PM2

LW01
Economics and Business Environment

Definition Economics:
 Economics can be defined as a social science that studies human behavior and its
relationship with ends and scars which have alternative uses.

Definition Marketing:
 Marketing can be defined as a management process that helps to firstly identify the
needs of the customers then anticipate on the needs of the customer at a profit

Economic data:
 Time-series data  measurement of one variable at different points in time
 Cross-sectional data  measurements of one variable at the same point in time but
different individuals

Methods of Averaging in Economics:

 The arithmetic mean  adds up all values for a variable and divides by n (number of
observations)
 The geometric mean  calculates the product of all the observations & then
calculates the nth root

What is business economics?

 Turning land labour, capital (factors of production) into a product or service

Key ideas in Economics:

 Economy is the collective interaction between producers and consumers making and
carrying out decisions

Idea 1: Decision making involves trade-offs

 Getting the most from scare resources, means facing different trade-offs such as how
to use your time, more people or more machines, etc.

Idea 2: The cost of something is what you give up getting it

 The opportunity cost is whatever is given to obtain some item. It measures the value
of what is forgone
 Sunk costs are costs that are beyond recovery at the moment a decision is made.
Unlike opportunity costs these costs should be ignored.

Idea 3: Rational people and businesses think at the margin

 Marginal changes describe small incremental adjustments

Idea 4: People and businesses respond to incentives

 Comparing cost and benefits
  Possibility of unintended consequences
Idea 5: Trade can make everyone better off
 Trade allows countries to specialize in what they do best and to enjoy a variety of
goods and services

Idea 6: Markets are usually a good way to organize economic activity

 Communist countries adapt central planning but have mainly been abandoned in
favor of markets
 Market economy means decisions are being taken by millions of firms and
households

Idea 7: Governments can sometimes improve market outcomes

 Market failure is when the market on its own fails to produce an efficient allocations
of resources
 Governments can intervene to improve the market

Idea 8: An economy’s standard of living depends on its ability to produce goods and services
 Economic growth is the increase in the amount of goods and services in an economy
 GDP per hand in a useful indicator of measuring living standards
 Productivity is directly related to living standards

LW02
Supply, Demand, Consumer Behavior and Elasticity

 Supply and Demand make the market economics work  determine quantity and
price sold
 Price vs. cost
o Price: The amount of money a buyer/customer pays
o Cost: Payment to factor inputs in production
 Law of Supply
o Shows how price affects producers
o When price goes up  Supply goes up
o When price goes down  Supply goes down
 Supply Schedule shows relationship between price and quantity supplied
 Supply Curve is a graphical display of the supply schedule
 Market Supply: Sum of all supplies of all sellers for a particular good
 Movement along supply curve is caused by change in price
 Shift in Supply Curve is caused by a factor affecting supply other than a change in
price such as:
o Input prices: Production Cost goes up  supply goes down
o Productivity: Productivity goes up  supply goes up. Productivity goes down
 Supply goes down
o Numbers of Sellers: More sellers in the market  increased supply. Fewer
sellers in the market  decreased supply
 Law of Demand
o Shows how price affects buyers/consumers
o When price goes up  demand goes down
o When price goes down  demand goes up
 Demand Schedule shows relationship between price of a good and the quantity
demanded
 Demand curve is a graphical display of the demand schedule
 Market Demand: Sum of all the individual demands for a particular good or service
 Movement along demand curve occurs when there is a change in price
 Shift in demand curve is caused by a factor affecting demand other than a change in
price such as:
o Income: Income goes up  consumers buy more. Income goes down 
consumers buy less
o Price of related goods: Price of product increases  customers might switch
to substitute. Price of complementary good increases  quantity demanded
for main product decreases
o Population: More people  more sales
 Equilibrium: Price where quantity supplied equals quantity demanded
 Above the equilibrium price  surplus; Below equilibrium price  shortage
 Law of Supply and Demand: price adjusts so that the equilibrium point is reached
 Price Elasticity of Supply: Measures how much the quantity supplied responds to
change in the price
o Inelastic: Supply is not very responsive to changes in price
o Elastic: Supply is responsive to changes in price
o Elasticity: can take any value grater than or equal to zero
o Percentage Change in Quantity supplied divided by percentage change in
price
o Determinants: Time period, Productive capacity, Size of firm/industry;
mobility of factors of production; ease of storing stock/inventory
 Price Elasticity of Demand: measures how much the quantity demanded responds to
a change in price
o Inelastic: Demand is not very responsive to change in prices
o Elastic: Demand is responsive to changes in price
o Elasticity: can take any value greater than or equal to zero
o Percentage change in quantity demanded divided by percentage change in
price
o Determinants: Availability of close substitutes; time horizon; necessities
versus luxuries
 Income elasticity of demand measures how the quantity demanded changes as
consumer income changes
o Percentage change in quantity demanded divided by percentage change in
income
 Cross-price elasticity of demand measures how the quantality demanded of one good
changes as the price of another good changes
o Percentage change in quantity demanded of good 1 divided by the
percentage change in price of good 2.
o Positive for Substitutes; Negative for complements
LW03
Production, Costs and Profit Maximization

