Foundations of International Marketing
Marketing Strategy – An Overview
Strategy: plan of action designed to achieve certain defined objectives.
Objectives in business: e.g. sales volume, rate of growth, market share, ROI, etc.
Strategies developed at multiple levels in organization. Together, integrated plan
for organization as whole. Corporate strategies = business unit strategies + any
plans for new business initiatives.
Heart of business plan is always marketing strategy. Other components of plan
must support business’s marketing mission.
Marketing strategy is composed of:
Product/market selection
What markets will we serve with what product lines?
Price
What prices will be set for individual products? How will prices be relative
to each other?
Distribution systems
Wholesale and resale channels through which products/services move to
users.
Market communications
Advertising in any form.
Product/technical service
May (not) be important.
Plant location
May define geographic market boundaries.
Brand strategy
Combination of these factors: marketing mix. Varies from one product/market to
another and in stages of growth.
4 primary elements in marketing mix:
Product/market selection
Product is total package of attributes customer obtains when making purchase.
Product attributes can be both positive and negative.
Perceived value: customer’s existing perception of product. Potential value: what
customer can be educated to recognize.
Market: pocket of latent demand. Markets can be segmented. Market segment:
set of potential customers that are alike in way they perceive and value product.
Segmentation is first step in product/market selection.
Demographic segmentation: relies on e.g. income, age, sex, ethnicity as
explanatory variables for differences in taste, buying behaviour and consumption
patterns.
,Geographic segmentation: relies on
different areas of the country and
different parts on the world, as they
may vary in market potential,
competitive intensity and
government regulations.
Psychographic variables: relies on
differences in individual
lifestyles/attitudes toward self, work,
home, family and peer-group identity.
The way industrial purchasers use
product and how it fits into processes
and systems may provide basis for
market segmentation.
In making product/market choices, factors that should be considered:
Product value
Focus on segments with highest product value.
Long-run growth potential
Resource commitments
Can resources be made available to compete in high potential market?
Does ROA justify?
Competitive poisoning
Advantage often lies with first-mover.
Company-product/market fit
New product/market opportunities must be assessed in context of existing
business.
Pricing
Prices of products/services are determined
by:
Supply/demand
The greater the supply, the lower
the price.
Production and overhead costs
Cost sets the floor. Low-cost producers have advantage.
Fixed and variable (per unit) costs affect pricing strategy.
Competition
Establishes ceiling. Responses to competitive price pressures:
o Differentiating products
o Attempting to dampen intrabrand competition among resellers
o Exercising price leadership
Buyer bargaining power
Buyers have strength to extent that they account for significant portion of
seller’s sales and they have multiple options for meeting procurement
needs.
Product value to potential customers
, May vary across market segments and among buyers. So products must be
different for different market segments.
Skimming pricing: in new market, price may be high to reach segments for
which product has greatest value and bring price down over time to reach
lower segments.
Penetration pricing: in new market, price may be low to achieve high
market share. Is higher-risk strategy.
Distribution
Distribution systems include: personal salesforce, with wholesale distributors and
retail outlets providing geographically structured market coverage. Electronic
ecommerce channels add new dimensions to worldwide distribution
infrastructure.
Elements in distribution system:
Direct sales reps
Employees of firm and call directly on customers.
Sales agents
Independent operators who carry lines of several suppliers.
Distributors
Buy from many suppliers and have wide product lines.
Retail outlets
Compromise vast infrastructure supplying end-products/services to
consumers and business buyers. In some product areas, retail outlets are
often franchised.
Internet
Provides consumer and industrial buyers convenient access to unlimited
products.
Channels support
o Products are stocked and available at resale level
o Resellers actively promote products to end-customers
o Resale prices and margins do not deteriorate
Suppliers gain strength under these conditions when dealing with channels
environment:
o Selective rather than intensive distribution
o Superior product line breadth and quality
o High degree of supplier/reseller interdependency
o Supplier salesforce presence at resale level
o End-market demand development
Distribution systems are hardest to build and therefore also hardest to change.
Market communications
Communication channels available: print media, television, direct mail,
telemarketing, trade shows, point-of-sale displays, personal salesforces and third-
party influencers.
