Question 1: What is globalization from a marketing perspective?

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1 Question 1: What is globalization from a marketing perspective? Answer 1: Globalization is the process of individual country markets merging into a single, unified international market, resulting from the economic and political integration of nation-states. This process of amalgamation has been spearheaded by the United States and other countries with open, market-driven economies for many years. However, there are many countries that still have not integrated their economies with the rest of the world. Some examples include North Korea, Albania, and Afghanistan. Globalization is important for marketers for several reasons. Globalization increases the market potential for products around the world. When countries allow for the free exchange of goods, services, and ideas across their borders, the domestic marketer will benefit from a larger geographic marketplace. This means that companies producing domestically (within a country) have the possibility to expand exponentially the market base for their products. Globalization increases competition around world. As more countries integrate economically, their goods and services will be added to the global inventory of goods and services. Therefore, while consumers will benefit from a greater variety of offerings, marketers will have greater competition coming from different parts of the world. Finally, globalization will stimulate innovation. A larger market base and greater competition will compel marketers to engage in further product development. Fortunately, companies will be able to spread their development costs across a larger market base and will seek strategic alliances with foreign producers to share developmental costs and consolidate their global strategies. Question 2: What is the SWOT analysis? Answer 2: The SWOT (strengths, weaknesses, opportunities, and threats) analysis is employed to diagnose the standing of the company in the industry. Strengths and 1

2 weaknesses are internal characteristics of the company, and opportunities and threats are issues external to the company. The purpose of SWOT is to identify and define the internal and external environments in which a company operates. Typically, the external analysis is performed before the internal analysis. After marketers determine the market/product opportunities available to the company and the nature and types of competition faced in the industry, they should make an objective assessment of the company's resources, expertise, and comparative advantages. By doing this, the marketer will get a total picture of where the company stands going forward. In an international context, the external analysis of opportunities and threats may result, for example, in the determination that a foreign market is ready for the company's products. Similarly, a threat for the company may be that some of its direct, domestic competitors are already marketing their products internationally, and from their successes overseas, they are leveraging to compete favorable at home. In the same way, the internal analysis of strengths and weaknesses may result, for example, in the determination that the company has a product with excellent qualities that can compete internationally. The same analysis may detect a weakness in the company's product line, which does not have an international presence in an industry that is becoming increasingly global. Question 3: What is the marketing objective? Answer 3: The marketing objective is a key component of the marketing plan. It guides the efforts for the development of the marketing strategy. Every marketing objective is tied to a corresponding target market and a marketing mix; the combination of these is known as the marketing strategy. It is the responsibility of the marketing manager to formulate the marketing objective based on a realistic assessment of the company's capabilities. Objectives statements should follow the SMART (simple, measurable, attainable, relevant, and time-bound) principle. Using simple language, the statement should 2

3 be easily understood by everybody involved in the marketing effort. Typical marketing objective measures include market share, sales volume, and brand awareness; the statement should provide both a benchmark and a goal. An objective is attainable when the marketing manager is confident that the company possesses the necessary material and human resources to reach the objective. Objectives should be relevant to the circumstances around the company. For a new product, for example, a relevant objective is to increase awareness of the product. Finally, statements have to establish target dates or time periods to accomplish the objective. The successful execution of the marketing activities should be measured along the way. Objectives provide an outcome for which to strive incrementally over a period of time. When the implementation of the marketing strategy's activities begins rolling out, measures should be in place to assess the progress toward the marketing objective. In an international context, the risk is always higher, and it must understood that there is a learning curve; this should be taken into consideration when formulating the marketing objective in terms of attainability of the identified goal and the time required to achieve it. Question 4: What is the marketing plan report? Answer 4: The marketing plan report is a document where the marketing manager describes the efforts to accomplish a marketing objective that is consistent with the mission of the corporation. Marketing plan reports include an executive summary, an introduction, the marketing plan itself, conclusions, an appendix, and the references. The executive summary is a critical component of the marketing plan report. It is a condensed version of the report itself. It summarizes the following four features of the report: purpose conclusions recommendations 3

4 findings Sometimes it may include a fifth feature the methods used to compile the information in the report. The marketing report should be written with the targeted audience in mind. Typically, this report will be read by the entire marketing department's staff, the managers in charge of other business functions (such as human resources and accounting and finance), and corporate executives. In an international setting, the marketing plan report will include recommendations regarding the feasibility of entering the foreign market and reaching the stated marketing objectives. Question 5: What is a marketing budget? Answer 5: The marketing budget is the means through which the marketing manager allocates the company's limited financial resources. While the budget supports all the marketing activities included in the marketing plan, there are three main areas where the overall marketing budget is usually allocated: marketing research promotion pricing The complexity of the marketplace requires extensive marketing research. Determining the information requirements and the best methods to obtain this information carries a high premium. In some cases, the survival of the corporation may be at stake in this decision; therefore, many companies are willingly to pay top dollar for outside marketing research services. Within promotion, advertising is the most powerful form of communication. Reaching out to the right consumer in an effective way is paramount, but it can be extremely expensive. Exorbitant advertising budgets are legendary in consumergoods industries. Also, the sales force plays an important role in selling and negotiating the carrying of the product to the trade and may require making 4

