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Exam 1 Study Guide- MKTG 3010

by: Taryn Connely

Exam 1 Study Guide- MKTG 3010 Marketing 3010

Marketplace > University of Utah > Business > Marketing 3010 > Exam 1 Study Guide MKTG 3010
Taryn Connely
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This study guide covers the material for exam 1, including chapters 1, 2, 3, 4, and 9
Principles of Marketing
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This 30 page Study Guide was uploaded by Taryn Connely on Saturday February 20, 2016. The Study Guide belongs to Marketing 3010 at University of Utah taught by Sandomir in Fall 2016. Since its upload, it has received 215 views. For similar materials see Principles of Marketing in Business at University of Utah.


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Date Created: 02/20/16
Marketing 3010; Sandomir Study Guide: Exam 1 Chapter One:  Marketing concept o Marketing:  An exchange of value, in which some transfer of value, occurs between a buyer and a seller.  The process of creating, distributing, promoting and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers and to develop and maintain favorable relationships with stakeholders in a dynamic environment. o Marketing Concept:  A managerial philosophy that an organization should try to satisfy customers’ needs through a coordinated set of activities that also allows the organization to achieve its goals.  Demand is the primary driver of revenue; revenue is the primary driver of profit. So, the marketing concept…  Identifies and satisfies needs and at growth stages, employs persuasion to turn needs into wants;  Creates wants and transforms them into needs- increasing demand and consumption  Fulfills economic requirement for production, distribution, and labor  Serves as bulwark against social disruption  Target markets o A specific group of customers on whom an organization focuses its marketing efforts o Market: customers who share a common need that can be satisfied by a specific product (CUSTOMERS) o Market: those who are willing, able, and have the authority to make an exchange (POTENTIAL Customers)  Difference between needs and wants o Needs: Difference between a consumer’s actual state and some ideal or desired state e.g. being hungry o Wants: Desire to satisfy needs in ways that are culturally and socially influenced e.g. want to eat a cheeseburger (unacceptable to cow).  Economic v. social aspects of marketing o Economic  Role: to facilitate exchange  Purpose: to provide utilities  Galbraith’s “Dependence Effect” and the urgency/ utility of wants  Consumer demand should drive production  Marketing should not manipulate consumers, but realizes at some point the market is saturated so companies must innovate and manipulate consumer demand.  Confucian Production/ Distribution Model  Make sure supply is greater than demand; always keep producing goods because then….  Employment increases, income increases, demand increases, consumption increases and prices fall. o Social  Role: innovation, greater choice, information, and environmental  Purpose: standard of living  Cicero’s “Fairness Doctrine”- don’t cheat/ be unethical just be better and produce better goods  Veblen’s assessment of “pecuniary emulation” and “conspicuous consumption”- consumers are looking for “trophies” because we have low self- esteem so we are searching for that ideal self and trying to live up to the requirements of the world.  Bernays’ “Propaganda Principle” – the factoid- and its relationship to conformity- we buy things to fill holes in our lives  Marketing utilities (all of which make up customer satisfaction) o Form/Psych Utility: Trees Furniture o Time/Psych Utility: 9-to-5 hrs  24hrs/day o Place/Psych Utility: Site purchases internet orders  E.g. going in a showroom such as best buy but then ordering online form Amazon for cheaper o Possession/Psych Utility: Dine-in only Free delivery  Economic functions of marketing o Generate products, services, careers, jobs, tax base, etc. o Create customer satisfaction, minimally through creating utilities and managing needs, wants while creating benefits o Catalyze exchange and growing GDP  Functions of marketing (exchange, facilitating, etc.—and the detailed parts) o Exchange Function  Buying: ensuring that product offerings are available in sufficient quantities to meet customer demand  Selling: using advertising, personal selling, and sale promotion to match goods and services to customer needs o Facilitating Function  Risk Taking: Dealing with uncertainty about consumer purchases resulting from creation and marketing of goods and services that consumers may purchases in the future  Financing: Providing credit for channel members (wholesalers and retailers) or consumers  Standardization and grading: Ensuring that product offerings meet established quality/ quantity control standards of size, weight, and other product variables  Securing market information: Collecting info about consumers, competitors, and channel members for use in making marketing decisions. o Physical