200086 Lecture Notes - Lecture 12: Marketing Communications, Cost Leadership

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amberhippopotamus661

26 Apr 2019

School

UWS

Department

University of Western Sydney

Course

200086

Professor

anon

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Document Summary

There are two broad categories of market position: cost leadership and differentiation. Cost leadership and differentiation market positioning strategies are applicable to any business and any industry. A business can choose to position itself using a cost leader strategy or a differentiation business strategy. A company using a cost leader strategy attempts to position itself in the minds of the consumers as a company that provides products the consumers want at a price that is lower than competing products available in the marketplace. Consumers expect basic products with no bells and whistles from a company using a cost leader strategy. Instead, consumers just expect the products to meet their needs and nothing more or less. Consumers expect more from a differentiated product and therefore are willing to pay a premium for a differentiated product. Market positioning refers to the ability to influence consumer perception regarding a brand or product relative to competitors.

Related Questions

Case Study: Wine exports to China rise in value before the mid-1990s, the wine market in Asia was non-existent and many wine producers did not see potential in the Asian markets. But during the late 1990s and early 2000s, the markets started to change, and, almost overnight, wine became a symbol of wealth and class. The only problem was that very few producers were serving the market.

As more producers became aware of the new potential markets, they started to enter China, Thailand, Singapore, Korea, and Japan. China posed specific problems for producers and importers as distribution channels and marketing strategies were virtually non-existent because the market was too new.

The wine market maintained double-digit growth from 2005 - 2010, and it should grow faster than any other alcoholic beverage sector in the coming five years. With consumption rising at 10% - 15% per year it can be tempting for producers, whose traditional markets are stagnant, to consider China as a possible solution to their problems. Though there is little doubt that the market will continue to expand, the challenges are numerous:

1. A lack of transparency, counterfeit products, and unreliable information.

2. Dominance of the domestic giants.

3. Consumer and cultural challenges.

4. Distribution and logistics.

The rewards are great for any foreign winery that can crack the market but the challenges are also great. The first step a winery must take before they carve out their niche, is to understand the reasons behind Chinese consumers buying habits, and how consumers purchase wine in China.

WHY CHINESE CONSUMERS BUY WINE

The majority of wine purchases are made during the major holidays: Chinese New Year, Spring Festival, and the mid-Autumn Festival. Most of these purchases are destined as gifts for people.

This is an interesting insight because gift-giving in China is important to the concept of face.

The Chinese wine consumer is typically a market follower, not a leader. He needs to feel safe about his purchase and does not want to lose face by choosing the wrong wine or admit that his knowledge of wine is limited.

Chinese consumers buy wine to impress or gain face (the Chinese word guanxi or the concept of face is somewhat analogous to influence or opportunities) within their social groups. Buying the right bottle of wine for a boss during the holidays could mean a promotion.

In contrast to America or Europe, wine is also used as a social lubricant in place of spirits or beer. European consumers will often pair wine with food but Chinese are more likely to use wine as a social lubricant at parties or events.

HOW CHINESE CONSUMERS BUY WINE

A survey conducted by the research company Wine Intelligence, which surveyed more than 1,000 Chinese upper middle-class drinkers of imported wine found that 75% of them said they often go online to look for wine information, and 62% said they frequently use social media as a source.

New wine consumers were increasingly reliant on the digital world to learn about wine, with an estimated 13 million Chinese adults frequently accessing information online. This is a significant percentage of consumers searching for information online.

Wineries that are looking to make an impact in China must create a strong digital strategy.

(Source: http://www.digitalintheround.com/chinese-wine-market-digital-strategy/)

Question 7a:
Which is the main macro-environment factor that provides an opportunity for wine products in China? Justify your answer.
(5 marks)

Question 7b:
Which is the macro-environment factor that leads Chinese consumers to purchase wine? Justify your answer.
(5 marks)

ceriseserval213

Q: Please read carefully and complete requirement number 4 wich is

A)â¨ Summarize your findings and recommendation for future plans.

B)Include a plan to visit the country. Identify travel objectives, key persons with which to meet, activities to experience (related to your industry),

C) travel plans and cost estimate.

Requirements. Note that requirements 1-3 are already answered in the report bellow the requirements section.

The final project for this course is a written International Investment Report. Your company wants you to research a possible investment in a foreign country. Please pick a company and a country for investment.

