This chapter introduces the key concepts of global marketing and the different strategic orientations firms can take when expanding internationally. It discusses the development of global marketing from domestic to export to international and multinational strategies. Finally, it addresses the biggest challenge in global marketing as designing marketing strategies that work across multiple country markets while allowing for local adaptation, and the importance of focus, value creation and competitive advantage for global success.

1. Chapter 1 Introduction to Global Marketing CHAPTER OUTLINE The development of GM GM: what it is and what it isn’t Importance of GM Reasons for GM Key to global success Global industries The biggest issue in GM Strategic orientation of GM

2. Domestic marketing Export marketing International marketing Multinational marketing Global Marketing THE DEVELOPMENT OF GM

3. DOMESTIC MARKETING Marketing that is aimed at a single market (firm’s domestic market). Firms face only one set of competitive, economic, and market issues. EXPORT MARKETING When a firm market its products outside its main base of operation and when products are physically shipped from one market to another. Domestic market remains of primary importance. Major challenge the selection of appropriate markets through marketing research, determination of appropriate product modifications to meet the requirements of exporting market, and development of export channels.

4. INTERNATIONAL MARKETING Much more directly involved in the local marketing environment Is likely to have sales subsidiaries Necessary adaptations to the firm’s domestic marketing strategy Participate in and develop entire marketing strategies for foreign market Major challenge the need to understand the different environments. MULTINATIONAL MARKETING The result of development of multinational corporation. Maximum amount of localization MNCs operate in several foreign countries as if the firms were local companies Multidomestic strategy each strategy is tailored to a particular local market Major challenge to find the best possible adaptation of a complete marketing strategy for an individual country.

5. GLOBAL MARKETING Opportunities for economies of scale and enhanced competitiveness will be greater if marketing strategies are integrated into a global scale Global marketing strategy a single strategy for a product, service or company for the entire global market Rather than tailor a strategy perfectly to an individual market, the company settles on one general strategy that can be applied throughout the world while at the same time maintaining flexibility to adapt to local market if necessary. Major challenge design marketing strategies that work well across multiple markets

6. Single country (domestic) marketing Dual country (Export) marketing Multicountry marketing Global marketing

7. Single Country Marketing Strategy Target market strategy Marketing mix Product Price Promotion Place Global Marketing Strategy Global market participation Marketing mix development 4 P’s: adapt or standardize? Concentration of marketing activities Coordination of marketing activities Integration of competitive moves GM : WHAT IT IS AND WHAT IT ISN’T

8. Strategy development comes down to two main issues similar to single country marketing Target market Marketing Mix Global marketing does not mean doing business in all of the 200-plus country markets Global marketing does mean widening business horizons to encompass the world in scanning for opportunity and threat

9. For US-based companies, 75% of sales potential is outside the US. About 90% of Coca-Cola ’ s operating income is generated outside the US. For Japanese companies, 85% of potential is outside Japan. For German and EU companies, 94% of potential is outside Germany. IMPORTANCE OF GM

10. Growth Access to new markets and access to resources Survival Against competitors with lower costs (due to increased access to resources) – e.g. India and China Or push (reactive) and pull (proactive) factors REASONS FOR GM

11. PROACTIVE MOTIVES 1. Profit and growth goals Firms can grow from internationalization experiences from the profitability of export affect the company ’ s attitude towards growing by the means of export (especially when you start to internationalize the perceptions about profitability may be far away form reality) 2. Managerial urge the desire of management towards global marketing activities is often simply a reflection of general entrepreneurial motivation - desire for continuous growth managerial attitudes play a critical role in determining the exporting activities of the firm these decisions are affected by the international background of the managers - those who have more international experiences are more internationally minded

12. 3. Technology competence / unique product If a company produces goods or services which are unique, a competence edge exists which can result in major business success abroad one issue is how long such an advantage will continue? 4. Foreign market opportunities market opportunities act as stimuli only if the firm has or is capable of securing resources necessary to respond to the opportunities in general decision makers are considering only a rather limited number of foreign market opportunities in planning their foreign market entry the market opportunities of similar overseas markets are explored first

13. 5. Economies of scale the benefits of decreasing production costs / unit by increasing production has increased the interest of firms to penetrate to foreign markets to search for this advantage 6. Tax benefits

14. REACTIVE MOTIVES 1. competitive pressures a firm may fear losing domestic market share to competing firms that have benefited from economies of scale gained by global marketing activities further, it may fear losing foreign markets permanently to domestic competitors that decide to focus on these markets. Competitors are an important external factor stimulating internationalization (Coca-Cola & Pepsi) 2.Domestic market: small and saturated A company may be pushed into exporting because of a small home market potential. If domestic markets are unable to provide sufficient economies of scale, export markets are automatically included in their market entry srategy. A saturated domestic market has a similar effect (car manufacturers in USA)

15. 3. Overproduction / excess capacity If domestic sales are below expectations  inventory can be above desired levels  with short-term price cudts export is started. When domestic markets are normal, global marketing activities may be terminated (Canadian paper and pulp producers). 4. Unsolicited foreign orders Many small companies have become aware of export market opportunities by accident (advertising, exhibition etc.)

16. 5. Extend sales of seasonal products seasonality in demand conditions may be different in domestic market from other international markets this can act as a stimulus for example to market skiing shoes to New Zealand during summer or harvesting machines to Argentina during winter. 6. Proximity to international customers / psychological distance German firms established near Austrian border may not even perceive their marketing to Austria to be international the same situation in Europe exists between Germany and parts of Switzerland, France, and parts of Belgium, Sweden and parts of Finland, Netherlands and parts of Belgium Between USA and Canada (partly with Mexico)

17. Value creation Competitive advantage Focus KEY TO GLOBAL SUCCESS

18. VALUE CREATION Value = Benefits/Price Price is a function of money, time, and effort Benefits result from the product, promotion, and distribution 2 methods of value creation Improved benefits Lower prices

19. COMPETITIVE ADVANTAGE An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors These attributes can include access to natural resources, access to highly trained and skilled personnel human resources, and new technologies such as robotics and information technology A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player

20. FOCUS Concentration and attention on core business and competence Nestle is focused: We are food and beverages. We are not running bicycle shops. Even in food we are not in all fields. There are certain areas we do not touch…..We have no soft drinks because I have said we will either buy Coca-Cola or we leave it alone. This is focus. - Helmut Maucher

21. STANDARDIZATION VS. ADOPTATION Globalization (standardization) Developing standardized products marketed worldwide with a standardized marketing mix Essence of mass marketing Global localization (adaptation) Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction Essence of segmentation Think globally, act locally THE BIGGEST ISSUE IN GM

22. Arabic read right to left Chinese “ delicious/happiness” The faces of Coca-Cola around the world

23. Marketing Mix Element Standardization Localized Product Promotion Place Price Big Mac Brand name Advertising slogan “I’m Loving It” Free-standing Big Mac is $3.10 in U.S. and Turkey McAloo Tikka potato burger (India) Slang ’Macca’s (Australia) MakDo (Philippines) McJoy magazine, “Hawaii Surfing Hula” promotion (Japan) Home delivery (India) Swiss rail system dining cars $5.21 (Switzerland) $1.31(China) McDONALD ’ S GLOBAL MARKETING

24. FACTORS LIMITING STANDARDIZATION Market characteristics: Physical environmental condition climate cars in Canada. product use conditions cars in the states population decide market size macroeconomic income level. McDonald’s in China cultural and social Wal-Mart and Nokia in Korea Language Nova in Mexico, Starbucks in 인사동 Industry conditions stages of product life cycle the level of local competition

