Marketing Strategies (HSC SSCE Business Studies): Revision Notes

Global Marketing

When businesses expand internationally, they must adapt their marketing strategies to suit different overseas markets. Each foreign market presents unique challenges including different consumer behaviours, cultural norms, economic conditions and competitive landscapes. Global marketing requires careful planning and research to ensure success in diverse international environments.

How globalisation has affected marketing management

Globalisation has fundamentally changed how businesses approach marketing. Many transnational corporations (TNCs) — businesses with production facilities in two or more countries operating on a worldwide scale — now develop marketing strategies for international markets.

Two main approaches to global marketing

Businesses face a critical decision when entering global markets: should they standardise their marketing approach or customise it for each market?

Standardised approach: Some TNCs treat the entire globe as one large, unified market. This means using the same marketing mix (product, price, promotion, place) across all countries, assuming customer needs and product usage are similar worldwide.

Customised approach: Other businesses believe the marketing mix must be adapted to account for differences in cultures, religions, tastes and economic conditions between countries. Most businesses recognise that overseas markets differ from domestic markets in meaningful ways.

The critical role of market research

Regardless of which approach is chosen, all global businesses must conduct thorough market research to understand the complexities of international marketing environments. This research must be even more comprehensive than for domestic markets.

Businesses need two types of information before entering global markets:

• Specific marketing decisions data — information about pricing, packaging requirements, distribution channels, and necessary product modifications
• Country analysis — understanding the target country's economic conditions, political stability, social structures and cultural characteristics

Global branding

Global branding is the worldwide use of a name, term, symbol or logo to identify a seller's products. We encounter global brands constantly in our daily lives — from Apple phones to Nike shoes to McDonald's restaurants.

Why businesses use global branding

Businesses increasingly adopt global branding strategies for several compelling reasons:

• Cost effectiveness — A single advertisement can be used across multiple countries, reducing production costs significantly
• Uniform worldwide image — Consistent branding creates the same brand perception globally, building trust and recognition
• Brand extension opportunities — A successful global brand name can be leveraged when introducing new products to the market

A successful brand represents one of a company's most valuable assets. Brands like Apple, Sony, McDonald's, Coca-Cola, Mercedes-Benz, Kellogg's and Nike have built enormous value through global recognition. Global branding achieves recognition that transcends language barriers.

Brand name strategies across markets

Most businesses maintain the same brand name globally. Nike is Nike everywhere. Starbucks operates as Starbucks in all markets. However, some brands use different names in different territories while maintaining consistent visual branding.

Standardisation

A standardised approach is a global marketing strategy based on the assumption that product usage and customer needs are identical worldwide. This means applying the same marketing mix across all markets — essentially "one marketing plan fits all".

Products suited to standardisation

Common examples of standardised products include:

• Electrical equipment
• Mobile phones
• Soft drinks
• Music
• Cosmetics
• Movies
• Fast foods

Advantages of standardisation

The standardised approach offers significant business benefits:

• Economies of scale — Longer production runs reduce per-unit costs
• Reduced research and development costs — One product design serves all markets
• Simplified operations — Spare parts, after-sales service and maintenance are standardised globally
• Uniform promotion — Marketing campaigns can be used across multiple countries
• Easier evaluation — Assessing and modifying one global plan is simpler than managing multiple localised plans

Risks of standardisation

However, standardisation isn't always appropriate. Translation errors can cause serious problems.

Customisation

Despite standardisation's advantages, many businesses find they must modify their marketing mix when entering overseas markets. A customised approach (also called a local approach) assumes that product usage and customer needs differ between countries.

When customisation is necessary

Adopting a customised philosophy means tailoring the marketing plan according to the target country's:

• Economic characteristics
• Political environment
• Sociocultural factors

The middle path: Combined approach

Many successful businesses adopt a combination of standardisation and customisation. This allows them to benefit from standardisation's cost savings while adapting to local market preferences where necessary.