You must evaluate the industry and country of investment to determine if the current circumstances in the specified country can support a business of your choice. Country evaluation should focus on economic, financial and political risk of the country. Industry structure analysis would look at the regulatory structure as well as the competition in the target country.

The final recommendation would be whether or not to enter the specific country in the designated sector and what should be your entry strategy. The goal of the project is to analyze the prospects for expanding your company into the foreign country.

Main Elements

To gain the full support of management, your report should include, as a minimum, the following content:

1. Introduction:

Describe the basics of the proposal. Identify:

Country basics

Company basics

Purpose of expansion and project specifications

2. Country Evaluation:â¨Describe the country of investment. Include the following:

Economic structure, indicators and risk

Financial structure, indicators and risk

Political structure and risk

Recent history which impacts current conditions and risks

Geography, natural resources and existing industries that impacts current conditions and risks

Overall risk indicators

3. Industry Evaluation:â¨Describe the industry in the country. Include the following:

Regulatory structure

Competition â Major and minor competitors

Local financing options for the expansion

Overall attractiveness of the industry

4. Recommendationâ¨ Summarize your findings and recommendation for future plans. Include a plan to visit the country. Identify travel objectives, key persons with which to meet, activities to experience (related to your industry), travel plans and cost estimate.

Report.

1.Company Basics: The Company, established in 2014, is a user-centric, focuses on the development of electric vehicles with headquarters in Gardena, California.

Industry: Automobiles

Product: Electronic Cars

Purpose of expansion: There are three main elements to consider China as the platform for company expansion:

Project Specifications:

The company can try to invest in China to produce electric cars. It could concentrate on upper class people to market their cars. They can enter into market with some suitable pricing strategies based on market and product that is targeted. Based on the present analysis, the company should manufacture small and affordable which are suitable for china market. The marketer should formulate suitable strategy to market the same.

2. Country evaluation: The basics of China

China is a country which mostly concentrates on the middle class group. China has a lot of manufacturers but very few retailers, and the products sold to the consumers are generally low cost items. Hence, large and international retailers are not able to sell high cost items in China. Therefore, such big foreign retailers lure the consumers with discounts to attract them.

China has a lot of local manufacturers and less retailers. This emerges as a golden opportunity for the foreign retailers. However, the ability to use the opportunity in a right way can only lead to a successful business

Economic structure: As per the reports, Real GDP raised by 6.7% year on year in the first half of 2016, but they expect a slowdown in the second half to lower full-year expansion to 6.6%. Subsequently, the reports revealed that economic growth will slow gradually, to 4.1% by 2020, as the authorities take delayed steps to tackle an unsustainable build-up in debt. Finally, the government's authoritarian behavior and its disappointing progress on market reform indicate the China's weak economic prospects.

Financial Risk: China has a different structure to finance the corporate. It poses challenging elements to get a deal and obtain financing. Companies should be able to showcase a variety of financing options when negotiating business projects in China. The companies should understand and communicate the western financier's perspective and the Chinese official's perspective while negotiating the projects. The companies should maintain a specialist to engage the operations of banking with Chinese banking community.

Political Risk:

There exists a unique type of political risk in China. There is a constant fight between the countryâs central government and other provincial, local governments over the applicable law and observance or non-observance of it. This concept makes the companies to be more cautious about rules of China. So, there is a dynamic political environment in China and the FF Company should be cautious about the political changes and take decision accordingly.

3. Industry evaluation:

Auto industry in China:

The Chinaâs automotive sector is growing at the rate of 24% compounding between 2005 and 2011 and, in 2010. Its growth has dominated the United States new car market which is an attractive point for FF to enter in China auto market. The forecasts of China auto market indicate that there are chances of slowing down the growth rate to 8% a year between 2011 and 2020 but still it could be an attractive one for FF company as the sales forecasts to reach 22 million by 2020 which is bigger than the European or North American markets.

Competition: BYD, Chery, FAW Volkswagen, GAC (Guangzhou Auto), BAIC (Beijing Auto) and Beiqi Foton and others have occupied electric car market in China. But there are still chances for the new players to exploit the market. The Electric vehicles are expected to grow in the A model segment due to increased public environmental awareness and expected government policy initiatives. Two trends are driving the Chinese auto market those are consumers will increasingly choose to buy bigger and more expensive cars. Another point to be focused is that the used-car market in China is growing, a development that could increase new car sales of the lower price segment in particular. Emerging urban alternatives such as improved public transportation, increased availability of car rentals and sharing could change the consumer behavior and could influence the auto market segment in China. The estimations say that by 2020, 20 Chinese cities will exceed this car-density threshold. The Chinese automotive structure faces major changes and the industry consolidates as a result of increasing competition.

