350 GlobalMarket REVIEW 2015€¦ · Global Marketing Lorna Valdes 350 GlobalMarket REVIEW 1 Lorna...

Global Marketing

Lorna Valdes 350 GlobalMarket REVIEW1

Lorna Valdes

1

350 Global Market REVIEW I

Global Marketing

Review Session 2015

Lorna Valdes

Lorna Valdes

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MRTG 350

To prepare for the final exam you should concentrateon the following chapters and article. The exam will also test your global grasp of the course.

10 Branding & Product decisions

11 Pricing Strategies

12 Distribution & Supply Channels

Review Article► FMCG brands target emerging world

Marketing to Rural India

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Final Exam

• Please, write legibly.

• English mistakes are not corrected nor taken into account but your text must be comprehensible.

• Use professional terminologyfrom the course material.

• Answers should be analytical, complete and to the point. No lengthy bluffing

•You may use specific examples from the course & articles to justify your answers.

• Main points should be underlinedor distinguished by the use of bullets .

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350 Global Market REVIEW I2-4

Final Exam• Essay Q, Short answers, Multiple choice

• The Multiple Choice Only one answer is correct. All answers must be on the answer sheet only.

• You should detach the answer sheet page 5.

Q 1 A B C D E

Q 2 A A C D E

X

X

X Yes x No

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The Global Economic Environment

Global Marketing

(Global Edition 8)

Chapter 2

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Principles of Global Marketing

Requirements for Global Marketing- Awareness of the macro-environment

– An understanding of the target market environment

– The use of market research and identification of market potential

– Decisions concerning product design, pricing, sourcing and distribution channels, advertising, and communications.

– Adaptation vs. extension

Determining whether the target market is both _________________ and ___________ to exchange something they ______ for something of ________.

Global Marketing


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Principles of Global Marketing

Determining whether the target market is both willing and able to exchange something they value

for something of value.

The value propostion

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Management Orientations

• What are the different Management Orientations?

• What difference does it make to marketing in foreign markets?

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Standardization versus Adaptation

• Globalization (Standardization)– Developing standardized products marketed worldwide with a

standardized marketing mix

– Essence of mass marketing

• Global localization (Adaptation)– Mixing standardization and customization in a way that minimizes

costs while maximizing satisfaction

– Essence of segmentation

– Think globally, act locally

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Management Orientations

Ethnocentric:Home country is

Superior, seesSimilarities in foreign

Countries

Regiocentric:Sees similarities and differences in a world

Region; is ethnocentric orpolycentric in its view of

the rest of the world

Geocentric:World view, seesSimilarities and

Differences in homeAnd host countries

Polycentric: Each host country Is

Unique, sees differencesIn foreign countries

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Economic Freedom

• The Heritage Foundation’s rankings of economic freedom among countries

– “free” “mostly free” “mostly unfree” “repressed”

• Variables considered include such things as:

– Trade policy

– Taxation policy

– Capital flows and foreign investment

– Banking policy

– Wage and price controls

– Property rights

– Corruption

– Black market

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Stages of Market Development

• The World Bank has defined four categories of development using Gross National Income (GNI) as a base

• BEMs, identified 10 years ago, were countries in Central Europe, Latin America, and Asia that were to have rapid economic growth

• Today, the focus is on BRIC: Brazil, India, and China, less on Russia

Global Marketing


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Mistaken Assumptions about Less Developed Countries – B.O.P.

1. The poor have no money.2. The poor will not “waste” money on non-essential

goods.3. Entering developing markets is fruitless because goods

there are too cheap to make a profit.4. People in BOP (bottom of the pyramid) countries cannot

use technology.5. Global companies doing business in BOP countries will

be seen as exploiting the poor.

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Purchasing Power Parity (PPP)The 2008 Big Mac Index

• Is a certain currency over/under-valued compared to another?

• Assumption is that the Big Mac in any country should equal the price of the Big Mac in the U.S. after being converted to a dollar price

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Social & Cultural Environment

Global Marketing

(Global Edition 8)

Chapter 4

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Task of Global Marketers

• Study and understand the cultures of countries in which they will be doing business

• Understand how an unconscious reference to their own cultural values, or self-reference criterion, may influence their perception of the market

• Incorporate this understanding into the marketing planning process

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Society, Culture, and Global Consumer Culture

• Culture—ways of living, built up by a group of human beings, that are transmitted from one generation to another

• Culture has both conscious and unconscious values, ideas, attitudes, and symbols

• Culture is acted out and reinforced through social institutions

• Culture is both tangible (clothing and tools) and intangible (religion, attitudes, beliefs, and values)

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What forms the basis of culture?

