Chapter 1, question 3 - `What are the main differences between global marketing and marketing in the domestic context?
International expansion provides new and potentially more profitable markets, it helps to increase the firm's competitiveness and facilitates access to new product ideas, manufacturing innovations and the latest technology;
Global marketing requires the firms to have skills in international business operations (e.g. personal skills, the manager's international experience) or financial resources;
Firms engaging in global marketing needs to
coordinate their marketing activities (it involves centralization, delegation, standardization and local responsiveness);
find global customer needs (international marketing research, analysis of market segments, seeking to understand similarities and differences in customer groups across countries);
satisfy global customers (adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions);
global marketing is more risky than marketing in the domestic country;
firms engaged in global marketing have better opportunities to expand their scale of operations, larger production capacity and larger asset base;they can reduce operating cost per unit, spread fixed cost over larger volume and lower transaction costs;
however in global marketing there is lack of personal relationships, the absence of trust and there is cultural distance;
Chapter 2, question 1 - Export motives, examples.
Internationalization motives are differentiated into proactive and reactive motives.
Proactive motives represent stimuli to attempt strategy change, based on the firm's interest in exploiting unique competences or market possibilities, e.g.:
profit and growth goals
managerial urge (motivation that reflects the desire and enthusiasm of management towards global marketing activities)
technology competence/unique product (a firm may produce goods or services that are not widely available from international competitors or may have made technological advances in a specialized field)
foreign market opportunities/market information (specialized marketing knowledge or access to information can distinguish an exporting firm from its competitors)
economies of scale (increased production for the international market can help in reducing the cost of production for domestic sales and make the firm more competitive domestically and internationally)
tax benefits
Reactive motives indicate that the firm reacts to pressures or threats in its home market or in foreign markets and adjusts passively to them by changing its activities over time, e.g.:
Competitive pressures (a firm may fear losing domestic market share to competing firms that have benefited from economies of scale gained by global marketing activities)
Domestic market: small and saturated
Overproduction/excess capacity (if the inventory in the domestic country is above desired levels it can be the trigger for starting export sales via short-term price cuts on inventory products)
Unsolicited foreign orders (enquiries from overseas resulting from advertising in trade journals that have a worldwide circulation, etc.)
Extend sales of seasonal products
Proximity to international customers/psychological distance
Chapter 2, question 3 - Discuss the most critical barriers to the process of exporting.
A wide variety of barriers to successful export operations can be identified. Some problems mainly affect the export start; others are encountered in the process of exporting.
Barriers hindering export initiation:
Insufficient finances
Insufficient knowledge
Lack of foreign market connections
Lack of export commitment
Lack of capital to finance expansion into foreign markets
Lack of productive capacity to dedicate to foreign markets
Lack of foreign channels of distribution
Management emphasis on developing domestic markets
Cost escalation due to high export manufacturing, distribution and financing expenditures.
Barriers hindering the process of internationalization:
General market risks:
Market distance
Competition from other firms in foreign markets
Differences in product usage in foreign markets
Language and cultural differences
Difficulties in finding the right distributor in the foreign market
Differences in product specialization
Complexity of shipping services to overseas buyers
Commercial risks
Exchange rate fluctuations when contracts are made in a foreign currency
Failure of export customers to pay due to contract dispute, bankruptcy, refusal to accept the product, etc.
Delays and damage in the export shipment and distribution process
Political risks
Foreign government restrictions
National export policy
Foreign exchange controls imposed by host governments that limit the opportunities for foreign customers to make payment
Lack of governmental assistance in overcoming export barriers
Lack of tax incentives for companies that export
High foreign tariff on imported products
Complexity of trade documentation
Confusing foreign import regulations and procedures
Revolution and wars disrupting foreign markets
Chapter 3: 1. Explain why internationalization is an ongoing process in constant need of evaluation.
The process theory of globalization, internationalization views as a "natural" evolution of firm's quest for survival or as a response to changing consumer demands and competitive forces. At the macro environment and industry levels, globalization gives rise to market turbulence:
* Increased competition from multinational firms;
* Loss of protected markets due to trade liberalization;
* Emergence of international marketing opportunities, all of which can affect the operations and performance of the SME.
In such an environment possession by management of an entrepreneurial orientation is expected to provide certain benefits. The challenge facing most entrepreneurial firms is to establish and develop a viable, competitive and sustainable business. International business activity for many firms, and particularly high-technology firms, may be an integral part of that process. In that respect too, internationalization is a firm-specific behaviour, in relation to and encompassing its international business activities. Internationalization for entrepreneurial firms is a growth and development process. It may involve one or a number of value chain activities, some of which may be more internationalized, or more frequently subject to internationalization, than others. Internationalization may be part of process, but for very small and very young firms internationalization is more likely to occur, in the first instance, through links and transactions with organizations and individuals in the external environment.
