UNIT 5
Extending marketing
5.1 Creating a Competitive Advantage
Two key trends in marketing for the twenty-first century are clearly discernible:
1. The trend towards the use of relationship marketing to improve customer satisfaction.
2. The trend towards in-depth competitor analysis as the means of identifying the company’s major competitors using both an industry and market-based analysis.
Competitive analysis involves closely examining the relevant information regarding competitors’ objectives, strategies, strengths and weaknesses, and reaction patterns and utilising the same for the development of competitive strategies.
To be successful, a company must consider its competitors as well as its actual and potential customers. In the process of performing a competitor analysis, the company carefully gathers and analyses information on competitors’ strategies and programmes. A competitive intelligence system (CIS) helps the company acquire and manage competitive information. The company must then develop a competitive marketing strategy of its own. The chosen strategy depends on the company’s industrial position and its objectives, opportunities and resources. Several basic competitive strategies are outlined in this section. Some of these are time-tested and some are relatively new.
Four primary competitive positions were reviewed in the section. The first is that of the market leader which faces three challenges: expanding the total market, protecting market share and expanding the market share. The market leader is interested in finding ways to expand the total market because it will benefit most from any increased sales. The leader must also have an eye towards protecting its share. Several strategies for accomplishing this protection task are also presented. Aggressive leaders also try to expand their own market share. The second position is that of the market challenger. This is a company that aggressively tries to expand its market share by attacking the leader, other runner-up firms or smaller companies in the industry. The third position is that of the market follower which is designated as a runner-up company that chooses not to rock the boat (usually out of fear that it stands to lose more than it might gain). Lastly, the market nicher is a position option open to smaller companies that serves some part of the market that is not attractive to the larger companies. These companies often survive by being specialists in some function that is attractive to the customer in the small market niche that they have chosen for themselves.
The analysis of the four competitive position options presented in this section would help you identify the various options that companies would like to use in their positioning strategy.
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5.2 The Global Marketplace
The world is shrinking rapidly with the advent of faster communication, transportation and financial flows. In the twenty-first century, the trend shows that companies need to seek and develop new markets to stay competitive. Domestically, companies cannot rely on government protection to survive. Economic communities in the world are striving to eliminate trade barriers. In Malaysia, many industries are global in nature. These companies that operate globally achieve lower costs and higher brand awareness.
However, venturing in the global market has never been an easy task. A company may have to overcome many challenges and obstacles to be successful. The risk factor is always there when entering international markets and so are the opportunities.
Due to the uncertain nature of the global marketplace, companies have to make careful decisions on which country to enter and how to enter. It is necessary to conduct feasibility studies before embarking on any serious steps to enter a global market. In this section, inputs have been given to you on some of the important questions.
1. How to look at the global market environment.
2. Deciding whether to go international.
3. Deciding which markets to enter.
4. Deciding how to enter the market.
You must consider the questions above seriously before committing to any investments. Some companies prefer to use safer modes of entry like licensing and indirect exports while some prefer a riskier mode. Whichever choice you make, be prepared to support it with valid findings and background studies.
Countries, customers, suppliers, people and competition differ from country to country. Making a similar judgment to serve all the places may lead to fatal losses. International ventures require thorough planning, careful implementation and a good control of tasks. Planning requires you to decide on the allocation of resources. You need to balance your resources locally and abroad. In terms of implementation, you should be able to coordinate the activities to suit the expectations and requirements of the foreign stakeholders. Global marketing demands extensive learning and adaptation practices. Rigidity may not be the right answer to develop a successful market catering to global requirements.
Another important matter for you to consider is how you can work with new partners from different cultural backgrounds. Gift giving in Japanese culture is common but in the Malaysian context, it can be viewed as bribery. In this situation, what will be your option? The answer lies in adapting to the culture of the host country where you plan to do business. In conclusion, the global market brings you you many surprises. You must be sure that you know the best way to deal with them. In many instances, a matter which is very insignificant to you may be very important for others. So you must decide whether to stand by your usual practices or adapt for the sake of market growth, customer relationship and business as you enter different markets.
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5.3 Market Ethics and Social Responsibility
This section examines the social effects of marketing practices by companies. A marketing system should sense, serve and satisfy consumer needs and improve the quality of consumers’ lives. In working to meet the consumer’s needs, marketers may take some actions that are not approved of by all the consumers or the publics within the social sector. Marketing managers must understand the criticisms that the marketing function may encounter. By understanding the criticisms, the manager is better prepared to respond to them in a proactive manner. Some of the criticisms are justified; some are not.
The primary criticisms of the marketing function with respect to its impact on individual consumers have been categorised in relation to:
1. High prices.
2. Deceptive practices.
3. High-pressure selling.
4. Shoddy or unsafe products.
5. Planned obsolescence.
6. Poor service to disadvantaged consumers.
These criticisms have emerged from the failure to practise consumer orientation effectively and adequately.
A separate set of criticisms is directed towards the marketing function by the society in general. Criticisms from this larger public body include comments on creating:
1. False wants and too much materialism.
2. Too few social goods.
3. Cultural pollution.
4. Too much political power.
In addition, critics have also pointed out that the marketing impact on other businesses may not always be good either. Marketing is accused of harming competitors and reducing competition by acquiring competitors, creating barriers to entry and using unfair marketing practices.
The current trend indicates that many marketers are practicing environment friendly marketing. They understand that marketing is beyond selling products and services. Many companies are taking environmental issues seriously. They respect and adhere to legislations which protect the environment. Adverse publicity regarding the negative impact of a company’s activities on the environment can ruin a company’s business completely.
Most successful companies have recognised that their companies need to follow enlightened marketing. This concept is based on the principles of consumer orientation, innovation, value creation, social mission and social orientation.
A code of ethics needs to be incorporated into company policies and mission statement to ensure widespread practice and serve as an implementation guideline. The policies include guidelines for customer relationships, distributors’ relations, staff relations, promotions, pricing and product development and services. In the long run, companies which adhere to a strict code of conduct will certainly reap the benefits.
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