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International Business > Ch 16 > Flashcards

Ch 16 Flashcards

1
Q

The Environment of International Business

A

Diverse Cultural, Political, Legal, Monetary, and Financial Environment of the firm

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2
Q

Global Marketing Strategy

A

Targeting Customer Segments and Positioning

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3
Q

International Marketing Program Standardization and Adaptation

A

-Global Branding and Product Development
-International Pricing
-International Distribution
-International Marketing Communications

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4
Q

Market Segmentation

A

Process of diving firms total customer base into homogeneous clusters in a way that allows management to formulate unqiue marketing strategies for each group

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5
Q

Firms frequently formulate market segments by grouping countries based on macro-level variables

A

-economic development
-cultural dimensions

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6
Q

Global Market Segment

A

A group of customers who share common characteristics across many national markets

Positioning: firm develops both the product and its marketing to evoke a distinct impression in the customer’s mind emphasizing differences from competitors

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7
Q

Global Positioning Strategy

A

Positions the offering similarly in the minds of targeted buyers worldwide

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8
Q

Adaptation

A

Firm’s efforts to modify one or more elements of its international marketing program to accomodate specific customer requirements in a particular market

-Necessary due to differences such as language, culture, regulation, economic conditions and other factors

-Useful in multidomestic industries

*Differences in national preferences
*Differences in living standards and economic conditions
*Differences in laws and regulations
*Differences in national infrastructure

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9
Q

Standardization

A

Efforts to make marketing program elements uniform with a view to target entire regions, even the global marketplace, with the same product or service

*Appropriate when market segments and customer needs are consistent among numerous countries

-Reduces costs by making possible economies of scale in design, sourcing, manufacturing, and marketing

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10
Q

Marketing Mix

A

-Global Branding
-Product Development
-International Pricing
-International Marketing Communications
-International Distribution

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11
Q

Standardization Advantages

A

-Cost reduction
-Improved planning and control
-Ability to portray a consistent image and build global brands

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12
Q

Adaptation Advantages

A

-Meet needs of customers more precisely
-Enjoy unique appeal
-Comply with government regulations
-Achieve greater success in combating customer resistance

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13
Q

Global Brand

A

A brand whose positioning, advertising, strategy, look, and personality are standardized worldwide

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14
Q

Standardization helps firms cut costs where local adaptation helps the firm cater to local needs and requirments

-Adaptation is costly and time consuming, managers usually prefer standardization

A
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15
Q

Regional Marketing Approach

A

*When buyer preferences and product standards have converged at a regional level

*Media and distribution channels are organized on a regional basis

*Countries in target regions have formed regional economic integration blocs

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16
Q

A strong global brand

A

-Increases efficiency and effectiveness of marketing programs
-Stimulates brand loyalty
-Allows the firm to charge premium prices
-Increases the firms’ leverage with intermediaries and retailers
-Enhances the firms competitive advantage in global markets

17
Q

Successful Global Brand

A

*High, conspicious visibility
*Status symbols
*Widespread appeal due to innovative features that seems to fit everyones lifestyle
*Close identification with a particular country

18
Q

Gray Market Activity

A

Legal Importation of genuine products into a country by intermediaries other than authorized distributors (parrallel imports)

19
Q

Factors That Affect International Pricing

A

*Nature of the market
*Nature of the product or industry
*Type of distribution system
*Location of the production facility

20
Q

Nature of the market

A

-Buyers income level and demographic profile are major factors that affect

-Foreign governments impose tarrifs, taxes, or other costs that lead to higher prices

-Firms must set lower prices to generate significant product sales

21
Q

Nature of the product or industry

A

*Products with high added value usually necessitate charging relatively high prices

-A specialized product gives a company greater price flexibility

22
Q

Type of Distribution System

A

-Firms that export rely on independent distributors based abroad

23
Q

Location of the production facility

A

-Locating manufacturing in countries with low cost labor enables a firm to charge lower prices

24
Q

3 common pricing strategies in IBUS

A

-Rigid Cost Plus Pricing
-Flexible Cost Plus Pricing
-Incremental Pricing

25
Q

Rigid Cost Plus Pricing

A

-Setting a fixed price for all export markets

-Management adds a flat percentage to its domestic price to compensate for the added cost of doing business abroad

-Disadvantage: May fail to account for local market conditions such as buyer demand, income level, and competition

26
Q

Flexible Cost Plus Pricing

A

-When management includes any added costs of doing business abroad in its final price

-Accounts for specific circumstances in the target market

27
Q

Incremental Pricing

A

-Setting prices to cover only the firms variable costs but not its fixed costs

Dumping: charging a lower price for exported products, sometimes below manufacturing cost, driving local suppliers out of business

28
Q

International Price Escalation

A

The problem of end user prices reaching exorbiant levels in the export market, caused by multilayered distribution channels, intermediary margins, tariffs, and other international customer costs

29
Q

Combating Export Price Escalation

A

1.Shorten the distribution channel
2.Redesign the product
3.Ship products unassembled
4.Reclassify the exported product
5. Move production or sourcing to another country

30
Q

In export markets…

-a strong domestic currency can reduce competitiveness

-a weakening domestic currency makes the firms foreign pricing more competitive

A
31
Q

Transfer Pricing

A

The practice of pricing intermediate or finished products exchanged among the subsidairies and affiliates of the same corporate family located in different countries

32
Q

*Root cause of gray market activity is a large enough difference in price of the same product between two companies

A

i. manufacturers inability to coordinate prices across its markets

ii. firm’s deliberate efforts to charge higher prices in some countries when compeitive conditions permit

iii. exchange rate fluctuations that result in a price gap between products priced in different currencies

33
Q

Gray Market Activity Can Lead To:

A

*Tarnish Brand Image
*Strained Manufacturer-Distributor Relations
*Disruptions in company planning

34
Q

Managers can pursue 4 strategies to cope with gray market imports

A

*Agressively cut prices in countries and regions that gray market brokers target

*Hinder the flow of products into markets where gray market brokers produce the product

*Design products with exclusive features that strongly appeal to customers

*Publicize the limitations of gray market channels

35
Q

Promotional Activities

A

Coupons, point of purchase displays, demonstrations, samples, contests, gifts, and internet interfacing

-Promotions usually require a high level of intermediary or retailer sophistication to suceed

36
Q

Distribution

A

*Most inflexible of the marketing program elements, once a firm establishes it, it may be difficult to change it

37
Q

Direct Investment

A

Disadvantage: high cost

Allows firm to:
-gain control over marketing and distribution activities in the market
-monitor the performance of employees and other actors in the market more effectively
-get closer to the market, helpful when the market is complex

38
Q

Global Account Management

A

Serving a key global customer in a consistent and standardized manner, regardless of where it operates

39
Q

International Marketing Communications

A

-Involves managing of advertising and promotional activities across national borders

-Compellled to adapt their international communications due to unique legal, cultural, and socioeconomic factors

-Firms must accomodate literacy levels, language, and available media

International Business (12 decks)

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