INTERNATIONAL RETAIL MARKETING
International Retail Marketing
Critically evaluate different concepts and theories relating to the marketing mix. Explain the role that the marketing mix plays in the formation of a marketing strategy for a retail organisation today. Discuss key factors that may cause the international retail marketing mix to differ from the retailer’s domestic marketing mix, and how these might be implemented.
Critically examine the retail marketing mix of your chosen retailer for their current domestic market, and, in the context of the issues discussed above, justify what modifications you consider may be necessary in order to internationalise their mix for a specific foreign destination country
TABLE OF CONTENTS
1.0 INTRODUCTION 3
2.0 PART (A) 3
2.1 MARKETING MIX THEORIES AND CONCEPT 3
2.2 ROLE OF THE MARKETING MIX 6
3 PART (B) 11
4 CONCLUSION 13
5 REFERENCES 14
The aim of any company that is in business is to grow and expand in terms of market share and product range. Many companies usually employ various optimal techniques towards these objectives and the choice of the concepts and theories to use is very important. There are various ways in which the company can achieve these desired results and one of them is through the use of the marketing mix strategies that target the key elements involved in market analysis. These key elements are the product itself, the price of that product, its placement and also the promotion modes employed to ensure the customer accesses the product.
In this part we are going to explore the various theories and concepts that pertain to marketing mix and the role they play in the designing of a marketing strategy for a retail organization. We shall also look at the main differences between an international retailer marketing mix and a domestic retail marketing mix.
MARKETING MIX THEORIES AND CONCEPTS
- In seeking to understand the optimal utilization of a company’s resources to enhance product penetration and affordability there is the 4Ps concept (Luan, 2010). It focuses on the product, price, place and promotion.
This refers to a good or service that is the end result of a process initiated either by the company, subsidiary or trading partner. It is what the company offers to its customers.
The producer must ensure that the product will satisfy the customers need adequately. It must be of the required quality standards and before production starts the company must carry out surveys on the exact requirements by the consumers. The company should be able to offer assurances on the safety of use of the product through warranties and safe packaging. This will ensure brand loyalty from the consumers which will lead to higher sales volumes and it will increase the market share of the product.
This is the value attached to a product or service and it must be paid in monetary terms to the producer.
The company must know how much the target customers are willing to pay and also their ability to pay for the product (Pitsaki, 2011). This will have a direct effect on their demand for the product. Therefore the product must be priced competitively to ensure affordability and also profitability on the part of the producer or company.
This is the venue where the buyer of the product expects to find it and all relevant information that pertain to the product.
The consumer should know where to find the product easily at any time and at the right quantities. This will call on the sellers to devise clear places where the information on the product can be accessed easily. They can use the internet and even mobile phones because majority of the people have access to them.
This is the process of reaching out to current and prospective customers to ensure the product has a wide customer base.
This calls for the stakeholders to come up with ways to inform the consumers of the presence of the organization and also its products. They must advertise their products through aggressive techniques (Peter, 2007) like sales promotions and also conduct public relations campaigns to make sure the company’s presence in the market is known by many.
The 4Ps model clearly indicates that the marketing mix is surrounded by the four elements which must be carefully determined to enhance success in the market.
- Growth strategy mix
This concept focuses on the use of the internet to ensure product penetration in the market (Yanan , 2000).
Market Development Strategies
The company can adopt the use of the internet to penetrate international markets. They can start advertising their products early in the potential market to make sure when they finally enter that particular region there products will already be known in various segments of the markets.
The marketing team will be required to devise the strategies to be used to increase the market share of the products. They must increase their presence online to target new customers. This will also improve the loyalty of the existing customers because they will be able to engage more with the company.
The internet will be used to ensure that the company engages fully with its suppliers and intermediaries. This will make them identify potential target areas and also whether they can develop other products to compete with those that are already in the market.
Development of the product
Through the use of the internet the firm will know the strategies to use in the development of their products. They will be able to know how to add value to existing products, how to improve efficiency in the subscription procedures and also how to increase the product range so that to bring on board more e-retailers as possible. They must seek good service providers who are reliable in the market and who will offer competitive prices.
- The 4 C’s Model
The customers being the target of many marketing initiatives take the centre stage in this model. The model focuses mainly on the pull marketing strategy as opposed to the push strategy adopted by the other models.
- Customers: Their needs must be fully satisfied by the products in the market.
- Cost: The cost of the product to the consumer should be analyzed to enhance affordability.
- Convenience: The product should be readily available to the consumer anytime and anywhere.
- Communication: There should be more interaction between the sellers of the product and the customers. This will ensure customer satisfaction
|CUSTOMERWhat do they need? How do they need it?||COSTHow affordable is the product?|
|CONVINIENCEWhere are they getting the product and how much is it costing them to reach the venue?||COMMUNICATIONAre they aware the product is available?|
ROLE OF THE MARKETING MIX
The role the marketing mix plays in the formation of a marketing strategy for a retail business will determine the suitability of the strategy and definitely the success of the business (Albers, 2010).
- The marketing mix will ensure the product chosen for sale by the retailer is suitable and fit for the particular market. This is because the success of the business will be determined by how good or bad the product is. The suitability of the product in the market will be determined by several factors which will revolve around the geographical area, the income levels of the consumers since it will affect their purchasing power and also their consumption and buying habits. The retailer will decide the units or packages of the product that best suit that market to ensure there are sales volumes and also customer satisfaction.