International expansion benefits:
* Provides new and potentially more profitable markets;
* Helps increase the firm's competitiveness;
* Facilitates access to new production ideas, manufacturing innovations and the latest technology.
2. What is meant by the concept of "psychological" or "psychic distance".
Psychic distance - differences in language, culture and political system which disturb the flow between the firm and the market. We also understand this concept as the individual manager's perception of the differences between the home and the foreign market and it is a highly subjective interpretation of reality. Psychic distance cannot be measured with factual indicators, such as publicly available statistics on level of education, religion, language and so forth. By assessing psychic distance at the individual level, it is possible to take appropriate steps to reduce the manager's psychic distance towards foreign markets.
Chapter5: Explore the reason for using a marketing information system in the international market. What are the main types of information you would expect to use?
“A marketing information system is a continuing and interacting structure of people, equipment and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate information for use by marketing decision makers to improve their marketing planning, implementation, and control". Kotler.
Information about the market coming from different sources and markets need to be ”digested” to support decision making process. MIS provides more insight in the market than raw data, give them more structure and clearness and support managers in decisions making process.
Information expected:
macro environment (demographic, economic, natural, technological, politics, cultural, public
micro environment ( suppliers, intermediaries, customers, competitors)
What are the dangers of translating questionnaires (which has been designed for one country) for use in multicountry study? How would you avoid these dangers?
Dangers:
some of the topics are not accepted in some cultures - e.g. asking for alcohol consumption in Muslim country is not in place, openness of the society,
some people are to shy to answer questions
environment differences changes the perception of the given problem
Moreover, there is a big language difference - semantic difference, which by translating a document can be overseen.
How to avoid:
Study culture differences
Cross out questions that are not relevant for given culture
Do back translation - e.g. from Polis to English, from English to Polish
Give more open - ended questions
A US manufacturer of shoes is interesting …
The following points are important to understand the market before entering with some:
Investigate local competition
General social and political contacts
Trade barriers
Government involvement
Transport costs
Labour cost and availability
Buyer behaviour and income
Marketing opportunities, costs
Chapter 7 questions 2, 5
Question 2: Asians are more group oriented, family oriented and more concerned with social status. How might such orientations affect the way you market your product to Asian customers?
Culture can and does influence the business sector in different parts of the world. For international marketers it's important to understand customers' personal values and accepted norms of behaviour in order to market them properly.
Understanding values and benefits is very important. Asians have respect for authority and for old age, they are more concerned with social status. Validation these norms while advertising the product may cause problems. The more rooted values and attitudes are in central beliefs (such as religion) the more cautiously the global marketing manager has to move. Because of this there are different work habits e.g. rewards are based not on achievement but on seniority.
Asian culture places a premium on loyalty, it takes more time to build trust with Asian partners. For them 'time' is not equal money but rather relationships. The establishment of proper personal relations are essential to conducting business. Before making transactions one should know one's business partner on a personal level. For Asians family is the most important group, thus family relationships influence the work environment and employment practices. In Asian countries a manager who gives special treatment to a relative is considered to be fulfilling an obligation. In Us and Europe it's considered nepotism. By knowing the importance of family relationships in workplace and in business transactions we can avoid embarrassing questions.
Asian culture establish a set of moral standards for business behaviour and this influence all decisions and actions in a company, including for example which actions are considered right or wrong, how to compete, what communication guideline to follow.
Question 5: What layers of culture have the strongest influence on business people's behaviour?
The behaviour of individual person is influenced by different layers of culture . The national culture determines the values that influence business/industry culture, which then determines the culture of the individual company.
Company culture has the strongest influence on business people's behaviour, it motivates people to work hard and stay with the business. It determines how members act, how energetically they contribute to team work, problem solving, productivity and quality. Company cultures evolve and change over time. As employee leave the company and replacements and hired the company culture will change. If it's a strong culture it may not change much. However, since each new employee brings their own values and practices to the group the culture will change. As the environment in which the company operates (the laws, regulations, business climate, etc.) changes employees behaviour. Some of the characteristics of company culture which should be implemented : employee commitment, strong trust relationships, customer-focused, high degree of adaptability etc. Personalities and experiences of employees create the culture of an organization. If most people in the organization are very outgoing the culture is likely to be open and sociable. Ideally organizational structure supports a positive, productive environment. Company culture, like any other culture, tell members how to behave- what to do and what not to do.
Chapter 8
Question 1: Why is screening of foreign markets important? Outline the reasons why many firms do not systematically screen countries/markets.
Screening of foreign markets is important for companies because it helps to determine whether the firm has a chance to grow in the market and be successful. The screening criteria can also provide information about the awaiting risks in new markets. The screening process can be divided into two groups, the preliminary screening and fine-grained screening.
Preliminary screening - markets/ countries are screened according to external criteria (the state of the market). SME's have to take into account the limited internal resources that it has.
Criteria:
Market size/growth
GNP per capita
Tariffs on the exports of goods from one country to another
Culturally similar markets
Political risk (BERI index)
This criterion helps to exclude countries in advance.