 Profitability through
o Increasing revenue (selling more or adjusting the price)
o Reducing cost of production
 The Factors of production
o Land, labor, capital
 Total cost: the market value of the inputs that a firm uses in production
o Payment to suppliers
o Payment for the factors of production
 Total Revenue (TR) = P x Q (price times quantity sold)
 Profit = TR – Total costs
 Opportunity costs can include both implicit costs and explicit costs
o Explicit costs: The input costs that the firm needs to buy
o Implicit costs do not require an outlay of money by the firm
 Production function shows amount of output which can be produced given different
combinations of factor inputs
 Labour intensive: rely on large amounts of labour
 Capital Intensive: rely on large amount of capitals
 Short Run: Some factors of production cannot be changed (fixed costs)
 Long Run: All factors can be altered (variable costs)
 Marginal Product: Increase in quantity of output of obtained from one additional unit
of an input
 Diminishing marginal product: Property whereby the marginal product of an input
declines as he quantity of the input increases
 Average Total Cost: Total cost divided by the quantity of output
 Average Fixed Cost: Fixed costs divided by the quantity of output
 Average Variable Cost: The variable cost divided by the quantity of output
 Marginal Cost: The increase in total cost that arises from an extra unit of production
 Profit Maximization:
o Firm will maximize profits at an output where MR = MC
o Marginal Revenue (MR): The change in total revenue from the sale of each
additional unit of output
o Marginal Cost (MC): The change in total costs from the production of each
additional unit
o As long as MR exceeds MC, profit can be increased by increasing production
 Economies of Scale: The more you make of something, the less it costs
o Internal Economies of scale refer to economies that are unique to a firm
o External Economies of scale refer to economies of scale faced by an entire
industry
LW04
Market Structures: Perfect Competition, Monopoly, Oligopoly and Duopoly

 Competitive market where more than one seller offers same/similar product
o More sellers  the greater the competition
o Closer the substitutes  more competitive
 Firms try to differentiate their products to influence the level of competition
o Building better relationships with customers, etc.
 Perfect Competition:
o Competitive firms
o Knowledge from buyers and sellers
o Single market price is determined by the interaction of demand and supply
 Profit is maximized when marginal revenue is equal to marginal cost
 Shutdown is a short run decision not to produce anything during a specific period
because of current market conditions
 To maximize short-run profits, managers must note that:
o Fixed inputs (and fixed costs) cannot be changed in the short run
o Can only change variable costs
 Exit is a long run decision to leave the market
 Imperfect competition: Firms have some degree of market power
 Monopoly: Extreme of imperfect competition
o Firm is the sole seller of a product without close substitutes
o Price maker  only one seller in a market
o Have implications for society
 Oligopoly occurs when just a few firms between them share a large proportion of the
industry ( a market with only a few dominant sellers)
 Duopoly is an oligopoly with two members

LW05
Market Failure and Government Intervention

 Government plays important role in economy (rules, money, taxing, etc.)

