality

o   Retailer’s losses are in the range of 25 billion $/yr

·         Advantages to franchisees

o   Capital to buy/lease building

§  Uses established trade name/marks

§  Get support for advertising

·         Technical support

o   Advantages to franchisers

§  Provides capital through royalties and fee

·         Royalties: advertising cost are regained form royalties

·         Help to expand rapidly

·         Describes risk

o   Parent company works to manage the company

o   Can maintain quality through monitoring

o   Franchising

§  Buying a form of distribution in which a parent company (franchises) grants independent business. The right to do business in prescribed manners over a period of time in a specified place

§  Discount Stores

o   High-volume

o   Low profit margins

o   Large bulk

·         Department stores

§  Customer service

§  Service based

§  Lower volume

§  Supermarket

·         Few nonfood items

§  Super Store

·         Some Kroger stores

§  Hyper- Markets

·         One-Stop shopping

·         Example: supercenter Wal-mart

§  Deciding how you want customers to think of your brand

·         What are you, what do you sell

§  Gold Circle= KMART

·         Competitive MKT

·         Meta Tabs

A special HTML tag that provides information about a Web page. Unlike normal HTML tags, meta tags do not affect how the page is displayed. Instead, they provide information such as who created the page, how often it is updated, what the page is about, and which keywords represent the page's content. Many search engines use this information when building their indices.

o   Doesn’t show up on company page but will show up on search engine

·         Overstock.com

o   Offer student discounts for students and faculty to search for items on their stock (inventory) so they will pop to the top of the free listings on Google so Google pushed overstock to the 10^th page

·         Search engine optimization (SEO)

o   Companies push themselves to the top of search engine methods

§  Placing address on home page so info pops up in city search

§  Place info on page that fits search terms

§  STML language

·         New competitor for Netflix

o   Amazon is introducing video streaming

§  Only for “prime member”

§  Trying to increase prime membership

o   Has brought Netflix stock down

·         Factors to be considered in selecting a type of distribution

o   Customer Convenience

o   Maintenance of Image for the Product

o   Manufacturer Control

·         Distribution Strategy

o   Channels help to decrease transaction time and costs

o   Agents work for a long term basis

o   Brokers work for a short term basis

o   Companies could us multiple channels

manufactures tries to push product to retailers to consumers

o   manufactures will target consumers, consumers goes to retailers and forces retailers to go to the manufactures

·         HTC

o   Two New Phones

§  Cha-Cha

§  Salsa

o   Added button for Facebook

§  If you’re reading the news on your phone, you can just press the FB button and it will be posted on your wall

·         Smart TV

o   Access internet through the television

o   Example: you can watch Netflix on television

o   Google and Netflix can benefit

§  Basically anybody who does e-commerce of some kind

§  And website providers

o   PC companies can be affected

§  Laptop companies

§  Time Warner, Direct TV

§  Blockbuster, Redbox

o   Manufacturers could be hurt because most people would stop watching commercials

o   Coupons

§  Most popular tool for promotions

§  400 billion are in the market

§  2% are redeemed

§  Introduce new products

§  Get existing customers to buy more

§  Combat competition

§  Maintain sales in off-season

§  Increase retail inventories

§  Note: Good for short-term objectives only

o   Nature of the product

§  Example: car vs. radical product by a new firm

o   Nature of the target market

§  Example: consumer vs. industrial product

o   Size of the target market

o   Ad Budget

o   Availability of media

§  By matching competitors’ ad budget in absolute dollars or allocating the same % of sales for the ad budget as their rivals

§  Is based on a percentage of firm’s past year sales

§  Simple to use

§  Affordable

·         Your always proportionate to last year’s sales

§  Be careful when the firm’s sales are at an extreme

Percent of Sales

Competitive Parity

o   Involves comparison of two or more specific brands on the basis of one or more characteristics

o   In some countries it is illegal to use this

§  Example: Germany

o   Advertising

o   Direct Marketing

o   Personal Selling

o   Sales Promotion

o   Publicity & Public Relations

·         The Communications Process

o   Source/Sender-> Encoding- >Channel Message<- Decoding<- Receiver/Audience

§  Noise

§  Response Feedback Loop

·         Super Bowl

·         Most memorable were the sponsored ads and the humorous ads

o   Example: Doritos and Budweiser

·         3 million dollars for 30 second commercials

·         About 111 million people watch the Super Bowl

o   30 million people watched solely for the ads