Benefit Sought And Usage Rate Marketing Essay

Published Date: 23 Mar 2015

Geographic Segmentation: Refers as it sounds to segmenting the market according the region of a country or the world, market size, market density, or climate. Nokia for example. Has targeted rural India for years by manufacturing rugged, yet sleek, cell phones ad sending army of customer service vans all over the countryside to demonstrate the company's commitment to helping customers. This way, Nokia holds 60% of Indian's handset market [1] .

Demographic Segmentation: Some common bases of demographic segmentation are age, gender, income, ethnic background, and family life cycle. The first one, of course refer to different groups including, new-born, infants, young children, teens, adults, and seniors. All of them can have a lot of potential, for example, through allowances, earnings and gifts, children account for and influence a great deal of consumption although they do not have specifically a wage.

Gender Segmentation, in the US, women make over 70% of purchases of consumer goods each year, this information is gold for marketers in these industries, it allows them to know how to approach in the communication strategy.

Income segmentation is a popular demographic variable for segmenting markets since it can determine the consumer's buying power. It doesn't really mean that the low segments which enter into the category " poor" are not targeted by any brand. There are many study cases where international companies have targeted this low-income segment, especially in developing countries such India, China or Brasil, and had many success, as the article from Prahalad indicates in " The fortune at the bottom of the pyramid". [2] 

The Life Cycle Segmentation is used as, frequently, consumption patterns among people of the same age and gender differ because they are in different stages of this cycle, which is to be intended as a series of stages determines by a combination of age, marital status, and the presence or absence of children. To make a practical example, we can say that according psychological studies, it has been proved that when young married move into the young divorced stage, their consumption patterns often revert back to those of the young single stage of the cycle. Moreover, consumers are especially receptive to marketing efforts at certain points in the life cycle.

Psychographic segmentation: All the previous variables mentioned before, frequently are very useful to make marketers decide about specific strategies to use, but sometimes they don't paint the entire picture of everything. Demographics provide the skeleton, whereas we can say that psychographics add meat to the bones. Some of the most important variables of this segmentation technique are the personality, which reflects a person's attitude, traits, and habits. Motives, marketers of baby products and life insurance appeal to consumer's emotional motives.

Lifestyles: this divides people into groups according to the way they spend their time, the importance of the things around them, their beliefs, and socioeconomic characteristics such as income and education.

Geodemographics: it clusters potential customers into neighborhood lifestyle categories. It combines geographic, demographic and lifestyle segmentations.

Benefit segmentation: This process clusters into same groups customers according the benefits they sought. For example, the snack food market, can be divided into six benefits : nutritional snackers, iweight watchers, guilty snackers, party snackers, indiscriminate snackers, and economical ones. This way, customer profiles can be developed by examining demographic information associated with people seeking certain benefits.

Usage-rate Segmentation: Divides a market by the amount of product bought or consumed. Categories vary with the product, but they are likely to include some combination of: former users, potential users, and heavy users. This type of segmentation allows marketers to focus their efforts on heavy users or to develop multiple marketing mixes aimed at different segments. In fact, there is a principle called " the 80/20 principle" which stated that 20% of customers generate 80% of the demand, although this principle is not numerically exact always of course, general the idea often holds the truth. Developing customers into heavy users then, is the goal behind any frequency/loyalty programs like the airline's frequent flyer programs. Many supermarkets and other retailers have also designed loyalty programs that reward the heavy-user segment with deals available only to them.

International Segmentation:

We have analyzed the potential opportunities that globalization allows to business. Segmentation though can be very useful in this case as well, where marketers try to find in different countries or regions customers groups whom expectations are shared and are more worthy than cultural or national values.

Sometimes, these segments for each country can be very small, but gathered all together can represent a very big and attractive market to go in, therefore, this products are conceived in a very general way, in order to fit in every market.

There are three different approaches marketers can adopt for international segmentation, and this is through :

- Similar geographic countries, with similar culture and infrastructures

- Universal segments within every country

-Different segments within different countries.

The first one, refers to homogeneous countries under the economical and cultural points of view. This could be the example of the Scandinavian countries. Unfortunately due the growing regionalisms marketers can find in some continents such as in Europe but not only even within the same country very different cultures and even languages that is why, this approach is hard to undertake successfully all the time.

The second approach, as seen before, regards multinational brands which are know and accepted globally. Particularly this could be the case for the automobile industry, cosmetics, audio products etc. This kind of products in fact, are used by segments which are considered universal despite the country of origin. In this case, the hardest barrier, is to find a precise marketing strategy to recall the customers. An example for this approach, could be represented for the elite class on every country we can think, whom are probably interested in the same products produced by elite brands such as Hermes, Mercedes, Gucci, Chivas, etc, despite if these people comes from Tokyo, New Delhi, London or wherever.

Finally, the third refers to different segments within different countries whom might be interested for the same product, although they have different expectations and use. For example, the commercialization of the model AE-1 Canon. It was presented in Japan as a substitute and secondary product for young people, in the US the same model was launched as a premium camera, whereas in Germany, it was targeting the most experts and exigent consumers although it was the end line of the best products available in this market.

Every single of these three approached have its pros and cons. Maybe the most used is the first one, which find and distinguishes consumers through national barriers. The second, allows the firm to acquire a strong and stable brand image, besides scale and experience economies. Finally, the third one can be risky since the product can be perceived differently according to the country of usage, although this differentiation might allow to fit every country better.

Positioning

Firms use a variety of basis for positioning, in order to after it create what is called a perception map which will be explained soon. Some of this positioning criteria includes the following:

- Attribute: This way the product is associated with an attribute, feature, or customer benefit.

