Description
Kyla Brinkley
MARK 3001 Fall 2015
Final Exam Notes (Book Only)
I. Chapter 2: Developing Marketing Strategies and a Marketing Plan
a. What is Marketing Strategy?
i. Marketing strategy: a firm’s target market, marketing mix (product, price, place, promotion), and method of
obtaining a sustainable competitive advantage
ii. Sustainable competitive advantage: something the firm can persistently do better than its competitors
1. Not easily copied
2. Can be maintained over long period of time
3. Key to long term financial performance
4. Competitors will try to break through to customers
5. Ex: Nike’s strong brand creates loyal customer base
iii. 4 strategies:
1. Customer excellence: focuses on retaining loyal
customers & excellent customer service
2. Operational excellence: achieved thru efficient
operations & excellent supply chain and human
resource management
3. Product excellence: having products w/ high
perceived value & effective branding & positioning
4. Locational excellence: having good physical location We also discuss several other topics like Was the birth of the massachusetts bay colony focused on religious liberty?
& internet presence
iv. Customer Excellence: involves a focus on retaining loyal customers & excellent customer service
1. Retaining Loyal Customers
a. Sometimes methods used by firm to maintain
competitive advantage help attract/maintain
loyal customers
i. Strong brand
ii. Unique merch
iii. Superior customer service
b. Having loyal customers is an important way to
sustain advantage over competitors
c. Loyalty: customers are reluctant to patronize
competitive firms
d. Methods to build customer loyalty:
i. Develop clear & precise positioning
strategy
ii. Creating emotional attachment through
loyalty programs Don't forget about the age old question of What is the difference between independent t.test and paired t.test?
1. Helps determine which types of
merch certain groups are buying
to tailor their offering to meet
needs of loyal customers
2. Customer Service
a. Marketers also may build competitive Don't forget about the age old question of What are the gross investments of a business?
advantage w/ excellent customer service
b. Consistency is difficult since customer service is provided by employees
c. Firms must instill importance of good
customer service in employees over long
period of time
d. Hard for competitors to build up same
reputation
v. Operational excellence: involves a firm’s focus on efficient operations and excellent supply chain management
1. By striving for efficient operations to get customers what they want, when they want it and in the We also discuss several other topics like 1,3-dibromopentane has how many stereoisomers in its family?
required quantities and at lower delivered cost, marketers…
a. Ensure good value to customers
b. Earn profitability for themselves
c. Satisfy their customers’ needs
2. Efficient operations let firms provide lower priced merch or use extra margin they earn to attract customers by offering better service, merch
assortments, or visual presentations than
competitors
3. Firms achieve efficiencies by developing
sophisticated distribution & information systems and strong relationships with vendors
a. Vendor relations must be developed over long term and can’t be offset by competitor
b. Firms with strong relationships may get
exclusive rights to…
i. Sell merch in a particular region
ii. Obtain special terms of purchase that
aren’t available to competitors
iii. Receive popular merch that may be in
short supply
vi. Product excellence: involves a focus on achieving high quality products: effective branding and positioning is key 1. some firms find it hard to get a competitive Don't forget about the age old question of Who is jean-jacuqes rousseau?
advantage if competitors can deliver similar
products easily
2. some firms have been able to maintain their
sustainable competitive advantage by:
a. investing in their brand itself
b. positioning using clear, distinctive brand
image
c. constantly reinforcing image thru merch,
service, promotion
vii. Locational Excellence
1. Location: a method of achieving excellence by
having a strong physical location and/or internet
presence
2. Important for retailers/service providers
3. A competitive advantage based on location is
sustainable because it’s not easily duplicated
viii. Multiple Sources of Advantage
1. Usually a single strategy isn’t enough to build a
sustainable competitive advantage
b. The Marketing Plan
i. Marketing plan: a written document composed of an analysis of the current marketing situation, opportunities & threats for the firm, marketing objectives and strategy specified in terms of the 4P’s, action programs, and projected or pro forma income (and other financial) statements If you want to learn more check out What is a class of procedures for representing perceptions and preferences of respondents spatially by means of a visual display?
