Flashcards
1
Q
describe the process of globalization?
A
The increased mobility of goods, services, labor, technology, and capital throughout the world.
Explanation: Globalization refers to the integration and movement of goods, services, labor, technology, and capital across international borders.
2
Q
a characteristic of the ‘Global Marketing’ stage in international marketing involvement?
A
Answer: B) Companies treat the world, including their home country, as one market.
Explanation: In the global marketing stage, companies standardize their strategies and treat the world as a single market, focusing on worldwide opportunities.
3
Q
What is the Self-Reference Criterion (SRC) in international marketing?
A
The tendency to evaluate other cultures based on one’s own cultural values.
Explanation: The SRC is the unconscious reference to one’s own culture when interpreting or assessing unfamiliar cultural phenomena.
ie. US burger place, expanding into India, and assuming beef patties will work on their menu too.
4
Q
example of a potential political risk when entering foreign markets?
A
Answer: A) Price controls imposed by the local government on imported goods.
Explanation: Political risk refers to the uncertainty regarding changes in government policies, such as price controls, which can affect market operations.
5
Q
According to David Ricardo’s theory of Comparative Advantage, countries should produce goods for which they have:
A
Answer: D) A comparative advantage, considering the opportunity cost of producing other goods.
Explanation: Comparative advantage suggests countries should specialize in producing goods that they can produce at a lower opportunity cost than other countries.
6
Q
what is considered a uncontrollable element in IM
A
political, legal, and cultural factors in foreign markets are uncontrollable.
7
Q
what is the main goal of the World Trade Organization (WTO)?
.
A
The WTO aims to facilitate global trade by reducing trade barriers such as tariffs and ensuring fair trade practices
8
Q
example of a ‘nontariff barrier’ to international trade?
A
Answer: B) A country setting a quota on the number of foreign products allowed to enter.
Explanation: Nontariff barriers restrict trade through methods like quotas, regulations, and other non-tax measures rather than taxes or tariffs.
9
Q
What is the primary function of the World Bank?
A
Answer: B) To provide loans and technical assistance to developing countries for development projects.
Explanation: The World Bank helps develop infrastructure and reduce poverty in developing countries by providing financial resources and expertise.
10
Q
Four broad modes of foreign market
entry?
A
- Exporting
- Contractual agreements
- Strategic alliances
- Direct foreign investment
11
Q
example of an ‘exchange control’ in international business?
A
Answer: A) A country restricting the flow of capital in and out of its borders.
Explanation: Exchange controls regulate the movement of capital and currency across borders, often to stabilize a nation’s economy or protect its currency.
12
Q
What is the primary benefit of entering a foreign market through franchising?
A
Answer: B) Minimizing financial risk while gaining access to new markets.
Explanation: Franchising allows businesses to expand internationally with reduced financial risk since the franchisee invests in establishing the business.
13
Q
example of a “monochronic” (M-time) culture?
A
Answer: B) Time is seen as a limited resource, and punctuality is highly valued.
Explanation: Monochronic cultures emphasize punctuality and time management, focusing on one task at a time and valuing efficiency.
14
Q
What is the primary goal of market segmentation in international marketing?
A
Answer: B) To divide the market into distinct segments that share similar characteristics.
Explanation: Market segmentation helps identify distinct consumer groups based on demographic, geographic, psychographic, or behavioral characteristics.
15
Q
what is a feature of a “cultural elective” in international marketing?
A
A practice that is important but not essential to success in the foreign market.
Explanation: Cultural electives are practices that can be adopted without significantly impacting business success, unlike cultural imperatives.
ie. in china offering tea to guests … you don’t need to drink it though but accepting it and taking a sip shows respect
16
Q
an example of “cultural borrowing”?
A
Adapting a product by incorporating elements from other cultures.
Explanation: Cultural borrowing involves adopting elements from other cultures to solve specific needs, such as incorporating foreign design trends into a product.
17
Q
What does “linguistic distance” refer to in international marketing?
A
The difference in languages between countries that may increase transaction costs.
Explanation: Linguistic distance refers to language barriers that may affect communication, marketing strategies, and the cost of doing business in different countries.
18
Q
What is the main goal of the “International Product Life Cycle” theory?
A
To analyze the stages of a product from introduction to decline in the global market.
Explanation: The International Product Life Cycle theory explains how a product moves through different stages, such as introduction, growth, maturity, and decline in global markets.
19
Q
Example of “economic nationalism”?
A
Promoting protectionist policies to support domestic industries.
• focusing on helping its own economy rather than relying on other countries
Explanation: Economic nationalism promotes local industries and employment by limiting foreign competition through tariffs, quotas, or other trade restrictions.
20
Q
What is the primary purpose of the “Balance of Payments” statement?
A
To record all financial transactions between a country and the rest of the world.
Explanation: The balance of payments accounts for all monetary transactions, including exports, imports, and capital flows between a country and its global partners.
21
Q
Which of the following best describes a “Free Trade Area” (FTA)?
A
A group of countries that eliminate trade barriers among themselves but maintain their individual external policies.
Explanation: A Free Trade Area eliminates tariffs and other trade barriers between member countries while allowing them to set their own tariffs with non-members.
22
Q
What is the impact of “cultural sensitivity” on international marketing?
A
It helps marketers avoid cultural stereotypes and build stronger customer relationships.
Explanation: Cultural sensitivity enables companies to create marketing campaigns that respect local values and traditions, avoiding misunderstandings and fostering positive relationships.
