Reading Notes

04 October 2021 20:19

R1: An Introduction to Marketing

Marketing: function with the responsibility for serving customers and for dealing with
intermediaries and external support organizations such as distributors and advertising agencies

2 Important Concepts
1. Market Selection: the choice of which customer needs to attempt to fill and which customer
needs to explicitly not attempt to fill; essentially making good use of the limited resources that
companies have (Any given organization has a very finite set of abilities and resources and,
thus, can serve only a certain group of customers and fill only a limited set of needs)
2. Marketing Mix: toolkit; consists of Product Policy (everything about the product), Price Policy
(pricing an financials of the product), Distribution Policy (intermediaries and product flow to
customers) and Communication policy (how does the org talk to stakeholders like customers,
retailers etc)
This is essentially the 4 Ps of Marketing

Four Cs of Marketing > Participants in marketing arena

Company (entity selling the product), consumer (Total purchasing unit sometimes referred to as
Decision Making Unit), channel (essential part, very important to do proper research and address
properly, integral to Decision Making Process), competitors

Industrial DMU: Big Complex, may need product as an industrial good or a consumer good

Marketing Process:

1. Stage 1: Analysis: quantitative and Qualitative approach

a. Market segmentation: Consumer Analysis; dividing a market into groups of consumers
who in some important way are more like one another than they are like the members
of another segment.
b. Quantitative analysis: Breakeven analysis and profitability projections

2. Stage 2: Developing Strategies, Plans and Programs

3. Stage 3: Implementation
4. Stage 4: monitoring and Auditing

R2: Marketing Myopia

What business are you really in?

Look at what needs are you products fulfilling; you are not just providing a product but a service
E.g. Railroads were not in the railroad business but the transportation business

Myth 1: An ever-expanding and more affluent population will ensure our growth.
○ Focus on increasing value of the products to customers, than just making them
Myth 2: There is no competitive substitute for our industry’s major product
○ There is always competition, we must be careful of newer entrants
Myth 3: We can protect ourselves through mass production
Myth 4: Technical research and development will ensure our growth

Marketing Idea: that businesses will do better in the end if they concentrate on meeting customers’
needs rather than on selling products

For Executives and Company

Don’t be product oriented but customer oriented; look at new avenues with opportunities not as
threats eg: Hollywood scorned and rejected TV when it should have welcomed; watchful for

MM Page 1
threats eg: Hollywood scorned and rejected TV when it should have welcomed; watchful for
opportunities.

Error of Analysis: When we mistake a company, industry or a product or a cluster of know-how so

narrowly as to guarantee its premature senescence

Shadow of Obsolescence: Industry assumes that their product is very strong and their strength is
unchallenged due to the superiority of its product; but it doesn’t work like that they soon come
under a shadow from their replacements (which may not be direct substitutes).
Eg: Dry Cleaning, Electric Utilities
Everything has a substitute, we have to recognize the company and the product wrt need it fulfils
and think from that perspective

there is no such thing as a growth industry; electric streetcar example. Their death shows the reality
of a self-deceiving cycle of bountiful expansion and undetected decay.

1. The belief that growth is assured by an expanding and more affluent population;
a. Belief that as population rises, so does customers and profits by scaling up
b. An expanding market keeps the manufacturer from having to think very hard or
imaginatively
c. Petroleum as a declining industry now: they should be in the fuel business not the
petroleum business where a majority of innovations come from outside the industry; the
industry as a whole is NOT indispensable but tends to behave that way despite cues
from outsiders and historical evidence; PETROLEUM can be replaced; its innovative uses
made by others (they should work on creating value by creating indispensable products
that require petroleum)
2. The belief that there is no competitive substitute for the industry’s major product;
3. Too much faith in mass production and in the advantages of rapidly declining unit costs as
output rises;
a. Possible profits look spectacular
b. Output is so prodigious that all effort concentrates on trying to get rid of it; emphasis on
selling, not marketing
c. Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is
preoccupied with the seller’s need to convert the product into cash, marketing with the
idea of satisfying the needs of the customer by means of the product and the whole
cluster of things associated with creating, delivering, and, finally, consuming it
d. Detroit is an example; the automobile industry; lack of control over their own product.
Ford: Mass production was the result, not the cause, of his low prices; unlike what is
happening now.
e. industry has its eyes so firmly on its own specific product that it does not see how it is
being made obsolete
4. Preoccupation with a product that lends itself to carefully controlled scientific
experimentation, improvement, and manufacturing cost reduction.
a. the realities of the market get Shortchanged; upgraded technology not necessarily
means it will sell; they may just be getting more funds and more
b. Consumers are unpredictable, varied, fickle, stupid, short-sighted, stubborn, and
generally bothersome
c. Tech may divert attention away from customers, thinking what should be innovated
without actually asking the customers their needs; technology direction towards the
same product is dangerous and should evolve to other specialized products

What business are we in?