25. Marketing infrastructure practices in distribution systems availability of outlets the number of malls, department stores, and supermarket accessibility of advertising agencies and media Regulatory environment product standards tariffs and taxes result in different price specific restrictions mention of competitors’ name (Europe vs. the States) patent law pharmaceutical drugs in Indonesia and India

26. Concept EPRG Schema STRATEGIC ORIENTATION OF GM Domestic market extension Ethnocentric Multi-domestic market polycentric Global marketing Regio/geocentric attitude or state of mind of management influence all decision regarding strategies

27. ETHNOCENTRIC ORIENTATION Home country is superior to others Sees only similarities in other countries Assumes products and practices that succeed at home will be successful everywhere Leads to a standardized or extension approach POLYCENTRIC ORIENTATION Each country is unique Each subsidiary develops its own unique business and marketing strategies Often referred to as multinational Leads to a localized or adaptation approach that assumes products must be adapted to local market conditions

28. REGIOCENTRIC ORIENTATION A region is the relevant geographic unit Ex: The NAFTA or European Union market Some companies serve markets throughout the world but on a regional basis Ex: General Motors have four groups for four regions – GMAP, GME, GMLAAM, GMNA GEOCENTRIC ORIENTATION Entire world is a potential market Strives for integrated global strategies Also known as a global or transnational company Retains an association with the headquarters country Pursues serving world markets from a single country or sources globally to focus on select country markets Leads to a combination of extension and adaptation elements

29. Chapter 2 Global Marketing Environment CHAPTER OUTLINE Global economic factors Cultural and social factors Political factors

30. Uncontrollable factors that affect global marketing: the global economy the cultural and social forces Political and legal forces GLOBAL ENVIRONMENT FACTORS

31. Components of economic factors International agencies promoting international trade Trade barriers Protection from protectionism ECONOMIC FACTORS

32. ECONOMIC FACTORS Stage of Economic Development Developed Countries: Mixed economies (Ex: U.S., Japan, Canada, & Western Europe) Developing Countries: Usually moving towards an industrialized economy (Ex: Hungary, South Africa, & Pakistan) Economic Infrastructure Economic infrastructure is a country’s communication, transportation, financial, & distribution systems. Critical for determining how, where, & to whom to market. Coke example in India

33. Consumer Income and Purchasing Power Marketers must consider the average household incomes of the consumers. Currency Exchange Rates

34. How purchasing power differs around the world

35. TRADE BARRIERS Tariffs Taxes on goods moving across an economic or political boundary Can be imposed on imports, export, or goods in trasit. Import tariffs are the most common Raise the price of imported goods and thereby protect domestic industries from foreign competition Generate tax revenues for the government Quotas Physical limits on the amount of goods that can be imported into a country. Screen quotas in Korean movie industry

36. Orderly marketing arrangement and voluntary export restrictions Agreement between countries to share markets by limiting foreign export sales Nontariff barriers Include a wide range of charges, requirements, and restrictions such as surcharges at border crossings, licencing regulations, performance requirements, government subsidies, health and safety regulation, packaging and labeling regulations, and size and weight requirements. French ban on the advertising bourbons and Scotch, but not on cognac A French tax on car horsepower – target American cars or environmental issue?

37. Definition of culture Components of culture Classifying the culture CULTURAL AND SOCIAL FACTORS

38. CULTURAL AND SOCIAL FACTORS Definitions A learned set of ideals, values, and standards that is shared by members of a society Basic characteristics A culture is shared within a society, a defined group of people who depend on each other for survival. Culture is learned Culture is based on symbols, the most important symbols being language. Culture is integrated: all aspects of culture function as a coordinated whole. Individual culture do not produce uniform behavior for all members: there are subcultures like gender.

39. COMPONENTS OF CULTURE aesthetics religion education Personal communication Values and attitude Social structure Manners And customs culture Physical And Material environment

40. CULTURAL INFLUENCES ON MARKETING Religions, history, Family, language, Arts/entertainment, education Symbols, morals, Rules of behavior, knowledge Selecting and Prioritizing wants For goods And services behaviors Cultural forces Cultural messages Consumer Decision process

41. PERSONAL COMMUNICATION Spoken languages Advertising slogans and company document must be translated carefully so that messages are received precisely as intended. Language blunders: GM’s chevy Nova. SK. The feel of the sound: Pocari sweat in Japan Body language George Bush’s V in Australia Personal space Mexicans are closer than Anglo-Saxons.

43. RELIGION Many businesspeople ignore the influence but it has profound impact on people Christianity: world’s largest religion Christmas in the States vs. St. Nicolas day in Holland vs. little Christmas in France Christian group boycotting Walt Disney's film Islam: second largest religion Islam prohibits alcohol and pork. German candy maker “haribo” produced pork-free gummi bear

44. EDUCATION Can have a major impact on how receptive consumers are to foreign marketing techniques. Education shapes people’s outlook, desires, and motivation. The type of employees and executive talent European education emphasizes the mastery of a subject through acquisition on knowledge whereas US approach emphasizes analytical ability and an understanding on concepts. This will lead to different thinking patterns and attitudes. Literacy One out of five Americans do not understand the directions on an aspirin bottle Affects marketing communication to consumers Influence earning potential of young people

45. AESTHETICS What a culture considers “good tastes” in the arts, the imaginary evoked by certain expressions, and the symbolism of certain color. Aesthetics can decide success or failure of GM Color green is a good color in Islam where as is represent sickness in some Asian countries. Black is color of death and mourning in the states, Europe, and Mexico, but it is white in Japan. Imagery and symbol Nike’s Air Melt Music The architecture of buildings

46. VALUES AND ATTITUDES Value ideas, beliefs, and customs to which people are emotionally attached Singapore value hard work and material success whereas Greece value leisure and a modest lifestyle. UK and USA value individual freedom and Japan and Korea value group concensus Attitudes positive or negative evaluations, feelings, and tendencies that individuals harbor toward objects or concepts. Reflect underlying value Attitude toward time Attitude toward work Attitude toward culture change

47. MANNERS AND CUSTOMS Manners appropriate ways of behaving, speaking, and dressing in a culture In Arab culture, one does not extend a hand to greet an older person and does not use left hands. Doing business during meal is ok in the states but not in Mexico. Customs appropriate habits or behaviors in specific situations. Gift of knives is not appropriate in Russia, France, or Germany. In Japan, one is not supposed to open in front of gift giver.

48. SOCIAL STRUCTURE A culture’s fundamental organization, including its groups and institutions, its system of social positions and their relationships, and the process by which its resources are distributed Social group family (nuclear vs. extended), gender Social status results in different preference for a job. Social mobility the ease with which individuals can move up or down a culture’s social ladder. Caste systems vs. class systems.