-Price and quality: In this case, the positioning base may stress high price as signal of quality or emphasize low prices as an indication of value. For example Walmart has successfully followed the low price and value strategy.

Use or application: The application of a product can be effective to position it with buyers. Danone for example introduced its Kahlua liqueur using advertising to point 228 ways to consume the product.

-Product user: This method focuses on a personality or type of user. Gap Inc. which have different brands offers basic casual pieces, such as jeans and t-shirts to middle of the road consumers, while with their Old Navy brand offers low priced, trendy casual wear geared to youth and college age groups, finally with Banana Republic targets with luxurious and casual wear 25-35 year olds.

-Competitor: Positioning against competitors as said previously is part of any positioning strategy. One famous example is the one of Avis positioning themselves as number two compared to Herz.

-Emotion: In this case the positioning happens according what the customer feels. For example, Nike's " Just do it" campaign didn't tell consumer's what "it" is, but most got the emotional message of achievement and courage.

Perceptual Mapping

This is a tool which displaying or graphing, in two or more dimensions, products, brands, or organizations shows their location in consumer's mind. To make this concept more comprehensive we can show an example, from the cordless phone market (exhibit n° 11).

Exhibit n° 11

This way, if we imagine a new cordless company brand which tries to enter into this market, it would be convenient to address themselves these questions regarding their own company and competitors:

What attributes does the brand own? What attributes do competitors own?

Are there gaps in the market that may be filled by the client brand?

How should we be positioned to be both relevant to the market and differentiated from the competition?

In addition to the map itself, analysis of the raw brand ratings, importance ratings, gaps, and ideal market position adds further insight into brand positioning opportunities.

Positioning in an international environment

Positioning is a very important step for marketers before starting with the development of a marketing mix strategy, since this process influences potential customers, the overall perception of a brand, organization or product line. Basically, it can be said that positioning is the place that a product, brand, or group occupies in the consumer's minds in relation with the competition. Normally, it can be said that good marketers concerned particularly about this, for example P&G markets 11 different laundry detergents, but each one of these occupies a unique positions, such as allergen-free, softening, or ultra concentrated.

Effective positioning requires assessing the positions occupied by competing products, determining the important dimensions underlying these positions, and choosing a position in the market where the organization's marketing effort will have the greatest impact. The distinctions can be either real or just perceived, for example, many everyday products, such as bleaches and soaps, differentiate between them just by brand names, packaging, color, smells etc. On the other hand, some firms instead of using the differentiation strategy, position themselves as being similar to other competing brands, for example artificial sweeteners advertised as tasting like sugar or margarine tasting like butter.

In an multinational environment the most difficult task for marketers regarding positioning is to maintain the coherence in the perception and awareness of their products or brands. For example, some fashion brands could be considered top of line in some regions while regular middle in others. Sometimes, marketers can actually not maintain the same awareness and coherence from its brand, in order to keep or get an advantage in a particular region. An example of what said before is Pizza Hut in China, who is trying to build an image different from the one they have in the US ( a fast food pizza restaurant) , to a trendy more selected type one.

Repositioning

Sometimes companies reposition themselves or their products in order to sustain growth, for example when they are heading near the declining stage of the PLC as mentioned before, or when they want to correct some positioning mistakes. Important multinational companies, such as P&G do this, for example, they cut prices of its premium laundry detergent called "Cheer" in order to reposition it as a value brand. [3] An entire industry of firms that need to think about repositioning is the supermarkets one. For more than a decade already, Walmart has been expanding, not only in urban but also in rural areas, causing devastating results to its competition, especially independent grocers. The thing is that according to the consulting firm "Retail Forward" predicts that two supermarkets will go out of business for every Walmart that opens in the US. This is because they position themselves as a low-price chain, with great economies of scale which presents unbeatable prices to its smaller competition, whom if do not want to exit the market will have to reposition for a more specific niche.

Cross cultural negotiations

Since the concept of globalization and foreign markets expansion are main issues regarding global marketing, it is furthermore very important to study and analyze from the human point of view how the cultural differences between the managers who are in charge of closing the deals can affect the future of the business.

Faced with different customs, perceptions and language, usually the human tendency is to stereotype the others, reason for why it is highly recommended to make some researching of the characteristics of a foreign culture before conducting negotiations. Understanding other cultures is often based on tolerance. Trust and respect are essential conditions for several cultures, e.g. the Japanese, Chinese, Mexican, and most Latin American cultures. The Japanese may ask for several meetings before actual negotiation issues are discussed, while North Americans and North Europeans are more inclined to do business as soon as possible.

Even the language of negotiation can be deceptive. Compromise for US and Europeans people is equal to morality, good faith and fair play. To the Mexicans and other Latin Americans compromise means losing dignity and integrity; in Russia and the Middle East it is a sign of weakness, while members of other cultures may regard the common western ideal of a persuasive communicator as aggressive, superficial and insincere. From Hofstede's [4] work we see that there are differences between national cultures. Each of four dimensions, the ones whose represent the corporate culture patterns exhibited across countries. In the following, implications of Hofstede's four dimensions on the company's international negotiation strategies will be briefly presented and discussed

Masculinity/Feminity ƒ  Masculine cultures, such as the Mexican i.e. , value assertiveness, independence, task orientation and self-achievement. Usually seek for competitiveness and negotiations end often in a win-lose situation. On the other side, female negotiators are more likely to be concerned with the agreement's aesthetics and longer-range effects; they feel that the details can be worked out later.

