FINAL EXAM REVIEW

Task for global marketers:

1. Stay home or go abroad (economic, political, cultural, legal, con…

a. Economic:
i. Saturation of domestic markets: saturation in industrialized parts of the world &
mktg opportunities overseas
ii. Global competition
iii. Globalization of markets: per capita income determines consumer buying
behavior (ex: income <$10,00 mainly buy food and necessities)
1. More choices
iv. Increase in world merchandise trade and GDP
v. World Economy
1. Nations with partially convertible currencies are exposed to ​fluctuations
in currency markets
a. Rise in value of local currency makes exports more expensive &
deters foreign investment (Mexican meltdown 1995 & asian
financial crisis 97-99)
2. Multinational trading blocks: ​free trade​ areas, common market,
monetary union, political union
vi. Country competitiveness
1. Productiveness of country which is represented by its firms’ domestic
and intl productive capacity
a. Important factor: role of human skill resources
vii. Emerging economies
1. BEMs & BRIC
2. Opportunities and challenges to policy makers, businesses and
economic community
viii. Helpful organizations for global trade
1. WTO & GATT
ix. Currency movements, capital surpluses, faster growth rates, and falling trade
and investment barriers helped multinationals from other countries join the
cross-border fray.
b. Financial
 i. Factors Influencing Exchange rates
1. Macroecon factors: inflation, economic growth, investment rate
2. Political factors: exchange rate control, election year
3. Random factors: unexpected events & fear of uncertainty
a. Countries aim to maintain lower value for their currency to
encourage exports
ii. Marketing in EU: 28 countries
c. Cultural
i. Must understand:
1. The material life
2. Language (spoken and unspoken)
a. France: toyota, MR 2 sports car, “M-R deux”
b. Germany: Ikea, Gutvik bed, sounds like “good fu*k”
3. Social interactions
4. Aesthetics (ideas &
perceptions)
5. Religion
6. Education
7. Value system
ii. Context: high (interpretation of
message rests on contextual cues) low
(put emphasis on written or spoken
words)

2. Which market to enter. (Stp & standardize vs

adoption, hofstede)
a. Hofstede classification scheme
i. Power distance: degree of inequality among ppl
ii. Uncertainty avoidance: ppl prefer structures situations with rules over
unstructured ones
iii. Individualism: ppl prefer to act as
individuals rather than group members
iv. Masculinity: importance of male values
(assertiveness, success, competitive
drive, achievement) vs female values
(solidarity, quality of life)
v. Long-term orientation vs short-term
focus: future vs past and present
orientations
b. World value survey--------------------------->
c. Adaptation to cultures
d. Marketing mix:
i. Product policy: food, beverages,
clothing very culture bound
ii. Pricing: customers, company,
competition collaborators
iii. Distribution: culture can dictate distribution strategies
iv. Promotion: majorly influenced on communication (taboos, norms)
 1. (Starbucks logo in saudi arabia)
e. Emerging Markets
i. Attractive as developed markets become saturated & can be top earners (McD
moscow)
ii. BRIC, Next 11 (bangladesh, egypt, indonesia, iran, korea, nigeria, pakistan,
Vietnam, philippines, turkey)
iii. Characteristics: low income, rapid econ growth, high income inequalities,
shortage of resources, diversity within markets, tech undeveloped, weak
distribution channels
iv. Success
1. Offer customized offering
2. Develop business model to surmount problems
3. Update tech
4. Cheap labor
5. Rapid scale up
v. Strategic Options