23
Q
Which of the following is a challenge of using secondary data for international market research?
A
Secondary data may be outdated or difficult to compare across countries.
Explanation: Secondary data, while useful, can be outdated or hard to apply across different international markets due to variations in data sources and methodologies.
24
Q
what is a potential risk of using “direct exporting” as a market entry strategy?
A
High financial risk and significant initial investment.
Explanation: Direct exporting requires substantial investment in logistics, marketing, and managing operations in foreign markets, which can be costly and risky.
25
What is the "diffusion of innovation" theory in international marketing?
The process of introducing a new product and its eventual adoption by consumers across different markets.
Explanation: Diffusion of innovation theory explains how innovations spread from early adopters to the larger consumer base, influencing product adoption across markets.
26
What does "brand positioning" in international marketing refer to?
The process of communicating a brand’s unique value to the target market in a way that sets it apart from competitors.
Explanation: Brand positioning is about creating a distinct identity for the brand in consumers' minds, ensuring it stands out against competitors in the target market.
27
What is an example of "cultural exclusive" in international marketing?
Avoiding a business custom that is reserved for locals, such as offering gifts to high-ranking officials in certain countries.
ie. in Japan certain buddhist rituals are only for japanese people.
If a foreign individual tries to perform a sacred ceremony without education/understanding its meaning they may find it disrespectful
Explanation: Cultural exclusives are customs that are specific to locals, which should be respected or avoided by foreigners in business interactions.
28
example of a major challenge when entering a market through a joint venture?
Loss of control over decision-making processes and strategies.
Explanation: Joint ventures require sharing control with local partners, which can lead to conflicts in decision-making and strategic direction.
29
describe/example of a "high-context" culture?
Trust-building and personal relationships are essential in business interactions.
Explanation: In high-context cultures, business relationships rely heavily on trust and personal rapport, and communication is often indirect
30
What is "back translation" used for in international marketing research?
To translate text into a foreign language and then return it to the original language to check for accuracy.
Explanation: Back translation helps ensure that the translated text conveys the same meaning as the original text, reducing misinterpretations.
31
What is the primary goal of "cultural relativism" in international marketing?
The idea that all cultures are equal and should be treated as such.
Explanation: Cultural relativism is the belief that all cultures should be understood and respected in their own terms, without judgment from the perspective of another culture.
32
What is the primary goal of "market segmentation" in international marketing?
repeat
To identify groups of consumers with similar needs and characteristics.
Explanation: Market segmentation helps businesses divide large, diverse markets into smaller, manageable segments based on specific characteristics such as demographics, behavior, or preferences.
33
What does the term "voluntary export restraint" refer to?
Agreements between exporting and importing countries to limit the volume of exports.
Explanation: Voluntary export restraints are agreements where an exporting country agrees to limit the quantity of its exports to a particular market, often to avoid more restrictive government-imposed barriers.
34
What does the term "voluntary export restraint" refer to?
Agreements between exporting and importing countries to limit the volume of exports.
Explanation: Voluntary export restraints are agreements where an exporting country agrees to limit the quantity of its exports to a particular market, often to avoid more restrictive government-imposed barriers.
35
What is "polychronic time" (P-time)?
Time is perceived as flexible, allowing for multitasking and interruptions.
Explanation: P-time cultures value relationships and flexible scheduling over rigid time management, often allowing for multitasking and interruptions during business processes.
36
What does the "self-reference criterion" in international marketing mean?
The tendency to evaluate other cultures based on one’s own cultural values.
Explanation: The self-reference criterion is a psychological tendency to judge other cultures by the standards of one’s own, which can lead to misunderstandings or misinterpretations when doing business internationally.
37
What is the main benefit of entering a foreign market through franchising?
Minimizing financial risk while gaining access to new markets.
Explanation: Franchising enables companies to expand into new international markets with relatively low financial risk since the franchisee invests in establishing the business and assumes some of the operational risks.
38
What is "global marketing"?
A company treats the world, including their home country, as one market.
Explanation: Global marketing refers to the strategy of offering a single product or marketing strategy worldwide, often by standardizing the product offering and using global communication strategies.
39
What is "direct export"?
A company selling products directly to foreign markets without intermediaries.
Explanation: Direct exporting involves a company managing its own export activities, such as marketing and distribution, in the target market, without relying on intermediaries.
40
What is "market skimming"?
A high initial price is set to maximize revenue from early adopters.
Explanation: Market skimming involves setting a high initial price to capture as much revenue as possible from early adopters, then lowering the price over time as the market becomes saturated.
41
What does the term "competitive pricing" refer to in international marketing?
Setting prices based on competitor prices in the target market.
Explanation: Competitive pricing involves setting a price point similar to or slightly below competitors to attract price-sensitive customers and remain competitive in a foreign market.
42
What does the "Monroe Doctrine" refer to in international marketing?
A policy opposing European colonialism in the Americas.
Explanation: The Monroe Doctrine was a U.S. policy warning European nations not to interfere with the Americas, which influenced trade and political relations in the Western Hemisphere.
ie. basically the US is saying you stay on your side and we’ll stay on ours
43
What is the main purpose of the "International Product Life Cycle" theory?
To analyze the stages of a product from introduction to decline in the global market.
Explanation: The theory explains how a product goes through stages such as introduction, growth, maturity, and decline in international markets, helping companies decide how to manage product strategies over time.