49. PHYSICAL AND MATERIAL ENVIRONMENTS Physical environment Topography all physical features that characterize the surface of a geographic regions. Scooters cannot be sold in mountainous regions Korean cars do not need cruise control Climate Siesta in southern Europe Material culture All the technology used in a culture to manufacture goods and provide services Used to measure technological advancement of a nation’s market

50. Hofstede’s cultural dimensions Hall’s High vs. low context culture CLASSIFYING CULTURE

51. HOFSTEDE’S CULTURAL DIMENSIONS Individualism vs. Collectivism Self-perception as individual or part of a group Individualism a loosely knit social framework in which people are supposed to take care of themselves and of their immediate families only Collectivism people distinguish in-groups and out-groups and feel absolute loyalty to in-groups. collectivist individualist In society, people are born into extended families or clans who protect them in exchange for loyalty. “ we” consciousness holds sway Identity is based in the social system There is emotional dependence of individuals on organizations and institutions The involvement with organizations is normal In society, everybody is supposed to take care of him/herself and his/her immediate family “ I” consciousness holds sway Identity is based in the individual There is emotional independence of individual form organizations or institutions The involvement with organization is calculative

52. Power distance The extant to which a society accepts the fact that power in institutions and organizations is distributed unequally Small power distance Large power distance Inequality in society should be minimized All people should be interdependent Hierarchy means an inequality of roles, established for convenience Superiors consider subordinates to be “people like me” Subordinates considers superiors to be “people like me” Superiors are accessible The use of power should be legitimate and is subject to the judgment as to whether it is good or evil. There should be an order of inequality in this world in which everybody has a rightful place; high and low are protected by this order A few people should be independent; most should be dependent Hierarchy means existential inequality Superiors consider subordinates to be a different kind of people Subordinates consider superiors as a different kind of people Superiors are inaccessible Power is a basic fact of society that antedates good or evil. Its legitimacy is irrelevant.

53. Uncertainty avoidance The extent to which a society feels threatened by uncertain and ambiguous situations and tries to avoid these situations by providing greater career stability, establishing more formal rules, not tolerating deviant ideas and behaviors, and believing in absolute truths and the attainment of expertise. Weak uncertainty avoidance Strong uncertainty avoidance The uncertainty inherent in life is more easily accepted and each day is taken as it comes Ease and lower stress are experienced Time is free Hard work, as such, is not a virtue Aggressive behavior is frowned upon Less showing of emotions is preferred Conflict and competition can be contained on the level f fair play and used constructively The uncertainty inherent in life is felt as a continuous threat that must be fought Higher anxiety and stress and experienced Time is money There is an inner urge to work hard Aggressive behavior of self and others is accepted More showing of emotions is preferred Conflict and competition can unleash aggression and should therefore be avoided

54. Masculinity vs. femininity Masculinity value assertiveness, the acquisition of money and things Femininity value caring for others, the quality of life, or people. feminine masculine Men needn’t be assertive, but can also assume nurturing roles Sex roles in society are more fluid There should e equality between the sexes Quality of life is important You work in order to live People and environment are important Interdependence is ideal Service provides the motivation One sympathizes with the unfortunate Small and slow are beautiful Men should be assertive. Women should be nurturing Sex roles in society are clearly differentiated Men should dominate in society Performance is what counts You live in order to work Money and things are important Independence is the ideal Ambition provides the drive One admires the successful achiever Big and fast are beautiful.

56. Hall’S CONTEXT FRAMEWORK Low-Context High-Context Information and meaning are explicitly stated in the message Individual “internalizes” meaning and information, so that less is explicitly stated Values Individualism Values Group Sense Values direct verbal interaction and is less able to read nonverbal expressions Values indirect verbal interaction and is more able to read nonverbal expressions Tends to use “logic” to present ideas Tends to use more “feeling” in expressions Tends to emphasize highly structured messages, give details, and place great stress on words Tends to give simple, ambiguous, non-contexting messages Emphasizes linear logic Emphasizes spiral logic

57. What you say is what you think - “No, I really mean it…” Silent language’s role is LOW. What you say is not really what you think. “As I am sure you understand,…” Read between the lines. A b c d e f g h i j k l m n o p A b c d e f g h i j k l m n o p A b c d e f g h i j k l m n o p W b x d y e Silent language’s role is HIGH.

58. ZER DEFECTS CONFORMS TO STANDARDS & SPECIFICATIONS Luxury GERMANY : FRANCE : USA : It works. JAPAN : Rapaille: What is “Quality”?

59. Political factors Dealing with host government Host government actions Political risk assessment Risk reduction strategies Legal factors Patents, trademarks, and copyrights Regulatory trends affecting global marketing POLITICAL AND LEGAL FACTORS

60. DEALING WITH HOST GOVERNMENT Political climate stability influences business ex> freedom party in Austria in 2000 Governments Government actions are governed by a lot of reasons from political philosophy, pressure from interest group to self-interest. Should understand the rationale behind the actions The major goals of government actions Self-preservation Security Prosperity Prestige Ideology Cultural identity POLITICAL FACTORS

61. Self-preservation Effort to keep sovereignty, which gives a nation complete control within a given geographic area. Branch office of global companies can be a threat because they are controlled or influenced by headquarters Many countries limit foreign ownership of newspaper, television stations, and radio stations. The need for national security To the extent possible, each entity seeks to maximize the opportunity for continued existence and to minimize threats from the outside infrastructure and essential resources, utilities, the supply of crucial raw materials are usually protected.

62. Fostering national prosperity A key goal of government is to ensure the material prosperity of its citizens. Host country can favor local industry of foreign competitors for this goal by imposing tariffs or customs duties. Enhancing prestige Government can enhance prestige with many ways; supporting team sports or individual athlete, having a national airlines, or having a leading company. They can encourage local companies at the expense of a foreign company. Protecting cultural identity Governments often intervene to protect their country’s cultural identity Entertainment industry is the typical example

63. HOST GOVERNMENT ACTIONS Jawboning Informal intervention of governments Use this form to prevent an act that, though legal, is perceived to be contradictory to their self interest. “ buy local” restrictions Public sector and government prefer local companies as a supplier Nontariff barriers Used by government mostly to keep imports from freely entering the home market Quotas and import restriction is the most common.

64. Subsidies Gifts that host governments dispense with the intention the overall benefits to the economy by far exceed such grants Used to encourage exports and to attract global companies to a certain country. Operating conditions Host government can have a direct influence on the operations of a foreign subsidiary by imposing specific conditions on the company's operations Local content Local content restrictions means that some part of the manufacturing must be done in the host country. Ownership conditions Some governments require local nationals become part owners of the foreign company.

65. Boycotts Politically motivated boycotts tend to be directed at companies of certain origin or companies that engaged in transactions with political enemies Takeovers Any host government –initiated actions that result in a loss of ownership or a loss of direct control by the foreign company. Expropriation a formal or legal taking over of an operation with the payment of compensation. Confiscation expropriation without any compensation. Domestication the limiting of certain economic activities to local citizens.

66. Host government goals and policy actions actions goal Self-preservation security prosperity prestige Ideology Cultural identity Jawboning X X X X X X “ buy local” restrictions X X X Nontariff barriers X X Subsidies X X Operating restrictions X X X X Local content X Ownership conditions X X Boycotts X takerover X X X X

67. POLITICAL RISK ASSESSMENT Some companies develop risk assessment systems Public or semipublic sources regularly monitor political risk The Economist Intelligence Unit (EIU) The International Country Risk Guide

68. RISK REDUCTION STRATEGIES Local partners This strategy can include placing local nationals on the boards of foreign subsidiaries or accepting a substantial capital participation form local investors. Invaluable status Achieving a status of indispensability Firms with high technology or specific product can use this strategy Vertical integration It is better to have several specialized, interdependent plants than have one fully integrated, independent plant.

69. Minimizing fixed investments Can lease the facilities or rely more on outside suppliers. Political risk insurance Both government and private offers the insurance Local borrowing Financing local operations from indigenous banks and maintaining high level of local accounts payable can help firms to be safe

70. PATENTS, TRADEMARKS, AND COPYRIGHTS Patents and trademarks are used to protect products, process, and symbols. They are issued by each individual country so marketers must register every product in every country in which they intend to trade. Counterfeit and piracy of software, entertainment, and fashion is increasing and Strategies firms can use include (1) do nothing if the effect is minimal, (2) co-opt the distributors through acquisition or licensing, (3) educate customers about the value of the original product through advertising, (4) investigate and bring legal actions, (5) join coalitions like the International Ani-counterfeiting Coalition, which brings pressure on governments, (6) use advanced technology that are difficult to copy, and (7) continue to enhance the brand with new products, making it difficult for pirates to keep up. LEGAL FACTORS

71. REGULATORY TRENDS AFFECTING GM Trade liberalization more and more countries reduce local manufacturing requirements and tariffs. Deregulation Many countries began to open up industries such as telecommunications, transportations, airlines, and banking. Privatization Countries are selling government-owned agencies, organization, and companies to private stockholders or firms.