1.
2. Copy branding in emerging markets
3. Team up with giants in market
4. Develop product in emerging market and bring to home market
vi. Segmentation:
1. Bottom of the pyramid (BOP) strategy (income<$2/day)
a. No: small, unprofitable, focus on them as producers
b. Yes: untapped money, growth opportunities, can become core
business
2. Wealthy: sell global brand
3. BOP: sell local brands & in small sizes
4. To ID most attractive market segments
5. Detect variations in customer needs
6. Reasons: country screening, market
research, entry decisions, positioning
strategy
 7. Scenarios: universal, global, regional, unique segments
8. Criteria: demographic, socioeconomic, lifestyle, behavior
vii. 1st mover advantage: gov support, access key marketing resources
viii. Pricing: thin margin & high volume
ix. Promotion: push strategy, educate about product, brand image, non-traditional
methods
f. Political
i. Government: ideology, communism, capitalism, socialism
ii. Corruption, embargoes, sanctions, trade laws
iii. Agreements, export license requirements
iv. Treaties, laws
v. Stability, national security

vi.
g. Legal
i. Sources: customs, international treaties, court decision
ii. Practices: price fixing, deceptive pricing, pollution regulations, patent
protection, barriers to entry, bribery, wages & benefits laws, warranty
requirements
iii. Different way of employing contracts across countries

3. How to enter (exporting, FDI, contract, joint ventures, acquisitions)

a. Positioning strategy
i. ID relevant set of competing products or brands
ii. Determine current perception held by customers about your product
iii. Develop possible positioning themes
iv. Develop marketing mix strategy
v. Monitor effectiveness & audit & change as needed
4. How to operate market mix strategies (product, price, place, promotion, people, purpose &
process)
5. How to manage a global marketing system (structure, process, leadership, hq, and subsidiaries)
a. Forces: market forces ($, communication tech), cost forces (economies of scale,
sourcing, logistics), government forces (trade policies, labor cost privatization of
industry), competition forces (export & imports, globalized competitors)
OTHER PLAN
Market entry mode decisions: goals, mode of entry, time of entry, 4ps, check performance in entered
markets.

How to choose countries:

1. Select indicators and collect data
a. financial, political, econ, environmental, cultural
b. Income per capita, population, compensation, political risk

c.
……………………………………………………………………………………………………………………
……………

d.
2. Determine importance of country indicators
3. Rate countries in the pool on each indicator
4. Compute overall score
Decision criteria for Mode of entry
1. Market size & growth
2. Risk
3. Government regulations
4. Competitive environment
5. Local infrastructure
6. Internal resources, assets, and capabilities
7. Need for control (tradeoff with cost of resources, commitment, and risk)

Types of Entry
1. Exporting
a. Indirect exporting (merchant, agents, export management companies)
b. Cooperative exporting (piggy back)
c. Direct exporting (set up own exporting dpt)
2. Licensing
a. Benefits: appeal to small companies lack resources, fast access to market, penetrate
global market
b. Caveats: licensee may not be committed, may become future competitor, other entry
modes affected (ned patent or trademark protection)
3. Franchising
a. Benefits: overseas expansion minimum investment, profits tied to franchisees’ efforts,
local knowledge
b. Caveats: revenue not adequate, limited opportunities, performance standards, cultural
problems, physical proximity
4. Contract Manufacturing (outsourcing)
a. Benefits: labor cost, saving on taxes, energy cost, raw materials, overhead, low political
and econ risk, quick access to market
b. Caveats: contract manufacturer - competitor, low productivity, home market backlash,
quality, production standards
5. Joint ventures
a. Benefits: high rate of return & control over operations, creation of synergy, share
resources, access distribution network, local suppliers & government officials
b. Caveats: lack of control, lack of trust, strategy conflicts, resource allocation conflicts,
transfer pricing, ownership of assets (teh & brand name)
6. Wholly owned subsidiaries
a. Mergers and acquisitions: quick access local markets, access to local brands
b. Benefits: greater control & higher profits, committed to the local market, investors
manage and control marketing, production, and sourcing
c. Caveats: risk of full ownership, risk of nationalization, sovereignty
7. Strategic alliances
a. Licensing agreements, market-based, operations and logistics
8. Timing of entry
a. Firm size, breadth of products and services, experience
b. Mode of entry, issues, market knowledge
c. TIMING IS EVERYTHING (walmart SK & germany)
 d.