Fine grained screening - the firm's competitive power in different markets is taken into account.
Firms do not systematically screen markets because of the cost which have to be incurred. Firms make their decisions intuitively (especially SME's); they choose markets in which they think that customer behavior is similar. The decisions which market to enter are often based on the “management feel.”
Question 3: Discuss the advantages and disadvantages of using only secondary data as screening criteria in the IMS process.
Secondary data is the information which has been collected for other purposes and is automatically available.
Advantages:
less expensive
less time consuming
no need for establishing contacts outside of the domestic country
objectivity, research is done in the home country and is not influenced by the foreign environment
quickly accessible background information
Disadvantages:
non-availability of data - in developing countries secondary data is scarce (poor statistical services)
reliability of data - political influences may alter the data, to show a more positive situation
data classification - data collected is to broadly classified for the use at micro level
comparability of data - comparing data from different countries, the data is than invalid because national definitions of statistical phenomenon differ between countries
Question 5: What are the differences between a global market segment and a national market segment? What are the marketing implications of these differences for a firm serving segments on a world wide basis?
In order to find the appropriate global market segment a company choosing to expand its operations has to follow these steps:
Choose the relevant segmentation criteria.
Develop appropriate segments.
Screen the segments and to narrow down the list of markets/countries which should be targeted.
Micro-segmentation: develop segments in each qualified country or across countries.
When deciding which countries to enter a company has to take general and specific characteristics, which are:
General:
geographic/language
political factors
demography
economy
technology
social organization
religion
education
Specific:
cultural characteristics
lifestyle
personality
attitudes and tastes
National market segment:
(The national market segment is not mentioned in the chapter, the information which I found is from the internet)
The national market segment bases on the following characteristics:
demography
geography
lifestyle
brand loyalty
product usage
profitability
The characteristics of the national segment and global are similar but the second one is more specific.
A firm serving segments around the world, has to look carefully at factors which will determine its actions in each country. Firms may choose to enter foreign markets which are similar to the national. This minimizes the costs but if the firm serves diversified global segments than the cost increase. When serving segments on a world wide basis the firms marketing actions are dependant on the global market segment characteristics
Chapter 9: Question 1
Why is choosing the most appropriate market entry mode and development strategy one of the most difficult decisions of the international marketer?
Choosing the most appropriate market entry mode is difficult because it depends on many various factors which influence international marketer's choice. Those factors can be divided into four groups: internal factors, external factors, desired mode characteristics and transaction specific factors. Firstly international marketer has to deal with internal factors which cover following issues: firm size, international experience, product and service (the physical characteristics of the product or service and its value/weight ratio).
Secondly he also has to consider external factors such as socio-cultural difference between countries, a particular country risk and demand uncertainty ,then market size and its growth, direct and indirect trade barriers, the intensity of competition and lastly number of relevant intermediaries available. Next he has to decide on the characteristics on the desired export mode by determining whether the firm he works for is risk averse or not, what degree of control does it want to have over exports and after they asses the flexibility of a given mode of entry. Finally its time to take transaction specific factors into account which in this case might be the problem to transfer know-how in some cases (sometimes it happens that specific know-how is difficult to articulate and transfer). Choosing an appropriate development strategy and market entry mode (be it one of export modes, intermediate modes, or hierarchical modes) forces marketers to consider numerous factors, which are all of great importance. That is what makes their decisions so difficult to make.
Ch10.1: Why is exporting frequently considered the simplest way of entering foreign markets and is thus favoured by SMEs?
Exporting has the advantage of the least cost and risk of any entry method, it allows the firm little control over how, when, where and by whom the products are sold. In some cases the domestic company may even be unaware that its products are being exported.
SME that is already experienced in traditional exporting may have resources that are too limited to open up a great number of export markets by itself. Thus, trough indirect export modes the SME is able to utilize the resources of other experienced exporters and to expand its business to many countries.
Export marketing groups are frequently found among SMEs attempting to enter export markets for the first time. Many of such firms do not achieve sufficient scale economies in manufacturing and marketing because of the size of local market or the inadequacy of the management and marketing resources available. Firms in an association can research foreign markets more effectively together, and obtain better representation in them. By establishing one organization to replace several sellers they may realize more stable prices, and selling costs can be reduced. Through consolidating shipments and avoiding duplicated effort firms realize transportation savings, and a group can achieve standardization of product grading and create a strong brand name.
Question 5: What is the difference between direct and indirect exporting?