44
What does the term "multinational marketing" mean?
Marketing activities conducted by a company that operates in more than one country.
Explanation: Multinational marketing refers to the practice of businesses operating and marketing their products in multiple countries, often adapting strategies for each market.
45
What is "supply chain management" in international marketing?
The management of the flow of goods, services, and information from suppliers to customers.
Explanation: Supply chain management is the process of overseeing the production, shipment, and distribution of products across different markets to ensure efficiency and cost-effectiveness.
46
What does "corporate social responsibility" (CSR) refer to?
Businesses acting in ways that are ethical, socially responsible, and contribute to sustainable development.
Explanation: CSR involves companies taking responsibility for their environmental, social, and economic impacts, ensuring that their operations benefit society.
47
What is "cost-plus pricing" in international marketing?
Setting prices based on the cost of production plus a profit margin.
Explanation: Cost-plus pricing involves determining the cost of producing a product and adding a predetermined profit margin to set the price for consumers.
48
What does the term "ethnocentrism" refer to in international marketing?
The belief that one’s culture or products are superior to those of other countries.
Explanation: Ethnocentrism is the tendency to judge other cultures based on the values and standards of one's own culture, which can lead to biases when conducting international business.
49
What is "glocalization" in international marketing?
Adapting global products to fit local cultural and market needs.
ie. mcdonald’s changing their global products to fit needs of the indian market.
50
What is "secondary data" in market research?
Data that has been collected for a purpose other than the current research project.
Explanation: Secondary data involves using pre-existing data from external sources, such as government reports or market studies, to gather insights for international marketing research.
51
What does the term "exchange controls" refer to in international business?
A country restricting the flow of capital in and out of its borders.
Explanation: Exchange controls regulate the movement of currency and capital across borders, often to stabilize the local economy or protect the domestic currency.
52
What is the purpose of "localization" in international marketing?
Customizing a product or service to meet the needs and preferences of the local market.
Explanation: Localization involves adapting products, marketing strategies, and communications to suit the cultural and legal requirements of different international markets.
53
What is "multinational marketing"?
Marketing activities conducted by a company that operates in more than one country.
Explanation: Multinational marketing refers to the strategies and activities of companies that extend beyond domestic markets to operate in multiple countries.
54
what is marketing? (2 words to define marketing)
value creation / creating value
55
value = ?
value = ∑ benefits/ ∑ resources
= (functionality, experiential, symbolic) /
(time, money, psychological)
56
what is benefits made up of? (3) value = ∑ benefits/ ∑ resources
experiential, symbolic and functionality
57
what is international marketing?
creating value in more than one country other than your own
58
what examples of resources? (3)
money, time, psychological
59
uncontrollable factors in the foreign environment?
• political legal forces
• economic forces
• competitive forces
• level of technology
• structure of distribution
• geography and infrastructure
• cultural forces
60
controllable factors in foreign environments?
• firm characteristics
• 4 p’s (price prod place promotion)
• research
61
uncontrollable factors in domestic environment?
• political/ legal forces
• competitive structure
• economic climate
62
what are the five elements of culture?
BTSVR
1. beliefs
2. thought processes
3. symbols
4. values
5. rituals
BTSVR
63
elements of culture (BTSVR) explain Beliefs
vary across cultures, learned in upbringing
relationship between superstition and beliefs is unclear
64
elements of culture (BTSVR) explain thought processes
ways of thinking vary across cultures
impact quick judgments over long term ones
65
elements of culture (BTSVR) explain symbols
astethics are considered symbols (art, dance, music, dress)
66
elements of culture (BTSVR) explain values
hofsteads 6 dimensions (index)
1. individualistic/collectivism
2. power distance
3. uncertainty avoidance
4. motivation toward achievement and success
5. long term orientation
6. indulgence vs restriction
67
what is culture
beliefs and values that are both seen and unseen that are learned shared and transmitted by a group of people
68
elements of culture (BTSVR) explain rituals
patterns of behaviours that are learned and repeated
• associated with major life events (marriage, funerals, graduation)
• important function of culture
69
the two types of time?
1. linear (doing it now, no extra time)
2. cyclical (flexible with time)
70
forms of government? (3) MAD
1. monarchy/dictatorship (ruled by one)
2. Aristocracy/oligarchy – ruled by few
3. Democracy – ruled by many
71
What is "trade liberalization"?
The reduction or removal of barriers to trade between countries.
Explanation: Trade liberalization involves reducing tariffs, quotas, and other barriers to encourage freer movement of goods and services across borders.
72
What is "gray market" in international marketing?
The sale of branded products through unauthorized channels at lower prices than authorized retailers.
Explanation: The gray market refers to the trade of goods in a market where they are not officially authorized for sale, often leading to price reductions or lower product quality.
73
What is the term "country of origin effect"?
The influence of a product's country of origin on consumer perceptions.
Explanation: The country of origin effect refers to how consumers perceive a product based on where it is made, influencing their buying decisions.
74
What is "direct marketing" in international marketing?
Selling products directly to consumers without intermediaries.
Explanation: Direct marketing involves reaching out to consumers directly, typically through mail, online ads, or telemarketing, without relying on intermediaries.
75
What is "local content requirement" in international trade?
Policies that mandate a certain percentage of a product’s value to be sourced locally.
Explanation: Local content requirements ensure that a portion of a product’s components are sourced from the domestic market, encouraging local industries.
