Answersto the Five Questions
Answersto the Five Questions
Cultureis one of the factors that influence the consumer behavior in thecurrent market. Cultural factors emerge from various components thatare related to culture or cultural vicinities from where the customercomes. Culture is a major factor, especially when it comes tocomprehending the behavior and needs of the consumers. Throughouttheir existence, a customer will be influenced by their family,friends, and their cultural environment that will teach them values,preferences, and the collective demeanors to their culture. For thegiven brand, it is imperative to fathom and takes into account howthe culture inherent to each market to adapt its marketing strategyand its product. It is crucial to do this because it would play avital role in the habit, perception, expectations, or behavior of thecustomers. For example, in the western parts of the world, it iscommon to invite friends home for a culinary dinner or a drink.However, it is contrary to some countries like Japan, which is not ofthat the local culture. Because of this custom, Japanese prefertaking their colleagues in a restaurant.
Areal specificity to consider for the brands in the market is theusage and consumption of a given product, such as sodas, snacks, andalcoholic beverage. Due to cultural differences, the seller shouldunderstand that the rate of consumption is not the same in allregions. For example, McDonald’s is one of the organizations in theworld that understand how culture affects its business. It hasadapted to the specificities of each market and culture. It is muchaware of the significance of providing the particular commodities tomeet the tastes and needs of the consumer from various cultures. Thefast-moving foods, for instance, France has McBuguette (with Dijonmustard and French baguette), a Chicken Maharaja and Masala GrillChicken in India (comprises of spices from India) and Mega TeriyakiBurger (made of teriyaki sauce). Therefore, the business enterpriseshould look at the culture of the given market before putting intoplace the marketing strategies on how to convey their products to theconsumers.
Onthe other hand, social factors can also influence the consumerbehavior. Such factors fall into three classes: family, referencegroups, and social status and roles. Reference groups are those thatprovide to the people some comparison point, less or more directabout their behavior, consumer habit, desires, or lifestyle. Theyaffect the image that a person has about themselves and theirbehavior. Some consumers can be influenced by the group they do notbelong to but wish to be part of it. Such a group is calledaspirational and has a direct impact on the customer who wants tojoin this group and hence buy the same goods.
Forexample, even if they do not want it yet, the browsing beginner maywish to purchase and advanced phone used by the aspirational group sothat he can get closer to such group. On the other hand, a teenagermay wish to buy the Smartphone or the shoe model used by the group ofthe popular people at their high school so that such groups canaccept him. In this case, the social factor can influence thecustomer behavior and the seller should consider such factor whenevaluating their marketing strategies. In the recapitulation, thefact of how cultural and social factors affect the consumer behavior,and the organizational marketing strategies can be well explained bythe Theoryof Consumer Behavior(ToCB), which states that the consumer tends to allocate theirlimited income among available products and services to maximizetheir utility.
Asthe companies are expanding and making the world a global village,there is a need for gathering the global information to planstrategically for their future and evaluate marketing strategies usedby their competitors so that they can remain in the competitivemarket. Due to this, companies should use the information system togather such information. The Information System (IS) is the organizedsystem that is used to collect, organize, store, and communicateinformation. It involves the study of complementary networks that theindividuals use in the process of collection, filtration, processing,creating, and distributing data.
Componentsof the Information System
PeopleResources:It is the human personnel employed in this system. The first resourcein this case is the end users. The end users comprise of theindividuals who use the IS and the in information produced from suchsystem. They can be engineers, salespersons, accountant, customers,clerks, or managers. The IS specialists is another human resource inthe system. Such group is comprised of the individuals that developand operate the IS. They include programmers, computer operators,testers, and other technical, clerical, and managerial personnel.
HardwareResources:The first component in this category is the machines. In this case,machines are the computers and other tools that work together withthe data media, and objects in which data can be recorded and saved.The computer system is another component in this class. It comprisesof the peripheral devices, for instance, Midrange Computer Systems(MCS), Microcomputer systems, and large computer systems (LCS).
SoftwareResources:Is the component that includes the sets of information processinginstructions. The concept of software does not only include theprograms that control and direct the computer, but also theinformation processing sets. Software resources include applicationsoftware, procedures of and operating instructions, and the operatingsystems.
DataResources: It includes data and the database. Data can be in various forms,including numerical data that comprises of alphabets and numbers andother characters that can be used in the business transaction. Thedata resources should meet the following factors: Comprehensiveness,Non-redundancy, and Appropriate structures.
NetworkResources:Telecommunication networks like intranet, extranet, and the internethave become very vital in the successful operations of theorganization. Telecommunication networks include communicationprocessor, communication media interconnected devices, and thecomputer.