Indirect exporting occurs when the exporting manufacturer uses independent organizations located in the producer's country. Indirect exporting is usually done by export buying agent, broker, export management company, trading company or piggybacking. Exporting firm is not really engaging in global marketing, because its products are carried abroad by others. This method may be appropriate if the international sales are viewed primarily as a means of disposing of surplus production or for firm with minimal resources to devote to international expansion, which wants to enter the market gradually. Such mode requires limited commitment and investment and posses minimal risk for the exporter, both market and political. Indeed, in the indirect approaches, foreign sales are handled in the same way as domestic sales. Firm doesn't take any control over the marketing mix elements, other than the product and doesn't have much contact with the potential customers. Also an additional domestic member in a distribution chain may add costs, leaving smaller profit to the producers.
Direct exporting occurs when a manufacturer or exporter sells directly to an importer or buyer located in a foreign market area. Direct exporting involves building up overseas contacts, undertaking marketing researches, handling documentation and transportation, and designing marketing mix strategies. Direct export modes include export through foreign-based agents and distributors. Compare to indirect exporting while exporting directly to the customer, the firm shortens the distribution chain, have access to local market experience and contacts with potential customers. It has more control over marketing mix. But on the other hand direct exporting requires some investments in sales organizations and faces greater risks in terms of possible trade restrictions and cultural differences, causing communication problems and information filtering.
Why are joint ventures preferred by host countries as an entry strategy for foreign firms?
Probability of repatriation of profits is lower because local partner is usually interested in reinvesting them in joint venture.
If foreign multinational enterprise enters local market it is interested in maximizing its global income, that is, the net income of all its affiliates and this means that it is quite wiling to run losses on some affiliates if this leads to higher net income for the whole network. However if multinational enterprise entered local market with help of joint venture the local partner will try to maximize profits of joint venture and will not pay attention to the whole network interests, so host country will benefit.
It is said that usually foreign partner contributes more to the joint venture than receives.
Part of property will be owned by resident of host country instead of foreign company this is important if host country prohibits foreign companies owe some property for example land.
Host country also receives new technologies, managerial experience etc.
CH.11 Q3
Under what circumstances franchising should be considered? How do these circumstances vary from those leading to licensing?
Franchising is a marketing oriented method of selling business service, often to small independent investors who have working capital but little or no prior business experience.
Franchising as an intermediate entry mode should be considered if it is business in service sector to enter new market. International franchising format should better be considered if it was previously tested and developed at a local market.
It should be considered for a company who has quite recognizable brand with sort of originality and are ready to expand by giving franchisee a right to use a total business concept including use of trade marks against some management fees. It especially suit well to service and people intensive economic activities, particularly where these require a large number of geographically dispersed outlets serving local markets.
Circumstances that matter in choosing an intermediate entry mode between franchising and licensing:
Franchising is all-encompassing, whereas licensing concern just one part of the business.
From the point of view of franchisee it is a start up situation, whereas licenses are usually taken by well-established businesses.
Licensing should be taken into account for a long term prospective (16-20 years) and franchising for 5-11 years (with opportunity to renew)
The franchisee is very definitely selected by the franchisor and licensees tend to be self selecting.
Franchising assumes greater degree of control compared to licensing.
Ch. 12
Q2: What are a firms major motives in deciding to establish manufacturing facilities in a foreign country?
The main reasons for establishing some kind of a local production are as follows:
To defend existing business.
To gain new business. Local production demonstrates strong commitment and is the best way to persuade customers to change suppliers, particularly in the industrial markets where service and reliability are often the main factors when making purchasing decisions
To save costs. By locating production facilities overseas costs can be saved in a variety of areas such as labour, raw materials and transport.
To avoid government restrictions that might be in force to restrict imports of certain goods.
Q5: Why is acquisition often the preferred way to estabilish wholly-owned operations abroad? What are the limitations of acquisition as an entry method?
Acquisition enables rapid entry and often provides access to distribution channels, an existing customer base and, in some cases, established brand names or corporate reputations. In some cases, too, existing management remains, providing a bridge to entry into the market and allowing the firm to acquire experience in dealing with the local market environment. This may be particularly advantageous for a firm with limited international management expertise, or little familiarity with the local market.
In saturated markets the industry is highly competitive or there are substantial entry barriers, and therefore there is little room for a new entrant. In these circumstances acquisitions may be the only feasible way of establishing a base in the host country.
No matter what form the aquisition takes, coordination and styles of management between the foreign investor and the local management team may cause problems.
Chapter14:Q2: What implication does the product life cycle theory have for international product development strategy?
The PLC emphasizes the need to review marketing objectives and strategies as product pass trough various stages. It is helpful to think of marketing decisions during the lifetime of a product but managers need to be aware of the limitations of the PLCso they are not misled by its prescriptions.
The PLC is a dependant variable that is determined by the marketing mix. If a product sale is declining management should not conclude that the product is in the declining stage. If management withdraws marketing resources from the product the brand sales will continue to decline. Instead management should increase marketing support in order to create recycle (to raise the sales again). This could be achieved by:
product improvement (new product packaging);
repositioning perception of the product;
reaching new users of the product (via new distribution outlets);
promoting more frequent use of the product (fulfilling same needs);
Promoting new uses of the product (fulfilling new needs).