76
What does "import substitution" refer to in the context of international trade?
The strategy of producing domestically what was previously imported to reduce reliance on foreign goods.
Explanation: Import substitution encourages domestic production to replace imports, helping to boost local industries and reduce dependence on foreign products
ie. when a country decides to produce their own cars rather than importing them
77
What is the "economies of scale" in international marketing?
The cost advantage obtained when the cost per unit decreases as the production scale increases.
Explanation: Economies of scale allow companies to reduce production costs as they expand output, benefiting from larger production volumes in international markets.
ie. the more the make, the cheaper it is (a business saves money by producing more)
78
What is "cultural sensitivity" in international marketing?
Understanding, respecting, and adapting marketing strategies to align with local cultural norms and values.
Explanation: Cultural sensitivity helps businesses navigate cultural differences in international markets, leading to more effective marketing campaigns that resonate with local consumers.
79
What is the "first-mover advantage" in international marketing?
The benefit of being the first company to enter a market, gaining brand recognition and customer loyalty.
Explanation: First-mover advantage allows companies to establish a strong brand presence and customer loyalty before competitors can enter the market.
80
What is "market development" in international marketing?
Expanding existing products into new international markets.
Explanation: Market development involves introducing existing products into new foreign markets, which helps companies increase their market reach and customer base.
81
What does "dynamic pricing" involve in international marketing?
Adjusting prices based on demand, competition, and other market factors.
Explanation: Dynamic pricing allows companies to adjust their prices in real-time depending on market conditions, such as consumer demand and competitor prices.
82
What does "ethnocentrism" in international marketing mean?
The belief that one’s culture or products are superior to those of other countries.
Explanation: Ethnocentrism refers to the tendency to view one’s own culture or products as superior, often leading to challenges in understanding foreign markets.
83
What is "market penetration" in pricing strategy?
A strategy where companies set lower prices initially to gain market share quickly.
Explanation: Market penetration pricing helps companies establish a foothold in new markets by setting low initial prices to attract customers and gain market share.
84
What does "product innovation" mean in international marketing?
Developing new or significantly improved products to meet the demands of foreign markets.
Explanation: Product innovation involves designing new products or enhancing existing ones to better suit the tastes, preferences, and needs of consumers in international markets.
85
What is "cross-cultural research" in international marketing?
The study of consumer behavior and cultural influences across different countries and regions.
Explanation: Cross-cultural research helps companies understand how cultural differences impact consumer behavior, allowing businesses to tailor their strategies effectively in various markets.
86
What is "competitive intelligence" in international marketing?
Collecting information on competitors’ marketing strategies, strengths, and weaknesses in foreign markets.
Explanation: Competitive intelligence involves gathering and analyzing information about competitors to gain insights into their strategies and make informed decisions in international marketing.
87
What does "international branding" refer to?
The process of developing a brand that appeals to consumers in multiple countries with minor adaptations.
ie. coca cola, apple, nike
88
What is "intellectual property" in international marketing?
Legal rights granted to individuals or organizations over their creations, such as inventions, trademarks, and copyrights.
Explanation: Intellectual property protection ensures that creators retain exclusive rights to their products, designs, or inventions, which is crucial when entering international markets
89
What does "foreign exchange risk" refer to in international marketing?
The risk that currency fluctuations may affect the cost of exports or imports.
Explanation: Foreign exchange risk involves the potential for currency value fluctuations, which can impact the pricing, profitability, and competitiveness of products in international markets.
90
What is "market exit strategy" in international marketing?
The plan a company follows to withdraw from an international market due to poor performance or other factors.
Explanation: A market exit strategy involves developing a plan to exit a market when the business is no longer sustainable or profitable, or when other strategic shifts are needed.
91
What does "export subsidy" refer to?
A government payment to exporters to help them compete in international markets.
Explanation: Export subsidies are financial incentives provided by governments to encourage companies to export goods, thus boosting international trade and market competitiveness.
92
What is "regional trade bloc" in international marketing?
A group of countries that have agreed to reduce or eliminate trade barriers among themselves.
Explanation: Regional trade blocs, such as the European Union (EU) or the North American Free Trade Agreement (NAFTA), help member countries boost trade by reducing tariffs and other barriers.
93
What is "cultural distance" in international marketing?
The differences in cultural values, beliefs, and practices between countries.
Explanation: Cultural distance refers to the extent to which two countries differ in their cultural norms and values, which can affect marketing strategies in international markets.
94
example of "emerging markets"?
They offer significant growth opportunities but may also involve higher risks.
Explanation: Emerging markets often present opportunities for growth due to their developing economies but carry higher risks, such as political instability or currency fluctuations.
95
What is "tariff escalation"?
The increase in tariffs as goods move through stages of processing.
Explanation: Tariff escalation refers to the practice of imposing higher tariffs on finished goods compared to raw materials, discouraging the export of processed goods.
96
What does "reverse innovation" refer to in international marketing?
The process of designing products in emerging markets that are then introduced to developed markets.
ie. tata nano car (the “cheap” car in india) although it didn’t succeed it influenced cost efficient manufacturing strategies in other markets
97
What does "trade liberalization" refer to?
The reduction or removal of barriers to trade between countries.
Explanation: Trade liberalization aims to open markets by reducing tariffs, quotas, and other restrictions, promoting global trade and economic cooperation.
98
What is the main challenge of "adapting products" for international markets?
Addressing differences in consumer preferences, regulations, and cultural factors.
