I - Core - Marketing Component - Summary - M370 Final SG PDF

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M370 Final Study Guide PRICING Price – Amount of money charged for a product or service  Relationship between seller and buyer: o If price = or < perceived value AND price > price floor, THEN exchange may happen  Factors that affect pricing: 1. Industry 2. Economy 3. Demand 4. Influences (government, social) 5. Elasticity of demand Major pricing strategies: 1. Customer value based pricing – Setting price based on buyers’ perception of value rather than on the seller’s cost a. Hard for company to measure customer’s value perception b. BEST STRATEGY FOR MOST FIRMS 2. Cost based pricing – Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk a. Low cost producers vs high cost producers 3. Competition based pricing – Setting prices based on competitors’ strategies, prices, costs, and market offerings a. External factors Elasticity: Price elasticity – Measure of the sensitivity of demand to changes in price  Elastic - a change in price causes a bigger % change in demand o EX: movie tickets, vacations, books o >1 o May force sellers to consider price change  Inelastic - a change in price causes a smaller % change in demand o EX: tap water, Apple products, gasoline o Volume doesn’t change much when price does o =1 intermediaries

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o Customers are familiar with buying from certain retailers o Intermediaries create utility & transaction efficiencies Multi-channel distribution systems – Single firm sets up >=2 marketing channels to reach >=1 customer segments o Most companies use multiple channels o Expands company’s markets o Gains opportunities to tailor to customer segments o Harder to control o Generate conflict Disintermediation – Cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries o EX: Southwest selling directly to consumer rather than through booking sites Re-intermediation – Opposite of disintermediation Intensive distribution – Stocking product in as man outlets as possible o EX: Soap, Coca-Cola, candy Exclusive distribution – Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories o EX: Rolex Selective distribution – Use of more than one but fewer than all of the intermediaries who are willing to carry the company’s products o Between exclusive and intensive o EX: TV brands, furniture o Best fit based on product

Warehousing v physical distribution: 

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Distribution center – Moving goods, not storing them o Storing costs money in “inventory carrying costs” o Today’s goal is efficiency through information systems o Acquire goods as necessary (keep goods flowing) Warehousing – Designed to store goods for longer periods of time Supply chain management – Managing upstream and downstream value added flows of materials, final goods, and related information among suppliers, company, resellers, and final consumers

Retail: 

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Definition: Activities involved in selling goods/services directly to final consumers for their use o Mostly done by retailers of course LOL Types of retailers: o Hypermarket – Sell everything at lower prices (all categories)

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 Target, Wal-Mart o Specialty – Narrow product lines with variety in them  Shoe Carnival o Category killers – Big box stores  Bed Bath and Beyond, Petsmart, Best Buy o Off-price retailers – Low price, high volume gap  Buy at less than regular wholesale prices and charge consumers less  TJ Maxx o Factory outlet – Manufacturer owned and operated store  Carries surplus, discontinued, or irregular goods  J-Crew, Nike, Michigan City Outlet Mall Retail convergence – Everything coming together o Higher competition and difficulty in differentiation o EX: Target competes with Kroger

Types of intermediaries: Merchant wholesalers take title to goods Merchandise agents or brokers NEVER take title to goods o Manufacturing agents, selling agents, commission merchants, merchandise brokers Logistics:  

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Goals: o Maximize customer service o Minimize distribution costs CULTURE

Global marketing process: 1. 2. 3. 4. 5. 6.

Assess environment Go global or not? Which markets to enter? How to enter markets? Global marketing program? Global marketing organization

Why must business (marketing) change between countries? 1. Economy – Look at industrial structure, income distribution, economy type 2. Political-legal differences – Monetary regulations, receptiveness, stable? 3. Cultural environment – Norms, behaviors, taboos

a. Culture is the most basic cause of a person’s wants and behavior b. Primary reason we change products Modes of market entry: 1. Exporting – selling homemade goods abroad 2. Strategic venturing – Possible joining with foreign companies or franchising 3. FDI – Developing foreign-based assembly or manufacturing facilities a. Biggest foreign involvement  Choosing the type of method that carries the least risk depends on the TYPE of risks considered

Financial capital risk Loss of Marketing control risk (AKA brand equity)

Export LOW HIGH

Strategic venturing MEDIUM MEDIUM

FDI HIGH LOW

Standardized vs adapted strategies 

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Standardized – Company uses same marketing mix and strategy in all of its international markets o EX: Heineken, Starbucks Coffee o Less costs, improved planning and control Adapted – Company adapts to international market o More costs, but larger market share and return o EX: Ford, Nokia

SAME promotion:

DIFFERENT promotion:

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SAME product: Straight extension – Market a product in a foreign market without changing product  Heineken  Starbucks Promotion adaption – Fully adapting advertising messages to local markets  Drakkar Noir

Product ADAPTION: Product adaption – Adapting a product to local conditions or wants in foreign market  Nokia  BP Dual adaption:  Some soft-drinks  Some clothing

Must assess product, promotion, price, place (4 P’s) during global market adaption

Reading 9:

Problems:

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1. Thinking in cultural terms 2. Dimensions of global brands 3. Global consumer segments 4. Opportunities The first of global culture doesn’t mean that consumers share the same tastes or values A brands global dimensions have significant impact in the eyes of consumers: o Quality signal (MOST IMPORTANT) – global brands have higher perceived quality  Viewed as expensive but reasonably price for the value perceived o Global myth (IMPORTANT) – Imagined global identity that they share with likeminded people  Symbols  Global brands make people feel like “citizens of the world”  US have very few global citizens o Social responsibility (SOMEWHATE IMPORTANT) – Global brands are expected to address social problems linked to what they sell Global consumer segments: o Citizens (LARGEST) – Rely on the global success of company and concerned if they address main issue o Dreamers – Eager in admiration of transnational companies o Anti-globals – Skeptical of transnational quality, dislike American value only goods, lack trust in social behavior o Agnostics – Evaluate a global brand by same criteria as a local brand Think globalness Manage the “dark side” – Even good companies have “dark” side they must manage o Bad perceptions of company Transnational companies would do well to manage their national identities as well as their globalness Build credible myths Treat anti-globals as customers (help get NGO’s on your side) Turn social responsibility into entrepreneurship o Can save money AND benefit business and increase social responsibility o Social responsibility isn’t just public relations!...