72. SWOT ANALYSIS It is an easy-to-use tool for developing an overview of a company’s strategic situation It forms a basis for matching your company’s strategy to its situation Process of examining the organization’s environment to determine Strengths – identifying existing organisational strengths Weaknesses – identifying existing organisational weaknesses Opportunities – what market opportunities might there be for the organisation to exploit? Threats – where might the threats to the future success come from?

73. EXTERNAL FACTORS Opportunity a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment. Possible Opportunities: Emerging customer needs Quality Improvements Expanding global markets Threat a factor in your company’s external environment that poses a danger to its well-being. Possible Threats: New entry by competitors Changing demographics/shifting demand Emergence of cheaper technologies Regulatory requirements

74. INTERNAL FACTORS Strengths Positive tangible and intangible attributes, internal to an organization. They are within the organization’s control. Weakness Factors that are within an organization’s control that detract from its ability to attain the core goal. Which areas might the organization improve?

75. SWOT MATRIX Internal Factors External Factors Strengths (list key strengths) Weaknesses (list key weaknesses) Opportunities (list key opportunities) SO Strategies: strategies that use strengths to take advantage of opportunities WO Strategies: strategies that alleviate weaknesses and take advantage of opportunities Threats (list key threats) ST Strategies: strategies that use strengths to overcome threats WT Strategies: strategies that alleviate weaknesses and overcome threats

76. Chapter 3 Understanding Local Customers CHAPTER OUTLINE local buyer behaviors The consumers’ decision process New brands at a local market

77. The Buyer Decision Process Problem/need recognition information search alternative evaluation purchase post-purchase behavior Seeking Customers Meeting Customers Keeping Customers

78. Problem/Need Recognition A problem/Need is when an individual perceives a difference between an ideal and an actual state of affairs New products often lead to tension and a recognized “problem” Types of Needs Functional needs needs for convenience and quality Social needs need related to social status Experiential needs related sensory desires and experience

79. Search A consumer’s search for alternative ways to solve the problem is closely related to his or her level of involvement with the product category For product with which involvement is high, search tends to be more comprehensive and time consuming For convenience and habit purchases, the decision process is shorter, with little need for extensive searches or alternative evaluations Search intensity is dependent on the perceived availability of the alternative One advantage for product with high global brand awareness is that initial distrust is easier to overcome

80. External Information Sources person publicity Advertising S/P Sales representative Word-of-Mouth Communication Mass media others firm media source

81. Evaluation of Alternatives When a new product or service is in the “ consideration set ” A highly involved individual will process the available information matching the pros and cons of the alternatives against preferences Consumers can deal with multi-attribute evaluations in several ways: They can use gradually less-important features to successively screen out alternatives A “hierarchical” decision rule ex> Lexicographic model They can consider all features simultaneously: A “compensatory” rule – hard to do. ex> Fishbein’s Mutli-attribute model

82. What is a Consideration set (or Evoked set)? The set of choices that are salient or kept in mind for purchase.  consumers are aware of a lot of brands in any given product category. However, not all brands are seriously considered for purchase. The consideration set is made up of the brands that are taken seriously by the consumer in his or her purchase decision. How many? Magic number 7 +/- 2(Miller 1956) Marketers’ objective is to put their products into a consumer’s consideration set and then be a strong option in the set

83. STRATEGIES TO MANAGE CONSUMERS’ CONSIDERATION SET Using a part-list cuing effect When a part-list is given, consumers actually remember less. ex> Avis “We are # 2. we work harder” campaign Give consumers a part-list of competitors including you so to reduce the number of options in the consideration set

84. Using an Attraction Effect Inferior brand’s ability to increase the attractiveness of another alternatives Bread maker $275 Bread maker $350 add a decoy brand to make the existing brand more attractive to consumers

85. Using a Compromise Effect Consumers tend to choose intermediate brands to reduce risks (expensive brands have high financial risk and cheap brands have high performance risk). \ 165,620 \ 278,000 \ 829,000 Make your brand as a compromise brand so to increase the chance of being chosen.

86. Using a Framing Effect presenting the same option in different formats can alter people's decisions. “ 75% lean meat” “ 25% fat” Frame your message with a positive expression (emphasize what consumers gain from the purchase).

87. Fishbein’s Multi-Attribute Model Consumers choose the brand on the base of the importance of attributes and the evaluation of each attribute for specific brand. Score = Sum (importance X evaluation) Lexicographic model The most common form that customers use Consumers consider the most important attributes first and choose the best evaluated brand on that attribute.

88. Cosmetic

89. Choice The final choice of which alternative to select or try is typically influenced by social norms and by situational factors Social Norms Where group pressures to comply are strong social norms influence is expected to override multiattributed evaluation The social norms can be usefully analyzed by the extended Fishbein model The social norms involve two aspects Social forces Motivation to comply

90. OUTCOMES OF BUYER’S DECISION PROCESS The main question about the outcomes revolves around the degree of customer satisfaction. Customer satisfaction is particularly important in mature markets where choices are many and the needs are already well met. Satisfaction engenders loyalty to the brand and to the company. Because buying is typically a risky choice between different brands, the marketer has to make sure that the customer does not encounter cognitive dissonance , a sense of possibly making the wrong choice.

91. Expectation disconfirmation theory Customers satisfaction/dissatisfaction comes from the comparison between expectancy consumers have before purchase and the evaluation from the actual experience. Expectation Actual performance Gap Ex = PF : confirmation  Ex>PF : negative disconfirmation  Ex<PF: positive disconfirmation 

92. A strong brand simplifies the process Reduce information search Reduces perceived risk Places a brand in the evoked consideration set more easily Brand loyalty means decisions go fast

93. Chapter 4 Global Marketing Strategies CHAPTER OUTLINE Segmentation Targeting Positioning

94. Segmentation criteria Segmentation and analysis on each segment Target market and marketing goals Competitiveness analysis and Positioning Positioning evaluation and repositioning S egmentation T argeting P ositioning STP STRATEGY

95. The typical way of approaching global marketing strategy is similar to the so-called S-T-P framework: Market segmentation Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors requiring separate products or marketing mixes. Target marketing Evaluating each segment’s attractiveness and selecting one or more to enter. Market positioning Setting the competitive positioning for the product and creating a detailed marketing mix.