Marketing Mix:

1. Product
a. Local branding: cola - owns thumbs up in India
b. Firm-based drivers, product-market drivers, market dynamics
c. Product adaptation driven by: consumer preferences, price spectrum, competitive
climate, organizational structure, history (france- croque mcdo; cola- diversity of intl
products)
d. Country of origin effect: Where it is made matters in the mind of consumers (particularly
with elderly) & depends on product category
e. Beware: product piracy
2. Pricing
a. Drivers of price: company goals (ROI, market share, product goals)
i. Company costs (incremental costs) iphone $ not same intly
ii. Customer demand
iii. Competition (cross-border price diff)
iv. Distribution channels (trade margins, everyday low price, grey market)
v. Government policies
b. Manage escalations: rearrange distribution channels, eliminate costly features,
downsize product, manufacture in foreign market, adapt product to escape tariffs or tax
c. Manage inflation: modify components, source low-cost suppliers, shorten credit, quote
prices in stable currency, inventory turnover
d. Manage price controls: adapt product line, shift target segment, launch new product,
negotiate with government
e. Pricing strategy:
i. Nature of customers
ii. Amount of product differentiation
 iii. Nature of channels
iv. Nature of competition
v. Market integration
vi. Internal organization
vii. Government regulation
3. Promotion
a. Beware: language barriers, culture barriers, religions
i. Hofstede
b. Adaptation vs standardization
i. Standardization:
1. Benefits: scale of economies, consistent image, consumer segments,
creative talent, cross-fertilization
2. Caveats: cultural differences, advertising regulations, market maturity,
“not invented here”
c. Sales promotion
i. Collection of short-term incentive tools lead to quick and larger sales of
particular product by consumer
d. Methods: direct marketing, event sponsoring, mobile marketing, product placement,
viral marketing, trade shows
4. Place
a. use of appropriate distribution channels in international markets increases the chances
of success dramatically
b. Materials management: inflow of raw material, parts, and supplies through the firm.
c. Physical distribution: movement of the firm’s finished products to its customers,
consisting of transportation, warehousing, inventory, customer service/order entry, and
administration.
d. Complexity factors: distance, exchange rates, foreign intermediaries, regulations,
security, perishability, cost of transportation
i. Types of transportation: ocean, air, freight, intermodal
e. Intl sourcing
i. Intense intl competition
ii. Pressure to reduce costs
iii. Need for manufacturing flexibility
iv. Short product development cycles
v. Quality standards
vi. Changing tech
f. Sell through
i. Direct sale
ii. Agent intermediaries
iii. Merchant intermediaries
g. Retailers beware: inventory turnover, market info

Selling
 5.

Global Operations
1. Marketing plan
a. Market situation
b. Objectives
c. Strategies
d. Action plans
i. BUT can lack ingo, unrealistic objectives, can’t separate short and long term
plans
2. Geographic structures: regional, national, continental

Key words:
- Big Emerging Markets (BEM): chinese, india, south korea, mexico, brazil, argentina, south
africa…
- Triad Regions: North America, Western Europe, Japan produce nearly 60% of world GDP
- top 5 exporting nations account for 35% of global trade in 2012
- Foreign Direct Investment (FDI): investment in manufacturing and service facilities in foreign
country
- Investing in manufacturing & distribution centers abroad
- Customer Relationship Management (CRM)

Questions to ask self as manager:

- Extent of globalization of their industry
- Do i have products that can probably be marketed abroad
- Do we have preliminary target country markets
- High sales potential
- Field data support theories
- Review entry mode given external factors and objectives
- Marketing plan most appropriate given resources and objectives
- Marketing mix questions
- Product:
- What product assortment should the company launch when it first enters a new
market?
- How should the firm expand its multinational product line over time?
- What product lines should be added or dropped?
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