1. Ch17

2.  Identifying group of consumers whose
purchasing behavior is different from others
in an important way. Market can be
segmented by (age, sex, lifestyle)
 Marketing mix should be adjusted based on
each market segment
 This includes pricing strategy,
communication , channels, pricing strategy

3.  Things that makes up a product such as design,
power, performance and quality )
 1. cultural differences:
 These make an important differences for a
product (includes language, religion, education
and social structure)
 2. Economic development:
 Consumer behavior is affected by the level of
economic development. In high developed
countries consumers demand lot of extra
performance attributes
 3. Product and technical standards:
 Set by the industry or government

4.  It means the choice of delivering product to
consumers
 Four different distribution channels based on
each country
 Retail concentration:
 Some countries got concentrated retail
system, while others had fragmented retail
system
 Fragmented means allot of retail, no one got
a major share of the market

5.  In developed countries there are a tendency
toward concentrated retailers. Why?
 Increase of car ownership
 Householders with big freezers
 These factors changed shopping habits and
facilitated the growth of large retailers
 Channel length:
 Number of intermediaries between the producers
and consumers. If producers sell directly to
producers it is a short channel, but if there are a
number of retailers and wholesaler it is a long
channel.

6.  Channel length depends on how the retail
system is fragmented. The more fragmented
the retail system the more expensive for
manufacturers to make contract with each
individual retailer.
 This makes the channel system longer
 Factors that shown to shorten the channel
length are
 Internet
 Large discount supermarkets

7.  Channel exclusivity:
 This means channel that is hard for others to
access. New producers find it hard to access
to shelf space in supermarkets. Retailers
prefer to carry existing products instead of
new ones.
 Channel quality :
Refers to the skills of established retailers and
their ability to sell and support the product.
Lack of channel quality may prevent from
market entry

8.  When channel quality is poor, international
business may have to pay attention to
upgrading the channel quality. This can be
done by providing extensive education to
existing retailers, and sometimes establishing
new owned channel

9.  Which channel producers will use to reach
potential consumers. Should they sell directly
to consumers or go through retailers? Or may
they use wholesaler? Should they use existing
import agent or establish their own channel?
 This depends on:
 Retail concentration
 Channel length
 Channel quality
 Channel exclusivity

10.  Generally, the longer the channel the higher
the price consumers should be charged for
the product.; so if manufacturers have to
work with long channel, they may afford
small profit margin.
 So if they need t increase their profit margin
and decrease the product price, they should
work to shorten the distribution channel

11.  Sometimes there are some benefits of long
channel?
 Cut selling cost
 Enter exclusive channels

12.  Barriers to international communication:
1. Cultural barriers
2. Source and country of origin effects: occurs
when the receiver of the message (consumer)
evaluate the message based on the sender
image.
So many companies may prefer to hide their
foreign origins to avoid evaluating the product
based on the product manufacturing country

13.  Noise levels
 Refers to the amount of other messages
competing for the consumers attention. In
developing countries noise is very high but in
less developed countries noise is less.

14.  Push and pull strategies
 Push selling emphasis personal selling than
mass media advertising, but using extensive
personal selling is usually costly
 Pull strategy depends on mass media
advertising
 Firms usually uses a mix of both strategies

15.  Factors that determine the choice of pull or
push strategies include
 1. Product type and consumers sophistication
Firms in consumer good industries that are
trying to sell to large segment of the market
generally favor a pull strategy. Firms that sell
industrial or complex products usually use
push strategy why?
Direct selling allows personal selling to teach
consumers about features of the product

16.  This may not be necessary in developed
countries where a complex products have been in
use for long time , product attributes are well
understood and consumers are already
sophisticated and there are high quality media
channels that can provide point of sale assistance
 2. Channel length: in longer distribution channels
where there are many intermediaries, using
selling personal will be expensive, so use pull
strategy, once demand is created selling people
will feel free to carry the product

17.  3. Media availability:
 Some countries got no good quality mass
media such as printing and electronic
 In general push strategy can be used when:
 Selling industrial products
 When distribution channel is short
 When few print or electronic media are
available

18.  In general pull strategy can be used when:
 For consumers goods
 When distribution channels are long
 When sufficient print and electronic media are
available to carry the market

19.  Standardized advertising:
 Spreading the fixed cost of developing
advertisement over many countries
 Fear about the scarcity of creative talent
some feel that one large campaign will be
enough than many small campaigns
 Localized advertising:
 Cultural difference among consumer should
be considered. Targeted messages are more
effective than global advertising

20.  Advertising regulations in some countries
may block the implementation of
standardized advertising

21.  Price discrimination
 Means charging whatever the market will
bear, in competitive market, prices should be
lower than others in the market
 business may achieve price discrimination by
engaging in an arbitrage

22.  Arbitrage occurs when a company capitalize
on a product differential price between two
countries, by purchasing a product in a
country with low price and reselling it in other
country with high price
 Second condition for success price
discrimination is price elasticity of demand in
different countries.
 Price elasticity of demand measures the
responsive of demand due to change in price

23.  Demand is elastic when a small change in
price causes a large change in demand.
 Inelastic demand means that large change in
prices causes a small change in demand.
 The elasticity of demand is determined by
some factors:
 Income level
 Competitive conditions

24.  Price elasticity tend to be higher in countries
with low income level.
 High competition usually results in high price
elasticity.
Three main pricing strategies:
Predatory pricing: using the price as a
competitive weapon to drive weaker
competitors out of the market, once
competitors are out companies can raise the
price and enjoy the high profits.

25.  To success in predatory pricing strategies,
firm should have a profitable position in
other markets to support the aggressive
pricing in the market it is trying to
monopolize.
 Multipoint pricing strategy:
This happens when two or more international
business compete against each others in two
national markets

26.  Pricing strategy for one firm can affect its
competitors in other market. Aggressive
pricing strategy done by a firm in one country
may have a competitive response by
competitors in other foreign markets.
 Experience curve pricing: means setting low
price worldwide to build global large sales
volume as rapidly as possible, even if this
means large losses at the mean time.

27.  After several years, they will have cost
advantage over their competitors and large
profits.