Presentation 4 – International Marketing Strategy

1
 Lecture Learning Objectives

Lecture 4

At the end of this lecture, participants will be able to:

• Define Strategy
• Discuss Strategic management
• Illustrate Strategic development and analysis
• Determine Business and Growth strategies
• Interpret Ansoff Growth strategy & Differentiation strategy
• Classify Price skimming strategy and penetration strategy
• Identify Acquisition strategy
• List Marketing and other strategies
• Classify Diversity of strategies
• Compare Integration approaches & Diversification strategies
• Define International marketing strategies
• Determine International marketing mix

2
 Definition of Strategy
1. A plan of action designed to achieve a long-term or overall aim.
"time to develop a coherent economic strategy"
master plan, grand design, game plan, plan of action, plan, policy, proposed action,
scheme, blueprint, programme, procedure, approach, schedule; "the government's economic
strategy"
More synonyms tactics, set of tactics

2. The art of planning and directing overall military operations and movements in a war or
battle.
"he was a genius when it came to military strategy"
the art of war, military science, military tactics; generalship
"the process could revolutionize military strategy“
a plan for directing overall military operations and movements.
"non-provocative defence strategies"

3
 Definition of Strategy

A business strategy is the means by which it sets out to achieve its desired ends
(objectives).

It can simply be described as a long-term business planning.

Typically a business strategy will cover a period of about 3-5 years (sometimes
even longer).

4
Strategic Management

5
 Strategic Management
What is the definition of strategic management?

The management of an organisation's resources in order to achieve its goals and objectives.

Strategic management involves setting objectives, analysing the competitive environment,

analysing the internal organization, evaluating strategies, and making sure that the strategies are
rolled out across the organization

6
 Corporate Strategy
What is the strategy of a company?

Company strategy is a term that is used to describe the combination of policies, processes, and
procedures that are employed to help a company operate according to its mission statement and
achieve its short-term and long-term goals

Ray Micallef MBA ACII RGN MIM 7

 Strategic development
What is the strategic development?

A strategic plan is a document used to communicate with the organization the organisations
goals, the actions needed to achieve those goals and all of the other critical elements developed
during the planning exercise.

8
 Strategic Analysis
What is the strategic analysis?

A strategic analysis for a business is one of the most basic and useful tools for strategic business
planning.

Often, a strategic analysis will be referred to as a SWOT analysis; this is an acronym for the major
divisions of the analysis:

1. Strengths
2. Weaknesses
3. Opportunities and
4. Threats

9
SWOT Analysis

10
 Business Strategies
Different Types of Business Strategies
 
A small company can use a number of business strategies, depending on its situation. For
example, new companies may face different challenges than companies that are more
established.

Therefore, the business strategies they implement may be different from those of key
competitors.

Four types of business strategies include the

1. Growth,
2. Product differentiation,
3. Price skimming and
4. Acquisition strategy

11
 Growth Strategy
Growth Strategy

A growth strategy involves introducing new products or adding new features to existing products.

Sometimes, a small company may be forced to change or increase its product line to keep up with
competitors.

Otherwise, customers may start using the new technology of a competitive company, e.g. cell phone
companies are constantly adding new features or discovering new technology. Cell phone
companies that do not keep up with consumer demand will not stay in business very long.

A small company may also adopt a growth strategy by finding a new market for its products.

Sometimes, companies find new markets for their products by accident, e.g. a small consumer soap
manufacturer may discover through marketing research that industrial workers like its products.

Hence, in addition to selling soap in retail stores, the company could package the soap in larger
containers for factory and plant workers.

12
Growth Strategy

13
 Differentiation Strategy
Differentiation Strategy

Small companies will often use a product differentiation strategy when they have a competitive
advantage, such as superior quality or service, e.g. a small manufacturer or air purifiers may set
themselves apart from competitors with their superior engineering design.

Obviously, companies use a product differentiation strategy to set themselves apart from key
competitors.

However, a product differentiation strategy can also help a company build brand loyalty according
to "Porter's Generic Strategies“.

14
Differentiation Strategy

15
 Price-Skimming Strategy
Price-Skimming Strategy

A price-skimming strategy involves charging high prices for a product, particularly during the
introductory phase.

A small company will use a price-skimming strategy to quickly recover its production and
advertising costs. However, there must be something special about the product for consumers to
pay the exorbitant price.

An example would be the introduction of a new technology. A small company may be the first to
introduce a new type of solar panel. Because the company is the only one selling the product,
customers that really want the solar panels may pay the higher price.

One disadvantage of a price-skimming is that it tends to attract competition relatively quickly.

Enterprising individuals may see the profits the company is reaping and produce their own
products, provided they have the technological know-how.

