<3.4 MARKETING STRATEGY>

A MARKETING STRATEGY is essentially a firm's PREPLANNED DECISIONS regarding how they will COMBINE THE 4 ELEMENTS MARKETING MIX, in order to ACHIEVE their specific OBJECTIVE.

• ASYMMETRIC INFORMATION: SELLERS know more about the QUALITY of the product than the BUYER and therefore can mislead the buyer by withholding information, in addition for more technical products consumers often LACK THE TECHNICAL KNOWHOW in order to make an informed and accurate decision and again can be easily misled.

• PERSUASIVE ADVERTISING: Marketers can persuade consumers to buy products by misleading them with claims about quality and content which could turn out to be false, and in some cases dangerous.

• Therefore consumers need to know that producers will face serious criminal consequences when it comes to false advertising and that LAWS to govern their behavior will be enforced.

This act makes it ILLEGAL to give the consumer a deliberately misleading impression about a product. For example, itis illegal to state that a pair of trousers is made of wool, when they are made of’ cotton. Advertisements must therefore be truth.

When selling products ONLINE or through MAIL ORDER there are certain rules and regulations that MUST be adhered to by the merchant such as:

• A guarantee to deliver the goods within 30 days, unless you’ve agreed otherwise with the customer.

• The price, including all taxes, must be clearly given

• You must tell the customer they can cancel their order up to 14 days after their order is delivered. They do not need to give a reason for canceling. 

It is ILLEGAL for misleading pricing claims such as ‘£40 off for this week only’, when the product was also being sold for the same price the previous week. TESCO WINES

Give an example of how the following THREE legal controls impact OFS's promotional activities. 

1) MISLEADING PROMOTIONS, "OFS, can't claim to be the......"

2) SALES OF GOODS ACT, and...

3) TRADE DESCRIPTIONS ACT.

• RISING INCOMES IN DEVELOPING COUNTRIES has resulted in HIGHER INCOMES meaning HIGHER DEMAND for CONSUMER GOODS including IMPORTS which provides new sales opportunities.

• SATURATION OF HOME MARKET means domestic sales are low, therefore new markets overseas give the firm a new chance for higher sales.

• TRADE BARRIERS such as IMPORT TAXES (TARIFFS) have been LOWERED in many parts of the world as GLOBALISATION occurs, making it easier and profitable to now enter these markers.

• GAIN GREATER LOCAL KNOWLEDGE rather than blindly sell exports from your home country into a new unfamiliar market firms are now encouraged to move production plants directly to these new markets so they can make sure their product is marketed correctly.

• LACK OF KNOWLEDGE ABOUT FOREIGN MARKETS means the firm may get their marketing mix wrong, for example, they may not be aware of the 'PLACE' where most of the target market shop.

• RELIGIOUS AND CULTURAL DIFFERENCES may mean that some products won't sell in another market. For example, alcohol products will not be sold in many Middle Eastern countries. McDonald's in India

• EXCHANGE RATE CHANGES can cause problems because you are now accepting payments in foreign currencies and there is always the risk that the exchange rate will change meaning the value of your revenue will fall in value when exchanged for your currency.

• TRADE BARRIERS such as tariffs or quotas on your products will mean that the prices of your products will be higher than domestically produced goods reducing sales or profits or both.

• INCREASED RISK OF NON-PAYMENT now that you are dealing with different countries' rules of law, corruption levels, may be an issue, and you increase the risk of being defrauded etc... CORRUPTION INDEX

• INCREASED TRANSPORT COSTS as products now have to be transported over longer distances, the costs of getting products to market will increase.

• YMG Explain 3 opportunities and 3 problems that YMG must consider when entering a new market.

• JOINT VENTURES as the name suggests refers to a BUSINESS VENTURE that is UNDERTAKEN JOINTLY by 2+ FIRMS. These agreements give firms access to knowledge and technologies that they are not specialised in, which lowers the risk when entering new and unfamiliar markets. Furthermore, it allows them to diversify their product range, enhance their brand further, and spread risk. If it's cross-border then 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, however, there is always the potential for disagreements and of course, all profits must be shared.

• EXAMPLES

• LICENSING— this is where the business (The 'Licensor') gives permission for another firm (The 'Licensee' or 'license-holder') in the new market being entered to produce the branded or ‘patented' products under license in exchange for a share of the profits per unit sold. This means the products do not have to be transported to the new market which obviously saves time and transport costs plus the fact that the product is no longer exported to the new market, means they avoid paying import taxes which should lower the product's selling price and make it more competitive, and thus increasing sales and profits. The major drawback is that you lose control of how the product is marketed by the licensee which may conflict with how the you wish the product to be branded.

• (PP) Consider the advantages and disadvantages of the following  ways PP could start selling its products in country Z. Recommend which way PP should choose. Justify your answer. 1) FORM A JOINT VENTURE with a retailer in country Z, 2) LICENSING in country Z, 3) Sell on-line to customers in country Z 

• QCH What is meant by a joint venture?

• QCH Identify and explain two reasons why QCH might want to enter new markets.

• YMG Explain how each of the following problems might affect YMG when entering new markets in other countries. 1. Problem caused by lack of local knowledge, 2. Problem caused by import quotas: 

• YMG Do you think a joint venture is the best way for a business to enter a new market in another country? Justify your answer.

• (ES) Explain how the following four legal controls may affect ES. 1) Control over misleading promotion, 2) Control over faulty products, 3) Control over location decisions, 4) Control over pollution.

• (PP) Consider the advantages and disadvantages of the following three ways PP could start selling its products in country Z. Recommend which way PP should choose. Justify your answer. 1) Form a joint venture with a retailer in country Z, 2) Sell to retailers in country Z, 3) Sell on-line to customers in country Z 

• (SC) Explain the following three factors SC will have to consider when marketing its products in foreign markets. Which factor do you think is the most important to achieve high export sales? Justify your answer. 1) Competition 2) Consumer needs, 3) Channels of distribution.

• (CC) CC’s bestselling product is a good quality camping cooker which is similar to those produced by competitors. Explain how each of the following three elements of the marketing mix could be used to market CC’s camping cooker. Justify why each element is important to the success of this product. 1) Price, 2) Promotion, 3) Place.