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Global Marketing Test #2

Key Concepts:

Terms in this set (32)

Linguists have divided the study of spoken language into four main areas: syntax (rules of sentence formation); semantics (system of meaning); phonology (system of sound patterns); and morphology (word formation). Unspoken or nonverbal communication includes gestures, touching, and other forms of body language. Both the spoken and unspoken aspects of language are included in the broader field of semiotics, which is the study of signs and their meanings. Language is a crucial tool for communicating with customers and channel intermediaries. Words have different meanings in different cultures. For example post in America may refer to putting something on a bulletin board, whereas in British English it may mean mailing through the post office. Similarly, Miller Lite was considered to have less alcohol in Europe, whereas Diet Coke was considered as a dietary supplement in the Middle East. Changes were made to market Miller Lite as Miller Pilsner in Europe and Diet Coke as light coke in the Middle East. In addition to syntax and semantics, phonology can have an impact. For example there is no letter that sounds like P in Arabic so Pepsi sounds like Bebsi and Popeye's sounds like Bobeye's. Similarly, sounds of r and l are intermixed in Chinese. In the United States recently, Sioux Gateway City airport decided to keep the symbol "SUX" although there were a lot of comments about its phonology. On the other hand, the airport decided to use it in marketing by using the slogan "Fly SUX" thereby making it easy for people to remember it. Semantics can also have an impact, such as the word Esso has negative connotation in some languages; Nova (as in Chevy Nova) meant it does not move and Colgate means "go hang yourself" in Spanish. Also, nonverbal cues can have different meanings. In some cultures shaking the head from right to left is considered as yes whereas it means no in some other cultures. Shaking hands is considered as finalizing the deal in some cultures and in others it is just an introduction. There are different ways of bowing in Far Eastern cultures to indicate different aspects. Thus, verbal and nonverbal communications have a distinct impact on marketing practices.
Power Distance is the degree to which members of a particular society expect power to be unequally shared. Hong Kong and France are both high power-distance cultures; low power distance characterizes Germany, Australia, the Netherlands, and Scandinavia. The power distance dimension reflects the degree of trust among members of society. The higher the power distance, the lower the level of trust. Companies in high power-distance cultures prefer sole ownership of subsidiaries because it provides them with more control. On the other hand, companies in low power-distance cultures are more apt to use joint ventures. Masculinity describes a society in which men are expected to be assertive, competitive, and concerned with material success, and women fulfill the role of nurturer and are concerned with issues such as the welfare of children. Femininity, by contrast, describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behavior. Japan and Austria ranked highest in masculinity; whereas Spain, Taiwan, the Netherlands, and the Scandinavian countries were among the lowest. The masculinity-femininity dimension is likely to manifest itself in the relative importance of achievement and possessions (masculine values) compared with a spirit of helpfulness and social support (feminine values). An aggressive, achievement-oriented salesperson can be more successful in Austria, Japan, or Mexico than in Denmark. The Japanese managers may react negatively to a woman, especially if she is younger than they are.
There are five different characteristics that are important in the adoption of innovations. They are: 1. Relative advantage. This involves a comparative assessment of the existing products or methods. If a product has a substantial relative advantage, it is likely to gain quick acceptance. The popularity of jump drives is an example for their preference over floppy disk. 2. Compatibility. This concerns with the extent to which a product is consistent with existing values and past experiences of adopters. For example, the first consumer VCR, the Sony Betamax, failed because it could only record for one hour. Most customers wanted to record for longer periods of time and thus selected VHS-format, although the recording quality of Sony-Betamax was superior to VHS. 3. Complexity. The degree to which an innovation or new product is difficult to understand, operate, and use. The more complex a product is, the slower will be its adoption. The new digital cameras are an example of their slow adoption since their operations are very complex. 4. Divisibility. This is the ability of a product to be tried and used on a limited basis without great expense. There are wide discrepancies in income levels around the world as well as the storage conditions. Smaller cans of Coke and Pepsi are popular in many countries, with affordable prices and less storage space requirement. 5. Communicability. It is the degree to which benefits of an innovation or the value of a product may be communicated to a potential market. Many of the software programs go unsold since their benefits are not fully communicated to customers. These characteristics give a clear outline of what is needed for an innovation to be successful.

