Market

Question

1. Describe how a gray market might develop for a product like Benchmade Knives. What factors might lead to the development of a gray market and how could the company defend itself against gray marketers?

Answer

According to Espinosa, a gray market, also known as a parallel market, is actually a name given to the market that develops in goods which are sold outside of their authorized channels of trade (Espinosa, “What is the Parallel Market?”). One of the major factors that might lead to the development of a gray market for this product is the fact that they are not readily available in international markets, especially in the East and Southeast Asian Regions. In these regions, the distribution of these products is taken on by unofficial distributors. In this case, the most effective way for the company to defend itself from gray marketers is through tapping official distribution channels in this region.

Question

2. What are the attributes of global brands according to Day & Reibstein? Do you agree with their conclusion that only a few global brands exist?

Answer

According to Day & Reibstein, global brand usually carry the following attributes: they have a consistent name that is easy to pronounce and is sold worldwide, brand positioning is same all across the world, sales are usually balanced with no specific region or country dominant, and that they address the same consumer needs across the globe (Day & Reibstein, 184-206). From these attributes, I agree with their conclusion that only a few global brands exist, given that more and more companies are beginning to tailor-fit their products to the specific needs of certain markets, even to the point where they are making brands that are actually unique to local markets.

Question

3. Compare two different global retailers operating in your country and describe their competitive advantages?

Answer

For this question, I am going to compare two global retailers that are major players in my homeland, China: Wal-Mart and McDonald’s. Wal-Mart is one of the largest retailing stores in the world, with 5,651 stores worldwide according to their official website. One of the major competitive advantages of Wal-Mart is the fact that they were able to tailor-fit their stores to localized needs of their market, resulting into stores that operate in a different banner (in China, it is famously known as Wal-Mart Supercenter – Sam’s Club). While McDonald’s has basically applied the same branding in China, it is also important to note that they have actually incorporated local ingredients and given their menus a distinctively Chinese appeal in order to tailor fit their product to the Chinese market.

Question

4. Describe the advantages and disadvantages of direct vs. indirect distribution channels. How does Nike distribute its products internationally?

Answer

One of the main advantages of using direct distribution channels to market a product is that they are able to interact to their costumers first hand; in this case, they may be able to know the actual traits and preferences of the market, and improvise on marketing their products. In addition, it is less costly than indirect marketing. However, the company here may not fully concentrate their efforts on more efficient production. Meanwhile, one major advantage of indirect marketing is that it enables the company to distribute efficiently their products even to faraway places where they have a remote presence, and are also able to focus more on production efficiency. While Nike greatly uses direct distribution of products due to the advent of the internet, majority of its products are still distributed through indirect channels, making their product penetrate wide regions across the globe.