Uncertainty avoidance ƒ  This dimension refers to the comfort level of a culture in an unclear or risky situation. High uncertainty avoidance cultures have bureaucratic negotiation rules, rely on standards, and trust only family and friends. Low uncertainty avoidance cultures prefer to work informally and without specific ritual procedures. Negotiators from high-risk avoidance cultures are likely to seek arrange determined commitments in terms of volume, timing and requirements.

Power distance ƒ  This dimension refers to the acceptance of authority differences between negotiators whom have power and those affected by power. Between equals negotiations are basically a western concept and are not found in status-oriented societies such as Japan, Korea or Russia. European and US negotiators are normally informal and refer to themselves by using first names, dressing in casual attire, etc. Completely on the other side, some cultures, such as the

Japanese, they dress conservatively, and you address to your counterparts by their proper titles and function in the company. Frankness and directness are important in the western world, but are not desirable in Asia for example.

Individualism/collectivism ƒ  Individualistic cultures tend to put tasks before relationships and value independence highly, one of the most individualistic cultures we can take as an example is the American one, this culture tolerates open conflicts and place the needs of the individual over the needs of a group, community or society. In contrast managers from a collectivistic culture, such as China, will seek a stable long term relationship, stressing above all the establishment of a personal relationship.

PART IV -

DESIGNING THE GLOBAL MARKETING PROGRAMME

One of the main research questions mentioned in the preface paragraph regarded the way, or model firms should take in consideration when This very known term refers to a unique blend of product, place, promotion and pricing strategies designed to produce mutually satisfying exchanges with a target market. With this, the marketing manager can control each component of the marketing mix, but the strategies for all four components must be blended to achieves the best results you can get. Any marketing mix is only as good as its weakest component. The Marketing Mix is a major issue, and it must be designed fully to satisfy targeted markets. At first glance for example, Mc Donald's and Wendy's may appear to have very similar marketing mixes since they both are in the fast food hamburger business, but the first one has been more successful at targeting parents with young children for lunchtime meals, whereas Wendy's targets the adult crowd for lunches and dinners, in the same way, the first one has playgrounds, and happy meals whereas the other has salad bars, carpeted restaurants of no playgrounds. This is the way how astute marketers by manipulating these elements can fine-tune the customer offering and achieving competitive success. Globally talking, there can't be such a thing as a standard mix for a multinational company, i.e. Coca Cola in order to reach their rural customers in India, had to adapt its place ( distribution) dimension due the lack of proper highways and hard reachability using bikes and small moving car groceries shops. Next, the four dimension will be discussed with practical cases on the global market field.

Product decisions

Usually the product decisions is the starting point in creating a marketing mix strategy, nothing can be set ( price, design, or promotion) until the firm has the product to sell. The same way, and excellent distribution channel, persuasive campaign and fair price have no value when the product offering is poor or inadequate.

A product, may be defined as everything, both favorable and unfavorable, that a person receives in an exchange, it may be a tangible good, a service or an idea, even a combination of these three. On the other hand, packaging, style, color, options, and size are some typical product features. Just as important are intangibles such as service, image and reputation. On the global field, all this characteristic should take into consideration the hosting culture i.e. Chevrolet launched a car name NOVA, which in the Spanish talking countries means " it doesn't work" having not a good performance on these markets, at the same time, while color white in the western world is symbol of purity and joy, in Japan it is associated to death.

Branding

Part of the success on any business or consumer products depends on the target market's ability to distinguish one product from another, in this sense, branding is the main tool for marketer to distinguish a product from its competition one.

A brand, is the name, term, symbol, design or combination of these, that identifies a seller's product. It can be said, that a brand has three main purposes, the product identification which builds brand equity ( this is a concept that refers to a brand which has gained a high awareness level, is very well perceived, good reputation, quality and brand loyalty among customers). Through a strong brand, furthermore it is possible to build a strong global brand, which refers to a brand that obtains at least a third of its earning from outside its home country, is recognizable outside its home base of customers, and has publicly available marketing and financial data. Second, the best generator of repeat sales is satisfied customers. Branding helps consumers identify products they wish to buy again and avoid those they do not. Brand loyalty, a consistent preference for one brand over all others, is quite high in some product categories such as cigarettes, brand identity is essential to build brand loyalty. The third main purpose of branding is to facilitate new-product sales. Having a well known and respected company and brand name is extremely useful when introducing new products.

As seen, issues regarding branding are not easy to handle, so are the decisions to undertake strategies regarding this issue. In fact, firms may choose to follow a policy of using manufacturer's brands, private brands or both. In either case, they must then decide among a policy of individual branding, family branding, or a combination of individual and family branding. Another usual strategy undertaken is the Co-branding, in which two or more brand names entail on a product or package. One main issue companies need to take into consideration, and most of the time represents a hard problem to solve, especially when commercializing an own brand in developing countries is the Tradermark issue. This, is the exclusive right to use a brand or part of it, others, are prohibited from using the brand without its permission.

In fact, it is no long time since counterfeiting has become a big issue, actually before 1980 it was a relative small business restricted to some particular items, luxury ones, as watched and leather goods. Nowadays, it has been transformed to a much bigger industry, with a full scale production and distribution channels of false versions of many different brands.

Especially in emerging markets, piracy might represent a big issue, but firms have the option to choose from many strategies to face it. These alternatives range from identifying the retail outlets and destroy the production facilities of the pirates, to even convert them into a legitimate business.

However, piracy is not only connected to negative issues, brand piracy in fact, can be seen as a positive element for a brand's value as it is a good indicator of a brand's strengths. If the company's product is copied, it is doing the right thing. Some brands embrace the counterfeit market rather than seeing it as a threat.

