BusAdmin 360 Principlesof Marketing Lecture 5 Outline of Last Lecture I. Understand consumer buying process-difference between functional and psychological needs-factors that affect information search-discuss post-purchase outcomes-factors that affect consumer decision process-how involvement influences the consumer decision-making processOutline of Current Lecture I. What factors go into assessing global marketsII. What to consider when deciding on a global entry strategyIII. Choosing a global market strategy Current LectureChapter 8 Global Marketing Showrooming: viewing items at physical store and purchasing online elsewhere through price-matching-some businesses will price-match best price so customers can have instant gratification Social Score?Measure how many people you reach through social media, how much they trust you, your influence topics; tracked from social networking sites-Sites like Klout, Kred, PeerIndexGlobalization: process by which goods, services, capital, people, information, and ideas flow across national borders These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Globalization of Production/offshoring: manufacturers’ procurement of goods and services from around the globe to take advantage of national differences in the cost and quality o various factors of production Assessing Global Markets Economic analysis using metrics (general economic environment)Infrastructure and technology (transportation, communication)Government actions (tariff, exchange control)Sociocultural analysis (individualism, time orientation) Economic Analysis Using MetricsGreater national wealth=better opportunities Three Major Economic Factors: 1) Economic Environment 2) Market Size and Population Growth Rate 3) Real Income Trade Deficit: country imports more than it exportsTrade Surplus: country exports more than it imports Gross Domestic Product (GDP): market value of goods and services produced by a country in a yearGross National Income (GNI): GDP plus net income earned from investment abroad Per Capita Income: overall income of population divided by the number of people included in the population Purchasing Power Parity (PPP): estimates amount of adjustment needed on the exchange rate between countries in order for exchange to be equivalent to each currency’s purchasing power-or exchange rate adjusts so identical good in two different countries has same price when expressed in the same currency Human Development Index (HDI)-composite metric of three indicators of the quality of life in different countries-life expectancy at birth-educational attainment-average incomes are sufficient to meet basic needsSummary**Enter market where you have Purchasing Power. **GDP, PPP, Per Capita Income influences: where you can make it more/less expensive; your talent pool; where you can sell itInfrastructure -basic facilities, services, and installations needed for a community/society to function-transportation, communication systems, public institutions Culture shift from family owned shops to megastore (WalMart)The new megastores don’t always match the cultures expectations like some local, cultural things that cannot be found or are not the same. Analyzing Government ActionsQuota: max quantity of a product in a time period; can only import so much product as a safeguard local industry so that they can compete. Unfortunately, local companies may not be efficientBoycott: group’s refusal to deal with a commercial organization to protect against its policies Exchange Control: regulation of country’s currency exchange rate Trade Agreement: an intergovernmental agreement designed to manage and promote trade activities for a specific regionTariff: (duties) tax levied on goods imported into a country; meant to make imported goods more expensive and less competitive with domestic productsDumping: foreign producer sells its offering in a foreign market at a price less than its production costs to gain market share; NOT sustainableHofstede’s Cultural DimensionsPower Distance: willingness to accept social inequality as natural; attitude of culture towards inequalities against us allUncertainty Avoidance: extent to which society relies on orderliness, consistency, structure, and formalized procedures of daily life; society deals with the fact that the future can never be known…figure it out? Individualism: perceived obligation to and dependence on groups; terms “we” or “I”Masculinity: extent to which dominant values are male oriented; lower=men and women are treated equally, higher=male dominated positions of powerTime Orientation: short-vs-long-term orientation; country that tends to have a long-term orientation values long-term commitments and is willing to accept a longer time horizon for something to occur; society’s search for virtue or short-term view-These all affect what people buy and why they buyChoosing Global Entry StrategyTop three mistakes of international business: 1) Lack of investment in the country2) Lack of investment in the process3) Lack of cultural sensitivityStrategic Alliance (moderate risk, moderate control): collaborative relationships between independent firms-they do not invest in one anotherJoint Venture (moderate-high risk, moderate-high control)Direct Investment (high risk, high control): 100% ownership of company and