CompetitiveAdvantage of Information System
Competitiveadvantage can be defined as the advantage accrued over thecompetitors in the competitive market as a result of offering thebuyers a significantly greater value, either through the provision oftraditional benefits or lowering the prices. The question that isusually asked in this context is how the IS gives a business acompetitive advantage over its competitors. Various entrepreneurshave debated such question and their controversial debates endedproviding the empirical evidence suggesting that the IS has no directadvantage on the Return on Investment (ROI). However, some managers,through defining a competitive advantage by using three terms, thatis, cost leadership, differentiation, and focus, have suggested thatIS has a direct impact on the ROI regarding the competitiveadvantage.
Itis paramount for the entrepreneurs to sustain the competitiveadvantage of the company. IS has enormous effects on assisting theorganization to accrue a competitive advantage. IS helps the companyto gain a competitive market through creation value and provides anorganizational edge over the competitors in the ways that can bemeasured using the Key Performance Indicators (KPI). Another way isto grab a vast market. If the company uses the IS, it is assured ofentering the world market and get many customers and hence, gain thecompetitive advantage over its competitors. The details ofcompetitive advantage can be well illustrated by the Theoryof Competitive Advantage(TOCA).
Importanceof Market Entry Strategy (MES)
Thereare many benefits the company gain because of adopting the givenmarket strategy. The entrepreneur should understand that no onemarket entry strategy can work for all markets globally. Somemarketing strategies can be substantial in the open market while theother one may need the organization to come up with the joint. Manyfactors influence the choice of the strategy that a company uses toenter the market. Such factors include transporting and sellingcost, the degree of adaption the required product, and difference inthe rates of tariffs. The following are the importance of marketentry strategy.
DirectExporting:It is one of the reasons for most companies to adopt the market entrystrategy. MES enables an organization to export directly to themarket it chooses. Many companies, after establishing a salesprogram, turn to the distributor or agent to represent it in theforeign markets. Such agents work in close collaboration with theorganization managers in representing their interests. They maybecome the head of the company and, for this reason, it is importantfor the company to choose the key staff member to represent theorganization.
Licensing:It is another reason for the adoption of the MES by most companies.Licensing is the sophisticated consensus where the firm transfers theuse of its products and services to another company. It is a usefulaction if the purchaser of the license has the significant marketshare of the market that a particular company wants to enter. ThroughMES, a company grabs the vast market for its products.
Franchising:The adoption of the MES helps the company to undertake the process offranchising. Franchising is the process of market expansion that hasgained popularity in many parts of the world. It works well with theorganization with the repeatable selling model that can betransferred easily into the other markets.
Partnering:MES enables the company to collaborate with another. Partnering takesvarious forms from a simple marketing arrangement to a complex marketalliance. Partnering is critical in the markets where cultures aredifferent, and the local partners will bring local knowledge andcontact with the domestic market.
Piggybacking:MES also enables the company to piggyback itself. Piggybacking is apeculiar way through which a company enters into the internationalmarket. It helps the company with interesting and unique product tosell them to the large domestic plants that are directly involved inthe international markets. Through this way, MES helps the company toreduce the costs because it sells domestically and the large domesticfirm is marketing the business’s products.
WhyCompany Chooses Different Market Strategies in Different Countries
Asdiscussed from above, not all market entry strategies can fit allinternational markets. For this reason, a company, through the salesand marketing department and the manager, should take it upon itself,as its sanctimonious duty, to look for the appropriate MES in variousglobal markets. The following are some of the reasons for theadoption of different MES in various countries.
Thedegree of Adaption: Thedegree of adaption of the given product differ from one country toanother. Such variation of the degree of adaption depends on of thecultural and social factors. For example, complimentary goods shouldbe sold in one place as they are used together. Japan does notproduce beverages like tea, coffee, and cocoa. Due to this, theJapanese will take quite some time to adapt to the sugar sold by thesugar producing company.
Transportand Marketing Costs:The costs of transport and marketing differ from one country toanother. For example, the US is a developed country. Its cost oftransporting the final product from the manufacturer to the marketwill not be the same as in South Africa. Due to this, different MESshould be used in different nations.
TariffRates:Tariff is the amount of tax paid by the citizens of a given country.The amount of tax payable in Korea is not the same as the one payablein Alaska. The entrepreneurs have come up with various ways ofselling their product to all nations across the world their using theappropriate MES.
Theglobal strategy is a term that incorporates three areas:international, global, and multinational strategies. Importantly,such three parts refer to the procedures that are designed to allowthe company to achieve its objectives regarding external expansion.For the company to develop a global strategy, it should distinguishbetween the three forms of developing internationally that come fromthe organization’s capabilities, current position internationally,and resources. If the organization still focuses on its domesticmarket, its strategies about the home markets can be construed asinternational. For instance, a company that deals in the dairyproducts might supply its excess products, such as milk and cheese,to the markets that are outside its mother country. The primarystrategy of such company is still directed to its domestic market.