 Reasons for Government Intervention:
o Businesses earn profit unfairly (price fixing, misleading advertising)
o Unsafe Working Conditions (long hours for low pay, unsafe machinery)
o Unsafe products harming customers (bacteria, unsafe toys or products)
o Not every citizen have economic safety and stability (reduce unemployment,
economic stability, inflation)
o Environmental Damage
 How do Governments intervene?
o Governments regulate business (rules for business, regulatory agencies)
o Governments make direct payments to individuals (basic needs, etc.)
o Governments own resources, products and services (own land, etc.)
o Governments help to pay for important economic activities (private business)
 o Governments control amount of money spend (taxes, spending, etc.)
o Governments make tax rules and collect special taxes
o Governments intervene to correct market failures (externalities)
 Market Failure occurs when market does not allocate resources efficiently
 Sources of Market Failure:
o Imperfect Knowledge of and between buyers and sellers
o Good not homogenous
o Resource Immobility
o Market Power
o Inequality (discrimination, poverty, unequal wealth distribution, etc.)
o Public goods
 Externalities (effects of a decision maker on a 3rd party that is not taken into
account)
o Negative Externalities: Occur when effects are detrimental to others
o Positive Externalities: Occur when the effects are beneficial to others
 Dealing with Externalities
o Direct Regulation is when the Government directly limits the amount of good
people are allowed to use
o Indirect Regulations: Instead of regulating behavior government can use
market-based policies to align private incentives

LW06
Macroeconomics and International Trade

 Microeconomics studies the individual parts if the economy

 Macroeconomics: the behavior and performance of the economy as a whole
 Countries engage in International Trade
o Different from each other, can benefit from differences
o Achieving economies of scale
 Absolute Advantage is the ability of a producer to produce a greater quantity of a
goof or service with the same quantity of inputs
 Comparative Advantage means a country can produce a good at a lower opportunity
cost than another country
 Free trade is based on the concept of comparative advantage
 Restrictions on Trade
o Protecting domestic jobs (place restrictions)
o National Security (restrictions on steel because of usage for national defense)
o Infant industry arguments and preventing domestic industries from unfair
competition
o Tariff: Taxes on foreign goods and services entering a country
o Import Quota: Limit on the quantity of a good that can be produced abroad
and sold domestically
o Subsidies: Help domestic producers compete against foreign imports and gain
export markets
 Exchange rates: rate at which a person can trade one currency for another
  Macroeconomic Environment can be described by a series of interrelated
macroeconomics variables: GDP, Inflation, Unemployment, Balance of Payments
 GDP measures total expenditure on the economy’s output of goods and services
o Economic growth is measured by GDP growth rate
o Circular flow of income describes all transactions between households and
firms in a simple economy
 Inflation describes situation in which the economy’s overall price level is rising
o Inflation rate is the percentage change in the price level from the previous
period
 Consumer Prices Index (CPI): A measure of the overall prices of the goods and
services bought by a typical consumer
 Unemployment: The number of people of working age who are able and available for
work at current wage rates and who do not have a job
 Unemployment measured by:
o Labour force = Number employed + Number of Unemployed
o Unemployment Rate = Number of unemployed divided by labour workfore
times 100
o Labour force participation rate= Labour force divided by adult population
times 100
 Balance of Payments: The official account of international payments for the import
and export of goods, services and capital
 The current account: Payments for goods and services transacted between the
domestic economy and foreign economies
 The financial account: Records the flow of investment funds between the domestic
economy and foreigners for investment
 The capital account: Records the transfer of funds for the purchase and sale of non-
financial assets such as land and the movement of funds for capital works

