1. Introduction to Marketing Strategy

8/9/2019 1. Introduction to Marketing Strategy

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Importance of Marketing

Marketing is an integral component of any .

The sole purpose of marketing is therefore,to get more people to buy more of yourproduct, more often, for more money.

Strategy is Essential for Survival and Success of an Organization

Importance of Strategy

Ineffective Effective

Efficient

Strategy

Die(slowly)

Thrive

a c

t i c s

InefficientDie

(quickly) Survive


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Dimensions of StrategySuccessful companies either have a Productivity advantag e or they haveValue advantage or combination of both.

The productivity advantage gives a lower-cost profile and the valueadvanta e ives the roduct a differential lus over com etition.

Real UnitCost

V a

l u e

A d v a n

t a g e

L o w

H i g h

CommodityMarketing

NicheStrategy

CostLeadership

Cost & ValueLeadership

Cumulative output

The Experience Curve

Productivity AdvantageLow High

Strategic Direction

CLEARLY DEFINESTARGET CUSTOMERS

AND THEIR NEEDS

Characteristics of Strategy

STRATEGY

CREATES ACOMPETITIVEADVANTAGE

INCURS

ACCEPTABLE

DERIVEDTO ACHIEVE

INTERNALLYCONSISTENT

RISK

RESOURCE ANDMANAGERIALLY

SUPPORTABLE

OBJECTIVES


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Marketing Strategy

A process of achieving overall corporate objectives through properidentification of market opportunities and effective deployment of companys marketing assets.

Marketing Assets are defined as those assets of company that contributedirectly or indirectly to profitable sales, some of these are:

Brand Name Distribution Network Customer Loyalty

Supplier Relationship Customer Relationship

Technology Base

Strategic Marketing Planning

ANALYSIS: Where are we now?

How are we going to get there?

PLANNING: Where do we want to be?

IMPLEMENTATION:

CONTROL: How do we ensure arrival?


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Strategy Development Process

Corporate Mission

What Businesses are we in?What businesses can we be in?What businesses should we be in?

Marketing Strategy Market Penetration Market Development Product Development Diversification

Strategic Direction Cost Leadership eren a on Focus

Market Positioning Segmentation Strategy Marketing Mix Strategy

Corporate Mission Statement

A mission statement should:

be specific to have an impact on every individual in the business be focused on customer need satisfaction reflect the distinctive competence of the business recognize opportunities & threats in competitive environment be realistic and attainable be flexible


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Strategic Window

s s

a r k e t A t t r a c t

i v e n

Strategy

M

Business Position

Marketing Assets

Marketing Knowledge (skills, systems and information) Brands (strong brands often earn premium prices and can

be enduring cash generators) Customer Loyalty (loyal customers buy more, are cheaper

to serve, are less price sensitive and refer new customers) Strategic Relationships (channel partners provide access to

new products and markets)


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Investment in Marketing Assets

Whilst accountants do not measure intangible assets, the discrepancybetween market and book values shows that investors do.

Expenditures to develop marketing assets make sense if the sum of thediscounted cash flow they generate is positive.

Marketing Assets in Balance SheetAssets Liabilities

- Land- Buildings- Plant

- Shares- Loans- Overdrafts

Assets Liabilities

- Land- Buildings- Plant


- Vehiclesetc.

etc.

Rs. 200 million Rs. 200 million

- Vehiclesetc.

etc.


Assets LiabilitiesMarketing Assets - an

- Buildings- Plant- Vehicles- Goodwill


etc.


Distribution Network Customer Loyalty Market Share Supplier Relationship Customer Relationship Technology Base


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Identifying Opportunities

MarketAnalysisLong-term trends, size, etc .

CustomerAnalysis

CompetitiveAnalysis

Environmental

Segments, buying processes, etc .

Relative strengths & weaknesses, etc .

Opportunities & treats, etc .Analysis

Identify Market

Opportunities

Asset Base Appraisal

Market AnalysisSize (Value, Volume): What is the market we serve?

Growth: Annual growth rate of the market, past history and future.

Diversity: Is the market served by few or many offerings?Is the market fragmented?

Channels: What is the upstream and downstream channel of distribution and supply? Where does the relative power lie?What is the strength of buyers and the strength of customers?


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Customer Analysis

Segmentation: Most markets are subdivided into smaller sectors based ondifferences between customers, either by their characteristics or by the waythey respond to market stimuli.

Buyer behaviour: Who are the customers and who are the consumers?What are the important buying criteria? Who makes the decisions? What arethe primary motivations for purchase? What are the principal benefits soughtfrom the product?

Sensitivity: How does the market react to price, to promotion, to service, toproduct quality etc. This information is necessary to understand the customersensitivity to the individual elements of the marketing mix.

Competitive AnalysisPotentialEntrants

Threat of new entrants

Barriers to entry economies of scale product differentiation capital requirement switching costs access to distribution channels cost disadvantages addition to scale government policy

Industry Competitors

Suppliers BuyersBargaining Power Bargaining Power

Powerful if large proportion of sellers sales large proportion of buyers costs

undifferentiated products

Powerful if few suppliers no substitutes

y experience

Intense rivalry if: numerous or similar sized competitors slow industry growth rate high fixed costs lack of differentiation diverse nature of competitors high strategic stakes high exit barriers

SubstitutesThreat of substituteProducts/Services

low buyer switching costs threat of backward integration sellers product not important to

quality of buyers product.

yof supplier group

supplier groups products aredifferentiated

threat of forward integration


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Environmental AnalysisGovernment: The legislative and regulatory framework within whichthe company operates affects most marketing decisions either directly or indirectly.Price controls, quality standards, advertising standards, competition policy willaffect the business.

Economy: Every business will have linkages with broader macro-economy.Interest rates impact not only costs but customers ability to buy. Exchange ratefluctuations have similar impact. Inflation, unemployment, taxation etc. are partof macroeconomic environment and must be considered while strategy development.

Society: Consumer movements on ecology, pollution, quality and service issues haveconsiderable impact on the companys business strategy and therefore must notbe ignored.

Technology: Rapid changes in technology is leading to shorter product life-cyclesand higher risks of failure. It is important to anticipate technology changes

to suitably modify companys marketing strategy.

Framework of Marketing-Conceptions

Nature of the three levels:

Objectives

Strategies

Increasingoperationalmeaning

Philosophy

Structure

MixProcess


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Marketing ConceptionsConception Level Visual Equivalent

1. Marketing-Objectives Place : Where do we want to go?

2. Marketing-Strategies Way : How do we get there?

3. Marketing-Mix Transport function : What do we have to do?

Environmental & Company AnalysisAnalysis of Environment

CompanyAnalysis

Where are we now?

Objectives

Merging

Crystallization Point

Where do we want to go?

Strategies

Mix

How do we get there?

What do we have to do?


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Marketing Conception Analysis Steps

1. Situation analysis (internal external)

2. Future developments the analysis of the company'senvironment

3. Chance-risk-analysis : end of the strategic analyzingprocess, point of crystallization

1. Introduction to Marketing Strategy

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