MARKETING STRATEGY:

WHAT IS A MARKETING STRATEGY?

• It is a plan to combine the 4 elements of the marketing mix (product, price, promotion, and place) for a product to achieve its marketing objectives
• It includes maintaining the product’s market share or increasing the sales of an existing 

FACTORS THAT AFFECT THE MARKETING STRATEGY:

Credit of the image: Cambridge IGCSE and O Level Business Studies 5th edition (Karen Borrington  Peter Stimpson)

LEGAL CONTROLS ON MARKETING:

• They include laws that protect consumers from being sold faulty/dangerous goods
• They prevent firms from advertising a product using misleading information
• They also prevent consumers from being exploited in industries when there is little to no competition (monopolizing). This could be found in niche markets that can price their products really high.

ENTERING NEW MARKETS:

WHY ENTER NEW MARKETS?

1. It increases sales, revenue, and profit
2. Increases potential customers
3. Trade barriers can be reduced, making transportation cheaper and easier

PROBLEMS WITH ENTERING FOREGIN MARKETS:

1. High transportation costs

2. Difference in language and culture: Due to the different languages spoken, it may be difficult to understand what exactly the customers want. Adding on, if a business that cooks its food with pork were to open in a Muslim country, it will have to modify its menu in order to appeal to the customers

3. Lack of market knowledge: getting the business to run will be expensive since the business isn’t well aware of the market in a new country and the customers will not be familiar with the business either

4. Economic differences: the costs and prices may differ significantly in different countries so a business may not sell as well and get the same profit. Example: an American business opens up in Egypt where $1 is worth 31 LE. If the American business were to sell with the same prices it does in America, it would lose a lot of money because it would be too expensive for Egyptians to invest in

5. Social differences: different people in different countries will want different products. For example, in the West, people there are interested in wine and alcohol a lot more than people in the Middle-East 

6. Difference in legal controls to protect the consumers: the business that is opening up in a foreign country may have to spend more money in order to abide with the new legal controls

HOW TO OVERCOME THESE PROBLEMS?

1. JOINT VENTURE:

• It is a contract between two or more firms to collaborate on a project
• The foreign business will collaborate with a local business in the same industry
• Advantages:

1. Reduces risk and cuts costs
2. Market potential for both businesses increases
3. Product and market knowledge can be shared between both businesses
4. Each business involved brings its area of expertise to the job

• Disadvantages:

1. Any mistakes done will reflect badly on both parties so it can damage both reputations
2. The decision making process may be ineffective due to different backgrounds and beliefs so disagreements can occur

2. FRANCHISE/LICENSE:

• The owner of the business (the franchisor) grants a license to another business/person (the franchisee) to use their business idea
• Example: McDonalds, Sephora, etc.
• Main disadvantages:

1. Quality problems caused by an inexperienced licensee could damage brand reputation
2. Licensee now has access to information about how the product is made and could therefore develop a better version and become a competitor