Business Expansion Based on Local Market Factors

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The best mode of market entry or expansion of (a) a small company, (b) a big company

Small companies should use exporting as their mode of market entry or expansion. This model has a low degree of control, systematic risk, dissemination risk, and resource commitment. EJV is the best mode of market entry for big companies. The degree of control, resource commitment, systematic risk, and dissemination risk, are rated as medium-high.

Management orientations: how products are priced in different countries.

There are 3 basic policy alternative positions that an organization can pursue on setting prices for its offers. These include ethnocentric, poly-centric, and geo-centric pricing policies. The ethnocentric pricing policy requires organizations to charge the same price for products and services regardless of where the consumers are situated. Poly-centric pricing allows managers of organizations to charge any price they view as the best in their markets. The geo-centric pricing policy controls how organizations set prices. In other words, the headquarters is established to control prices basing on local market factors.

Pros of Ethno-centric pricing

Charging the same price eliminates gray markets of products and services around the world. It is simple. It does not require any information about market environments.

Cons of Ethno-centric pricing

This approach ignores to respond to the market and competitive conditions of each market across the globe. It also makes companies fail in maximizing profits in their respective markets.

Pros of Poly-centric pricing

Poly-centric pricing gives managers a chance to set prices that favor their businesses in global markets, and hence make huge profits. It helps companies to grow rapidly due to huge gains. It also allows sellers to charge prices, which customers can afford.

Cons of Poly-centric pricing

Poly-centric pricing leads to product arbitrage due to price disparities between markets in different countries. It is also sensitive to the conditions of local markets, especially when they are higher than what the local people can afford.

Pros of Geo-centric pricing

It ensures that the pricing experience is leveraged and applied to base on local factors such as competition, costs, income levels, and marketing strategies employed in the markets among others. The low-income earners benefit a lot because marketers set prices based on their capabilities. It is the best approach to deal with product arbitrage and international accounts.

Cons of Geo-centric pricing

It limits manufacturers from entering markets inhabited by low-income earners and high manufacturing costs among other factors. This is because the headquarters coordinate and controls pricing, limiting them to charge high prices. It denies them the independence to make their own pricing decisions.

How has the internet revolutionized global placement decisions?

Through the internet, marketers can research what takes place in markets across the globe. They can identify the local factors affecting these markets. Therefore, they make decisions about whether to expand their businesses to those markets based on the benefits and risk factors surrounding them. They no longer travel to those markets to conduct research.

Different advertisements for different markets

The company products are advertised differently, in different countries. The companies use different strategies to position their offers to consumers. For instance, the way the company advertises its products in Canada is not similar to South Africa. The company uses different messages and pictures to pass advertising messages to consumers. They base their strategies in terms of culture, income levels, and other local factors surrounding the market environments. For instance, in the adverts below, the company has an ad for South Africa and another one in Canada. It uses blacks in South Africa, and whites in Canada. This makes the consumers feel that the product was made particularly to serve their needs.