Managers also have to be aware that the duration of the PLC stages is unpredictable. A product may appear to be mature when actually it has only reached a temporally plateau prior to another upsurge. Important is also that not all products follow the classic PLC curve> Fads are fashions, that peak early and decline very fast.
Q 5: Describe briefly the IPLC theory and its marketing implications.
IPLC- The International product life cycle. The IPLC theory describes the diffusion process of an innovation across national boundaries. Typically, demand first grows in the innovating country. In the beginning excess production in the innovating country (greater than domestic demand) will be exported to other advanced countries where demand also grows. Only later does demand begin in less developed countries. Production, consequently, takes place first in the innovating country. As the product matures and technology is diffused production occurs in other industrialized countries and then in less developed countries. Efficiency/ comparative advantages shift from developed countries to developing countries. Finally, advanced countries, no longer cost effective, import products from their former customers.
Examples: textile industry & the computer/ software industry (now many made in Bangalore, India).
In foreign market the time span for a product to pass through a stage may vary from market to market. In addition, due to different economic levels in different countries, a specific product can be in different PLC stages in different countries (some product can be in the decline stage in the home market, it is in the maturity stage for country A & in the introduction stage for country B).
Q 9: What is the importance of ' country of origin' in international product marketing?
The country of origin of a product, typically communicated by the phrase 'made in...', has a considerable influence on the quality perception of that product. Some countries have a good reputation and others have a poor reputation for certain products (e.g. Japan & Germany- good reputations for producing cars). The country-of-origin effects are especially critical among eastern European consumers (Russian, polish & Hungarian customers evaluated domestically produced television products much lower than western-made products).
The country of origin is more important than the brand name & can be viewed as good news for western firms that are attempting to penetrate the eastern European region with imports whose brand name is not yet familiar. Another study showed that some products from Eastern Europe have done well in the West, despite negative country-of-origin perceptions (e.g. Belarus tractors have sold well in EU and USA not only because of their reasonable price but also because of their ruggedness). When considering the implications of product positioning it is important to realize that positioning can vary from market to market, because the target customers for the product differ from country to country. In confirming the positioning of a product or service in a specific market or region it is therefore necessary to establish in the consumer's perception exactly what the product stands for and how it differs from existing & potential competition. In developing a market-specific product positioning the firm can focus upon one or more elements of the total product offer, so the differentiation might be based upon price & quality, one or more attributes, a specific application, a target consumer or direct comparison with one competitor.
Q14: What is the characteristic of a good international brand name?
Branding, as a whole, is essential for any serious business because quite simply a company's brand is what distinguishes it from its competitors. A brand is a product or service with a unique mark, symbol or logo that has a defined set of attributes and characteristics which create a unique experience for the consumer. A brand consists of eight basic building blocks:
- The Name
- The Logo (brand icon)
- The Brand's Colors
- The Slogan and Brand Messaging
- The Sound of the Brand
- The Overall Look and Feel = The Brand's Position
- Packaging the Brand
- The Brand Experience
The brand name should be the name that will stick in people's mind. This name can't get out of their head. Something that is catchy, witty, saucy or bold. Brand name should be connected with type of services or products that company is offering If company has a wide range of varying products then a cool business name should connect, not isolate any of those products or services. Google is a good example. What does Google mean? It's a catchy name that means nothing, but now is known by millions and millions of people. The International brand name cannot contain letters which exist only in domestic alphabet. The International Brand name's meaning cannot be interpreted in wrong way, or simply mean something offensive in foreign language.
Chapter 15: Q 1: What are the major causes of international price escalation? Suggest possible courses of action to deal with this problem.
Major causes of international price escalation are: net ex-works price, shipping costs(logistical costs), tariffs, distributors mark-up and other firms(intermediary costs). In the distribution channel it all adds up and leads to the price escalation; the longer the distribution channel the higher the final price will be.
The following management options are available to counter price escalation:
Rationalizing the distribution process. One option is to reduce the number of links in the distribution process, either by doing more in-house or by circumventing some channel members.
Lowering factor price from the factory (firm's net price), thus reducing the multiplier effect of all the mark-ups.
Establishing local production of the product within the export market to eliminate some cost.
Pressurizing channel members to accept lower profit margins. This may be appropriate if these intermediaries are dependent on the manufacturer for much of their turnover.
Q 6: What relevance has the international product life cycle theory for pricing strategy in international firms?
After the introduction stage (during the part of which the price is below the total unit cost), profits begin to flow. Because supply is less than demand prices do not fall as quickly as costs. Consequently the gap between costs and prices widens, in effect creating a price umbrella, attracting new competitors. However, the competitive situation is not stable one. At some point the umbrella will be folded by one or more competitors reducing the prices in attempt to gain or retain market share. The result is that a shake-out phase will begin; inefficient producers will be shaken out by rapidly falling market prices in the late growth product stage and maturity stage. Starting from introduction the firms set up the high price and as the products is becoming mature the prices fall.