The trend towards standardisation

Over the past decade, as globalisation has intensified, the standardised approach has become more common than the customised approach. Improved global communications and converging consumer preferences have made standardisation increasingly viable.

Global pricing

Global pricing refers to how businesses coordinate their pricing policies across different countries. This represents one of the most critical yet complex challenges for transnational corporations.

Why pricing matters globally

Price is the only element of the marketing mix that generates revenue — all other elements (product development, promotion, distribution) involve costs. Therefore, global pricing strategy directly determines profitability. Accurate pricing decisions are essential for successful international expansion.

Global businesses can implement three main pricing strategies.

1. Customised pricing

Customised pricing occurs when consumers in different countries are charged different prices for the same product. This is the most commonly used global pricing method.

The cost-plus method

Many global businesses use cost-plus pricing to cover additional export expenses including:

• Transportation costs
• Tariffs (taxes on imported products)
• Warehousing expenses
• Local taxes
• Insurance

The formula is:

$\text{Overseas price} = \text{Domestic price} + \text{Export costs} + \text{Desired profit margin}$

This method ensures all costs are covered while maintaining profitability in each market.

2. Market-customised pricing

Market-customised pricing sets prices according to local market conditions, offering even more flexibility than basic customised pricing.

Key factors influencing market-customised prices:

• Level of local competition
• Demand intensity in the market
• Local consumer purchasing power
• Competitive positioning

In highly competitive markets, businesses may need to charge lower prices. In markets where they hold a monopoly or strong market position, prices can be higher.

Exchange rate impact

Prices in foreign markets are significantly influenced by foreign currency exchange rates. For example, if A$1 = US$0.70, one Australian dollar equals 70 US cents. Conversely, one US dollar would equal A$1.43.

3. Standardised pricing

Standardised pricing means charging customers the same price for a product anywhere in the world. This strategy only succeeds if foreign marketing costs remain low enough not to significantly affect overall costs.

Risks of standardised pricing:

• Domestic competition — Local businesses may undercut the standardised price by having lower operating costs
• Exchange rate fluctuations — Currency changes can make standardised prices uncompetitive or unprofitable in some markets

Exam technique: Analysing pricing strategies

When evaluating global pricing strategies in exam questions:

• Identify which pricing approach is being used
• Explain why this approach suits the business's circumstances
• Analyse the advantages and disadvantages for that specific market
• Consider factors like competition, costs, exchange rates and consumer purchasing power
• Evaluate whether the chosen approach is likely to achieve the business's objectives

Competitive positioning

Competitive positioning relates to how a business differentiates its products in the competitive marketing environment. It addresses the fundamental question: how will we carve out our place in the market?

The differentiation challenge

In global markets, as in domestic markets, businesses must clearly demonstrate how their products are superior to competitors' offerings. Without effective differentiation, businesses require more time, money and effort to persuade potential customers to purchase their products.

Three pillars of competitive positioning

To differentiate successfully and avoid competing solely on price (which is difficult to sustain long-term), businesses should develop:

• Product leadership — Offering innovative, superior quality products that set industry standards
• Positive customer relationships — Building strong connections with customers through excellent service and understanding their needs
• Operational excellence — Delivering reliable, efficient service and consistent quality

Maintaining competitive advantage globally

To develop and maintain a competitive position in challenging global environments, businesses must:

• Gain deep understanding of the dynamic environments in which they operate
• Continuously monitor changing market conditions
• Adapt strategies according to evolving conditions
• Invest in understanding customer needs across different markets
• Build strong brand identity that transcends price competition

Exam technique: Evaluating competitive positioning

When asked to evaluate a business's competitive positioning:

• Assess how effectively they differentiate from competitors
• Analyse whether differentiation is based on product features, customer service, or operational efficiency
• Consider whether their positioning is sustainable long-term
• Evaluate how well their positioning suits the target market's needs and preferences
• Recommend improvements or adjustments to strengthen their competitive position