We are in the value creation business, not just the product creation business. The product and the
organization should create customers and satisfy them by being consumer oriented. We must
recognize the mortality of any product/idea and use it to generate long term value example use of
aluminium. We are in the value satisfaction business. We must think of the company as an entity
that is buying customers by doing things that would make people want to do business with us rather
than us driving sales on them.

MM Page 2
than us driving sales on them.
The entire corporation must be viewed as a customer creating and customer-satisfying organism.

R3: Marketing Analysis Toolkit

• 5C Analysis
1. Customers:
a. Understanding Consumer Needs driving Consumption
Outlining potential customers, what need does the product fill in the customers lives;
functional role; how does it make consumers' lives better or easier; other roles; is it
related to consumer identity; analysing the direct and indirect benefits consumers
receive from the product as well as the negatives like pain, unhappiness, etc.
Be rational and also include needs which may seem irrational to you but are prevalent
b. Understanding the Decision making process behind customers choices
How do consumers come to realize they have a need and the process by which they seek
to fulfil that need
i. Problem Recognition:
When, where, and how consumers’ needs arise; the situational, social, or
marketing triggers that cause consumers to realize they have a problem that
needs to be solved.
ii. Information Search
Sources of information consumers use to learn more about the available options;
we also analyse the role of social influences and ask questions like who do our
customers get the advice from, what reference group do consumers benchmark
against, whose opinion matters, etc
iii. Evaluation of Alternatives
Understanding which attributes or features of the product are most important to
consumers when choosing among brands or products. Basically how do customers
make a choice?
iv. Purchase Decision
Where do customers go to purchase the product? What happens in the store at
time of purchase? What social influences do they encounter while purchasing
v. Post Purchase Evaluation
Post purchase assessment of customer satisfaction, usage, regrets, doubts,
feelings etc.
2. Context: How factors in the world around them impact the business model; converting our
research into strategic implications to understand the opportunities and challenges presented
to the business by its external context.
a. Demographic Environment: understanding the current state and future direction of the
population in a market. key facts about gender, age groups, cultural segmentation,
generational cohorts etc
b. Economic Environment: understanding the macroeconomic and microeconomic
conditions facing consumers in the market. Is the economy strong or weak,
unemployment, inflation, debt levels etc are important factors
c. Socio-cultural Environment: understanding prevailing worldviews, political and social
ideologies, value systems, traditions and rituals, and the fashion and taste system. What
is valued; what subcultures should we target in the market?
d. Political/Legal Environment: important to make sure the company is operating within
the law and common business practice as well as to look for opportunities to grow and
improve further
e. Technological Environment: understanding how technology is affecting consumers and
their purchasing needs and habits; evolution and changing tech and its impact on the
product
f. Natural Environment: understanding consumers’ connection to and concern for the
natural world, as well as how your own product and operations are reliant upon and
affect the natural environment. Importance of Raw materials, climate, consumer

MM Page 3
 affect the natural environment. Importance of Raw materials, climate, consumer
dependence on natural environment
3. Company:
a. What is the business model and the competitive strategy
i. Low Cost
ii. Superior Performance
iii. Niche Market
b. Competitive Advantage Analysis: A competitive advantage is something that the
company does or can do that is of value to consumers and that competitors cannot
match. We need a sustainable advantage that is difficult to replicate. Highlight out core
competencies and outline assets for better analysis
4. Collaborators/complementors: We analyse the strength of each relationship to find out how
we can leverage, identify threats, ways to increase value etc.
a. Collaborators are companies and/or people who help the firm in marketing the product
to customers.
b. Complementors are the companies and/or people who also benefit when the firm sells
its product.
5. Competitors: identifying and analysing companies who compete with the firm by delivering a
similar product to consumers or an alternate solution to consumers’ needs.
a. Analyse their business model
b. Marketing strategies
c. Competitive strategies and advantages etc
d. Where are they better? How do they package? How are they positioned in market? How
do the opportunities and constraints that the context offers differentially affect your
company versus your competitors?

