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.
Factors that affect the marketing strategy:
Legal Controls on Marketing
- 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
- 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
- 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.
- 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
- 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.
|TO FRANCHISOR||Rapid, low cost method of business expansion
Gets an income from franchisee in the form of franchise fees and royalties
Franchisee will better understand the local tastes and so can advertise and sell appropriately
Can access ideas and suggestions from franchisee
Franchisee will run the operations
|Profits from the franchise needs to be shared with the franchisee
Loss of control over running of business
If one franchise fails, it can affect the reputation of the entire brand
Franchisee may not be as skilled
Need to supply raw material/product and provide support and training
|TO FRANCHISEE||Working with an established brand means chance of business failing is low
Franchisor will give technical and managerial support
Franchisor will supply the raw materials/products
|Cost of setting up business
No full control over business- need to strictly follow franchisor’s standards and rules
Profits have to be shared with franchisor
Need to pay franchisor franchise fees and royalties
Need to advertise and promote the business in the region themselves
9 thoughts on “3.4 – Marketing Strategy”
These notes are good but I have a question –
Will reading and understanding ONLY your notes for business studies be enough to do well in the IGCSE exam? Or do we have to also look at other textbook and sources to do well?
Hi, these notes are good enough for revision, but please do go through the textbooks as they have very clear definitions of key terms and lots of examples and case studies that will help you for the exams. Also, practise past papers and check their mark schemes for additional points.
Hope that helps! Good luck!
Okay! thanks for letting me know 🙂
Your website is helpful in some many ways
Thank you so much for taking your time to do this for us students
Always glad to help!
Your sources are really good and summarised although to improve i would suggest adding lot’s of images for those visual learners out there like in the text books and remove the many spelling and grammar mistakes. Another question is that do you get all this information from a text book, so should i rely heavily on only using IGCSE AID to revise?
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Hello! I haven’t added visuals (like in the textbooks) because these are supposed to be revision notes, ie, reference material to be used before the exams, after you’ve learned from the course books.
The notes are sourced from various textbooks and online sources.
I proofread these notes periodically to correct language errors and make updates. Please point them out so I can address each specifically.
No estoy de acuerdo de que las ventas de cada países son diferentes nada mas, también en los negocios del mismo país pueden ser mas caro que los otros porque hay muchas gente que traen los productos de otros países para la venta y hay muchas gentes que les gusta tener otras marcas de producto diferentes y es mejor el que tiene del país, así si hay productos costoso.
I’m afraid none us speak Spanish. I’ve plugged your comment into google translate. Please let me know is this is what you were trying to say:
“I do not agree that the sales of each country are just different, also in businesses in the same country they can be more expensive than the others because there are many people who bring products from other countries for sale and there are many people who likes to have other different product brands and the one he has in the country is better, so if there are expensive products.”