In 2004, Giorgio Armani was on a trip to Shanghai, where he purchased a fake Armani watch for $25 instead of the $710 ( price of the original one). He said: 'It was an identical copy of an Armani watch...I'm flattered to be copied. If you are copied, you are doing the things right'.

Although this was a publicity stunt, it does highlight the fact that consumers of fake brands are opposites to consumers of the authentic product and so pose no threat to the brand owner.

Packaging

Packages have always served a practical function, that is, simply, to hold contents together and protect good as they move through the distribution channel. Today, however packaging is also a container for promoting the product and making it easier and safer to use.

Besides its relative principal function of protecting the product, packaging also promotes the product as said before, facilitates storage, use, and convenience of products. Lately, a fourth function that is becoming increasingly important is to facilitate recycling and reduce environmental damage, as it was seen in the first chapters regarding the importance of being environment friendly.

Global issues in branding and packaging

When planning to expand into a new foreign market with an existing product, the company has three options for handling the brand same:

One brand everywhere : This strategy is coherent when the firm markets mainly one product and the brand name does not have negative connotations. An example of this is Coca Cola. The advantages of a one-brand-name strategy are of course greater identification of the product, and ease of coordinating promotion.

Adaptation and modification : If the brand of a company cannot be pronounced in a foreign market, or it has a negative connotation, then it is better to adapt the name of it modify it.

Different brand names in different markets : Local brand name are often used when translation or pronunciation problems occur, when the marketer wants the brand to appear to be a local brand, or when the regulations require localization. For example, Sprite had to be renamed Kin in Korea to satisfy a government prohibition on the unnecessary use of foreign words.

In addition to global branding decisions, companies must consider global packaging needs. The three more important international issues regarding this are labelling, aesthetics, and climate considerations. The first one, (labeling) refers properly translating ingredients, promotional, and instructional information on labels, in some countries such as Belgium, it is more difficult due products require bilingual packaging.

The aesthetics requires also attention, since some logos or visual elements can be different perceived among different countries. For example, as said before colours may influences consumers decisions.

Lastly, extreme climates and long distance shipping necessitate sturdier and more durable packages for goods overseas. Spillage, spoilage and breakage are all more important concerns when products are shipped long distances or frequently handled during shipping and storage.

New products development in global markets

Increasing globalization of markets and competition, it's enough reason for global companies to launch new products from a worldwide perspective. It is easier for a company which starts from the beginning with a global strategy to design products that will be commercialized worldwide. Some companies design their products to meet regulations in their major markets and then, when it is mandatory, meet the smaller market's requirements country by country. This happens because through this strategy firms can take advantage of economies of scales thanks to the standard production requirements. If marketers undertake an efficient and accurate market research of how make the product diffusion as efficient as possible and develop a new product which meets the needs of the customers, big part of the success is guaranteed. Of course, product matters are not the only ones that will decide wheatear the company will have success or not, as we will analyze the other components of the marketing mix.

Distribution decisions

Also know as marketing channel, it can be intended as a large canal through which products, their ownership, financing and payment and communication flow to the consumer. This is represented as a business structure between interdependent organizations that reach from the point of production to the point of reaching the consumer. The distributions channels facilitate the physical movement of goods through the supply channel and encompassing the process involved in getting the right product to the right place and time.

The channel member, which are called intermediaries, or resellers, negotiate one with the other, buying and selling the product, changing its ownership during its movement from the manufacturer to the final consumer. Besides the principal objective, moving the goods, channel members provide specialization and division of labor, overcoming discrepancies and provide contact efficiency.

Before choosing a particular marketing channel, managers must answer some questions, which depend on some factors, such as: who are we selling? How do they buy? Where do they buy? The location in fact and the size of the market are very important. The choice depends also on the product factor, since more complex customized, and expensive tend to benefit from shorter and direct marketing channels, for example pharmaceuticals and scientific instruments. The PLC is also an important factor.

On the other hand, producer's characteristics must be taken into consideration as well before choosing the best distribution channel. In general, producers with large financial resources are better able to use more direct channels, since they are able to train own sale forces, warehouse their own goods, and extend credit to its customers.

Levels of distribution intensity

Organizations have three option for intensity of distribution, exclusive, selective and intensive.

Intensive distribution aims to cover the maximum level of the market. That means trying to have their product available in every outlet where potential customers might want to buy it.

The selective distribution is achieved by screening dealers and retailers, eliminating some few in the targeted geographical area. An example of this type of intensity is the one used by DKNY clothing, which is sold only in selected retail outlets, mainly full price department stores. The third type of intensity is the so called, exclusive one, the most restrictive form of market coverage, which entails only one or a few dealers within a giving area. Usually retailers commit time and money to promote the products as long as the manufacturer guarantees them the exclusivity area.

Channels and distribution decisions for global markets

As we know, the globalization process has been eased by the spread of free trade agreements and treaties in the last decades ( EU, NAFTA, UNASUR..) making the distribution channels more complex and evolved.

Executives should recognize the unique cultural, economic, institutional, and legal aspects of each market before trying to design marketing channels abroad. Producers introducing products in foreign markets have to decide whether this product will be marketed through intermediaries, directly, by the company salespeople, or local ones, or maybe through distributor or agents.

Each decision may have a positive side, but at the same time a backhanded result, for example the use of the company's salespeople would provide more control and lower the risk than using local foreign intermediaries, at the same time, local people know better how to communicate and behave with their local market.