1. Reference point for evaluating whether firm has met its objectives
2. used by stakeholders like investors/potential
investors
ii. planning phase: the part of the strategic marketing planning process when marketing executives, in conjunction with other top managers, define the mission or vision of the business and evaluate the situation by assessing how various players, both in and outside the organization, affect the firm’s potential for success
iii. implementation phase: the part of the strategic marketing planning process when marketing managers identify and evaluate different opportunities by engaging in segmentation, marketing, and positioning and implement the marketing mix using the 4Ps
iv. control phase: the part of the strategic marketing planning process when managers evaluate the performance of the marketing strategy and take any necessary corrective actions
v. not always necessary to go through the entire process for every evaluation
vi. Step 1: Define the Business Mission
1. Mission statement: a broad description of a firm’s objectives and the scope of activities it plans to undertake; attempts to answer 2 main questions: what type of business is it? What does it need to do to accomplish its goals and objectives?
a. These questions should be answered at
highest corporate level before marketing
executives can get involved
2. Another key goal or objective is often imbedded in a mission statement to relate to how the firm is
building its sustainable competitive advantage
3. Smaller firms may have objectives like achieving a specific level of income and avoiding risks
vii. Step 2: Conduct a Situation Analysis
1. Situation analysis: second step in a marketing plan; uses a SWOT analysis that assesses both the internal environment with regard to its Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats
a. Also assesses opportunities & uncertainties in the marketplace due to changes in these
CDSTEP forces:
i. Cultural
ii. Demographic
iii. Social
iv. Technological
v. Economic
vi. Political
b. Strengths are positive internal attributes of the firm
c. Weaknesses are negative attributes of the
firm
d. Opportunities pertain to positive aspects of the external environment
e. Threats represent the negative aspects of the company’s external environment
viii. Step 3: Identifying and Evaluating Opportunities Using STP (Segmentation, Targeting, Positioning)
1. STP: the processes of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profits
a. Next step after completing situation audit
2. Segmentation
a. Many types of customers appear in any
market but most firms can’t satisfy everyone’s
needs
b. Market segment: a group of consumers who respond similarly to a firm’s marketing efforts
c. Market segmentation: the process of dividing the market into groups of customers with
different needs, wants, or characteristics—
who therefore might appreciate products or
services geared especially for them
3. Targeting
a. Target marketing/targeting: the process of evaluating the attractiveness of various
segments and then deciding which to pursue
as a market
4. Positioning
a. Market positioning: involves the process of defining the marketing mix variables so that
target customers have a clear, distinctive,
desirable understanding of what the product
does or represents in comparison with
competing products
5. After identifying its target segments, a firm must evaluate each of its strategic opportunities
6. Firms are usually most successful when they focus on opportunities that build on their strengths relative to those of their competition
ix. Step 4: Implement Marketing Mix and Allocate Resources 1. Product and Value Creation
a. Products: anything that is of value to a
consumer and can be offered through a
voluntary marketing exchange
b. Key to success of any marketing program is creation of value, so firms attempt to develop
products that customers see as valuable
enough to buy
2. Price and Value Capture
a. Value-based marketing requires firms to
charge a price that customers perceive as
giving them a good value for the product they
receive
b. Important for firm to have clear focus on what products to sell, where to sell them, and what
methods to use in selling them
c. Pricing is the only activity that actually brings in money
i. Price too high: not much volume
ii. Price too low: low margins and profits
d. Price should be based on the value the
customer perceives
3. Place and Value Delivery
a. Firm must be able to make the product
accessible when & where the customer wants
it
4. Promotion and Value Communication
a. Marketers communicate value proposition
through variety of media
b. New promotion channel: daily deal websites i. Groupon
ii. Get word out
iii. Smaller companies get name
recognition
x. Step 5: Evaluate Performance Using Marketing Metrics 1. Metric: a measuring system that quantifies a trend, dynamic, or characteristic
a. Used to explain why things happened and to project the future
b. Compare results across regions, strategic
business units (SBUs), product lines, and time periods
2. Understanding causes of performance lets firms make appropriate adjustments
3. Usually begin by reviewing the implementation programs
a. Analysis may indicate that strategy (or even mission statement) need to be reconsidered
4. Problems can arise from successfully implementing poor strategies and poorly implementing good
strategies
5. Who Is Accountable for Performance?
a. At each level of an org, the business unit and its manager should be held accountable only
for the revenues, expenses, and profits that
they can control
b. Expenses that affect several levels of the org (labor/capital expenses from operating
corporate hq) shouldn’t be arbitrarily assigned
to lower levels
c. Performance evaluations are used to pinpoint problem areas
d. Reasons performance may be above or below planned levels must be examined
i. Ex: manager should only be held
accountable in the case of the
inadequate sales force job or setting
inappropriate forecasts
e. When actual performance is going to be below the plan because of circumstances beyond
the manager’s control, the firm can still take action to minimize the harm
i. Important questions:
1. How quickly were plans adjusted?
2. How rapidly and appropriately
were pricing and promotional
policies modified?
