Professional Documents
Culture Documents
Marketing Foundations Notes
Marketing Foundations Notes
o Society
Stakeholders
Individuals, organisations and groups with a rightful interest in the activities of a
business
o Owners
o Employees
o Customers (and clients)
o Partners
o Government
Ethics and Corporate Social Responsibility
Ethics are a set of moral principles that guide attitudes/behaviour
Law and regulatory bodies govern the conduct of individuals/organisations
Corporate social responsibility are businesses with the obligation to act in the interests
of the societies that sustain them
o Trade Practices Act, ACCC
The Marketing Mix
Set of variables a marketer can exercise control over in creating an offering for
exchange
Internal
The parts of the organisation, the people and the processes used to create,
communicate, deliver and exchange offerings that have value
External
The people and processes that are outside the organisation and cannot be directly
controlled, only influenced
Such as when outsourcing (transferring internal function to external provider)
Measured as opportunities and threats
The external environment includes:
o Micro-Environment
Forces within an organisations industry that affects its ability to serve
customers/clients
Customers and clients, marketers need to understand current
and future needs
Partners e.g. logistics firms, financers, advertising agencies,
suppliers
Competitors
Not directly controllable
o Macro-Environment
2. Market Research
3. Consumer behaviour
What is consumer behaviour?
Analysis of behaviour of individuals/households who buy g/s for personal
consumption
Consumers make decisions along a continuum
o Habitual decision making extended decision-making
One we know our target market we want to work out:
o Why they behaviour in a certain way?
o Whey that have preference for particular brands?
Influences on consumer behaviour
Situational
Group
Physical location
Social interaction
Time available
Purchase
motivation
Mood
Cultural
Culture
Subcultural
Social class
Social
Reference
groups
Family
Roles and status
Individual
(independent of social circumstances)
Personal
Psychological
Demographics
Motivation
e.g. age,
Perception
occupation,
Beliefs and attitudes
income
Lifestyle
Social class
Individuals of similar rank within social hierarchy
Defined by values and lifestyles
Indicators include income, occupation and education
Group influences - Social influences
Influences on the individual to behave in a way that reflects group norms
Reference groups
Any group to which an individual looks for guidance
o Membership reference groups: groups the individual belongs to
o Aspiration reference groups: would like to belong
o Dissociative reference groups: does not wish to belong
Opinion leader is reference group member who provides relevant and influential
advice about a specific topic of interest to group members
Family
Family life cycle is series of characteristic stages most families pass through
Family decision-making roles is differing responsibilities for specific types of
decisions
Pester power is influence of children on parents purchasing decisions
Role and status
Individuals play a number of roles with complex set of expectations
o Parents, child, neighbour, employee, employer, customer, friend
Influence of status lies in perceived status of individual
o Criteria such as formal role, age, social popularity, technical competence
Individual influences - Personal
Demographic, lifestyle and personality factors that influence consumer behaviour
Demographics
Vital and social characteristics of populations e.g. age, education
Lifestyle
Involves how an individual spends their time/interacts with others
Personality
Unique set of psychological characteristics and behavioural tendencies that
characterise an individual
o Combination of genetics and experiences
Individual influences Psychological
Internal factors, independent of situational or social circumstances, that shape
thinking, aspirations, expectations and behaviours
Motivation
Drive to satisfy unfulfilled needs or achieve goals
Maslows hierarchy of needs
Suggests people seek to satisfy needs according to hierarchy that places low order
biogenic before higher order psychogenic needs
o Physiological (hunger/thirst), safety, love/belongingness, esteem, selfactualisation
Perception
Psychological process that filters, organises and attributes meaning
o Selective exposure, attention, distortion, retention
Beliefs
Descriptive of evaluative thoughts that an individual holds regarding their knowledge
of a person, idea or product
May be based on objective knowledge, opinions or faith
Attitudes
Individuals relatively stable and consistent thoughts, feelings and behaviours towards
an object/idea
Learning theories
Behavioural learning theory: stresses role of experience and repetition
o Relevant in low involvement purchases
Cognitive learning theory: learning takes place through rational problem solving,
