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MARKETING

 

 

 

Marketing is the management process responsible for identifying, anticipating and satisfying consumer's requirements profitably.

 

Initially organizations used to focus on merely producing goods through mass production techniques and their aim was to produce goods at the lowest possible cost. Later they realized that they needed to make an effort to sell those goods to people even if the consumers were unwilling to buy it. Now, however, the focus has shifted to finding out what exactly are the requirements of the consumer and then producing the goods according to their requirements. This new thinking is called the Marketing Concept.

 

Before carrying out an marketing activity an organization should carry out two broad analysis of the environment.

 

SLEPT meaning Social, Legal, Economic, Political and Technological factors in the environment that influence or can influence the organization's activities.

 

SWOT meaning Strength, Weakness, Opportunities and Threats.

 

After analyzing the SLEPT factors in the environment an organization will be able to find out what opportunities are available and what threats the organization is facing. Then they should try to find out in which areas, products etc they are strong and where they are weak. Having analyzed all these factors an organization should then develop it's marketing strategies (broad action plans).

 

In a marketing activity we have to focus on the following 4 Ps :

 

Product: A product can be a goods, service or even an idea. The marketing department should check what types of products are in demand, if any modification is required in the existing products or should the production of some products be stopped, or should some new products be developed etc.

 

Place: The marketing strategy should be devised in such a way that the company's products reach the customers at that right place. Arrangements should be made through various distribution channels (sole selling agents, wholesalers, retailers ) etc to ensure that the product is available at the retail stores when a consumer comes to actually buy it. This concept is increasing changing with the growth of e-commerce as the role of the distribution channels is minimized.

 

Price: Price is a very important component in marketing as some goods are highly price sensitive, meaning that any change (increase or decrease) in their price can bring about a major change in the demand. The price is set after considering the costs, prices of competitors, profit margin required, buyers perception about the product etc.

 

Promotion: promotion includes all those activities that help increasing the awareness of the product in the minds of the consumers. Inorder to do this marketers use various promotion tools like advertising, sales promotion, publicity, direct marketing, personal selling etc.

 

Apart from the above mentioned 4 Ps there are three additional Ps that are used in case of marketing of services.

 

Process:  A service is delivered to the customers through a process. For example, when we go to the airport we have to wait in a queue, and the staff take us (the consumers of the service) through a process of baggage screening, collecting the boarding passes and then taking a seat in the aircraft.

 

Physical Evidence: In case of services the environment in which the service is offered also makes a great impact on the consumers perception about the liking or disliking of the service. For example, when we go to a restaurant we not only look at how good the food is, but also at the surroundings, the ambience, the cleanliness etc.

 

People : The actual staff that meets the customer is very important coz we form our opinion about the company's service based on the attitude of the staff. For example, in a hospital we tend to form an opinion about the service based on the attitude that the doctors, nurses and other staff have towards their patients. Yes ofcourse, the actual success of the treatment is very important too.

 

Today, marketing is a highly specialized field of study with various dimensions.

 

Marketing Strategy decides the various goals and plans that the organization will follow.  Marketing Communications decides how the consumers will be made aware of the offerings of the company.

International Marketing decides how an organization should venture out into new or similar business at a foreign location.

 

To make all such diverse and important decisions, management requires a lot of information about various aspects. This information is provided to management through Marketing Research.

 

Marketing research is the systematic design, collection, interpretation and reporting of information to help solve specific problems or take advantage of marketing opportunities.

 

It should be noted however that marketing research is not the same as market research. Market Research is just one element of the whole marketing research. In a marketing research we collect information about various diverse issues like product, price, promotion etc. but in case of a market research we are only trying to find out how good or bad a particular market (area, place, country etc) is for our company's products.

 

In every big organization the marketing department collects a lot of data. These data are then stored in a very systematic manner for use in the future. This framework for the day to day management and structuring of information is called Marketing Information System.

 

Remember that the mere collection of data does not constitute a marketing information system coz inorder to serve some purpose the data collected has to be tabulated and arranged in a systematic manner. Only then does data become information. And when this information is analyzed appropriately, it becomes knowledge.

 

The Marketing Research Process

 

The marketing research process moves in the following steps:

 

1.      Defining and locating the problem: The first step is to find out in which specific area of marketing does the problem lie. Here we need to find out the real problem which may sometimes be hidden beneath the visible problem. Thus we need to make a distinction between the symptom and the cause. For example, the problem that might be visible to us could be decreasing sales but the actual hidden problem could be in the pricing strategy or even in the promotion strategy.