From my point of view , The Chinaâs automotive sector is growing at the rate of 24% compounding between 2005 and 2011 and, in 2010. Its growth has dominated the United States new car market which is an attractive point for FF to enter in China auto market. The forecasts of China auto market indicate that there are chances of slowing down the growth rate to 8% a year between 2011 and 2020 but still it could be an attractive one for FF company as the sales forecasts to reach 22 million by 2020 which is bigger than the European or North American markets.

So before calculating the travel costs it is important to understand that China has a different structure to finance the corporate. It poses challenging elements to get a deal and obtain financing. Companies should be able to showcase a variety of financing options when negotiating business projects in China. The companies should understand and communicate the western financier's perspective and the Chinese official's perspective while negotiating the projects. The companies should maintain a specialist to engage the operations of banking with Chinese banking community.

4. ??

carminegnat140

Choose the right answer

Question 1

With respect to consumer behavior, one's attitudes, learning, and perceptions would be

		impersonal influences
		interpersonal influences
		personal influences
		insitutional influences

Question 2

In Maslow's hierarchy of needs,

		a physiological need must be met directly before social needs.
		esteem needs are the highest order of needs.
		self-actualization needs are the highest order
		safety needs and esteem are of the same importance.

Question 3

The most likely product to be purchased in an attempt to satisfy self-esteem needs would be

		"super class" tickets for your next air flight.
		a really fast computer.
		a home security system.
		yogurt and health food.

Question 4

Which of the following is not a characteristic that distinguishes organizational markets from consumer markets?

		Organizational markets are more geographically concentrated.
		More people exert influence on the organizational buying decision.
		The organizational market tends to have a greater number of buyers.
		Organizations often engage in multiple sourcing and vendor analysis.

Question 5

Consumers may attempt to reduce postpurchase anxiety in the consumer decision process by

		avoiding favorable information about the selected brand
		seeking reassurance from dissatisfied customers
		seeking information that favors the rejected brands
		ignoring unfavorable reports about the chosen brand

Question 6

The buying center concept explains how groups of people participate informally in business purchase decisions and

		methods to break through group perceptions.
		the role the group members play in buying decisions.
		how family units operate as buying centers.
		the process of performing vendor analysis.

Question 7

In the organizational buying process, a triggering event such as announcement of the availability of a new product whose use could improve the company's market performance is referred to as

		need or opportunity recognition
		identification of suppliers
		information search
		word-of-mouth exploration

Question 8

An undifferentiated marketing strategy

		serves the consumer better because the products offered are designed to meet the needs of a specific group of people
		benefits from the control and efficiency of short production runs
		ignores differences among consumer groups and focuses on the broad market
		is the most common strategy today and is used more now than in the past

Question 9

Goods purchased by the ultimate consumer for personal use are called

		personal products
		purchased products
		consumer products
		commercial products

Question 11

A particular purchasing agent might allow some salespeople to see the engineers responsible for developing product specifications but not allow others the same privilege. In the buying center, this purchasing agent is filling the role of

		a "hard" nose
		a gatekeeper
		an influencer
		a decider

Question 12

"Our prices are the lowest, we guarantee it" is an example of a positioning strategy based on the product's

		competitors
		price
		class
		application

Question 13

Segmenting the market based on exactly how an industrial purchaser will use products is referred to as

		customer-based segmentation
		benefits segmentation
		end-use application segmentation
		geographic segmentation

Question 14

The lumber your carpenter purchases to finish out your basement is classified as

		a home improvement product
		a raw material
		a business product
		a consumer good

Question 15

When consumer demand for personal computers affects computer manufacturers' demand for computer chips, this situation is known as

		volatile demand
		conjoined demand
		derived demand
		joint demand

Question 16

Which of the following is a personal factor in consumer bahavior?

		a cultural influence
		group membership
		friends' opinions
		a person's attitudes

Question 17

Cognitive dissonance would be most likely to occur after the purchase of

		sneakers
		groceries
		an automobile
		cosmetics

Question 18

Which of the following would be most likely to break through a person's perceptual screen?