3. In short, did I react to salvage an
adverse situation, or did my
reactions worsen the situation?
6. Performance Objectives & Metrics
a. Many factors contribute to a firm’s overall performance
b. Hard to find single metric to evaluate
performance
c. Methods:
i. Compare firm’s performance over time ii. Compare to competing firms
iii. View firm’s products as a portfolio
7. Financial Performance Metrics
a. Revenues (sales)
i. Global measure of firm’s activity level
b. Profits
c. Attempt to maximize one metric may lower another
i. Ex: a manager could easily increase
sales by lowering prices but the profit
would suffer
d. Managers must understand how their actions affect multiple performance metrics
i. Unwise to use just one metric
e. Can assess absolute or relative level of sales and profits
f. Metrics used to evaluate a firm vary
depending on
i. The level of the organization at which
the decision is made
ii. The resources the manager controls
g. Firms are also starting to report corporate social responsibility (CSR) metrics in major areas
i. Impact on environment
ii. Diversity
iii. Energy conservation
8. Portfolio Analysis
a. Management evaluates the firm’s various products and businesses (its portfolio) and allocates resources according to which
products are expected to be the most
profitable for the firm in the future
b. Portfolio analysis is usually performed at the strategic business unit or product line level of the firm
c. Strategic business unit (SBU): a division of the firm itself that can be managed and
operated somewhat independently from other divisions and may have a different mission or objectives
d. Product lines: groups of associated items, such as those that consumers use together or think of as part of a group of similar products e. Goodyear
i. SBU: north America, Europe, middle
east, Africa, Latin America, Asia/pacific
ii. Product line: car, van SUV, or aviation tires
f. Market share: percentage of a market accounted for by a specific entity
i. Used to establish the product’s strength in a particular market
ii. Discussed in units, revenue, or sales
g. Relative market share: a measure of the product’s strength in a particular market,
defined as the sales of the focal product
divided by the sales achieved by the largest firm in the industry
h. Market growth rate: the annual rate of growth of the specific market in which the product competes
i. Measures how attractive a particular market is
i. Boston Consulting Group Matrix
i. Hard to implement in practice—hard to measure both relative market share & industry growth
ii. Dangerous self-fulfilling prophecy to place a product into one of these
categories
iii. Stars
1. Occur in high growth markets
2. High market share products
3. Require heavy resource
investment in promotions/new
production facilities to fuel rapid
growth
4. Ex: iPhone
iv. Cash cows
1. Low growth markets
2. High market share products
3. Have excess resources that can
be spun off to those products that
need it
4. iPod
v. Question marks
1. High growth markets
2. Low market shares
3. Most managerially intensive—
require significant resources to
maintain/increase market share
4. Managers must decide whether to infuse question marks with
resources generated by the cash
cows so they can become stars, or
withdraw resources/phase out the
products
5. Ex: iPad (but could also be
considered a star)
vi. Dogs
1. Low growth market
2. Low market shares
3. Should be phased out unless
needed to complement or boost
the sales of another product or for
competitive purposes
4. Ex: iMac
xi. Strategic Planning Is Not Sequential
1. Actual planning processes can move among the steps given above
2. Ex: a situation analysis may uncover a logical
alternative that isn’t included in the mission
statement, so the mission statement would have to be revised
c. Growth Strategies
i. Market Penetration
1. Market penetration strategy: a growth strategy that employs the existing marketing mix and
focuses the firm’s efforts on existing customers
a. Requires greater marketing efforts like
increased advertising and more
sales/promotions
ii. Market Development
1. Market development strategy: a growth strategy that employs the existing marketing offering to
reach new market segments, whether domestic or international
2. International expansion is generally riskier than domestic expansion because firms must deal with differences in gov regulations, cultural traditions,
supply chains, and language
3. But many US firms have a competitive advantage in global markets because US culture is widely
emulated for consumer products esp. for young
people
iii. Product Development
1. Product development strategy: a growth strategy
that offers a new product or service to a firm’s
current target market
iv. Diversification
1. Diversification strategy: a growth strategy
whereby a firm introduces a new product or service
to a market segment that it does not currently serve
2. Related diversification: a growth strategy whereby
the current target market and/or marketing mix
shares something in common with the new
opportunity
a. Firm may be able to purchase from existing
vendors, use the same distribution and/or
management information system or advertise
in the same newspapers to target markets that
are similar to their current consumers
3. Unrelated diversification: a growth strategy
whereby a new business lacks any common
elements with the present business
a. Doesn’t capitalize on either core strengths
associated with markets or products
b. Viewed as risky
FOR REVIEW:
Marketing plan phases:
1. Planning phase
2. Implementation phase
3. Control phase