 

2.      Developing a Hypotheses: A hypotheses is a guess or assumption about a certain problem. For example, we might make a guess that the decreasing sales are due to the incorrect pricing strategy. And then we collect various data to check whether the guess that we made was right or wrong.

 

3.      Collecting Data: The kind of hypotheses that we make about the situation will determine the approach of collecting data.

 

·        When we need to find out some specific information about a product or a problem we carry out exploratory research.

 

·        When the problem identified in the first stage is quite clear we need to collect data about that phenomenon to know various characteristics associated with that problem. This is called descriptory research For example, a researcher trying to find out how many people in the age group of 18 to 30 eat ice cream in a particular city.

 

·        Sometimes when we need to measure the relationship between two or more variables we use causal research. For example, the marketers hold other variables constant and then try to find out what will be the changes in demand if price is increased.

 

Inorder to collect data we can use various tools. These are as follows:

 

·        Secondary Data : Any data that is already collected by some one else for some other purpose other than the current research is called secondary data. This type of data may include internal sources like sales records, research reports etc. It may also include external sources like trade journals, publications of chamber of commerce, govt. publications, magazines, internet etc.

 

·        Primary Data : Any data that is gathered for a specific project or purpose by ourselves is called primary data. This type of data may be collected through observation of people, surveys (interviews, use of questionnaires ), focus groups (inviting a selected group of people and asking them to talk about a product and then analyzing what they say). While collecting primary data we often choose a sample. A sample is a representative of the whole population on which we then apply the results of the research conducted on the sample.

 

4.      Analyzing and interpreting research finding: After the data is collected, it is then arranged and tabulated so that it can be analyzed. Various statistical tools like mean averages, deviations etc are used to interpret the data.

 

5.      Reporting the research findings : Finally, the marketer collects all the information and then makes a clear and objective judgement about how right (or wrong) the assumed hypotheses was. A written report is often prepared and recommendations are given to the management. Based on these the management takes the appropriate decisions.

 

Characteristics of a good marketing research

 

A good marketing research should be conducted in a scientific manner without any bias or subjectivity. We shouldn’t solely rely on just one method of data collection. The value derived from the data received should be higher than the costs of collecting the data.

The research process and the collection of data should be done in an ethical manner.

 

Trends in Marketing Research

 

An increasing number of large scale organizations are now using Marketing Decisions Support Systems (MDSS). MDSS is a coordinated collection of data, systems , tools and techniques with supporting software and hardware by which an organization gather and interprets relevant information from business and environment and turns it into a basis for marketing action.

 

Suppose a marketing manager needs to analyze and take action. The manager puts questions to the appropriate model located in the MDSS. The model draws up data, which are then analyzed statistically. The manager can then use a program to determine the optimal course of action. The manager takes this action , which (along with other forces) affects the environment and results in new data. All of these actions take place in the computer.

 

Conclusion

 

Thus we can see that Marketing research plays a very integral role in any modern business. We are surrounded by a very dynamic environment and if organisation have to ensure that they experience the sweet smell of continued entrepreneurial success, then they need to be aware of relevant changes. The key to success today is information and as has been rightly quoted by Marion Harper "To manage a business well is to manage it's future; and to manage the future is to manage information. "

 

 

 MARKETING TOPICS IN SYNOPSIS

 

 

INTRODUCTION

 

Definition: Management process responsible for identifying, anticipating and satisfying consumer's requirements profitably.

 

Exchange between buyer and seller of something of value

 

Goods/Services/Ideas --- Serducts or Provices

 

A market is a:

 

ü     Place for buyers and sellers

ü     Geographical area

ü     Relationship between the demand and supply

 

Why study marketing:

 

·        Used in all organisations,

·        Important for business and economy,

·        Consumer awareness,

·        Big portion of costs.

 

* Production era           * Sales era       * Marketing era

 

Marketing Strategy: selecting target markets and using the right marketing mix

 

Goods:

 

1.      Product

2.      Price

3.      Place

4.      Promotion

 

Services:

 

5.      Physical evidence

6.      Process

7.      People

 

Mission:            overriding premise in line with the values and expectations of stakeholders

Goal:                 general statement or aim of purpose

Objectives:        quantification of goals

Strategy:           broad action plans

Action:             individual steps (tasks/tactics) to achieve strategies

Control:             monitor results

Rewards:           payoff for reaching objectives

 

Marketing Management should be Effective and Efficient

--- It involves Planning, Organizing, Implementation and Control of Marketing activities.

