Contemporary Issues in Marketing - Essay Example

?Contemporary issues in marketing International market penetration and the resultant formulation of marketing strategies is a process that is being adopted by more and more companies today. The international market penetration process is divided into four phases. The first phase the marketing group can look at the character and objectives of the company that is planning to expand, then consider the expansion and marketing constraints that are present in the home country and lastly consider the penetration and marketing constraints in the host or foreign market. All the above phases mean that the strategy to be developed should effectively put the principles of the company closer to the needs of the specific consumers that the company targets. If a company puts the above in consideration then it will definitely develop unique strategies that make it competitive in the new market. This is addition to proper review and correction policies will determine the success of the adapted international marketing mix that Weny Trippes (fictional company) has developed. Weny Trippes has a really wide market appeal in the soft drink market in the United States. A company such as Weny Trippes has the ability to introduce new products that meet the demands and quality requirements of its consumers faster than any other company in the local scene. It has better consumer need responsiveness, better innovative skills, quality products and processes as well as higher efficiency that promotes its differentiation advantage in the United States market. This has made the company to consider developing marketing strategies that can ensure the success of its product line in other foreign markets such as those of Central America, East Africa, or Northern Europe, Chinese market and the Middle East markets. Different foreign markets have different needs and present unique different challenges that Weny Trippes has to form effective entry and marketing strategies on how to overcome them. This research paper will aim at developing an international market penetration as well as marketing strategy for Weny Trippes a company that has established itself in the United States as one of the leading soft drink manufacturer and confectioner. A firm’s prosperity depends on its capability or adaptability to external changes. Increasing competitiveness on a global ground has forced many industries to expand to foreign countries. Internationalisation, which is the process by virtue of which a firm moves from operating in its domestic market to international markets, has hence become an ongoing trend in the economy. But this however may have effects that are not evident in the domestic sector especially in terms of coping up with a foreign environment. The international market for many products is subject to many dynamic influences that can lead to changes in the volume, mix and distribution of demand and sources of competitiveness (Ofori 2000). Before this decision to venture into the market Weny Trippes only ventured the domestic market and never thought of expanding its business beyond the borders of its home country. The international penetration option for the companies is a means of expanding the profits and at the same time attempting to cash on the weakness and lack of creativity by the home companies or firms that produce similar products (Akkaya 2006). Organizations are optimally entering into newer foreign markets mainly the onset of globalisation. “Globalisation is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment …. This process has effects on the environment, on culture, on political systems...” (Rothenberg 2002, p1). Thus, its wish to make an impression in foreign markets is further driven by the globalization. In addition, Weny Trippes has a really diverse range of soft drink products and energy drinks that it intends to develop an international marketing strategy so as to promote them in several foreign markets. The competitive advantage of Weny Trippes is based on the differentiation advantage of the company to be able to offer products that are of more benefits to the consumers than the competitors can offer (Dess and Alan 2006). This has enabled the company to have room to develop more quality and superior products that offer more value to the local market consumers and at the same time generate high profits from the sale of its products. Weny Trippes has more resources than its competitors since the company was established earlier than any other company in the local scene. The firm has over the years amassed lots of reputation and awards due to its fast growth, product development as well as the superiority of its products over other similar products in the local market scene. The criteria to be used in the international market analysis The planning process that precedes penetration of international markets and the eventual marketing efforts involves several steps before the company can fully develop the strategy it will follow during the process. The first phase of the planning process involves a preliminary analysis and screening of the targeted foreign markets so as to ensure that the firm matches its needs to those of the specific targeted country. This should be done guided by the uncontrollable environmental factors, the values that define the company as well as the screening criteria selected by the firm (Doole and Lowe 2004). The second phase of this planning process involves incorporation of the marketing team in the development of marketing mix strategies that are suitably adapted to meet the demands of the targeted markets. This should be done by attempting to match the marketing mix to the target markets. Following this phase the company/firm then needs to develop a comprehensive marketing plan and lastly implement and ensure control of the whole establishment through regular evaluation on the performance of the main pillars of the whole international penetration venture. The four phases involved in this international planning process depend on the conducted market research, information available in each of the specific phases in addition to the conducted evaluation on program performance. The international penetration planning process can be divided into four phases. Doole and Lowe (2004) state that the first phase the marketing group can look at the character and objectives of the company that is planning to expand, then consider the expansion and marketing constraints that are present in the home country and lastly consider the