II. Chapter 8: Global Marketing
a. Increasing globalization affects massive US corporations that actively search out new markets as well as smaller businesses that increasingly depend on goods produced globally to deliver their products & services
b. In the US the market has evolved:
i. Regional marketplaces
ii. National markets
iii. Geographically regional markets (ex: US/Canada) iv. International markets
v. Global markets
c. Globalization refers to the processes by which goods, services, capital, people, information, and ideas flow across national borders
d. Consumers have easy access to global products and services e. BRIC countries: Brazil, Russia, India, China
f. Assessing Global Markets
i. Because different countries, with different stages of globalization, offer marketers a variety of opportunities, firms must access the viability of potential market entries ii. Economic Analysis Using Metrics
1. The greater the wealth of people in a country, the better the opportunity a firm will have in that
particular country
2. 3 economic factors a firm conducting an economic analysis of a country market must look at:
a. Evaluating the General Economic
Environment
i. Healthy economies provide better
opportunities for global marketing
expansions
ii. There are several ways a firm can use
metrics to measure the relative health of
a country’s economy
iii. To determine the market potential for its
good or service, a firm should use as
many metrics as it can obtain. Ex: level
of imports/exports
iv. Trade deficit: results when a country
imports more goods than it exports
v. Trade surplus: occurs when a country
has a higher level of exports than
imports
vi. Gross domestic product (GDP):
defined as the market value of the
goods and services produced by a
country in a year; the most widely used standardized measure of output
vii. Gross national income (GNI): consists of GDP plus the net income earned from investments abroad (minus any
payments made to nonresidents who contribute to the domestic economy)
1. US firms that invest or maintain
operations abroad count their
income from those operations in
the GNI not the GDP
viii. Purchasing power parity (PPP): a theory that states that if the exchange rates of 2 countries are in equilibrium, a product purchased in one will cost the same in the other, expressed in the
same currency
1. Ex: Big Mac Index
ix. Various metrics help marketers
understand the relative wealth of a
country but don’t give a full picture of economic health because based solely on material output
x. Weak dollar not always bad: can mean greater demand in other countries
because product is cheaper
b. Evaluating Market Size and Population Growth Rate
i. Less developed nations are
experiencing more population growth than developed countries
ii. So, the more developed countries that have highest purchasing power today may become less attractive because of stagnated growth
iii. BRIC countries are likely to be the source of most market growth, so
consumer goods companies are paying close attention to the strong demand in BRIC nations
iv. International companies can’t afford to
not focus their efforts in BRIC countries
v. Sometimes they sell the same products
there and sometimes they create new
ones to meet consumers’ tastes
1. Ex: Maharaja Mac instead of Big
Mac in India
vi. Long supply chains in which goods pass
through many hands are often
necessary to reach rural populations in
less developed countries, adding to the
product’s cost
c. Evaluating Real Income
i. Firms can make adjustments to an
existing product or change the price to
meet the unique needs of a particular
country market
ii. These shifts are common for low-priced
consumer goods
iii. Some fashion and jewelry
manufacturers also lower prices in
countries where the incomes of their
target markets can’t support higher
prices
iv. Local marketers are getting more price
competitive as well
1. They already know the
market/distribution channels and
have good name recognitions
2. More flexible with prices
iii. Analyzing Infrastructure and Technological Capabilities 1. Infrastructure: the basic facilities, services, and installations needed for a community or society to function, such as transportation and
communications systems, water and power lines, and public institutions like schools, post offices, and prisons
2. Marketers are concerned with 4 key elements of a country’s infrastructure:
a. Transportation
i. System to transport goods throughout
the various markets
b. Distribution channels
i. To deliver goods timely and at
reasonable cost
c. Communications
i. Must be developed to let customers find
info about the products/services
available
d. Commerce
i. Commercial infrastructure, consisting of
legal, banking, regulatory systems
ii. Allows markets to function
iv. Analyzing Government Actions
1. Gov actions and the actions of nongovernmental political groups can significantly influence firms’ ability to sell goods/services because they often result in laws or other regulations that either
promote the growth of the global market or close off the country and inhibit growth
2. Tariff: a tax levied on a good imported into a country. AKA: duty
a. Intended to make imported goods more
expensive and less competitive with domestic
products
b. Protects domestic industries from foreign
competition
c. May also be imposed to penalize another
country for trade practices the home country
views as unfair
3. Quota: designates the max quantity of a product that may be brought into a country during a specific time period
a. Ex: US allows 1.2 million tons of sugar to be imported without a tariff because the country