LW07
Changing Marketing Environment and Market Led Strategic Management

 Marketing: A form of exchange, which is the act or process of receiving something

from someone by giving something in return.  “The basic function of marketing is
to attract and retain customers at a profit”
 Customer Satisfaction: Creation of a stream of exchanges upon which organizational
success depends
 The Marketing Concept
 Product Orientation: Production Capabilities  Manufacture product  Aggressive
sales of effort  Customers
o Philosophy: We produce what we are best at and then we will try to find
customers who are willing to buy
 Market Orientation: Customer Needs  Potential market opportunities  Marketing
products and services  Customers
o Philosophy: We first analyze what our target group wants and then we will try
to develop/produce/sell the right product/service
 Core principles of Marketing
o Search for market opportunities
o Uncompromisingly customer focused
o Integrated effort of all company departments
 Positive relationship between Market Orientation relies on sales growth, market
share and profitability, international performance
 Market Driven Business

 Effectiveness = objective divided by output (  means doing the right things)

 Efficiency = input divided by output ( An efficient firm produces goods
economically – it does things right)
 Ineffective + Inefficient: Goes out of business quickly
 Effective + Inefficient: Survives
 Ineffective + Efficient: Dies Slowly
 Effective + Efficient: Does well, thrives
 Benefits of the marketing concept
o Customer value customer satisfaction customer loyalty  long-term
customer relationships
 Positive Balance between perceived benefits and perceived sacrifice leads to
customer value
 Customer satisfaction occurs when perceived performance matches or exceeds
expectations
 Customer loyalty: customers return to the same supplier if they are statisfied with
the product
 Long-term customer relationship: satisfied long-term customers are the best
protection against competitive initiatives
  Effective Marketing Mix: Matches customer needs, creates competitive advantage,
matches corporate resources and well balanced
 Environmental Scanning: process of monitoring and analyzing the marketing
environment of a company (Alignment of Company operations, company strategy
and marketing environment)

LW08
Consumer Behavior and Business to Business Marketing

 Co-creation of value, global consumer culture, use of social media  New context of
customer behavior
 Key questions in understanding customers: Who is important, where do they buy,
how do they buy, what are their choice criteria, when do they buy
 The roles of the buying center
o Initiator: person who begins the process of considering a purchase
o Influencer: person who attempts to persuade others in the group concerning
the outcome of the decision
o Decider: the individual with the power and/or financial authority to make the
ultimate choice regarding which product to buy
o Buyer: person who conducts the transaction
o User: actual consumer/user of the product
 The customer decision making process
o Need recognition or Problem Awareness  information search  evaluation
of alternatives  purchase  post-purchase evaluation of decision
 Choice criteria are the various attributes (and benefits) a consumer uses when
evaluating products and services
o Technical, Social, Economic, Personal
o In all cases perception is critical
 When a purchase is highly involving, the customer
is more likely to carry out extensive evaluation
 In low-involvement situations the amount of
information processing may not be worthwhile or
sensible High-Involvement Model of Decision Making
 Common for customers to experience some post-
purchase concerns  cognitive dissonance
 Customer behavior process, buying center, choice
criteria, purchase situation and timing can be
influenced
The low-involvement Model of Decision Making
  Organizational Buying: Decision-making process by which organizations establish the
need for purchased products and services and identify, evaluate and choose among
alternative brands and suppliers
o Industrial Markets, Reseller Markets, Government and Institutional Markets
o Characteristics: Network technology and e-commerce; Nature and size of
customers, complexity of buying, negotiations, risks and uncertainty, etc.
 Costumer or Organizational Product
o Customer: Personal or household use
o Organizational: use in business, manufacture, resale to others
 Six roles in decision making units in B2B markets:
o Initiator: begin purchase process
o Users: Use the product
o Deciders: select supplier/model
o Influencers: provide information and add decision criteria throughout process
o Buyers: authority to execute the contractual arrangements
o Gatekeepers: control flow of information
 B2B E-Procurement facilities many processes associated with the purchasing
function: tendering, awarding contracts, establishing contractual agreements and
ordering  Formats: catalogue sites, vertical markets, auction sites, exchange
markets, buying alliances

