Global Business chapter 17

  1. Market Segmentation
    • refers to identifying distinct groups of consumers who's purchasing behavior differs from others in important ways.  Markets can be segmented by: 
    • geography
    • demography
    • socialcultural (social class, religion, values, etc) and
    • psychological (personality)
  2. Concentrated retail system
    a few retailers supply most of the market
  3. Fragmented retail system
    there are many retailers supplying the market, no one of which has a major share of the market.
  4. Channel Length
    • The number of intermediaries between the producer (the manufacturer) and the consumer. 
    • the more fragmented the retail system, the more expensive it is for a firm to make contact with each individual retailer.
  5. Exclusive distribution channel
    • one that is difficult for outsiders to access
    • ie often difficult for a new firm to get access to get shelf space in supermarkets.
  6. Channel Quality
    refers to the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses
  7. Barriers to international communication
    • 1. cultural
    • 2. Source and country of origin effects
    • 3. noise levels
  8. Source effects
    • occur when the receiver of a message evaluates the message on the basis of status or image of the sender.
    • E.g when there was "Japan bashing" in the US in the early 90s, Honda responded by making commercials that emphasized how American the firm had become
  9. country of origin effects
    • the extent to which the place of manufacturing influences product evaluations
    • these can either negatively or positively affect a firm
  10. noise
    • tends to reduce the probability of effective communications
    • refers to the amount of other messages competing for potential consumer's attention and this too varies across countries
  11. push strategy
    • emphasizes personal selling rather than mass media advertising in the promotional mix
    • requires intensive use of a sales force and is relatively costly
  12. Pull strategy
    depends more on mass media advertising to communicate the marketing message to potential consumers.
  13. factors that determine the attractiveness of push and pull strategies
    • product type to consumer sophistication: is the product new to the market? can the people understand what the product does and the benefits of such a product?
    • channel length
    • media availability
  14. When are push strategies used?
    • for industrial products or complex new products
    • when distribution channels are short
    • when few print or electronic media are available
  15. When are pull strategies used?
    • for consumer goods
    • when distribution channels are long
    • when sufficient print and electronic media are available to carry the marketing message
  16. The price elasticity of demand
    a measure of the responsiveness of demand for a product to change in price
  17. elastic
    demand is said to be elastic when a small change in price produces a large change in demand
  18. inelastic
    a large change in price produces only small change in demand
  19. strategic pricing
    the concept has three aspects: predatory pricing, multipoint pricing and experience curve pricing
  20. predatory pricing
    • the use of price as a competitive weapon to drive weaker competitors out of a national market. 
    • once the competitor has left the market, the firm can raise prices and enjoy high profits
  21. Multipoint pricing
    refers to the fact a firm's pricing strategy in one market have have an impact on its rival's pricing strategy in another market
  22. Experience curve pricing
    • as a firm builds its accumulated production volume over time, unit costs fall due to experience effects
    • many firms pursuing an experience curve pricing strategy on an international scale will price low worldwide in attempting to build global sales volume as rapidly as possible, even if this means taking large losses initially.
  23. tight cross-functioal integration between R&D, production, and marketing can help a company ensure that...
    • 1. product development projects are driven by customer needs
    • 2. new products are designed for ease of manufacture 
    • 3. development costs are kept in check
    • 4. time to market is minimized
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Global Business chapter 17