		a newspaper ad featuring white type on a black background
		a black- and -white classified ad
		reducing the size of the ad
		using fewer colors in the ad

Question 19

The Fortune 500 list of America's largest firms based on sales revenues and number of employees provides a basis for

		market segmentation based upon customer type
		demographic segmentation based upon geographic location
		end-user segmentation of this market
		demographic segmentation based upon customer size

Question 20

Straight rebuy behavior by industrial purchasers will probably continue if the supplier provides

		poor service
		poor quality
		shipping delays
		satisfactory performance

Question 21

A controversial technique of subconscious communication, aimed at circumventing the perceptual screens, is called

		shadowed perception
		leger-de-main
		subliminal perception
		perception incognito

Question 22

Those products that are actually considered when making a consumer purchase decision are

		customer options
		customer selections
		the evoked set
		the product set

Question 23

The component of the business market that consists of individuals and firms that acquire goods and services to be used directly, or indirectly, in producing other goods and services is called:

		wholesaling and retailing
		the commercial market
		government
		an institution

Question 24

The institutional market does not include which of the following?

		hospitals
		museums
		motion pictures theatres
		universities

Question 25

Advertising for smoke alarms, air bags and life insurance typically uses which of Maslow's levels of needs to appeal to consumers?

		self-esteem needs
		safety and security needs
		physiological needs
		protection needs

Question 26

One type of buying center role is that of the

		influencer who supplies information for evaluation.
		authority figure who decides who, what, where, when, and how.
		disseminator who function is to get advertisements to prospects.
		specifier who needs on the specifications of products

Question 27

Manufacturing firms that convert to automated factory systems must purchase equipment that they have never bought before, such as robots and computers. This buying situation is called

		a straight rebuy
		a modified rebuy
		a contract purchase
		new-task buying

Question 29

A commonly used basis for segmenting consumer markets is

		product-related characteristics
		health-related matters
		information-related concepts
		performance-related criteria

1 points

Question 30

The business market is also known as the

		wholesale market
		corporate market
		organizational market
		distribution market

Question 31

Which of the following consumer problem-solving behaviors requires the least effort?

		extended problem solving
		limited problem solving
		impulsive buying
		routine response behavior

Question 32

The relationship between the demand for silk cloth and consumer demand for silk blouses and neckties is known as

		joint demand
		demand volatility
		derived demand
		consumer demand

Question 33

Examples of business market items that would usually be purchased as a straight rebuy are

		high quality raw materials
		heavy-duty machinery
		paper clips and pencils
		high-tech components

Question 34

The person who joins a local bowling league for the social interaction, even if he or she is a novice bowler, is probably trying to satisfy his or her

		esteem needs
		self-actualization needs
		physiological needs
		belongingness/social needs

Question 35

Campbell's "Soup for One" is an example of a product that is targeted to

		large families with high product usage of certain things but different preferences
		dual-income couples with no kids
		well-off older families
		non-traditional households such as nonfamily, single-person or single-parent situations

Question 36

Red Ryder Industries markets rodeo and horse riding supplies specifically to women. This is an example of

		market stratification
		market segmentation
		non-traditional marketing
		multi-gender marketing

Question 37

Purchases made by choosing a preferred brand or one of a limited group of acceptable brands are called

		extended problem solving
		routinized response behavior
		limited problem solving
		selective problem solving

Question 38

The slogan "the graying of America" describes the trend

		toward people retiring later in life
		of the word force to contain a disproportionate number of older Americans
		for gray hair to develop from years of high-stress urban work
		upward in the elderly population as Americans tend to live longer

Question 39

People or institutions must have sufficient purchasing power and the authority and willingness to buy to be considered a

		market
		buyer
		player
		segment

Question 40

Reference group influences would be most likely to be significant in the decision to buy

		a loaf of bread
		a Mercedes Benz
		a clock radio
		cellophane tape

Question 41

Internal search in the consumer decision process may include

		subscribing to consumer magazines to evaluate alternatives
		talking to family members
		reviewing past purchases
		surveying coworkers for buying options

Question 42

The process of dividing the total market into several smaller, homogeneous groups is called

		market penetration
		market segmentation
		market mixing
		market division

200086 Lecture Notes - Lecture 12: Marketing Communications, Cost Leadership

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