Explanation: Adapting products to foreign markets involves navigating local consumer preferences, regulatory environments, and cultural differences to meet specific market demands.
99
What is "Market Share" in international marketing?
The percentage of a company’s sales in a foreign market relative to its total sales globally.
100
What does "multinational marketing" refer to?
Marketing activities conducted by a company that operates in more than one country.
101
What is "ethnocentric orientation" in international marketing?
A strategy where a company uses the same marketing strategies and product offerings in all markets, regardless of local differences.
102
What does "linguistic distance" mean in international marketing?
The difference in languages between countries that may increase transaction costs.
ie. english and chinese are far apart
103
What does "brand equity" mean in international marketing?
The perceived value of a brand in the minds of consumers.
104
What is "price elasticity of demand"?
The sensitivity of consumer demand to changes in product prices.
105
What does "tariff" refer to in international trade?
A government-imposed tax on imported goods.
106
What is "global branding"?
The use of a single brand name and identity for a company’s products worldwide.
ie. coca cola
107
What is "price discrimination" in international marketing?
Offering different prices for the same product based on the income level of consumers in different countries.
108
What is the primary goal of "cultural adaptation" in international marketing?
Adjusting marketing strategies to fit local culture and consumer preferences.
109
What does "nationalization" refer to in international marketing?
The process of a government taking control of private industries, often without compensation.
110
What is the difference between "global marketing" and "multinational marketing"?
Global marketing treats the world as one market, while multinational marketing customizes strategies for each individual market.
111
What is "franchising" as an international market entry strategy?
Allowing a foreign entity to use a company’s brand, business model, and operational systems in exchange for royalties.
112
What does "branding adaptation" mean?
Modifying a brand’s messaging, identity, or products to meet the cultural and market preferences of foreign consumers.
ie. Vicks in western countries --> Wicks in germany (they pronounce w as a v, meaning it sounds the same as their original name)
113
What is "economic risk" in international marketing?
The risk that economic instability, such as inflation or a recession, will negatively affect business operations in a foreign market.
114
What is "price discrimination" in international marketing?
Offering different prices for the same product based on the income level of consumers in different countries.
ie. netflix charges lower subscription costs in india than in canada due to income
115
What is "joint venture" in international marketing?
A business arrangement where two or more companies collaborate to enter a foreign market and share risks and rewards.
116
difference between nationalism and targeted animosity
nationalism : directed to all foreign countries
ie. Buy Canadian
targeted animosity: directed toward a particular country
ie. China Boycotting Japanese brands
117
what is confiscation?
Seizing of a company’s assets without payment
118
what is Expropriation?
Government seizes investment but makes some reimbursement for the assets
119
what is Domestication?
Host country gradually gains control of investment
ie. panama canal
ie. a japanese car company entering into brazil
• starts by importing cars
• next will build a factory in brazil
• then will hire brazilians
• eventually will use brazilian suppliers rather than importing all the good
120
why is africa a paradox ?
mostly poor population but land rich with opportunities
121
what are the 4 heritages of todays legal systems hint: (CCIC)
common law
civil law
islamic law
commercial legal system
122
international marketers deal with 3 kinds of distance, what are these?
1. miles
2. time zones
3. cultural distance
123
what is common law based on
traditions , practices, precedents
(set by past court’s interpretation of statutes, legal legislation and ruling)
124
what are the Benefits of Global Marketing? (4)
1. Knowledge helps scale production and marketing efforts
for multinational businesses
2. Global diversity in marketing talent leads to new
approaches across markets
3. Improved coordination and integration of marketing allows
for transfer of knowledge across countries
4. Gives marketers access to toughest customers
5. Financial benefits from diversity of markets
125
what is civil law based on?
all inclusive system of written laws
126
what is islamic law based on
interpretation of the Koran
ie. islamic law and banking (they don’t charge interest but they charge you a fee that is basically the same amount)
127
what is Corporate planning
Long term, generalized goals for enterprise as whole
128
what is Strategic planning
Conducted at highest levels of management
129
Conditions in the domestic environment, such as market saturation, slow
population growth, or product obsolescence, may encourage it to ______
expand
130
what is Tactical planning
Conducted locally; addresses marketing and advertising
• Actions and allocation of resources to implement strategic planning goals in specific markets
131
Expansion Strategy : Process and Key
factors of first stage: Know Thyself Expand or Not?
• country
• industry
• company
• product
• perceived
132
Expansion Strategy : Process and Key
factors of second stage: international market evaluation (IME)
• segmentation variables
• market selection
• opportunity assessment
133
Expansion Strategy : Process and Key
factors of third stage: Mode of Entry (MOE)
• exporting
• contractual agreements
• alliances
• direct investment
134
Expansion Strategy : Process and Key
factors of fourth stage: overall strategy
• scope
• sequencing
• timing
• coordination
• cross market optimization
135
Expansion Strategy : Process and Key
factors of fifth stage: marketing mix
4 p’s
• product
• place
• price
• promotion
136
go through an example of McDonalds expanding into India using the Expansion Strategy: Process and Key
Example: McDonald’s Expanding into India
Step 1: Know Thyself - Expand or Not?
• Country: India had a growing fast-food industry, rising urbanization, and an increasing middle class.
• Cultural and religious factors played a significant role (e.g., large vegetarian population, restrictions on beef).
• Industry: The quick-service restaurant (QSR) industry was competitive, with local players like Haldiram’s and global chains like KFC and Domino’s.