emphasising acquisition and processing of new information
o Relevant in high involvement purchasing decisions
Types of consumer decision making
Habitual: low engagement, small, routine, low-risk products
Limited: infrequently bought but familiar products
Extended decision making: high engagement, high price, high-risk and/or infrequent
and unfamiliar products
Consumer decision making steps
Need/want recognition
o Become aware of unsatisfied wants/needs
o Marketer stimulates/creates awareness of new need/want
Information search
o Seeks information from sources about how to solve the problem
Evaluation of opinions
o Develop evaluation criteria, rank alternatives, consider not purchasing/other
uses of money
Purchase
o Choose product and brands, decide to purchase or not to purchase, purchase
Post-purchase evaluation
o Continue to evaluate product, deal with post-purchase cognitive dissonance,
assess attitude towards product/bank/seller in relation to future purchases
Cognitive dissonance: when purchaser has second thoughts or doubts
Industrial
distributors
(sell to
organisational
buyers)
Primary
industries
(agriculture
or mining)
Secondary
industries
(manufacturing)
Retailers
Retailers
N.B Retailers sell to consumers
Federal
(Commonwealth)
State
(provincial)
Local (municipal)
Charities
Religious
organisations
Clubs
o Buyers
o Gatekeepers (control relevant information)
Steps in the decision making process
Problem/need recognition
o Initiator becomes aware of a problem/unsatisfied need
o External party creates a new problem or need
Information search and specification development
o Seek information about the problem and possible solutions
o Develop product specification to describe the features required of the solution
Evaluation of options
o Identify potential vendors and invite proposals
o Analyse and evaluate each characteristics of the proposed solution/each
potential vendor
Purchase
o Choose one or more suppliers based on evolution of solutions/vendors
o Decide to purchase (or not to), purchase
Post-purchase evaluation
o Evaluate product/suppliers and assess attitude in relation to future purchases
Factors
External environmental factors: macro-environment (PESTL) and microenvironmental (industry, customers, competitive situation) which are not directly
controllable
Internal environmental factors: explain why each organisations makes purchasing
decisions
o Nature of the organisations (size, location, objectives, resources)
o Organisational structure (how responsibility/authority is arranged)
o Individuals within the organisation (personal characteristics)
5.
The market
Groups of customers with heterogeneous needs and wants
Markets can have a variety of characteristics:
o Common wants, needs and demands
o Unique wants, needs and demands
o Contains subgroups
Market segments are subgroups within the total market that are relatively similar in
regards to certain characteristics
What is targeting marketing?
An approach to marketing based on identifying, understand and developing an
offering for those segments of the total market that the organisation can best serve
Mass marketing
A single product will meet the needs of most people in the market (undifferentiated
approach)
Producing large volumes at a lower cost per unit makes it possible to sell at a lower
price and capture very large markets
One-to-one marketing
Unique, customised offering to meet individual needs
Results in higher unit costs and a more restricted market
Differentiated targeting strategy (in between mass and one-to-one)
Developing a different marketing mix for each target market segment
o Product specialisation: concentrated on offering a single product range to a
number of marketing segments e.g. barcode scanner
o Market specialisation: focused on meeting a wide range of needs within a
particular market segment e.g. travel agent
o Product-market specialisation: offering a single product to a single market
segment
Entails high costs and therefore to achieve high profits it requires higher retail prices,
higher market share and strong customer loyalty
The target marketing process
6. Product
Definitions
Product: good/service offered to the market for exchange
Service: intangible offering that does not involve ownership
Good: physical (tangible) offering capable of being delivery to a customer
Idea: concept, issue or philosophy offered to the market
Product item: particular version of a product
Product line: set of product items related by characteristics e.g. end use, target
market, technology or raw materials
Product mix: set of all products that an organisation makes available to customers
Product: Consumer vs. B-to-B
Consumer products: purchased by households/individuals for private consumption
Business to business products: purchased by individuals/organisations for use in
production or for daily business operations
Consumer product classifications
Shopping products: moderate to high engagement with purchase based on
consideration of features, quality and price e.g. washing machine
