Marketing (Edexcel A Level Business)

Revision Note

Jennifer Aryiku

Written by: Jennifer Aryiku

Reviewed by: Steve Vorster

Glocalisation

  • Global marketing strategy is the process of planning, producing, placing and promoting a business’s product or service to the global market 

  • Glocalisation is a strategy where businesses aim to reach customers globally and also take into consideration the needs of the local market 

    • The term ‘think global, act local’ is used to describe the strategy of glocalisation 

Different Marketing Approaches

  • There are several marketing approaches that a business can take when it comes to expanding its operations to other countries or regions

  • The three main approaches are:

    • Domestic/ethnocentric

    • Mixed/geocentric

    • International/polycentric

The Domestic/Ethnocentric Approach

  • Businesses see the domestic market and foreign markets as very similar

  • This approach is based on the belief that the company's home country culture and marketing practices are superior to those of other countries

  • There will be no changes to the products for overseas customers and marketing of the product will be the same

    • E.g. Apple sells standardised products across their global markets e.g. iPhone, iPad which helps them to reduce costs as they can benefit from economies of scale

The Advantages & Disadvantages of the Ethnocentric Approach

Advantages

Disadvantages

  • Businesses can benefit from economies of scale as the product is standardised and produced on a large scale 

  • Costs are also lower as there is no investment into product development to adapt products for different markets

  • The business could potentially lose sales as the product is not tailored to the needs and wants of markets overseas 

  • This approach can lead to cultural insensitivity and may not resonate with local customers in other countries

Polycentric/International approach

  • Businesses adapt their marketing strategy by tailoring their products to the local market 

  • The company treats each country as a unique market and develops a customised marketing mix for each market

    • E.g. KitKat (Nestle) has developed different adaptations of the chocolate to reach different consumers in the international market 

      • The packaging for KitKat in Japan was changed to include cherry blossoms, a symbol of good luck

      • Additional flavours, such as purple sweet potato and matcha powder, were included to appeal to the tastes of the local market

The Advantages & Disadvantages of the Polycentric Approach

Advantages

Disadvantages

  • Sales are likely to increase as the product is tailored to meet the needs of customers

  • This helps to develop brand loyalty in overseas markets

  • Product development to adapt the product may increase average unit costs 

  • There will also be additional costs in market research to find out about the market

The Geocentric/Mixed Approach      

  • This strategy is a mix of the polycentric and ethnocentric approach

  • This approach utilises the benefits of standardised products but also tailors products to meet the needs of local markets overseas while maintaining a consistent brand image across markets

    • E.g. McDonald's has a geocentric approach by adapting their menu to meet the tastes and culture of different overseas markets

    • McDonald's do not offer beef or pork in India due to religious reasons. However in the majority of western countries, McDonald's has standardised products such as the Big Mac

The Advantages & Disadvantages of the Geocentric Approach

Advantages

Disadvantages

  • Sales are likely to increase as the product is tailored to meet the needs of customers

  • This helps to develop brand loyalty in overseas markets

  • There will be costs associated with the product development and menu changes required to meet the needs of the local market

Examiner Tips and Tricks

The question can ask you to recommend which type of approach a business should take when expanding abroad. You should take into account the best approach for the type of business that is being considered in the extracts

Adapting & Applying the Marketing Mix to Global Markets

  • The marketing mix is the set of controllable marketing tools that a company uses to promote its brand or product in a market

    • It consists of the four Ps - product , price , place , and promotion

  • Businesses have to adapt the marketing mix to a new overseas market ensure the success of the product/service

  • By adapting the marketing mix to meet local needs, companies can effectively penetrate global markets and build a strong global brand

Adapting the Marketing Mix to Global Markets 

Place

Product 

  • Businesses have to identify the best channel of distribution to get the product/service to the customer in a particular market 

  • They also need to consider the available technology as many transactions take place via e-commerce

  • Businesses need to consider how much they should modify or adapt their products to meet new markets overseas

  • They need to consider if they will take an ethnocentric, polycentric or geocentric approach 

Price 

Promotion

  • When making pricing decisions, businesses must consider customer incomes, costs of production and taxes

  • They must also consider the stage of the product life cycle the product is at within that market

  • The state of the economy (recession or boom) will also impact the pricing strategy

    • E.g. In 2022, Coke in Finland was $2.42, whereas in Egypt is was $0.18

  • Promotion needs to be adapted to meet language and cultural differences

  • Businesses must aim to choose the most effective method of promotion to promote products in that market

    • E.g. social media may be an effective marketing tool in some markets but less effective in others

Adapting & Applying Ansoff's Matrix to Global Markets

  • Ansoff's Matrix is a strategic planning tool that helps businesses identify potential growth opportunities by analysing their product and market strategies

    • The matrix consists of four growth strategies - market penetration, market development, product development, and diversification

  • Expanding outside of domestic markets generates risks for the business, so they need to ensure that they adopt the right strategy

    • By doing so, businesses can effectively penetrate global markets and achieve long-term success

Ansoff’s Matrix

 

EXISTING PRODUCTS

NEW PRODUCTS 

EXISTING GLOBAL MARKETS 

Market Penetration 

Product development 

NEW GLOBAL MARKETS

Market development 

Diversification 

Market Penetration

  • This strategy focuses on selling existing products into existing markets 

    • Carries the least risk - if a business already operates in a market and launches another product, customers are already familiar with the business

Market Development 

  • This strategy focuses on selling existing products to new markets

    • Businesses may have to adapt the product to meet the needs of customers in global markets who have different preferences 

    • This strategy carries more risk as customers may not understand the product

      • E.g. Tesco opened stores in China and later had to withdraw from the market as they lacked understanding of Chinese consumer habits

Diversification 

  • This strategy involves businesses developing new products for new markets 

  • A high risk strategy as the business may have limited knowledge about the market

  • This strategy requires a deep understanding of local market conditions and consumer behaviour to ensure that the new product and market are a good fit for the business

Product Development 

  • A growth strategy where a business aims to introduce new products into existing markets

  • This requires market research to identify the target market's needs and preferences, developing products that meet those needs, and adapting the marketing mix to ensure that the products resonate with local consumers

Examiner Tips and Tricks

In Paper 1, you are often required to make links between Theme 1 and Theme 4. When you have questions on marketing, refer to the marketing strategies and concepts from other sections of the course to explain the different approaches a business may undertake when expanding into an international market

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Jennifer Aryiku

Author: Jennifer Aryiku

Expertise: Economics Content Creator

Jennifer has completed a degree in Economics at City University London and a PGCE in Business and Economics Education from the Institute of Education, UCL. She is passionate about young people and helping in their education. She has over 10 years experience which includes working as an Academic Mentor and Head of Economics & Financial Education. Jennifer has also co-written an Economics workbook and is an examiner for UK exam boards.

Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.