96. SEGMENTATION It is impossible that one product satisfy every customer’s every need! Therefore, it is more efficient to provide a product which satisfies one need to a group of people with similar need Understand market Choose segmentation Method and criteria identify the Characteristics of Each segment

97. No Market Segmentation

98. Segmentation by Sex

99. Segmentation by Age

100. Two stages of global segmentation It is common to distinguish two stages of global segmentation Macro-segmentation the division of a number of countries into subgroups of more similar clusters Micro-segmentation the identification of local segments which are similar across the countries in a cluster. The micro-segmentation techniques used in local marketing are also useful in global segmentation

101. MACRO SEGMENTATION clustering of countries on the basis of common characteristics deemed to be important for marketing purposes, e.g. data on: Population size Population character Disposable income levels Educational background Primary languages Level of development Rate of growth in GNP Infrastructure Political affiliation

102. 0 .9 .8 ,7 .6 .5 .4 .3 .2 .1 0 -.1 -.2 -.1 0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1.0 • SOT • UKI NOR • • SWE • DEN FIN• • SWI • AUS • NET • GER • NEZ • BEL • AUT • COL • CHI • VEN • SPA • BRA • PER • MEX PUE • • FRA ITA• • ARG PHI • • THI • ISR • JAP • MAC • IND • PAK Factor VI Religion TUR • Protestant Catholic Factor III Standard of Living Macro-Segmentation on Standard of Living and Religion

103. Macro-Segmentation on “Think” and “Feel” Dimensions

104. TRADITIONALIST 18% HOMEBODY 14% RATIONALIST 23% PLEASURIST 17% STRIVER 15% TRENDSETTER 13% 6 PAN-EUROPEAN LIFESTYLE SEGMENTS Relative size of segments in percent, of the European Market, as developed by the RISC research agency Macro-Segmentation Based on Lifestyle

105. MICRO SEGMENTATION Major segmentation variables Geographic: Region of country City or metro size Density or climate Demographic: Age, gender, family size, family life cycle, income, occupation, education, race, religion, etc. The most common and easiest way of segmentation

106. Mattel’s Barbie Hasbro’s G. I. Joe

107. Psychographic: Social class, Lifestyle (VALS, LOV, AIO), Personality Behavioral: Occasion: Benefits Sought User Status : non-users, light users, heavy users No single way to segment a market. May combine more than one variable to better define segments.

108. AIO 활동 activity 관심 interest 의견 opinion 일 취미 사회활동 휴가 오락 클럽회원활동 지역사회활동 쇼핑 스포츠 가족 가정 직업 지역사회 여가활동 유행 음식 대중매체 업적 자기자신에 대한 의견 사회적 이슈 정치 사업 경제 교육 상품 미래 문화

109. VALS 질문항목 예제 I am often interested in theories. I like outrageous people and things. 3. I like a lot of variety in my life. 4. I love to make things I can use everyday. 5. I follow the latest trends and fashions. 6. Just as the Bible says, the world literally was created in six days 7. I like being in charge of a group. 8. I like to learn about art, culture, and history. 9. I often crave excitement. 10. I am really interested only in a few things. 11. I would rather make something than buy it. 12. I dress more fashionably than most people.

111. Benefit Segmentation of the Snack Food Market Nutritional snakers Weight watchers Guilty snackers Party snackers Indiscriminate snackers Economical snackers % 22 14 9 15 15 18 Benefit sought Nutritious No artificial Low calorie Quick energy Good tasting Low calorie Good to serve Goes well with beverage Good tasting Satisfies hunger Low price Best value Demographics Have young children Younger single females nonurban teens Larger families Psychographics controlled Outdoor High anxiety sociable hedonistic Price-oriented Consumption light light heavy average heavy Average Types of snack Fruits vegetable Yogurt vegetables Yogurt Cookies candy Nuts Chips pretzels Candy Ice cream cookies No specific

112. Segmentation by Personality Factors Type of drinker Personality type Drinking patterns Reparative drinker Sensitive and responsive to needs of others, adapts to these needs by sacrificing own aspirations, well adjusted to this situation Drinks at end of day, usually with a few close friends, controlled drinker, seldom drunk, drinking is self reward for sacrifices made to others. Social drinker Driven by own ambitions, attempts to manipulate others to get what he wants, not yet attained level of aspirations, but expects to. Drinks heaviest on weekends, in larger groups in social settings, drinks as menas of acceptance of and by others, controlled drinker Indulgent drinker Considers self a failure, bales environment and others Heavy drinker, drinks in isolation as a form of escape Oceanic drinker Considers self a failure but blames own shortcomings Also heavy drinker and drink to escape recognition of shortcoming, doesn’t drink alone

113. Requisites for segmentation Measurable & Accessible Actionable & Relevant Homogeneous within a segment Heterogeneous between segments

114. TARGETING Targeting a market or country should be done strategically. The factors to consider include market, competition, and interfirm factors. The choice of target countries should also consider the tradeoff between focus and diversification. market competition interfirm market size potential product life cycle present competitors Future competitors Objective resources Competency

115. Fit to the firm Market size Competition Day time user 직장인의 휴식 Low Small High couple Low Big Extremely High Stay over Foreign tourist High Big Medium Local tourist High Small Medium 사교모임 , 유흥 , 취객 대상 High Small Medium Coffee shop Social purpose Low Big Extremely high Business purpose Low Medium Extremely High Sauna High Big High club regular Low Big Medium high Group users Low Big Medium high restaurant regular Low Big Extremely high Group users Low Big Extremely high Special occasion service 결혼식 , 가족 모임 , 사은회 , 세미나 , 연말 모임 등 Low Big Extremely high

116. 규모 Group Tour 28% of foreign tourists Budget backpakers 26% of foreign tourists Business travles 43% of foreign tourists 특성 mostly Asians older people price sensitive younger people stay for a long time price insensitive mostly use business hotels 자사와의 Fit high high 경쟁강도 Medium low 예상 비용 low low low high high

117. Diversification Strategy In developing a global strategy, some companies make a conscious effort to be a player in different countries and different market segments. Difficulties in one market segment or country can be offset by gains elsewhere. Focus Strategy Markets and segments can be given more attention and markets positions fortified. This is particularly advantageous when the country or segment competitive rivalry is intense.

118. Diversification vs Focus

119. Integrated global business strategies

120. POSITIONING Product’s position is the way the product is defined by consumers on important attributes, or as the place the product occupies in consumers’ minds relative to competing products. Perceptual position maps can help define a brand’s position relative to competitors. Unique positioning is achieved through differentiation Types of positioning Positioning by attributes: Reebok Image positioning Positioning by occasions: Kisses, Conditions Positioning by users: Nike, Johnson’s baby lotion Positioning by competition: Hazzys, Bean Pole Repositioning: Johnson’s baby lotion, Arm & Hammer baking soda

121. Full positioning of the brand is called the brand’s value proposition. Potential value propositions include: More for More providing the most upscale product or service and charge a higher price Ex> Ritz Carlton, Mont Blanc More for the Same Can attack competitors’ “more for more” strategies ex> Lexus vs. Mercedes Benz The Same for Less Sell the same product with less price Ex> amazon.com, Dell, Walmart Less for Much Less Meeting customers’ lower performance requirements at a much lower price ex> Southwest Airlines, Daiso More for Less The winning proposition but hard to achieve and sustain

122. Hypothetical Competitive Positioning Map for Selected Retailers

123. Healthy drink Ionic drink Female drink Sports drink Thirst quencher masculine Product Space Map(Positioning Map) A B I 1 C I 2 D sporty masculine Size of a circle =market size healty feminine

124. American Soap Market scent weak moisturizing strong moisturizing weak scent strong 1 2 7 4 5 3 6 8 Tone Zest Dove Lux Dial Lifebuoy Lava Coast Phase 3 Safeguard

125. Korean Car Market 보수적 중장년층에 소구 고급 / 품위 실용적 현대적 스포티 청년층에 소구 EF 소나타 에쿠스 체어맨 오피러스 그랜져 XG 아토스 비스토 마티즈 라노스 리오 티뷰론 SM3 엑센트 BMW 매그너스 아반떼 XD SM5 라세티

126. Position Map - Korean Actor

127. Chapter 5 Global Products and Services CHAPTER OUTLINE product life cycle product standardization localization vs. adaptation strategic choices for new markets global service marketing global brand strategy