Convenience products (fast-moving consumer goods): little engagement,
inexpensive, frequently purchased
Speciality products: highly desired with unique characteristics that consumers will
go to considerable effort to obtain e.g. Ferrari
Unsought products: purchased to solve a sudden, unexpected need
B-to-B product Classifications
Parts and materials: products that form part of the purchasing businesss products
Equipment: capital equipment and accessory equipment used in the production of
businesss products
Services and suppliers: products that are essential to the business operations but do
not directly form part of the production process
Product Adoption
Product Adoption Process
Awareness
o Consumer becomes aware of the product but knows little about the product
Interest
o Experiences interest in the product and seeks information to learn more
Evaluation
o Consumer evaluates information and decides whether or not to try
Trial
o Examines and tries out the product and decides if it will satisfy a need/want
Adoption
o Decides to purchase the product and evaluates whether it will re-purchase
The diffusion of innovation
Theory that social groups influence the decisions made by individuals in such a way
that innovations are adopted by the market in a predictable pattern overtime
Product differentiation
Creation of products and product attributes that distinguish it from one another
o Characteristics perceived by customers such as design, brand, image, style,
quality
Branding
Brand: a collection of symbols to create an image in a customers mind
Brand image: the set of beliefs that a consumer has regarding a particular brand
Brand name: part of a brand that can be spoken (including numbers, words, letters)
Brand mark: part of a brand not made up of words (often symbols of designs)
Trade mark: brand name or brank mark that has been legally registered so as to
secure exclusive use of the brand
Brand equity: added value that a brand gives a product
Brand loyalty: customers favourable attitude/purchasing behaviour towards a brand
Brand metrics: measure of the value of a brand e.g. brand assets, stock price
analysis
Brand strategies include:
o Individual branding: approach where each product is branded separately
o Family branding: uses the same brand for many of the organisations products
o Brand extension: giving an existing brand name to a new product in a
different category
Brand ownership includes:
o Manufacturer brands: brands owned by producers and clearly identified
with the product at the point of sale
o Private label brands: brands owned by resellers and not identified with
manufacturer
o Generic brands: products that only indicate product category
o Licensing: brand owner permits another party to use the brand on its products
o Franchising: agreement to establish a business model
o Co-branding: use of two or more brand names on the same product
Packaging
Primary packaging: holds the actual product
Secondary packaging: material used to hold or protect the product (removed or
discarded after purchase)
Shipping package: used to carry out of the factory and through distribution channel
Labelling: usually forms part of the packaging and provides promotion, legal and
other information
Compulsory label information can include:
o Brand name/logo
o Product name
o Ingredients list
o Use-by-date or date of packaging
o Barcode
Existing product expansion
Line extensions: new products that are closely related to existing products in a
product line
Product modifications: changes to the characteristics of a product e.g. functionality,
quality, aesthetics
Product positioning
The way in which the market perceives a product in relation to competing offerings
Product deletion: process of removing a product from the product mix
The role of law
Marketing law is regulations that draw the line between acceptable competitive
business conduct and unacceptable business practices
Designed to protect consumers, traders and the competitive system that underpins the
free market
Example of marketing laws:
o Competition and Consumer Act 2000: provides protection for consumers and
prevents some restrictive trade practices of companies
o Australian Consumer Law: uniform legislation for consumer protection
Product Laws
Intellectual property laws:
o Covers patents, trademarks, registering designs and copyright
Packaging/labelling laws
o Designed to standardise information and protect against misleading
information e.g. weight, contents of food, ingredients
Common law protection and statutory protection
o Statutory protection:
Australian Consumer Law
Misleading and deceptive conduct
Unfair trade practices
Product safety and information standards
Trade Measurement Legislation
National Measurements Act 1960 (Commonwealth)
Product liability laws
o Minimum acceptable product safety and quality standards e.g. food hygiene
regulations, manufacture liability for defective/negligent products
7. Pricing
What is price?