Porter's Five Forces: Industry Competitiveness

These five forces create the profitability potential for the industry and for the firms competing
within it and, therefore, have serious implications for marketing strategy

1. industry competitors,
Helps identity what it takes to compete successfully and what level of profitability is expected
given competitive pricing and cost dynamics.
2. potential entrants: judges the competitiveness of
3. availability of substitutes,
4. buyer power, and
5. supplier power

MM Page 4
 USING THESE FRAMEWORKS FOR DECISION MAKING

• Market Segmentation and Target Market Decisions: The customer section of the 5 C's analysis
provides essential input into different customer segments. The competitive section of the 5 C's
analysis shows who various competitors are targeting, so that the marketing manager can
choose a unique and profitable target market.
• Branding Decisions: The company section of the 5 C's analysis provides essential input on the
brand equity that the firm currently has. The competitive section of the 5 C's analysis provides

MM Page 5
 brand equity that the firm currently has. The competitive section of the 5 C's analysis provides
input on the brand equity that competitors have so that the firm can assess its brand's
strengths and weaknesses vs. others.
• Positioning Decisions: The company section of the 5 C's analysis identifies the competencies
that the firm possesses which allow it to claim a unique and differentiated position in the
marketplace. The competitive section of the 5 C's analysis shows how competitors are
positioned which can help identify points of parity and points of difference. The customer
section of the 5 C's analysis provides insight into what customers value so that various
positioning statements can be evaluated.
• Product Decisions: The company section of the 5 C's analysis identifies the product related
competencies the firm possesses and the competitive section identifies the product features
and benefits offered by other firms in the industry. The customer section of the 5 C's analysis
provides insight into which product features customers value so that product feature additions
can be evaluated.
• Pricing Decisions: Porter's Five Forces analysis is crucial to making pricing decisions. Before a
price can be assigned to a product, managers need to understand the underlying profitability
of the industry and the competitive dynamics that affect it. Analyzing the company's supplier
power, buyer power, competitive rivalry, the availability of substitutes, and the threat of new
entrants helps determine how much power the company has to raise prices.
• Distribution Decisions: The buyer power section of the Porter's Five Forces analysis sheds
essential light on the company's relationships with its buyers, which in many cases include not
only the end user of the product, but intermediaries, such as retailers, who deliver and sell the
product to the end user. Companies that have power over their retailer buyers will be able to
gain more shelf space and better promotional deals than those that have little power. The
complementer section of the 5 C's analysis informs strategic planning for distribution, as it
often includes analysis of distribution partners.
• Promotion Decisions: The customer section of the 5 C's analysis provides important insight
into the customer's decision making process, which can indicate at what point the company
can communicate with the customer. The customer's media habits can indicate where, when,
and how to communicate.

R4: Industrial Buyer Behaviour

Industrial buying behaviour tends to reflect the goals and purposes of the organization as a whole,
and it responds strongly to the performance measures the organization imposes on itself. If the
organization is in business to make a profit, purchasing is predominantly oriented toward buying at
the lowest possible price without having to compromise on factors such as product quality, delivery,
and technical service

MM Page 6
Class
05 October 2021 10:01

Takeaways:
1. Always be in the shoes of the actor
2. Image matters
3. Always do your Homework; prepare well

Class 2

We must change the company on the basis of what the customer wants.

Real product Services

To increase sales and meet our costs; We want to reduce the per unit Customer
cost; in order to produce a large quantity of we do standardization Orientation
Rational Customers; low cost

Class 3

Marketing Strategy and Strategic Planning

Perceived Cost: the cost we associate while getting a product; may be monetary or non-
monetary; social cost, time, etc.

Value Preposition: Elevator speech stating the specific benefits any offering provides to the
buyer; it helps define strategy and is very necessary; tells consumers why they should choose
your product over your competitors

Beach Resort
Target Market: Families, Couples and Honeymooners
1. Enjoy Private Beach;
2. Family friendly etc

Point of Differentiation: How can we differentiate us

5 Cs Framework

1. Customer: Influencer, Decider, Buyer,

2. Company: best way to do the analysis of a company is through a SWOT analysis
3. Collaborators and Complementers Analysis
4. Competition: Direct or Indirect

a.

b. Mystery Shopping is one of the most cost effective way to understand what a
competition is doing
Indirect:

To understand competitiveness of the industry and identify the Indirect Competitions

MM Page 7
To understand competitiveness of the industry and identify the Indirect Competitions

5. Context
Macro Environment: PESTLE Framework

Class 4

Key Problems:
➢ Hardness of Soil
➢ Cable Price
○ Add cost
➢ No extension timeline

What can he Control?

