3.4 Marketing strategy

Question 1

What is a marketing strategy?

Answer 1

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.

Question 2

What are some examples of marketing objectives?

Answer 2

• Increase sales
• Increase market share
• Entering a new market

Question 3

What are the legal Controls on Marketing?

Answer 3

Misleading promotion – Falsely advertise a product.

Weights & measures – Businesses can’t sell underweight goods (e.g. chocolate bar containing less chocolate than advertised)

Sale of goods – Businesses can’t sell products that are faulty or doesn’t work like it is advertised

Question 4

Why do businesses enter new markets?

Answer 4

Low trade barriers – low trade barrier allows businesses to easily and profitably trade between countries.

Home markets are saturated – demand for the product are no longer growing the country.

Other countries developing – New markets opens up abroad as other countries become more developed.

Question 5

What are the problems with entering a foreign market?

Answer 5

High transport costs – increased costs as businesses have to pay to ship products abroad.

Lack of knowledge – Company X may not know consumer habits in the country they are expanding to. (e.g. where consumers like to shop)

Trade barriers – Countries may have trade barriers to protect local businesses, this may make importing products less profitable for the business. (import quotas)

Exchange rate changes – Exchange rates can change which may mean cost of importing products may become more expensive.

Question 6

How would you overcome the problems with entering a foreign market?

Answer 6

Joint ventures – A joint venture can be created between a business in country X and another business in country Y, this means that business X can gain information from business Y.

International franchising – An example of this is McDonald’s a US company can sell its franchise to a franchisor in China with local knowledge.

Licensing – Business in country X can sell the license of their product to a business in country Y, This can avoid transport costs and trade barriers

Question 7

What are the advantages of becoming a joint venture when entering an international market?

Answer 7

• 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

Question 8

What are the disadvantages of becoming a joint venture when entering an international market?

Answer 8

• 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.