penetration and marketing constraints in the host or foreign market. A company’s character can be determined by observing its philosophies, its objectives, the resources that are available for the company to expand, the management style exercised by the leaders, the financial limitations of the company, its range of products, the marketing and management skills present at the company as well as any other important factors that uniquely define the company in its present market. The above mentioned factors play a really important role in creating the expansion plan for the company. A company’s character determines the way or level at which a company interacts with other company’s during its trading processes. Still on the first phase the international market penetration planner needs to look at the business expansion constraints present in the home country, these might include the political scene at the country, the legal as well as economical constraints present. In addition it is still necessary to look at the international expansion constraints in the host country that might include economic, geographical location constraints, the available structures of product distribution, the political as well as the legal scene in that country, the market competitiveness of the foreign country, the culture of the people as well as the level of technology at the disposal in that country (Gaines-Ross and Chris 2005). The technological aspects are the key, as it will aid the marketing team to come up with appropriate strategies. The availability of media technologies is a key factor in deciding the various modes of marketing campaign. That is, whether marketing can be carried out through print medium or Television medium or internet medium, apart from the direct form of marketing campaigns. The second phase of international market penetration strategy for Weny Trippes will involve looking at the products quality, pricing strategies, promotion techniques as well as the distribution methods that the company wishes to implement or use once in the foreign market. Things to consider in evaluating the products of Weny Trippes will include the adaptation that is necessary to fit the product into that foreign market, the features that will uniquely identify the products once in that foreign market, the packaging of the products, the uniqueness of the brand name for the target foreign market, service to be offered at the retail shops, as well as the stylishness of the product as it is redesigned to fit into the new market. It might be necessary to restyle the products so as to make them fit properly with the persons of the target population. It is also necessary to observe at several factors that relate to the price of the products that Weny Trippes intends to distribute to the several oversea markets. This might include factors such as credit and discount facilities that the company intends to offer in the foreign market, as part of marketing strategies. Product promotion is also a really important factor in the planning process of a company intending to penetrate a foreign market. The promotion strategies that need to be observed include: the advertising strategies, if personal selling would be effective, the command the media has in that particular state, the sales promotion strategies that are to be used as well as the message that the promoter intends to pass across to the consumers in the targeted country (Dess and Alan 2006). The third phase of planning will involve critically analysing the situation at hand in order to be able to set the objectives and goals that the company will be aiming to meet once it penetrates the foreign market. After this the marketing strategizing team needs to formulate the strategy and tactics that will guide the process of penetrating the international market. According to Johansson (2002) this will include looking at the budget that is needed to fund the process as well as the action program that is to guide the international market penetration process. The fourth phase of the international market penetration process involves the implementation of the processes designed as well as putting together structures that will aim at evaluating the success of the process. This is necessary as it will assist the company identify errors in the process of implementation and device strategies that will aim at correcting the faults in the process. The process of planning a firm’s penetration into an international market should be preceded by collection of data both primary and secondary on the prevailing market conditions in the regions or countries of interest. The primary data collection process involves the company setting up a marketing group that will travel to each of the designated countries and collect data from the actual market that is under consideration. On the other hand the use of secondary data involves looking at data sources that are already in existence. These sources need not have been gathered for the task at hand but must be relevant and reflect on the issues that are being considered by the researching parties. Leonard (2005) argues that the use of primary data is preferred over secondary data but the costs and time involved in the process limits many researchers to rely on only the secondary data which involves only some minimal efforts and cost. Some of the limitations associated with the use of secondary data in the research process include lower accuracy levels, difficult in finding relevant available data, difficulty in the comparison of the data as well as timeliness issues. The minimum threshold for a country to be selected for international market requires a stable political system so as to be able to protect the workers and also promote growth of the business, it has to have proper infrastructure for the product distribution, the government regulations on taxation of soft drinks and registration of new companies should not be prohibitive or really expensive. Organizations built their strategies and structures through engaging with these rules of the game that were common in the particular society. This gave them particular capabilities, some (but not all) of which were capable of being leveraged to good effect in international competition.” (Morgan 2007, p. 2). It is also necessary that the country’s income per capita be large enough to ensure that the business won’t collapse due to the lack of enough sales revenues to support the growth of the company and at the same time account for the costs involved in establishing the business. In addition to