distribution function  Transporting: Moving products form their points of production to locations convenient for purchases  Storing: Warehousing products until needed for sale  Value equation o Customer satisfaction > cost of acquisition Creates Value  Commodification and techno-equilibrium o Marketing must keep up with consumers when it comes to technology o Most anything can be done on the internet today so many marketers have begun using social media, apps, websites, and text messaging to target their consumers. o Examples:  Visiting a company’s website/ social media to find contact info  Viewing/ giving a review on yelp  Purchasing online  Mailing lists through email and text messaging for promo’s  Marketing myopia o Occurs when a company views marketing just as selling a specific product instead of fulfilling customer needs/ the marketing concept (marketing- oriented). o Examples:  AT&T- We are a telephone company (myopic); We are a communications company (Marketing-oriented)  Disney- We are in the animation business (myopic); We are in the entertainment business (marketing- oriented)  Customer relationship management o CRM: Using information about customers to create marketing strategies that develop and sustain desirable customer relationships o Relationship marketing: Establishing long-term mutually satisfying buyer- seller relationships to keep customers coming back.  Galbraith’s two types of demand o D1: urgent demand from consumers (this is ideal form of demand) o D2: secondary demand; manipulating consumers when the market begins to slow; R&D innovates to create new demand  Bacon—why people really go into business o Profit, Security, Honor, Self-Esteem o Untested hypothesis from the 17 century- exchange matters more than profit because it makes up happier and healthier and it encourages production and distribution  How value is created (see slide re: Ritz, Container Store, etc.) o Creating Value  Customer satisfaction: Apple and Nordstrom  Customer relationships: Amazon; Four seasons; USAA  Empowerment: Ritz- Carlton(provides anything a guest could every want; employees can spend up to $2000 to resolve a customers issues); FedEx  Training: Container Store (240 hrs of training per employee)  Teamwork: Southwest airlines  Manufacturing products that perform  Earning trust  Avoiding unrealistic prices  Providing facts for buyers  Offering organization- wide commitment  Providing service expertise  Providing value- added services  4ps o The Marketing Mix  Product: The physical unit, package, warranty, after- sale service, image value, sizes, brand name, variety, quality, design, etc.  Price: List price, credit terms, allowances, flexibility, discounts, payment period, etc.  Place: Channels, middlemen, market coverage, transportation, assortments, locations, inventory, etc.  Promotion: Objectives, personal selling, advertising, sales promotion, public relations, word- of- mouth, etc.  Ed Bernays and the marketing of cigarettes to women o A taboo by men was going on that did not permit women to smoke, which was hindering the tobacco industry. o Ed Bernays was approached in 1929 to break down this taboo. He met with a pyscho analyst, Dr. Brail, to see what cigarettes meant to women. He called them “Torches of Freedom” saying women smoke to dramatize the taboo against them. o From this info he decided to take advantage of the Easter Sunday holiday and had a woman walk in the parade smoking a cigarette and then give info about what they were doing to the press. He hoped this would invalidate the taboo of women smoking. o Next morning it was all over the news “Debutants light torches of freedom to protest mans inhumanity to human” o Immediately following this the taboo diminished and women across the nation were smoking in public.  Belgium Beer Case o New Belgium Brewing started in America in 1991 by Jeff Lebesch and Kim Jordan (marketing director) after Jeff’s trip to Belgium. o Today it is the 3 largest craft brewer in the country with products available in 37 states o Total beer sale in the US are dropping but the craft beer industry sales have increased to $8.7 billion; NBB has a sales growth rate of 15% o This success is a result of a corporate culture that stressed creativity and an authentic approach to treating all stakeholders, employees, the community and the environment with respect. o NBB spends a lot of time researching and developing, collaborating, and satisfying customers with quality products. o Jordan worked tirelessly to get their products on the shelves even delivering the beer in her own car. o Their prices are higher than other domestic beers but have a higher profit margin; their popularity has led to new competition. o Promotion: the company based its brand on its core values; environmental stewardship and establishing an environment for employees to feel comfortable to be creative; also promote their product through social media. o Sustainability: first fully wind powered brewery in the USA; give employees bikes after 1 year to ride instead of drive; recycle boxes, caps, glass, office supplies, etc.; stores