Chapter 16 : distribution decisions
1. Discuss current distribution trends in world markets.
Distribution channels → 15-40% of the retail price of goods and services
Channel evolution because of technological developments: electronic data interchange → direct order from customers to suppliers, JIT
New emerging channels in order to reach specific market segments and improve efficiency: catalogue retailing, telephone ordering, cable TV shopping and internet ordering
New philosophy of creation of a long-term integrated strategic plan between manufacturers and retailers (before: power struggles, loose relationships…) → it emerged because of the “international retailing” = worldwide tendency towards concentration in retailing, creating huge buying power in retail channels, worldwide shift from manufacturer to retailer dominance → “trade marketing” = the manufacturer markets directly to the retailer to create a better fit between product and outlet, the objective is to create joint marketing and strategic plans mutually profitable.
Cross-border alliances in retailing: horizontal (between a retailer and another retailer) and international, mainly between Western European retailers as a response to threats and opportunities of the EU internal market, there is no sharing of equity but coordination of operational activities (buying, product marketing, branding…), the main present advantage is central purchasing from suppliers (price advantages)
2. What are the factors that affect the length, width and number of marketing channels?
In the text there's no specific part about the number of channels, I think the number depends on different combinations of all those factors below plus competition and the degree of integration of the different channel members
Customer characteristics (size, geographic distribution, shopping habits, outlet preferences) i.e. : e-commerce → shorter length of the channel, Dell…
Nature of the product
Width (market coverage) :
intensive coverage → convenience products, mature products, frequently purchased, low price , non-technical, self-service…
exclusive coverage: specialty products, new products, high-price, infrequently purchased, distinctive, personal-selling, technical products…
selective coverage: products with characteristics between those two categories
Length (number of levels in the channel), the longer the channel the higher the final consumer price:
Longer channels: consumer goods, convenience goods, mass distribution
Shorter channels: industrial products,
Local regulations, business practices
Width: exclusive coverage may be considered as restraint to trade
Length: i.e. in Japan → long channel because of social and cultural purposes (members of the channel are like family members, even the less effective are tolerated)
5. Do grey marketers serve useful marketing functions - for consumers and manufacturers?
Definition of grey marketing:
importing or selling of products through market distribution channels not authorized by the manufacturer
occurs when the manufacturer use significantly different market prices for the same product in different countries, mainly exists for high-priced , high-end products (fashion, luxury apparel)
Grey marketers buy branded goods intended for one market at low price and sell them with a higher profit in a higher priced market
From the point of view of the manufacturer:
main problem → authorized intermediaries loose motivation
grey marketers compete on price (usually slight difference in order to make a big profit) but usually offer poor after-sales service and poor marketing support
From the point of the customer:
They still pay a relatively high price on a high price market (the difference between the purchase price and the selling price is a big profit for the grey marketer but almost no benefits for the customer )
They are offered a poorer after-sale service
Ch 17
Q1. Assess and discuss problems associated with assessing advertising effectiveness in foreign markets.
Advertising evaluation and testing the final stage in the advertising decision process. It is more difficult to test advertising effectiveness in international markets than in domestic markets. There are a number of reasons for that:
1) Distance and communication gap between domestic and foreign markets.
2) This makes it very difficult to transfer testing methods used domestically e.g. Conditions for interviewing people can vary from country to country.
3) Many firms try to use sales results as a measure of of advertising effectiveness, but AWARENESS TESTING is actually very important thing too (especially during the early stages of a new product launch)
4) Overall it's difficult to isolate the advertising effect. This can be solved by testing, in a group of countries, independent variables (e.g. advertising, media mix etc) against sales (dependent variable). The markets/countries are grouped according to similar characteristics.
Q2. Compare domestic communication with international communication. Explain why “noise” is more likely to occur in the case of international communication process.
THE FIRST PART OF THE QUESTION IS TOTALLY UNCLEAR TO ME AND THERE'S NO
ANSWER TO IT IN THE BOOK, SO IF ANYONE CAN GIVE ME A HAND I'LL BE
GREATEFULL (THAT IS UNLESS THIS ANSWER IS ACTUALLY CORRECT)
1) Lanfuage differences - A slogan or advertising copy that is effective in one language may mean something different in another language
2) Economic differences - in contrast to industrialized countries, developing countries may have radios but not television sets. In countries with low levels of literacy written communication may not be as effective as visual or orla communication
3) Socio-cultural differences - dimensions of culture (religion, attitudes, education etc) affect how individuals perceive their environment and interpret signals and symbols e.g. nudity that is common in French advertisings is completely unacceptable in most of the countries around the world.
What is „NOISE“? To communicate in an effective way the sender needs to have a clear understanding of the purpose of the message, the audience to be reached and how this audience will interpret and respond to the message. However, sometimes the audience cannot hear clearly what the sender is trying to say about its product because of the „NOISE“of rival manufacturers making similar and often contradictory claims about their products.
