BUSINESS IG 2:

Chapter 14
Marketing Strategy:
3.4.1 Justify marketing strategies appropriate to a given
situation
3.4.2 The nature and impact of legal controls related to
marketing
3.4.3 the opportunities and problems of entering new foreign
marketing
 3 . 4 . 1 J U S T I F Y M A R K E T I N G S T R AT E G I E S
A P P R O P R I AT E T O A G I V E N S I T U AT I O N

• Marketing strategy: a plan to achieve the marketing

objectives using a given level of resources.
• A business produces a marketing strategy only after
careful market research. The marketing strategy also
contains details of the marketing budget.
THE MARKETING MIX AND CONSUMER DECISIONS:
 If a marketing strategy is to achieve a business’s
marketing objectives, the marketing decision about
PRODUCT, PRICE, PROMOTION and PLACE must be
linked.
 It does not mean that all these elements are of equal
importance. How important each part of the marketing
mix is in influencing consumers varies depending on the
situation.
The marketing objectives could include:
• Increasing sales of an existing product/service by selling
to new markets or selling more to the existing market
• Increasing sales of new products or services by improving
an existing product (extension strategy ) or a totally new
innovative product
• Increasing market share which will include increasing
sales but also taking market share away from competitors
• Maintaining market share if competition is increasing
• Increasing sales in a niche market
 3.4.1 JUSTIFY MARKETING STRATEGIES APPROPRIATE TO
A GIVEN SITUATION CONTINUED…

DECIDING MARKETING STRATEGY:

o A business’s marketing strategy is a plan to achieve its marketing objectives using a given level of resources.
o Once a business has set its objectives then it will need to take decisions about product, price, promotion and place to achieve them.
These decisions will depend to some extent on the marketing budget available and the stage the product is at in its life cycle.
Recommendations and justifying a marketing strategy in given circumstances:
• As time goes by the marketing mix will need to be changed. This may be because there are new competitors, the product gets to a
different stage of its product life cycle, consumer tastes change, or the business wants to enter a different market.

Factors involving choice of market strategy:

• The market research
• Clear marketing objectives
• Importance of each element of marketing mix
• The marketing budget
• The monitoring of marketing strategy – looking at objectives
 3.4.2 THE NATURE AND IMPACT OF LEGAL
CONTROLS RELATED TO MARKETING:
Legal controls: laws that control the activity of business
LEGAL CONTROLS RELATED TO MARKETING:
 All areas of business are affected by some legal controls. These are the legal controls and regulations set by a country in which business operate.
Most countries put laws in place to protect consumers from unfair or dangerous business activity.
The common legal controls on businesses which affect the marketing functions are once that:
1. Protect consumers from faulty and dangerous goods
2. Prevent businesses from using advertising to mislead consumers
3. Protect consumers from being exploited in industries where there is little to no competition
Impact of legal controls on marketing strategy:
• Firstly, the impact on businesses, to protect consumers is that they will increase their cost. Products may need to change, to meet the minimum
requirements (quality standards) or prevent any health and safety issues.
• A large company that dominates a market may face legal controls, such as anti-trust or competition laws, if it is said to be exploiting consumers by
charging high prices or providing poor quality goods or services.
• Advertisements may have to be withdrawn and redesigned if they are found to contain misleading or inaccurate information.
• The business may have to advertise its product again. It may also be required to issue statements of apology in the newspaper and in the worst
case be fined for deliberately misleading consumers. All these actions increase the business’s costs.
 3.4.3 THE OPPORTUNITIES AND PROBLEMS OF
ENTERING NEW FOREIGN MARKETS:
GROWTH POTENTIAL OF NEW MARKETS IN OTHER COUNTRIES:
• One of the reasons for businesses expanding into new markets in other countries is that the market in their own country has reached maturity or might even be in decline. Other countries
can offer huge marketing opportunities for increased sales, revenue and profits.
Opportunities:
 Home markets might be saturated, and these new markets give the chance for higher sales.
 There is a wider choice of location to produce products, and this encourages businesses to sell as well as produce in these countries. The business will have more information about these
markets and be better placed to sell to them as well.
 Trade barriers have been lowered in many parts of the world making it easier and profitable to now enter these markets.

PROBLEMS OF ENTERING FOREIGN MARKETS:

 Lack of knowledge, the business may not be aware of competition or the habits of consumers in these markets.
 Cultural differences, religion or culture may mean that some products won’t sell in another market.
 Exchange rate changes, if the exchange rate is not very stable then exchange rates changes can mean the price of imported goods change and the products can become too
expensive to sell in the new market.
 Import restrictions, if there are tariffs or quotas on imported products then the prices of these products may be higher than domestically produced goods – reducing sales or
profits or both.
 Increased risk of non-payment, methods of payment may be different in these new markets, and it may be more difficult to be certain that payment for imported goods will be
made.
 Increased transport costs, as products must be transported over long distances then the cost of getting products to market will increase. However, there have been benefits from
using containers to transport products and then container ships are getting larger, and all this has led to reductions in transport costs.
 3.4.3 THE OPPORTUNITIES AND PROBLEMS OF ENTERING
NEW FOREIGN MARKETS: CONTINUED…

BENEFITS AND LIMITATIONS OF METHODS TO OVERCOME SUCH PROBLEMS:

Possible solutions to problems:
 International licensing – this is where the business gives permission for another firm in the new market being entered to
produce the branded or ‘patented’ products under license. This means the products do not have to be physically
transported to the new market which saves time, transport costs and can get round trade restrictions.
 International franchising – this means that foreign franchises are used to operate a business’s franchise abroad. This
means that again local knowledge is used to choose the best place to locate the business.
 International joint ventures – this allows the business to gain important local knowledge so that culture and customs can
be adapted to enable a more successful entry into the new market.
 Localising existing brands - there is a phrase ‘thinking global – acting local’, which is being used by several global
businesses. It means that there is still a common brand image for the business, but it has adapted to local tastes and
culture therefore increasing sales.