16
Ray Micallef MBA ACII RGN MIM 17
18
 Acquisition Strategy
Acquisition Strategy

A small company with extra capital may use an acquisition strategy to gain a competitive
advantage.

An acquisition strategy entails purchasing another company, or one or more product lines of that
company e.g. a small grocery retailer on the east coast may purchase a comparable grocery chain
in the Midwest to expand its operations.

19
Acquisition Strategy

20
 Marketing strategy
Marketing strategy has the fundamental goal of increasing sales and achieving a sustainable
competitive advantage.

Marketing strategy includes all basic, short-term, and long-term activities in the field of marketing
that deal with the analysis of the strategic initial situation of a company and the formulation,
evaluation and selection of market-oriented strategies and therefore contribute to the goals of
the company and its marketing objectives

21
 Marketing strategy
Developing a marketing strategy
 
The process usually begins with a scan of the business environment, both internal and external,
which includes understanding strategic constraints.

It is generally necessary to try to grasp many aspects of the external environment, including
technological, economic, cultural, political and legal aspects.

A marketing strategy or marketing plan is an explanation of what specific actions will be taken
over time to achieve the objectives.

Plans can be extended to cover many years, with sub-plans for each year, although as the speed
of change in the merchandising environment quickens, time horizons are becoming shorter.

Marketing strategy should not be confused with a marketing objective or mission.

22
 Other strategies
The customised target strategy
 
The requirements of individual customer markets are unique, and their purchases sufficient to
make viable the design of a new marketing mix for each customer.
 
If a company adopts this type of market strategy, they design a separate marketing mix for each
customer.

The differentiated strategy

Specific marketing mixes can be developed to appeal to all/some of the segments when market
segmentation reveals several potential targets

23
 Diversity of strategies
Marketing strategies may differ depending on the unique situation of the individual business.

However, there are a number of ways of categorizing some generic strategies. A brief description
of the most common categorizing schemes is presented below:
 
Strategies based on market dominance
 
In this scheme, firms are classified based on their market share or dominance of an industry.
 
Typically there are four types of market dominance strategies:

• Leader
• Challenger
• Follower
• “Nicher”

24
Diversity of strategies

25
 Entrant strategies
 
According to Lieberman and Montgomery, every entrant into a market – whether it is new or not
– is classified under

1. A Market Pioneer,
2. A Close Follower or
3. A Late follower

26
 Pioneers
 
Market Pioneers are known to often open a new market to consumers based off a major
innovation.

They emphasise these product developments, and in a significant amount of cases, studies have
shown that early entrants – or pioneers – into a market have serious market-share advantages
above all those who enter later.

Pioneers have the first-mover advantage, and in order to have this advantage, business’ must
ensure they have at least one or more of three primary sources:

1. Technological Leadership,
2. Pre-emption of Assets or
3. Buyer Switching Costs

27
 Pioneers
Technological Leadership means gaining an advantage through either Research and Development
or the “learning curve”. This lets a business use the research and development stage as a key
point of selling due to primary research of a new or developed product.

Pre-emption of Assets can help gain an advantage through acquiring scarce assets within a
certain market, allowing the first-mover to be able to have control of existing assets rather than
those that are created through new technology.

While Market Pioneers may have the “highest probability of engaging in product development”
and lower switching costs, to have the first-mover advantage, it can be more expensive due to
product innovation being more costly than product imitation.

It has been found that while Pioneers in both consumer goods and industrial markets have gained
“significant sales advantages”, they incur larger disadvantages cost-wise

28
 Close followers
Being a Market Pioneer can more often than not, attract entrepreneurs and/or investors
depending on the benefits of the market.

If there is an upside potential and the ability to have a stable market share, many businesses
would start to follow in the footsteps of these pioneers. These are more commonly known as
Close Followers.

These entrants into the market can also be seen as challengers to the Market Pioneers and the
Late Followers.

This is because early followers are more than likely to invest a significant amount in Product
Research and Development than later entrants.

By doing this, it allows businesses to find weaknesses in the products produced before, thus
leading to improvements and expansion on the aforementioned product.

Therefore, it could also lead to customer preference, which is essential in market success

29
 Close followers
Due to the nature of early followers and the research time being later than Market Pioneers,
different development strategies are used as opposed to those who entered the market in the
beginning, and the same is applied to those who are Late Followers in the market.

By having a different strategy, it allows the followers to create their own unique selling point and
perhaps target a different audience in comparison to that of the Market Pioneers.

Early following into a market can often be encouraged by an established business’ product that is
“threatened or has industry-specific supporting assets”.

30
 Late followers
 
Those who follow after the Close Followers are known as the Late Entrants.

While being a Late Entrant can seem very daunting, there are some perks to being a latecomer,
e.g. Late Entrants have the ability to learn from those who are already in the market or have
previously entered.