 

 

ENVIRONMENT

 

Collect information about external environment through Environmental Scanning.

 

Assess information collected through Environmental Analysis

 

Responses towards environment could be to either:

 

ü     Accept it, or

ü     Confront it

 

Macro Environmental Forces:

 

·        Social: demographics, population size and structure, lifestyles, buying behavior, needs, attitudes, family, age, status, perception etc.

 

·        Legal: various laws that affect businesses. Precompetitive legislation (MRTP Act), Consumer protection legislation, Non-governmental regulatory forces (code of advertising standards and practice.)

 

·        Economic: economic condition (prosperity, recession, depression, recovery), consumer demand and spending power, income (disposable, discretionary), wealth, savings, spending patterns.

 

·        Political: got, stability, type, role…maintain good relations

 

·        Technological: level of technology, it's role and impact on business, consumers and marketing

 

·        Societal/Green: clean and green movement, eco-friendly

 

Use acronym SLEPTG for the above.

 

Competitive environment: monopoly, oligopoly, monopolistic competition, perfect competition

 

These help us in identifying the Opportunities and Threats

 

Micro Environmental Forces:

 

Analyze the various aspects of your own organisation and identify it's Strengths and Weaknesses.

 

 

SEGMENTING MARKETS, TARGETING AND POSITIONING

 

 

Types of Markets :       Consumer Markets (for self consumption)

Organisational Market (producer, reseller, government or institutions)

 

Identify Markets

 

ü     Undifferentiated approach: same marketing mix for all purposes. Best when same need, I marketing mix satisfies all and product is homogenous.

ü     Market segmentation: grouping people with similar needs and offering separate marketing mixes for each group. Helpful in market penetration, product/market development.

 

Elements of Segmentation:                     Segmenting                   Targeting                      Positioning

 

1.      Segmenting: grouping customers and dividing markets into divisions. Use
variables like:

 

For Consumer Goods:

 

Customer Characteristics:

Demographics: (age, life-cycle, population statistics…)

Socio-economic: (income, occupation, education and class…)

Geographic: (climate, terrain, density, city size…)

Personality, motives, attitudes, lifestyles.

 

Product related behavioural characteristics:

purchase behavior

benefits derived out of product.

 

For Organisational Goods:

 

Geographical location

Type of organization

Size of organisation

Use of product

 

Effective segments should be Measurable, Sustainable, Accessible, Stable and Beneficial

 

2.      Targeting : Based on resources, competition and product characteristics

 

Concentration strategy: all marketing efforts towards one market segment by one marketing mix. Helps specialize but moving to new segments difficult. E.g. Ferrari sports car

Multi-segment strategy: marketing efforts directed at two or more segments with separate marketing mixes. Helps increase sales, reduce risks but more costs of production, marketing.

 

3.      Positioning: the place a product occupies in the consumer's mind. Position can be found through Market Research. Affected by reputation and image. Perceptual Mapping - visually depicts the consumer's perception about different brands and their perceived attributes.

 

Steps in Positioning:

 

1.       Define segments in market

2.       Define which segment to target

3.       Understand what consumers expect and believe as important.

4.       Develop products for these needs

5.       Evaluate positioning/image of competitors as viewed by consumers

6.       Select credible position after matching with needs

7.      Promote well with right marketing mix

 

 

MARKETING RESEARCH

 

 

Meaning: Systematic, design, collection, interpretation and reporting of information to help marketers solve specific marketing problems.