LW09
Market Segmentation and Positioning

 Market Segmentation: Identification of individuals or organizations with similar

characteristics that have significant implications for the determination of marketing
strategy
 Advantages: Target Market selection, Tailored marketing mix, opportunities and
differentiation
 Process of Market Segmentation
o Disaggregated Market: characteristics of individual customers understood
o Segmented Market: Customers grouped into segments on basis of similar
characteristics
o Target Market: aim to design a mix that is distinctive from competitors’
offerings
 Customer segmentation into: Behavioral, Psychographic and Profile
 Company’s capability to compete
o Exploitable marketing assets Evaluating Market Attractiveness
o Cost advantages
o Technological edge
o Managerial capabilities and
commitment
  Target Marketing Strategies
o Undifferentiated Marketing
 No strong difference in customer characteristics
 Single Marketing mix for the whole market
o Differentiated Marketing Mix
 One sperate Marketing Mix for each segment
o Focused (Niche) Marketing
 One marketing mix for several segments
Repositioning Strategies
o Customized Marketing
 One separate Marketing Mix for each customer
 Positioning: Market Segmentation, Target Market, Differential
Advantage
 Successful positioning: Clarity, Consistency, Competitiveness,
Credibility

LW10
Value Creation Strategies Through Brands

 Product: Anything that can satisfy customer needs

 Product Line: group of related products all marketed under a single brand name that
is sold by the same company
 Brand: created by developing a distinctive name, packaging and design to distinguish
the offering from a competing product/service
 Product Mix: total set of brands marketed in a company: the sum of the product lines
offered
 Importance of Strong Brands: add value, barrier to competition, profits, market
shares, brand loyalty, brand extension, quality certification, trust
 Brand Equity: measure of the strength of a brand in the marketplace
o Customer-based brand equity resides in the minds of customers and consists
of brand awareness and brand image
o Proprietary-based brand equity is based on assets that are attributable to the
company and consists of patents and relationships
 Building Successful brands: Quality, Positioning, Repositioning, Communication, Being
First, Long-term perspective
 Key branding decisions: Brand Names, URL, Characters, Logos and Symbols, Slogans,
Easy to Pronounce and Remember, Packaging, Rebranding

LW11
Value Creation strategies through services and relationships

 Service: Any act or performance one party can offer to another this is essentially
intangible and does not result in the ownership of anything
o Main Business: Hotels, Airlines, Bank
o Side Business (Servitization): support sale of goods, aftersales service of
producer, deliver service of a producer
 Service Characteristics
o Intangibility (  cannot touch a haircut or hotel stay therefore use clean
smell, pictures of VIPs that come to this place)
 A service is a deed, performance or effort
 Difficulty in evaluation
 Use tangible cues
 Benefits of non-ownerships
o Perishability (Time Elasticity  adjusting prices)
 Consumption cannot be stored
 Match Supply and Demand
 Use of part-time staff
 Differential pricing
o Variability (empower staff to decide quickly)
 Standardization difficult
 Selection, training and rewarding of staff
 Evaluation systems
o Inseparability (Customer integration via direct contact with staff)
 Simultaneous production and consumption
 Avoid inter-customer conflict
 Importance of Service provider
 Managing Service Quality
o Expected Service  Barriers (Misconceptions, Inadequate resources,
Inadequate delivery, Exaggerated promised)  Perceived service
 Managing Service Productivity
o Technology  Customer Involvement in Production  Balancing supply and
demand
 Managing Customer Relationships
o Process of creating, maintaining and enhancing strong relationships with
customers and other stakeholders
o Customer owned resources: brand knowledge, experience, skills,
connectedness
o Customer Motivation: Brand passion, trust, commitment
o Core service can be developed around a company’s offer that meets
customers’ needs in a distinctive manner
o Relationship Quality: Service quality, trust commitment, satisfaction  must
be mutually rewarding
o Customer Relationship Management (CRM) is a term for methodologies,
technologies and e-commerce capabilities used by companies to manage
customer relationships
 Managing Service Staff
o Selection of suitable staff, empowerment, motivation, evaluation, etc.
 Three types of Marketing in Service Indutries
o External Marketing: Company positioning itself as a top service provider
o Interactive Marketing: Employees providing top service
o Internal Marketing: Company positioning itself as a top employer
LW12
Value Creation Strategies Through Pricing