Why is the “NOISE” more likely to occur in case of international communication process?
1) Objectives need to be set correctly:
• Increase sales from existing customers
• Obtain new customers
2) How're you going to advertise and whom are you targeting? You don't try to advertise luxury brand at a fun fare for poor children as they won't buy it
3) Message decisions (creative strategy) - if the campaign will be standardized internationally with only minor modifications such as translation. Standardization implies a common message, creative idea, media and strategy. It can be cheap, but that can backfire in some countries e.g. pro-American adverts in Iran or Cuba or even by not understanding some of the local nuances.
4) Media selection is an important factor - which media is used for whom, and when e.g. TV advertising exercise equipment designed for young people in the morning when they're at work doesn't work.
5) Most important though is Language differences - companies often burn their own bridges e.g. Opel Nova which was being sold in Spain which mean Open “no go”, in Latin America “Avoid Embarrassment - use Parker Pens” was translated “Avoid PREGNANCY - Use Parker Pens” or Electrolux ad in the US “Nothing SUCKS like an Electrolux”.
Ch 17 q 3: Why do more companies not standardize advertising messages worldwide? Identify the environmental constraints that act as barriers to the development and implementation of standardized campaigns.
Standardization allows the realization of economies of scale in the production of advertising materials, reducing advertising costs and increasing profitability. On the other hand, since advertisement is based largely on language and images, is mostly influenced by socio-cultural behavior on consumers in different countries.
In reality is not a question of either /or. For the internationally oriented firm it is more a question of the degree or standardization/localization. A study by Hite and Frazer (1988) showed that a majority (54 %) of internationally oriented firms were using a combination strategy (localizing advertising for some markets and standardizing advertising for others). Only 9% of the firms were using totally standardized advertising for all foreign markets . This could indicate a trend towards less standardization. A total of 37% of the firms reported that they were using only localized advertising. Many of the global companies using standardized advertising as well known.( e.g. Coco-Cola, Intel, Philips, Morris/Marlboro).
The Cathay Pacific advertisements show that the company uses a standardizes strategy in the South - East Asia aria. The only element of adaptation is the translation of the English text into Japanese
1. Customers like to be approached individually
2. There're different regional meanings to words e.g. "Mitsubishi Pajero" in Spanish means Mitsubishi wanker
3. Colors are culture specific: White in Europe is color of youth and purity while in muslim countries it's color of death
4. Countries boycott other country's products e.g. Arabic countries started boycotting Danish products after caricature of profit Mohamed was published
5. Certain stereotypes are not well accepted in different nations e.g. Arabic nations won't accept ideas of the modern family in their advertising (e.g. of Kraft cheese in Saudi Arabia)
6. Certain countries will not react well to advertisings created in certain countries e.g. Many Americans will not buy products if they're associated with muslim world after 9-11.
7. If an advertisement is standardized and people travel from country to country it won't grab their attention. If they see something new, they'll stop and look at it.
8. Sometimes its impossible to translate the advertising and synchronize it with the lips of the actors causing that it just comes fake and many people are put off by it
9. In many countries things like nudity are not allowed while in many they are. France has high degree of nudity which could be never screened in Asian or Middle Eastern countries.
Q5: What is meant by saying that advertising regulations very around the world?
Advertising regulation refers to the laws and rules defining the ways in which products can be advertised in a particular region. Rules can define a wide number of different aspects, such as placement, timing, and content. In the United States , false advertising and health -related ads are regulated the most. Many communities have their own rules, particularly for outdoor advertising. In the United Kingdom advertising of tobacco on television, billboards or at sporting events is banned. It is also prohibited to advertise cars on the basis of how fast they can move and the relationship which the event has with the sport seen as a healthy pursuit, unlike smoking. Similarly alcohol advertisers in the United Kingdom are not allowed to discuss in a campaign the relative benefits of drinking, in most instances therefore choosing to focus around the brand image and associative benefits instead of those aligned with consumption. There are many regulations throughout the rest of Europe as well.
Advertising regulation has been widely recognized as a significant environmental factor that impacts international advertising over the world .
On the other hand, we are living in a fascinating age of globalization, when products, ideas, and people regularly flow across national borders. When it comes to protecting consumer interest and maintaining fair market conditions, governments around the world may face an identical set of challenges, and may consequently resort to similar regulatory responses. Thus, it is possible that countries share considerable common ground in their regulation of advertising, despite their pronounced social, economic, and political differences.
Chapter 18: Question 1
Explain why negotiation process may differ from country to country.
Negotiation process may differ from country to country because there are differences between national cultures.
Within each culture we can distinguish four dimensions.
-masculinity or femininity (there are differences of attitude to competition, self achievement, ways of resolving conflicts etc.)