spent barley and hop grains in an on site silo for local farmers to pick up the grains to feed their pigs and other animals free of charge. Chapter Two:  Levels of strategic planning o Strategic Planning: The process of establishing an organizational mission and formulating goals, corporate strategy, marketing objectives, and marketing strategy o Levels: Mission Statement/ Organizational Mission & Goals  Corporate Strategy  Business- Unit Strategy  Marketing Strategy  SWOT Analysis  Marketing Mix Elements  Mission statement o A mission statement describes the organization’s overall purpose/ long-term vision of what they want to become o What business are we in, which customers should we serve, what products and benefits can we create for our customers, how should we develop the firms capabilities?  Strategic business units o SBU: A division, product line, or other profit center within the parent company o Sells a distinct set of products to an identifiable group of customers and each competes with a well-defined set of competitors. o Each SBU can have its own set of strategic plans, costs, revenues, investments, market growth, opportunities, and profit- making potential all separate from each other and the parent company.  Pre-SWOT internal search (people, access to money, culture, etc.) o First analyze the market environment to look for any opportunities based on core competencies o Corporate resources and competencies  Money, People, Reputation, Brand Image, Physical Facilities o Corporate Culture  Ethical Values, Norms, & Beliefs that influence the behavior of everyone in the organization  Risk-taking, Profit- centered, People- centered, Output- centered  SWOT Analysis o Assessment of organization’s strengths, weaknesses, opportunities and threats o Must convert weaknesses into strengths and threats into opportunities o Match internal strengths with external opportunities o Internal Environment: identify strengths and weaknesses in the firm’s employees, technologies, facilities, finances, etc. o External Environment: Identify opportunities and threats to a firm from consumers, competitors, the economy, etc.  BCG Matrix (Market growth/ market share matrix) o A helpful business tool based on the philosophy that a product’s market growth rate and its market share are important considerations in determining its market strategy. o Building Share: Low Share/ High Growth Rate  For question marks and corporate “problem children”  When to gain share (offensive)  In growth markets  Where competitors not entrenched  Where price wars unlikely b/c market is expanding  New product potential  Where NP offers better performance/ lower costs  Underperforming acquisition  Where increased advertising, superior distribution, access and/or core competencies exist  Cowardly competitor  Competitor is unwilling to fight back so as to avoid expensive battle which is profit erosive  There is no history of vigorous competition  Wounded competitor  Competitor is unable to fight back (lack of resources or marketing muscle) o Holding Share: High Share/High Growth Rate  Cut costs and prices based on experience curve  Selectively cut prices on products under siege  Cut price in attacker’s home market reducing competitors primary profit source  Heavy promo spending which favors leader’s volume advantage  Perpetual innovation which, 1) deprives competitors of a chance to leapfrog current products and 2) expands the product line, leaving no niches to enter  Vigorous later entry, imitation, improvement of competitor’s product and heavy promotion to fend off attacker  Blocking distribution access through, 1) exclusive agreements, 2) backward integration, 3) shelf tying agreements  Signaling commitment to defend may dissuade the entry of new products; this may be done by sabotaging the product during test marketing o Harvesting: High Share/ Low Growth Rate  When to harvest  Questionable future  Fast vs. slow decline  Fast vs. slow decline once promo is withdrawn  How to harvest  Cut marketing expenditures  Reduce service  Drop small customers  Trim product line  Cut R&D  Cut plant/ equipment investment  Raise prices  Substitute cheaper materials  Feign commitment through “splash advertising” o Top orgs. up advertising; others forced to pull out  Competitive advantage o The result of a company matching a core competency to opportunities it has discovered in the marketplace  Cost competition issues o Experience curve: Boeing o Efficient Labor: Nike, Levi-Strauss o No- Frills Goods and Services: Southwest airlines o Government Subsidies: Semiconductors o Product Design: BMW o Reengineering: Chinese auto manufacturing o Production Innovations: Ford; GE o New Methods of Service Delivery: Delta  Value competition issues o Product/Service Differentiation o Uniqueness as value; low price does NOT add value to your product  Lexus: Brand name  Caterpillar: strong dealer network  Maytag: product reliability  Neiman Marcus: image  FedEx: service  Niche competition issues o Buddy Freddy’s Restaurants: only Florida o Migros: dominant Swiss grocer o Block drug: products for teeth only (Polident, Poligrip, Sensodyne) o Chef’s garden: growing and shipping rare artisan vegetables directly to restaurants and even individuals  First mover advantage o The ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace o Being the first helps a company build a reputation as a market leader and for a short period of time is free of competition, which may help build brand loyalty; Gives first movers the opportunity to protect secrets and technology through patents o Disadvantages: high cost from developing/ researching a new product and there is a risk the product will fail  Late mover advantage o The ability of later market entrants to achieve long-term competitive advantages by not being the first to offer certain products in a marketplace o Late movers have the ability to benefit from first movers mistakes and improve on the product design and marketing strategy; also have lower initial investment costs and there is more certainty about the products success because there is more data available. o Disadvantages: first mover may have established patents, hard to gain market share if consumers stay with first mover; timing is crucial.  Difference between strategies and tactics o Marketing Strategy: A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market  PME Grid o Product/Market Expansion Grid  Marketing objective o Realistic: especially with regard to exaggerated internal demands or (un)anticipated external exigencies o Measurable: market share = hearts and minds; the numbers are a benchmark; Benchmark: internal or external measure o Time Specificity: By the time marketers achieve their objectives, they will have a sense of the reality and the meaning of it all o Must fit with the overall company mission and company objectives o Examples:  Brand equity (FRED) – leads to stronger position o Differentiation o Relevance o Esteem o Familiarity/Knowledge  How 4ps would be used to respond to marketing objectives o The 4p’s and marketing objectives work hand in hand to successfully achieve goals o Marketing Strategies/activities to achieve the marketing objectives Selecting a target market and developing the marketing mix  Bolt Bus Case o BoltBus noticed that traditional bus companies were losing market share and bus travel was declining; at the time bus services had a stodgy and old-fashioned image and had long routes through major bus stations. o They recognized a market opportunity to target the price- conscious, time-pressured consumers who were steering away from the traditional bus system. o BoltBus conveyed the key benefit of point-to- point speed, while contrasting the old strategy of long routes. o BoltBus does tickets sales purely online to target the tech savvy consumers and stay with the times, they target college students, young professionals and young families who are looking for affordable and comfortable travel. o They adjust their prices depending on demand, do promos and offer a rewards system. o Their busses are deluxe with a lot of legroom, electric plugs at every seat and Wi-Fi to contradict the old, loud busses people once knew. o Several competitors emerged and bus travel is now one of the fastest growing methods of travel between US cities. Chapter Four:  CSR o Corporate Social Responsibility  An organization’s obligation to maximize its positive impact and minimize its negative impact on society  Issues: consumerism/consumer rights; community relations- equality, health and safety, education, etc.; environmental sustainability- air pollution, water pollution, land pollution, etc.  Cause related marketing o The practice of linking products to a particular social cause on an ongoing or short-term basis to tackle a social problem  Ex: Bank of America Merrill Lynch demonstrates cause-related marketing through its partnership with nonprofit organization  Differences between consumerism, community relations, and environmental sustainability issues o Consumerism:  The social movement directed toward protecting consumers from harmful business practices e.g. Pink Slime 2014  Consumer Bill of Rights, right to be safe, right to be informed, right to be heard, right to choose freely o Community Relations  Financial Public: banks, investment analysts, stockholders  Media Publics: Television, newspapers, magazines, web  Government Publics: Lawyer Intermediary Chain  Citizen Action Publics: PR relationship to citizen groups, environmental groups, minority groups, etc.  Local Publics: Departmental relationship to residents and community organizations (P&G Tide Loads of Hope program- mobile Laundromats in stricken areas)  General Public: PR and Advertising relationship to all- an image- oriented effort  Internal Publics: Departmental relationship to employees, volunteers, board of directors o Environmental Sustainability  Environmental Stewardship is a position taken by an organization to protect or enhance the natural environment as it conducts its business activities  Green Marketing: a marketing strategy that supports environmental stewardship by creating an environmentally founded differential benefit in the minds of consumers  What are “publics”? o Groups of people who have interest in an organization such as suppliers and intermediaries, competitors, and consumer groups.  