Global Marketing


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Beliefs, Values, and Attitudesthe basis of culture

• Belief—an organized pattern of knowledge that an individual holds to be true about the world

• Values—enduring belief or feeling that a specific mode of conduct is personally or socially preferable to another mode of conduct

• Attitudes—learned tendency to respond in a consistent way to a given object or entity

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High- and Low- Context Cultures

• What is the difference? Give examples of High and Low context aspects.

• Give examples of High and Low context countries.

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High- and Low- Context Cultures

• High Context

– Information resides in context

– Emphasis on background, basic values, societal status

– Less emphasis on legal paperwork

– Focus on personal reputation

• Saudi Arabia, Japan

• Low Context

– Messages are explicit and specific

– Words carry all information

– Reliance on legal paperwork

– Focus on non-personal documentation of credibility

• Switzerland, United States, Germany

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Hofstede’s Cultural Typology

• What are the six aspects of Hofstede's Cultural Typology?

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• Power distance

• Individualism vs. collectivism

• Masculinity vs. Femininity

• Uncertainty avoidance

• Long-term vs. Short term orientation

• Indulgence vs. Restraint

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• Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster."Prof. Geert Hofstede, Emeritus Professor, Maastricht University.

• What are the practical applications for Geert Hofstede's research on cultural differences?

Global Marketing


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• What are the practical applications for Geert Hofstede's research on cultural differences?

• For those who work in international business, it is sometimes amazing how different people in other cultures behave. We tend to have a human instinct that 'deep inside' all people are the same - but they are not. Therefore, if we go into another country and make decisions based on how weoperate in our own home country - the chances are we'll make some very bad decisions

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Self-Reference Criterion

• Define self-reference criterion.

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Self-Reference Criterion and Perception

• Unconscious reference to one’s own cultural values; creates cultural myopia

• How to reduce cultural myopia– Define the problem or goal in terms of home-country cultural traits

– Define the problem in terms of host-country cultural traits; make no value judgments

– Isolate the SRC influence and examine it

– Redefine the problem without the SRC influence and solve for the host-country situation

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Everett Roger’s Diffusion of Innovations Theory

• What are the three parts to this theory?

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Everett Roger’s Diffusion of Innovations Theory

• What are the different parts to this theory?

• The Adoption Process

• Characteristics of Innovation

• Categories of Innovators

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Diffusion Theory: The Adoption Process

• What stages does a consumer go through in assessing

his/her desire to purchase a "new" product?

Global Marketing


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Diffusion Theory: The Adoption Process

• The mental stages through which an individual passes from the time of his/her first knowledge of an innovation to the time of product adoption or purchase

– Awareness

– Interest

– Evaluation

– Trial

– Adoption

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Characteristics of Innovations

• Innovation is something new in a specific market, five factors that affect the rate at which innovations are adopted include:– Relative advantage- over existing products

– Compatibility– with consumers past experience & values and

with existing products

– Complexity- too complex to understand & use?

– Divisibility – adapting products to different markets

– Communicability- how well the product’s advantages are communicated to consumers

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The Adoption Process

• What are the different consumer adopter categories?

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Categories of Adopters

• Classifications of individuals within a market on the basis of their innovativeness. Each category has a specific psychographic and demographic profile

• Five categories

– Innovators

– Early Adopters

– Early majority

– Late majority

– Laggards

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Categories of Adopters

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Marketing Environment

• When marketers refer to the environment and environmental considerations – what do they mean?

Global Marketing


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Marketing Environment

• When marketers refer to the environment and environmental considerations – what do they mean?

• Factors within a business environment typically include suppliers and clients, technology improvements, government activities, economic trends, competition, laws, social and market trends. The social environment of the host country plays a major role, so the company must fully understand the social norms of that country to function efficiently and effectively. Social norms include things like the culture and language of the host country.

Nothing to do with ecology

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Segmentation,Targeting,Positioning

Global Marketing

(Global Edition 8)

Chapter 7

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Segmentation, Targeting, Positioning

• What is the purpose of Segmentation, Targeting, Positioning and how are they connected?

