Write short notes on marketing mix?

Answer 1

Marketing Mix: Marketing Program (The 4 Ps)

International organizations must decide how much to adopt their marketing strategy to local conditions. At one extreme are organizations that use a globally standardized marketing mix worldwide.

Standardisation of the product, advertising and distribution channels promise low cost. At the other extreme is an adapted marketing mix where the producer adjusts the marketing mix elements to each target market.

Most brands are adapted to some extent. These marketing mix i.e. product, promotion, price, place (distribution channels)

1) Product:

There are 5 distinguished adoption strategies of product and promotion to a foreign market. These are indicated below:

a) In straight extension, it means that a product is introduced into a foreign market without any change to it. This has been successful with cameras, electronics and machine tools, but disastrous with food products

Straight extension is tempting because it involves no additional R&D expenses, manufacturing, retraining, or promotional modification, but it can be costly in the long run.

b) Product adaptation: In this strategy, you alter the product to meet local conditions or preferences. There are several levels of adaptation, a company can produce an (i) regional version of its product e.g NOKIA customized its 6100 series for its every market (major market)

(ii) A country version

(iii) A city version

(iv) Retailer version

c)Product Invention: This involves creating something new. It can take 2 forms backward invention i.e. re-introducing earlier product forms that are well adapted to foreign country's needs.

Forward invention, i.e. creating a new product to meet the needs in Another Country. Product invention is costly strategy, but payoffs can be great particularly if a company can portray a product innovation to other countries.

2. Promotion:

Companies can run the same advertising and promotion campaigns used in the home market or change them for each local market. This process is called communication adaptation. If it adapts both product and communication, the company engages in dual adaptation.

One can use the same message everywhere varying only the language, name and colours to fit into particular foreign markets. Second, one can use the same theme globally but adapt the copy to each local market.

Thirdly one can use an approach that consist of developing a global pool of ads from which each country selects the most appropriate e.g Cocacola.

Fourthly one can allow the country managers to create their own country specific ads within guidelines.

3. Price:

Multinationals face several pricing problems when selling abroad. These are:

a) Price escalation problem: a Mercedes may sell for about $10,000 in US but it will cost over 7 million in Kenya, this is because of cost of transportation, tariffs, importer margin, wholesaler margin and retailer margin to its factory price.

Because of the cost escalation, organizations face the problem of how to set prices in different countries. Organisations have 3 choices

- Set uniform prices everywhere: This strategy would result in prices being high in poor countries and not high enough in the rich countries.

- Set a market based price in each country: This strategy would force an organization to change what each country can afford. It ignores differences in the actual costs from country to country and it can make intermediaries to re-ship the products to high price countries.

- Set a cost based on each country: Here an organization would use standard markup of its cost everywhere.

b) Another problem would be when an organization sets a transfer price (i.e. the price it charges another unit in the organization) for goods it strips to its foreign subsidiaries. If an organization charges too high to its subsidiary it may end up paying high tariffs and if a company charges too low a price it can be charged with dumping.

c) Dumping is another problem, it occurs when an organization charges either less that its cost or less than it charges in its home market in order to enter or win the market.

4) Place (Distribution Channels):

A multinational organization should pay attention to how the product moves within the foreign country. This distribution channel involves 3 steps.

The first link is the sellers international market headquarters where decision of channels and other marketing mix elements are made.

The 2nd link is the channel between nations, this involves getting the products to the borders of the foreign nation. The decision made include the type of intermediaries (agents, trading companies) that will be used, the type of transportation (air, sea) and financing and risk arrangements.

The 3rd link is channel within foreign nations. This involves getting the product from their entry points to final buyers and users.