International Business Ch. 18 Vocab/Ideas Flashcards Preview

International Business Summer 1 > International Business Ch. 18 Vocab/Ideas > Flashcards

Flashcards in International Business Ch. 18 Vocab/Ideas Deck (27):

Marketing Mix

The 4 P's:


-Product attributes


-Pricing strategy


-Communication strategy


-Distribution strategy



Market Segmentation

- identifying distinct groups of consumers whose purchasing behavior differs from others in important ways

Markets can be segmented by:

-socio-cultural factors
-psychological factors


Consumer Needs Depend On:

1. Culture

- tradition, social structure, language, religion, education

2. Level of economic development

- consumers in highly developed countries tend to demand a lot of extra performance attributes
- consumers in less developed nations tend to prefer more basic products

3. Product and technical standards

- national differences can force firms to customize the marketing mix


Distribution Strategy

- the means the firm chooses for delivering the product to the consumer 

How a product is delivered depends on the firm’s market entry strategy:

- firms that produce locally can sell directly to the consumer, to the retailer, or to the wholesaler
- firms that produce outside the country have the same options plus the option of selling to an import agent


How Does Distribution Influence Marketing Strategy?

A Typical Distribution Strategy;


A image thumb

Concentrated Retail System

a few retailers supply most of the market
common in developed countries


Fragmeted Retail System

- there are many retailers, no one of which has a major share of the market

- common in developing countries


Channel Length

the number of intermediaries between the producer and the consumer.

- short channel - when the producer sells directly to the consumer

- common with concentrated systems

- long channel - when the producer sells through an import agent, a wholesaler, and a retailer

- common with fragmented retail systems


Channel Exclusivity

– how difficult it is for outsiders to access

- Japan's system is a very exclusive system


Channel Quality

- the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses 

- good in most developed countries, but variable in emerging markets and less developed countries

- firms may have to devote considerable resources to upgrading channel quality


Cultural Barriers

- it can be difficult to communicate messages across cultures

-a message that means one thing in one country may mean something quite different in another

-firms need to develop cross-cultural literacy, and use local input when developing marketing messages


Source Effects

- occur when the receiver of the message evaluates the message on the basis of status or image of the sender 

- can counter negative source effects by deemphasizing their foreign origins


Country-of-Origin Effects

- the extent to which the place of manufacturing influences product evaluations



Noise Levels

- the amount of other messages competing for a potential consumer’s attention

- in highly developed countries, noise is very high

- in developing countries, noise levels tend to be lower


Push Strategy

- emphasizes personnel selling

- i.e. "push" products onto consumers

- Apple Retail Stores

- a push strategy works well for industrial products

- a push strategy may be better when media is not easily available


Pull Strategy

- emphasizes mass media advertising

- i.e. "pull" customers to the product

- Bud Light Commercials

- a pull strategy works well for firms in consumer goods selling to a large market segment

- a pull strategy works better with longer distribution channels

- a pull strategy relies on access to advertising media


Price Discrimination

- occurs when firms charge consumers in different countries different prices for the same product

For price discrimination to work:

-must be able to keep national markets separate

-countries must have different price elasticity of demand


Price Elasticity of Demand

- a measure of the responsiveness of demand for a product to changes in price

- demand is elastic when a small change in price produces a large change in demand

- demand is inelastic when a large change in price produces only a small change in demand


- Typically, price elasticity is greater in countries with lower income levels and larger numbers of competitors


Predatory Pricing

- use profit gained in one market to support aggressive pricing designed to drive competitors out in another market

- after competitors have left, the firm will raise prices and earn higher profits


Multi-Point Pricing

- a firm’s pricing strategy in one market may have an impact on a rival’s pricing strategy in another market

- managers should centrally monitor pricing decisions


Experience Curve Pricing

- price low worldwide in an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially

- firms that are further along the experience curve have a cost advantage relative to firms further up the curve


Anti-Dumping Regulations

- dumping occurs when a firm sells a product for a price that is less than the cost of producing it

- antidumping rules set a floor under export prices and limit  a firm’s ability to pursue strategic pricing


Competition Policies

- most industrialized nations have regulations designed to promote competition and restrict monopoly practices

- can limit the prices that a firm can charge


Why Is New Product Development Important?

- Product innovation should be a strategic priority
today, competition is as much about technological innovation as anything else

- The pace of technological change is faster than ever and product life cycles are often very short

- new innovations can make existing products obsolete, but at the same time, open the door to a host of new opportunities

- Firms need close links between R&D, marketing, and manufacturing


Where Should R&D Be Located?

- New product ideas come from the interactions of scientific research, demand conditions, and competitive conditions

- The rate of new product development is greater in:

- countries where
more money is spent on basic and applied research and development

- demand is strong

- consumers are affluent

- competition is intense


Why Should R&D, Marketing, And Production Be Integrated?

Integration will ensure that:

- customer needs drive product development

- new products are designed for ease of manufacture

- development costs are kept in check

- time to market is minimized


Why Are Cross-Functional Teams Important?

- Cross-functional integration is facilitated by cross-functional product development teams

- Effective cross functional teams should:

- be led by a heavyweight project manager with status in the organization

- include members from all the critical functional areas

- have members located together

- establish clear goals

- develop an effective conflict resolution process