generally consumes more than it produces
4. Tariffs artificially raise prices (lowering demand) 5. Quotas reduce availability of imported merchandise 6. But taxes and quotas benefit domestically made products because they reduce foreign competition
7. Exchange control: refers to the regulation of a country’s currency exchange rate: the measure of how much one currency is worth in relation to another
a. A designated agency in each country, often the central bank, sets the rules for currency exchange
b. In the US the Federal Reserve sets the currency exchange rates
c. When the dollar fails, the cost of doing business increases for firms that depend on imports of finished products, raw materials, or services on other countries
d. Buyers in other countries find the costs of US goods and services much lower than they were before
8. Trade agreements: intergovernmental agreements designed to manage and promote trade activities for specific regions. Ex: EU, NAFTA, ASEAN (Association of Southeast Asian Nations)
a. Trading bloc: consists of those countries that have signed a particular trade agreement
b. Marketers must consider the trade
agreements to which a particular country is a signatory or the trading block to which it
belongs
9. Analyzing Sociocultural Factors
a. Understanding another country’s culture is critical to the success of any global marketing initiative
b. Culture: the shared meanings, beliefs, morals, values and customs of a group of people
i. Exists on 2 levels:
1. Visible artifacts
a. Behavior
b. Dress
c. Symbols
d. Physical settings
e. Ceremonies
2. Underlying values
a. Thought processes
b. Beliefs
c. Assumptions
c. Hard to understand underlying values d. Hofstede’s cultural dimensions
i. Power distance: willingness to accept social inequality as natural
ii. Uncertainty avoidance: the extent to which the society relies on orderliness, consistency, structure, and formalized procedures to address situations that arise in daily life
iii. Individualism: perceived obligation to/dependence on groups
iv. Masculinity: the extent to which
dominant values are male oriented.
Lower masculinity ranking means men & women are treated equally, higher
masculinity means men dominate
positions of power
v. Time orientation: short- vs long-term orientation. A country with long-term
orientation values long-term
commitments and is willing to accept a longer time horizon for things like the success of a new product introduction
vi. Latin American countries (brazil): high power distance, low individualism
vii. US, Australia, Canada, UK: high
individualism, low power distance
viii. China: high time orientation, low individualism
ix. India: medium to high for all 5
dimensions
x. Russia: high uncertainty
avoidance/power distance
xi. These scores only informative in
comparative sense
e. Cultures also classified by importance of verbal communication
i. US/Europe: verbal—spoken/written
ii. Asia: nonverbal cues, situation/context
important
f. Culture affects every aspect of human
behavior:
i. Why people buy
ii. Who’s in charge of buying decisions
iii. How/when/where people shop
v. The Appeal of BRIC Countries
1. Brazil
a. 7th largest economy in the world and growing b. Large, literate populations
c. Social programs that let over half of the
country to enter middle class
d. Welcomes foreign investors
2. Russia
a. Growth as consumer market
b. Strong demand for US products/brands
c. Expected to be Europe’s largest online market d. However, aging population/low birth rates:
population could decline and corruption is
widespread: ethical dilemmas
3. India
a. 1.1 billion people: 15% of world population
b. Expanding middle/upper classes
c. Young population: media age 25
i. Global attitudes
ii. Fluent in English
d. Retail environment dominated by small
stores/lacks modern supply chain
management facilities & systems
i. Changes by gov are modernizing this
ii. Foreign retailers with multiple brands
can carry half of joint ventures rather
than wholesale joint ventures
iii. Retailers with own brand like levis can
own all of their Indian businesses rather
than partner with an Indian company
4. China
a. Embraced market-oriented economic
development
b. Increased liberalization in the economy has
caused large increase in GDP
c. Second largest economy
d. 3rd largest market for US exports
e. However, unequal economic distribution:
migrant workforce w/ low-paying jobs
f. Population slowed with gov populations
controls limiting one child per family, also
causing rapid aging for population
g. Median age 34 years, slightly younger than
US
g. Choosing a Global Entry Strategy
i. When a firm concludes its assessment analysis of the most viable markets for its products/services, must conduct internal assessment of its capabilities
ii. Includes:
1. Assessment of firm’s access to capital
2. Current markets it serves
3. Manufacturing capacity
4. Proprietary assets
5. Commitment of management to the proposed
strategy
iii. Approaches firm can take when entering new market vary according to level of risk firm is willing to take
iv. Exporting: producing goods in one country and selling them in another
1. Least financial risk
a. No investment in people, capital equipment,
buildings, or infrastructure
2. Allows limited return to the exporting firm
v. Franchising: a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor
1. Franchising contract allows franchisee to operate business using the name/business format
developed & supported by the franchisor
2. Global franchisors: McDonalds, pizza hut,
Starbucks, dominos, KFC, holiday inn