• High growth potential in fast food, but preferences for local flavors had to be considered.
• Company: McDonald’s had a strong global brand and franchising model.
• Needed to adapt its offerings to suit Indian tastes.
• Product: Traditional McDonald’s menu items, like Big Macs, wouldn’t work due to India’s large vegetarian population and religious restrictions on beef.
• Perceived Opportunities & Obstacles Abroad:
• Opportunities: High demand for affordable, fast, and hygienic food.
• Obstacles: Strict government regulations, import duties, and cultural sensitivities.
Decision: India presented a high-potential market but required significant menu customization.
Step 2: International Market Evaluation (IME)
McDonald’s conducted an in-depth analysis of the Indian market.
• Segmentation Variables:
• Country: India as a target market, focusing on metro cities first.
• Consumer Type: Young professionals, students, and middle-class families.
• Climate: Hot climate influenced demand for cold beverages and light meals.
• Market Selection:
• Screening: Focus on urban centers like Mumbai, Delhi, and Bengaluru before expanding to smaller cities.
• Segment Data:
• Strong demand for affordable Western-style fast food.
• Preference for spicy and vegetarian-friendly options.
• Opportunity Assessment:
• Demand Potential: High urbanization, increasing disposable income.
• Competitors: KFC, Domino’s, and local chains like Nirula’s.
• Other Markets: India was a testing ground for possible expansion into other South Asian markets.
Decision: McDonald’s saw India as a long-term growth market but needed to localize its menu.
Step 3: Mode of Entry (MOE)
McDonald’s had to decide how to enter India.
• Exporting: Not viable since McDonald’s required physical locations.
• Contractual Agreements:
• Franchising: McDonald’s traditionally uses a franchise model, making it a logical choice for India.
• Alliances:
• Joint Ventures: McDonald’s partnered with two Indian companies:
• Hardcastle Restaurants (West & South India).
• Connaught Plaza Restaurants (North & East India).
• Direct Investment:
• Greenfield Investment: McDonald’s built supply chains and distribution networks from scratch, including a local cold storage system for fresh ingredients.
Decision: McDonald’s entered India through joint ventures and local franchises to navigate regulations and cultural preferences.
Step 4: Overall Strategy
• Scope:
• Used a “Waterfall” approach—first launching in metro cities, then expanding to smaller towns.
• Sequencing:
• Gradual rollout to learn from early locations and refine strategies.
• Timing & Coordination:
• Entry was timed with India’s growing economy and increasing demand for quick-service restaurants.
• Cross-Market Optimization:
• India’s menu innovations, like McAloo Tikki and Masala Grill, later influenced McDonald’s vegetarian offerings in other countries.
Step 5: Marketing Mix
McDonald’s tailored its 4Ps (Product, Place, Price, Promotion) for India.
• Product:
• Beef and pork were removed from the menu due to religious sensitivities.
• Introduced vegetarian-friendly items like McAloo Tikki Burger, Paneer Wrap, and Maharaja Mac (chicken-based Big Mac).
• Spicy flavors were added to match Indian taste preferences.
• Place:
• Focused on high-footfall locations like malls, business districts, and near colleges.
• Drive-thrus were introduced for convenience in certain areas.
• Price:
• Adopted value pricing with budget-friendly combos for price-sensitive consumers.
• Introduced the “Happy Price Menu” with items starting at very low prices to compete with local vendors.
• Promotion:
• Used localized advertising campaigns highlighting Indian flavors (e.g., “I’m Lovin’ It” with a Bollywood twist).
• Targeted youth and families, promoting McDonald’s as a fun and hygienic alternative to street food.
• Engaged in CSR initiatives to build a positive brand image.
137
What is an encoding error in international advertising?
Short answer
An encoding error occurs when a company uses symbols, language, or visuals that don’t translate properly in the target market. This can confuse or offend consumers. A well-known example is when Electrolux used a slogan that unintentionally sounded inappropriate in English
138
what is a distribution channel ?
a set of interdependent organizations involved in the process of making a product or service available for use/consumption by the consumer or business owner
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what are the 3 steps of the distribution process ?
1. physical handling and distribution of goods
2. passage of ownership/title
3. buying and selling negotiations: between producer and middlemen, middlemen and customers
140
what is the import oriented distribution structure ?
where the importer controls fixed supply of goods (importer/wholesaler performs most marketing functions)
• limited supply
• high price
• small group of customers
• demand for product exceeds supply
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T/F:
retail to consumer ratio varies dramatically by market
True
142
a high concentration of retailers means what for marketers in terms of competition
more competition for marketer
143
what is direct selling
products/services sold directly to consumer, bypassing traditional retail channels
(ie. email marketing, social media, door to door sales etc)
144
what are the retail patterns in developing countries vs developed countries?
developing : mom and pop shops
developed: box box stores like walmart target costco etc
145
what are the 2 types of external middlemen
1 agents
2 merchants
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what are agent middlemen
individuals who don’t own the goods (ie. real estate agents)
147
what are merchant middlemen
• own the goods and may prioritize profit over you
• assume all trading risks
148
what are a few types of home country middlemen? (there are 6)
1. trading companies
2. ETCS
3. complementary marketers
4. manufactures export agent (MEA)
5. webb pomerene export associations (WPEAs)
6. Foreign sales corp (FSC)
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what do trading companies do
accumulate, transport and distribute goods from many countries
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what are ETCs
Export trading companies, allow producers of similar products to form ETCs
joint export ventures are more efficient for producers and suppliers
151
what do complementary marketer’s do?