Measure of value to both buyers and sellers
o Buyers see are measure of benefit
o Sellers need prices to cover cost/generate profit
Price is a determinant of sales volumes
o Sales volume influences cost
Price is directly related to profitability
o Profit = ($ sales volume) total costs
Profits are when total revenues > total costs, i.e. prices must exceed costs
Return on investment is profit required to justify investment in a project
Pricing objectives
Objectives should be SMART
o Specific, measureable, actionable, reasonable, timetabled
Objectives focus on:
o Profitability
o Long-term prosperity
o Market share
o Positioning
Not-for-profit pricing
Do not seek to make profits
Objectives include:
o Generating funds to sustain activities
o Making products/activities appealing to a target market
o Encouraging change in attitude/behaviour amongst market
Demand considerations
Cost considerations
Cost mix includes:
o Fixed
o Variable
o Marginal costs (expressed in cost per extra unit of production)
o Shared (cost shared across products)
Pricing methods and strategies
Price floor
Minimum price to cover costs
o Cannot maintain this approach
o Low prices generate high sales volume
o However, may conflict with high-quality/differentiated positioning
Price leader
High-volume product priced near cost to attract customers into the store
Expected they will buy other, normally priced products
Loss leader
High-volume product priced below cost to attract customers into the store
Expected they will buy other, normally priced products
Non-price competition
Approach to competition based on factors other than price e.g. promotion/distribution
o Organisations must differentiate by product attributes
o Can build loyalty which insulate organisation from competitor price offers
Business-to-business pricing
Overview of B2B relationships
Business market involves purchasing products for use in production of others
products, for resale or for daily use in business
Involves relationship between suppliers and organisational buyers
Need to be close, long-term and formal
More complex
Pricing methods
Discounts:
o Reduction in price in return for another benefit e.g. cash, seasonal, quantity
Geographic pricing:
o Include price differentials based on those costs that vary with distance
o E.g. freight on board destination price (seller has built in transport costs), or
freight on board origin price (price excludes delivery cost)
Price management
Purchasing behaviour is usually rational evaluation of value
Relative importance of price varies between individuals, market segments and product
categories
Perceptions of vary with time (especially over economic cycles)
Buyer sensitivity price falls into:
o Value-conscious
o Price-conscious
o Prestige-sensitive
Examples of managing perceptions of value and price
Approach
Description
Example
Advantages
Multiple-unit
Multiple units of a
Ice creams in six Save by buying
pricing
product are sold for a
packs
a low unit price,
Disadvantages
Margin per product
may be lower
8. Promotion
What is promotion?
Marketing activities that make potential customers, partners and society aware of and
attracted to the businesss offerings
o Marketing communication (a term for promotion) refers to communicating a
message to the market place
Objectives of promotion
To support the organisations overall marketing objectives
To demonstrates features/benefits
To encourage product trial and create demand
To reinforce the product or brand and encourage repeat purchase
To increase support offered by retailers
o Discounts
o Rebates are return of some of purchase price upon presentation of proof of
purchase
o Point of purchase promotions including in-store signage/display, free
product trials or demonstrations in store
o Event sponsorship e.g. exclusive merchandise deal
Trade sales promotion presents products to business customers and stimulated the
products movement through the market channel
o Conventions and trade shows
o Sales contest for marketing intermediaries
o Gifts and premium money
o Trade allowances
o Cooperative advertising
o Dealer listings
Benefit: can be used irregularly to smooth demand
Limitation: can lose effectiveness if overused, easily copied and the public become
increasingly cynical about product value
Personal selling
Efforts that seek to persuade consumer to buy products
o Mainly used for expensive, high-involvement or industrial products
o System involves: information, needs, product, leverage, commitment/close,
follow up
o Good sales people are: committed, enthusiastic, persuasive, self-confident,
have good listening skills, self-motivated
Benefit: can be tailored to specific individuals
Limitations: expensive, limited reach, labour intensive and time consuming
Additional forms of marketing
Ambush marketing: presentation of messages at an event that is sponsored by an
unrelated business or competitor (however, need to assess risk)
Product placement: in movies, videos, songs, books
A plug: media overtly promoted a product within the program rather than separately
Guerrilla marketing: aggressive/unconventional
Viral marketing: social networks to spread
Permission marketing: aims to build an ongoing relationship with customer
Sponsorship: paid association
o However, need to consider media fragmentation, consumer cynicism, social
consciousness and environmental awareness
Push and pull policies
Push: product is promoted to the next institution in the marketing channel
Pull: product is promoted to consumers to create demand through the marketing
channel
Statutory regulation of advertising
Australian Consumer Law
ACL Section 18: prohibition on misleading and deceptive conduct or conduct likely to
mislead and deceive by persons engaged in trading or commerce
o E.g. comparative advertising, use of celebrities, similar or identical brands
9. Placement/Distributions
Marketing channels
Marketing intermediaries: individuals/organisations that act in the distribution chain
between the producers and end user
Distribution channel: the group of individuals/organisation directing products from
producers to end users
Effective intermediaries in marketing channels achieve the following:
o Time utility: available at the time when wanted
o Place utility: available in the locations wanted
o Form utility: customising products to needs
o Exchange efficiencies: making transactions simple/cheap through efficiency
Decisions take into account nature of product and target market
Generally a choice between:
o Intensive distribution: distributed via every suitable intermediary
o Exclusive distribution: distributed through single intermediary for any given
geographic region
o Selective distribution: distributes products through intermediaries chosen for
some specific reason
Place laws
Prevent suppliers from imposing unreasonable restraints on distributors
o Exclusive dealing: restricting products a distributor may sell
o Territorial restraints: restricting area in which a distributor may operate
o Customer restraints: restricting customers with which a distributor may deal
Consumer product marketing channels
Supply-chain management
Managing marketing channels based on ongoing partnerships among marketing
channel members that reduce cost, eliminate redundant processes and develop new
ways to deliver value to customers
o Channel captain: when one member of the marketing channel can exert power
over the ability of others members to achieve goals (known as channel power)
The more parties involved in the marketing channel, the greater potential for conflict
Types of supply-chain management
Horizontal channel integration
o Bringing organisations at the same level of operation under single
management structure e.g. retailer buys out competitor
Vertical channel integration
o Bringing different stages of the marketing channel under single management
structure e.g. wholesalers buy s a retailer of transport business
Vertical marketing system
Distribution of goods
Order processing
All activities involved in managing information requires to receive/handle/fill order
Important to minimise cost and ensure customer satisfaction
Inventory management
Managing stocks of products to ensure availability to customers
Important to minimise holding cost e.g. JIT method
Most businesses manage inventory by developing a trigger to reorder
o Could be based on usage rate, safety stock etc.