The 4ps ethics (and legal) issues o Product:  Planned obsolescence (e.g. iPhone always evolving)  Product quality and safety  Product warranties  Fair packaging/labeling  Pollution o Promotion  Bait and switch advertising  False and deceptive advertising  Promotional allowances  Bribery o Price  Price fixing  Price discrimination  Price increases  Deceptive prices o Place  Exclusive territories  Dumping  Dealer/ Distributer rights  Predatory competition  Three types of ethics: pre- conventional/conventional/post-conventional o Pre-conventional: childlike and egocentric and based upon expectation of reward or punishment; presumption- that adult marketers have moved past this stage; actuality- come on, give us a break o Conventional: other-directed and based upon loyalties and obedience to companies, societies, etc.; presumption- that adult marketers will act within legal boundaries; actuality- come on, give us a break; after all, some boundaries are elastic. o Post-conventional: inner- directed and built upon a more holistic view of interior and exterior considerations; presumption- that adult marketers care about consequences of their actions; actuality- you have finally convinced us because this one feels “about right”  Ethics pyramid (Pyramid of Corporate Social Responsibility) o Philanthropic  Be a good corporate citizen  Contribute resources to the community; improve quality of life o Ethical  Be an ethical corporate citizen  Obligation to do what is right, just and fair; avoid harm  Accept conventional and post conventional theories o Legal  Obey the law; play by the rules  Law is society’s codification of right and wrong o Economic  Be profitable corporate citizen and make money- our world of “bounded rationality” depends upon economic gain  Accept profitability as the foundation upon which all other responsibilities rest  Deontology v. utilitarianism v. casuistry v. relativism v. virtue ethics o Deontology: obligations and duties (Cicero and Kant) o Utilitarianism: the choice that yields the greatest benefits to the greatest number is the ethically correct choice (John Stuart Mill) o Casuist: Best possible solutions given historical experiences of others (Confucius) o Moral Relativism: Ethical truths depend on individuals and groups that hold them (Mead) o Virtue Ethics: Solving ethical dilemmas leads to ethical truths (Plato and Aristotle). This elides with the idea that our purpose as a species is to improve and advance- neither holds precedence; rather, they are unified in purpose. This is classified as the teleology  Differences between Friedman and Rockefeller, Jr. re: CSR o Milton Friedman: Friedman says accept no social responsibility except that required by law (enacted as regulation) or putative tradition (understood by majority as a “given”)  The job of the corporation is to maximize returns to stockholders  Businesses are better at making products and delivering services then addressing the social environment  Most global competitors do not have to address social concerns and this makes them more competitive o Rockefeller Jr.: Accept social responsibility as the foundation of organizational existence. This means that the welfare of the employees and community are first considerations- this is especially “true” when conditions demand it (e.g. macroeconomic shifts that impact everyone)  It’s the right thing to do  If corporations do not act responsibly, governments will regulate CSR or levy fines e.g. Valero Energy fined $4.25 mil for pollution  It can be a profitable undertaking e.g. Wal-Mart adds skylights for natural lighting and mandates use of less packaging on store-brand toys  It is prophylaxis against split personality. It isn’t reasonable to teach our children to be responsible for one another, and then practice the opposing principle when we market products and services.  Four CSR “sustainability” tactical suggestions o Eliminate the concept of waste  Pollution and waste usually stem from inefficiency so we should focus on how to create things without waste o Reinvent the concept of a product  Aim for only 3 categories: consumable- can be eaten or turn to soil; durable- cars, TV’s, etc. that can be recycled; unsalable- radioactive and toxic materials o Make prices reflect the cost:  Every product should reflect its actual cost, not only the direct cost but also cost of air, water and soil o Make environmentalism profitable:  Consumers are beginning to recognize that competition in the marketplace should not occur between companies that are harming the environment and those that are trying to save it  Foreign Corrupt Practices Act and implications o This act prohibits American companies from making illicit payments to foreign officials in order to obtain or keep business; this law has been created to prevent businesses from gaining an unfair advantage through bribery  Ex: Diebold Inc. paid $25.2 million to settle allegations that it had bribed government officials in Indonesia and China and falsified records in Russia to secure and retain contracts.  