➢ He did not check the hardness of the soil

Class 7
Global Expansion: Lesson Objectives

MM Page 8
MM Class 8

5 Steps to consumer decision making

1. Need recognition
2. Information Search
3. Option Alternative
4. Purchase Decision
5. Post Purchase Decision

Assumption: The consumer is rational

To Do
1. Fix Submission 1 - Weekend
2. Add details to SWOT, PESTLE etc. - Weekend
3. Prepare Questionnaire - Weekend
a. Add Extra data (Would you choose Nano vs Bike vs Maruti)
b. Factor consideration: Petrol costs, Engine Horsepower, Price, seating size, look, mileage
c. Triggers: why nano?

MM CASE 9

MM Page 9
MM Page 10
Book Notes
08 October 2021 00:10

Chapter 2: Strategic Planning

What is Strategic Planning?

the managerial process of creating and maintaining a fit between the organization’s objectives
and resources and the evolving market opportunities

Importance?
• Errors can threaten the existence of organizations
• Right strategy can boost an organization's growths

Answers: Organizations main activity and how it will reach its goals; eg: Bingo

Marketing planning involves designing activities relating to marketing objectives and the
changing marketing environment. Marketing planning is the basis for all marketing strategies
and decisions.
Issues such as product lines, distribution channels, marketing communications, and pricing are
all delineated in the marketing plan, aka guidebook of marking activities for a marketing
manager
Why?
To compare actual and expected performance; clearly state and outline the activities we want to
focus on and examine the marketing environment in conjecture with the inner workings of the
business. It serves as a reference point for the success of future activities.

Marketing Plan: large and complex

Writing a Marketing Plan: Requires

information, competitive intelligence,
managerial intuition, judgement.

Other elements that may be included in a plan

are budgets, implementation timetables,
required marketing research efforts, or
elements of advanced strategic planning.

Depending on whether a company focuses on

profits first or market share first, they choose
amongst various alternatives and make their
decisions but in the long run, these two goals
are compatible.

No one single format to build one, these

elements don’t have to necessarily occurs in a
sequential order but can be undertaken
simultaneously and in conjunction with each
other

Setting Marketing Plan Objectives: WHAT DO WE WISH TO ACCOMPLISH THROUGH OUR

MARKETING ACTIVITIES; these objectives should be

MM Page 11
MARKETING ACTIVITIES; these objectives should be
1. Realistic
2. Measurable
3. Time Specific
4. Compared to a benchmark/baseline
5. Consistent with and indicate the priorities of the organization

Functions:
1. Communicate marketing management philosophies
2. Direction for lower-level marketing managers
3. Integration of marketing efforts for consistency

Defining the Business Mission: Important for firms longrun resource allocation, profitability and
survival
Begins with the Mission Statement: "What Business are we in"; made after careful cost benefit
analysis and an analysis of existing and anticipated environmental conditions.
Focus should be on the Market/markets the organization is attempting to serve over the
good/service offered; protects the organizations from becoming obsolete;
Not be too narrow: to not suffer from marketing myopia (always focus on value/benefits to
customers)
Not be too Broad: Be clear of what business you are in

SBU: a subgroup of a single business or collection of related businesses within the larger
organization
➢ Has a distinct mission statement
➢ Specific target market
➢ Control over resources
➢ Own competitors
➢ Plans independent of other SBUs in the organization

SWOT/Situation Analysis:
to understand the environment where the product/service will be marketed

➢ Internal Strengths: Organization Resources, employee capabilities, technology

➢ Internal Weakness: Organization Resources, employee capabilities, technology
➢ External Opportunities: Aspects of marketing environment; aka environmental scanning
➢ External threats:

Environmental Scanning:
the collection and interpretation of information about forces, events, and relationships in the
external environment that may affect the future of the organization or the implementation of
the marketing plan.