all these it is important that the target country’s population have a favourable culture that encourages leisure so as to create the groundwork for the consumption of Weny Trippes products. If the country or region does not meet the above desired threshold criteria then the marketing team shall not the next step to adapt the marketing mix elements to foster the penetration into the targeted market. International market analysis and appraisal The criteria which the firm will use for international market analysis and appraisal will include looking at the international expansion constraints in the host country. These should relate to the principles that define the character of Weny Trippes. Keegan (2002) states that all the different markets have different characteristics that need to be evaluated against the visions of the company in penetrating the new foreign markets. In the different markets there are different languages which require the company to translate its brand names to meet different markets, develop new products to meet the tastes of the different markets as well as adapt the marketing mix elements to reflect the regulatory and control structures that constrain operation in the companies. Without doing this Weny Trippes cannot achieve the same success levels as it has at home. After the data is collected on the five regions that Weny Trippes needs to penetrate the marketing team began looking as to how the five regions met the specifications of the first phase of penetration. The political scene in the Middle East was not one that encouraged the company to penetrate the region while in the rest of the regions it was stable enough to sustain the operation of the business. In terms of the geographical location the east African country posed the greatest challenge in addition to the high taxation rates that existed in the country. The poor education levels for the African country required that the company had to develop a simpler brand name if it expected to penetrate that market well. The company registration process in Africa was also a limiting factor into how the company was to establish its presence in the region. It took the longest time to undergo the company registration process in Africa than in any other targeted region. All the markets except the African one were really competitive in the soft drink industry and thus posed lots of challenge as to how the products would be priced, marketed and promoted so as to beat the competition in those market areas. Central America, Northern Europe, Chinese market and the Middle East market had well developed infrastructure to distribute the products to the consumers in the target market. The only exception was the African market that required special strategies to formulate how the products would be distributed in that market. Apart from Africa all the other countries had the correct culture and attitude to foster the consumption of the soft drinks. The selection criteria gave rise to the data needed to adapt the marketing mix to meet the needs of the selected foreign markets. The marketing mix adaptation Firms entering foreign countries should need to market its products or services. Although, apt services will bring in more customers, effective marketing efforts will entice the targeted customers and help to build a stronger customer base. The general process of marketing is of analysing marketing opportunities, selecting target markets, developing the marketing mix and managing the marketing effort (Kotler and Armstrong 1996; Pride and Ferrell 1995). The marketing opportunities can be analysed by the needs of the targeting customers. The analysis process involves establishing current demand and forecasting future growth potential of the market, taking into consideration the competitive intensity and structure of the target market segment as well as the market environment (Root 1994). The guideline, the marketing department of foreign firms including construction firms can use to formulate marketing strategies is the Marketing Mix. Marketing Mix consists of 4 variables, Product, Price, Place (distribution) and Promotion, which are used to make major marketing management decisions. Formulating a marketing plan or campaign, based on all these 4 variables, will result in effective marketing. Managing the market effort is the process in which the identified customer needs are satisfied through the continuous process of marketing. It also includes developing the strategic plans for the company’s future growth in marketing. Products It is necessary for Weny Trippes to determine whether it intends to pursue a standardization or adaptation marketing strategy in penetrating the foreign markets. These can be more clearly illustrated by looking at the four alternatives that a company has in deciding how to penetrate an international market. These include selling the products without any modification in the international market, modifying the products to meet the needs and demands of the different foreign countries or regions that the company intends to penetrate. Weny Trippes can also decide to develop entirely new products for each unique market or use all the differences needed by each foreign market into one unique wholesome product that can be sold competitively on all foreign markets as a global product, with a unique marketing strategies. For these markets Weny Trippes intends to use adaptation to meeting the needs and demands of its foreign market consumers. This is necessary if the company is to maintain its competitiveness and targeted performance levels for the market it intends to penetrate. Adaptation means the degree of customization that is needed in the products and product lines that the company to put into effect so as to succeed in the foreign market. The need for adaptation should be looked at as to how this process can foster the success of the company’s products in different target markets that Weny Trippes intends to penetrate. Customization is not the end of the task, customized or even localized marketing strategies based on the product is the key. Pricing Pricing of the product is definitely one of the main elements in the strategic planning of the marketing plan. In the pricing of the soft drinks for each foreign country, there are several factors that come into play. According to Kotler and Armstrong (2004) these include the analysis of the market, the identification of the target market, the use of the marketing mix decisions, clear understanding of the demand curve, calculation of the fixed and variable