Eight quality characteristics, impacts of quality and internal/ external levels o Quality  The level of performance, reliability, features, safety, cost or other product characteristics that consumers expect to satisfy their needs and wants  8 Characteristics  Durability  Reliability  Low Maintenance  Degree of Aesthetic Pleasure  High Degree or Precision  Product Safety  Ease of Use  Few Repairs  External: quality improvements increased customer satisfaction increased market share increased earnings/profit  Internal: quality improvements increased productivity lower costs and prices increased market share increased E&P  FTC—what it does –why we marketers are all “conventionalists” when it comes to regulatory agencies like the FTC o Federal Trade Commission (FTC)  An agency that regulates a variety of business practices and curbs false advertising, misleading pricing, and deceptive packaging and labeling o What it does  Reviews mergers and acquisitions; challenges those that could lead to higher prices, fewer choices, or less innovation;  Seeks out and challenges anti-competitive conduct including monopolies and agreements between competitors;  Promotes competition in industries where consumer impact is high, such as health care, real estate, oil and gas, technology and consumer goods o FTC Powers  Cease and desist orders  Consent decrees  Affirmative disclosure  Corrective advertising  Restitution  Counter- advertising (involves FCC giving permission to advertisers to counteract claims) o FTC Bureau of Consumer Protection  Enhances consumer confidence by enforcing laws that protect consumers. Presently, dealing with “behavioral targeting” (computer tracking) and “identity theft”  Dumpster diving  Skimming (credit card storage devices)  Phishing (fake fin, institutions spamming)  Changing your address (diverting bills)  Old-fashioned stealing  Pretexting (false pretense calls and fraud)  Green washing o When products are promoted as being more environmentally friendly than they really are  Channel stuffing o Involves shipping surplus inventory to wholesalers and retailers at an excessive rate, typically before the end of a quarter. o This may conceal declining demand for a product or inflate financial statement earnings, which misleads investors.  Tom’s Shoes Case o Tom’s is a for-profit philanthropic business with a one-to- one model o For every pair of shoes someone buys, Friends of Toms donates a pair of shoes to a child in a developing country; due to its success they have now expanded into eye wear, for every pair of sunglasses sold a corrective eye surgery or pair of prescription glasses is donated. o They take social responsibility seriously and also work with non-profit organizations Chapter Three:  Oligopoly/monopoly/pure competition/monopolistic competition o Oligopoly: a competitive structure in which a few sellers control the supply of a large portion of a product o Monopoly: a competitive structure in which an organization offers a product that has no close substitutes, making that organization the sole source of supply o Pure competition: a market structure characterized by an extremely large number of sellers, none strong enough to significantly influence price or supply o Monopolistic competition: a competitive structure in which a firm has many potential competitors and tries to develop a marketing strategy to differentiate its products  Discretionary v. disposable income o Disposable income: after-tax income o Discretionary income  Disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and water  Recession v. depression o Depression  A stage of the business cycle when unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy o Recession  A stage of the business cycle during which unemployment rises and total buying power declines, stifling both consumer and business spending  BBB/NARB o Better Business Bureau (BBB)  Self-regulatory force that settles problems between consumers and businesses and between businesses and other businesses such as advertising, pricing, and quality. o National Advertising Review Board (NARB)  A self- regulatory unit for advertising issues once the issue has first gone to the National Advertising Division (an arm of the BBB), if it is not resolved here it will go to the FTC.  