 Pricing Methods: Costs, Competition and Marketing

 Full cost pricing
o Advantages
 Indication of minimum price needed to make a profit
 Usage with other methods possible
o Criticisms
 Takes no account of customers’ willingness to pay
 Increase in price when demand falls
 Sales estimate made before price is set
 Direct-Cost (Marginal Cost) Pricing
o Advantages
 Avoids problems of allocating overheads
 Indicates lowest price at which it is sensible to take business
o Criticisms
 Business buoyant  no indication of optimum price
 Cannot be used in the long-term
 Competitor-Orientated Pricing
o Going-rate pricing
 No product differentiation  producers forced to accept going-rate
o Competitive Bidding
 Price according to specification by purchaser
 Market Orientated Pricing
o Value to customer, Marketing strategy, Price-quality relationships, costs,
competition, explicability, etc.
 Pricing New Products
o Usual objective: Gain profitable market penetration
o Key decision: positioning strategy New Product Launch Strategies
o Target market and extent of differential
advantage
 Pricing Existing Products
o Build Objective: Market penetration and
market share leadership  Achievement
result in long-term profit maximization
o Hold Objective: maintain sales and/or market
share  maintain or match price relative to
the competition or to use value parity
o Harvest objective: maintain or raise profit margins for short-term profit
maximization even if result is long-term failing sales and/or market shares
 High price market segments
o Product provides high value
o Customers have high ability to pay
o Customer and bill payer are different
 o Lack of competition, Excess demand, high pressure to buy, switching costs
 Low Price Conditions
o Only feasible alternative
o Market presence or domination
o Experience curve effect/low costs
o Make money later/elsewhere, battier to entry, predation
 Ethical Issues in Pricing
o Price fixing, Predatory pricing, Deceptive pricing
o Price discrimination, penetration pricing and obesity, Product dumping

LW13
Communicating Customer Value: Digital Marketing and Social Media

 Digital Marketing:
o newest and fastest-growing channels for communicating and selling directly
to customers are digital
o provides marketers and consumers with opportunities for greater interaction
and individualization
o very few marketing programs can be considered complete without
meaningful digital component
 Marketing Communications: means by which firms attempt to inform, persuade and
remind customers (directly or indirectly) about the products and brands they sell
 Mass marketing communications (ad, product placement, PR, sponsorship, etc.) can
facilitate wide dispersion of brand and company messages
 Direct marketing communications: direct contact with
individual (potential) customers
 Integrated Marketing Communications: how brand
messages, tools and media channels can be integrated to
develop coordinated communication strategies that
maximize the efficiency and effectiveness of the
promotional element of the marketing mix
 Owned Media: channel that you create and control (company blog, YouTube
Channel, website, Facebook page)
 Earned Media: customers, press and public share your content (voluntarily given by
others)
 Paid Media: pay third party to broadcast your message to other individuals
 Digital Media Channels: social media, Search Engines, Website, Mobile Apps, Email,
Digital and display advertising
 Key dimensions of Digital Age
o Applications
 Websites, E-commerce, social media, communications, etc.
o Audiences
 Shoppers, Businesses, Communities
o Marketing
 Globalization of markets and competition, remote/mobile working
o Technology
  Internet, mobile, satellite, social networks, data and information
 Elements of Digital Marketing Planning
o Strategic Alignment, Integration, Value Proposition, Implementation and
change
 Assessing target segment involves considering customer connectivity, channel usage,
media consumption, digital engagement, etc.