Late Followers have the advantage of learning from their early competitors and improving the
benefits or reducing the total costs.

This allows them to create a strategy that could essentially mean gaining market share and most
importantly, staying in the market.

In addition to this, markets evolve, leading to consumers wanting improvements and

advancements on products.

31
 Late followers
Late Followers have the advantage of catching the shifts in customer needs and wants towards
the products.

When bearing in mind customer preference, customer value has a significant influence.

Customer value means taking into account the investment of customers as well as the brand or
product.

It is created through the “perceptions of benefits” and the “total cost of ownership”.

On the other hand, if the needs and wants of consumers have only slightly altered, Late Followers
could have a cost advantage over early entrants due to the use of product imitation.

32
 Late followers
However, if a business is switching markets, this could take the cost advantage away due to the
expense of changing markets for the business.

Late Entry into a market does not necessarily mean there is a disadvantage when it comes to
market share, it depends on how the marketing mix is adopted and the performance of the
business.
 
If the marketing mix is not used correctly – despite the entrant time – the business will gain little
to no advantages, potentially missing out on a significant opportunity.
 

33
https://www.youtube.com/watch?v=TD7WSLeQtVw

Ray Micallef MBA ACII RGN MIM 34

Break

35
 Growth strategies
 
Growth of a business is critical for business success, so using strategies such as horizontal
integration, vertical integration, diversification and intensification will all benefit a business’s
growth, be it long term or short term.

Ansoff's Matrix gives a simpler explanation of the various growth strategies.

36
Growth strategies

37
 Horizontal integration
 Horizontal integration is the degree at which employees are specialised and integrated in. There
are low horizontal levels which show that employees are specialised in their work and high
horizontal levels which show that employees are integrated in their work.

A business's horizontal boundaries can determine the quantities and changes of products that are
produced by two or more businesses that have been merged producing the same product as one
business.

Some benefits of the horizontal integration strategy is that it is good for fast changing work
environments as well as providing a broad knowledge base for the business and employees.

High levels of horizontal integration leads to high levels of communication within the business.

Another benefit of using this strategy is that it leads to a larger market for merged businesses,
and it is easier to build good reputations for a business when using this strategy.

38
 Horizontal integration
 A disadvantage of using the horizontal integration strategy is that this limits and restricts the field
of interest that the business is expanding the new products into.

Horizontal integration can affect a business's reputation, especially after a merge has happened
between two or more businesses.

There are three main benefits to a business's reputation after a merge.

 
• A larger business helps the reputation and increases the severity of the punishment.
• As well as the merge of information after a merge has happened, this increases the
knowledge of the business and marketing area they are focused on.
• The last benefit is more opportunities for deviation to occur in merged businesses rather than
independent businesses.

39
Horizontal integration

40
 Vertical integration
 Vertical integration is when business is expanded through the vertical production line on one
business.

An example of a vertically integrated business could be Apple. Apple owns all their own software,
hardware, designs and operating systems instead of relying on other businesses to supply these.
 
By having a highly vertically integrated business this creates different economies therefore
creating a positive performance for the business.

Vertical integration is seen as a business controlling the inputs of supplies and outputs of
products as well as the distribution of the final product.
 
Some benefits of using a Vertical integration strategy is that costs may be reduced because of the
reducing transaction costs which include finding, selling, monitoring, contracting and negotiating
with other firms. Also by decreasing outside businesses input it will increase the efficient use of
inputs into the business. Another benefit of vertical integration is that it improves the exchange if
information through the different stages of the production line.

41
 Vertical integration
Some benefits of using a Vertical integration strategy is that costs may be reduced because of the
reducing transaction costs which include finding, selling, monitoring, contracting and negotiating
with other firms.

Also by decreasing outside businesses input it will increase the efficient use of inputs into the
business.

Another benefit of vertical integration is that it improves the exchange if information through the
different stages of the production line.

Some competitive advantages could include;

• Avoiding foreclosures,
• Improving the business marketing intelligence, and
• Opens up opportunities to create different products for the market.

42
 Vertical integration
Some disadvantages of using a Vertical Integration Strategy include the internal costs for the
business and the need for overhead costs.

Also if the business is not well organised and fully equipped and prepared the business will
struggle using this strategy.

There are also competitive disadvantages as well, which include; creates barriers for the business,
and loses access to information from suppliers and distributors.

43
 Diversification
 Diversification is an area included in the Ansoff Matrix strategy, where the most risk for a
business is situated.

This is due to the use of a new product being introduced to a new market, so there are no already
existing target markets or competition.
 
There are two types of diversification, vertical and horizontal.

Horizontal diversification is when a new product is introduced but doesn’t contribute to the
already existing product line.

