2.1 growing the business - oakwoodacademy.org.uk

2.1 Growing the Business

2.1.3 How businesses compete internationally

Learning Aim: To understand globalisation and its impact on businesses

Learning Objectives

• All students should be able to (grade 3): identify the main benefits to businesses of using e‐commerce and the internet and the different methods of selling overseas

• Most students should be able to (grade 5/6): Describe the challenges of expanding overseas

• Some students should be able to (grade 7/9): Discuss how businesses have to adapt their marketing mix to be successful overseas

2

Key elements to this topic

Changing the marketing mix

to compete internationally

The use of the internet and e-commerce

The “Give Me Challenge”

Your challenge is to GIVE ME the answers to the six questions on the next

slide.To answer the questions, you will need to watch the clip and take notes. You

may want to work in pairs and divide the questions between you. Good luck!

Give me…..

a description of the products

offered byGraze

A country that Graze expanded

to

A benefit to Graze of

operating online and using e-commerce to

compete internationally

An example of how Graze adapted its

marketing mix to meet the needs of

customers abroad

The forecasted market size of

the global health market

by 2025

A positive and negative effect of

adapting the marketing mix to

meet the customer needs in different

countries

11 22 33

44 55 66

Note down the questions

How businesses compete internationally

A positive and negative effect

countries

A positive and negative effect of adapting the marketing mix

to meet customers needs in different countries

Give me…..

a description of the products

offered byGraze

A country that Graze expanded

to

A benefit to Graze of

operating online and using e-commerce to

compete internationally

An example of

abroad

An example of how Graze adapted its

marketing mix to meet the

needs of customers

abroad

The forecasted market size of

the global health market

by 2025

PositiveMore likely to

meet the needs of consumers –increase sales -

success

Healthy snack foods USA

Easy way to sell directly to a wider, global market. Using technology has

allowed them to collect useful data on taste

preferences in the US market

New snack products can be created and uploaded

quickly to their online store

ProductAdapted the

product to meet the needs of the US

market, e.g. changed the flavour

of the BBQ sauce

32.8 bnNegative

Increased costs of adapting marketing mix to new markets

11 22 33

44 55 66

Use of the internet and e‐commerce

In 1.4, we looked at the impact of technology and e‐commerce on the marketing mix of a business.

E‐commerce and the internet gives businesses the opportunity to sell directly to a global market without the need to have a physical presence in that country.

Graze

Using the internet and e‐commerce has allowed Graze to reach new geographical markets.

It has given the business the opportunity to promote, sell and distribute its snack boxes to wider markets and compete internationally.

Methods of selling overseas

• Exporting direct – the business stays in the UK and sells directly to the customer in other countries.

• Using overseas distributors and agents – the business uses other businesses or individuals (agents) who are based in other countries. They help sell the products, as they know the market, in return for a percentage of the price. This practice is very common in the car industry, where the manufacturers use “dealers” to sell their cars.

• Setting up overseas business units – the business will set up a factory in another country to make the product, which might be slightly different due to local preferences.

• Buying a business overseas – a merger or takeover of an overseas firm allows a business to “buy” the production unit and to carry on selling to their existing customers.


Learning Objectives




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Marks and Spencer:How they got it wrong in China

Business success in one country is no guarantee that it will be successful in another.

Let’s consider the case of M&S in China.

Read through the articles (in pairs).

Highlight the mistakes that Marks and Spencer made when it expanded to China (product, price, place, promotion).

Note down your findings on the A4 sheet. Be prepared to feedback your thoughts

Context corner: Marks and Spencer

Marks and Spencer – its key mistakes…

• Place: located some stores in areas where there were well established, cheaper rivals

• Place: established themselves in multi‐storey department stores; Chinese consumers prefer shopping in smaller stores

• Product: failure to translate British and European sizes into Chinese• Product: Clothing was not adapted to the Chinese body shape, which

tends to be smaller• Promotion: lack of awareness of the brand, little engagement with

Chinese consumers

Overall, M&S failed to compete with local Chinese businesses, as the business did not meet the needs and wants of the Chinese consumers successfully enough!


Learning Objectives




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Theme 1… Flash back!

In 1.4.3 we studied the In 1.4.3 we studied the marketing mix.What are the 4 elements of the marketing mix?

How businesses change the marketing mix to compete internationally

Businesses that are successful in global markets often adapt their marketing to meet the needs of consumers in that country. This is sometimes referred to as glocalisation. Watch the clip and in your books identify:1. How the fast food chains have

changed their marketing mix to meet the needs of the Indian customers (product, price, place and promotion)

2. The potential benefits and problems of their approaches

How businesses change the marketing mix to compete internationally

Product Price

Place Promotion

Benefits Problems

Draw these two tables in your books to note down your answers as you watch the video.

Be prepared to feedback your answers.

Product

Customers in different countries will have different needs and wants. Their tastes and preferences may be different. Fashions may not be the same. Cultures will provide different influences. In the clip, we saw how the fast food chains changed their products and menus to cater to the customers in India.

Price

KFC is owned by US company Yum! Brands. KFC do not publish their prices on their website, as the prices differ in different countries. In India, Yum! reduced the prices in areas where consumers had lower incomes and where they faced intense competition. The price was changed to meet the needs of different consumers in the Indian market.

PromotionMany businesses would struggle to run the same promotional campaign globally. Often the promotion will need to reflect the cultural differences in the different countries. Businesses will need to think carefully about the best ways to reach their target audiences.

Some considerations may include:• Appropriate images used in

advertising• Translation of the marketing

message• Promotion through social media –

which platforms are the most popular for the target audience?

The Pepsi slogan, “Come alive with the Pepsi Generation” translated in Taiwanese became, “Pepsi will bring your ancestors back from the

dead”. Culturally this was seen as an insult!

Beer manufacturer Coors tried to translate its slogan, “Turn it loose,” into Spanish. It went horribly wrong when it was read as “Suffer

from diarrhoea.”

In China, the Kentucky Fried Chicken slogan “finger‐lickin’ good” became “eat your fingers off.” Again, implying an action considered rude

and uncivilised in Chinese culture.

Source – realbusiness.co.uk

• Distribution will need careful checking, both in terms of speed and cost. Graze carried out significant research into the best postal services to use in America.

• M&S invested in new multi‐storey department stores; according to reports, the Chinese prefer to shop in smaller stores.

• International payment is not straightforward. Why is this the case?

• There are also issues with trade restrictions, such as tariffs, which might mean there is an additional cost when exporting to other countries.

Place


Learning Objectives




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2.1 growing the business - oakwoodacademy.org.uk

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