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UGA / Marketing / MARK 3001 / Define marketing strategy.

Define marketing strategy.

Define marketing strategy.


School: University of Georgia
Department: Marketing
Course: Principles of Marketing
Professor: Kimberly grantham
Term: Summer 2015
Cost: 50
Name: MARK 3000/3001 Final Exam Study Guide--Textbook
Description: This is a study guide made up of all of the notes from the final 3 chapters of material, which will be the majority of the exam.
Uploaded: 12/03/2015
32 Pages 29 Views 9 Unlocks

Kyla Brinkley

Define marketing strategy.

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

What are the four sets of criteria necessary to assess a country’s market?

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

It is an ongoing marketing research system that collects customer inputs and integrates them into managerial decisions?

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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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  


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


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  


i. Healthy economies provide better  

opportunities for global marketing  


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  


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  


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  


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  


b. Protects domestic industries from foreign  


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  


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  


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  


f. Culture affects every aspect of human  


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  


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  


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  


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  


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  


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  


i. Translations gone wrong

ii. Many countries have multiple variants  

on a language or more than one  


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  



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  


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  


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  


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  


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  


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  


i. Hard for customer to evaluate because  

service is intangible

c. Customers use 5 building blocks of service  


i. Reliability: the ability to perform the  

service dependently and accurately

ii. Responsiveness: the willingness to  

help customers and provide prompt  


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  


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  


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


Services are:





Service Gaps

1. Knowledge gap

2. Standards gap

3. Delivery gap

Communication gap

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