LW14
Managing Marketing Strategy: Implementation and Decision Making

 Key planning questions

o Where are we now? (Business mission marketing audit: Swot analysis)
o Where would we like to be? (Marketing Objectives)
o How do we get there? (Core strategy, Marketing Mix decisions, Organization,
Implementation)
o Are we on course? (Control)
The Marketing Planning Process
 Mission Statements
o Influenced by
 Customer groups being served
 Macroenvironmental change
 Background of the company, personalities
o Effective mission statement
 Solid understanding of business
 Strong personal conviction and motivation
of the leader
 Enabling success
 External Marketing Audit: Macroenvironment
o Political/Legal: EU and national laws, codes of practice, political instability
o Economic: Economic growth, unemployment, economic trends
o Environmental: Global Warming, Pollution, scare resources, recycling
o Social/Cultural: changes in world population, age, household structure,
attitudes, etc.
o Technological: Innovations, Smart, Bio, communications
 External marketing Audit: Microenvironment
Internal Marketing Audit Checklist
o Market: Size, growth rates
o Customers: Who are they, choice
criteria, buy when and where, rating of
competition on product, promotion,
price, distribution, etc.
o Competitors: who are they?,
objectives and strategies, strengths
and weaknesses, etc.
o Distributors: strengths and
weaknesses, power changes,
distribution methods, decision-making
unit/process and choice criteria
 o Suppliers: who, location, strengths, weaknesses, power changes

 SWOT analysis
SWOT analysis and strategy
o Strengths and Weaknesses (Internal and Controllable) development
o Opportunities and Threats (External and Uncontrollable)
 Strategic Objectives for each product
o Build: Create a new brand and a new target audience
o Hold: Maintain this success and benefit from market
growth
o Harvest: Make as much money as possible with the
products
o Divest: Abandon the investment in the product
 Core Strategy
o Target Markets  Competitors Targets  Competitive Advantage
 Testing Core Strategy Strategic Thrust Alternatives
o Clearly defines target customers and their needs, creates
a competitive advantage, incurs acceptable risk, resource
and managerially supportable, derived to achieve
product market objectives, internally consistent
 Rewards of Marketing Planning
o Consistency
o Encouraging monitoring of change/organizational
adaptation
o Stimulates achievement
o Resource allocation How to handle marketing planning problems
o Competitive Advantage
 Problems in Making Planning Work
o Political
o Opportunity cost
o Reward Systems
o Information/Culture/Personalities
o Lack of knowledge and skills

LW15
Global Marketing Strategy

 Triggers for Expansion to Global Markets (Globalization)

o Saturated domestic markets, small domestic markets, low growth domestic
markets, customer drivers, competitive forces, cost factors, portfolio balance
 Deciding which markets to enter
o Macroenvironmental issues (economic, socio-cultural, political-legal) 
Foreign Market  Microenvironmental issues (Market Attractiveness: market
size and growth rate competition, profit potential; Company capability profile:
skills, resources, product adaptation, competitive advantage)
 Foreign Market Entry Strategies
o Exporting (Indirect/Direct), Corporative, Direct Investment
 Developing International Marketing Strategy
o Standardization versus adaptation
o Standardize where you can, stay local where you must Selecting a Foreign Market Entry Mode
o Can create massive economies of scale
but full standardization can be difficult
o Adaptations allows local tastes and
preferences to be met but increases
costs
o Two approaches
 Market Segmentation (Buyer
motives, preferences, behavior, price sensitiveness)
 Profiled on: region, lifestyle, income, age, etc.
 Barriers to developing standardized global brands
o Culture and consumption patterns Grid to aid thinking about standardization
and adaptation of the Marketing MIx
o Language differences
o Regulations
o Media availability and promotional
preferences
o Organizational structure and culture