Competitive Advantage: set of unique features of a company and its products that are
perceived by the target market as significant and superior to the competition. It is the factor or
factors that cause customers to patronize a firm and not the competition.
1. Cost Competitive Advantage: aim is to be the low-cost competitor in the market while
maintaining satisfactory profit margins
a. Various ways to get an advantage: obtaining inexpensive raw materials, creating an
efficient scale of plant operations, designing products for ease of manufacture,
controlling overhead costs, and avoiding marginal customers
b. May occur with a change in the process; like IKEA begins by deciding a final price
c. Reduction of Costs:
i. Experience Curves: Costs decline at a predictable rate as experience with a
product increases; reflects learning by doing, tech advances, economies of
scale; allows management to forecast costs and set prices based on
anticipated costs
Eg: Boeing

MM Page 12
 Eg: Boeing
ii. Efficient Labor
iii. No-frills goods and services: no extra service at the cost, eg Jet Airways and
Southwest
iv. Government Subsidies
v. Product Design: Eg BMW and Japan; design can help offset high labour costs;
reverse engineering can also help find efficiency
vi. Reengineering: rethinking and redesigning business processes to achieve
improvements in performance
vii. Product Innovations
viii. New Method of service delivery
d. Eg: Walmart, IKEA

2. Product/service Differentiation: longer lasting competitive advantage than cost; firm

provides something unique or valuable to the buyers;
3. Niche Advantage: Target and Serve single segment of the market; a segment with good
growth potential but not crucial for success of major competitors

Strong and Sustainable competitive advantage: one that cannot be copied by competitors.
Each company needs to build their own.

After the SWOT analysis and identifying our competitive advantage; we must evaluate the
strategic direction of the firm by choosing among strategic alternatives

Method for Developing Alternatives:

Firms can explore these options
Ansoff's Strategic Opportunity Matrix
1. Market Penetration: Increase market share
among existing customers
2. Market Development: Attracting new customers
to existing products, stimulate additional sales,
3. Product Development: New product for same
market, based on manager intuition and market
research; makes use of established distribution
channels
4. Diversification: New Products, New Markets;
risky but highly profitable if entering an under
tapped market

To determine the future cash contributions and cash requirements expected for each SBU,
managers can use the Boston Consulting Group’s portfolio matrix; beats the challenge we face
of balance portfolio of SBU's for best long term performance

Assumption: Profitability and Market Share are strongly linked

Measurement of Market Share: relative market share, the ratio between the company’s share
and the share of the largest competitor

4 categories of SBUs
1. Star: Fast Growing market leader, large profits but need lots of cash to finance rapid
growth.
Marketing Tactic: Protect Existing market share, reinvest earnings in product
improvement, distribution, promotion and product efficiency; aim is to capture new
customers as they enter the market
Eg: Ipad
2. Cash Cow: Generates more cash than it needs to maintain its market share; low growth
market with dominant market share.
Strategy: Maintain dominance; be the price leader and continuously make technological
improvements; allocate the excess cash elsewhere where growth prospects are the
greatest
3. Problem Child: aka Question mark; rapid growth with poor profit margins; low market

MM Page 13
 3. Problem Child: aka Question mark; rapid growth with poor profit margins; low market
share in high growth industry;
Strategy: lot of cash support; aim for better market share: invest heavily, acquire
competitors; or drop the SBU
4. Dog: Low Growth potential, low market share.
Strategy: harvest or Divest

4 basic resource allocation strategies

1. Build: If a problem child has the potential to become a star, we use this. May give up short
term profit for long term goals
2. Hold: For Cash Cows, organizations would want to hold to take advantage of the very
positive cash flow
3. Harvest: Good for all SBUs apart from stars; aim is to increase short term cash return
without too much concern for long term impact.
It is especially worthwhile when more cash is needed from a cash cow with long-run
prospects that are unfavourable because of low market growth rate
4. Divest: Get rid of SBU with low growth and low profit margins; dogs and problem children

Marketing Strategy: involves the activities of selecting and describing one or more target
markets and developing and maintaining a marketing mix that will produce mutually satisfying
exchanges with target markets. (The market segment we focus on)
Market Segment: group of individuals or organizations that share one or more characteristics.
May have relatively similar product needs.

How?
Starting from Market Opportunity Analysis: the description and estimation of the size and sales
potential of market segments that are of interest to the firm and the assessment of key
competitors in these market segments

Selection of Target Markets

1. appealing to the entire market with one marketing mix
2. concentrating on one segment
3. appealing to multiple market segments using multiple marketing mixes

We must fully describe the market segment and target market keeping in mind the
demographics, ethnicity, psychographics, buying behaviour, culture, etc.

