Development of Product Growth Strategies in Relation to Market Development Opportunities - Literature review Example

Explain why it is necessary for marketers to deploy different product growth strategies in relation to market development opportunities. Provide examples to support your answers. 1. Introduction The increase of competition in markets worldwide has led firms to adopt marketing strategies that can offer a competitive advantage; however, the marketing plans used for the promotion of products and services internationally often fail to perform in accordance with their potentials; the responsibility for this failure belong mainly to marketers who cannot understand and evaluate appropriately the demands of consumers. The requirements of effective marketing strategies in the international market can be differentiated from those set in marketing plans that are limited in a particular state; other criteria for the differentiation of marketing plans used in various industrial sector can be also set – taking into consideration the consumer preferences, the characteristics of the target market and the resources available. The need for the alignment of marketing strategies with specific demands and rules is extensively highlighted in the literature. In this context, it is noted that ‘globalization of business has created the need for international public relations practitioners to identify, study and understand the world views, mindsets, and habits of their global publics in order to effectively communicate’ (Ihator, 2000, 38). In any case, culture is considered to be a significant criterion for the development of marketing strategies – a view which is in accordance with the study of Tan (2002); Taylor (2002) also emphasizes on the importance of culture for marketing plans in all industrial sectors. Other criteria, like the condition of the advertised product (Zhang et al., 1996, 40), have been considered as the potential basis for the development of marketing policies. Current paper focuses on the examination of the importance of market development opportunities for the product growth strategies deployed by marketers in various industrial sectors. It is proved through this study that marketers tend to be influenced by the market development opportunities when having to design a product growth strategy; however, the above dependency is not standardized – it is a relationship which is strongly depended on the willingness of marketers to use the market development opportunities as the basis for a product’s marketing policy; examples are provided that justify further – referring to the existing literature – the above assumptions. 2. Market development opportunities and product growth strategies Through the decades, different criteria are set for the promotions of products and services in the market. The specific issue is highlighted in the study of Yelpaala (1994) where it is noted that under the influence of the technological and financial development worldwide new marketing policies have appeared based on the new consumer characteristics, which are summarized as follows: ‘sophisticated lifestyles, tastes, and desires for high quality, efficient, and low priced products of affluent societies’ (Yelpaala, 1994, 940). In this context, marketing policies deployed by marketers worldwide can be evaluated only after examining current social, political, technological and financial conditions – which can be differentiated in countries around the world; under the influence of these conditions the format of marketing policies used for the promotion of products and services worldwide had to change in order to respond to the demands of the market. The reference to the general framework of marketing as a fundamental business concept is necessary: in accordance with Kline (2005, 141) marketing aims to develop ‘the relationship between sellers and buyers, generally companies and consumers, in a process that can be both cooperative and competitive’. Marketers need to understand the above relationship and use marketing plans, which best suits to the customer needs but also the market’s characteristics. In any case, market development opportunities are considered to play a key role in the development of product growth strategies – in the context described in the section that follows. 2a. Policies used by marketers when having to develop a product growth strategy – role of market development opportunities The marketing plans developed in reference with a specific product need to be based on specific rules – referring to the legal and the ethical principles applied on a particular market; more over, the trends of the specific market need to be identified and appropriately evaluated. When a marketing policy addresses the public around the world, the challenges for the marketers involved can be many; however, it is possible using appropriate marketing techniques to manage to respond to the demands of such a project; two different approaches are suggested by Lenartowicz et al. (1999, 790) regarding the development of international marketing plans. These approaches are explained as follows: ‘qualitative, supported by cultural anthropology, and quantitative supported by cross-cultural psychology’ (Lenartowicz et al., 1999, 790); however, the value of these approaches – as also of other marketing techniques - in marketing is depended on the ability of marketers to identify and appropriately evaluate the market conditions but also the consumer preferences; the potentials of the advertised product to respond to the needs of the market and the consumers should also be evaluated by marketers using relevant criteria of evaluation. In accordance with Aufreiter et al. (2000, 53) ‘when traditional marketers think of organization, they mean structure: distinct product, channel, and customer groups focusing on specific functional tasks, such as brand management, customer segment management, and market research’. The characteristics of marketers’ way of thinking are actually important in order to understand the choice of criteria used by marketers in order to develop a marketing plan; at a next level, the alignment of a product’s growth strategy with the market development opportunities could be effectively explained and justified. The marketers perceptions – as explained above – would not be the only criterion for the development of the above relationship – referring to the relationship between a product’s growth strategy and the market development opportunities; the common market practices would also influence the adoption by marketers of specific rules and principles – including the establishment of a dependency of a product’s growth strategy on the market development opportunities. Marketers would also use the actual performance of marketing plans that have similar characteristics –i.e. they have been based on the market development opportunities – in order to justify the particular choice. The above issues will be analysed below using appropriate literature. Market development opportunities is considered by Cravens (1989) to be among the four criteria that should be used by marketers worldwide in order to develop effective international marketing plans; the other three criteria that focus on the achievement of the same target are: ‘achievement of competitive position, domination on selected market segments and development of competitive advantage towards the rivals in a specific industrial sector’ (Cravens, 1989, 18). The study of Zhang et al. (1996, 29) presents another important