Meaning horizontal diversification focuses more on product that the business has knowledge
about, whereas vertical diversification focuses more on the introduction of new product onto
new markets, where the business could have less knowledge of the one market.

44
 Diversification
A benefit of horizontal diversification is that it is an open platform for a business to expand and
build away from the already existing market.

A disadvantage of using a Diversification strategy is that the benefits could take a while to start
showing, which could lead the business to believing that the strategy doesn’t work.

Another disadvantage or risk is, it has been shown that using the horizontal diversification
method has become harmful for stock value, but using the vertical diversification had the best
effects.

45
46
 Strategic models
Marketing businesses often use strategic models and tools to analyse marketing decisions. There
are three main models that can be applied and used within a business to receive better
results and reach business goals.

47
 Strategic models
The 3C’s
 
The 3C’s stand for: Customer, Corporation and Competitor, is a strategic model that uses these
three key factors which lead to a sustainable competitive market.
 
Each factor is key to the success of this strategy. The corporation factor mainly focuses on
maximising the strengths of the business from which the business can influence the relevant
areas of the competition to achieve success within the industry.
 
Customers are the basis to any business. Without customers you have no business. The most
important factors of customers and the wants, needs and requirements that the business needs
to fulfil in order to attract buyers.

The competition can be looked at in various different ways such as; purchasing, design, image and
maintenance.

The more unique steps a business takes the less competition a business will face in that field.

48
 Strategic models
The Ansoff Matrix
 
The Ansoff Matrix model was invented by H. Igor Ansoff and is a model that focuses on four main
areas, which are;

1. Market penetration,
2. Product development,
3. Market development and
4. Product/ Market Diversification.

These are then split into a further two areas known as the ‘New’ and ‘Present’.

From this strategy, businesses are able to determine the product and market growth.

This is done by focusing on whether the market is a new market or an already existing market,
and whether the products are new or already existing.

49
 Strategic models
Marketing Mix Model (4P’s)
 
The 4P’s also known as Price, Product, Place and Promotion is a strategy that originated from the
single P meaning Price.

This strategy was designed as an easy way to turn marketing planning into practice.

This strategy is used to find and meet the consumers’ needs and can be used for long term or
short term purposes.

The proportions of the marketing mix can be altered to meet different requirements for each
product produced, similar to altering ingredients when baking a cake.

50
 Strategic models
Real-life marketing
 
Real-life marketing primarily revolves around the application of a great deal of common-sense;
dealing with a limited number of factors, in an environment of imperfect information and limited
resources complicated by uncertainty and tight timescales.

Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven.

For most of their time, marketing managers use intuition and experience to analyze and handle
the complex, and unique, situations being faced; without easy reference to theory.

This will often be 'flying by the seat of the pants', or 'gut-reaction'; where the overall strategy,
coupled with the knowledge of the customer which has been absorbed almost by a process of
osmosis, will determine the quality of the marketing employed.

51
 Marketing Strategy
An organization's strategy combines all of its marketing goals into one comprehensive plan.

A good marketing strategy should be drawn from market research and focus on the product mix
in order to achieve the maximum profit and sustain the business.

The marketing strategy is the foundation of a marketing plan.

52
Marketing Strategy

53
International Marketing Strategies

54
55
Strategic approach to market entry

56
57
58
 Developing a successful marketing strategy
Know the Market

• When you first decide you want to expand your marketing to a global level, you need to
understand the environment with which you will be working.

• Each region of the world has different norms and behaviours when it comes to marketing
messages, what is appropriate in that country, how people prefer to be contacted, and more.

• Be sure to do research on how that market will respond to your marketing strategy so you get
the most traction from your new audience

59
 Developing a successful marketing strategy
Develop a Marketing Plan
• Succeeding in a global environment does not mean simply changing the language of your
efforts.

• You will want your global marketing plan to be consistent with your domestic efforts, but it
will need to be customised based on the knowledge of the region.

• After you have some insight into the global landscape, you can craft a plan to outline your
course of action.

• The plan will start with the identification of your goals and objectives —
– Why are you expanding your efforts?
– What are you looking to achieve?
– How will you measure success?

• Once these are established, you can sketch a path covering the overarching strategy and
the tactics to achieve those goals.

60
 Developing a successful marketing strategy
Customise Your Marketing Approach

• You will likely decide to start your global marketing efforts online to reach a global audience
and centralise your efforts there.

• But remember that what worked for reaching your domestic audience may not translate well
overseas.

• Be sure to adapt your initiatives to fit the audience you are trying to reach to create a
customised experience for them. What works well in one country or one region, will likely not
yield the same results in other markets.

• Speak to the needs of that particular region to market your product or service, and customize
your approach for that environment.

61
Why do you need a successful marketing strategy?

62