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Market Segmentation• Represents an effort to identify and categorize groups of

customers and countries according to common characteristics

Targeting• The process of evaluating segments and focusing

marketing effortson a country, region, or group of people that has significant potential to respond

Positioning• Locating a brand in consumers’ mindsover and against

competitors in terms of attributes and benefits that the brand does and does not offer

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Global Market Segmentation

• Defined as the process of identifying specific segments—whether they be country groups or individual consumer groups—of potential customers with homogeneous attributes who are likely to exhibit similar responses to a company’s marketing mix.

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Discussion Questions

• What are the four principal consumer segmentations?

• Briefly describe them.

Global Marketing


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Global Market Segmentation

• Demographics (age, gender, income, education, occupation) Geo-demographics

Demographic information is a starting point but not the decisive factor

• Psychographics

• Behavioral Characteristics different from psychographics

• Benefits sought

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Psychographic Segmentation• Grouping people according to attitudes, value, and lifestyles

Behavior Segmentation• Focuses on whether people buy and use a product, how often, and how

much they use.

Benefit Segmentation• Based on understanding the problem a product solves, the benefit it

offers, its ‘job’, or the issue it addresses

What other segmentation strategies exist?

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What are common Positioning Strategies?

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Positioning Strategies

• Attribute or Benefit

• Quality and Price

• Use or User

• Competiton

• Global consumerculture positioning (GCCP)– Identifies the brand as a symbol of a particular global culture or

segment for example?

• Foreign consumerculture positioning (FCCP)– Associates the brand’s users, use occasions, or product origins with

a foreign country or culture for example?

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High Tech - High Touch products

• GCCP products are often High Tech or High Touch

• Describe High Tech and High Touch characteristics

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High Tech - High Touch products

• High Tech – often technical, involves rational buying motives, purchased for objective & measurable reasons.

• High Touch – consumers feel a more emotional attachment, judged on subjective & aesthetic basis, may involve an act of self-indulgence.

Global Marketing


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Pricing Decisions

Global Marketing

(Global Edition 8)

Chapter 11

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Do you know these Prices, Pricing Strategies, Issues?

• Law of one price/arbitrage

• Floor, Ceiling, Optimum Pricing

• Penetration/Skimming Strategy

• Psychological Pricing

• Optional Pricing

• Companion Pricing / Bundling

• Target costing / Cost Plus Pricing

• Price escalation

• Environmental issues

• Gray market goods

• Dumping

• Price fixing

• Transfer pricing

• Countertrade

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Global Pricing: Three Policy Alternatives

• Extension/Ethnocentric – same price worldwide

• Adaptation/Polycentric – price set country-by-country adapted to local circumstances

• Geocentric – company strategy & local considerations set price

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Discussion Questions

• What are some basic global pricing possibilities and considerations?

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Basic Pricing Concepts

• The Global Manager must develop systems and policies that address

– Price Floors – the lowest a seller will accept

– Price Ceilings – the highest a buyer will accept

– Optimum Prices- based on consumer demand/volume

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Global Pricing Objectives and Strategies

• Managers must determine the objectivesfor the pricing– Unit Sales

– Market Share

– Return on investment

• They must then develop strategies to achieve those objectives– Penetration Pricing

– Market Skimming

Global Marketing


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Market Skimming and Financial Objectives

• Market Skimming– Charging a premium price

– May occur at the introduction stage of product life cycle

– Targets innovators and early adoptors

– Enables quick ROI

Sony Ad. for camcorders

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Penetration Pricing and Non-Financial Objectives

• Penetration Pricing– Charging a low price in

order to penetrate market quickly

– Appropriate to saturate market prior to imitation by competitors

1979 Sony Walkman

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Target Costing vs Cost Based Pricing

• What's the difference?

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• Target Costing is the process of determining the maximum consumer price point for a new product and then developing a prototype that can be profitably made for that maximum target cost figure.

• The Research & Development team is then given the responsibility of designing the product so that it can be made for no more than the target cost.

• If the desired target cost cannot be achieved, the company must re-evaluate/re-engineer the product features and price.

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• Cost-Based Pricing is based on an analysis of internal and external cost; manufacturing (including R&D, overheads) and production.

• Cost-based pricing involves calculating the (unit) cost of the product, and then adding a percentage mark-up to determine price.

• The cost-based pricing company uses these costs to find a price floor and a price ceiling. The floor and the ceiling are the minimum and maximum prices for a specific product in a specific market.