 

Types: Qualitative and Quantitative

 

MIS - framework for research

 

Marketing Intelligence - all data in an organisation

 

Process:

 

1.      Define problem

2.      Develop hypothesis

3.      Collect data

4.      Analyze and interpret

5.      Report research findings

 

Sources:

 

Secondary: already available

           

            Internal (records, database)

            External (census, government, publications)

 

Primary: collect for self use, first time

           

            Observation - personal, mechanical

            Surveys (population or sample), mails, telephone, personal

 

Research should use Ethical Means

 

 

PRODUCT CONCEPTS

 

 

Product: a complexity of tangible and intangible attributes, including functional, social and psychological utilities or benefits. Product may be Goods / Services / Ideas

 

 

 

 

 

 

 

Levels of Product

 

Core benefit or service

Actual product (quality, features, brand name, packaging, design…)

Augmented product (after-sales, customer service, warranty, installation, delivery, credit…)

 

Product Life-Cycle

 

Every product moves through four stages of its life cycle :

 

Introduction, Growth, Maturity and Decline

 

Other Terms

 

Product Item: specific version of a product that is distinct. (Cadbury's Dairy Milk chocolate)

Product Line; group of related products because of marketing, technical or consumer considerations. (All Cadbury's chocolates)

Product Mix: all group of products that an organisation offers to customers. 

            Depth - number of products offered in each product line

            Width - number of product lines a company offers.

 

 

NEW PRODUCT DEVELOPMENT

 

 

Problems: Negative push, market size overestimation, actual product turns out bad, wrong positioning, high actual costs, competitor's copy…

 

Organizing NPD: NP Managers, Committee, Department, Venture Teams etc.

 

Steps in NPD Process:

 

1.      Idea Generation: customer's needs, research teams, copy/change competitor's products, sales representatives, top management.

Methods:- Attribute listing, Forced relationship (combined product), Need/Problem identification (Marketing Research), Brainstorming.

 

2.      Idea Screening: screening by a committee. Match with organisations objectives/goals. Drop error Vs Go error. Rate and weight various ideas.

 

3.      Concept Development and Testing: more refinement of ideas.

E.g.: Nutritional powder to add to milk. Concepts could be breakfast drink for adults for evening; tasty drink for children for midday; health drink for older people before sleep. Next prepare positioning map in terms of different features. Also prepare brand positioning showing competing brands.

 

Testing: Find preferable attributes by customer, turn to engineering (customer driven engineering). Find utility values/weightage given by customer to each feature.

 

4.      Marketing Strategy Development: preliminary strategy. Includes:-

Target market size, structure, positioning, market share, profit goals

Planned price, distribution, marketing budget

Long term sales and profit and marketing mix strategy.

 

5.      Business Analysis: attractiveness in terms of business. Estimate initial sales, replacement sales and repeat sales. Calculate various costs, overheads etc. and profits.

 

6.      Product Development: develop prototype through R&D. CAD, CAM, 3-D simulations, virtual products, functional testing and consumer testing.

 

7.      Market Testing:

Consumer Products: simulated test marketing (focus group), controlled test marketing (soft launch in limited places) test markets (how many cities, timing, action)

Industrial Products: alpha testing, beta testing, trade shows and exhibitions

 

8.      Commercialization:

When - first, parallel, late

Where - local, regional, national, international or global

How - positioning, promotion decisions, AIDA (all standardized or adapted - Glocal)

To whom - early adopters, heavy users, opinion leaders. 

 

 

ORGANIZATIONAL BUYING BEHAVIOR

 

Organizational buying us the decision making process by which formal organisations establish the need for purchasing products and services and identify, evaluate and choose among alternative brands and suppliers.

 

Industrial Goods Include:

 

Raw Materials, Major Equipment, Accessory Equipment, Component Parts, Process Materials, Consumables, Industrial Services

 

Characteristics:

 

Fewer Buyers, Larger Buyers, Leasing, Fluctuating Demand, Multiple Sales Call, Larger Buyers, Derived Demand, Inelastic Demand, Direct Purchasing, Close Supplier-Customer Relationship, Professional Purchasing, Several Buying Influences, Geographically Concentrated

Three Different Types of Organizational Buying Situation:

Straight Re-buy

Modified Re-buy

New Task

 

Major Influences on Organizational Buying Include:

 

Environment: Political, Economic, Social, Legal, Technological, Cultural, Natural and Competitive

 

Organizational: Objectives, Policies, Structure, Procedures, Structure and Systems

 

Interpersonal: Authority, Status, Empathy, Persuasiveness

 

Individual: Age, Education, Job Position, Personality and Risk Attitudes

 

Participants in the Buying Process include Gatekeepers, Users, Influencers, Deciders and Buyers

 

Stages in the Business Buying Process

 

Problem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Routine Specification

Performance Review

 

 

BRANDING

 

A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from competitors. - AMA

 

Six Levels of Meaning

 

Attributes:                                 Mercedes - expensive, well-built, durable, prestige

Benefits:                                   "Won't need another car for long", Admired & Important

Values:                                     High performance, safety and prestige

Culture:                                    German culture of being organized, efficient and high quality

Personality:                               No-nonsense boss (person), reigning lion (animal), high tower (object)

User:                                                       55 year old top executive expected but not 20 year old secretary !!

