3.4.1 Justify marketing strategies appropriate to a given situation:
You need to know how to apply the marketing mix to different target markets, analyse what are the most important parts of the marketing mix, and recommend the most suitable marketing strategy.
Marketing strategy is the overall plan for achieving a businesses marketing objectives, within the marketing budget. It contains all the elements of marketing we have looked at from market research, through brand image to the 4Ps.
A crucial part of marketing strategy is a balanced marketing mix, where each of the 4Ps works together in order to achieve the marketing objectives. Each product is unique and will have a unique marketing mix. For a music streaming service the place is not so important, as consumers can access the service from anywhere with an internet connection. For a coffee shop or restaurant location is key, as the location must be convenient for consumers.
The most common question on marketing strategy is like this example, you must explain why three elements are important to the marketing mix, then come to a conclusion as to which is the most important.
| Past Paper Question Example Paper 2 (b) Consider how the following three elements of the marketing mix could help to make the new healthy eating product successful. Which do you think is the most important element for the success of the new product? Justify your answer. [12] – Price – Place – Promotion – Conclusion |
Remember there is no right or wrong answer, so look for evidence in the case study which guides you to a certain conclusion. In this case as it is a new product aimed at a specific target market the business should focus on promotion to build their customer base among health conscious consumers.
| ⭐⭐⭐Top Tip ⭐⭐⭐ An evaluation point you can make in nearly all marketing strategy questions, is all elements of the marketing mix need to complement each other and work together to achieve the marketing objectives. |
3.4.2 Legal Controls on Marketing
Many countries pass laws to protect consumers from false advertising and products that don’t work.
Consumers may take legal action against businesses who break these laws. Legal action is when a business is taken to court. This is usually a very high cost for a business, damages a business’ reputation and has a negative effect on brand image.
As Cambridge IGCSE is an international qualification, and each country has different laws regarding marketing, what you need to know for legal controls is very broad, but there are three “need to know” legal controls on marketing.
Firstly, a business can’t make false or misleading claims about its products, like pills that will cure all illnesses or a dating site that guarantees you will find true love. Red Bull claimed its energy drink “gives you wings”. It had to pay $13 million in damages and stop using the slogan.
Secondly a business must make sure its products are fit for purpose and safe to use. Samsung had to remove the Galaxy S8 from sale after faulty batteries caught fire.
Finally, as we saw with the growth of competitive markets, businesses must make sure they don’t use their dominant position to stop competitors or exploit consumers. In 2015 China fined Japanese car companies for price fixing (making an agreement to keep prices high).
3.4.3 Problems and Opportunities of Entering
Foreign Markets
There are strong links with other parts of the course in this section and a lot of cross over content. Therefore, you may already know most of the “need to know’ information.
In Unit 6 we explore in detail the opportunities of globalisation, and how international markets have become more accessible to companies due to free trade, technology and the increased movement of goods and services across borders. Growth into international markets can be particularly appealing to companies who have reached maturity or decline stage for their products in domestic or traditional markets.
International marketing focuses on the challenges of expanding into new countries and finding solutions to these difficulties.
Despite the huge growth potential, moving into international markets has obstacles which must be overcome. Hugely successful multinational corporations have failed when moving a winning marketing mix abroad. Uber didn’t take off in South East Asia, Tesco failed in the United States and Starbucks has had little success in Australia.
So why can it be so tough expanding internationally? It’s all about the market differences making life difficult.
Firstly, there are language and cultural difficulties. Business will have to employ specialists to translate all communication which adds costs, and also places a barrier which may lead to ineffective communication.
Cultural difference may mean products need to change to be successful in other countries. McDonald’s can ensure it does not sell pork in Muslim countries, but it could be harder for cosmetics companies to adapt to international differences in taste for beauty products. Western countries often demand skin tanning products, while East Asian countries prefer skin whitening products.
Furthermore, social differences like the average age of the population, and income differences between richer and poorer countries can radically affect the success of product launches in international markets.
As we have just seen in the last section, legal controls vary from country to country. Health and safety regulations in a new market may mean that a product has to be radically redesigned, adding much higher costs to production and reducing profit margins.
Finally, businesses will have a wealth of information about their existing markets, but international markets are completely unknown. If the business does not have a strong international brand image it will also be unknown to consumers. Without market information on consumers’ needs and wants, current trends, preferred distribution channels and effective local marketing strategies, expansion can be a high risk strategy.
So how can a business increase its chances of success and overcome the challenges of international expansion?
There are three methods businesses can use to overcome the difficulties of moving into international markets. The good news is we have already looked at two of them in Unit 1, joint ventures and franchising.
Joint ventures are when two companies work together on a specific project.
They share capital and risks, benefit from each other’s expertise and split profits from the venture. For example Volkswagan, a German car manufacturer set up a joint venture with JAC motors, a local Chinese company, to produce and sell its cars in China.
Working in partnership with a local company reduces the challenges due to lack of information about the local market, however, cultural differences between both companies may make decision making difficult.
Franchising means one business buying the license to use another company’s logo, branding and sell their products. This allows entrepreneurs in local markets to act on behalf of the franchisor, and use their local knowledge and language skills.
However, the franchise model is not easily used by businesses that don’t use it already in their home market. For businesses like manufacturers or technology companies, franchises aren’t suitable.
Licensing is a business arrangement in which one business gives a company in an international market permission to manufacture its product for a specified payment. This means the company in the international market or licensee will deal with all the language, cultural and social differences and any legal issues. However, it means the licensor loses some control over the manufacture of it’s products. If there are quality issues with products made by the licensee in the international market it could damage a business’s brand image. The popular quiz show “Who Wants to be a Millionaire” has been successfully licensed to over 100 different countries worldwide.