5 concessions that are expensive for the company. Price is perhaps the marketers last and best tool to attract an undecided consumer. Sometimes marketers must sacrifice profits to set prices at the right level for the target market. These forgone profits must then come from the marketing budget. Question 6: What is the product life cycle? Answer 6: The product life cycle (PLC) is a tool marketers use to follow the progress of a product (or brand) within a product category. The PLC includes the following five stages: product development introduction growth maturity decline The first stage is product development, which refers to the period of time that it takes for a product idea to become a prototype and then a small-scale production sufficient to market test the product in the target market. Introduction is the second stage, and it involves rolling out the product throughout the geographic area where the target market is located. It also involves a high level of promotional and distribution expenditures. This stage is critical because during this period of time, the company has to correct any possible problems with the product. The next stage, growth, is also important. In this stage, the marketer has to decide whether the product needs to expand its line to include new forms, models, or styles to meet the various needs of the target market. The maturity stage is the longest of all the stages. In this stage the competition is fierce among the competitors left standing in the product category. Companies try to maintain the status quo and the share of the market that they gained during the 5

6 growth stage. However, some competitors may jockey for preferential exposure of their products through the channel of distribution and in the media trying to increase their market share at the expense of other competitors. Finally, decline is the last and second-longest stage of the cycle. When a product category will be phased out is determined by managers within the product category and throughout the industry. Typically, changes in product preferences and the introduction of new technologies account for the disappearance of product categories. Companies gradually start pulling their products from the marketplace as the new product category establishes its place. Question 7: Why is product development important? Answer 7: Product development focuses on the improvement of existing products or the development of new products. It is considered the engine of innovation in many industries. In the packaged goods industry, product development is considered a core business function, at the same level of operations management, marketing, human resources, accounting, and finance. Product development is closely coordinated with marketing and its subsidiary functions such as business development, marketing research, and advertising. Many multinational companies have decentralized the product development function to lead countries where the company has commanding shares in the market. For example, some Japanese auto makers have relocated their product development functions to the United States. Question 8: What are examples of foreign market entry strategies? Answer 8: A foreign market entry strategy is the method used by a company in the home country to enter a host country's market. Companies have different entry strategy options when entering a foreign market. These options vary in their degree of 6

7 commitment to the foreign market and the risk involved. The most widely used entry strategies are as follows: exporting licensing foreign direct investment (FDI) Exporting is the entry strategy that carries the least risk and commitment to the foreign market. In this strategy, the company sells its product with little or no modifications to a foreign market. Exporting allows companies to manage the foreign market from a distance using intermediaries to help with the effort. Licensing is an intermediate strategy. It carries more risk and commitment than exporting but less than direct, foreign investment. In this strategy, the company may license intellectual property such as a production technique, a trademark, or a product concept for a fee. Licensing is a popular foreign market entry strategy for many American companies because American products and services are in high demand around the world. Foreign direct investment (FDI) is the riskier strategy and the one that requires the highest level of commitment; but, it is also the strategy that renders the highest payoff for the company. In this strategy the company may build a plant, buy a local company or land, and invest in the infrastructure of the foreign country. FDI is typical in industries where raw materials located in other parts of the world need to be utilized and where local target markets need close monitoring by the company. Question 9: What does the implementing of the marketing strategies involve? Answer 9: The implementation of the marketing strategies needs to be programmed over the same period of time established in the marketing objective's statement. In this step, the marketer not only executes the planned strategies, but he/she also devises the specific actions or tactics that will help carry out the marketing strategies. 7

8 Tactics are actions taken based on decisions made by middle-level managers executing a specific strategy. The management of tactics is referred to as the program. Programs involve a focus on the coordinating and prioritizing of resources across departments within a marketing function. This can include message design and media buying within advertising and across marketing functions (e.g., advertising, distribution, and sales management). An example of the implementation of a strategy can be illustrated by considering an American multinational company wanting to change its brand name to one that is more perceptible to consumers around the world. Changing the brand name is considered the strategic decision or strategy. The specific decisions to implement this strategy are referred to as tactics. Examples of tactics consistent with a change to the brand name are as follows: Retain a specific marketing consulting company to create the new name. Hire a certain advertising agency to promote awareness of the new name. Secure the funding from the corporate budget to train the worldwide sales force on the new name change and the implications to their sales job. Question 10: What does the controlling of marketing strategies involve? Answer 10: Controlling marketing activities is the last step of a marketing plan even though the plan establishes in great detail what needs to be done. Invariably, changes will occur due to the unpredictable nature of the marketplace. In this step, marketers design control procedures to monitor the effectiveness of the plan and allow for adjustments based on the changes observed. Monitoring procedures can include tracking documentation of the following: sales reports media expense reports quarterly income statements ongoing marketing audit reports Once the marketer verifies the information from the monitoring procedures, he or 8

9 she must decide what course of action to take. A diligent marketer would have prepared beforehand several contingency action plans for each of the key marketing activities monitored. That is why this step is also known as contingency planning. 9