take on non competitive but complementary products, distribute them for another firm hoping to broaden product line
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what is Manufacturers export agent MEAs
the agent middleman or firm providing selling services
short term relationships with producer, operates on straight commission basis
153
what is webb pomerene export association
major form of group exporting
has unique benefits:
• reduction of export costs
• demand expansion through promotion
• trade barrier reduction
• improvement of trade terms through bilateral bargaining
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what do foreign country middlemen do
moves manufacturer closer to the foreign market
• involvement with problems of language, distribution, communications and financing
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what do Government affiliated middlemen do?
deal with governments in every country
• less efficient than other middlemen
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4 points to address before the selection process (choice of channels)
1. **identify specific target markets** within and across countries
2. specify **marketing goals** in terms of volume market share and profit margin requirements
3. specify **financial and personal commitments** to the development of international distribution
4. identify control, length or channels, terms of sale and channel ownership
157
what are the 6 C’s of cost strategy
1. cost
2. capital
3. control
4. coverage
5. character
6. continuity
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what are the two kinds of channel costs
1. capital/investment costs of developing the channel
2. continuing cost of maintaining the channel
159
high vs low capital requirement/investment
high investment = more control
pros: more control over branding pricing and customer experience
low investment = less control
pros: lower financial burden and easier market entry
160
Q: What does “Cost” refer to in channel strategy?
A: The total expense of establishing and maintaining the distribution channel.
161
Q: What does “Capital Requirements” mean?
A: The financial investment needed to build and run a channel, such as stores or warehouses.
162
Q: How can companies reduce capital requirements in foreign markets?
A: Use local agents or distributors instead of building infrastructure.
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Q: What does “Control” refer to in the 6 Cs?
A: The level of influence the company has over pricing, branding, and customer experience.
164
Q: How does control relate to channel choice?
A: More direct channels offer more control, but require higher investment.
165
Q: What is “Coverage” in the 6 Cs framework?
A: The extent to which the channel reaches the target market geographically or demographically.
166
Q: How do companies increase coverage in global markets?
A: Use multiple local partners, omni-channel strategies, or digital platforms.
167
Q: What does “Character” mean in channel strategy?
A: How well the channel fits the product and market needs.
168
Q: Give an example of character affecting channel choice.
A: Fresh food needs fast logistics; luxury products need exclusive channels.
169
What does “Continuity” focus on in the 6 Cs?
A: Long-term channel reliability and loyalty of partners.
170
Q: What are risks related to continuity in channel strategy?
A: Distributors quitting, retiring, switching brands, or underperforming.
171
Why are distribution channel decisions important?
⸻
A: They impact every other marketing decision and influence how the product reaches the market.
172
What are the three main functions of distribution?
1. Physical handling & distribution,
2. Passage of ownership,
3. Negotiation between parties
173
What trends are driving changes from traditional to modern channels?
A: Globalization, political/economic reforms, and the internet.
174
How do distribution patterns differ internationally?
Retailer size, retailer-to-consumer ratios, and resistance to change vary by market.
175
Why are new middleman systems being invented?
To improve efficiency and gain a competitive edge in evolving markets.
176
What is direct selling and where is it common?
Selling directly to consumers; common in markets with underdeveloped distribution systems.
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What causes resistance to distribution change?
Threats to local businesses and entrenched consumer habits.
178
What is piggybacking?
When a firm distributes noncompetitive but complementary products through another company.
179
What should be considered before choosing a channel?
Target market, marketing goals, resource commitment, control needs, and channel ownership.
180
How are middlemen located and selected?
⸻
Through market research, screening, credit checks, and initial agreements.
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What are ways to motivate middlemen?
Financial incentives, psychological rewards, communication, support, and relationship building.
182
When is termination of a middleman necessary?
When performance is poor or the market requires a restructure.
183
What is Integrated Marketing Communications (IMC)?
The strategic coordination of advertising, sales promotions, PR, and personal selling to present a unified message to consumer
184
Why is IMC important in international markets?
helps ensure consistent messaging while adapting to local media, cultural norms, and consumer behavior.
185
How can the availability of communication channels impact IMC decisions?
A: Limited access to certain media may force companies to adapt their messaging or increase use of alternatives like direct selling.
186
What is the purpose of sales promotions in international markets?
A: To stimulate short-term consumer purchases and enhance retailer cooperation.
187
What is Integrated Marketing Communications (IMC)?
The strategic coordination of advertising, sales promotions, PR, and personal selling to present a unified message to consumers.
188
Why is IMC important in international markets?
It helps ensure consistent messaging while adapting to local media, cultural norms, and consumer behavior.
189
How can the availability of communication channels impact IMC decisions?
Limited access to certain media may force companies to adapt their messaging or increase use of alternatives like direct selling.
190
What is the purpose of sales promotions in international markets?
To stimulate short-term consumer purchases and enhance retailer cooperation.
191
What challenges do firms face when using sales promotions abroad?
Legal restrictions, cultural misunderstandings, and limited media availability.
192
Why is local adaptation important in sales promotions?
Different countries have unique consumer responses and regulations that require tailoring tactics accordingly.
193
Give examples of sales promotion objectives.
Encourage product trial, gain retail displays, increase stocking by stores, and support advertising.
194
What role does public relations play internationally?
