Chapter 22 Marketing strategy

22.1 Planning the marketing strategy

Contents of a marketing plan

• purpose of the plan and mission of the business

• situational analysis – where the business is now, which includes market research

• marketing objectives – the strategy must be focused on achieving these

• marketing strategy – the overall plan of action to be taken to achieve the objectives

• marketing mix – the combination of the 4Ps that is to be used

• marketing budget – the resources available

• executive summary and time frame for implementing the plan.

Benefits and limitations of marketing planning

• The marketing plan is an essential part of the overall business plan of existing businesses or
proposed new start-ups. The plan should demonstrate that a market exists for the product; that it
would be profitable to exploit this market; and that the marketing-mix tactics are appropriate for the
market.

• Marketing planning reduces the risk of failure of strategies that are very different to those the
business has followed before. By following the stages of a plan, major potential risks are much
reduced because clear objectives are set, market research is undertaken, a coordinated strategy is
used and promotion spending is kept within budget.

• Planning marketing activities helps to give clear direction to other departments within the
business: finance prepares the cash resources needed, operations ensure sufficient output is
produced and human resources recruits and trains the workforce needed.

Marketing planning limitations:

• Marketing plans take up much management time and a small business may not have the skilled
management expertise to produce an effective and professional plan.

• Any plan can be affected by events and, in a fast-changing market, a complex and inflexible plan
could be a disadvantage. When facing changes, such as the entry of a new competitor, only a flexible
marketing plan is likely to be successful.

• A plan that is not based on adequate research of the market and customers’ preferences can result
in inappropriate marketing strategies being adopted.
22.2 Approaches to marketing strategy

Consistency

A marketing strategy must be consistent in the quality, quantity and message the marketing
activities portray.

Coordination

The marketing strategy must be completely coordinated. All marketing activities in the strategy need
to be tied together so that a consistent message is communicated to customers and potential
customers

Focused

The importance of measurable marketing objectives to the overall marketing plan cannot be
overstressed. Marketing strategies must be focused on achieving specific marketing objectives.

The changing role of IT and AI in marketing

IT applications in marketing

• Internet

• Email

• Mobile

• In store – digital signage

• Social media

Potential AI applications in marketing

• Gain a more complete understanding of consumers by monitoring what they are buying, reading,
watching and commenting on via social media. This data analysis allows marketing managers to
quickly modify a message or special offer to meet consumer preferences.

• Optimise the effectiveness of digital advertising campaigns by analysing consumer word searches,
social profiles and other online data. Once this has been done, more effective digital promotions can
be directed at consumers.

• Create detailed consumer profiles so that the right message can be sent to each individual at the
right time, using the right media. This type of personalisation of the media message about a product
is one of the great advances in AI analysis of consumer-related data.

• AI’s analysis of huge blocks of data and its ability to identify trends allow brand marketing to
interact with consumers exactly when they are making purchasing decisions. This real-time
interaction through an online conversation at the precise moment of purchase or decision-making
can directly influence which product is bought.

There are also possible limitations to using AI in marketing:

• Consumer resistance to data being collected and used may lead to pressure-group activity against
businesses dependent on big data.

• Management supervision and control is still required.

• It needs significant investments in data collection, IT expertise and computing power.

• At present, AI computing systems lack human creativity and imagination.

22.3 Strategies for international marketing

Globalisation and increased economic collaboration have positive and negative implications for
marketing:

Positive implications

• Greater opportunity for selling goods in other countries without tariffs and quotas. The national
markets may be saturated. Moving internationally gives the chance of higher sales, economies of
scale and improved profitability.

• One global marketing strategy can be used to create a global brand identity. This saves on the
costs of ‘different products for different markets.

• By sourcing and importing materials and supplies from low-cost countries, with no tariffs or
quotas, businesses should be able to reduce prices and become more competitive.

• More opportunities to arrange mergers, takeovers and joint ventures with businesses in other
countries which could make marketing in other countries easier.

Negative implications

• Businesses from other countries now have freer access to the domestic market. This increases
competition. Wider consumer choice means that if national businesses are uncompetitive, sales will
fall.

• Increased competition from multinational businesses will force national businesses to reduce
prices and profits may fall.

• Using the same marketing strategy across the world does not consider the cultural and taste
differences between consumers of different nations. Businesses may need to ‘think global but act
local’.

• Activity from anti-globalisation pressure groups may result in bad publicity for multinationals in
particular. There is growing concern about the cultural and environmental impact of globalisation
and pressure-group activity could lead to consumer boycotts and a fall in demand.

Importance of international marketing for a business

• Saturated home markets: one country can have only so many fast-food restaurants, for example.
When the market stops growing and competition is severe, a move to another country, with few
large competitors, can offer rapid sales increases.