Globalstrategies are the route to maximize the company’s performance byintroducing the standardized programs and processes of marketing itsproducts. For example, in South Korea, its soda production industryhas increased its production. The global and international drinksstrategy have involved blending the global brands, such as Spriteand Cokewith the local brand, such as PocaraSweat.On the other hand, the Apple iPod followed the same strategy in everypart of the world: in this case, its advertising billboard waslocated in the US, but it was possible to be placed everywhere.
Implicationof Three Definitions within Global Strategy
GlobalStrategy:It is the situation where the company treats the world as one largemarket and the sole source of supply with the least-restricteddiscrepancy. The most important part of this strategy is that thecompetitive advantage is developed largely.
MultinationalStrategy:In this strategy, the company trades with the number of markets thatare beyond its country. However, the multinational strategy needsother distinctive strategies of these partnering markets. Such needis because the customer demand and the level of competition aredifferent in each nation.
InternationalStrategy:In this strategy, the company’s goals are related to the domesticmarket. However, there are some objectives regarding the overseaevents and hence need the implementation of the internationalstrategy. Contrary to the multinational strategy, the competitivemarket in the international market is developed for the domesticmarket.
Importanceof Global Strategy
Fromthe organization’s perspective, international expansion gives anopportunity for the new profits and sales. In some areas, it can bethe lucratively poor situation in the domestic market, and theinternational expansion can be the opportunity for higher productionand profits. For example, low output and profits of the Chinese homemarket were one of the main reasons for the Chinese ConsumerElectronic Company called TCL opted to take the internationalexpansion strategy. Through this, it has pursued new overseafactories, and offices.
Fromthe customer’s perspective, the international trade has led to lowprices for the products because the difference in the economies ofscale and the extent that has derived from the large market.Following the Global Strategy Theory (GST), customers like buyinggoods and services with the global image. For example, Nike acquiresits sports shoes from the low-cost countries like the Vietnam and thePhilippines.
Thechannel of distribution is the path through which products andservices move from the producers to the consumers (Dent,2011).It can also involve the payment of the transported goods from theconsumers to the manufacturers. Such channel can either be a shortand direct transaction from the producer to the consumer, or maycomprise of numerous interconnected intermediaries along the pathsuch as agents, wholesalers, retailers, distributors, and theconsumers. Each in the distribution channel receives the commoditiesat one pricing level and unleash it to the next intermediary at ahigher pricing point than the price they bought the item until itreaches the final person (the consumer). Following this channel, itmeans that the product in the path is sold at the highest price tothe consumer as compared to its price from the vendor to the firstperson in the channel. For example, coffee does not reach theconsumer before passing through the path that involves the farmer,manufacturer, exporter, importer, agent, distributor, and finally itreaches the consumer.
Mostof the developing companies have developed the international marketsin which they sell their products. Due to this, they have chosen thechannels of distribution as one of the ways of conveying their goodsto the customers. Channels of distribution are crucial to theprosperity of the organization’s international marketing strategydue to the number of reasons. Below are some of the advantages gainedby the company that uses various distribution channels as their waysof delivering their goods to the consumers.
InformationProvider:Because the company exports its products to the trustworthy agent inthe international market, it receives reliable information about themarket and the consumers’ tastes and preferences and theirperception regarding the product. The middlemen have the duty ofimparting information from the manufacturer to the customers too.Various developments, such as change of the consumer psychography,demography, entry of the new competitor, and the behavior of themedia are also some of the information the intermediaries provide tomanufacturers. Because the middlemen are always in the marketplacefor the consumers, they provide such information at the minimal cost.
PriceStability:The intermediaries have the obligation of maintaining the prices inthe market. In many cases, the middlemen feel the grip of theincrease in the price of the given product, but they continue sellingthe product to the consumers at the same initial price. Such incidenthappens due to the competition of the intra-middlemen. Theintermediaries also stabilize the price by maintaining theiroverheads low.
Promotion:When the company uses the distribution channel as its majorinternational marketing strategy, agents and middlemen promote itsproducts. Many of such intermediaries design their sales strategiesthat aim at building the consumers’ traffic on the market.
Financing:The international intermediaries finance the vendors’ operation bygiving the requisite working capital through advance payment for theproducts. Such payment can be used to produce more goods and maintainthe organization.
MatchingDemand and Supply:The intermediaries also assemble the produced commodities fromvarious producers in a way that the consumer can easily affect thepurchase. The process of matching is performed in the functions thatfollow.
Dent,J. (2011). Distributionchannels: Understanding and managing channels to market.London: Kogan Page.