Types of Marketing Strategies on Foreign Markets

Topics: Marketing, Marketing research, Marketing plan Pages: 5 (1563 words) Published: April 10, 2011
Types of Marketing Strategies on Foreign Markets
On the single European market, the development of a company marketing strategy should be preceded by a market research to identify the following elements: the potential capacity of selected segments of the market for a relevant industry, consumers’ tastes and needs, appropriate methods for entering a market (including identification of the methods employed by major competitors), as well as the necessary degree of product standardisation and differentiation. The marketing strategy means setting a long-term objective for an enterprise, as well as identifying the instruments, methods and measures for its achievement. In the classic approach, M. Porter distinguished three major market competition theories, that is, strategy of low prices, strategy of differentiation and strategy of concentration [12-14]. 1. The strategy of low prices is employed by companies with a cost advantage resulting from their controlling a large market share of usually standardised products manufactured in large volumes (effect of scale). On the Single European Market this strategy is pursued, for instance, by many clothing companies that manufacture standardised articles sold through large chain stores or by mail-order houses. 2. The strategy of differentiation consists in giving special features to products or services sold by a company, which will distinguish them from the other goods offered on the market. In the Single European Market, this strategy may also translate into the adjustment of goods to the requirements of selected national or regional market segments. This strategy makes it possible for a company to earn higher profit margins and gain a dominant position in selected market segments. If successful, the strategy triggers the imitation effect among major competitors, as a result of which the position held by market leaders may be undermined. One barrier to this strategy may be the relatively low absorption of a market. 3. The strategy of concentration attempts to target a predefined group of buyers, selected group of goods or geographical market (regional or local). In order to identify a market strategy on the European or global market, the so-called Ansoff matrix can be used [15]. According to this matrix, strategies can be divided into four types: ■ market penetration,

■ market development,
■ product development,
■ innovation.
Market penetration means intensified activities to increase the sales of a given product on the existing market. The market is well-known, the demand unmet and it is possible to reach potential buyers. The market development strategy attempts to introduce an existing product into new markets. An enterprise may go beyond the domestic market and win foreign markets. In this way its activities become internationalised. An enterprise may also use this strategy after a long period of operation on foreign markets, for instance (as has already been observed) when shifting from a double concentration strategy to a segment concentration strategy, or from domestic concentration to the double diversification strategy. The product development strategy consists in product modification (e.g. its packaging, colour) and the creation of a new product to sell on the existing market. This may be a domestic as well as a foreign market. The strategy of innovation aims at placing new products on new markets. It requires large outlays on product research and surveys of new markets, among which foreign markets are quite frequent. However, this strategy bears the highest risk, resulting from the uncertain success of the intended sales of the new product and of its performance on the new market. Some similarities can be found among the strategies identified using the Ansoff matrix and those relating to market segments and particular foreign markets. A shift from a double concentration strategy to a segment concentration strategy corresponds to the penetration strategy and also...
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