1Marketing Exam 2Chapter 7: Global MarketingGlobalization: is a process of interaction and integration among the people, companies, and governments of different nations- driven by international trade and investment and aided by communications and transportation technology- affects the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the worldGlobal marketing vs. International MarketingGM: marketing activities are coordinated and integrated across multiple countries marketsIM: marketing activities are developed specifically for each individual market. There is little or no effort to coordinate marketing activities.Benefits- expands economic freedom - spurs competition - raises productivity and living standards- offers access to foreign capital, global export market - acts as a check on govt powerand advanced technologyMarket AssessmentDeveloped Countries  complex andSophisticated industriesLess Developed Countries  Basic Indust.Economic Analysis using basic metricsGross Domestic Product (GDP): most widely used. Defined as the market value of the goods and services produced by a country in a yearGross National Income (GNI): consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy)Purchasing Power Parity (PPP): theory that states that if the exchange rates of two countries are in equilibrium, a product purchased on one will cost the same in the other, expressed in the same currency- The Big Mac Index: theory of (PPP), which argues that in the long run exchange rates should move to equalize the price of an identical basket of goods between 2 countries.2Human Development Index (HDI): measure of 3 indicators of the quality of life in different countries: life expectancy at birth, educational attainment, and whether the avg. incomes are sufficient to meet the basicneeds of that countryAnalyzing Infrastructure and Technological Capabilities- Four elements: transportation, distribution channels, communications, and commerce - are essential to the development of an efficient marketing systemAnalyzing Government Actions1. tariffs : is a tax levied in a good imported into a country (intended to make imported goods more expensive and thus less competitive with domestic products)2. Quota : limit on the amount of a product entering a country3. Boycott : exclusion of products from a country4. Exchange Control : refers to the regulation of a country’s currency (exchange rate); the measure of how much one currency is worth in relation to another. MUST be sold to a control agency 5. Marketing Group: Common trade alliance6. Trade Agreement : agreement to stimulate international trade ( marketers must consider the TA’s to which a particular is signatory or the trading bloc to which it belongs)Analyzing Socio-cultural Factors- understandings another country’s CULTURE is crucial to the success of any global marketing initiative.Market Entry Strategy     1. Exporting: producing goods in one country and Selling them in another. Requires the least financial risk but also allows for only a limited return to the exporting firm.2. Franchising: contractual agreement between a firm, the franchisor, and another firm or individual (the franchisee). Allows franchisee to operate business using the name and business format developed and supported by the franchisor. Initial profit is reduced because the profit is split…. Could also break away3. Strategic Alliances: collaborative relationships between independent firms, though the partnering firms do not create an equity partnership; they DO NOT invest in one another.4. Joint Venture: formed when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared (access to resources: vendors, real estate)35. Direct investment: requires a firm to maintain 100% ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries. Requires the highest level of investment and exposes the firm to significant risks… loss of its operating/initial investmentChoosing a global market strategy1. determine the target markets to pursuer2. developing a marketing mix that will sustain a competitive advantage over timeTargeting Market- Segmentation, targeting, and positioning (STP) is more complicated than domestic STP- cultural differences, positioning,Global Marketing MixGlobal Product or Service Strategies1. Sell the same product or service in both the home country market and host country2. Sell a product or service similar to that sold in home country but include minor adaptations3. Sell totally new products or servicesPricing Strategies: is a difficult task1. tariffs 2. Quotas 3. Anti-dumping policies 4. Economic conditions 5. Competitive factorsDistribution Strategies: form complex value chains that involve middlemen, exporters, importers, and different transportation systems. Additional middlemen typically add costs and ultimately increase the final selling price of the product (want to shorten these channels)Communication/ Promotion Strategies: literacy levels, adapt to language differences, cultural and religious differencesChapter 8: Segmentation, Targeting, and PositioningMarket Segmentation: is the process in marketing of dividing a market into distinct subsets that behave in the same way or have similar needs. (challenge for the dev. And marketing of profitable products and services) (Develop segment profiles)Market Targeting: develop measure of segment attractiveness. Select target segmentsMarket positioning: Develop positioning for target segments. Develop a marketing mix for each segmentImportance of Market Segmentation: enables marketers to identify groups of customers with similar needs and to analyze the characteristics and buying behavior of these groups- provides marketers with information to help them design marketing mixes specifically matched with the characteristics and desires of one or more segments4Segmentation, Targeting, Positioning Process- this focuses on how firms use that strategy to identify the target markets they will serve- research is the key component here as well as in analysis—should tie togetherStep 1: Strategy or Objectives1. undifferentiated