 

Brand Equity

 

Brand Awareness

Brand Acceptance

Brand Preference

Brand Loyalty - Brand Advocator / Brand Killer

 

Branding Strategy

 

To brand or not to brand decisions

Brand sponsoring decisions

Brand name decisions

Brand strategy decisions

Brand re-positioning decisions

 

 

PACKAGING

 

All activities of designing and producing the container for a product.

 

Levels

 

Old Spice Aftershave lotion in a bottle               (Primary Package)

In a Cardboard Box                                         (Secondary Package)

In a Corrugated Box                                         (Shipping Package)

 

 

Three Basic Functions:

 

Protect: during storage, transport, from children

 

Offer Convenience: in pouring, squeezing, storing, stacking & consuming.

 

Communication: Grab the attention of passer by, Persuade "Buy Me", Build loyalty with pack, information about ingredients, how to use, warnings…perceptual meanings of status or quality.

 

Packaging Designer's Tools

Shape

Size

Color

Graphics

Materials

Smell

 

MARKETING COMMUNICATIONS

 

The Communication Process:

 

Sender - Encoding - Message - Decoding - Receiver - Feedback

                                    ----Noise -----

 

Developing Effective Communication:

 

Identify Target Audience:          (whom do you want to send your message to )

Determine Objectives:               (awareness, knowledge, liking, preference, conviction, purchase)

Design Message:                       (message content, structure, format, source)

Select Channels:                       (personal or non-personal channels)

Establish Budget:                      (affordable, % age of sales, competitive-parity, objective and task)

Communication Mix:                 (advertising, sales promotion, public relations, personal selling,

direct marketing)

Measure Results:                      (have the efforts yielded effective results)

 

Manage Integrated Marketing Communications

 

 

ADVERTISING

 

"Paid form of non-personal representation of goods, ideas or services by an identified sponsor"

 

Advertising Appeals: Emotional, Rational, Moral

 

Developing an Advertising Program

 

Setting Objectives:        (informative, persuasive, reminder, reinforcement)

Deciding Budget:          (what stage of PLC, market share, competition etc.)

Choosing Message:       (generation, evaluation, selection, execution)

Media:                          (media selection - reach/frequency/impact, specific vehicles, media timing)

Evaluation:                    (communication effect, sales effect)

 

Choosing an Advertising Agency

 

Define Requirements

Develop a Pool List of Agencies

Credentials Pitch

The Brief

Pitching

Analysis

Select Winner and Announce

Agree Contract Details

 

Agency Types: In-house, Full Service, Creative Shop

 

 

SALES PROMOTION

 

"Short term incentives designed to stimulate demand by consumers or trade"

 

Consumer Promotion Tools:

 

Samples:                       (sent door to door, in mail, at store, attached with another product)      

Coupons:                      (giving bearer a saving on the purchase of specific product)       

Cash Refund:                (send proof of purchase to manufacturer and get refund by mail)

Price Packs:                 (e.g. two for the price of one, or two related products together)

Premiums:                     (gifts given absolutely free or at low prices)

Prizes:                          (contests - best entry wins, games - collect n win, lucky draw)

Warranties:                   (promise to fix error or refund money during a specified period)

Frequency Programs:    (reward loyalty of customers with various offers)

Tie-in-Promotions:        (teaming of two or more brands to increase pulling power)

Cross-Promotion:         (use one brand to advertise another non-competing brand)

Point-of-Purchase:        (attractive displays at place of purchase)

 

Trade Promotion Tools:

 

Price-Offs, Allowance, Free Goods, Trade Shows, Sales Contests, Specialty Advertising

 

 

PUBLIC RELATIONS

 

" Programs aimed at promoting or protecting a company's image in the minds of it's publics"

 

Uses of Public Relations:

 

Assisting in the launch of new products

Assisting in repositioning a mature product

Building interest in a product category

Influencing specific target groups

Building the corporate image

Public Relations Tools

 

Publications:                 (reports, brochures, articles, newsletter, magazines, CDs etc.)