costs involved in the production of the product, a clear understanding of the incumbent environmental factors, understanding the objectives to setting the price of the soft drinks. The price of the soft drinks will obviously be affected by the cost of producing the product and delivering it to the market. This is in turn affected by the level of technology and labour availability for the different markets. Africa presented the greatest challenge due to its cheap labour, low technology as well as the low incomes of the population. This was done intentionally so as to ensure that the overall product price does not intimidate the buyers in the final African market. The pricing of the product will also make it to be competitive to what is already on the market. It is necessary not to price the product too low, where the situation might be seen as ‘dumping’ the product in the market which might have legal repercussions on the firm in the developed European, Chinese and central American markets. For these markets the prices have to similar to the competitors or slightly higher so as to support the notion that the higher cost is due to the higher quality of the products. The firm plans to utilize the penetration pricing strategy where its soft drink products will be priced slightly lower than the competitor products on the market so as to ensure that the product reaches the target market in the lowly developed countries while maintaining the same prices for the economically developed countries (Armstrong and Philip 2003). Low pricing strategy was to be adopted in Africa contrary to the other four markets so as to attract a large consumer base. It is necessary for the firm to understand the basic costs involved in the development of the soft drinks and be able to use this information while pricing the product. Various cost minimization techniques were utilized during the creation of these products in the Middle East and African market. Thus, pricing forms a key part of the marketing strategy, as the competitive price can be specifically used as part of the marketing campaigns. Promotion The promotion strategies to be used to attract the potential consumers of the product will include advertising, personal selling, direct mailing of the product, sales promotion ideas and use of proper public relations. The most potential environment to meet potential consumers is through home and street advertisement. As well as placing strategic advertisements on the web, through high visit sites, or even social networking sites. In addition, sponsoring social events can go a long way in ensuring that the target market comes into contact with the product in the underdeveloped Middle East and African markets (Gaines-Ross and Chris 2005). Advertisements can be placed in magazines that are almost certain to be found in all families for all the markets. From the target market research analysis done earlier during the analysis of the market potential, several magazines and popular gazettes were found to be common in all these environments. This means that if the firm places soft drink advertisements on these magazines it is most likely that the desired market will see it. These need to be adapted to meet the cultural and language constraints for each foreign market. The firm can go a step further and place the advertisement on televisions network channels more popular with the target market. This was possible for all the five markets with drastic modifications on the advertisements so as to ensure that they reflect the culture and language of the unique consumers. This process of localization is a key part of marketing strategy. “Localization is the process of adapting a product or service to a particular language, culture, and desired local "look-and-feel." (gvlocalization.com). The success rate from this form of advertisements should be high based on how the message is delivered to the customers. Use of adapted advertisements that include existing consumers declaring their satisfaction gained from the use of the soft drinks will definitely go along way in encouraging potential customers to consider purchasing the products. Distribution This is the area where the firm decides to strategically place its product is an important element in the marketing mix plan. For the product it is necessary to identify distributors who are available at the consumers need areas. The soft drink products being offered by Weny Trippes need established companies in all the foreign markets to distribute the products. Cateora and Ghauri (2003) state that depending on the most established means of transportation the company will need to decide on how to best utilize the available resources. Central America, Northern Europe and the Chinese market had properly developed distribution systems. The political instability in the Middle East and low technology in the African country forced the company to explore different techniques on how to distribute the products within the market. Effective distribution is an important process in ensuring success of the firm’s international market penetration. Conclusion When firms wants to initiate the internationalization process and want to make an imprint in global markets, it has to formulate both penetration strategies and importantly marketing strategies like analysed above. Marketing strategies are the crucial component because they will only entice and help build relationships with the customers. Importantly, the firms had to localize the marketing strategy in line with the behaviour of the local customers. By studying and understanding about the mindset or ‘pulse’ of the local prospective customers, companies including soft drink major, Weny Trippes can come up with optimal marketing process and the resultant strategies. Bibliography Akkaya, F 2006, Global Marketing strategies, Under secretariat of Foreign Trade, viewed 26 April, 2011 http://www.dtm.gov.tr/dtmadmin/upload/EAD/DisTicaretDegerelendirmeb/fatihakkaya.doc. Cateora, P and Ghauri, P 2003, International Marketing, McGraw-Hill Publishing Company, European Edition. Armstrong, G, and Philip K 2003, Principles of Marketing, Prentice Hall, Upper Saddle River, NJ. Dess, G and Alan B 2006, Eisner. Strategic Management: Text and Cases, McGraw-Hill Irwin, Boston. Doole, I and Lowe, R 2004, International Marketing Strategy - Analysis, Development and Implementation, Thomson Learning, London. Gaines-Ross, L and Chris K 2005, "The Brand Name CEO." Across the Board 36, no. 6, pp. 26–29. 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