Chapters 8-12 Flashcards
(14 cards)
What is per capita income and why can it be an important metric for firms when considering global expansion?
• Per capita income: the overall income of a population divided by the number of people included in the population
What is infrastructure, and why is it important for companies to consider it when expanding?
• Infrastructure: the basic facilities, services, and installations needed for a community or society to function; includes transportation, communication systems, water and power lines, and public institutions.
What are the five global entry strategies we discussed in class? Which are risky, which are not risky? What are some qualities of each strategy?
• Exporting (low risk, low control): producing goods in one country and selling them in another
o Less costly
o Example: A firm receives orders from another country
• Franchising (low-moderate risk, low-moderate control): a contractual agreement between the firm (the franchisor) and another firm or individual (the franchisee). Allows the franchisee to operate a business using the name and business format of the franchisor.
• Strategic Alliance (moderate risk, moderate control): collaborative relationships between independent firms – they do not invest in one another
o Volkswagen and Suzuki – VW to the Asian market
o Cisco and Tata Consulting – expertise in the US and India
- Joint Venture (moderate-high risk, moderate-high control): 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
- Direct investment (high risk, high control): requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often though the formation of wholly owned subsidiaries
Define and provide an example of each of these methods for describing market segments: geographic, demographic, psychographic, geodemographic, benefits, behavioral.
• Geographic: organizes customers into groups on the basis of where they live o Region (northeast, southeast) o Areas within a region (urban, suburban, rural, state, city, zip code)
• Demographic: group consumers according to easily measured, objective characteristics such as age, gender, income, and education
o Kellogg’s cereal
• Cocoa Krispies and Froot Loops = children
• Special K and All-Bran = adults
• Psychographic: separates consumers by how they describe themselves; how people self-select based on the characteristics of how they choose to occupy their time (behavior) and what underlying psychological reasons determine those choices.
o A person has a strong need for inclusion or belonging
o A person considers themselves an innovator in a product category
o A person “marches to the beat of their own drummer”, and does not seek out approval of others
o Self-values: are goals for life, overriding desires that drive how a person wants to live their lives
o Self-respect, self-fulfillment
o Self-concept: the image people ideally have of themselves
o “Marketers market self-concept through communications that show their products being used by groups of laughing people who are having a good time”
o Lifestyles: the way we live, how we live our lives to achieve goals
o VALS: Value and Lifestyle Survey; most widely used psychographic tool
o Customers are classified into eight segments based on answers to a questionnaire
• Geodemographic: uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers o “Birds of a feather flock together” o PRIZM (Potential Rating Index by Zip Market) by Nielsen Claritas o Tapestry by ESRI o PRIZM – 66 geodemographic segments or neighborhoods, sorted on 60 characteristics
• Benefit: groups consumers on the basis of the benefits they derive from products or services
o Dividing the market into segments whose needs and wants are best satisfied by the product benefits
o Starwood (hotel and leisure):
• W Hotel: world class restaurants, bars and lounges, sparsely furnished rooms
• Element: appeals to clients requiring extended stay accommodations
• Behavioral: divides customers into groups based on how they use the product or service
o Occasion segmentation: based on when a product is purchased or consumed
Define perceptual maps and ideal points
• Perceptual map: displays, in two or more dimensions, the position of products or brands in the consumer’s mind
• Ideal points: a specific spot on the perceptual map that shows where the customer’s ideal product would lie on the map
o In the book example, the size of the asterisks denotes the size of the market
Define and provide an example of a licensed brand
- a contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee
- Angry Birds using Star Wars in its game
List one pro and one con for a brand that takes on the name of a product category
- Pro: brand recognition and repetition
- Con: Not ideal, as the individual brand loses its value – ‘Get me a band-aid’ does not mean ‘Get me a Band-Aid brand adhesive strip’
What are brand associations and brand loyalty and how can they help a firm?
• Brand associations: reflect the mental links that consumers make between a brand and its key product attributes, such as a logo, slogan, or famous personality
o Toyota Prius = economical
o BMW, Audi = performance, luxury
o Nike = Michael Jordan
• Brand loyalty: when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category
o Develops positive word-of-mouth
What is a manufacturer brand? Provide an example of a manufacturer brand
• Manufacturer brands: also called national brands, are owned and managed by the manufacturer
• The manufacturer develops merchandise, produces it, and invests in marketing
o Proctor and Gamble US-based advertising budget: $2.2 billion
List, define, and provide an example for each of the four categories of private brands we discussed in class.
• Premium brands: offer the consumer a private label that is comparable to, or even superior to, a manufacturer’s brand quality (Kroger’s Private Selection, President’s Choice)
• Generic brands: target a price-sensitive segment by offering a no-frills product at a discount price
o Not as popular as other private-label categories, as consumers need at least some measure of quality
- Copycat brands: imitate the manufacturer’s brand in appearance and packaging, generally are perceived as lower quality, and are offered at lower prices
- Exclusive co-brands: a brand that is developed by a national brand manufacturer, often in conjunction with a retailer, and is sold exclusively by the retailer
• Family brands: a firm uses its own corporate name to brand all its product lines and products; the individual brands benefit from the overall brand awareness associated with the family name
o Kellogg’s
We discussed two ways that firms name their brands. List, define, and provide an example of each.
• Either family brands where every product line and product has the same brand name or individual branding where each product has its own name, individual identity (whopper)
What is a brand extension? A line extension?
• Brand extension: using the same brand name in a different product line, an increase in the product mix’s breadth
o Colgate: toothpaste, toothbrushes, dental floss
o Halo effect
• Line extension: the use of the same brand name within the same product line, which increases the product line’s depth
List, define, and draw a graph of each of the categories of the diffusion of innovation.
- Diffusion of innovation: the process by which the use of an innovation – whether a product, a service, or a process – spreads throughout a market group, over time and across various categories of adopters
- Pioneers or breakthroughs: new-to-the-world products that create new markets
- First movers: the first to create the market or product category, become readily recognizable to consumers and establish a commanding and early market share lead
- Innovators: buyers who want to be the first on the block to have the new product or service (2.5%)
- Early adopters: not as risky as innovators, but wait and purchase the product after careful review (don’t just buy based on the “name”) (13.5%)
- Early majority: members of this group don’t take much risk, wait until the bugs are worked out of a product or service (34%)
- Late majority: the last group of buyers to enter a new product market; at this point, the product has achieved its full market potential (34%)
- Laggards: consumers who avoid change and rely on traditional products until they are no longer available (16%)
Define the product life cycle. List, define, and draw a graph of each of the categories of the product life cycle curve.
• Product life cycle: defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning
o Not every product follows the same life cycle curve
- Introduction stage: usually starts with a single firm, innovators are the ones to try the new offering
- Growth stage: marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions
• Maturity stage: characterized by the adoption of the product by the late majority, intense competition for market share among firms
o Marketing costs increase as firms defend market share against competitors
o Price competition increases, profit margins erode
• Decline stage: firms either position themselves as niche products (for diehard consumers) or exit the market
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