Decision-making process (DMP):
1. Awareness of need
2. Search for information
Marketing Strategy – An Overview
Strategy: plan of action designed to achieve certain defined objectives.
Objectives in business: e.g. sales volume, rate of growth, market share, ROI, etc.
Strategies developed at multiple levels in organization. Together, integrated plan
for organization as whole. Corporate strategies = business unit strategies + any
plans for new business initiatives.
Heart of business plan is always marketing strategy. Other components of plan
must support business’s marketing mission.
Marketing strategy is composed of:
Product/market selection
What markets will we serve with what product lines?
Price
What prices will be set for individual products? How will prices be relative
to each other?
Distribution systems
Wholesale and resale channels through which products/services move to
users.
Market communications
Advertising in any form.
Product/technical service
May (not) be important.
Plant location
May define geographic market boundaries.
Brand strategy
Combination of these factors: marketing mix. Varies from one product/market to
another and in stages of growth.
4 primary elements in marketing mix:
Product/market selection
Product is total package of attributes customer obtains when making purchase.
Product attributes can be both positive and negative.
Perceived value: customer’s existing perception of product. Potential value: what
customer can be educated to recognize.
Market: pocket of latent demand. Markets can be segmented. Market segment:
set of potential customers that are alike in way they perceive and value product.
Segmentation is first step in product/market selection.
Demographic segmentation: relies on e.g. income, age, sex, ethnicity as
explanatory variables for differences in taste, buying behaviour and consumption
patterns.
,Geographic segmentation: relies on
different areas of the country and
different parts on the world, as they
may vary in market potential,
competitive intensity and
government regulations.
Psychographic variables: relies on
differences in individual
lifestyles/attitudes toward self, work,
home, family and peer-group identity.
The way industrial purchasers use
product and how it fits into processes
and systems may provide basis for
market segmentation.
In making product/market choices, factors that should be considered:
Product value
Focus on segments with highest product value.
Long-run growth potential
Resource commitments
Can resources be made available to compete in high potential market?
Does ROA justify?
Competitive poisoning
Advantage often lies with first-mover.
Company-product/market fit
New product/market opportunities must be assessed in context of existing
business.
Pricing
Prices of products/services are determined
by:
Supply/demand
The greater the supply, the lower
the price.
Production and overhead costs
Cost sets the floor. Low-cost producers have advantage.
Fixed and variable (per unit) costs affect pricing strategy.
Competition
Establishes ceiling. Responses to competitive price pressures:
o Differentiating products
o Attempting to dampen intrabrand competition among resellers
o Exercising price leadership
Buyer bargaining power
Buyers have strength to extent that they account for significant portion of
seller’s sales and they have multiple options for meeting procurement
needs.
Product value to potential customers
, May vary across market segments and among buyers. So products must be
different for different market segments.
Skimming pricing: in new market, price may be high to reach segments for
which product has greatest value and bring price down over time to reach
lower segments.
Penetration pricing: in new market, price may be low to achieve high
market share. Is higher-risk strategy.
Distribution
Distribution systems include: personal salesforce, with wholesale distributors and
retail outlets providing geographically structured market coverage. Electronic
ecommerce channels add new dimensions to worldwide distribution
infrastructure.
Elements in distribution system:
Direct sales reps
Employees of firm and call directly on customers.
Sales agents
Independent operators who carry lines of several suppliers.
Distributors
Buy from many suppliers and have wide product lines.
Retail outlets
Compromise vast infrastructure supplying end-products/services to
consumers and business buyers. In some product areas, retail outlets are
often franchised.
Internet
Provides consumer and industrial buyers convenient access to unlimited
products.
Channels support
o Products are stocked and available at resale level
o Resellers actively promote products to end-customers
o Resale prices and margins do not deteriorate
Suppliers gain strength under these conditions when dealing with channels
environment:
o Selective rather than intensive distribution
o Superior product line breadth and quality
o High degree of supplier/reseller interdependency
o Supplier salesforce presence at resale level
o End-market demand development
Distribution systems are hardest to build and therefore also hardest to change.
Market communications
Communication channels available: print media, television, direct mail,
telemarketing, trade shows, point-of-sale displays, personal salesforces and third-
party influencers.
Decision-making process (DMP):
1. Awareness of need
2. Search for information
