66 Cards in this Set
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joint venture
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Involves a foreign company creating a new company, in conjunction with a local company, to which the companies contribute capital, equity, and labor.
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joint ventures encourage:
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--The development of local expertise.
--The development of the local market.
--Improving the country's balance of trade, assuming that the production can be exported abroad.
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joint venture advantages:
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--Higher control, potentially resulting in higher profits.
--Costs and risks shared with joint-venture partner.
--Local partner shares market expertise, relationships, and connections to local government.
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joint venture disadvantages
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--Problematic if franchisee cannot guarantee quality.
--Repatriation of profits may be difficult if local government has control over joint-venture partner.
--Can produce a new competitor.
--70% of all joint ventures break up within 3.5 years
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consortia
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--Involve three or more companies joining forces to form a new company.
---Can create monopoly effect, so they are only present...
1.Where costs are high, often in the area of research and development
2.In markets that are underserved
3.In areas where the government or the marketpla…
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Wholly Owned Sudsidiaries
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--Can be developed by the company (greenfielding) or can be purchased (acquisition or merger).
--Involve long-term market commitment.
-- high cost.
--high control of operations.
--greatest level of risk.
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branch offices
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--Branch offices in the target market are in charge of pricing, promotion and distribution of the product.
--Like these subsidiaries, branch offices offer companies a high level of control; however, they present a much lower risk.
--Involves substantial investment:
1.sales office
2.s…
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outsourcing
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Defined as the strategic use of outside resources to perform activities that are usually handled by internal staff and resources.
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turnkey operation
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--No investment or long term presence
--Contract to build and train
--Set up logistics, train local employees and mngt
--Take one time profit
--"Turn keys" over to locals and leave
--No future participation, no risk, no footprint
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Global Standardization
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Standardization of products across markets and of the marketing mix worldwide.
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Global Standardization advantages:
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Advantages:
1.Allows for economies of scale
2.Encourages global branding
---Global branding involves using the same brand name, logo, image, and positioning everywhere in the world
---Global brands are more prestigious, signaling that the company has the resources to back the brand
3…
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global standardization disadvantage:
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Cannot perfectly meet the needs of all target consumers
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Regional Standardization
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Standardization of products across regions and of the marketing mix within the region. (EU and NAFTA)
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Regional Standardization advantages:
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Allows for economies of scale.
Addresses consumer preferences for higher quality and lower price. (Mercedes A-B-C class)
Facilitated by international travel within the region.
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Regional Standardization: disadvantages
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Cannot perfectly meet the needs of all target consumers in the region.
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Global Localization
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Global branding with localized marketing adaptation to differences in local culture, production capabilities, governmental restrictions, etc. (Jeans inseam)
aka "Glocalization"
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Modular Adaptation
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Offer parts (modules) that can be assembled worldwide in different configurations, depending on market needs.
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Core Product Strategy
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Involves using a standardized strategy for the core product worldwide, but varying certain aspects of the offering (product ingredients, advertising, for example) from market to market. (Maharaja Mac)
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Mandatory Adaptation
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Involves adapting products to local requirements so that they can legally and physically operate in the respective countries.
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Non-Mandatory Adaptation
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1.Adapting a product to better meet the needs of the local market, or developing new brands for individual local markets, even though such adaptation is not required.
2.Sometimes easier to buy the local brand company
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Private Label (Retailer) Brands
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--Compete effectively with multinational brands.
--Often, premium store brands are perceived by local markets as high-quality, on par with multinational brand.
--Retailer brands are also innovative and high quality.
--They appeal to consumers during economic downturns.
--They have gre…
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Country of Origin
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Country with which good/service is associated
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Country of Manufacture
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--Country where the product is manufactured (for products).
--Country where the headquarters are located (for services).
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Product Stereotypes
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Product-specific stereotypes that associate the country of origin as a certification of quality.
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Service Stereotypes
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service based stereotypes that associate the country of origin as having bad service. ex. french waitors
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Ethnocentrism
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Ethnocentrism
1."My culture is better, my way is better, our products are better". "This will work everywhere"
2.The belief that purchasing foreign products hurts the local economy by causing loss of jobs, and that it is morally wrong and unpatriotic.
3.Leads to the rejection of foreig…
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Service Entry Barriers
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1.Represent a manifestation of protectionism at the
--Firm level. CPA license
--Government level. H1 visa
--Consumer level.
Examples:
--Requirement to use national service providers.
--Prohibition against employment of foreign nationals.
--Direct competition from government provid…
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Design counterfeiting
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Copying designs or scents, which is very common and risk free since companies cannot be prosecuted.
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Brand-name counterfeiting
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--Selling counterfeit products as original products bearing the respective brand name.
--(Malaria pills, Coach bags, Nigeria cassettes, Windows)
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Consumer Factors (Counterfeiting Factors)
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--Willingness to purchase counterfeit goods because risk is low and prestige gains are high.
--Willingness to purchase counterfeit goods products that are consumed publicly. (shirt, watch, bag)
--Consumers and retailers might not notice the difference.
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Technology factors
(Counterfeiting Factors)
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--Affordable, quality copying technology.