Warehousing
Enable businesses to hold surplus/safety stock
Becoming obsolete due to increasing link between producers/consumers (from the
internet), demand for customisation and speed of innovation
Variation of a warehouse is a distribution centre
o Focuses on moving rather than storing
o Cross-docking is this process of receiving, assembling into orders and
shipping them with minimum handling
Distribution of services
Retailing
Any exchange in which the buyer is the ultimate consumer of the product (not
reselling/using it in the making of something else)
The retailing strategy
The marketing organisation to decide a suitable approach
Retailer must then decide on location/positioning
o Location (often CBD, free standing, shopping centres etc.) determines:
Determines geographic area customers come from
Proximity to competitors/complementary retailers
Access to parking/transport
o Positioning is important as it:
Identifies gap in the market and targets it by creating a distinguished
feature in the minds of customers
Store image is an important factor to attract customers
Benefits of retailers
Retailers add value for customers and products by creating/providing:
o Time utility (24 hours)
o Place utility (corner store)
o Form utility
o Advice/personal service
o Exchange efficiencies
o Or a mixture of these
Types of retailers
Manufacturers wholesalers
o Wholesalers owned by the producer
10.
Services marketing
Process
All of the systems/procedures used to create, communication, deliver and exchange an
offering
o Functional expectations: expectations of the technical delivery
o Customer service expectations: relate to the service experience
Physical evidence
Tangible cues that can be used as a means to evaluate service quality prior to purchase
o Includes architectural design, floor layout, furniture, background music
Service marketing challenges
1. Achieving a sustainable differential advantage
o Services cannot be protected by legal patents
o Innovations are immediately replicated
2. Managing profitable customer relationships
o Professional service provides manage customers as individuals
o Consumer service providers typically provide a standardised offering
o Churn (rate of customer turn over) and the fact that many customers will never
be profitable
3. Deliver consistently high levels of service quality and customer service
o Quality can be examined in different ways:
Search qualities: determined prior to purchase e.g. flight duration
Experience equalities: determined after or during e.g. quality of meal,
speed of cleaning
Credence qualities: characteristics impossible to evaluate e.g. hygiene
in restaurant
o To maintain quality they need to:
Understand customer expectations
Establish service quality standards
Manage customers service expectations
Measure employee performance
Check-list of Service Quality
Dimension of service quality Explanation
Reliability
Consistency and
dependability
Tangibles
Physical evidence
Responsiveness
Assurance
Evaluation criteria
Began on time
Finished on time
Billed correctly
Condition of premises
Presentation of service
provider
Condition of equipment
Enquiries responded to
Service provided promptly
Accommodated urgent needs
Demonstrated knowledge
service provider
Empathy
and skills
Reputation
Personal manner of service
provider
Listened to needs
Cared about customers
interests
Provided personalised
service
Not-to-profit marketing
Marketing activities of individuals and organised designed to achieve objects rather
than generate profits
o Activities of non-for-profits e.g. Red Cross
o Social marketing e.g. anti-smoking campaigns
4. Electronic marketing
Electronic marketing
The activities involved in planning and implementing marketing in the electronic
environment
o Sales of product via e-commerce website
o Texting potential customers
o Emails to participate in surveys
o Discount vouchers on take away websites
Advantages/disadvantages
Advantages
For
Convenience
consumers
For marketing
Disadvantages
Inability to physically examine
product
Risk of credit card fraud
Lack of personal service
Increased competition
Some target markets have lower
rates of internet access
Consumer concerns about security
Characteristics of e-marketing
Profiling
Getting to know customers/potential customers before they make purchases
Organisations can gather information on customers through:
o Requiring registration to access a website
o Cookies on websites
o Competitions requiring personal information
o Storing information in database
Interaction
Control
The ability of the customer to determine how they interact with the marketing
message and to influence the presentation and content of the marketing message
o Push advertising: sent from the marketer to the customer
o Pull advertising: the customer actively seeks out
Accessibility and comparability
Customers can easily research different options/opinions/reviews
Choice of completing transaction online or in-store
Digitalisation
Ability to deliver a product as information or to present information about a product
digitally
o Some can be completely digitalised e.g. music, others the service cant e.g.
