Relationship Between the Components of the Marketing Program - Coursework Example

RELATIONSHIP BETWEEN THE COMPONENTS OF THE MARKETING PROGRAMME, AND BETWEEN THE MARKETING PROGRAMME AND MARKET ENTRY STRATEGY Lecturer:Date: RELATIONSHIP BETWEEN THE COMPONENTS OF THE MARKETING PROGRAMME, AND BETWEEN THE MARKETING PROGRAMME AND MARKET ENTRY STRATEGY Introduction Several definitions can be found for the concept of grey market, most of which argue that a grey market exists when goods are imported and distributed to areas that are outside the distribution channels of the original copyright owners and authorised importers of the goods (Keith and Housden, 2008). Indeed the existence of grey markets would be seen as part of a collective international marketing decision problem rather than an independent issue that manufacturers and authorised distributors face (Schuster and Phil, 2009). This is because most of the factors that lead to the creation of grey markets are those that are influenced by the core management actions of the companies considered to be the original owners of grey market goods. It is against this backdrop that grey markets have often been differentiated from black markets with the argument of the legality behind grey markets and not black markets (Silayoi & Speece, 2007). But regardless of the fact that grey markets may generally be considered to come within the legal premise of doing business, the fact that grey markets come with huge disadvantages to original copyright and distribution owners of products cannot be overemphasised (Dong-Jin and Sirgy, 2009). This paper therefore seeks to address two major issues, the first of which has to do with finding the causes of grey markets by looking into the conditions that make it necessary for grey markets to exist. The second aspect of the paper looks at solutions to the problem by focusing on how pricing decisions and brand decisions can be used to reduce the likelihood of grey market activity. Conditions necessary for the existence of grey markets In the estimation of Mailloux (2010), it is one thing for companies to have a marketing programme and another thing for the companies to distinguish their marketing programmes from market entry strategies. This is because the marketing programme itself is often made up of different components that seek to address different areas of business activity (Shusterman, 2012).It is for this reason that Sugden (2009) argued that a typical marketing programme would look into both internal and external factors that affect the successful marketing of a company’s products. On the other hand, the market entry strategy tries to focus on internationalisation strategies that are conducive for specifically targeted markets. This means that when there is a better understanding of the relationship between marketing programme and market entry strategy, it is easier for companies to address every issue that has to do with global competition. With this said, the conditions that necessitate the existence of grey markets can be directly likened to the way and manner in which manufacturing companies address the relationship they establish between their marketing programmes and market entry strategies. This is because most of the conditions are market specific and take a combination of marketing programmes and market entry strategies to addressing them (Treverton and Mizell, 2011). One such identified condition has to do with the product life cycle characteristics of items or products produced. Because grey markets generally exists when products are traded through distribution channels that are unauthorised by original manufacturers, one would expect that there should be some core condition about the product itself that also makes buyers in these unauthorised distribution centres buy from grey marketers. In the analysis of Shimp and Subhash (2007), the life cycle of a product is one such important condition that causes grey markets to exist. Citing example of products with very short life cycles, it was indicated that consumers have naturally had a wet appetite and positive purchasing attitude towards these products, knowing that if they do not buy them early enough and from whichever source the products may soon fade away in terms of relevance, importance and availability. Real life scenario with how a product life cycle can be a condition for grey markets to exist has been cited with the case of different computer software which has been noted to have very short life cycle in most cases. Because of this, end users are always eager to possess the products at the early stages of the lifecycle, motivating grey marketers to look for unexplored distribution channels (Gupta and Lehmann, 2005). The other identified condition has to with differing regional supply and demand outlook of markets. Very often, when the broader view of international marketing is taken, it would be noted that different market segments and for that matter different international markets have different demand and supply pattern (Hays, 2003). According to Stothers (2007), there are different factors that cause such differences in the demand and supply pattern of different markets. Some of these could be differences in consumer behaviour, differences in bargaining power of consumers, and differences in market laws and regulations (Kotler, 2013 and Bhanji, 2012). But whatever the cause of the difference may be, Nissanoff (2006) indicated that there is often an underlying outlook at makes the sale of products in one market segment or international market different from the other. Knowing this, people engaged in grey markets have always sought a means to outsmart authorised manufacturers and dealers by buying from authorised centres and starting new markets in unapproved distribution centres (Reid and Bojanic, 2009). By implication, the overall demand and supply differences that are found in different regions act as a major condition that makes the existence of grey markets possible. Analysing the issue of differing regional demand and supply outlook, Levy and Weitz (1995) shared an opinion by relating this form of difference to the larger impact of globalisation on international marketing. In the opinion shared, it was noted that through globalisation, the international market has actually become more complicated and sophisticated in its definition. By inference, it is very difficult today to know the exact borders of a manufacturer’s market. This creates a major contention when it comes to the debate on whether manufacturers must be focused on international markets on global competition (Kotler and Keller, 2006). A way of addressing this issue would however be noted to be the rightful identification of what should go into a company’s international programmes. This is because a well composed international programme for a company would not only