Furthermore, marketer must be aware an get information about the particularities of the channel structures in the particular market they are targeting. Normally, highly developed economic nations are more specialized, so it will be perhaps more easier to marketers to find more options and availabilities in countries such as Germany or Japan, rather than in countries such as Venezuela or India, where usually distribution channels are limited and tend to shun the large-scale formats which are popular in the US and EU. Lastly, it must been said that many countries have "gray" distribution channels in which products are distributed through unauthorized intermediaries. It is estimated that sales of counterfeit luxury items ( just as it was briefly mentioned before) such as Prada handbags have reached almost $2 billion a year, of course nowadays internet also proved to be a way for pirates to circumvent authorized distribution channels.

Strategic channel alliances might be a really good option to evaluate, since it can be practical when the creation of a marketing channel may be too expensive and time-consuming and when a company wants to run promotions. Normally, these alliances are proving to be more successful for growing businesses than mergers and acquisitions, especially in fact, in global markets where cultural differences, distances, and other barriers can be very challenging.

Lastly, although it could be more a logistics management issue, shipper and distributors must be aware of the permits, licenses, and registration they may need to acquire depending on the type of product they are importing, commercializing or simply moving, which can be tariffs, quotas, and other regulations applied in each country. This multitude of rules are managed by the WTO in order to develop a global set to encourage countries to participate. In some instances, poor infrastructure makes transportation unreliable, and even in the more industrialized countries it still can be complicated due government regulations.

Pricing decisions

First of all, it must be said that pricing means something different according if we are talking about a seller or a consumer. For the latter one is the cost of something, whereas for the first price means revenue-the primary source of profits. Marketing managers are frequently challenged by the task of setting the price. But what is price? Well, usually it is described as what is given up in exchange to acquire a good or service. While doing this, price plays two roles in the evaluation of alternative products: Measures the sacrifice ( willing to pay to have it), but not necessarily since also time can be lost waiting to acquire a new good or service. Secondly it gives information cue, in fact, consumers do not always choose the lowest priced product for each category. One explanations of this, is that we infer quality information from price. That is, higher quality should mean for us, higher price, this is further convey by the prominence and status of the purchaser. In fact, a Swatch watch, or a Rolex one can be equally accurately. Although wearing one or the other convey different meanings.

Furthermore, consumers are interested in acquiring products in a "reasonable price", which is a concept linked to the idea of value. In other words, the price paid is based on the satisfaction consumers expect to receive from a product and not necessarily the satisfaction they actually receive.

The price consumers have to pay, is what will become the organization's revenue, it is easy to calculate it by multiplying the cost of a single product by the amount of total goods sold. Of course, from revenue other costs will be detracted, such as the ones arising from production, sales, distribution, finales activities among others. What is left is what is called profit ( if there is some).

In fact profits can be very difficult to achieve, thereby managers must choose a price which is not too high or too low. If the price exceeds that value that it has on the consumer's mind, then sale opportunities will be lost because nobody will purchase the item, conversely, if the product is good, and managers set a low price, it will have great value for the consumers but the firm will be losing revenues capacity. This is way, setting the right price is one of the most stressful and pressure tasks of marketing managers as trends in the consumer market attest:

-Confronting a flood of new products, consumers evaluate the price of each product and compares it with already existing ones.

-Firms are trying to maintain or regain their market share by lowering prices, strategy which often starts a price war.

-Internet has made price comparison easier to control and find.

Besides, in business markets, also because of the last financial crisis, consumers have become more price sensitive, so it's necessary to analyze the price elasticity [5] and more informed. As exhibit n°12 shows, just the change of the 1% of the price, in some markets or for some brands can bring significant changes, that is why even cents count on setting the optimal price.

The effect of 1% increase in price on economic results.

Exhibit n°12 Gardan R., Marn N,.(1993). "Price wars", Mc Kinsey quarterly 3:87

As Exhibit n°12 shows just the 1% increase on price has a significant effect on the economics results, although in order to achieve success, marketers should do some market research since some countries, such as the German one, are extremely sensitive to price, and this 1% rise up on the product price could mean a precious lost of market share.

Setting the price on a product

As we saw previously, setting the price has an important impact on the success of the product, that is why it is a hard task to set the right one. In order to get the possibilities to be more likely successful, there should be four steps to follow and research:

1- Establishing the pricing goals.

2- Estimate de demand, costs and profits.

3- Choosing a price strategy, in order to determinate a base price.

4- Fine-tune this base price with tactics.

Next, some examples and explanations from the mentioned steps:

1-The first thing to do, is to establish the pricing goals. That is, is the company may have some objectives which fall into three categories, profit oriented, sales oriented and status quo. Of course, the all three categories bring trade-off which managers must know how to weigh. For example, a profit maximization objective may require an initial bigger investment; or, reaching the desired market share often means sacrificing short term profits. Sure, managers cannot ignore demands and costs, that is why, even though they have planned short or long term pricing goals, they have to take in consideration the next factors.

2-The total revenue of a company is a function of demand for the product, costs and elasticity of the consumers. There are some questions which managers should consider when analyzing this factors.

What price is so low at which consumers could start questioning its quality?

What is the higher price, consumers would still think it's a good deal?

What is the price on which, consumers would start considering the product as "expensive"?

Considering this factors, then managers are ready to estimate how much profit, and market share can be earned at each possible price.

3-The third step regards, choosing the best pricing strategy. This step, defines the initial price and gives direction for the further movements over the PLC.

The strategy should aim to set a competitive price in a specific market, based on a well defined positioning strategy. It must be taken in consideration as well, that changing for example from a premium price to a super premium price, will need also a change in the product in self, since the increasing of it must be explained through more value for the customer.