a. Found that global franchising entails lower
risks & requires less investment
b. Firm has limited control over market
operations in foreign country
c. Profit reduced because must split with
franchisee
d. Threat that franchisee will leave & operate as
a competitor w/ different name
vi. Strategic Alliance: a collaborative relationship between independent firms, though partnering firms don’t create an equity partnership (don’t invest in each other)
1. May rely on each other to provide training/skills the other lacked
2. Can maintain alliances with other companies
vii. Joint Venture: formed when a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared
1. Local partner offers foreign entrant more
understanding of the market & access to resources like vendors/real estate
2. Some countries require joint ownership of firms
entering their domestic markets
a. Problems: partners disagree, gov places
restrictions on firms ability to move profits out
of the foreign country
viii. Direct Investment: when a firm maintains 100% ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries
1. Requires highest level of investment
2. High risks:
a. Loss of operating and/or initial investments
b. Economic downturn can increase risk
c. Some firms think these rights are outweighed
by high potential returns
3. No potential profits to be shared with other firms
h. Choosing a Global Marketing Strategy
i. 2 components:
1. Determining the target markets to pursue
2. Developing a marketing mix that will sustain a competitive advantage over time
ii. Target Market: Segmentation, Targeting, and Positioning 1. More complicated:
a. Firms considering global expansion have
more trouble understanding cultural nuances
of other countries
b. Subcultures within each country should be
considered
c. Consumers often view products & their role as consumers differently in different countries
i. Product, service, retailer must be
positioned differently in different markets
2. Company must monitor economic/social trends to protect its position within the market and adjust its products/strategies accordingly
3. Segments & target markets should be defined by more than just geography
iii. The Global Marketing Mix
1. Early stages of globalization (1950s-60s) US firms were uniquely positioned in global marketplace— had skills necessary to develop, promote, and
market brand name consumer products
2. 1970s-80s, Japanese firms dominated global marketplace: exploited skills in production, materials management, and new product development
3. Today, retailers (Zara), financial services firms (Citicorp) software firms (Microsoft) are dominating newest stage of globalization by exploiting
technological skills
4. Today Asian and South American countries dominate manufacturing of consumer products 5. Global Product or Service Strategies
a. Sell the same product or service in both home country market & host country
b. Sell product or service similar to that sold in home country but include minor adaptations
c. Sell totally new products or services
d. Strategy firm chooses depends on needs of target market
e. Level of economic development & differences in product & technical standards help
determine need for/level of product adaptation f. Cultural differences (food, language, religion) also play role in product strategy planning
g. Russia has one of the biggest new markets in the world and has transitioned to a market economy with consumers with disposable income
h. Global product strategy relates directly to consumer behavior
i. Consumers in developed countries
demand more attributes in their products
than those in less developed countries
i. Glocalization: the process of firms
standardizing their products globally but using different promotional campaigns to sell them j. Reverse innovation: when companies initially develop products for niche or
underdeveloped markets and then expand them into their original or home markets
6. Global Pricing Strategies
a. Determining the selling price in the global marketplace is hard
b. Many countries still have rules governing the competitive marketplace, including those that affect pricing
i. Ex: some European countries can only
have sales twice a year: hard for stores
like Walmart
c. Other issues: tariffs, quotas, antidumping laws, currency exchange policies can affect pricing decisions
d. Market prices must be adjusted to reflect the local pricing structure
7. Global Distribution Strategies
a. Global distribution networks form complex value chains that involve middlemen,
exporters, importers, and different
transportation systems
b. Additional middlemen add cost, increasing
final selling price
c. Constant pressure exists to simplify
distribution channels wherever possible
d. # of firms with which seller needs to deal to
get merch to consumer determines complexity
of a channel
e. Less developed countries: manufacturers
have to get product through many distribution
channels to get product to end users, who
often lack transportation to get to large
shopping malls, so product must get to
smaller retail outlets near their homes
8. Global Communication Strategies
a. Major challenge in developing a global
communication strategy: identifying the
elements that need to be adapted to be
effective in the global marketplace
b. Ex: literacy levels & media availability vary
around the world
c. Differences in language, customs, and culture
also complicate marketer’s ability to
communicate with customers in various
countries
i. Translations gone wrong
ii. Many countries have multiple variants
on a language or more than one
language