-uncertainty avoidance (which refers to comfort level in uncertain or risky situations)
-power distance (acceptance of authority differences between those who have power and those affected by the power)
-individualism and collectivism (tendency to promote selfish or cooperative behavior)
-different organizational models (for example: flexible and democratic British model, well organized German model with very detailed rules and procedures, pyramidal hierarchical French model held together by a united command imposing strict rules)
All those dimensions crate a unique framework for every country which takes part in negotiations. That is why negotiations will always have to differ in order to achieve their goals. It simply depends with whom you are negotiating with...
(I really tried not to go into to much details- I think it's enough but should You think that I have to explain something more clearly drop me a line)
Chapter 16, Q10: How is retailing know-how transferred internationally?
Transfer of the marketing knowledge of company to international market can be divided into stages. These specified stages characterize proportional degree of reluctance. Retail companies will typically move from reluctance to cautions expansion abroad, starting with the closest market. Trend of internationalization created tree styles of international operation:
Multinational - operates as autonomous entities within each country
Transitional - seeks to achieve global efficiency while responding to national opportunities and constraints
Global - usually very little differences across national boundaries; achieves the most efficient economies of scale; the least local responsiveness
Moreover the transferred knowledge has to be adjusted to other environment to various consumer behaviors. These are differences in consumer tastes, buying habits and spending patterns from county to county. The tailored knowledge has to reconsider also shortages of key resources such as land and labour, tax ad tariff structure etc.
Chapter 7: Question 6: The focus of this chapter has been mainly the influence of culture on international marketing strategies. Try also to discuss the potential influences of marketing on cultures.
It is not only the marketing that affects cultures, but the international brands that try to sell their product. International brands have a huge impact on the consumer behavior and culture. For instance, the arrival of McDonalds and KFC in Asian countries has actually impacted the eating habits of the population - especially the youth. Soft drinks like Coke and Pepsi have almost wiped out local players. Driven by the food industry wanting to make more sales (and here comes the marketing, branding, selling and distribution in play) the populations of Northern Europe and America as a whole have been indoctrinated to consume what this industry perceives as good for you. When looking at Polish customs and culture we might observe that eating at home is concerned to be the right thing. Burger King has recently created a slogan “Burger King: a good reason to eat out” which only aims to show us that maybe eating at home is not necessarily the right solution. As we can see big corporations have a huge impact on cultures and its habits.
It has been observed that with international global brands entering the market, local companies do get hit since they cannot match the advertising and marketing budgets of the global giants. This of course means that more and more foreign corporations take part of the market share. What it means is that foreign businesses want to promote their products/services creating higher demand in the local country. In many cases these large corporations introduce a product or service that wasn't even in demand, therefore creating a new market.
Question 3: Do you think that cultural differences between nations are more or less important than cultural variations within nations? Under what circumstances is each important?
In my opinion every marketing campaign should take under consideration the cultural characteristics of a society it is trying to target. If the research shows that the country as a whole has relatively similar set of cultural characteristics, it is possible to create one marketing campaign for the whole country. If, on the other hand, the cultural variations are very high, then it is obvious that the company is dealing with more than one group of consumers that they're trying to target and maybe they should think of having more than one marketing campaigns.
It is usually the case that the cultural variations within one country are less significant than cultural differences between nations. Citizens of one nation usually share the same religion, history and habits. If there are any variations it is usually the case that at least the cultural basics remain the same. In some cases however ignoring these cultural variations within one country might cause many problems (e.g. the situation of Basque Country in Spain). It is important for the marketing staff to recognize how big are the differences within one nation and whether they should be taken under consideration in a marketing campaign. The ultimate goal is to successfully target a specific group of people with the same cultural characteristics, not necessarily the whole country.
When dealing with different cultures it is crucial to take its characteristics under consideration such as:
Language
Manners and customs
Technology and material culture (how a society organizes its economic activity)
Social institutions
Education
Values and attitudes
Aesthetics
Religio
What are the reasons for the increasing level of outsourcing to international subcontractors
The answer to the question is in bold, but I also summarized the reason to outsource, not just internationally.
Concentration on in-house core competences - contractor wishes to concentrate management time and effort on those core business activities that make the best use of in house skills and resources. It may also difficult to obtain skilled in house labor.
Lower product/production costs
Economics of scale - sub constructor produces similar parts for different customers, thus with their experience in this field, can reach a lower cost per unit
Lower wage costs - domestic costs of production can make the in house production uneconomic, so motivating international outsourcing
General cost efficiency - each element of the supply chain has potential to be outsourced, but when outsourcing the contractor must be cautious, and analyze all aspects (quality, time, cost, risk…)
Increased potential for innovation - ideas for innovation can be generated by the subcontractor due to its more in depth understanding for the component.
Fluctuating demand - if the contractor is confronted with fluctuating demand levels, external uncertainty and short product life cycles, it may transfer some risk and stock management to the subcontractor to better cost and budget control. Plus is dealing with international subcontractor, they can cut costs with currency fluctuation.