Regarding the freedom in pricing, well it depends on if the firm is launching a product which is already on the market, or if it is a new product, this happens because according to this, it will be easier to find substitutes and competition, and if there are, then the freedom will be restricted. It is said actually that just 15 percent of companies do serious pricing research. [6] 

Companies that do serious planning for creating a price strategy can select from three basic approaches: price skimming, penetration pricing and status quo pricing.

The first one is also called "market plus" because it denotes a high price relative to the prices of the competing products. Usually in order to be successful using this strategy, the product must be in possess of unique attributes.

Penetration pricing, represents instead the opposite of the skimming strategy, since it charges relatively low price for a product as a way to reach to the masses. The objective is to gain market share, but of course by doing this, it will take even more time to reach the break eve point, since it requires a higher volume of sales than would a skimming policy.

The third price strategy ( the so called status quo) as pretty much intends the name, charges a price which is very close, or the same as the competition does. Of course, this might be the easiest and simple strategy, although there is the risk it ignores completely the demand or the cost factor, especially if the competition firms have different dimensions, productivity chains etc.

4- Fine-tuning the base price, this is what managers should set after understanding the marketing consequences of price strategies. From this general price level on, marketers can work on short term techniques approaches that do not change the general price level. These pricing tactics allow the firm to adjust for competition in certain markets, meet government regulations, take advantages of particular demand situations, and meet promotional and positioning goals. Next we will briefly analyze the most famous tactics which may vary according to geographic location, type of discounts, and other factors.

Discounts, Rebates and Value-Based pricing; Managers use the various forms of discounts to encourage customers to do what they would not ordinarily do, this might be intended as making them buy something they were not planning to buy at the moment, pay with cash something usually they would pay in rates, taking delivery out of season etc. The following most common tactics are:

-Cash discounts - referring a price reduction in return from prompt payment of a bill.

-Quantity discounts - As the name indicates it, the consumer gets a lower price the higher the amount he purchases.

-Seasonal discounts-the price is lowered for buying merchandise out of season.

-Promotional allowances- is a payment to a dealer for promoting the manufacturer's product.

Rebates- This is a cash refund given for the acquisition of a particular product during a specific period.

The Value-based pricing instead, it's a particular pricing strategy that has grown out of the quality movement. It could be perhaps considered one of the most accurate and recommended marketing strategy to set a price, since it figures it according to the value the product offers to the consumer, instead of the production costs or competitor' s prices. This assumes that the firm is customer driven, therefore tries to understand the attributes customer are looking for. Of course, customers determine the value of a product ( not just its price) relative to the value of alternatives, therefore, this price should be set on a level that seems good to the customer compared with the prices of other options as well.

Geographic pricing: Because many seller ship their wares to a worldwide market, the costs of freight can affect significantly the total cost of a product. These are some of the methods used for geographic pricing;

-FOB origin pricing- is a price tactic that requires the buyer to absorb the freight costs from the shipping point. With this method, the farther buyers are from sellers, the more they pay, due distance issues of course.

-Uniform delivered pricing- with this method, the seller pays the actual freight charges and bills every purchaser an identical, flat freight charge.

-Zone pricing- a marketing manager who wants to equalize total costs among buyers within large geographical area, it may represent something in between the previously mentioned alternatives.

Other tactics: Mangers use these tactics for several purposes, for example to stimulate demand for specific products, to increase store patronage, and to offer a wider variety of merchandise at a specific price point. Next, some of the most used nowadays marketing tactics.

-Single price tactic - in this case the seller offers all goods or services at the same price ( or maybe has two or three prices for everything). This method allows them to remove the price comparison from the buyers decision, furthermore it simplifies their pricing system and potential errors.

- Flexible pricing- Basically it means that different customers pay different prices for the same products or services. The disadvantage is that there will be a lack of profit margins.

-Professional service pricing - usually adopted by professionals with lengthy experience and training. Sometimes the charging can be according the found solution to a problem, performance of an acts or simply hourly. Those who use professional pricing have an ethical responsibility not to overcharge the customer.

Price lining- in this case the seller sets a series of prices for a type of products. Cell phone carriers, use this type of method mostly.

Leader pricing- Attempts to attract customer by selling a product near their production cost, or even below it hoping that shoppers will buy other items once they are in the store.

Psychological pricing- We all know this tactic, it means basically to price at odd numbered to connote a bargain and pricing at even numbered prices to imply quality. An example of this is seeing products that instead of costing $100 cost 99.95$ and so on.

Price bundling- By bundling marketers sell two or more products in a single package for a special price. Bundling can be an important income stream for these companies because the variable cost tends to be low.

International pricing strategies

Pricing policy in contrast to the other elements of the global marketing mix, is highly controllable and inexpensive to change and implement. Therefore pricing strategies and action should be integrated with the other elements of the global marketing mix. On the other hand, differently to local market set pricing, international pricing is much more complex. In fact, its framework depends on many factors, which can be divided by:

Internal - Corporate and marketing objectives, firm positioning, product development and market entry modes.

External - Government influences and constraints, inflation, currency fluctuation, .

Product factors - Stage in PLC, product features, cost structure

Market factors - customer perceptions, nature of competition, competitors objectives

Pricing strategies - pricing across products, across countries.

In determining the price level for a new product in the market the general alternatives are;

-Skimming:

In this case the objective is to 'skim the cream' from the top end of the market, achieving this way the highest possible contribution in a short time. In order to be able to apply this method, the product must be unique, and should offer extra features, great comfort and variety of ease, this way the segments of the market must be willing to pay the high price.

