Marketing strategy

Marketing strategy is the programs or action plan whereby a firm's resources and advantages
are managed in order to advance the marketing objectives.

In order to transform marketing strategy into marketing programs, decisions on marketing

mix, marketing expenditure and allocation are necessary.

5.1 MARKETING MIX

Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market. Though there is a number of marketing mix tools, the four
factor classification of these tools called the four Ps: Product, Price, Place (distribution) and
Promotion. The particular variables under each head are as follows:

PRODUCT PRICE PLACE PROMOTION

Product variety Last Price Channels Sales Promotion

Design Discounts Assortment Sales Force
Features Allowances Locations Public Relations
Brand Names Payment Period Transport Direct Marketing
Packaging Credit terms Coverage Advertising

5.2 The Product

The most basic marketing mix tool is product, the firm's tangible offer to the market. A
product is anything that can be offered to a market to satisfy a want or need.

Product includes physical goods, persons, places, organizations and ideas.

5.2.1 Five Levels of a Product

In order to plan the marketing offering, it is necessary to think about the levels
of the product.

i)Core Benefit:
This is the most fundamental level of the product. This is the fundamental
service or benefit that the customer is really buying.

ii) Basic Product:

This is the second level in which the marketer has to turn the core benefit in to a basic
product, ie, the service or benefit is turned into a tangible product.

iii) Expected product:

This is the third level of a product. The marketer prepares a set of attributes and conditions
that buyers usually expects and agrees to when they purchase this product.

iv) Augmented product:

This is the product that meets the customer’s desires beyond their expectations. A marketer
can argument the product by providing additional features to the product.

v) Potential Product:
This encompasses all the argumentations and transformations that the product might
ultimately undergo in the future. While the augmented product describes what is included in
the product today, the potential product points to its possible evolution. Here is where
companies search aggressively for new ways to satisfy customers and distinguish their offer.

5.2.2 Product Classifications

Product can be classified into three groups according to their durability and tangibility.
They are:
i) Non durable goods: Non durable goods are tangible goods that normally are consumed in
one or at few uses. E.g.: Soap, salt and bread Since these goods are consumed quickly and
purchased frequently, the appropriate strategy is to make these available in many locations,
charge only a small mark-up and advertise heavily to induce trial and build preference.

ii) Durable goods: Durable goods are tangible goods that normally survive many uses.
E.g.: Coir products, Refrigerator and machine tools

iii) Services: They are intangible and inseparable, variable and perishable goods.
E.g.: Haircut, repairs and transport

5.2.3 Product Mix Decisions

A product Mix is the set of all products and items that a particular seller offers for sale to
buyers. A company's product mix has a certain width, length, depth and consistency. The
width of the product mix refers to how many different product lines the company carriers.
The length of the product mix refers to the total number of items in its product mix. The
depth of its product mix refers to how many variants are offered of each product in the line.
The consistency of the product mix refers to how closely rotated the product lines are in end
use, production requirements, distribution channels or some other way.

These four dimensions of the product mix provide the handle for defining the company's
product strategy. The company can add new product lines, thus widening the product mix.
The company can lengthen or deepen its product line. Finally the company can pursue more
product line consistency or less. depending upon whether it wants to acquire a strong
reputation in a single field or participate in several fields.

5.2.4. Brand Decisions.

A brand is a name, term, sign, symbol or design or a combination of these intended. To

identify goods or services of one seller or group of sellers and to differentiate them from
those of competitors. A brand can convey the attributes, benefits and values of the product. It
can also convey the culture and personality of the marketer and the user.

5.2.5. Brand - Strategy decisions

i) The company has five choices when it comes to brand strategy

ii) The company can introduce line extension
iii) It can introduce brand extension
iv) It can introduce multi-brands
 v) It can introduce new brands
vi) It can also introduce co-brands.

5.2.6. Packaging & Labelling Decisions.

Packaging includes the activities of designing and producing the content or for a product.
These are three types of packages via. primary package, wrapper secondary package and
shopping package. Label is a subset of packaging. Labels carry only one brand name or a
great Ideal of information as per the requirement of law.

5.3. PRICING STRATEGIES

Price is the amount of money and/or other items with utility needed to acquire a product.

Pricing Objectives: Pricing objectives a management select must be compatible with the
overall goals set by the company and the goals for its marketing program. The objective can
be profit oriented, sales oriented or status oriented.

5.3.1 Methods of setting Price

i) Cost-Plus Pricing

It means setting the price of one unit of a product equal to the total cost of the unit plus the
desired profit on the unit.

ii) Marginal Cost Pricing

Under Marginal Cost Pricing, fixed costs are ignored and prices arc determined on the basis
of marginal cost.

ili) Going-Rate Pricing

Under Going-Rate Pricing Policy, the firm adjusts its own price, policy to the general pricing
structure of the industry.

iv) Customary Pricing

Pricing of certain goods remain fixed as a result of the prices prevailed for a considerable
period of time. Only when the costs change significantly. customary prices of these goods are
changed.

