MARKET DEVELOPMENT STAGES (CHAPTER 2)

a) The World Bank has defined four categories of development using Gross National Income
(GNI) as a base
b) BEMs, identified 10 years ago, were countries in Central Europe, Latin America, and Asia
that were to have rapid economic growth
c) Today, the focus is on BRICS: Brazil, Russia, India, China and South Africa

Low-Income Countries (GNI per capita of $1,045 or less)

Characteristics:

1. Limited industrialization
2. High percentage of population in farming
3. High birth rates
4. Low literacy rates
5. Heavy reliance on foreign aid
6. Political instability and unrest
7. Concentrated in Sub-Saharan Africa

Lower-Middle-Income Countries (GNI per capita: $1,046 to $4,125):

Characteristics:

1. Rapidly expanding consumer markets

2. Cheap motivated labor
3. Mature, standardized, labor-intensive industries like footwear, textiles and toys
4. 50 bottom-ranked countries are LDCs—least developed countries

Upper-Middle-Income Countries (GNP per capita: $4,126 to $12,745)

Characteristics:

1. Rapidly industrializing, less agricultural employment

2. Increasing urbanization
3. Rising wages
4. High literacy rates and advanced education
5. Lower wage costs than advanced countries

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High-Income Countries (GNI per capita: $12,476 or more)

Characteristics:

1. Sustained economic growth through disciplined innovation

2. Service sector is more than 50% of GNI
3. Characteristics, continued:
4. Importance of information processing and exchange
5. Ascendancy of knowledge over capital, intellectual over machine technology, scientists and
professionals over engineers and semiskilled workers
6. Future oriented
7. Importance of interpersonal relationships

PREFERENTIAL TRADE AGREEMENTS (PTA) (CHAPTER 3)

a) Many countries seek to lower barriers to trade within their regions

b) PTAs give partners special treatment and may discriminate against others
c) Over 300 PTAs have been notified to the WTO

Free Trade Area

1. Two or more countries agree to abolish tariffs and other barriers to trade amongst themselves
2. Countries continue independent trade policies with countries outside agreement
3. Rules of origin requirements restrict transshipment of goods from the country with the lowest
tariff to another

Customs Union

1. Evolution of Free Trade Area

2. Includes the elimination of internal barriers to trade (as in FTA)
3. AND establishes common external barriers (CETs) to trade
4. Examples: The EU and Turkey, the Andean Community, Mercosur, CARICOM, Central
American Integration System (SICA)

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Common Market

1. Includes the elimination of internal barriers to trade (as in free trade area)
2. AND establishes common external barriers to trade (as in customs union)
3. AND allows for the free movement of factors of production, such as labor, capital, and
information

Economic Union

1. Includes the elimination of internal barriers to trade (as in free trade area)
2. AND establishes common external barriers to trade (as in customs union)
3. AND allows for the free movement of factors of production, such as labor, capital, and
information (as in common market)
4. AND coordinates and harmonizes economic and social policy within the union

HIGH- AND LOW-CONTEXT CULTURES (CHAPTER 4)

High Context

1. Information resides in context

2. Emphasis on background, basic values, societal status
3. Less emphasis on legal paperwork
4. Focus on personal reputation
5. Example: Saudi Arabia, Japan

Low Context

1. Messages are explicit and specific

2. Words carry all information
3. Reliance on legal paperwork
4. Focus on non-personal documentation of credibility
5. Example: Switzerland, U.S., Germany

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THREATS POSED BY A FOREIGN GOVERNMENT (CHAPTER 5)

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TARGET MARKETING STRATEGIES (CHAPTER 6)

Standardized Global Marketing

1. Mass marketing on a global scale

2. Standardized marketing mix
3. Minimal product adaptation
4. Intensive distribution
5. Lower production costs
6. Lower communication costs

Concentrated Global Marketing

1. Niche marketing
2. Single segment of global market
3. Look for global depth rather than national breadth
4. Ex.: Chanel, Estee Lauder

Differentiated Global Marketing

1. Multi-segment targeting
2. Two or more distinct markets
3. Wider market coverage
4. Ex.: P&G markets Old Spice and Hugo Boss for Men

**EXTRA NOTES

Standardized global marketing

An international marketing strategy that uses the same marketing strategy and marketing mix
in all of the company international markets. For example, Starbucks Coffee utilizes a global
brand approach by leveraging its global brand image. However, it adapts its marketing and
operations to local markets.

Concentrated global marketing

Targeted to one specific market segment or audience. For example, a company might market
a product specifically for teenage girls, or a retailer might market his business to residents in
a specific town. Concentrated marketing strategies are often targeted for smaller groups of
people, because they are designed to appeal to a specific segment.

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 Differentiated global marketing
When a company creates campaigns that appeal to at least two market segments or target
groups. For example, a store can promote a sale that appeals to people in at least two cities
or locations, or a company can market a product that appeals to women in at least two age
groups. For example, a retailer might market low cost to a budget-conscious segment and
product quality to an affluent market segment.