groceries
Electronic marketing methods
Banner advertisements e.g. on newspapers
Pop-up advertisements
Brochure sites
Web 2.0 (or Social Web) i.e. members contribute to build community/content e.g.
Wikipedia, Facebook
Viral marketing i.e. use of social networks to spread message, relying on
forwarding/linking/word-of-mouth
Portal i.e. website acting as a gateway
Search engine optimisation (SEO) i.e. tailoring features to website to achieve best
possible search results
Search engine marketing i.e. paid advertising the appears similar to search result
Email/SMS/MMS marketing
Apps
Ethical and legal issues
Privacy
Misleading of deceptive conduct
Intellectual property issues:
o Copyrights
o Trademarks
o Patents
o Domain names
5. International marketing
Globalisation
Process through which individuals, organisations and governments become
increasingly interconnected and similar
Barriers have diminished
Greater closeness in terms of trade, finance, living standards and security
Standardisation vs. Customisation
Standardisation: applying a uniform marketing mix across international
modifications to meet local conditions
Customisation: tailoring marketing mix to specific characteristics of each market
Global trade
Large proportion of total production/consumption is sent overseas/sourced from
overseas
Many governments run export promotion programs to help domestic organisations
succeed in international markets
o Australian Trade Commission (Austrade)
o NZ Trade and Enterprise Agency
The international environment
Political forces
Alliances/agreements between countries
o Alliances favour one country which can enhance success but work against
international marketing goals
o Alliances aim to:
Stream line paperwork
Reduce/eliminate trade barriers
Create preferred zones of trade
o Agreements can be bilateral (2) or multilateral
Political factors within target market countries
o Democratic systems see regular changes in government and therefore policy
o Dictatorships see infrequent chances but drastic change when it occurs
o Multiparty systems often suffer an inability to implement policy
Economic forces
The global economy
o Exchange rates
The economies of each specific country
o Market specific economic indicators:
Levels of income/wealth
Exchange rates
Availability of credit
Quality of national infrastructure
Socio-cultural forces
E.g. different meanings of colour for each country
o Anglo-Saxon interpret green as envy, whereas it symbolises love in Japan
Technological forces
Cheap communication enable easy transfer of information
Technology has created, revolutionised and destroyed entire industries
Marketers cannot assume potential markets will have the same technological
infrastructure as the home market
Legal forces
Tarrifs: charge to effectively increase the price relative to domestically made goods
Quotas: annual limits on imports
Embargos: bans/restrictions on imports
The benefits of going international
The world holds more potential
May find a market that does not have access to its products
Economies of scale
It has become a more feasible option:
o Communication/transport technology
o Increasingly free trade environment
It is a way to respond to increased domestic competition
Methods of Market Entry
Exporting
Sale of products into foreign markets from home market base
o Direct: marketing organisation deals directly with international market
o Indirect: approach that relies on the use of specialist marketing intermediaries
Contractual agreements
Licensing: business (licensee) in a foreign country manufactures and sells the product
of a home country and pays commission on the sales it makes
Franchising: business (franchisee) pays a fee in return for the right to use the
marketing/business plan of another business
Contract manufacturing: business pays a foreign business to manufacture its
product and market it in the foreign country under the domestic businesss name
Strategic alliances and joint ventures
Strategic alliance: cooperative arraignment between business in a foreign market
Joint venture: marketing organisation forms a new business with an existing business
in the target foreign market
Direct investment
FDI: outright ownership of a foreign operation
Greenfields operation: new business established in foreign market from ground up