A Review of Marketing. 7 The International Marketing Task Political/legal forces Economic forces 1 2 Environmental uncontrollables country market A Environmental

A Review of Marketing

7

The International Marketing Task

Political/legalforces

Economicforces

1

2

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

Competitivestructure Competitive

Forces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

Economic climate

Cultural forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

What is Marketing?

Marketing is much more than advertising and selling

For individual organizations, marketing is as all decisions and activities involved in getting and keeping customers

Comparative Advantage: The Basis for Exchange


Land of shirts and shorts - David and Hugo David spends all his day making shorts - 6 pairs a day David spends all his day making shirts - 6 pairs a day Hugo spends all his day making shorts - 6 pairs a day Hugo spends all his day making shirts - 10 pairs a day


Hugo has absolute advantage in shirt production (10/6) Neither person has absolute advantage in shorts production

(6/6) Comparative Advantage for shorts

– David - ratio of shorts to shirts = (6/6) = 1.0 – Hugo - ratio of shorts to shirts = (6/10) = 0.6

David has relative, or comparative, advantage in shorts production

Comparative Advantage for shirts– David -ratio of shirts to shorts = (6/6) = 1.0– Hugo - ratio of shirts to shorts = (10/6) = 1.6


When Comparative Advantages in production exist, total production will be higher if everyone specializes in their areas of comparative advantage.

E.g. If Hugo and David each spend half their time on shorts and half on shorts, and can produce half the goods in half the time, they will produce:

Shirts Shorts

David’s production 3 3

Hugo’s production 5 3

Total Production 8 6


If Hugo and David completely specialize in their area of comparative advantage, they will produce:

Shirts Shorts

David’s production 0 6

Hugo’s production 10 0

Total Production (+2) 10 6


But Hugo has no pants!! To realize higher production and still be fully clothed, they need to

exchange shirts for shorts. The terms of trade must be mutually beneficial to motivate both

David and Hugo to participate. E.g. if the exchange rate is set at 3 pairs of shorts for 3 shirts

David starts with 6 pairs of shortsDavid trades 3 pairs of shorts for 3 shirts David finishes with 3 pairs of shorts and 3 shirts

Hugo starts with 10 shirtsHugo trades 3 shirt for 3 pairs of shortsHugo finishes with 7 shirts and 3 pairs of shorts

Why incur cost of trading?


Change exchange rate to facilitate trade– Half the shirts are traded for half the shorts - 5 shirts for 3 pairs of shorts


Hugo starts with 10 shirtsHugo trades 5 shirts for 3 pairs of shortsHugo finishes with 5 shirts and 3 pairs of shorts

Why incur cost of trading?

We can expect this market to move to an exchange rate somewhere around 4 shirts for 3 pairs of shorts

That exchange rate will produce:


Hugo starts with 10 shirtsHugo trades 4 shirts for 3 pairs of shortsHugo finishes with 6 shirts and 3 pairs of shorts

Both David and Hugo end up with one shirt more than they would have it they worked alone.

Principles of Economics Illustrated

Comparative advantage in production motivates specialized production (to achieve higher total production).

Specialized production results in “discrepancies of assortment” which must be resolved through trade.

The exchange rate in trade must benefit all parties to motivate participation

Barriers to Trade

Comparative advantage lays a foundation for economic exchange but it does not guarantee trade (even if the proper exchange rate is set).

Hugo and David might refuse to trade for social, moral, or political reasons.– International Business - Tariffs, quotas, embargoes

Even if Hugo and David are willing to trade, the costs of trade may exceed the benefits. If the costs of trading exceed the value of two shirts, Hugo will not trade.

Sources of Trading Costs

Trading costs stem from various “market making” activities that are needed to arrange and complete economic transactions. – Communication

– Negotiation

– Transportation

– Storage

Marketing: Micro and Macro levels

Macro Level:– Marketing is the process by which buyers and sellers

are brought together and discrepancies of assortments, place, and time are resolved.

– Marketing activities include: Communication to inform buyers and sellers about each other. Negotiation and consummation of transactions Transportation of goods from the point of production to the

point of purchase. Storage of goods from the time of production to the time of

purchase

Marketing: Micro and Macro levels Micro Level (The individual organization)

– Marketing is all the decisions and activities involved in getting and keeping customers.