iii. Bing means virus in Chia
d. Firms with global appeal can run global
advertising campaigns and simply translate
the wording in the ads and product labeling
e. Other products require a more localized
approach because of cultural & religious
differences
FOR REVIEW:
4 sets of criteria necessary to assess a country’s market: 1. Economic analysis
2. Infrastructure and technological analysis 3. Government actions or inactions
4. Sociocultural analysis
Components of a Country Market Assessment ∙ Economic analysis using metrics
o General economic environment
o Market size and population growth
o Real income
∙ Sociocultural analysis
o Power distance
o Uncertainty avoidance
o Individualism
o Masculinity
o Time orientation
∙ Government actions
o Tariff
o Quota
o Exchange control
o Trade agreement
∙ Infrastructure and technology
o Transportation
o Channels
o Communication
o Commerce
Global Entry Strategies:
∙ Export
∙ Franchising
∙ Strategic alliance
∙ Joint venture
∙ Direct investment
III. Chapter 13: Services
a. The intangible product
b. Service: any intangible offering that involves a deed, performance, or effort that can’t be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer
c. Customer service: specifically refers to human or mechanical activities firms undertake to help satisfy their customers’ needs and wants
d. Firms add value to their products by providing good customer service
e. Service-product continuum from service-dominant to product dominant
i. Doctor
ii. Hotel
iii. Dry cleaners
iv. Restaurant
v. Apparel specialty store
vi. Grocery store
f. Most offerings are a mixture of service and product-dominant g. Many stores view service as a method to maintain a sustainable competitive advantage
h. Services account for 76% of the US gross domestic product i. Growing dependence/growth of service-oriented economies because:
i. Less expensive for firms in developed countries to manufacture products in less developed countries
1. Proportion of service to production goods has
increased
ii. People place high value on convenience and leisure 1. Household maintenance like lawn maintenance, hair care, pet grooming performed by specialists
iii. People are demanding more specialized services 1. Plumbers, personal trainers, health care providers, etc.
j. Services Marketing Differs from Product Marketing i. Intangible: a characteristic of a service: it cannot be touched, tasted, or seen like a pure product can
1. Hard to convey the benefits of services
2. Service providers offer cues to help customers
experience/perceive their service more positively
a. Ex: comfortable waiting rooms
3. Difficult to promote
a. Marketers must creatively employ symbols
and images
b. Images must reinforce the benefit or value
that a service provides
4. Professional service providers like doctors, lawyers, accountants, and consultants depend heavily on consumers’ perceptions of their integrity and
trustworthiness but they also need to market their offerings using promotional campaigns
a. Too far? Aggressive commercials for
attorneys
b. American Bar Association (ABA) has drafted a set of rules that its members must abide by
when advertising, such as banning pop-up
ads or actors when advertising law services
c. Ethical dilemma—challenge of advertising law services
ii. Inseparable Production and Consumption
1. Services are produced and consumed at the same time
2. Inseparable: a characteristic of a service: it is produced and consumed at the same time; service and consumption are inseparable
3. Interaction with the service provider can have an important impact on the customer’s perception of the service outcome
a. Does the hairstyle seem to be having fun?
4. Customers rarely have the opportunity to try the service before purchasing it
a. Some service firms provide extended
warranties or 100% satisfaction guarantees
iii. Heterogeneous
1. Heterogeneity: as it refers to the differences between the marketing of products and services, the delivery of services is more variable
2. if a customer has a problem with a service it can’t be recalled, unlike with a product
3. by the time the firm recognizes the problem, damage has been done
4. but, marketers can use the variable nature of
services to their advantage: a micromarketing
segmentation strategy can customize a service to
meet customer’s needs exactly
5. some service providers tackle the variability issue by replacing people with machines
a. atm is faster than going in the bank
b. kiosks in retail stores to shop online or find
merchandise
iv. Perishable: a characteristic of a service: it cannot be stored for use in the future
1. Provides challenges and opportunities in the task of matching demand and supply
2. Ex: movie theaters are cheaper for matinee since they aren’t busy at that time (not in demand)
k. Providing Great Service: The GAPS Model
i. Service gap: results when a service fails to meet the expectations that customers have about how it should be delivered
ii. The Service Gaps Model is designed to encourage the systematic examination of all aspects of the service delivery process and prescribes the steps needed to develop an optimal service strategy
iii. 4 service gaps
1. Knowledge gap: reflects the difference between customer’s expectations and the firm’s perception of those expectations
a. Firms can close this gap by researching what
customers really want using marketing metrics
like service quality/zone of tolerance
2. Standards gap: pertains to the difference between the firm’s perceptions of customers’ expectations
and the service standards it sets
a. By setting appropriate service standards,