As more segments are targeted and more of the product will be available the price will be gradually lowered. The success of skimming depends on the ability and speed of competitive reaction. With it, firms will gain high margins although their market share might not be big.

-Market pricing:

If similar products exist in the targeted market, market pricing may be used. In this case, the final price will be based on competitive prices. Although companies typically use pricing as a differentiation tool, the global marketing manager may have no choice but to accept the prevailing world market price. Of course, the breakeven point should be achieved in order to cover the production costs and other value chain expenses.

-Penetration pricing:

used to stimulate market growth and capture market shares by deliberately offering products at lower prices than the competition does. This approach requires mass markets, price-sensitive customers and reduction in unit costs through economies of scale and experience curve effects.

Pricing during difficult economic times

Since the aim is to know how to adopt the best pricing decisions in a globalized market, it must be taken in consideration the fact that, as said before, nowadays the economy is worldwide interdependent so, even if far away countries which are not trade partners are having recessions in their economic trend, it could soon or later either way bring consequences to your company.

Especially in crucial times of inflation and recession pricing is always an important aspect of marketing, if the firm does not adjust to the economic trends it may lose ground that might never make up again.

During inflation, special pricing tactics are often needed. These, can be divided into cost oriented and demand oriented tactics. The first one type, culls product with a low profit oriented margin from the product line, but there must be take in consideration some three reasons.

-A high volume of sales on an item, even if it has a los profit margin, can result highly profitable at the end.

- Eliminating some products from the product line, could reduce economies of scale, having a consequence on the other items.

-Even if removing one of the products from the production line doesn't affect significantly the costs from the other products, if could have a price-quality imagine on the entire line.

On the other hand, demand-oriented tactics use price to reflect the changing patterns of the demands as consequence from the inflation and high interest rated.

In case of recession, ( a period of reduced economic activity) where demand for goods and services is lowered, and high unemployment rates is common, marketers can still find in an astute way to build market share because competitor are struggling to make ends meet. In fact, during recession conditions, firms can obtain improvement of profits of 20 percent or sometimes more. [7] 

In this particular case, two interesting maneuvers, already mentioned, can be adopted. The value-based pricing stresses to customers that they are getting a good value for their money. The other one is the bundling/unbundling strategy which can stimulate the demand.

In any case, recession times are good for marketers for analyzing the specific demands of items and the revenue they produce. Prices often lower during recession, which gives place to a price wars where firms finish losing profits and exit the market. What have been discovered recently is that suppliers are an excellent source of cost savings. Specific strategies that companies use with suppliers include renegotiations of contracts, help-offering, keeping pressure on and paring down suppliers.

Promotion & Communication decisions

Even if a company has developed a really good product or service, no matter how well distributed and priced is, probably, it won't survive in the market place without the proper promotion, intended as the communication task from marketers which informs, persuades, and reminds potential buyers of a particular product in order to stimulate a response.

The promotional strategy of company, is a plan which sets the optimal use of the elements for an efficient promotion campaign, so, advertising, PR, personal selling and sales promotion.

It can be said, that the aim of the promotional mix strategy is to convince the previously targeted customers, that the offered product has a good value for their money, and it offers better advantages than the competitor' s one.

In order to do this, marketers must know really well their product, and know where they overcome the rivals product's feature, then inform consumers about this superior benefits and position the product in the market place.

The promotion mix, meets the needs of the target market and fulfill the organization's overall goals. As mentioned previously, it contains different elements, which will be presented next.

Advertising- Whether it is a multi-million dollar campaign or a simple classified ad, almost all companies use some kind of advertising. This, can be intended as any form of impersonal paid communication in which a company is identified

The traditional media, so, newspapers, magazines, books, billboards, radio and TV are the most commonly used advertisement methods, although with the new communication channels, marketers are using always more new methods, such as blogs, e-mail, websites and social media.

One of the main benefits of this kind of advertising is the large number of people you can communicate with at the same time.

Public Relations ( PR): Usually the aim or PR is to build a positive public image. This marketing function evaluates public attitudes, area of social interest and executes programs of action in order to earn public understanding and acceptance, furthermore, it is also useful to educate the public about the firm's goals and objectives, introduce new products and support the sales effort. Of course PR concerns not just the final customer, but suppliers, stockholders, employees and the community where it operates.

Besides what previously said, the PR department may perform any of the following activities:

-Corporate Communication ƒ  Create internal and external messages to promote a positive image of the company.

-Press relations ƒ  Place newsworthy information in the media to attract attention to a product, or service.

-Public affairsƒ  Build and maintain community relations.

- Lobbying ƒ  Make influence on government in order to obtain more favorable legislation or regulations.

- Crisis Management ƒ  In charge to responding to unfavorable publicity or negative events.

Sales promotion: It is to be considered all the other activities, besides advertising and PR, that have as objective to stimulate the consumer purchase decision. It is normally used as a short term tool which should stimulate a boost to increase demand. Some examples of this are, trade shows, coupons, contests, free samples etc.

Personal selling: Basically, a purchase situation in which one person of the firms tries to influence the other ( potential purchaser). Both have different objectives they want to accomplish, on one side, the buyer, wants to obtain the product at the lowest price possible assuring the best quality, while the seller wants to maximize the revenue and profits.

Global Marketing Communication

When a company develops a new product, changes an old one, tries to increase sale, or enters a new market, it must communicate its selling message to potential customers. The two major categories of communication are, interpersonal communication and mass communication. The first one is direct, face to face, an example of this, is a salesperson speaking directly with a client. On the other hand, the latter involves a concept to large audiences, for example newspapers or TV.