5.3.2. Pricing Strategies

The following are the different methods of pricing strategies

i) Market Skimming Pricing

Under their pricing method a relatively high price is set for a new product. This pricing
method is adopted under the following circumstances - When the new product has distinctive
features strongly desired by the customers. When demand is mostly inclastic. When the new
product is protected from competition through one or more entry barriers such as a patent.

ii) Market - Penetration Pricing

A relatively low initial price is fixed for a new product. The price will be low in relation to
target market's expected prices. The primary aim of this strategy is to penetrate the mass
market immediately and in so doing, generate substantial sales volume and a large market
share. At the same time, it is included to discourage other firms from introducing competing
products.

This strategy make more sense under the following conditions -

When a large mass market exist for the product

When demand is highly elastic.cost

• Substantial reduction in unit operations. can be achieved through the large scale Fierce
competition already exist in the market for this product.

Other Pricing strategies are: Point of production Pricing: The seller quotes the selling price at
the point of production. This is referred to as FOB pricing.

Uniform Delivered Pricing: The same delivered price is quoted to all buyers regardless of
their locations. Zone Delivered Pricing:-Divides the seller's market into a limited number of
broad geographical zones and then sets a uniform delivered price for each zone.

Freight Absorption Pricing:- A manufacturer quoted to the customer a delivered price equal
to its factory price plus the freight cost that would be charged. There are also other Special
Pricing Strategies such as

One Price Strategy: A seller changes the same price to all similar customers who buys
identical quantities of a product.

Flexible Pricing Strategy:- A situation when similar customers may pay

different prices when buying identical quantities of a product.

5.4 DISTRIBUTION

Even before a product is ready for market. management should determine what methods and
routes will be used to get it there. This means establishing strategies for the products
distribution channels and physical distribution.

5.4.1. A Distribution Channel

A Distribution channel consist of a set of people and firms involved in the transfer of title to a
product as the product moves from the producer to ultimate. consumer or business user. It
includes both the producer and the final customer. In order to design an effective distribution
channel, the following sequences decisions are required. Specifying the rate of distribution
i.e. the Company should decide in which way the distribution will be used- either defensively
or offensively. Selecting the type of channel - i.e. to select the most suitable channel for the
Company.

Determining intensity of distribution is to determine the no. of middle men used at the
wholesale and retail levels in a particular territory. Choosing specific channel members - i.e.
to select specific forms to distribute the product.

5.4.2. Vertical Marketing System.

This is a new type of channel that has become the document forms of distribution during the
last three decades. This is a specifically designed channel to improve operating efficiency and
marketing effectiveness. Under this system, each function is performed at the most
advantageous position in the channel.

5.5 PROMOTION.

Promotion is an element in the organization's marketing wise that serves to inform, persuade
the remind the market of a product and/or the organization selling it, ie hopes of influencing
the recipient's feelings, benefits or behavior. There are four methods of promotion as given
below.

i) Personal Selling

It is the direct precaution of a product to a prospective consumer by a representative of the

organization selling it. Personal selling takes place face to face or over the phone, and it may
be directed to a middleman or a consumer.

ii) Advertising
Advertising is impersonal mass communication that the sponsor has paid for and in which the
sponsor is clearly identified. The most familiar form of advertisements are formed in the
broadcast (TV and Radio) and print media.

iii) Sales Promotion

It is a demand stimulating activity designed to supplement advertisement and facilitate

personal selling. It is paid for by the sponsor and frequently involves a temporary incentive to
encourage a purchase. Many sales promotions are directed at consumers.

iv) Publicity

It is a special force of public relations that involves new stores about an organization or its
products. It involves an impersonal message that reaches the mass audience through the
media. Unlike advertising, it is not paid for and the organization that is the subject of the
publicity has no control over it and it has greater credibility than advertising.

5.5.1 Promotional Mix

An organization’s combination of personal selling, advertising, sales promotion, public

relation and publicity to help in advertising its marketing objectives is its promotional mix.
An effective promotional mix is a critical part of all marketing strategies.

The following factors should be taken into account when determining the promotional mix.

i) Target Market:

The audience greatly influences the choice of a promotional mix

The Following are the variable that affects the choice of a promotional method.

• Customer's readiness to buy.

• Geographic scope of the market
 Type of customer
 Concentration of the market
ii) Nature of the product:

The product attributes that influences promotional strategy are -

• Unit value
• Degree of customization
• Pre-sale and post sale service

iii) Stage of the Product Life Cycle

In a product's introductory stage, advertising and personal selling are critical. Later if a
product becomes successful and competition intensifies, more emphasis given on preserve
advertising.

5.6 Marketing Expenditure

Research methodology

A company must decide what level of marketing expenditure is necessary to active its
marketing objectives. Companies typically establish their marketing budget at a percentage of
the sales goal. A particular company may spend more than the normal percentage ratio in the
hope of advertising a higher market share.

Marketing Allocation

Market must decide on the allocation of the marketing budget to the various products,
channels, promotion media and sale areas.