appreciate its defined distribution channels and market segments as areas where there should be focus in determining the outcome of overall marketing (Shaw, 2012). With this point noted, the cause of grey markets through differing regional demand and supply outlook becomes even greater for manufacturers to address because by implication, they would have to be dealing with a broader search for where differences in supply and demand are, and find ways of addressing the gaps that exist in-between. Reducing the likelihood of grey market activity There are several effects that authorised distributors suffer as a result of the existence of grey markets. To minimise the effects, Janssen (2004) admonished manufacturers on the need to understanding two major aspects of international marketing decisions which are pricing decisions and product decisions. In the context of the two major conditions identified, the use of pricing decisions and product decisions could be seen as very direct and appropriate ways of reducing the likelihood of grey market activities. This is because each of these two means seek to tackle the problems that have been addressed from a very broad and open-ended perspective without limiting the abilities of manufacturers. But before the implementation of any of these two international marketing decisions can be made possible, Baker (2009) charged companies to be highly innovative in their approach to fighting grey markets. The need for such innovation was re-echoed by Po (2008) who observed that when companies are dealing with grey markets they are not presented with the usual legal backings that come with the fight against illegal market operations such as copyright infringement and black market activities. Because to this, the manufacturers are always left between an innovative way of battling a legal action that is being taken by people who are often their customers and leaving the legal action to continue and bear the consequences that come with it. In the light of this, the discussion on how to reduce the likelihood of grey market activity with the use of pricing decisions and product decisions has been done to embrace the larger innovative call. Pricing decisions were ranked by Homburg, Sabine and Harley (2009) as one of the most vital international marketing decisions that companies make. Such decisions are generally taken to ensure that there is a form of balance of pricing in all identified markets so that the need for grey markets to be created will not exist because of pricing differentiations. But when looking at the broader picture of where people involved in grey market activities would often select distribution channels that manufacturers do not make use of at all then one would ask how possible it is to use pricing decisions to control such markets. It is from this perspective that Lymbersky (2008) questions manufacturers on the prudence of having different prices for different international markets. This is because as soon as differences exist in international markets, what grey markets do is that they would buy from one market with cheaper price and sell in an entirely different market with higher prices, but at lower price. This notwithstanding, the challenge of currency differences in different markets will cannot be overlooked in deciding to use of pricing model that defines a flat price for products across all international markets. To overcome this dilemma, Svante & Göran (2009) sees some hope in the use of cost leadership strategy option in ensuring that defining flat price rates by the use of the international market with the weakest currency does not become a problem for manufacturers. This is because when pricing decisions are based on the outcome of cost leadership strategy option, it will be possible to have a cheaper product across all markets so that the need to reduce this further in grey markets will not be an incentive (Kotler & Keller, 2005). On the issue of product decisions, Kotabe and Helsen (2004) sees it as a very good way in tackling the issue of product life cycle as a cause of grey markets. This can be noted to be a very workable and valid position given the fact that manufacturers have the right to presenting different products with different lifecycles with different marketing strategies. This is indeed where the issue of market entry strategy comes in. Most of the time, a major problem that manufacturers encounter is that they do not become the determinants of the lifecycle of the products they produce but their competitors. For example with the fast changing nature of the tablet computer and smart phone industry, a manufacturer may be faced with the need of killing an existing technology when competitors introduce a new one so that they can continue to be in business. It is against this backdrop that product decisions that are aimed at assigning different marketing and entry strategies to different products must be taken. Where the lifespan of a given product may be seen to be very short, it would be more advisable to use a contingency marketing strategy that ensures that a manufacturer reaches very far with the products’ marketing than grey markets can do (Levitt, 2013). Such contingency marketing strategies can be fast tracked by ensuring that there is the use of as many sales strategies as possible. Some of these sales strategies could include electronic commerce, which has been noted to be a perfect answer to global competition, which is also an avenue for grey markets to exist (Hollensen, 2014). Conclusion The discussions in the paper have been very useful in throwing more light on international marketing decisions by looking critically at the issue of grey markets. This paper has outlined the major conditions that pave way for the existence of grey markets to be product life cycle characteristics and differing regional supply and demand outlook. Clearly, these are causes that confirm grey markets to be an international marketing decision based issue because each of the cause can be rooted into one form of international marketing strategy or the other. Through conscious internationalised decision that looks at the overall output of products and how these products can be influenced negatively into creating grey markets, manufacturers can do a lot to reduce the incidence of grey markets if not stop it all together. It was in the light of this that the paper noted that most of the factors that can be put in place in reducing the likelihood of grey market activities are those that are directly related to pricing and product decisions. This is because these two forms of decisions have been noted to come in the wake of the international marketing ideology where manufacturers see themselves as being in direct competition with all other market players around the world (Young, 2005). 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