• Profit opportunities: rapid sales growth may be combined with low costs of operation and create
high profitability. If a business produces in a country with low labour and property costs and low tax
levels, it can gain higher profit margins by selling at high prices in high-income countries. The great
wealth of some nations, such as the Arab oil states, provides some luxury goods producers with the
opportunity to sell at higher prices than in their domestic markets.

• Spreading risks: international marketing means that the sales and profits of a business are much
less dependent on economic and legal constraints in the home country.
• Poor trading conditions in the home market: for example, in 2019, sales of luxury products in
Greece fell due to the economic austerity crisis, but sales of luxury goods in China continued to
increase.

• Legal differences creating opportunities abroad: for example, strict legal controls on the selling and
advertising of tobacco products in the USA and EU have encouraged most large cigarette
manufacturers to target their selling to emerging market economies with fewer restrictions.
Profitable, yes, but how ethical is this?

International markets: identification, selection and entry

There are four stages in the decision-making process to select which foreign country to sell products
in and how to sell them in this new market:

• Identify potential suitable markets

• Screen potential markets

• Select the market to enter

• Enter the new market

International marketing strategies

There are, then, two broad approaches to selling goods and services internationally. These are
known as pan-global marketing and global localisation.

Pan global marketing - marketing a standardised product across the globe, as if the entire world
were a single market, selling the same product the same way everywhere.

Pan-global marketing strategies

Pan-global marketing may continue to be important for two groups of products in particular. The
first is upmarket brands with international appeal for their exclusivity, such as Rolex watches, Rolls-
Royce cars and Versace dresses. The opportunity to buy the same product as famous pop stars and
film actors is the key promise made by these brands. Consumers do not want them adapted to suit
their local markets. The second is mass-appeal brands such as Levi’s, Apple and Nike, which have
substantial opportunities for global campaigns and standardised products, and the economies of
scale that result from these.

Global localisation – adapting the marketing mix, including differentiated products and adjusting for
national and regional tastes and cultures, in order to maintain local differences.

Global localisation strategies

These strategies are summed up as ‘thinking global – acting local’

Choosing the strategy to develop a global market

The choice of strategy will be influenced by the differences between the existing national market
and the target global markets. The greater these differences are, the greater the need for a localised
strategy and not a pan-global strategy.

the main differences between international markets are:

Economic and social differences - Decisions about international marketing activities need to take the
cost of living into account as well as differences in tax rates, interest rates and the age structure of
the population. Social differences, such as the role of women and the importance of marriage in
society, vary substantially too. These social factors may have a considerable impact on the choice of
products to sell in foreign markets and the marketing strategies used to sell them.

Legal differences - Some products have a different legal status in different countries. For example,
goods such as guns can be sold legally in the USA but are illegal in other countries.

Cultural differences - Cultural differences are a key factor to consider in international marketing, yet
they are often difficult to define and measure. They can exercise a powerful impact on people’s
behaviour. Failure to recognise cultural differences, including language differences, can have a
disastrous effect on a firm’s marketing strategy. For example, some words have unfortunate
meanings when translated into another language. The use of male and female models together in
advertisements is not acceptable in some countries with strong religious traditions. Colours can have
different significances too: in the Far East, white is associated with mourning, whereas black is
associated with mourning in the West.

Differences in business practices - Accounting standards and rules can vary in different parts of the
world. The business may be planning on using direct marketing by setting up a local company to
manage the distribution and selling. The ease and cost of setting up a limited company vary widely
between countries. It can take a few days in the UK, yet the formalities and form-filling can take
more than a year in Sierra Leone, for example.

Selecting the method of entry into international markets

Exporting products

Exporting can be undertaken by selling the product directly to a foreign customer. This happens with
online e-commerce sales. Direct exporting is also commonly used for large and expensive items of
capital equipment, such as aircraft, sold to business customers. Alternatively, the exporting business
could set up its own marketing division in each target country.

International franchising

International franchising means that foreign franchisees are used to operate a firm’s activities
abroad. This can take the form of one foreign company being used as a franchisee for all the
branches in their own country.

Joint ventures -
Licensing - Licensing allows another business in the foreign country to produce the branded goods or
patented products under licence. This will involve strictly controlled terms over quality. Licensing
means that goods do not have to be physically exported, saving on time and transport costs – and
making food products fresher too. The business selling the licence avoids the capital cost of setting
up its own operating bases abroad.

The limitations of this approach could include:

• possible lapses in quality

• unethical production methods used by the licensee to cut costs, reflecting badly on the main
business

• business failure of the licensee, cutting production and sales of the product and reducing income
to the business selling the licence.

Direct investment in foreign subsidiaries