3.3: Impact of globalisation on global economies

Question 1

what is global marketing?

Answer 1

the same products and strategy can be used in all markets

Question 2

what is glocalisation?

Answer 2

when the business adapts its products and/or marketing plans to suit individual countries or market segments

Question 3

what is the ethnocentric approach?

Answer 3

business believes that a success in the home market will also be successful in other countries
uniform approach world-wide

Question 4

what is the polycentric approach?

Answer 4

each country considered unique so each subsidiary business develops its own strategies

Question 5

what is the geocentric approach?

Answer 5

all markets have similarities and differences
some adaptation to suit local preferences and tastes

Question 6

give an example of a firm that uses the ethnocentric approach

Answer 6

Panasonic
early McDonald’s expansion

Question 7

give an example of a firm that uses the polycentric approach

Answer 7

McDonald’s currently - McAloo Tikki in India

Question 8

give an example of a firm that uses the geocentric approach

Answer 8

Nestle

Question 9

why is a good pricing strategy important for firms in the global context?

Answer 9

for some markets with elastic demand, price will need to be low to attract consumers –> one western price may not be correct for firms like McDonald’s

Question 10

what is reverse innovation?

Answer 10

designing a product that is less complex than existing models so that it can be sold in mass markets where incomes are lower than they are in developed economies

Question 11

why would firms that sell luxury goods not lower their prices in emerging or developing economies?

Answer 11

a reduction in price and growing sales would reduce the exclusivity that makes it possible to charge high prices
marketing focuses on viewing the product as a valuable social symbol

Question 12

why is market research essential?

Answer 12

ensures that the nature oof the product fits consumer requirements
ensures that the price is appropriate for the target market
promotional activity will be meaningful to consumers
distribution arrangements are consistent with consumer expectations

Question 13

what are joint ventures?

Answer 13

businesses become involved in a collaborative relationship with a local producer

Question 14

how do mass markets form in emerging markets?

Answer 14

rising incomes
larger markets
economies of scale and technological change
prices fall
quantities demanded increase
mass markets form

Question 15

what are subcultures?

Answer 15

groups of people who have interests and values in common

Question 16

what are global market niches?

Answer 16

smaller, specialised parts of a global market where customers in more than one country have particular needs that are fully met by the global mass market

Question 17

what are the characteristics of successful global niche businesses?

Answer 17

market orientation
very good customer service
expertise in their field
prioritising profit and not market share
innovation to satisfy change in the market
focus on cost efficiency but not at expense of quality
using marketing mix appropriately for different market segments

Question 18

advantages of a global marketing strategy

Answer 18

large scale production of standardised products - economies of scale gained, same marketing used everywhere so lower costs, lower r&d and market research costs

Question 19

disadvantages of a global marketing strategy

Answer 19

sales lost if some market segments not catered for
marketing and product may not be suitable

Question 20

advantages of glocalisation

Answer 20

sales increase as markets specifically targeted
specialised products appeal to consumers
revenue and profits increase
marketing suits local situation and media

Question 21

disadvantages of glocalisation

Answer 21

cannot gain economies of scale
market research and r&d costs high
harder to manage wide product range
costs higher

Question 22

evaluation of different marketing methods

Answer 22

benefits of targeted marketing vs increased costs
usually geocentric approach to gain some benefits from targeting without incurring huge costs

Question 23

describe product in the marketing mix

Answer 23

standardised products are cheaper as low r&d costs
some products dont need adapting - ipods
some products easily adapted - food
backward innovation - making cheaper, simpler products for developing markets

Question 24

describe price in the marketing mix

Answer 24

level of income is crucial esp with mass mkt
low dvlpment - lower prices than home mkts
some luxury products - prices same to maintain status

Question 25

describe promotion in the marketing mix

Answer 25

must suit local culture local celebs must suit local media

Question 26

describe place in marketing mix

Answer 26

traditional distribution networks might not work no retail networks in remote areas door-to-door selling sales incentives - distribution network of local agents develop new infrastructure

Question 27

what are the advantages of operating in a global niche market?

Answer 27

focussing on a smaller segment means business can provide specialist products/services - more valuable, higher demand, greater added value demand inelastic - can charge higher price less competition smaller mkts - better knowledge of customers, more effective mkting, higher sales and profits

Question 28

what are the disadvantages of operating in a global niche mkt?

Answer 28

small scale production - no economies of scale market limited success may attract takeover bids narrow focus may be affected severely by change if successful may expand and lose benefits of being niche

Question 29

what does being aware of social and cultural differences do in business?

Answer 29

reduces risk and increases sales

Question 30

why are language differences important when it comes to business?

Answer 30

accurate communication is essential

Question 31

why are cultural differences in business meetings important when it comes to business?

Answer 31

appropriate behaviour leads to improved relationships

Question 32

why are pricing strategies differences important when it comes to doing business?

Answer 32

reflect income of new market, but need to maintain brand image

Question 33

why are product differences important when it comes to doing business?

Answer 33

adapt to suit local culture and conditions eg McDonald's, clothing

Question 34

why are promotion differences important when it comes to doing business?

Answer 34

must appeal to local market, language and slogans, celebrities

Question 35

why are place differences important when it comes to doing business?

Answer 35

distribution channels often different, think about infrastructure

Question 36

what are the advantages of a joint venture?

Answer 36

spreads risk gain local knowledge avoid culture clashes use existing supply chains costs shared may be a legal requirement for some govts - china

Question 37

what are the disadvantages of joint ventures?

Answer 37

partner might not be suitable or reliable communication problems culture clashes can occur managemnt style different profits are shared

Question 38

give an example of price mm and why

Answer 38

Tata's Nano car - £1300 enables indian consumers to become car owners for the first time

Question 39

give an example of product mm and why

Answer 39

McDonalds Mahrajah burger - chicken not beef reflects dietary requirements in a country where beef is not widely consumed

Question 40

give an example of promotion mm

Answer 40

the future group indian supermarkets - no neat stacking, organised chaos consumers suspicious of over-pricing so chaotic style reflects bazaars and mkts

Question 41

give an example of place mm

Answer 41

unilever investing in direct selling schemes e.g. Shakti programme widens network of potential customers - especially in rural areas