Events  :                       (news conferences, trade shows, contests, competition, anniversaries)

Sponsorships:               (supporting sports, cultural events etc)

News:                          (motivate media to air or publish press releases about company events)

Speeches:                     (trade associations, seminars…)

Public Service:              (contributing money and time to social causes)

Identity Media:             (logos, cards, buildings, uniforms, stationery, brochures, dress code)

 

 

DIRECT MARKETING

"Using consumer-direct channels to reach customers without using marketing middlemen"

 

Channels of Direct Marketing

 

Face to Face Selling    

Direct Mail                  

Telemarketing              

M-Marketing                           

Kiosk Marketing         

E-Marketing

 

Growth of Direct Marketing

Market Fragmentation, Tailor-made Technology, List Explosion, Sophisticated Software, Hybrid Marketing System, Constant Search for Cost-Effective Communications

 

Effective Direct Marketing

Identify Prospects - Target Media - Sell Products - Get Customer Information - Build and Analyze Database - Talk to Key Customers Regularly - Cross sell/Upsell/Renewal - Increase Customer Value - Analyze Database

 

 

PERSONAL SELLING

 

"Informing and persuading customers to purchase products through an interactive relationship in an exchange situation"

 

Steps in Personal Selling

 

Prospecting and Qualifying

The Opening

Need and Problem Identification

Presentation and Demonstration

Dealing with Objections

Negotiations

Closing the Sale

Follow Up

 

Sales Techniques

 

Memorised Selling                   

Formula Selling            

Need Satisfaction Selling          

Consultative Selling

 

PRICING

 

Price is the only "P" of the marketing mix that generates revenue.

 

PRODUCT

QUALITY

PRICE

HIGH

MEDIUM

LOW

HIGH

Premium strategy

High value strategy

Super value strategy

MEDIUM

Over charging strategy

Medium value strategy

Good value strategy

LOW

Rip off strategy

False economy strategy

Economy strategy

 

Steps in the Strategic Price Planning:

 

1.      Determine influence of product (innovative/repeat/copy product) and distribution strategy (exclusive stores or discount stores)

2.      Evaluate market, cost (fixed and variable), competition (dumping), legal and ethical factors.

3.      Determine the flexibility (high and low end) in price strategy.

4.      Set price strategy objectives: survival, max. current profit, max. current revenue, max. skimming, product-quality leadership, mere cost recovery, social pricing.

5.      Decide how to position price relative to key competitors.

6.      Decide whether price will be active or passive element of the mix strategy

7.      Develop policies based on 3Cs.- cost, customer demand and competition

8.      Implement, manage and control price strategy.

 

Pricing Methods:

 

·        Mark-up pricing: cost + profit % or certain profit % on sales.

·        Perceived value pricing: value of product in consumer's mind.

·        Value pricing: low price for high quality goods.

·        Going rate pricing: based on competitors price

·        Sealed bid pricing: quotations submitted for industrial markets

·        Psychological pricing: high price tag for gift item, low product displayed in high location, odd number, e.g. $ 299 only.

·        Geographical pricing: pricing for distant customers. cash, barter, complex counter trade.

·        Price discounts: cash, quantity, seasonal, trade-in

·        Promotional pricing: loss-leader pricing (sell at loss of popular product), special event, cash coupon rebates, low-interest financing, installments, psychological discounts (inflated price discounts)

·        Discriminatory pricing: customer segment (low price for students), product form (5 gallon or 1.5 liter mineral water), image pricing (same product in different packaging), location, time

·        Product mix pricing: product line pricing (4 versions of same shoes), optional feature (cars), captive product (spare parts expensive - Gillette), two part pricing (annual and rental), by-product pricing, product bundling.

 

Reaction to price changes: by consumers and by competition.

 

  

MARKETING STRATEGY

 

Definition: indicates the specific markets towards which activities are to be targeted and the types of competitive advantages that are to be developed and exploited.

 

Each organisation has several SBUs - Strategic Business Units (separate product line or profit center competing with defined sets of competition). E.g. PepsiCo includes Pepsi Cola, Fritolays, KFC, Pizza Hut…

 

Develop a Strategic Market Plan. It is a blueprint for all activities of an organisation in the marketplace. Marketing Plan deals with implementing the marketing strategy for target markets and marketing mix.


