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MARK 3000/3001 Final Exam Study Guide--Textbook

by: Kyla Brinkley

MARK 3000/3001 Final Exam Study Guide--Textbook MARK 3001

Marketplace > University of Georgia > Marketing > MARK 3001 > MARK 3000 3001 Final Exam Study Guide Textbook
Kyla Brinkley
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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.
Principles of Marketing
Kimberly Grantham
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This 32 page Study Guide was uploaded by Kyla Brinkley on Wednesday December 2, 2015. The Study Guide belongs to MARK 3001 at University of Georgia taught by Kimberly Grantham in Summer 2015. Since its upload, it has received 287 views. For similar materials see Principles of Marketing in Marketing at University of Georgia.


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Date Created: 12/02/15
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 & 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 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 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 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 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 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 th a. 7 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. 3 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


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