4.3.1 Marketing Flashcards
Define Glocalisation.
- Glocalisation is a strategy where businesses aim to reach customers globally & also take into consideration the needs of the local market
What are the 3 main marketing approaches that a business can take when it comes to expanding its operations to other countries or regions?
- Domestic/Ethnocentric
- Mixed/Geocentric
- International/Polycentric
What is the domestic/ethnocentric approach?
- Businesses see domestic market & foreign markets as very similar
- This approach is based on belief that company’s home country culture & marketing practices are superior to those of other countries
- There will be no changes to the products for overseas customers & 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
What are the advantages & disadvantages of the ethnocentric approach?
Advantages:
- Businesses can benefit from economies of scale as product is standardised & produced on a large scale
- Costs are also lower as there is no investment into product development to adapt products for different markets
Disadvantages:
- Business could potentially lose sales as the product is not tailored to the needs & wants of markets overseas
- This approach can lead to cultural insensitivity & may not resonate with local customers in other countries
What is the polycentric/International approach?
- Businesses adapt their marketing strategy by tailoring their products to local market
- Company treats each country as a unique market & 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
What are the advantages & disadvantages of the polycentric/international approach?
Advantages:
- Sales are likely to increase as the product is tailored to meet the needs of customers
- This helps to develop brand loyalty in overseas markets
Disadvantages:
- Product development to adapt the product may increase average unit costs
- There will also be additional costs in market research to find out about the market
What is the Geocentric/Mixed approach?
- This strategy is a mix of the polycentric & 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
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
What are the advantages & disadvantages of the Geocentric approach?
Advantages:
- Sales are likely to increase as the product is tailored to meet the needs of customers
- This helps to develop brand loyalty in overseas markets
Disadvantages:
- There will be costs associated with the product development & menu changes required to meet the needs of the local market
Why is it important to adapt the marketing mix to global markets?
- To ensure the success of the product/service
By adapting the marketing mix to meet local needs, companies can effectively penetrate global markets & build a strong global brand
How can you adapt ‘place’ to global markets?
- Businesses have to identify the best channel of distribution to get the product/service to the customer in a particular market
- They also need to consider the available technology as many transactions take place via e-commerce
How can you adapt ‘product’ to global markets?
- Businesses need to consider how much they should modify/adapt their products to meet new markets overseas
- Need to consider if they will take an ethnocentric, polycentric or geocentric approach
How can you adapt ‘price’ to global markets?
- When making pricing decisions, businesses must consider customer incomes, costs of production & taxes
- Must also consider stage of the product life cycle the product is at within that market
- The state of the economy (recession or boom) will also impact the pricing strategy
E.g. In 2022, Coke in Finland was $2.42, whereas in Egypt is was $0.18
How can you adapt promotion to global markets?
- Promotion needs to be adapted to meet language & cultural differences
- Businesses must aim to choose the most effective method of promotion to promote products in that market
E.g. social media may be an effective marketing tool in some markets but less effective in others
What is Ansoff’s matrix?
- A strategic planning tool that helps businesses identify potential growth opportunities by analysing their product & market strategies
Matrix consists of 4 growth strategies - market penetration, market development, product development, & diversification
Expanding outside of domestic markets generates risks for business, so they need to ensure that they adopt right strategy
By doing so, businesses can effectively penetrate global markets & achieve long-term success
What is market penetration?
- Strategy focuses on selling existing products into existing markets
Carries least risk - if business already operates in a market & launches another product, customers are already familiar with the business
What is market development?
- This strategy focuses on selling existing products to new markets
- Businesses may have to adapt product to meet the needs of customers in global markets who have different preferences
- 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
What is diversification?
- Strategy involves businesses developing new products for new markets
- High risk strategy as the business may have limited knowledge about market
- Strategy requires a deep understanding of local market conditions & consumer behaviour to ensure that the new product & market are a good fit for the business
What is product development?
- Growth strategy where a business aims to introduce new products into existing markets
- Requires market research to identify the target market’s needs & preferences, developing products that meet those needs, & adapting the marketing mix to ensure that the products resonate with local consumers