training employees to meet and exceed those
standards, and measuring service
performance, firms can try to close this gap
3. Delivery gap: the difference between the firm’s service standards and the actual service it provides to customers
a. Can be closed by getting employees to meet or exceed service standards when the
serviced is being delivered by empowering
service providers, providing support and
incentives, and using technology where
appropriate
4. Communication gap: the difference between the actual service provided to customers and the
service that the firm’s promotion program promises a. Firms can close this gap by being more
realistic about the services they can provide
and managing customer expectations
effectively
iv. The Knowledge Gap: Understanding Customer Expectations
1. Knowing what the customer wants is important to providing good service
2. To reduce the knowledge gap firms must
understand customers’ expectations by undertaking customer research and increasing
interaction/communication between managers & employees
3. Customers’ expectations are based on their knowledge and experiences
4. Expectations vary according to the type of service and the situation
5. Service provider must know and understand the expectations and service usage of the customers in its target market
6. Evaluating Service Quality Using Well-Established Marketing Metrics
a. To meet or exceed customer’s expectations, marketers must determine what those
expectations are
b. Service quality: customer’s perceptions of how well a service meets or exceeds their
expectations
i. Hard for customer to evaluate because
service is intangible
c. Customers use 5 building blocks of service
quality
i. Reliability: the ability to perform the
service dependently and accurately
ii. Responsiveness: the willingness to
help customers and provide prompt
service
iii. Assurance: the knowledge of and
courtesy by employees and their ability
to convey trust and confidence
iv. Empathy: the caring, individualized
attention provided to customers
v. Tangibles: the appearance of physical
facilities, equipment, personnel, and
communication materials
d. Market research provides a means to better
understand consumers’ service expectations
and their perceptions of service quality
i. Can be extensive/expensive or
integrated into firm’s everyday
interactions with customers
e. Voice-of-customer (VOC) program: an
ongoing marketing research system that
collects customer inputs and integrates them
into managerial decisions
i. Used by most service firms today
l. Service Recovery
i. Despite a firm’s best efforts, sometimes service providers fail to meet customer expectations
1. When this happens it is best to try to make amends with the customer and learn from the experience
2. Best to avoid a service failure altogether but when it does, creates opportunity for firm to demonstrate its customer commitment
ii. Effective service recovery efforts can increase customer satisfaction, purchase intentions, and positive word of mouth
iii. Social media provides an enormous stage on which to share dissatisfaction
1. Ex: yelp
iv. Effective service recovery demands:
1. Listening to the customers and involving them in the service recovery
2. Providing a fair solution
3. Resolving the problem quickly
v. Listening to the Customers and Involving them in the Service Recovery
1. Firms often don’t find out about service failures until a customer complains
2. Customer must have opportunity to air complaint completely and firm must listen carefully
3. In many cases, the customer may just want to be heard so it’s important for firm to show sympathy by listening carefully and being anxious to rectify the situation to ensure it doesn’t happen again
4. When the company and customer work together the outcome is often better than either could achieve on their own
5. When customers participate in resolution, it results in a more positive outcome than just listening and providing a preapproved set of potential solutions that may satisfy them
vi. Finding a Fair Solution
1. When mistakes happen customers want to be treated fairly
2. Distributive Fairness: pertains to a customer’s perception of the benefits he or she received
compared with the costs (inconvenience or loss) that resulted from a service failure
a. Customers want to be compensated a fair
amount for their perceived loss
b. The key is listening to customer
c. Customers usually want tangible restitution, not just an apology
i. If this isn’t possible, next best thing it to
assure customer that steps are being
taken to prevent the failure from
recurring
3. Procedural Fairness: refers to the customer’s
perception of the fairness of the process used to
resolve complaints about service
a. Customers want efficient complaint
procedures over whose outcomes they have
some influence
b. Customers tend to believe they have been
treated fairly if the service providers follow
specific company guidelines
c. But rigid adherence to rules can have
negative effects
d. Service providers should have some
procedural flexibility to solve customer
complaints
vii. Resolving Problems Quickly
1. The longer it takes to solve a service failure, the
more irritated the customer will get and more likely it
is they will share their negative opinion
2. To resolve service failures quickly, firms need clear
policies, adequate training for their employees, and
empowered employees
3. Social media helps for faster responses
FOR REVIEW:
Services are:
-Intangible
-Inseparable
-Heterogeneous
-Perishable
Service Gaps
1. Knowledge gap
2. Standards gap
3. Delivery gap
Communication gap