Brock Cameron Hughes 1 Global Marketing Chapter Notes Chapter 3: Cultural Foundations *culture truly impacts the market,

effects consumer demand, behavior, reactions *study culture to predict consumer demand *culture impacts soft skills of management Meaning of Culture *underlying value framework that guides behavior *manifests as learned behavior *everyone works towards lifes necessities, culture determines these self-reference criterion *judging other based on own point of view *harder to get unbiased information ethnocentricity *believing what you do is best

Culture & Buyer Behavior

Culture & Materialism *state of tension *new & improved

Culture & the Core Benefit *do people in other countries want same core benefit? Cultural Indicators

*high & low context *high: India dont bring anything for the meal means bring something *low: America face value *silent language: non-verbal communication, space & time

Hofstedes Cultural Dimensions 1. power distance -ability to affect change, US: small (can change) 2. Individualistic vs. Collectivistic -self vs. family/community 3. masculinity vs. femininity 4. uncertainty avoidance -want to know what theyve got, clear & unambiguous 5. long-term orientation -planning for long-term

Culture & How to do Business *managerial style *negotiation *know what they hear

*nonadaptation: value the foreignness

Chapter 4: Country Attractiveness How to systematically research a foreign country

Brock Cameron Hughes 3 Global Marketing Chapter Notes *market research firm expensive, produce newsletters to purchase *aggregators buy information from research companies: acquire, catalog, reformat, resell *personal observation *balance of cost & benefit Environmental Research *physical environment: location, ease of access, climate *social/cultural: much less easy to do, not obvious *economic: buyer behavior, currency, income distribution, consumption *trade blocks/regulatory: NAFTA, ASEAN, EU business set up *being measured into indicators

Systematic Entry Screening 1. country identification: statistics on internet, general information 2. preliminary screening: macro-level indicators 3. in-depth screening: industry specific information, market potential 4. selection: yes, we are going, or no, we are not

Chapter 5: Export Expansion Firm: unique set of circumstances resources? risk?

4 Modes of Entry

1. Exporting indirect: using an agent (Li & Fung), not in direct contact direct: co. in Bangladesh contacting H&M we can make product for you Marni in Barneys

2. Licensing/franchising licensing: selling a brand name or technology (sunglasses/fragrances) franchise: selling a business model (ZARA), product is same

3. Strategic alliance two companies decide what they do well is complementary to each other joint venture: equity based Illy in Germany

4. Wholly-owned manufacturing subsidiary IKEA

Entry Barriers 1. Tariff barriers taxes, custom duties (tax at border, Harmonized Tariff Schedule), quotas (regulations) GATT: broke down apparel barriers

2. non-tariff barriers red tape-ism regulations (paperwork, permits, product testing, licenses, certificates) underdeveloped countries way around is bribery

3. natural barriers

Brock Cameron Hughes 5 Global Marketing Chapter Notes high level of competition restrictive channels (slotting fees) high costs of transportation developed countries

4. exit barrier leases political risk

Exporting easiest not dissimilar to working in own country indirect (export specialist wholesales to retailer in market) direct (wholesale to retailer in market) direct sales (direct to customer: catalog, website, etc.) shipping (freight forwarder, shipping carrier, customs clearing agent) shipping & logistics (UPS, DHL) Bill of Lading: proof of shipment pricing: market position, end price FOB: freight on board (all responsibility changes to buyer once is boards) CIF: cost, insurance, freight (shipper pays all, big companies) local distributor: finding right person/company to distribute product, screen distributor payment: letter of credit (LC) similar to escrow account currency exchange

Chapter 6: Licensing, Strategic Alliance, FDI Licensing selling brand name/technology licensor to licensee Disney (Takihyo in Japan) need good contract lawyer

Franchising selling business model franchisor to franchisee franchisor pays for advertising, creates training manuals, may sell product to franchisee OEM Original Equipment Manufacture Selling unbranded product to be branded LG sold to Kenmore to be sold at Sears products & services are standardized must be continuously monitored

Strategic Alliance collaborative arrangement between two companies who belong to different countries Toys R Us + McDonalds Japan Types of alliances 1. Distribution alliance: VW sold through Nissan in Japan

Brock Cameron Hughes 7 Global Marketing Chapter Notes 2. Manufacturing alliance: Levis made by Edwin and bought back by Levis to sell 3. R&D alliance 4. Joint venture: 2 companies form a new company Foreign Direct Investment wholly owned subsidiary acquisition: Levis buys local jeans company in Japan