Marketing Strategy vs. Marketing OperationMarketing Strategy – Organization sets its general direction and objectivesMarketing Strategy:

Which product or services should be offered? Which potential customers are targeted for selling efforts? How will the organization position itself against competitors?

Marketing Operations – Organization attempts to implement its strategy and meet its objectives

Marketing Operations How are the organization’s product or services designed? How are these products or services priced? How are these products or services distributed? How are these products or services advertised and sold?

4 Ps - Product Product decisions are all decision which relate to the physical product and/or

service offering, including its name, packaging, warranty, and availability. Product dimensions include:– Size of the product– Color(s) of product– Scent of the product– Materials/ composition of the product– Design of the product– Packaging materials– Package colors and package design– Brand name– Warranty– Availability of options– Customizing services– After-sale service offerings– Inventory levels

4 Ps - Price Price decision are all decisions which relate to the price of the

product, price negotiation, and payment terms. Pricing dimensions include:– Price to end user– Price to distribution intermediaries– Fixed vs. negotiated pricing– Negotiation policies– Credit policies– Credit charges– Payment terms (the amount of time allowed for payment and any discount

given for payment on time)– Volume discounts– Introductory allowances– Trade-in policies

4 Ps - Place Place (distribution) decisions are all decisions which relate to the places at

which the product or service is made available to buyers and the methods by which the product or service reaches those places. Place dimensions include:– Selection of geographic markets– Types of outlets from which end-users buy– Level of competition among end-use outlets– Number of end-use outlets– Required qualifications for end-use outlets– Specific identities for end-use outlets– Types of intermediaries which service end-use outlets– Level of competition among intermediaries– Number of intermediaries which service end-use outlets– Required qualifications for intermediaries which service end-use outlets– Specific identities for for intermediaries which service end-use outlets– Push v. pull policy

4 Ps - Promotion Promotion decisions are all decisions which relate to communication with buyers about the product or

service, solicitation of purchases, and short-term purchase incentives. Promotion dimensions include:– Size of advertising budget, if any– Selection of all ad media (television, radio, magazines, etc.)– Selection of ad vehicles (Time, Sports Illustrated, etc.)– Ad Scheduling– Ad appeals– Ad executions– Ad allowance (co-op advertising) programs– Size of sales force– Levels of sales force compensation– Method of sales force compensation– Sales quotas at which commissions or bonuses activate or change– Sales territory definitions– Sales force selection and training– Size of budget for consumer promotions– Types of consumer promotions to be used.– Size of budget for “trade promotions”– Types of trade promotions used.

Principles of Marketing Management

Before making any marketing decisions, analyze the buyers – segment the market. Consider how the market is changing. Evaluate your strengths and weaknesses, both in absolute terms and relative to your

competitors. Given buyer characteristics, market segments, market trends, and your strengths and

weaknesses, choose a marketing strategy that will allow your organization to reach its objectives.

Make product, price, place, and promotion decisions that are consistent with buyer analysis and marketing.

In developing your marketing strategy and programs, share ideas within the organization, study other successful organizations to see how they do it, and pick the best ideas.

Make sure your program is legal and ethical As part of the implementation process, make sure that everyone in your organization

knows your marketing strategy and the role s/he plays in making that strategy work.

7

The International Marketing Task

Political/legalforces

Economicforces

1

2

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

Competitivestructure Competitive

Forces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

Economic climate

Cultural forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

International Marketing Concepts

Domestic Market Extension (Ethnocentric)

Multi-Domestic Market (Polycentric)

Global Marketing (Regio/Geocentric)

Concept EPRG Schema

Examples of Global Marketing

Product Design

Brand Name

Product Positioning

Packaging

Advertising Strategy

Sales Promotion

Distribution

Customer Service

Canon photocopier/McDonalds/Toyota/Ford

Marlboro/Coke/Pepsi/Mercedes/Caterpillar

Colgate toothpaste/Unilever fabric softener

Gillette razors

Coca-Cola/British Airways/Benetton

IBM

Benetton/United Distillers

American Express/Hertz

Documents

A Review of Marketing. 7 The International Marketing Task Political/legal forces Economic forces 1 2 Environmental uncontrollables country market A Environmental