EXPORT SELLING VS. EXPORT MARKETING (CHAPTER 7)

Export selling

- involves selling the same product, at the same price, with the same promotional tools in a
different place

Export marketing

- tailors the marketing mix to international customers

**EXTRA NOTES

Export selling

- Selling to a foreign country with the focus on the product and the emphasis on selling. The
key elements of marketing mix (product, price, promotion, and channels of distribution) are
all the same as in the home market. Only the place or distribution is adjusted in export selling

Export marketing

- A storage that allows a company or business to increase market share. Businesses will
maintain manufacturing and production within their own country while seeking foreign
markets to export their goods and products. The most important factor in export marketing is
often the government assistance needed to access foreign markets.

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PROs and CONs LICENSING (CHAPTER 8)

A contractual agreement whereby one company (the licensor) makes an asset available to another
company (the licensee) in exchange for royalties, license fees, or some other form of compensation.

- Patent
- Trade secret
- Brand name
- Product formulations
- Worldwide sales of licensed goods
- Total $241.5 billion in 2014

Advantages to Licensing

1. Provides additional profitability with little initial investment

2. Provides method of circumventing tariffs, quotas, and other export barriers
3. Attractive ROI
4. Low costs to implement
5. Licensees have autonomy to adapt products to local tastes
6. License agreements should have cross-technology agreements to share developments and
create competitive advantage for each party

Disadvantages to Licensing

1. Limited market control

2. Returns may be lost
3. The agreement may be short-lived
4. Licensee may become competitor
5. Licensee may exploit company resources

**EXTRA NOTES
Types of Comparison Advantages of Licensing Disadvantages of Licensing
Trade name You acquire the right to use a More time is required to establish
well-known trade name and the name and brand
brand
Known product Has a good reputation Probability lose if other licensing
perform badly
Location Benefit from the assistance in Don’t have a right to select own
selecting a good location location
Proven business Proven business format that Untried idea and operation,
has sold successfully therefore the risk is high
Sourcing Specify materials and restrict Do not free to choose other
the sources of supplies sourcing from other supplies

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PRODUCT VS. SERVICE (CHAPTER 9)

Basic for Comparison Product Service

Meaning Material items that can be see, touch Amenities, facilities, benefits or
or feel and ready for sale to the help provided by other people
customers
Nature Tangible Intangible
Transfer of Ownership Goods can be transfer Service cannot be transfer
Evaluation Very simple and easy Complicated
Return Goods can be return Service cannot be return
Separated Goods can be separated Service cannot be separated
Variability no yes
Storage yes no
Production of There is a time long between Production and consumption of
Consumption production and consumption of service occurs simultaneously
goods

TYPES OF RETAILERS (CHAPTER 11)

I. Department Stores
Sell a wide range of merchandise that is arranged by category into different sections of the
physical retail space. Some department store categories include shoes, clothing, beauty
products, jewelry, housewares, and so on. For example, people shopping at SOGO can buy
clothing for a woman, a man, and children, as well as house wares such as dishes and
luggage.

II. Specialty Retailers

Specializing in specific industries or products, this type of retailer is able to offer the customer
expert knowledge and a high level of service. They also add value by offering accessories
and additional related products at the same outlet. Nike and Adidas are examples of specialty
retailers.

III. Supermarkets
Supermarkets are large, self-service stores with central checkout facilities. They carry an
extensive line of all types of food and beverage products, and sometimes also home products,
clothing, and consumer electronics as well. Supermarkets have significant buying power and
therefore often retail goods at low prices. For example is Giant Supermarket.

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IV. Convenience Stores
Usually located in residential areas. This type of retailer offers a limited range of products at
premium prices due to the added value of convenience. A convenience store is a small retail
business that stocks a range of everyday items such as groceries, snack foods,
confectionery, soft drinks, newspapers, and magazines. A convenience store may be part of
a petrol station, so customers can purchase goods conveniently while filling their vehicle with
fuel. It may be located alongside a busy road, in an urban area, near a railway or railroad
station, or at another transport hub. In some countries, convenience stores have long
shopping hours, some remaining open 24 hours. Millennium Mart is one of the example of
convenience store.

V. Discount Retailers
This type of retailer offers a variety of discounted products. They offer low prices on less
fashionable branded products from a range of suppliers by reselling end of line and returned
goods at discounted prices. The discount stores generally offer a limited range and the quality
in certain cases might be a little inferior as compared to the department stores. For example,
Walmart currently operates more than 1300 discount stores in United States and in India,
Vishal Mega Mart comes under discount store.

VI. Hypermarkets
Sometimes called as Supercenter or Superstore is a big box store combining a supermarket
and a department store. Hypermarkets retail facility carrying a wide range of products under
one roof, including full groceries lines and general merchandise. Hypermarkets allow
customers to satisfy all their routine shopping needs in one trip. AEON. Tesco, and Mydin
Wholesale Hypermarket are the examples of Hypermarket in Malaysia.

“MULAKAN DENGAN BISMILLAH, SEMOGA DISUDAHI DENGAN ALHAMDULILLAH”

ALL THE BEST

29/12/2018