Marketing Mix
The term marketing mix refers to a unique blend of product, place (distribution), promotion, and
pricing strategies (often referred to as the four Ps) designed to produce mutually satisfying
exchanges with a target market
➢ All 4Ps must be blended for best results
➢ As strong as the weakest P
➢ By manipulating elements of the marketing mix, marketing managers can fine-tune the
customer offering and achieve competitive success
The heart of the Marketing Mix is the product, we design a place strategy, decide on a
promotion campaign and set up a price based on the product.

Product is not just the product: it also includes the packaging, warranty, services, image, value,
brand name, etc. Tangible goods or services. Why do we buy products? Benefits plus what they
mean to us

Place or Distribution is all about figuring out where a product should be made available and
where would customers want to buy the product. Goal: products arrive in usable condition at
designated places when needed

Promotion is all about the advertising, PR, sales promotion and personal selling. It aims to bring

MM Page 14
Promotion is all about the advertising, PR, sales promotion and personal selling. It aims to bring
about mutually satisfying exchanges with target markets. Aim is to motivate people to buy a
product by reminding them of its uses, quality, etc,

Price is one of the most important competitive weapons; easily flexible and very important as it
directly relates to revenue

Implementing the market plan is very important. Many companies experience failure while
doing this and it requires detailed communication.
After the implementation of a Marketing Plan; we evaluate it: by gauging the extent to which
marketing objectives have been achieved during the specified time period
Four common reasons for failing to achieve a marketing objective are:
1. unrealistic marketing objectives,
2. inappropriate marketing strategies in the plan,
3. poor implementation,
4. changes in the environment after the objective was specified and the strategy was
implemented.
Control: Monitoring Effectiveness. Evaluate marketing results in light of the marketing plan's
object. Control helps us in correcting actions that are not in line. Marketing Audit is a control
device: it helps us to allocate marketing resources efficiently

Effective strategic planning requires continual attention, creativity, and management

commitment. It should not be a yearly activity. It should be an ongoing process. It is based on
the creativity of the managers as they need to challenge assumptions and build new strategies
on the basis of these assumptions. They also need to lookout for new avenues and
opportunities.

CHAPTER 4

Mktg Environment

➢ External/Internal Factors
➢ Controllable/Non Controllable
➢ Use Change in Controllable situation while adapt in non-controllable situations
➢ PESTEL

Understanding the market > who are the players, nature of the customer

CHAPTER 5

Global Marketing: marketing that targets markets throughout the world

Global Vision: recognizing and reacting to international marketing opportunities, using effective
global marketing strategies, and being aware of threats from foreign competitors in all markets

MM Page 15
Benefits of Globalization:
1. Globalization expands economic freedom, spurs competition, and raises the productivity
and living standards of people in countries that open themselves to the global
marketplace
2. For less developed countries, globalization also offers access to foreign capital, global
export markets, and advanced technology while breaking the monopoly of inefficient and
protected domestic producers. Faster growth, in turn, reduces poverty, encourages
democratization, and promotes higher labor and environmental standards.
3. Check on Government Power
4. Higher Individual freedom and concrete rights
5. Lifting people out of poverty > creation of a middle class

Multinational corporation: a company that is heavily engaged in international trade, beyond

exporting and importing
For India: Many companies, earn a large percentage of their total revenues abroad.

Global Business Develops in stages:

Stage 1: Operate in one country, sell in other
Stage 2: Foreign Subsidiary to manage sales in that country
Stage 3: Operate an entire line of business in another country
Stage 4: Competitive advantage (tech companies) through availability of talent/capital

➢ They may be selfish, deliberately pushing capital intensive technology and sometimes
support reactionary and oppressive regimes if it is in their best interests to do so
➢ Critics: Firms take much more wealth out, selective people only get to benefit, wider gap
between rich and poor

Blocking FDI?
➢ Countries are erecting barriers to foreign investments

Global marketing: global marketing is defined as individuals and organizations using a global
vision to effectively market goods and services across national boundaries.
Global Market Standardization: markets throughout the world are becoming more alike,
uniform
Variation vs Standardization?
➢ How should companies tackle it, where should they go?