1. Relative Advantage
2. Compatibility
3. Complexity
4. Divisibility
5. Communicability
A framework for selecting target markets should take into account the market size of the targeted market. The market size should then be multiplied by the competitive advantage in that country. Multiplying the market size and competitive advantage index yields a market potential. The next step in the analysis requires an assessment of the various market access considerations. Finally, multiplying the market potential by the terms of access index gives the final market potential. This framework takes into account the competitive advantage, market potential and the terms of access. This framework should prove useful as a preliminary screening tool for inter-country comparisons. However, it does not go far enough in terms of assessing actual market potential. Global marketing expert David Arnold has developed a framework that goes beyond demographic data and considers other marketing-oriented assessments of market size and growth potential. Thus, instead of a "top-down" segmentation analysis beginning with, for example, income or population data from a particular country, Arnold's framework is based on a "bottom-up" analysis that begins at the product-market level. The product-market refers to a market defined by a product category. For example, in the automotive industry that would refer to luxury car market. Arnold's framework incorporates two core concepts: marketing model drivers and enabling conditions. Marketing model drivers are key elements or factors required for a business to take root and grow in a particular country market environment. The drivers may differ depending on whether a company serves consumer or industrial markets. Enabling conditions are structural market characteristics whose presence or absence can determine where the marketing model can succeed. For example, in India, refrigeration is not widely available in shops and market food stalls. This creates challenges for storing dairy products and confections. So the enabling conditions are very important. After marketing-model drivers and enabling conditions have been identified, the management should weigh the estimated costs associated with entering and serving the market with potential short- and long-term revenue streams. One way to determine the marketing model drivers and enabling conditions is to create a product-market profile.
The three basic categories of target marketing strategies are: standardized marketing, concentrated marketing, and differentiated marketing. Standardized global marketing is analogous to mass marketing in a single country. It involves creating the same marketing mix for a broad mass market of potential buyers. It is also known as undifferentiated target marketing since it is based on the premise that a mass market exists around the world. Product adaptation is minimized, and a strategy of intensive distribution ensures that the product is available in the maximum number of retail outlets. The appeal of standardized global marketing is due to the lower production costs. The concentrated target marketing involves devising a marketing mix to reach a niche. A niche is a single segment of the global market. For example, in cosmetics, Chanel has targeted the upscale, prestige segment of the market. Concentrated targeting is also the strategy employed by the hidden champions of global marketing-companies unknown to most people that have succeeded by serving a niche market that exists in many countries. These companies define their markets narrowly and strive for global depth rather than national breadth. The narrowing of market definition is the key principle in this strategy. The third category differentiated global marketing, represents a more ambitious approach than concentrated target marketing. It is also known as multi-segment targeting. It entails targeting two or more distinct market segments with multiple marketing mix offerings. This strategy allows a company to achieve wider market coverage. For example, in the sport utility vehicle segment, Rover has a Range Rover at the high end of the market. A scaled down version, the Land Rover Discovery, is offered which competes directly with the Jeep Grand Cherokee. The Freelander, its newest vehicle, has been on sale in Europe for several years. Thus, there is a multi-pronged approach to marketing.
Psychographic segmentation involves grouping people in terms of their attitudes, values, and lifestyles. Respondents are carefully selected by asking questions to assess their attitudes, values, and lifestyles. There are different companies that provide services and help in assessing these psychographic variables. Different groups are given names based on the attributes which describe their attitudes, values, and lifestyles. Automakers rely on this segmentation since the purchase behavior of a considerable size of consumers is dependent on psychographic values. A psychographic study showed that Porsche buyers could be divided into several distinct categories. One of the categories, "Top Gun" was found to buy Porsches and expect to be noticed. Proud Patrons and Fantasists, on the other hand, found such conspicuous consumption as irrelevant. Thus, automakers can design autos based on the preferences of populations grouped under each category. It is preferable to market to a mind-set rather than a particular age group. For finding such a group, psychographic studies are important. These analyses are expensive and require careful interpretations. SRI International, one of the market research organizations, has developed VALS/VALS 2 analyses of consumers based on psychographic values. A research team in Europe identified four lifestyle groups: Successful Idealists, Affluent Materialists, Comfortable Belongers and Disaffected Survivors. The first two groups represent the elite, while the latter two represented the mainstream European consumers. It should be noted that the segmentation and targeting approach used by a company can vary from country to country. Methods that can truly assess a population segment of a country should be employed for psychographic segmentation.
Global consumer culture positioning (GCCP) is defined as a strategy that identifies the brand as a symbol of a particular global culture or segment. It has proven to be an effective strategy for communicating with global teens, cosmopolitan elites, and globe-trotting laptop warriors who consider themselves members of a transnational commerce culture. For example, Sony's slogan "My First Sony" is positioned as the electronics brand for youngsters around the globe with discerning parents. Benetton uses the slogan "United Colors of Benetton" to position itself as a brand concerned with the unity of humankind. Categories of products that lend themselves to this positioning are both associated with high levels of customer involvement and by a shared "language" among users. High tech products such as iPod, iPhone, MP3 players, video cameras, and all such technology-prone items fall into these categories.

Foreign consumer culture positioning (FCCP) associates the brand's users, use occasions, or production origins with a foreign country or culture. Foster's Brewing Group's U.S. advertising proudly uses the brand's nation of origin in all of its print ads and other promotions as being Australian. Local consumer culture positioning (LCCP) strategy associates the brand with local cultural meanings, reflects the local culture's norms, portrays the brand as consumed by local people in the national culture, or depicts the product as locally produced for local consumers. Budweiser's U.S. advertising particularly focuses on local aspects.