Optimal Entry Strategy Company strategic posture Incremental Protected Control Indirect exports Joint venture Wholly owned sub Indirect exports Indirect Direct exports Alliance/licen Licensing/alli ances Licensing Emerging Product/market situation High-growth Mature Services

exports sing Acquisition/alli Wholly owned Franch/allian/ ance sub expo

Chapter 7: Understanding Local Consumers *understand buyer behavior *treat the customer right *offer quality that justifies consumer loyalty offer products/services appropriate to the local usage conditions that have some local competitive advantage Buyer Decision Making Problem recognition -> search -> eval. of alternatives -> choice -> outcomes

*most people do what they do for a reason *buyers are goal-oriented Problem Recognition *what happens an individual perceives a difference between an ideal and an actual state of affairs Multiattributed evaluation *consumers can use gradually less-important features to successively screen out alternatives (hierarchal) or consider all features simultaneously (compensatory) Choice *final choice between alternatives is influenced by social norms and by situational factors in-store promotions social norms: group pressures are strong to comply motivation to comply: matter of culture, high-context/homogenous cultures Local Market Segmentation identifiable measurable reachable able to buy willing to buy

*most basic local segmentation criterion is economic development Value-based Segmentation strivers: material, professional goals

Brock Cameron Hughes 9 Global Marketing Chapter Notes devouts: religion & tradition altruists: social welfare intimates: family fun seekers: pleasure creatives: knowledge & technology

*salient attributes: change over time, from battery life to screen resolution *emerging markets: low levels of product penetration, weak marketing infrastructure, weak consumers, & weak competitors *market development: involves promotional efforts to get more customers into the market and generate economies of scale for existing product lines Chapter 8: Local Marketing in Mature Markets *highly developed, stable economy *democracy *well developed market systems *very segmented society *high GDP *USA, Western Europe, AUS, New Zealand, Japan What Do I Need to Know? *many small niches segmentation (each have unique requirements) *people always want the new thing *large populations big markets *positioned through differentiation (something special) *educated customer *must satisfy & delight customer

*promotion is very important *me too products Pan-European Marketing *1992:tariff barriers & customs duties were scrapped, goods & labor were to able move freely between countries *market to a single market same product all places *simplified payments & equalized prices

Australia & New-Zealand *ranked 6th on quality of life index *4.2 million people agrarian *five industries: forest, dairy, meat, fruits, wool APEC *products only need slight changes: dark & glossy cars *local production inefficient: high costs Chapter 9: New Growth Markets *NIE: newly industrialized economy *developing country *new democracy *growing GDP Segmentation *huge middle class: demand variety, willing and able to pay for it *market segmentation information is harder to find *lesser segmentation than mature markets Positioning

Brock Cameron Hughes 11 Global Marketing Chapter Notes *emphasizing brand name *aspirational economy *global products carry cache *very little adaptation want the real thing *prices can remain premium *brands must spend money on developing distribution *advertising with celebrities

Chapter 10: Emerging Market *low GDP *authoritarian government *political risk *lack of infrastructure *extreme wealth disparity not much of a middle class *luxury to rich, extreme value to poor *high levels of illiteracy What Do I Need to Know? *value: balance between affordability & aspiration *create basic products with few features, small package size *financing options: selling washing machines to entire villages in Africa *hottest growth markets in the world *store credit *poor distribution network: must find way to reach people *lack of broadcast media

*distributing samples are effective

Chapter 11: Global Marketing Strategy *not easy to be truly global *consider all markets jointly & equally Create a Global Mindset *selling (typical) vs. marketing *standardization: Take same product to foreign country? cost saving coordination: do everything at same time? Or stagger?

*centralization *locals resent everything standard *mature markets are anti-global desire for local *balance of standardize & localize Global Market Segmentation *2-step process *Macro segmentation: grouping countries, examining general criteria *Micro segmentation: for each country, develop data on Target Segments *reachable *able & willing to buy *be able to find size sales potential Competitive Analysis *simple identification of competitors

Brock Cameron Hughes 13 Global Marketing Chapter Notes *assess position (How strong? How committed to protection? How much resources?) Global Product Positioning *positioned in same way in all markets *uniform positioning is desirable spillover effect CHART ON 392 Global Market Planning *STEP 2 CHART ON 394&ON