128. Place Mix Product Mix Price Mix Promotion Mix Providing the best price Providing the best product Providing accessibility to target customers Provide product information and persuade customers

129. Augmented product concept Core benefit Formal product augmentation package brand style installation delivery payment methods warranty

130. Product Life Cycle Model (PLC)

131. sales cost profit MKT objectives product price low High cost per customer Negative Awareness and trial basic product cost-plus distribution selective distribution communication Increase awareness for early adopters and dealers Introduction stage

132. Rapid growth Cost per customers gets lower Profit increases Maximize market share product extensions, service, warranty Market penetration intensive distribution Increase awareness of mass market Growth stage sales cost profit MKT objectives product price distribution communication

133. The biggest lowest High profits Keep market share and maximize profit Diversify Brands and models competitive more intensive distribution Emphasize difference from your competitors Mature stage sales cost profit MKT objectives product price distribution communication

134. decreases lowest decreases milk the brand Remove weak items Keep or reduce price Select a few channels Keep hard-core loyal customers Decline stage sales cost profit MKT objectives product price distribution communication

135. Diffusion of New Products

136. PRODUCT STANDARDIZATION Although there is increasing demand for local variety as economic growth takes place and as anti-globalization sentiment spreads, global products and brands are usually standardized in some ways. Global product examples Gillette razor blades Sony television sets Benetton sweaters Regional products and brands are unique to a particular trading region Honda’s European car model “Concerto” Mcdonalds’

137. Advantages of standardization Cost Reduction Improved Quality Enhanced Customer Preference Global Customers Global Segments Disadvantages of standardization Off-Target Lack of Uniqueness Vulnerability to Trade Barriers Strong Local Competitors

138. LOCALIZATION Refers to the changes required for a product or service to function in a new country (ex: fax machines fitted with new types of telephone jacks for use in a foreign country). Localization avoids having potential customers reject a product outright. A standardized product still needs to be localized to function properly. ADAPTATION When products are changed to match customer tastes or preferences. Adaptation gives customers a positive reason for choosing a given product.

139. PREFER REJECT Line shows likelihood of Purchase Uniform Localized Adapted + - Uniform vs Adapted Product

140. Fully standardized Fully adapted Incremental manufacturing cost Combined costs Cost of lost sales Optimal Level of Standardization

141. What to standardize? 100% standardization is rare Usually starts with a core product as the foundation Various features are added, these may differ according to the country market Can also involve modular design , where various features are packaged as modules, different assembly combinations in different markets Pitfalls of standardization Overstandardization: Standardization compromises the positioning strategy Narrow Vision: Goals should not be narrow and inflexible Rigid Implementation: Some flexibility in implementation needs to be retained by local units

142. EUROPE ASIA LATIN AMERICA NORTH AMERICA Honda City Honda Element Honda Fit Honda Stream Honda’s Non-Global Car Models

143. EUROPE ASIA LATIN AMERICA NORTH AMERICA Goodyear Eagle F1 Goodyear Eagle F1 Goodyear Eagle F1 Goodyear Eagle F1 Goodyear’s Globally Uniform Tires

144. STRATEGIC CHOICES FOR A NEW MARKET Strategy one: product extension-communication extension Marketing a standardized product with the same communication strategy around the world. The most cost effective Not feasible for all kinds of products Strategy two: product extension-communications adaptations Marketing a standardized product with a different communication strategy in each country Can use when the sociocultural event surrounding the product differs by country but the use conditions are identical

145. Strategy three: product adaptation-communication extension Marketing an adapted product with the same communication strategy Used when adaptation of the product is unavoidable Sometimes product formulation can be changed without the customer knowing it. Strategy four: product adaptation – communication adaptation Marketing an adapted product with different communication strategy in each country Because this strategy cost a lot, each market has to be of sufficient volume to succeed Strategy five: product invention Usually used when consumers cannot afford the product Typically redesign original product for a lower level of complexity to gain low price

146. Accounting Advertising Banking Broadcasting Computer services Consulting Data processing Design & engineering Distribution Education Entertainment Health care Insurance Investment banking Leasing Legal Services Lodging Media Reservation systems Restaurants Tourism Telecommunications Transportation Utilities SERVICE INDUSTRIES

147. Services are different from products in following characteristics Intangibility you cannot easily touch a service Heterogeneity the service is not exactly the same each time Inseparability services are produced when they are consumed Perishability you cannot store a service

148. The Service “Product” Core service is what the customer is really buying. For example, an oil change and tune-up for your car provides trouble-free operation Formal service package specifics services offered to the customers including price, service features, the packaging, and guarantees Augmented service: the totality of the benefits a customer receives or experiences they have when buying the product. Generic benefits Provider’s behavior Physical surroundings Provider’s appearance Brand image Features Quality Packaging After-sales support Price Warranty Core service Formal service package Augmented service

149. Three factors that influence the globalization potential of services Stage in the Life Cycle – potential is highest during the maturity stage because then the service is fully developed and can be blueprinted. Infrastructure barriers – service applicability depends on availability of infrastructure, as when, for example, warehouse stores require customers to take home large items in their own cars. Idiosyncratic Home Markets – special regulations induce domestic service providers to develop practices that are not applicable elsewhere, as when, for example, advertising agencies in Japan produce television programs whose sponsorship the agency controls.

150. Service quality Desired Service highest or ideal quality Predicted or Expected Service lies somewhere between the desired & the adequate service Adequate Service forms the lower limit below which the service quality is unacceptable Perceived Service must lie between the desired & the adequate service levels to make sure customer is satisfied

151. Desired Service Predicted/Expected Service Adequate Service (Perceived Service low) Surprise Acceptable Dissatisfaction Zone of tolerance Performance Gap Service Quality: The Gap and the Zone of Tolerance (Perceived Service high) Inadequate Service

152. SERVQUAL - the dimensions of service quality Reliability ability to perform the promised service dependably and accurately Assurance Knowledge and courtesy of employees and their ability to convey trust and confidence (Competence, courtesy, credibility and security of the service) Tangibles Appearance of physical facilities, equipment, personnel, and communication materials Empathy Caring, individualized attention the firm provides its customers (Access to organization’s representatives, communication and understanding the customer) Responsiveness Willingness to help customers and provide prompt service

153. Culture and service quality Since services are intangible, service quality is more difficult to quantify, allowing for a more subjective view Different cultures have different habits and preferences and therefore different definitions of service quality So culture affects perceived service quality & customer satisfaction strongly And what is considered high service quality in one country is not necessarily high in another country ex> France: quality = luxury German: quality = conforms to the standard and specification Japan = zero defect USA = working well

154. Asking Listening Japanese Americans Expressing doubt Expressing sympathy Explain what cannot be done Explain what can be done Defending company policy Apologize for company policy Responsibility of the buyer Responsibility of the seller “ We’ll fix it, but…” “ I’m very sorry” Low customer satisfaction High customer satisfaction Personal Service Quality: Differences in Complaint Handling

155. BRANDS are symbols associated with a product or service that identifies legally the maker of the product. Brands are copyrighted and are then legally protected. The copyright needs to be registered in each country where the brand is sold for the protection to hold. As a competitive advantage, a strong brand can be a sustainable advantage – but needs forceful enforcement against piracy and imitators. BRAND STRATEGY

156. The concept of a “brand” has been extended beyond the domain of products and services; Brands are now used for entertainment celebrities, sports teams and stars, art institutions and even places and nations. The country-of-origin factor is a reflection of the nation’s brand equity.

