Marketing Concepts chapter 7

Back Translation
where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors
Balance of Trade
the difference between the monetary value of a nation’s exports and imports

over the past 30 years, the US has decreased its number of exports and increased the number of imports

exports exceeds imports-trade surplus
imports exceed exports-trade deficit

Bottom of the Pyramid
the largest, but poorest, socioeconomic group of people in the world
Consumer Ethnocentrism
the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products
Countertrade
the practice of using barter rather than money for making global sales

used in countries that don’t have convertible currencies or where government-owned enterprises lack the cash or credit for imports

accounts for 10-15% of world trade

cross-cultural analysis
the study of similarities and differences among consumers in two or more nations or societies

involves an understanding and an appreciation for the values, customs, symbols, and language of other societies

values
represent personally or socially preferable modes of conduct or states of existence that tend to persist over time

ex: McDonalds does not sell beef hamburgers in India because the cow is sacred

customs
what is normal and expected about the way people do things in a specific country

ex: cleaning floors with their feet in the Philippines

cultural symbols
things that represent ideas and concepts

different cultures attach different meanings to things

global marketers can tie positive symbolism to their products and services and brands to enhance their attractiveness to consumers and increase sales

semiotics
examine the correspondence between symbols and their role in the assignment of meaning for people
currency exchange rate
price of one country’s currency expressed in terms of another country’s currency
dumping
when a firm sells a product in a foreign country below its domestic price at or below its actual cost
Economic Espionage Act (1996)
makes the theft of trade secrets by foreign entities a federal crime in the US. Prescribes prison sentences of up to 15 years and fines up to $500,000 for individuals. Agents of foreign governments found guilty face a 25-year sentence and a $10 million fine.

economic espionage- collection of trade secrets or proprietary information about competitors

economic infrastructure
a country’s communications, transportation, financial, and distribution systems

critical consideration in determining whether to try to market to a country’s consumers and organizations

Ex: smaller roads with low speed limits, preferred modes of transportation in china is bike

exporting
global market-entry strategy (1)

producing products in one country and selling them in another

indirect exporting- when a firm sells domestically produced products in a foreign country through an intermediary

direct exporting-without intermediaries

Licensing
global market-entry strategy (2)

a company offers the right to a trademark, patent, trade secret, or other similarly valued item of intellectual property in return for a royalty or a fee

advantages: low risk, capital-free entry
disadvantages: licensor forgoes control of its product and reduces potential profits gained from it, may be creating its own competition

contract manufacturing
contract with foreign firm to manufacture products according to stated specifications
contract assembly
contract with foreign firms to assemble, not manufacture, parts and components that have been shipped to that country
franchising
variation of licensing, one of the fastest-growing market entry strategies

ex: McDonalds

Foreign Corrupt Practices Act (1977)
the prevalence of bribery in global marketing has led to an agreement among the world’s major exporting nations to make bribery or foreign government officials a criminal offense
direct investment
global market-entry strategy (4)

entails a domestic firm actually investing in and owning a foreign subsidiary or division

Product extension
selling virtually the same product in other countries

product strategy

works well in countries that share the same needs, desires, and uses for the product

Product adaptation
changing the product in some way to make it more appropriate for a country’s climate or consumer preferences

product strategy

Product invention
companies can invent totally new products designed to satisfy common needs across countries

product strategy

Communication adaptation strategy
adapting your promotional message and realizing that different countries and cultures have different motives for buying things even though the products are the same

promotional strategy

Dual adaptation strategy
modifying both product and promotional strategy
joint venture
global market-entry strategy (3)

when a foreign company and a local firm invest together to create a local business

share ownership, control, and profits of the new company

can cause problems when countries have other plans for extra profits

global brand
a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs

ex: McDonalds, but they adapt or add menu items in certain countries

global competition
exists when firms originate, produce, and market their products and services worldwide

broadens competitive landscape for marketers

global consumers
consumer groups living in many different countries or regions of the world who have similar needs or seek similar features and benefits from products or services
gray market
also called parallel importing. is a situation where products are sold though unauthorized channels of distribution

when individuals buy products in a lower-priced country from a manufacturer’s authorized retailer, ship them to a higher-priced country, and sell them below the manufacturer’s suggested retail price through unauthorized retailers

gross domestic product (GDP)
monetary value of all products and services produced in a country during one year
microfinance
practice of offering small, collateral-free loads to individuals who otherwise would not have access to the capital necessary to begin small businesses or other income-generating activities

ex: women in India

international firms
engages in trade and marketing in different countries as an extension of the marketing strategy in its home country

market their existing products in other countries in the same way they market in their home country

multinational firms
views the world as consisting of unique parts and markets to each part differently
multidomestic marketing strategy
multi national firms use this and means they have as many different product variations, brand names, and advertising programs as they do countries that they conduct business in
Porter’s diamond of national competitive advantage
explain a nation’s competitive advantage and why some industries and firms become world leaders

Factor conditions- reflect a nation’s ability to turn its natural resources, education, and infrastructure into a competitive advantage

Demand conditions- both the number and sophistication of domestic consumers for an industry’s product

Related and supporting industries- access to world-class suppliers that accelerate innovation

Company strategy, structure, and rivalry- the way a nation’s businesses are organized and managed and intensity of domestic competition

global marketing strategy
practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ

allows marketers to realize economies of scale from their production and marketing activities

popular among business-to-business marketers

transnational firms
views the world as one market and emphasizes cultural similarities across countries or universal consumer needs and wants rather than differences
protectionism
practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas

limits outsourcing of jobs, protects nation’s political security, discourages economic dependency on other countries, promotes development of domestic industries.

quota
restriction placed on the amount of product allowed to leave or enter a country
strategic alliances
agreements among two or more independent firms to cooperate for the purpose of achieving common goals such as a competitive advantage or customer value creating
tariffs
government tax on products or services entering a country

primarily serve to raise prices on imports

Trade feedback effect
a country’s imports effect its exports and vice versa

Every nation’s imports arise from the exports of other nations. As the exports of one nation increase, its national output and income rise, which it turn leads to an increase in the demand for imports

World Trade Organization (WTO)
Formed by major industrialized nations of the world in 1995 to address an array of world issues regarding trade and set rules governing trade among its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

159 WTO member countries and they review more than 200 trade disputes annually