In the process of communication, marketers are both senders and receivers of messages. As senders, they try to persuade, or simply remind or inform customers about their product, as receivers instead, they attune themselves to the target market in order to develop the appropriate messages, adapt the existing ones, and spot new opportunities.

Next, exhibit n° 13 presents the typical communication process and its stages.

Exhibit n° 13 Shannon's (1948) Model of the communication process

The sender, is the originator of the message. It could be the organization itself, or a salesperson.

Encoding means to convert the sender's idea in a message. Something really important to remember, especially when a firm tries to communicate with a foreign culture or market, is that what matters is not what the source says, but what the receivers will hear.

The message need to be transmitted from one to the other, and this happens through a channel, which might be a radio, face to face communication, newspaper, computer etc. On the other side of the communication channel, the model finds the receiver, who will decode the message. This action can be intended as the interpretations of the languages and symbol.

As said before, even if the message has been received, it could be not necessarily properly decoded, this is due people tend to manipulate, alter, and modify it to reflect their own biases, needs, knowledge and culture. Especially in foreign markets, marketers must worry about the translation and possible miscommunication, and decide whether to launch a customize or global communication campaign.

Last, marketers find the feedback, from the source, it could be a simple " I agree" or a non verbal sign, smile or gesture. In some cases when it is impossible to receive a personal feedback, then companies must use measurement tools as the percentage of TV viewers who recognize, recalled, or stated that they were exposed to the company' s messages.

The impact of Web 2.0 on Marketing Communication

As said in the first chapter, the Information Technology Communication (ITC) is one of the three phenomena changing the way commerce and economy used to work before.

In fact, internet and related technologies are having a profound impact on marketing communication, Web 2.0 tools, which include blogs, podcasting and social networks especially. In the beginning these tools were used by individual to express themselves, but business began to see that these tools could be used to engage with consumers as well. For example, blogging has altered the communication process for the promotional elements that rely on mass communication- advertising, pr, and sales promotion- by moving them away from impersonal, to a direct communication model.

One of the main issues related to this topic, is always the trade-off between standardization or adaptation.. A study by Hite and Frazer (1988) showed that a majority (54 %) of internationally oriented companies were using a combination strategy (localizing advertising for some markets and standardizing advertising for others). Only 9 per cent of the ¬rms were using totally standardized advertising for all foreign markets, much lower than in previous studies. [8] This could indicate a trend towards less standardization. A total of 37 per cent of the companies reported that they were using only localized advertising. Many of the global companies using standardized advertising are well known (e.g. Coca-Cola, Intel, Philip Morris/Marlboro).

PART V -

Controlling the global marketing program

At last but not least comes the control process, which is not only important to evaluate how the global marketing performance was, but it also provides the necessary feedback to start planning the next cycle.

Exhibit n° 14 shows the linking between the marketing plan, the marketing budget and the control system.

Exhibit 14

After building the global marketing plan, its quanti¬cation appears in the form of budgets. These are meant to be intended as the basis for the design of the marketing control system necessary for a possible reformulation of the plan. These budgets should represent a projection of actions and expected results; meanwhile, the process to achieve these results should be capable of being accurately monitored and controlled. In fact, measuring performance against budget is the main management review process, which may cause the feedback from exhibit n° 14.

The marketing budget is a managerial tool that balances what needs to be spent against what can be afforded and helps make choices about priorities. The marketing budget is usually the most powerful tool with which you think through the relationship between desired results and available means.

Unfortunately, however, 'control' is viewed often as being negative. If employees fear that the control process will be used to judge their performance, and for punishing them, then the so called "managerial slacks" pop-out.

The evaluation and control of global marketing probably represents one of the weakest and most difficult areas of marketing practice in many companies. There are many possible reasons for this: primarily, there is no such thing as a 'standard' system of control for marketing.

The global question is to determine how to establish a control mechanism capable of finding emerging problems before they are made. Considered here are various criteria appropriate for the evaluation process, control styles, feedback and corrective action. These concepts are important for all businesses, but in the international arena they are vital.

CONCLUSION

What then is marketing?

The last approved definition of it by the A.M.A. in 2007 defines marketing as: " the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large".

Compared to the 2004 definition some changes have been made; first of all it is no longer considered a "function" inside the organization, instead marketing is positioned as a broader activity, in which not only certain agents participate, but rather the whole organization.

The new definition also positions marketing as providing long-term value rather than simply being an exchange of money (short-term) for the benefit of the shareholder/organization.

Therefore, in this century, marketing is responsible for more than just sales, and its responsibilities differ depending on the level of organization and strategy. Businesses are no longer defined by the production of their factories and offices, but by their customers. There has been a shift from transactions to a relationship focus. Customers have become partners and the firms must make long-term commitments to maintaining those relationships with quality service and innovation. Furthermore, marketing should give the organization the resources/inputs to gain and retain customers through the last proven key factor that gives success to a company, the "experience" factor. Indeed, big names such as Apple or Starbucks commercialize the same products as their competitors, but it is the way they do so by wooing their customers that makes them the leaders.

The necessity of firms to go abroad - in order to increase opportunities of market shares, revenues and other motives (pag.30) and at the same time calm the tension caused by the saturation of the market and competition from low cost foreign competitors - obliged marketing to change, to become more complex, to increase the research effort and use new methods to be successful in the hosting markets. Marketing and its tools, had to adapt to globalization.

Global marketing makes the already complex and sometimes blurred boundaries of marketing even more complicated, while adding more trade off decisions and problems to be solved. One of the main issues regarding this fact is, as mentioned in the beginning of this review, whether or not to adapt the g