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Chapter 16 - Marketing Strategy (Marketing strategy developed by a…
Chapter 16 - Marketing Strategy
A plan to combine the right combination of the four elements of the marketing mix for a product or service to achieve a particular marketing objective(s).
Marketing strategy developed by a business will differ depending on
the size of market
and
number of size of competitors
. It will need to identify the marketing objectives of the business. Marketing objectives include:
increasing sales of an existing product/service by selling to new markets or selling more to the existing market
increasing sales of new product or service by improving an existing product or a totally new innovative product
increasing market share which will include increasing sales but also taking market share away from competitors
maintaining market share if competition is increasing
increasing sales in a niche market
Different elements of the marketing mix are important in influencing consumer decisions when developing a marketing strategy aimed at a specific target market
target market
Product
Is the product new and innovative or an existing product?
what type of product does the target market like?
does the product need to be changed to meet consumer tastes?
Price
what price will the target customers be willing to pay?
what price do competitors charge?
Place
where does the target market buy their product?
where should the product be sold?
what channels of distribution should it use?
what channels of distribution do competitors use?
Promotion
what methods of promotion should be used to attract the target market
what methods do competitors use?
what budget is available for promotion?
Consumers can be easily misled. Sometimes, advertising can be so persuasive so nearly everyone buys it but if it was not as good as the advert claimed, consumers need protection against businesses. There are laws for customer protection
Weights and measures
retailers and producers commit an offence if they sell underweight goods or if the weighing equipment they use is inaccurate
Trade Descriptions
it is illegal to give the consumer a deliberately misleading impression about a product
Supply of Goods and Services Act
This act does the same for services as the Sale of Goods Act does for products. A service has got to be provided with reasonable skill and care.
It is illegal for misleading sales with description "this week only" when the sale has been going on from previous weeks.
The Distance Selling Regulations
it allows customers a cooling-off period of seven working days - this means they can change their mind about purchasing the good or service.
Entering New Markets Abroad
Opportunities
Growth potential of new markets in other countries. Countries in different parts of the world are now developing and seeing their population enjoying rising incomes
home markets might be saturated and these new markets give the chance for higher sales
there is a wider choice of location to produce products and this encourages businesses to sell as well as produce in these countries. business will have more information about these markets and be better placed to sell to them as well.
trade barriers have been lowered in many parts of the world making it easier and profitable to now enter these markets
Problems
lack of knowledge
- the business may not be aware of competitors or the habits of consumers in these markets
cultural difference
- religion or culture may mean that some products won't sell in another market
exchange rate changes
- if the exchange rate is not very stable then exchange rate changes can mean the price of imported goods change and the products can become too expensive to sell in the new market.
import restrictions
- if there are tariffs or quotas on imported products then the prices of these products may be higher than domestically produced goods - reducing sales or profits or both
increased risk of non-payment
- methods of payment may be different in these new markets and it may be more difficult to be certain that payment for imported goods will be made
increased transport costs
- as products have to be transported over long distances then the costs of getting products to market will increase. However, there have been benefits from using containers to transport products and the container ships are getting larger and all this has led to reduction in transport costs.
Methods to overcome the problems of entering new markets abroad
joint ventures
- this allows the business to gain important local knowledge so that culture and customs can be adapted to enable a more successful entry into the new market.
licensing
- this is where the business gives permission for another firm in the new market being entered to produce the branded or 'patended' products under licence. This means the product do not have to be physically transported to the new market which saves time, transport costs and can get round trade restrictions.
international franchising
- this means that the foreign franchises are used to operate a business's franchise abroad.
localising existing brands
- there is a phrase 'thinking global-acting local' which is being used by several global businesses. It means that there is still a common brand image for the business but it has adapted to local tastes and culture therefore increasing sales.