Builds strong relationships with media, manages public perception, and handles crises.
195
How does PR differ from advertising?
PR is earned media (unpaid) focusing on credibility, while advertising is paid and controlled.
196
How can PR be used proactively?
Through sponsorships, press events, and community engagement to enhance brand image.
197
Why is global advertising more complex than domestic advertising?
Cultural differences, media availability, language, legal constraints, and consumer expectations vary across countries.
198
What are the steps in developing an international advertising campaign?
1) Research, 2) Set goals, 3) Develop message, 4) Choose media, 5) Set budget, 6) Execute, 7) Evaluate.
199
What cultural factors influence advertising effectiveness?
Style, humor, emotions, value systems, and symbolism.
200
What is the difference between product standardization and message standardization?
A product can be the same worldwide, but messaging must often adapt to fit local cultural preferences.
201
What is product attribute/benefit segmentation?
Differentiating markets based on how consumers perceive the value or benefit of a product.
202
What is regional segmentation in advertising?
Creating advertising strategies tailored to regions (e.g., pan-European campaigns), often using shared media platforms.
203
What is consumer culture segmentation?
Targeting groups based on shared values and behaviors rather than geography.
204
What are the components of the international communication process?
Information Source → Encoding → Message Channel → Decoding → Receiver → Feedback → Noise
205
What is a common reason messages fail in international advertising?
Cultural misinterpretation or poor encoding that leads to confusion or offense.
206
What is noise in the communication process?
External disruptions that distort the message, such as competitive ads or poor media selection.
207
What is a promotional misfire?
When a message is misunderstood, poorly received, or causes backlash due to cultural or language issues.
208
What causes encoding errors?
Using words, symbols, or colors that convey unintended meanings in the target culture.
209
How can decoding errors impact advertising?
The consumer might misinterpret the message, making the ad ineffective or even offensive.
210
How can companies prevent misfires?
Through local testing, understanding the Self-Reference Criterion (SRC), and adapting to local culture.
211
What legal constraints affect international advertising?
Restrictions on comparative ads, alcohol/tobacco promotion, or advertising to children.
212
What are some examples of linguistic limitations?
Poor translation, dialect differences, and slang misinterpretation.
213
How does literacy affect advertising strategy?
Low literacy may require visual communication, symbols, or radio over written formats.
214
Why is cultural diversity a challenge in global advertising?
Differences in tradition, values, and norms change how messages are perceived.
215
Give an example of how a cultural norm affects ad design.
Humor or sex appeal might work in North America but be offensive in the Middle East.
216
What media limitations exist internationally?
Limited access to channels, censorship, or dominance of state-run media.
217
How do production and cost constraints affect ads?
Smaller markets or developing countries may have lower-quality production options and tighter budgets.
218
What are key tactical media considerations in global campaigns?
Availability, cost, coverage, and reliability of data.
219
Why is a multimedia approach often used internationally?
It ensures broader coverage and mitigates weaknesses of individual media channels.
220
How are digital and social media changing global advertising?
They allow direct engagement, real-time feedback, and cross-border reach—especially among youth.
221
What does the price-quality grid represent?
It maps product strategies based on perceived quality vs. pricing (e.g., Premium, Good Value, Economy).
222
Give examples of brands in each price-quality category.
Premium: Rolex
Good Value: IKEA
Economy: No Name
Overpriced: Unbranded electronics with high markups
223
What factors influence international pricing decisions?
Tariffs, costs, competition, currency fluctuations, payment methods, and attitudes.
224
How do currency fluctuations impact price?
They can make exports more or less expensive, altering competitiveness and profit margins.
225
What are two types of pricing behavior in international markets?
Active: Price used strategically to meet goals
Static: Price set passively, usually just to sell surplus inventory.
226
What is the goal of active pricing?
Maximize profit, volume, or market share through strategic price setting.
227
What are parallel imports (gray markets)?
Unauthorized imports of genuine goods priced lower in one country and sold in another without the brand’s permission.
228
What causes parallel imports?
Price differences between countries and lack of strict distribution control.
229
How can companies limit parallel imports?
Use exclusive distribution, pricing strategies, or product variation by region.
230
What is full-cost pricing?
Pricing that includes fixed and variable costs, ensuring each unit carries its share of all costs.
231
What is variable-cost pricing?
Focuses on covering only the additional (marginal) costs of exporting.
232
What is skimming pricing?
Setting a high price to target consumers willing to pay a premium, often used during product launch.
233
What is penetration pricing?
Offering products at low prices to quickly gain market share and undercut competitors.
234
What causes price escalation in foreign markets?
Shipping, tariffs, taxes, middlemen, and local operating costs.
235
How does inflation impact international pricing?
It increases production costs and may price out lower-income consumers.
236
How can companies reduce price escalation?
Manufacture locally, simplify products, use free trade zones, or shorten the distribution channel.
237
What is dumping?
Selling goods abroad below cost or home-market prices; regulated by WTO.
238
What should a price quotation include in international trade?
Delivery terms, responsible party, payment terms, currency used, and documentation required.
239
What are common methods of international payment?
1. Letters of Credit
2. Bills of Exchange
3. Cash in Advance
4. Open Account
5. Forfaiting
240
What is a letter of credit?
A bank-backed guarantee of payment to the seller, commonly used in risky transactions.
241
What is forfaiting?
When a third party assumes long-term payment risk, often used in big-ticket or capital goods exports.
