The 4Ps in Global Marketing and Product Life Cycle - Report Example

The 4Ps in Global Marketing and Product Life Cycle Select one of the 4Ps of marketing and discuss how it may be adapted for various multinational and global markets. Give real-world examples of adaptations. For 2–3 markets of interest to you, describe and explain the adaptations. (3 pages) 

Please explain adaptation of one of the 4Ps of marketing for multinational and global markets, explained real-world adaptations and recommend adaptations for selected markets. The 4Ps of marketing are product, price, place and promotion. These are based on the important concept of marketing mix and are interdependent of one another. All 4 are controllable variables. “The idea is to set these variables in such a way so that sales will take place.” (Volker, 1998) In multinational and global markets it is about setting the right mix that works best in the target markets. MNCs that sell the same product or service across different countries seek to adapt their marketing mix in accordance with the national or local preferences or requirements. We shall take the example of price and look at price differentials and how price may be adapted for various multinational and global markets. Prices may be established strategically by a company or predetermind. Marketing strategies could involve fixing the price depending on certain objectives. For example, markup can be applied to the cost price to arrive at the figure for selling price. Tactical pricing can be implemented through discounts and concessions again for a specific purpose. The obvious issue of pricing in more than one country or region is the currency and this could be subject to exchange rate fluctuation. If using the mark-up strategy, differences in price cold be due to differences in cost price. For example, if a certain product is manufactured in more than one country it may be that due to various differences in e.g. land, labour, and utility, the different cost prices will result in different prices even if the same mark-up is used. An example of a price adaptation practice is Oxford University Press. They publish books in various countries around the world. In some countries the books are produced there as well. Because there are differences in the cost of resources in different parts of the world this means that their books get produced at different costs even if the books are alike. If they keep the same profit margins the retail prices can differ. They also produce in countries with cheap labour and low cost of material resources, so their books are comparatively cheaper in these countries than say in Europe and America. These books are usually marked ‘For sale only in [name of country]’. The above example of price adaptation in the books market is due to differences in the cost of manufacturing, distribution and product marketing, and this is related to the location of production plants. There are also other reasons for price variations and the practice of price adaptation. These are exchange rate fluctuations, differences in consumer demand, strategic business objectives and factors related to the differences in government policies and commercial taxes. Some prominent global businesses could be operating at losses in some countries but make a strategic decision to maintain “a local presence in order to maintain their economies of scale, as well as their reputation as a global player.” (Marketing Teacher) Starbucks in the fast food restaurant market is one such business. Another form of price adaptation for strategic reasons is known as ‘transfer pricing’. In this approach, “goods are effectively sold to the international subsidiary which then attaches its own margin based upon the best price that local managers decide that they could achieve.” (ibid) This strategy is a common practice when a MNC has branches in more than one tax jurisdiction. So this can created problems with tax authorities is the goal of transfer pricing is “to maximise after-tax revenue by setting transfer prices that reduce the total tax paid.” (Canada) In the real world then, adaptation is inevitable and a must. It is contrary to the practice of standardisation in global marketing. In fact, Kapferer (1992) suggests that an absolute global marketing mix does not even exist. Like other factors, pricing too is a key decision. It is linked to objectives, costs, expectations, profit motivation etc. Objectives have “a significant impact on your decisions related to the prices you set” (Centre for Business Planning). They can be various and the prices are set accordingly. So, high adaptation is most favoured for a number of reasons, some of which are mentioned above. 2.There are well-defined stages in every product development life cycle. Your product is at the “introductory” stage. What are some of the implications of this stage for the decisions you must make about each of the 4Ps when designing a strategic marketing campaign? Provide rationale for the answers. Give examples of real products in your answer. (2 pages) 

Please explain product, price, place and promotion decisions for the introductory stages and support analysis with reasons and examples. The product development life cycle comprises of an introductory stage followed by growth, maturity and decline. “This sequence is known as the product life cycle and is associated with changes in “the marketing situation, thus impacting the marketing strategy and the marketing mix.” (QuickMBA, 2007) In the first introductory stage, the business is building a product awareness and developing a market for the product. The following factors can have an impact on the 4Ps: Product branding takes place and quality of the product is defined. Also, at this stage patents are made and the company obtains trademarks. Pricing strategy is such that the prices are usually kept low. This is called penetration pricing and the aim is to quickly create a market share. On the other hand, what is known as high skim pricing may be established so as to recover the costs of research and development or where success if fairly predictable. This strategy is employed where investment was large. Profits are not always a possibility. Place tends to be a selective decision until greater information becomes available of consumer acceptance and market share. Promotion is targeted at the early adopters and those risk takers who took it on. Most communications at consumers focuses on building product awareness besides also informing other potential consumers. New product ‘trials’, ‘gift packs’ and samples are often given to consumers to ‘try before they buy’, and coupons may be given and sales may be held to entice them. Thus, in the introductory stage, product patenting, defining quality standards, establishing an appropriate pricing policy, deciding on distribution, getting the right communication messages across etc. are the important decisions made. The introductory stage is critical because it is a ‘make or break’ period for the company. Careful monitoring is typically made throughout and the potential is evaluated against what is being experienced thus far. Its success leads onto success in growth and maturity and its failure can end any hopes of growing at all. Examples of types of products currently in this stage are 3G mobile phones, iris-based personal ID cards and E-conferencing. Taking McDonalds as an example, it is another business in the fast-food restaurant market. It has opened numerous outlets around the world. Although some factors are similar globally for McDonalds, local adaptation strategies are evident. As far as place is concerned, McDonalds has always sought to locate in busy places that are easily accessible. According to Vignali (2003), their prices are determined locally. A marked difference exists between pricing in the US and the UK for example. In the US, prices are generally lower whereas in the UK they are higher. The differences correspond with differences in consumer expectations of quality. So the reason is McDonald’s adopting prices based on the perceptions of consumers of the value of fast food. Their range of products and the ingredients used to make them differ only slightly and are affected by catering to local tastes, demands and customs. In promotion, McDonald’s appears to use a common them for advertising but varies them in local markets. The practice of McDonald’s is carefully researching new local markets and developing appropriate marketing mixes for those markets. The result is local adaptation of the 4Ps by the global giant McDonalds. References Canada. http://www.canadianeconomy.gc.ca/English/economy/transferpricing.html. Centre for Business Planning. (2009). Issues Affecting Price. Centre for Business Planning. http://www.businessplans.org/Pricing.html. Kapferer, Jean Noel. (1994). Strategic Brand Management: New approaches to creating and evaluating brand equity. Free Press. Marketing Teacher. International Marketing and Price: How should we set prices for international markets? http://www.marketingteacher.com/Lessons/lesson_international_marketing_price.htm. Oxford University Press. http://www.oup.com/about/worldwide/ QuickMBA. (2007). Marketing: The Product Life Cycle. http://www.quickmba.com/marketing/product/lifecycle/. Vignali, C. (2001). McDonald’s: “think global, act local” – the marketing mix. British Food Journal, Vol. 103, Issue 2, P. 97. Volker, Mike. (1997). Business Basics for Engineers: Marketing. http://www.sfu.ca/~mvolker/biz/mktintro.htm Read More