Marketing (Edexcel A Level Business)

• Global marketing strategy is the process of planning, producing, placing and promoting a business’s product or service to the global market 
  
  
• Glocalisation is a strategy where businesses aim to reach customers globally and also take into consideration the needs of the local market 
  • The term ‘think global, act local’ is used to describe the strategy of glocalisation 

• There are several marketing approaches that a business can take when it comes to expanding its operations to other countries or regions
  
  
• The three main approaches are:
  • Domestic/ethnocentric
  • Mixed/geocentric
  • International/polycentric
    
    

1. The Domestic/Ethnocentric Approach

• Businesses see the domestic market and foreign markets as very similar
• This approach is based on the belief that the company's home country culture and marketing practices are superior to those of other countries
• There will be no changes to the products for overseas customers and marketing of the product will be the same
  • E.g. Apple sells standardised products across their global markets e.g. iPhone, iPad which helps them to reduce costs as they can benefit from economies of scale
     

The Advantages & Disadvantages of the Ethnocentric Approach

2.   Polycentric/International approach

• Businesses adapt their marketing strategy by tailoring their products to the local market 
• The company treats each country as a unique market and develops a customised marketing mix for each market
  • E.g. KitKat (Nestle) has developed different adaptations of the chocolate to reach different consumers in the international market 
    • The packaging for KitKat in japan was changed to include cherry blossoms, a symbol of good luck
    • Additional flavours such as purple sweet potato and matcha powder were included to appeal to the tastes of the local market
       

The Advantages & Disadvantages of the Polycentric Approach

3. The Geocentric/Mixed Approach      

• This strategy is a mix of the polycentric and ethnocentric approach
  
  
• This approach utilises the benefits of standardised products but also tailors products to meet the needs of local markets overseas while maintaining a consistent brand image across markets
  • E.g. McDonald's has a geocentric approach by adapting their menu to meet the tastes and culture of different overseas markets
  • McDonald's do not offer beef or pork in India due to religious reasons. However in the majority of western countries, McDonald's has standardised products such as the Big Mac

The Advantages & Disadvantages of the Geocentric Approach

• The marketing mix is the set of controllable marketing tools that a company uses to promote its brand or product in a market
  • It consists of the four Ps - product , price , place , and promotion
    
    
• Businesses have to adapt the marketing mix to a new overseas market ensure the success of the product/service
  
  
• By adapting the marketing mix to meet local needs, companies can effectively penetrate global markets and build a strong global brand
  
  

Adapting the Marketing Mix to Global Markets 

• Ansoff's Matrix is a strategic planning tool that helps businesses identify potential growth opportunities by analysing their product and market strategies
  • The matrix consists of four growth strategies - market penetration, market development, product development, and diversification
     
• Expanding outside of domestic markets generates risks for the business, so they need to ensure that they adopt the right strategy
  • By doing so, businesses can effectively penetrate global markets and achieve long-term success

Ansoff’s Matrix

Market Penetration

• This strategy focuses on selling existing products into existing markets 
  • Carries the least risk - if a business already operates in a market and launches another product, customers are already familiar with the business
      

Market Development 

• This strategy focuses on selling existing products to new markets
  • Businesses may have to adapt the product to meet the needs of customers in global markets who have different preferences 
  • This strategy carries more risk as customers may not understand the product
    • E.g. Tesco opened stores in China and later had to withdraw from the market as they lacked understanding of Chinese consumer habits
       

Diversification 

• This strategy involves businesses developing new products for new markets 
• A high risk strategy as the business may have limited knowledge about the market
• This strategy requires a deep understanding of local market conditions and consumer behaviour to ensure that the new product and market are a good fit for the business
   

Product Development 

• A growth strategy where a business aims to introduce new products into existing markets
• This requires market research to identify the target market's needs and preferences, developing products that meet those needs, and adapting the marketing mix to ensure that the products resonate with local consumers