157. Dimensions of nations as brands Culture & Heritage, Exports Governance Immigration & Investment People and Tourism  The six dimensions together define the national brand as perceived in the world.

160. Why brands are important Products are increasingly standardized. “ Benchmarking” means competitors monitor each others’ products. Imitative targeting of new product development makes product differentiation difficult to sustain. Customers learn that quality and features are comparable across competitors. End result: One of the few sustainable competitive advantages is the brand.

161. Branding Strategies To brand or not to brand? - ‘generic brand’ Manufacturer brand vs. Dealer brand - ‘private brand (PB)’ Individual brand vs. Family brand - ‘brand extension’ - same brand name for different product categories (ex) 풀무원 , 식물나라 , Arm & Hammer - advantage: minimize launching cost - disadvantage: failure affects other brands (ex) 샘표 캔커피 , Bic stockings, Levi Tailored classic

162. Private Brands

163. GLOBAL BRANDS Brands associated with global products which are well known in all major markets of the world Ex> Sony, Mercedes-Benz REGIONAL BRANDS Brands which are uniform across a region Ex> P&G’s Pert in N America, Vidale Sassoon in Asia, Acura is Honda Legend in Asia LOCAL BRANDS Brands found in only one or two markets Ex> Jever Pilsener in Germany, Fortnum & Mason in the U. K. A &W Rootbeer in the Us. And Pocari Sweat in Japan and Korea The typical multination firm has a “portfolio” of brands, some of which are global, some are regional, and some local only.

164. Typical Global Brand Portfolios

165. Global brand equity Customer Brand Equity is the value of the positive associations that consumers have with a product’s brand name. These associations often involve emotional attachments, affinity, positive brand image, and brand identity. They also involve cognitive factors such as familiarity, knowledge and perceived quality, as well as social factors including peer group acceptance. When these associations turn negative (as in anti-globalization sentiments against global brands) the brand equity can go down very quickly.

166. Financial brand equity the monetary value of a brand in terms of net revenues the brand is expected to generate over time, across all country markets. Financial brand equity is sometimes called “hard equity” – while customer brand equity is “soft” equity. For “hard equity” global reach of the brand matters more, since the value is computed as a sum across markets and segments. For “soft equity”, affinity to the individual consumer matters more.

167. Advantage of global brands Demand spillover The name is familiar because of media spillover, satellite communications, word-of-mouth etc. Global customers People travel to many countries and multinational customers operate in many locations, making the global brand a natural choice everywhere. Scale economies any spending on product improvements and advertising can be leveraged across more markets. Disadvantage of global brands Negative spillover Bad news travel faster across country markets Product line spillover Negative spillover affects also other products with the same brand name. Brand loyalty Local brand loyalties can be strong.

168. Role of brands: cultural differences JAPAN US EUROPE IMAGE RISK REDUCTION RECOGNITION/ENVY “ FEEL GOOD” TIME SAVER ACHIEVEMENT EMOTIONAL PEER DOMINATION HIGH ASPIRATIONS “ BELONGING” DISTINCT PEER RECOGNITION INDIVIDUAL _________________________ ________________________ ______________________ “ VALUE ADDED” AFFECT CONVENIENT AND SURE CALCULATED SOCIAL VALUE __________________________ ________________________ ______________________ DEFINES THE GROUP IDENTIFIES THE INDIVIDUAL HIGH-LOW STATUS

169. Chapter 6 Global Communication Strategies CHAPTER OUTLINE Advertising strategies Sales force strategies Sales promotion strategies

170. One of 4 “p’s” Major objectives to convey and persuade customers that the product’s differentiated value compared to the competing products Promotion Strategies

171. Advertising Global Marketing Communication Sales Promotion Public Relations Personal Selling Sponsorship Marketing Promotional Mix – Integrated Marketing Communication

172. Message Decisions Target Audience Media Budget Strategy Objectives Communication Decisions

173. Product Characteristics Stage in product life cycle Target market characteristics Type of buying decision Available funds Push & pull strategies Factors influencing Promotional Mix

174. Corporate level advertising - Corporate Identity Program Product level advertising - pioneering (informative) advertising Telling the market about a new product / suggesting new uses for a product/ explaining how the product works - competitive (persuasive) advertising Building brand preference / encouraging switching to your brand - reminder advertising Keeping the product in customers’ minds during off-seasons / maintaining top-of-mind product awareness Advertising

176. Ad appeals Informational appeal Aims at fulfilling functional needs Aims at fulfilling social/ experiential needs Emotional/experiential appeal testimonials comparative ads two-sides slice of life price-oriented teasers lifestyle patriotic appeals dramatic appeal to fear, sex, or humor

177. Teaser Campaign

178. Image ads

179. Humanity appeals 삼성 기업광고

180. Patriotic ads

181. Fantasy ads

182. Dramatization

183. Humor ads

184. Fear appeals

185. Sex appeals

186. Testimonial 저도 미용실 가서 몇 시간씩 트리트먼트 받고 싶고 그렇거든요 . 시간도 만만치 않고… 몇 분만 해주어도 미용실 가서 영양팩 받은 느낌이에요 . Pantene

187. Comparative ads http://www.dailymotion.com/video/xogii_pub-pepsi-vs-coca-cola_ads

188. Two-sided

189. Slice of Life LG Maestro P&G Fabreeze

190. ELM: Elaboration Likelihood Model Petty & Cacioppo 1980s Advertisement Involved? Able? Central Route Peripheral Route Yes No Peripheral Cues: - endorsement - repetition - emotional appeals Central Cues: - cognitive appeals - focus on message

191. Peripheral Route Evaluation cues used by consumers extrinsic cues Brand name Country-of-origin situational variables models Delivery methods

192. Model effects Source Credibility Credible models are more persuasive credibility = expertise + trustworthiness How to increase credibility Adopt expert as a model Build intimate relationship with viewers Argument that contradicts the firm’s immediate gains ex> Don’t eat fast food campaign by French McDonald’s Breast feed campaign by Nestle

193. Source Attractiveness Physical attractiveness of the model influence the persuasion positively. ex> Nixon vs. Kennedy Similarity The similarity between a model and a viewer influence the persuasion positively.

194. The Effects of Delivery Methods The number of argument The more argument, the more persuasive Repetition Repetition increases focus, understanding, and memory whereas decreases persuasion mere exposure effect vs. advertising wear-out Substantive variation, cosmetic variation can prevent the wearout effects Ex> SK Telecom 현대 생활 백서 . 삼양라면 . Empas.

195. Medium Newspaper T.V. D.M. Radio Magazine Outdoor Advantage Flexible, Timely, Local market Disadvantage Short life Few “pass-along” Good attention Wide reach Expensive Fleeting exposure Expensive “ Junk mail” image Audio only Fleeting exposure Long lead time No audience selectivity Very short exposure Audience selectivity Personalization Wide reach Low cost Audience selectivity Long life and “pass-along” Repeat exposure Low cost Advertising Medium

196. Global advertising Media advertising that is more or less uniform across many countries, often, but not necessarily, in media vehicles with global reach Advantages Consistency of brand communications Media spill over Cost savings Improved production Leveraging a great idea Disadvantages Images and symbols might not be locally acceptable Appropriate media might not be available Product usage is not the same Local creativity is stifled

197. Global Ad categories IDENTICAL ADS ads are identical, usually with localization only in terms of language voice-over changes & simple copy translations PROTOTYPE ADVERTISING the same ads, but the voice-over may be changed to avoid language & cultural problems, & the ad may be re-shot with local celebrities PATTERN STANDARDIZATION similar but less structured global approach, wherein the positioning theme is unified & some alternative creative concepts are planned, but execution differs between markets

