GMS 522 Exam Review
The Promotional The tools the global marketer has available to form a total
Mix communications program for use in the targeted markets.
- Publicity & PR
- Sales promotion
Global Advertising Advertising that is fairly uniform across many countries.
Multidomestic Advertising deliberately adapted to particular markets and
Advertising audiences in message and/or creative execution
Publicity Any form of nonpaid, commercially signiﬁcant news or
editorial comment about ideas, products, or institutions.
Public Relations Public relations is the marketing communications function
charged with executing programs to earn public
understanding and acceptance.
Sponsorship The practice of promoting the interests of the company by
associating it with a speciﬁc event (typically sports or culture)
or a cause (typically a charity or a social interest).
Audiences Suppliers, intermediaries, government, the local community,
bankers and creditors, media organizations, shareholders,
and employees. Global Distribution
Channels - The ﬁrm sells directly to customers through its own ﬁeld
sales force or through electronic commerce.
- The company operates through independent intermediaries,
usually at the local level
- The business depends on an outside distribution system
that may have regional or global coverage.
McCain Foods/AmeriCold in US
Channel Design Length – the number of levels or different types of
intermediaries in the channel.
Width – the number of institutions of each type in the
channel. 11Cs Customer characteristics
Demographics and psychographics
Japanese keritsu system
Channels in the country may be blocked by domestic
Must meet objectives for proﬁtability/ market share
Nature of the product
Financial requirements to set up channel. Resources
determine degree of channel ownership.
Cost involved in maintaining the channel once established.
Number of areas where product is represented and quality of
Use of intermediaries is associated with loss of control.
Distributor relationships need to be nurtured for the long term
Distance complicates communication in international
channels. Need to consider:
Social distance – familiar with partner’s ways of operating
Cultural distance – working method differ because of
differences in national culture
Technological distance - product or process technologies of
the partners may differ
Time distance – time between initial contact and delivery of
product or service
Geographic distance – physical distance Grey Trade The grey trade, or parallel distribution, refers to the sale of
authentic and legitimately manufactured trademarked items
by intermediaries other than authorized channel members.
Range of products affected:
Inexpensive consumer items e.g. watches
Expensive capital equipment e.g. earth moving equipment
Supply Interference Engaging in relationship building with distributors and
requesting the careful screening of orders and careful
disposal of surplus inventory
Dealer Interference Searching for gray imports at the gray traders’ outlets in the
importing country, then asking the dealer to help dispose of
Demand Using advertising to educate customers about the
Interference drawbacks of gray goods.
Strategic Attack Creating stronger reasons for customers to patronize
Objectives Targeted ROI
Increase/defend market share
Nature of product – innovation/standard
Adjustments due to customers and competition
Price controls Max. price that can be charged set by gov’t. Polycentric pricing
The ﬁrm sets prices in each country market independent of
headofﬁce involvement. Advantages? Disadvantages?
Subsidiaries are completely free to make pricing
decisions based on the unique market and competitive
conditions in their country.
Downside – arbitrage opportunities
Geocentric pricing The ﬁrm establishes a minimum ﬂoor price below which the
strategy product cannot be sold by its subsidiaries in any country.
Managers are, however, allowed to add a country markup
to better reﬂect demand and competitive conditions in their
national markets. Advantages? Disadvantages?
Pricing is responsive to local market conditions
Price arbitrage is still possible▯
Ethnocentric Single worldwide price is set and country managers have
pricing strategy no latitude to tailor these set prices to local conditions.
Pricing no longer responsive to local market conditions
No arbitrage possibilities
Transfer Pricing: The pricing of sales to members of the extended corporate
family. Also referred to as intracorporate pricing.
- Minimization of the ﬁrm’s global tax burden
- Offset rampant inﬂation in country in which subsidiary
- Motivation of subsidiary managers
Standard worldwide One price for foreign importers/intermediaries regardless of
price country. Dual pricing Domestic and export prices differentiated.
Cost-driven Export prices based on:
Full allocation of all domestic and foreign costs (cost plus
method) – Competitiveness?
Marginal cost – considers only the direct cost of producing
and selling for export. Disregard FC and all other costs
associated with selling domestically.
Market- Export pricing according to the dynamic conditions of the
differentiated marketplace. Price varies based on:
Price Escalation The combined effect of export related costs is that export
prices will usually be higher than domestic prices
Cash in advance The most favorable term for the exporter because it relieves
the exporter of all risk and allows for immediate use of the
money. It is not widely used.
Letter of credit An instrument issued by a bank at the request of a buyer.
The bank promises to pay a speciﬁed amount of money on
presentation of documents stipulated in the letter of credit,
usually the bill of lading, consular invoice, and a description
of the goods.
Open Account The normal manner of doing business in the domestic
market. Exporter is at risk for non-payment but favorable for
Consignment sales The most favorable term to the importer. Allows the importer
to defer payment until the goods are actually sold. Countertrade The term for transactions in which all or part of the payment
is made in kind rather than cash. Reasons:
- Exchange controls in some developing countries
- Debt problems
- Inability to obtain trade ﬁnancing
Barter goods are exchanged directly for other goods of
arrangements approximately equal value
Counterpurchase The participating parties sign two separate contracts that
specify the goods and services to be exchanged. Some
amount of cash will be involved as products are not of equal
Buyback - One party agrees to supply technology or equipment that
enables the other party to produce goods with which the price
of the supplied products or technology is repaid
Offset Company agrees to offset a hard currency sale to a country
by making a hard currency purchase of an unspeciﬁed
product from the country at some time in the future
Localization Changes required for the product to function in the speciﬁc
foreign country. Telephone jacks in NA, Eastern Europe and
Africa are different. Localization avoids having potential
customers reject the product out of hand. In many products,
localization is accomplished by building in compatibility
with multiple systems at the outset.
Adaptation Changes are made to the product in order to better match
consumer tastes and preferences. Adaptation provides
consumers with a reason to purchase the foreign product
over the domestic.
Fade-in/fade-out Gradual option is the most common. Here the global brand is
linked to the local brand for a time, after which the local brand
is dropped Summary axing The ﬁrm simply drops the local brand name and introduces
the new brand
Focus groups Offer the development team a chance to hear spontaneous
reactions to a new concept and hear suggestions for
Counterfeit Deﬁned as any product bearing an unauthorized
Products representation of a trademark, patented invention, or
copyrighted work that is legally protected in the country
where it is marketed
Foreign Market Assessing the market potential of prospective countries
Evaluating and selecting a mode of entry
Assessment of the ﬁrm’s capability to operate in the selected
Systematic Market Systematic market selection involves formal strategic
Selection planning, market research, consideration of many country
options and entry mode options, developing contingency
plans and setting long term objectives.
Cultural distance Anything which disrupts the ﬂow of information and
knowledge between host and home countries).
Country Selection ( a ) Macro-segmentation
( b ) Preliminary screening – markets/countries assessed
based on external screening criteria.
( c ) Secondary (ﬁne grained) screening – ﬁrm’s relative
competitive advantage in each market is taken into
( d ) Final country selection Macro-segmentation Involves the development of segmentation criteria that can be
applied to group countries for marketing purposes.
Internationalization Indirect exporter
Stages Direct exporter
Foreign sales subsidiary