RFID technology o Radio Frequency Identification Detection (RFID)  Tracking products through various points of distribution channels  Point of sale reader alerts for stock replacement  POP promotion to shopping cart screens  Uncontrollable external variables o Competitive forces o Economic forces o Political forces o Legal/Regulatory forces o Technology forces o Sociocultural forces  Preserve Products Case o Started in 1996, but people called it crazy because this wasn’t yet a major concern o Today it is a multi-million dollar company with products available in over a dozen countries o Preserve takes plastics from products and recycles them to make consumer goods such as toothbrushes, razors, kitchenware, storage containers, etc. o Not only are the products recyclable but also dishwasher safe, not tested on animals and long lasting o Due too green washing and green products traditionally being more expensive, Preserve works hard to prove its trustworthiness and price-competitiveness. o They encourage their customers to return their products when they have exceeded their life cycle so they can be recycled again; stays in contact with customers frequently to build trustworthy relationships Chapter Nine:  Balance of trade o Domestic firms  Confines its sales and marketing efforts to its home market o Exporting firms  Expands sales by offering its products for sale in other countries o Multinational firms  Operates in many foreign markets, and  Often transfers capital intensive technologies to other countries- doesn’t create that many jobs  Usually keep headquarters here in the USA but may have several world headquarters  One that views the world as its market, and  Tends to adapt its basic strategy but usually prefer global marketing standardization  Develop their global business in four stages  Global and international/transnational marketing o Global Marketing  Views world as one market  Emphasis on cross-cultural similarities  Organization plans products on “world-wide” basis  Often fights against restrictions against foreign purchases of factories, land, and companies. China and Russia are most guilty of this; but the USA is now beginning to erect barriers too o International Marketing  Views world as a series of different markets  Emphasis on cross-cultural differences  Every market requires culturally adapted marketing efforts  Separate “international division” does planning  Quotas o A limit on the amount of goods an importing country will accept for certain product categories in a specific period of time o The goal is to allow countries to export specific products to the US at a relatively low tariff but acknowledge higher tariffs above predetermined quantities  Tariffs o Any duty levied by a nation on goods bought outside its borders and brought into the country o Because they raise the prices of foreign goods, tariffs impede free trade between nations o Usually designed to raise revenue for a country or to protect domestic products  Embargoes o A governments suspension of trade in a particular product or with a given country o Established for political, health, or religious reasons on specific products or countries.  GATT/WTO o General Agreement on Tariffs and Trade (GATT)  An agreement among nations to reduce worldwide tariffs and increase international trade o World Trade Organization (WTO)  An entity that promotes free trade among member nations by eliminating trade barriers and educating individuals, companies, and governments about trade rules around the world  MERCOSUR o Elimination of trade tariffs between Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, Venezuela o An alliance that promotes free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America  NAFTA o Elimination of trade tariffs between USA, Canada, and Mexico o This alliance merges the three into a single market  Levels of Involvement in Global Marketing o Globalized marketing  Marketing strategies are developed for the entire world (or more than one major region) with the focus on the similarities across regions and country markets o Regional marketing  Marketing strategies are developed for each major region, with the countries in the region being marketed to in the same way based on similarities across the regions country markets o Multinational Marketing  International markets are a consideration in the marketing strategy, with customization for the country markets based on critical differences across regions and country markets o Limited exporting  The firm develops no international marketing strategies, but international distributors, foreign firms, or selected customers purchase some of its products o Domestic marketing  All marketing strategies focus on the market in the country of origin  Values v. beliefs o Society’s deeply held beliefs about right and wrong ways to live  Foreign market entry strategies  International product strategies  Product dumping o Selling products at ridiculously low prices  IMF and World Bank o International Monetary Fund (IMF)  Short-term loans to member nations that are unable to meet budgetary expenses; lender of last resort- Europe dir. o World Bank  Low interest loan to LDC’s for infrastructural investments/debt- USA dir.  EVO Case o 5% of their business comes from outside the US even though they are based here o There is a retail store but also do a lot of sale online because they want to reach customers globally o Due to vendor agreements evo cannot ship some of the brands it sells internationally  Two reasons: market saturation overseas and maintain control over products in order to compete fairly in the global marketplace o As they grow they may be able to negotiate more favorable terms with vendors


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