198. Brand Name same Theme same Visual same Positioning same Actors same Words same Language (local) Media same Materials same Slogan same Brand Name same Theme same Visual same Positioning same Actors not same Words not same Language (local) Media not same Materials not all same Slogan same PROTOTYPE ADVERTISING PATTERN STANDARDIZATION

199. VISUAL PROCESSING Low literacy Younger Segments Low Involvement products High context societies VERBAL PROCESSING High Literacy Older segments High involvement products Low context societies TV commercials Magazines Newspapers Radio Ads Cultures and Visual vs Verbal Processing

200. Personal Selling Two-way, personal communication between salespeople and individual customers The most efficient but most expensive promotion method. Common for industrial goods. Salesperson- an individual acting for a company by performing one or more of the following activities: prospecting, communicating, servicing, and information gathering. Steps in the selling process Prospecting and qualifying preapproach approach Presentation and demonstration Handling objections closing Follow-up

201. Global Personal Selling Culture affects the “people skill’s of the global marketer Differing human relations - e.g. the role of a salesperson is looked down on by hierarchical cultures Degree of market development - e.g. level of customer sophistication Differing regulatory environments - e.g. salesperson costs escalate in countries where fringe benefits are high Geographic and physical dimensions - e.g. climate, transportation conditions, population density Good salesmanship varies across countries Personal selling is usually the least global of all marketing activities

202. Sales Promotions Short-term incentives to encourage the purchase or sale of a product or service Whereas advertising offers reasons to buy a product, sales promotion offers reasons to buy now. Types: consumer promotions, business promotions, trade promotions, sales force promotions

203. Types of consumer promotions Coupon : certificate that gives buyers a saving when they purchase a specified product Sample: a small amount of a product offered to consumers for trial Cash refund offer : offer to refund part of the purchase price of a product to consumers who send a “proof of purchase” to the manufacturers Price pack (cents-off deal): reduced price that is marked by the producer directly on the label or package Premium: good offered either free or at low cost as an incentive to buy a product Point-of-purchase (POP) : display and demonstration that takes place at the point of purchase or sale

204. Activities related to forming and managing images. – seek for understanding and acceptance from viewers. Include both internal and external activities Internal activities Provide information through Internal publications (e.g. newsletters and intranets) Manage corporate culture External activities Manage global identity Provide information to consumers and stakeholders. Crisis management Public Relations (PR)

205. Sponsorship marketing Event marketing : sponsors events such as sports and culture. ex> mecenat Cause related marketing : sponsors a specific cause

206. Chapter 7 Global Pricing Strategies CHAPTER OUTLINE Pricing processes Types of pricing strategies

207. Identify pricing objectives Forecast demand Forecast cost Analyze competitors’ price Set the pricing strategies Process of Setting Up Pricing Strategies

208. Survival set the price to barely compensate the cost Short-term strategy to avoid exit from the market Maximize profits Skimming pricing Maximize sales Usually achieved through low price Market penetration pricing PRICING OBJECTIVES

209. Things to consider: unique value Customers' awareness of substitutes difficult to compare alternatives price relative to income inventory effect Things to consider: cost structure at different levels of production experience curves FORECAST DEMAND FORECAST COST

210. Cost Consumer Demand Competition Standards for pricing strategies: 3Cs

211. Cost based pricing strategies Cost plus, markup pricing Target return investment: achieve target ROI through breakeven analysis Customer-based pricing strategies Perceived value : ex> PSM Yield maximization pricing: different price for different market Ex> online vs. offline.

212. Skimming Pricing - High price  low price - aim to maximize short-term profit - High-end market /Early market - high demand, low competition Penetration Pricing - low price  high price - aim to maximize short-term sales - Med/low-end market / majority market - low demand, high competition Competition-based pricing

213. Unit sales Time in local market Profitability Time in local market Penetration price Penetration price Skimming price Skimming price Skimming vs. Penetration Pricing

214. PSM Model Overview A method to set the price according to what customers perceive the quality of the product. Easy to handle. Outcome from the model Price Indifference Point Optimal Pricing Point Range of Acceptable prices

215. The Questions Cheap At what price on the scale would you consider the product or service to be cheap? 상품의 가격이 어느 정도면 적당히 싸다고 생각하십니까 ? Expensive At what price on the scale would you consider the product or service to be expensive? 상품의 가격이 어느 정도면 비싸지만 이용해볼 만하다고 생각하십니까 ? Too Expensive At what price would you consider the product or service to be so expensive that it is beyond considering buying? 상품의 가격이 어느 정도면 아무리 품질이 좋아도 너무 비싸서 이용하지 않겠다고 생각하십니까 ? Too Cheap At what price do you consider the product or service to be so cheap that you would question the quality? 상품의 가격이 어느 정도면 품질이 의심스러울 만큼 싸서 이용하지 않겠다고 생각하십니까 ?

216. Define Product Establish Baseline Price Range Survey 4 Questions Plot Cumulative Frequency Indifference Price Optimal Price Point Range of Acceptable Prices Process

217. Plotting Cumulative Frequency Cheap Descending: Expensive Ascending Too Expensive Ascending Too Cheap Descending

218. Indifference Point Price at which an equal number of respondents feel it is Cheap and Expensive. Reverse ‘Cheap” & “Expensive” to get “Not Cheap” & “ Not Expensive” Because respondents can not relate to “Not Cheap”; but can related to “Cheap” and reverse is “Not Cheap”

219. Optimal Price

220. Acceptable Prices Range (APR) Point of Marginal Cheapness Point of Marginal Expensiveness

221. Chapter 8 Global Distribution Strategies CHAPTER OUTLINE Distribution objectives and functions Distribution structure

222. Distributive Objectives Minimize total distribution costs for a given service output Determine the target segments and the best channels for each segment Objectives may vary with product characteristics e.g. perishables, bulky products, non-standard items, products requiring installation & maintenance

223. Distribution channel functions Information : gathering and distributing marketing research and intelligence information Promotion: developing and spreading persuasive communications about an offer Contact: finding and communicating with prospective buyers Matching: shaping and fitting the offer to the buyer’s needs Negotiation: reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred Physical distribution: transporting and storing goods Financing: acquiring and using funds to cover the costs of the channel work Risk taking: assuming the risks of carrying out the channel work

224. Number of Channel Levels manufacturer consumer manufacturer consumer manufacturer consumer manufacturer consumer retailer retailer retailer wholesaler wholesaler jobber Direct channels : has no intermediary levels Indirect channels channel strategies are decided by cost (efficiency) and control (effectiveness)

225. Vertical Marketing Systems Conventional distribution channels : a channel of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole Vertical marketing systems: a distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all corporate.

226. Type Corporate VMS A vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established through common ownership Contractual VMS A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sale impact than they could achieve alone Wholesaler-sponsored voluntary channels Retailer corporatives Franchise organizations

227. Horizontal Marketing Systems A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunities E.g. Nestle jointly sells General Mills cereal brands in markets outside North America. Hybrid Marketing Systems Multichannel distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

228. Exclusive Distribution Giving a limited number of dealers the exclusive rights to distribute the company’s products in their territories E.g. New automobiles and prestige women’s clothing Intensive distribution Stocking the product in as many outlets as possible E.g. For everyday life products Selective distribution The use of more than one, but fewer than all, of the intermediaries who are willing to carry the company’s products E.g. home appliances Numbers of marketing intermediaries

229. Types of retailers Specialty Store Department Store Supermarket Convenient Store Discount Store MWC (Membership Warehouse Club) Category Killer Factory Outlet Telemarketer – Homeshopping Channel Internet Shop