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Environmental (external) Influences on Pricing leading to Price Escalation

• What are they?

Global Marketing


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Environmental Influences on Pricing Decisions

• Currency Fluctuations

• Inflationary Environment

• Government Controls, Subsidies, Regulations

• Import/Export duties

• Competitive Behavior

• Sourcing

• Cost of distribution, shipping

• Corruption

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Gray Market Goods

What is :

• a Gray Market?

• Dumping?

• Countertrade?

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Gray Market Goods

• Trademarked products are exported from one country to another where they are sold by unauthorized persons or organizations

Occurs when product is in short supply, when producers use skimming strategies in some markets, and when goods are subject to substantial mark-ups

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Dumping

• Sale of an imported product at a price lower than that normally charged in a domestic market or country of origin.

• Occurs when imports sold in the US market are priced at either levels that represent less than the cost of production plus an 8% profit margin or at levels below those prevailing in the producing countries

• To prove, both price discrimination and injury must be shown

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Countertrade

Used for• Sales to “soft-currency” developing countries which lack hard currency

resources to pay for them

Different Forms• The direct exchange in kind -Barter

Country A

Country B

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Countertrade

Countertrade• Different Forms:

– Payment of original purchase through, often later, sale of a related product to a third party -Buyback

Country A

Country Z

Country B

Global Marketing


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CountertradeCountertrade• Different Forms:

– Payments or “Soft Loans” from the originating country are provided on the basis of the purchase of capital goods from suppliers in the originating country -Offset

Country A

Country B

Supplier

Government

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Global Marketing ChannelsGlobal Retailing

Global Marketing

(Global Edition 8)

Chapter 12

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Distribution Channel

• What is the function of a distribution channel?

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Functions of a Distribution Channel

• The main function of a distribution channel is to provide alink between production and consumption.

• To enter international markets successfully, firms need tosecure adequate distribution channels for their products inthe targeted markets.

• But gaining access to, as well as developing andmaintaining marketing channels in foreign marketsrequires substantial knowledge of the distributionstructures and patterns in those markets.

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Global Retailing

• Department stores

• Specialty retailers

• Supermarkets

• Convenience stores

• Discount stores and warehouse clubs

• Hypermarkets

• Category killers

• Outlet stores

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Global Retailing

Global retailing market entry considerations:

• Easy or difficult to enter the foreign market

• Culturally close or distant from home market

• What are the four market entry expansion strategies available to retailers considering expanding abroad?

Global Marketing


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Global Retailing Strategies

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Global Marketing ChannelsDistribution - Supply Chain

What utilities for the consumer are created by good channel management?

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Channel Objectives

• Channels are made up of a coordinated group of individuals or firms that perform functions that add utilityto a product or service

– Place utility—availability of a product or service in a location that is convenient to a potential customer

– Time utility —availability of a product or service when desired by a customer

– Form/Product utility —availability of the product processed, prepared, in proper condition and/or ready to use

– Information utility —availability of answers to questions and general communication about useful product features and benefits

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Supply Chain Management

• Supply chain management (SCM) is the oversight of materials (raw & components), information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.

• It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed).

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Supply Chain Definitions

• Supply Chain– Includes all the firms that perform support activities by generating

raw materials, converting them into components or finished products and making them available to customers.

Know your supplier! Know your supplier's suppliers!

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Building Sustainable and Ethical Supply Chains

No other aspect of global marketing is so closely connected to corporate social responsibility (CSR) concerns as is Supply Chain Management (SCM).

What ethical and sustainable issues are inherent in SCM?

Global Marketing


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Supply Chain Management & CSR ethical concerns

• Globalization

• Sourcing practices

• Workers Rights & Safety

• Fair Trade

• Environmental issues; pollution, land destruction.

• Food chain safety (pesticides, GMO….)

• Animal welfare

• Labelling

• Packaging (recyclable or not)

• Supply chain cost pressures (price of oil)

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Supply Chain Management

The CSR need to address--

• Human Rights

• Improved sustainability

• Food Safety

• Environmentally friendly packaging

• Carbon-footprint reducing network design and logistics

Going green and CSR have moved beyond buzzword status to become a business imperative that can lower costs and provide a competitive advantage in the marketplace.

350 GlobalMarket REVIEW 2015€¦ · Global Marketing Lorna Valdes 350 GlobalMarket REVIEW 1 Lorna...

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