External Environment Facing Global Marketers

1. Culture: common set of values, Values and roles lead to opinion formation which leads to
people's preferences and thus has an effect on a marketers options
2. Economic and Technological Development: depending on the development level of a
country > the industries will come to the country; income levels impact purchasing power
and demand
3. Political Structure and Actions: Government policies, mix and match of ideologies,
regulations and efficiency of the economies,
a. Legal Considerations; intertwined with political environment > taxes, quotas,
boycotts, exchange control, market grouping, trade agreements
b. Uruguay Round (worldwide lowering of trade barriers), NAFTA (world's largest free

MM Page 16
 b. Uruguay Round (worldwide lowering of trade barriers), NAFTA (world's largest free
trade zone), failure of Doha round > increased emphasis on Bilateral emphasis,
CAFTA, EU (trade, political and economic community) > The EU is an attractive
market, with purchasing power almost equal to that of the United States. But the EU
presents marketing challenges because, even with standardized regulations,
marketers will not be able to produce a single European product for a generic
European consumer.
4. Demographic Makeup: information is very important to marketers as it aids in their
market research
5. Natural Resources

Doing business in China and India

➢ Emerging markets, largest populations, geographical areas, income disparity
➢ No specific "average" Indian customer > requires segmenting in the local market, tailored
strategy for target segments

Global Marketing by the Individual Firm

➢ Management needs to have a solid grasp of the global environment before entering in the
global marketplace - strategic alliances
➢ Why?
○ Extra Profits
○ Unique product/technology which can give them an advantage
○ Exclusive information about the marketplace, situation, foreign customers
○ Saturated domestic markets, excess capacity, economies of scale

➢ Exporting: easiest, selling domestic products to buyers in other countries

○ Export Merchant: intermediary, company may decide to sell through them instead
of directly; aka buyer for export: assumes all risks and sells internationally
○ Export Broker: brings buyers and sellers together; risk assumed by manufacturer
○ Export Agents: Help with international financing, shipping, etc. Facilitators.
➢ Licensing and Franchising: relatively risk free way to enter international markets
○ legal process whereby a licensor allows another firm to use its manufacturing
process, trademarks, patents, trade secrets, or other proprietary knowledge. The
licensee, in turn, pays the licensor a royalty or fee agreed on by both parties.
○ Keep an eye out for proper quality, pricing, distribution etc.
○ May create a new competitor in the long run
➢ Contract Manufacturing: foreign company produces a certain volume of products to
specification, with the domestic firm’s brand name on the goods. The domestic company
usually handles the marketing. Thus, the domestic firm can broaden its global marketing
base without investing in overseas plants and equipment.
After establishing a solid base, the domestic firm may switch to a joint venture or direct
investment.
➢ Joint Venture: Domestic Firm buys part of a foreign company or joins with a foreign
company to create a new entity; quick and relatively inexpensive way to go global.
➢ Direct Investment: Active ownership; controlling interest or a large minority interest;
highest risk and reward

MM Page 17
 highest risk and reward

Global Marketing Mix

➢ Thorough understanding of the global target market > similar methods but higher
difficulty as the context is different and vastly differentiated environments
➢ Information is important to gather; dependable info
➢ Product: Do we alter or not; if we do, do we change completely or adjust just a little bit?
○ Global Market Standardization: one product one message same promotion
▪ May work in some countries and with some products
▪ In developing countries it may work as people want more Western/American
brands
○ May backfire if culture not taken into consideration, absolute standardization may
need to give way
○ Creating a new product or drastically changing existing products
○ Slightly alter a product as per local conditions
➢ Promotion: Depending on country and environment: use of the product, way we market
it, highlight different features as per the need
➢ Place (Distribution): Depending on the level of development, distribution, consumer
preferences we have to manage and change out distribution strategy
➢ Pricing: Unique problems in the global sphere, consumer willingness and income levels
need to be taken into consideration
○ Dumping is the sale of an exported product at a price lower than that charged for
the same or a like product in the “home” market of the exporter. This practice is
regarded as a form of price discrimination that can potentially harm the importing
nation’s competing industries. Dumping may occur as a result of exporter business
strategies that include:
(1) trying to increase an overseas market share,
(2) temporarily distributing products in overseas markets to offset slack demand in
the home market,
(3) lowering unit costs by exploiting large-scale production, and
(4) attempting to maintain stable prices during periods of exchange rate fluctuations
○ Counter Trade: Fastest way, all or part of the payment in the form of other goods or
services: straight barter, compensation agreement,

Chapter 7

➢ Business Marketing: Marketing of goods and services to individuals and organizations for purposes
other than personal consumption.
➢ B2B Commerce: Using internet to facilitate activities between organizations is called business-to-
business electronic commerce