- The marketing mix will also help the retailer in knowing the pricing modes he is going to adopt for his products. If he prices his commodities very highly they will not get customers and again if he prices them low he won’t meet set revenue targets. The retailer will therefore be required to analyze all the factors that will influence his product prices such as supplier prices, price of substitutes, competing retailers’ prices and transportation costs. This will ensure the retailer does not lose customers and he gets the expected profits from his business. The company will also be able to meet its obligations like payment of taxes, rents and rates.
- Also the marketing mix will make the retailer know how his product will have wider reach to its customers. This can be done through opening more retail stores in different localities to enhance wide coverage. He will also be able to evaluate the additional costs that will result from such expansion such as increased rental bills, more wages because of the additional employees hired and even more utility bills.
- The retailer will decide whether he will advertise his business. This may not be feasible because majority of the commodities he could be dealing with are normally advertised by the producer. The only advertising he can do is to inform the prospective customers of the location of his business.
There are various factors that may cause the international retail marketing mix to differ from the domestic retailer’s marketing mix. These include;
- The international retailer will be expected to heavily advertise his products in the new market as opposed to the domestic retailer who expects the advertisements for the products to be done by the producer. This means the international retailer will incur heavy advertisement costs which in the initial stages may eat into his profits. This implies that profits may not be realized in the short run for the international retailer as opposed to the domestic retailer. The product may therefore take long to penetrate the international market due to these initial costs. The domestic retailer is already established in the market and his product enjoys loyalty from his customers and is already in profitability.
- The international retailer will have no control of the prices that are in the market. The prices will already have been set by the local operators in that market (Rossi, 2000).The international retailer will be forced to take the prices as they are in that market to ensure that there are sales volumes. This is despite the many expenses he has incurred at the set up stage which if taken to account will mean his product price should be higher, but because the international retailer wants to enhance competitiveness he will take the market prices so that he can compete adequately with the rival products.
- The international retailer will be supposed to carry out very intense promotional campaigns for his products. This is as opposed to the domestic retailer whose promotions are minimal since his goods which are mostly locally produced are mainly advertised by the producers. The domestic retailers can devise to block the international retailer by adopting low price strategies (Harald, 2008). This will mean the international retailer will take a long time to attain a considerable market share in the foreign market for his products. The international retailer will be forced to seek favorable distribution channels for his products to ensure they reach the target consumer.
- The domestic retailers will be on the look out to dominate the places the international retailer may choose to advertise his products. They will adopt defensive techniques to guard against their market share which is under threat from the international retailer. The international retailer will therefore be expected to identify areas where those in the domestic market have no full control over. Such areas may include the internet and other social sites frequented by many people.
In this part we are going to review the retail marketing mix for Superdrug Company and what they are supposed to do so as to internationalize their marketing mix when they venture in Australasia.
The Superdrug Company will have to study the marketing mix in the foreign market carefully to enable it come up with a good strategy to enter that market.
The market mix for Superdrug is very strong in the UK which is their home market (Meyer, n.d). They are major players in the beauty and cosmetics industry and their products enjoy wide appeal. The products are of high quality and the company enjoys sizable market share. This is because the products have fully penetrated the market. However the beauty and cosmetic industry in Australasia is saturated with many players. The company must maintain the same quality for the products to ensure customer satisfaction. Product quality as seen in the 4Ps model is very important as it will determine the customer satisfaction levels. The satisfaction derived from the product will guarantee the sales volumes the company will achieve and the market penetration levels.
Superdrug will be forced to adopt a price reduction strategy for their products to realize sales volumes. There are many substitutes for their products in that foreign market and each of the domestic players will be seeking to guard their market share. Reducing prices will increase the preference of their products to many consumers and this will enhance market penetration (Edwin, 2007). However this can only be done in the short run when the products are still in the initial introduction stages. The company after securing a sizable market share should revert to applicable prices in order to realize profits.
The company being a foreign entrant will be expected to heavily promote its products among the consumers. This will make the majority to be aware of their presence. They will conduct sales promotions in the key areas they will identify. They should convince the consumers why they should stop using their current products and adopt theirs. This means the advertising budget will be huge because the local companies will also be guarding against their market share.
Superdrug on evaluating the market will be required to identify the most convenient places to place their advertisements to ensure wide accessibility. They should consult with the major advertising consultants in the new market and seek their advice. Interaction with the consumer will be very crucial (John, n.d) because this is what will determine the demand for their products. The company should also adopt the use of the internet to alert customers of their entrance to this new market. Loyal customers like the tourists will be happy to know their favorite products from the company are also available
The role played by the marketing mix in the formulation of marketing strategy to be adopted by companies is very important. It is used to identify key variables that determine the suitability of a particular product being in the market. This is because many industries today are dominated by players who will not give in easily to their market share. The local players want to maintain their profit margins and when any foreign entrant attempts to venture in to their market they will employ defensive tactics to ensure they preserve their market share. To overcome all these obstacles a company should fully understand the market in which they are operating because the information gathered in local markets may also be important in the foreign markets. Failure to do this will place firms at a disadvantage whenever they seek expansion and it will be very harming to the business and to the industry as a whole.
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Edwin, S (2007) Product Management. Bristol. Ace Publishers Ltd, P.23
Harald, J (2008) Brand Evaluation. Berlin. Dietz Printers, P.41
John, E (n.d) “ Relevance of Competition”( Online). Available from http://www.markettrends.org/ (Accessed on 28th April 2012)
Luan, Y (2010) Marketing Mix Responsiveness. Brisbane. Senton Publishing House, P.17
Meyer, P (n.d) “History of Superdrug company” (Online). Available from http://www.superdrug.com/ (Accessed on 28th April 2012)
Peter, E(2007) Marketing Mix methodology. Cambridge. Cambridge Press, P.25
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