BS14: Marketing strategy

• MARKETING STRATEGY

  • produced after careful market research
  • contains details of the marketing budget
• CHOOSING A MARKETING STRATEGY

  • dependent on the marketing mix and how they affect consumer decisions
  • each part of the marketing mix is not equal in importance
  • how important each marketing mix is in influencing consumers varies depending on the situation
• DECIDING MARKETING STRATEGY

  Once a business has set its objectives then it will need to take decisions about product, price, promotion and place to achieve them.

  
  

  DEPENDENT ON:

  • amount of marketing budget
  • stage the product is at in its life cycle
• The common legal controls on businesses which affect the marketing function are:

  • protect consumers from faulty and dangerous goods
  • prevent businesses from using advertising to mislead consumers
  • protect consumers from being exploited in industries where there is little or no competition (e.g. monopoly)
• IMPACT OF LEGAL CONTROLS

  • increased costs
• INCREASED COSTS (legal controls)

  • product needs to be changed to meet minimum quality standards and safety standards
  • large companies may face anti-trust or competition laws to prevent exploiting
  • misleading/inaccurate advertisements may need to be withdrawn
• BENEFITS OF ENTERING NEW FOREIGN MARKETS

  • growth potential
• GROWTH POTENTIAL (entering new foreign markets)

  • market in home country of business may have reached maturity stage
  • new markets gives new chances for increased sales, revenue and profits
  • the increase in international marketing has been made possible because of developments in technology
  • e.g. internet can reduce foreign trade barriers
• PROBLEMS OF ENTERING NEW FOREIGN MARKETS

  • language and culture differences
  • economic differences
  • social differences
  • legal control differences
  • lack of market knowledge
• LANGUAGE AND CULTURE DIFFERENCES (entering new foreign markets)

  • some words do not translate from one language to another, or may have a completely different meaning in another language
  • cultural differences like colours, numbers, and symbols have different meanings and importance in different places
  • it may be inappropriate to use certain images in advertisements due to religious or other reasons
• ECONOMIC DIFFERENCES (entering new foreign markets)

  • average income of consumers differs widely between countries
  • cost of selling goods and services in foreign markets may be higher because of transport and other exporting costs
  • prices may be too high for consumers to afford in the new market
  • hard for businesses from developed countries to sell in developing countries due to the income gap
• SOCIAL DIFFERENCES (entering new foreign markets)

  • social factors such as the age structure of the population, the importance of family and the role of women all have an impact on business activity
  • e.g. a country full of young people want different things than a country full of old people
• LEGAL CONTROL DIFFERENCES (entering new foreign markets)

  • countries have their own laws and regulations to protect consumers from unfair or dangerous business activity
  • this may differ from country to country
  • the business must ensure that its products and the way it conducts business satisfy the laws of the countries it is looking to expand into
  • may cause an increase in costs from product changes
• LACK OF MARKET KNOWLEDGE 1 (entering new foreign markets)

  • the business does not know the market
  • the market – consumers – does not know the business
• LACK OF MARKET KNOWLEDGE 2 (entering new foreign markets)

  Knowledge about:

  • market size
  • competitors
  • brand image of existing products
  • customer loyalty to existing products
  • consumer tastes and preferences
  • sources of media for promotion
  • channels of distribution

  is essential for the business to succeed.
• METHODS TO OVERCOME PROBLEMS

  • franchising (fr________g)
  • licensing (li______g)
  • joint ventures (j___t v______s)
• INTERNATIONAL FRANCHISING (methods to overcome problems)

  • entrepreneurs can buy the right to use the name, logo and product of an existing business
  • not just within a country; internationally
• LICENSING (methods to overcome problems)

  • a business in a country permits a firm in a foreign country to produce its branded product under license (limited)
  • BENEFIT: goods are produced in a country by a firm that understands the local market
  • LIMITATION: risk of poor quality or other problems that could damage the reputation of the product's original business
• JOINT VENTURE (methods to overcome problems)

  • an agreement between two or more businesses to work together on a project
• BENEFITS OF JOINT VENTURE:

  • risks are reduced, costs are cut
  • businesses bring different expertise to the joint venture
  • increased market potential, especially if the businesses operate in different geographical areas
  • market and product knowledge can be shared to benefit other businesses in the joint venture
• LIMITATIONS OF JOINT VENTURE:

  • mistakes will reflect on all businesses in the joint venture, damaging reputations
  • ineffective decision making processes due to different business culture or different leadership styles of the businesses