--Local partners of multinational firm have access to know-how. (Antryx Y2K)
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Distribution factors
(Counterfeiting Factors )
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--Supply chains are not adequately controlled.
--Traders may use Internet chat rooms and unauthorized dealerships.
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Local government factors (Counterfeiting Factors)
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--Governments may not interfere; even the government may run counterfeiting operations.
--Cracking down would lead to loss of jobs and unrest.
--Customs representative and other enforcement officials may not be familiar with authentic brands. Inspector may get months pay for walking awa…
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Product Standards: ISO 9000
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1. Quality standards for each industry set by the International Organization for Standardization (ISO).
2. ISO 9000 certification: quality in product features that are required by the customer:
---Implies that the firm ensures that its offerings satisfy customer requirements and comply …
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Product Standards: ISO 14000
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1. Environmental management system standards that help business reduce its environmental impact, facilitate sustainable development, and foster international trade.
2. Discourage firms from engaging in hazardous practices in countries where policies are lax.
3.Promote efficient enviro…
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The International Product Life Cycle
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illustrates a complex relationship between the product life stages and international trade and investment activity characteristic of each stage
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international product life cycle: introduction
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Products are first developed in industrialized countries.
Products are traditionally first marketed in industrialized countries.
Increasingly, product life cycles are shortened and the product is marketed in emerging markets as well.
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International Product Life Cycle: Growth
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1. Characterized by:
---Increasing competition from other multinationals.
---Rapid product adoption.
--Product is marketed primarily in developed countries.
--Product is exported to developing countries.
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Introduction
and Growth
Stages:
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MNC Manufactures Product in Developed Countries; Exports to
Developing Countries
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Early Maturity:
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MNC Moves Production to Developing Country; Begins
Importing to Home Country
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Late Maturity
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Developing Country Competitor
Exports Product To MNC Home
Country; Competes with MNC
Imports
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Decline
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Developing Country Markets Remain Viable Target Markets for
MNC; MNC Home Country Market Is Diminishing
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International Product Life Cycle: Maturity
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--Product is adopted by most target consumers.
--Sales are leveling off.
--Profits decline due to intense competition.
--Manufacturing operations move to developing countries to take advantage of cheap labor.
--New competitors: firms from developing countries.
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International Product Life Cycle: Decline
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--Products are rapidly losing ground to new technologies and product alternatives.
--Decrease in sales and profits.
--Product lifecycle is extended through sales to consumers in developing countries.
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Product mix
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The total number of products that a company offers its target markets
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Product line
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All the brands the company offers in one product category.
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Product consistency
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Extent that product lines are related, have same distribution, and same consumers
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Product length
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Total number of brands in the product mix.
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Product width
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Total number of product lines the company offers to its target international consumers.
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Product depth
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Total number of different offerings in a product line.
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New Product Development
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1.High risk
2.High cost
3.Challenges in international markets:
---Competition can appropriate the product/service idea and deliver final product or service to the market more swiftly than the initial developer.
---International consumers might not respond as anticipated.
---Local a…
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Steps in New Product Development
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1. generating new product ideas
2. screening ideas
3. developing & evaluating product concepts
4. performing a product business analysis
5. designing and developing the product
6. test marketing
7. launching product internationally
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test marketing
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--Involves testing new product performance in a limited area of a national or regional target market.
--Provides estimate of product performance in the respective country or region.
--Expensive and time consuming.
--Open to competitive sabotage.
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Simulated Test Marketing
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--Not costly and does not give competition much information about the product.
--Also helps to reduce risks related to marketing, sales, and capital expenses.
--Example: LITMUS
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Controlled Test Marketing
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Involves offering a new product to a group of stores and evaluating the market reaction to it, while varying different aspects of the marketing mix.
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Actual Test Marketing
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1.Necessitates important strategic decision and commitments.
2.Can create conditions where the product might be vulnerable to competitive reactions.
3.Provides valuable information for the manufacturer.
4.Focus on cities appropriate for the test.
5.Involves selecting distributors a…
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Degree of Product/Service Newness
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--New product to an existing market or company.
--New product line.
--New item in existing product line.
--Modification of an existing company product.
--Innovation (new product to the world).
-----Radical innovations: Represent fundamental changes for consumers, entailing departures…
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Diffusion
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speed of adoption worldwide
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Trialability
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the ability of consumers to experience the product with only minimal effort.
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Lead country
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wealthy industrialized country where the product is adopted first.
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Lag country
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developing country that adopts the product later.
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Innovators
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--Risk takers who can afford to pay a higher price during the introduction stage (2.5% of the total market).
--Primarily consumers in developed countries.
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Early adopters
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--Consumers who purchase the product early in the lifecycle stage and who tend to be opinion leaders in their community.
--(13.5% of the total market).
--Primarily consumers in developed countries.
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Early majority
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--Consumers who enjoy status of being among the first to purchase a popular product (34% of the total market).
--Consumers are primarily from developed countries.
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Late majority
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--Consumers who adopt popular products when the risk associated with them is minimal (34% of the total market).
--Consumers are from both developed and developing countries.
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Laggards
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--The last consumers to adopt a product; they are risk averse and conservative in their spending (16% of the total population).
--Consumers are primarily from developing countries.
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MKTG 320: Exam 1