 

Tools for Strategic Market Planning:                  1. BCG Matrix

 

HIGH

STARS

PROBLEM CHILD (?)

LOW

CASH COW

DOGS

Market

Growth Rate

HIGH

LOW

RELATIVE MARKET SHARE

 

Stars: Market leaders, growing, huge profits, large invst. Required for growth. Protect share, reinvest in promotion, better coverage, product features. Obtain larger share of new users.

 

Problem Child (?): Rapid growth, low profits, demands cash. Invest heavily, acquire competitor's share, divestment if not feasible. Focus on a profit niche.

 

Cash Cow: Profitable products, more cash generated. Maintain dominance, improve processes, maintain price leadership, increase cash from resources in other product.

 

Dogs: Cost disadvantages, low opportunities for growth. Focus on specialized niche, abandon, harvest (get cash from remaining life), divestment (sale)

 

2.      GE Strategic Business Planning Grid / GE Nine Cell Grid

 

After analyzing business position determine business direction by developing competitive strategies.

 

 

COMPETITIVE STRATEGIES

 

 

1.      Intense Growth: When current markets and products have potential for increasing sales.

 

·        Market penetration: increase sales in current markets with current products (Pepsi and Coke with their advertisements)

·        Market development: increase sales of current products in new markets (Virgin Atlantic Airlines in Dubai)

·        Product development: increase sales by improving current products or developing new products for current markets. (Nokia 5110 in UAE)

 

2.      Diversified Growth: New products in new markets. Helps spread risks, reduce costs and share the benefits of promotion.

 

·        Horizontal diversification: not technologically related products (Sony's purchase of Columbia pictures)

·        Concentric diversification: related to new product technologically or on marketing factors but new product introduced into new markets. (Coke and Thumbs up in India)

·        Conglomerate diversification: new product unrelated to existing products and introduced in new markets. (Laura Ashley clothing to Laura Ashley No. 1 perfume)

 

3.      Integrated Growth: growth in the same industry but in three different ways, viz.

 

·        Forward: ownership of distribution system (shoe firm buying retail store)

·        Backward: ownership of supply system (newspaper buying paper mills)

·        Horizontal: ownership/acquisition of competitors (Coke acquiring Parle in India)

 

Other Important Terms:

 

Market Leader: Holding highest market share

Market Challenger: biggest competitor, attacks aggressively

Market Followers: copy cats, me--too

Market Nichers: focus on narrow segment, specialize and make profits (Body Shop, Porsche)

 

Market Size Estimation

 

Market Potential

Sales Forecast

Market Share

Evaluating market opportunity: what units (money, items..) account for changes as well

  

 

ASSESSING STRATEGIC ENVIRONMENT

 

Threat of Entry: economies of scale, capital requirements of entry, access to distribution channels, expected retaliation, legislation (government monopoly), differentiation.

Supplier Power: high switching costs, important brand value of supplier, supplier integrating forward risk, size

Buyer Power: volume high, easy substitution, risk of backward integration

Threat of Substitutes: don’t be myopic. Furniture competes with car, holiday. Doing without can also substitute. E.g. Tobacco, alcohol.

 

Analyzing Strategic Capability

 

·        Resource audit; physical, human, financial, technical, intangible.

·        Value chain: support activities: firm infrastructure, HRM, technology, procurement

Primary activities: inbound logistics, operations, outbound logistics, marketing and sales, service. Find critical success factors and try to build linkages. Check also for appropriate control systems (financial, human, stock, marketing etc.)

·        Comparing: previous years, others in the industry benchmarking

·        Assess Balance: of products, resources, skills and personalities, corporate culture

·        Identify key issues through SWOT analysis (strengths, weaknesses, opportunities and threats) And find core competencies (determine ownership, durability, transferability and replicability

 

Strategic Options

 

Generic strategies:

Price based or

Differentiation. (differentiation from whom and on what basis.)

Focus could be on one or also as a combination of both cost and differentiation.

 

Direction: withdrawal, consolidation, market penetration, product development, market development, diversification - related (backward, forward, horizontal)  or unrelated.

 

Methods:

Internal development (develop by self),

Mergers and acquisition (useful if no knowledge of internal development, quick, but problems in 'fitting'.

Joint ventures/alliances, consortia, networks, licensing, franchising, contracting.

 

 

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