CHAPTER 17 MARKETING STRATEGY

A marketing strategy is a plan to combine the right combination of the four elements of
the marketing mix for a product to achieve its marketing objectives.

Marketing objectives could include maintaining market shares, increasing sales in a niche
market, increasing sale of an existing product by using extension strategies etc.

How the elements of the marketing mix work together

Each element of the marketing mix influences the others, so the messages across all
elements need to be consistent. For example, a business selling luxury cruises to people
who are retired would be unlikely to do well by advertising them at very low prices, in
magazines aimed at teenagers.

The need for consistency means that sometimes there have to be compromises when
making decisions about the different elements.

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 How it How it
How it influences How it influences
Element influences influences
‘place’ ‘promotion’
‘product’ ‘price’

If the product is If the product has

A new product may
expensive to to be tried on, it
need more
Product produce, the may be most
promotion than a
price will have to successful if sold
mature product
be higher from a shop

If price needs It would not be

Expensive products
to be low, the advisable to sell
may be best suited to
Price quality of the expensive
being promoted with
product may be products through
a free gift
affected discount retailers

A product that is only

A product sold sold online may need
A product that is
in luxury a different approach
sold cheaply
Place outlets needs from one sold in
may be sold in
to be high shops, eg more
discount shops
quality information about
the product

A promotion
A buy-one-get- campaign that
Promotions can
one-free offer used national
be used to
would not be media would
Promotion reduce the cost
suitable for an require the
of products that
expensive product to be
have a high price
product available
nationally

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Factors that affect the marketing strategy:

Legal Controls on Marketing

There are various laws that can affect marketing decisions on quality, price and the
contents of advertisements.
• laws that protect consumers from being sold faulty and dangerous goods
• laws that prevent the firms from using misleading information in
advertising Example: Volkswagen falsely advertised environmentally friendly diesel
cars and were legally forced to pull all cars from the market
• laws that protect consumers from being exploited in industries where there is little
or no competition, known as monopolising.

Entering New Markets

Growing business in other countries can increase sales, revenue and profits. This is
because the business is now available to a wider group of people, which increases
potential customers.

If the home markets have saturated (product is in maturity stage), firms take their
products to international markets. Trade barriers and restrictions have also reduced
significantly over the years, along with new transport infrastructures, so it is now cheaper
and easier to export products to other countries.

Problems of entering foreign markets:

• Difference in language and culture: It may be difficult to communicate with people in
other countries because of language barriers and as for culture, different images,
colors and symbols have different meanings and importance in different places. For
example, McDonald’s had to make its menu more vegetarian in Indian markets
• Lack of market knowledge: The business won’t know much about the market it is
entering and the customers won’t be familiar with the new business brand, and so
getting established in the market will be difficult and expensive
• Economic differences: The cost and prices may be lower or higher in different
countries so businesses may not be able to sell the product at the price which will give
them a profit
• High transport costs: The mode and efficiency of the types of transport available and
their related costs may differ in different locations depending on the stage of
development in those areas.
• Social differences: Different people will have different needs and wants from people
in other countries, and so the product may not be successful in all countries

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• Difference in legal controls to protect consumers: The business may have to spend
more money on producing the products in a way that complies with that country’s
laws.

How to overcome such problems:

• Joint venture: an agreement between two or more businesses to work together on
a project. The foreign business will work with a domestic business in the same
industry. Eg: Japan’s Suzuki Motor Corporation created a joint venture with India’s
Maruti Udyog Limited to form Maruti Suzuki, a highly successful car manufacturing
project in India.

Advantages:
• Reduces risks and cuts costs
• Each business brings different expertise to the joint venture
• The market potential for all the businesses in the joint venture is increased
• Market and product knowledge can be shared to the benefit of the businesses

Disadvantages:
• Any mistakes made will reflect on all parties in the joint venture, which may
damage their reputations
• The decision-making process may be ineffective due to different business culture
or different styles of leadership

• Franchise/License: the owner of a business (the franchisor) grants a licence to

another person or business (the franchisee) to use their business idea – often in a
specific geographical area.

Fast food companies such as McDonald’s and Subway operate around the globe
through lots of franchises in different countries.

ADVANTAGES DISADVANTAGES

Profits from the franchise

TO Rapid, low cost method of needs to be shared with the
FRANCHISOR business expansion franchisee

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 Gets an income from Loss of control over running
franchisee in the form of of business
franchise fees and royalties
If one franchise fails, it can
Franchisee will better affect the reputation of the
understand the local tastes entire brand
and so can advertise and sell
appropriately Franchisee may not be as
skilled
Can access ideas and
suggestions from franchisee Need to supply raw
material/product and
Franchisee will run the provide support and training
operations

Cost of setting up business

No full control over business-
need to strictly follow
franchisor’s standards and
rules

Working with an established Profits have to be shared

with franchisor
brand means chance of
business failing is low
Need to pay franchisor
Franchisor will give technical franchise fees and royalties
and managerial support
Need to advertise and
Franchisor will supply the promote the business in the
TO
raw materials/products region themselves
FRANCHISEE