Essay Questions on Marketing
Q1. Identify three separate tools that can be used for analyzing a market and explain using examples how companies can use these to aid their decision making when planning to expand their export marketing operations
A PESTLE (political, Economic, Social, Technological, Legal and Environmental) analysis is one market analysis tool. The PESTLE factors are a framework for examining all the external factors that affect a business (Murphy, 2004). These factors are then weighed on how they support or impede marketing operations. They are a good indicator of growth and decline in a business. In addition, they can show the potential of a business, help address specific marketing shortcomings and therefore propel a business to profitability. For instance, exporting companies should be wary of the Legal factors affecting the export of goods in all their operational countries. Alexander (2008) observes that total compliance with the legal factors can save a business the agony and losses that accompany cancelation of business licenses. In addition, effective surveillance of the political atmosphere in each country will help an exporting business to predict patterns of civil strife and other events occasioned by political differences.
The second tool is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. The SWOT analysis helps businesses to evaluate their intrinsic (internal) strengths that set them apart in their industry as well as the internal weaknesses that can hamper growth and profitability (Murphy, 2004). In addition, a business is able to evaluate external factors that favor them (opportunities) as well as the threats that abound. In all, an export business should seek to use marketing activities to maximize on the profits and take advantage of opportunities such as great demands of certain exports in certain areas. Moreover, an export business can market its flagship products intensively in its main export destinations so that it can overcome weaknesses that come with new and unpopular products (Murphy, 2004). Marketing should also seek to gather information companies that export similar products to the same target market so that an exporting company can improve on its pricing, packaging, sizing, quality among other issues.
The third marketing tool that can exporting companies can use is the Porter’s Five Forces Model. This marketing tool helps businesses to identify where its power lies in any business situation (Alexander, 2008). The tool considers; supplier powers, buyer powers, competitive rivalry, Threat of substitution and the threat of new products. An exporting company can use this market analysis tool to establish for the presence of string and negative buyer power such as formation of cartels. According to Murphy (2004) this analysis can help an exporting company to set strategies and specific product promotion strategies in cost effective manners. An exporting company that has lost market shares to new market entrants can use this tool to establish the overall effect that issue has on its operations. In all, the combination of the five forces helps in the formulation of effective marketing strategies.
Q2. The marketing communications promotional mix comprises of five tools. Using examples explain why companies entering an export market might be required to adapt their promotional activities
Marketing Communications Mix refers to the blend promotional tools that a business uses to communicate persuasively to its customers, building value and relationships. The five marketing communications mix are; Advertising, sales promotion, personal selling, public relations, and direct marketing (Belch & Belch, 2012). Companies entering an export market might be required to adapt their promotional activities in order to suit the dynamics of specific target markets. The kind of consumers in a given destination as well as the communication technologies in use in that destination determines the channels of advertising that an export company will use (Belch & Belch, 2012). In cases where there is low penetration of internet services, a company may be compelled to advertise through radios to reach many people.
The cultures of some destination markets value personalized services as compared to others. For instance, in Asian countries, one culture is always dominant and has a heavy influence on other smaller ones. In many Asian countries, the culture upholds personalized services and therefore marketing in such cultures can entail personal selling strategies such as face-to-face selling, sales trainings, sales meetings, among other ways that involve company personnel interacting with their customers (Scammell, 2006). The American culture is vibrant and comprises many cultures and as such, public relations strategies and direct advertising would be suitable for that market.
Some issues determine the component of promotion mix to be employed in a given area. For instance, destination markets with many people who avoid advertisements and salespeople can be reached through public relations. Creation of good name through Corporate Social Responsibility and courteous, prompt services can draw in customers in as much as advertising can do (Scammell, 2006). When an exporting company has huge resources to put into marketing it can use sales promotions because they attract wide consumer attention that can dramatize product offers, invite quick customer responses among other beneficial effects.
In all, the promotional mix strategies that an exporting company chooses vary on whether it wants to have push or pull strategy. The push strategy entails using the sales force to push the product through distribution channels to the customers. The pull strategy calls for massive advertising and consumer promotion to induce the final consumers to purchase products (Belch & Belch, 2012).
Q4. Explain using examples why choosing the most appropriate market entry strategy is one of the most difficult decisions for the international marketer.
The four commonest market entry strategies are licensing, joint venture, exporting, and sole venture (Helm, 2004). According to Pehrsson (2004) choosing the most appropriate market entry strategy is difficult because a business has to consider allocation of limited resources, acquisition of substantial market share, profitability, and sustainability of the business venture. Choosing a market entry strategy is always pinned on considerations of time and money. A business has to evaluate ownership advantages. For instance, market entry strategies that pursue joint ventures involve an international company getting into partnership with a local company. This poses the difficulties of reshuffling employees, management personnel and styles, introduction of new products, product rebranding, change of corporate colors among other issues that may confuse the existing clientele (Pehrsson, 2004). The joint venture may also be unpopular with the local people and this poses a huge challenge to this market entry strategy. For instance, the entry of the Wrigley Company into the Middle East market through a joint venture with Dubai-based confectionary company Mars was faced by some opposition and the company had to put in massive resources to stabilize that mew market.
International marketers also face the challenge of unfamiliar cultures, language barrier and socio cultural conflicts when they opt to go into new markets through sole ventures (Helm, 2004). The problems that persist in this regard include difficulties in market acquisition, lowering of product process thereby minimizing the profit margins. The companies could also lack prime land and premises to locate their businesses. In addition, they may lack highly talented staff and whey they do obtain them the employees may demand exceptionally high salaries. There is also the threat of industrial unrest as the company adjusts to the new market. In case of sole venture, many companies face difficulties in acquiring all the necessary documentations (Pehrsson, 2004). In addition, the taxation rates in different countries keeps on fluctuating and, this poses a danger to the establishment of the business.
Market entry through licensing also faces some difficulties although they are minimal compared to other strategies. Licensing brings about difficulties such as limiting the participation of the entrant to specific product, process, trademark, or length of agreement. These issues could bring about compromises in product quality, pricing, and brand equity among other issues that could affect the entire company (Helm, 2004). The potential returns from manufacturing and marketing could be lost due to detachment. Licensees could also become competitors in case they adopt better processes ad technologies. The licensing process is also difficult because it entails a lot of planning, fact-finding and interpretations.
The fourth market entry strategy exporting could also pose massive challenges to market entry. The existence of trading and regional blocs could prevent companies from exporting to certain lucrative markets. The costs of exporting to some regions could be subject to massive inflations and foreign exchange fluctuations thereby leading to huge losses for the market entrant (Pehrsson, 2004). Civil and political unrest in destination markets could influence taxation at border points. International crimes and issues such as terrorism and piracy also influence the wellness of exporting businesses.
Pehrsson, A. (2004). Strategy Competence: A Successful Approach To International Market Entry. Management Decision, 42(6), 758-768.
Alexander, C. (2008). Market risk analysis. Chichester, England: Wiley.
Belch, G. E., & Belch, M. A. (2012).Advertising and promotion: an integrated marketing communications perspective(9th ed.). New York: McGraw-Hill/Irwin.
Helm, R. (2004). Market commitment, export market entry strategy and success: conceptual framework and empirical examination. International Journal of Globalisation and Small Business, 1(1), 58.
Murphy, J. J. (2004). Intermarket analysis profiting from global market relationships. Hoboken, N.J.: J. Wiley.
Scammell, A. (2006). Business Writing For Strategic Communications: The Marketing And Communications Mix.Business Information Review, 23(1), 43-49.