criterion for the development of effective marketing plans: the culture. At a next level, if culture is considered as related with the market opportunities – a relationship that could be justified – then the dependency of marketing plans on market opportunities would be a logical result. The importance of market opportunities for the development of products’ growth strategies is further highlighted in the study of Kotler et al. (2008); in the above study it is made clear that the development of a successive business portfolio should be based on a product/ market expansion grid which ‘suggests four possible growth paths: market penetration, market development, product development and diversification’ (Kotler et al., 2008, 163). On the other hand, de Mooij (2009, 285) noted that market penetration could be depended on two different criteria: the national wealth and the culture. These criteria can affect the growth of a product in a particular market. In this context, it is noted by the above researcher that there are products that have a high performance within a particular market while other don’t perform well – their sales are low. The above differentiation can be explained – in accordance with de Mooij (2009, 273) – on the basis that the former – products with high sales – better respond to the cultural characteristics and the national wealth of a particular country. Another aspect of the relationship between the market development and the product development is analysed in the study of McDonald (2007); in the above study it is noted that ‘there are two kinds of research and development: a) technology driven and b) market driven’ (McDonald, 2007); market development is presented therefore as a criterion for the establishment of specific scientific advances; the ability of a market to absorb the relevant products has to be set as a basis for the researchers that work in the specific field. 2b. Dependence of product growth strategies on market development opportunities - examples The relationship between the market development opportunities and the product’s growth strategy is emphasized by de Mooij (2009); examples for the above relationship are considered to be the following ones: a) the television – referring especially to the period of the initial appearance of this product and b) the mobile phone – a product which continues to have prospects for high growth in most markets internationally (de Mooij, 2009, 285) – while still there are markets that this product would not have chances to perform well – an indicative example is the countries of Sahara or those of New Zealand where indigenous populations live. Another example of the relationship between the market development and the product growth strategy is the research and development field; the above field – which can be developed within different industrial sectors – is characterized by the development of products that are unique but necessary- at least at a high percentage - for fundamental human needs; indicative examples are the drugs produced for the treatment of a particular disease or the machinery produced for the development of specific industrial tasks – which were usually not supported by the technology. The importance of the market development opportunities in relation with the development of products’ growth strategies is also highlighted in the study of Moeller (2008, 172); in the above study emphasis is given on the use of the Return on Investment (ROI) technique by marketers when there is a need for the promotion of a product within a specific market; in accordance with the study of Moeller (2008) the potential performance of this product in the particular market needs to be estimated – at least at an average level – in advance ensuring that risks are limited. The use of ROI for the estimation and the evaluation involved in the introduction of a product in a specific market proves that market development opportunities need to be taken into consideration by marketers when having to establish a product’s growth strategy in a particular market. 3. Conclusion The development of effective marketing strategies is depended on various criteria; following the common marketing principles and using the appropriate marketing tools – those that have been tested in practice and have been found to be effective – would be an important strategic policy – at least at the beginning of the relevant initiative. During the development of the specific process various issues need to be taken into consideration; the expected performance of a product in the target market should be a criterion for choosing the marketing plan that will be deployed in the specific task – in this context, if no chance of success seems to exist for a product in a particular market then it would be preferable to stop the efforts for advertising this product in the above market. On the other hand, customer preferences might be changed periodically; the specific issue is highlighted in the study of Hall (2002, 24) who notes that ‘consumers change their minds about a product, then they change their attitude, and then they act’; in this context, a product which is not welcomed by the consumer in a specific market in the initial attempt to enter this market it might perform well later – its entrance in the market should be delayed and reviewed again in the future. Marketers should be able to identify and evaluate the opportunities of development and the consumer preferences in the target market and decide accordingly for the development of a product’s growth strategy in relation to the specific market. Entrepreneurs should assist marketers by providing the resources necessary for the development of the relevant activities. Works Cited Aufreiter, N., Lawyer, T., Lun, C. (2000). A New Way to Market. The McKinsey Quarterly, 53-58 Cravens D. W., Hills, G. E., LaForge, R., Lunsford, D. (1989). Toward a Theory of Marketing Strategy for New Ventures: Some Preliminary Propositions. In Proceedings of the Winter Educators Conference. Chicago: American Marketing Association De Mooij, M. (2009) Global Marketing and Advertising: Understanding Cultural Paradoxes. SAGE Ihator, A. (2000). Understanding the Cultural Patterns of the World -- an Imperative in Implementing Strategic International PR Programs. Public Relations Quarterly, 45(4): 38-47 Hall, B. (2002). ‘A New Model for Measuring Advertising Effectiveness’ Journal of Advertising Research, 42(2): 23-33 Kline, J. (2005). Ethics for International Business: Decision Making in a Global Political Economy. Routledge. London Kotler, P., Armstrong, G., Wong, V., Saunders, J. (2008). Principles of marketing. Pearson Education Lenartowicz, T., Roth, K. (1999). A Framework for Culture Assessment. Journal of International Business Studies, 30(4): 781-796 Moeller, E. (2008) The Four Pillars of Profit-Driven Marketing: How to Maximize Creativity, Accountability, and ROI. McGraw Hill Professional Tan, J. (2002). Culture, Nation, and Entrepreneurial Strategic Orientations: Implications for an Emerging Economy. Entrepreneurship: Theory and Practice, 26(4): 95-111 Taylor, C. R. (2002). What Is Wrong with International Advertising Research. Journal of Advertising Research, 42(6): 48-55 Yelpaala, K. (1994). Strategy and Planning in Global Product Distribution - beyond the Distribution Contract. Law and Policy in International Business, 25(3): 839-944 Zhang, Y., Gelb, B. (1996). Matching Advertising Appeals to Culture: The Influence of Products Use Conditions. Journal of Advertising, 25(3): 29-42 Read More