Measures of Online Success

1. Recency: Customers who purchase recently are more likely to purchase again in the near future;
over customers who haven't bought in a while
2. Frequency: Frequent Purchasers likely to repeat buying patterns
3. Monetary Value: Big spenders are the most profitable

Stickiness = Recency X Frequency X Monetary Value

Disintermediation: the elimination of intermediaries such as wholesalers or distributers from a

marketing channel
Eg: Dell, Walmart
Reintermediation: the reintroduction of an intermediary between producers and users

Relationship marketing is a strategy that entails seeking and establishing ongoing partnerships with

MM Page 18
Relationship marketing is a strategy that entails seeking and establishing ongoing partnerships with
customers.
➢ As customers become more demanding and competition becomes more intense > building a
relationship becomes more important
➢ We must use social media and internet to encourage and build relationships with businesses

Strategic alliance (strategic partnership): a cooperative agreement between business firms;

can take the form of licensing or distribution agreements, joint ventures, research and development
consortia, and partnerships. They may be between manufacturers, manufacturers and customers,
manufacturers and suppliers, and manufacturers and channel intermediaries.
EG: Honest Tea and Coca-Cola; Starbucks and TATA
➢ Alliances need to be built on commitment and trust
➢ Relationship Commitment: firm believes an ongoing relationship with some other firm is so
important that it warrants maximum efforts at maintaining it indefinitely; Perceived breakdown in
commitment leads to a breakdown in the relationship
➢ Trust: One party has confidence in an exchange partner's reliability and integrity

Other Cultures: Japan

Amae is the feeling of nurturing concern for, and dependence upon, another. Reciprocity and personal
relationships contribute to amae. Relationships between companies can develop into a keiretsu—a
network of interlocking corporate affiliates. Within a keiretsu, executives may sit on the boards of their
customers or their suppliers. Members of a keiretsu trade with each other whenever possible and often
engage in joint product development, finance, and marketing activity.

Categories of Business Customers

Producers Resellers Governments Institutio

ns
Original Equipment Retail and Wholesale Contracts; bid on. Federal Schools,
Manufacturers (OEM) > businesses. Retailer Buys to sell is like a huge Hospitals
produce new products, to final consumers while conglomerate with over etc
incorporate into existing or wholesalers sell to retailers. lapping functions
utilize in running the business Business product distributors
EG: Construction, are wholesalers that buy
Manufacturing, etc. business products and resell
them to business customers

National Industrial Classification:

MM Page 19
National Industrial Classification:
Each classification group is relatively homogeneous in terms of raw materials required, components
used, manufacturing processes employed, and problems faced

Business Demand:
1. Derived: based on the products they would be using it for; need to carefully monitor patterns
2. Inelastic: A product used in the production of the final product is needed; generally inelastic. This
product's cost is generally a small part of the total cost of the final product
3. Joint: Sales are linked; demand can be of multiple items as once
4. Fluctuating: As per the multiplier effect (or accelerator principle) >
a small increase or decrease in consumer demand can produce a much larger change in demand
for the facilities and equipment needed to make the consumer product

Significantly higher purchase volume

Less customers > each customer is crucial; got to be aware of needs and level of satisfaction
Location of buyers > more concentrated
Distribution System > shorter channels; direct channels more common. Further increased because of
internet. Eg: B2B exchanges
Nature of buying > Formal purchase
Nature of buying influence > experts
Negotiations > quite common; final price decided after discussions > lengthy and detailed contracts
Reciprocity: Buying from supplier that buys from you
Leasing: Lease expensive equipment > reduce capital overflow
Promotion: Personal Selling

Business Buying Behaviour:

Business buying behavior has five important aspects:
1. buying centers: Everyone involved in purchase decision; varies with the complexity and
importance of a purchase decision; composition changes

MM Page 20
2. evaluative criteria: Evaluating in order > quality, service and price
3. buying situations:
If a firm does decide to buy a product instead of making it, the purchase will be a new buy
(purchase of product for the first time; very critical), a modified rebuy (generally less critical, less
time-consuming; some change in the good or service; relationship exists between buyer and
seller), or a straight rebuy (a situation in which the purchaser reorders the same goods or services
without looking for new information or investigating other suppliers).
4. business ethics, and
5. customer service: Very important to manage and tackle customer behaviour, expectation and
concerns. Focus on keeping current customers satisfied is the right way to ensure longevity. Best
way is to manage by internally dividing your customers into groups of service levels > depending
on internal criteria.

MM Page 21