MARKETING

STRATEGIES
Course Instructor – Prof. Pallavi Agarwal
Course Contents
1. The strategic role of marketing: Corporate,
business and marketing strategies, definition,
components of strategy, hierarchy of strategies,
strategic planning systems, characteristics of
effectives planning systems.

2. Process of formulating and implementing

strategy, market opportunity analysis, customer
analysis, implementation and control .
3. Business strategies and their marketing implications,
defining strategic business unit, business unit
Courseallocating
objectives, Contentsresources within the business
unit, the business units competitive strategy, BCG
Growth Share Matrix, GE Matrix, Shell’s Matrix

4. Formulation of marketing strategies for new market

entries, mass market penetration, Niche penetration,
skimming and early withdrawal objectives of
alternative pioneer strategies
Course Contents
5. Marketing strategies for leaders, challengers,
and followers

6. Controlling market strategies and programmes,

control process, setting standards of
performance, specifying and obtaining
feedback data, corrective action, strategic
controls, product market entry controls
LEARNING OUTCOMES
 To understand the application of various marketing
concepts learned in the marketing specialization.

 To connect the various principles of marketing with

practical applications.

 To become a strategic planner as well as the

executer.
Reference Books
1. Ashok Ranchhod, Marketing Strategies: A Contemporary
Approach, Pearson Education Asia, New Delhi, 2011

2. Gravens and Piercy, Strategic Marketing, 9th Edition, Tata

McGraw Hill, New Delhi, 2009

3. Walker, Gountas, and Mullins, Marketing Strategy: A Decision

Focussed Approach, Tata McGraw Hill, New Delhi, 2011

4. UC Mathur, Strategic Marketing Management, Text and Cases,

MACMILLAN, New Delhi, 2006
STRATEGIC ROLE OF MARKETING
Marketing is the process by which companies engage customers, build
strong customer relationships, and create customer value in order
toMARKETING
capture value from customers in return.

The two-fold goal of Marketing is

 To attract new customers by promising superior value and

 To keep and grow current customers by delivering value and

satisfaction

For e.g., Nike, Amazon

MARKETING MANAGEMENT
 Marketing management is the process of developing strategies
and planning for product or services, advertising, promotions,
sales to reach desired customer segment.
MARKETING STRATEGY/STRATEGIC
MARKETING
Marketing strategy is a long-term, forward-looking approach to
planning with the fundamental goal of achieving a sustainable
competitive advantage.

Strategic marketing addresses three simple questions:

(1) Where are we now?
(2) Where are we going? and
(3) How are we going to get there?
MARKETING STRATEGY/STRATEGIC
MARKETING
 What customers will we serve?

 How can we serve these customers best?

 Selecting Customers to serve e.g., Nordstrom, Dollar

General

 Choosing a value proposition e.g., Hyatt Regency

brand

Hyatt Regency brand declares that Sometimes its good not

to be home. It ads highlight the joys of traveling and fun
things that people do when they are traveling on
CORPORATE AND BUSINESS
STRATEGIES
BUSINESS STRATEGIES
COMPONENTS OF STRATEGY
A good strategy has the following components:
 Scope
 Goals
 Resource Allocation
 Sustainable Competitive Advantage
 Synergy
COMPONENTS OF STRATEGY
Scope

 The decisions made by the top level management with respect to the
scope of the organization should indicate the company s strategic
vision.

 The strategic vision acts as a cohesive force that binds the various
activities and product-markets, which in turn define what businesses a
company operates in and what it should enter in future.

For example, Caterpillar

COMPONENTS OF STRATEGY
Goals

 A strategy should specify the goals and objectives of the

organization.

 It should also clearly specify the dimension in which performance

has to be accomplished like the increase in volume, growth of
market share, and return on investment.

For example, one of the goals could be 2% increase in market

share in the current financial year.
COMPONENTS OF STRATEGY
Resource Allocation
 Any organization has limited financial and human resources.
A good strategy specifies how these limited resources are to
be optimally allocated throughout the organization.
COMPONENTS OF STRATEGY
Sustainable Competitive Advantage
 A good strategy specifies how an organization can compete
in each of its businesses.

 It should also specify how a company can position itself in

the product market and how it can sustain its competitive
advantage over present and potential competitors.
COMPONENTS OF STRATEGY
Synergy
 Synergy helps enhance the total performance of the related
businesses.

 For this purpose, strategy should be formulated in order to

exploit the potential sources of synergy across the
businesses.
HIERARCHY OF STRATEGY
 At this level, strategic decisions relate to organization-wide policies and are
taken care by top-level management (BOD) with a vision of determining
‘Where the company wants to be?’
CORPORATE STRATEGIES
 It has two main aspects- Formulation of Strategy (strategic planning)
and Strategy Implementation

 The nature of strategy at this level tend to be value-oriented, conceptual

and than other levels.

 There is also greater risk, cost and profit potential as well as greater need
of flexibility associated with this level.

 Major financial policy decisions involving acquisition, diversification

and structural redesigning belong to this level.
Corporate level strategy can be formulated based on four initiatives,
which are as follows:

CORPORATE STRATEGIES
Diversifying
Coordination between various businesses
Identifying the strategic fit to find a competitive advantage
Identifying the priorities for allocating the resources
BUSINESS STRATEGIES
 Business-level strategy is more likely related to a unit within the whole. It is concerned with competition in
a market.

 The concerns are about what products or services should be developed and offered to which markets in order
to meet customer needs and organizational objectives.

 At this level, multifunctional strategies developed at corporate level are formulated and implemented for
specific product market in which the business operates.

 Thus, managers at this level translate general directions and intent into concrete functional objectives.

 Decisions at this level include policies involving new product development, marketing mix, research &
development, personnel, etc.
BUSINESS STRATEGIES
The following aspects should be considered when formulating
a business level strategy:

Responding to the changes in the environment

Attaining a sustainable competitive advantage
Developing distinctive competencies
Coordinating strategic initiative of various functional units
Dealing with the strategic issues of the business
FUNCTIONAL STRATEGIES
 Functional strategy involves decision-making with respect to specific functional areas- production,
marketing, personnel, finance etc.

 While corporate and business level strategies are concerned with “Doing the right things”, functional
strategies stress on “Doing things right”.

 Operating level strategy is concerned with strategic approaches for managing frontline operating
units(like plants, sales, etc.) and for handling day to day tasks of strategic significance(like
advertising campaign, purchasing materials, inventory control, maintenance, etc.). Thus, it focuses
on how the different functions of the enterprise contribute to the other levels of strategy.

 Thus, functional level strategic management is the management of relatively narrow areas of activity,
which are of vital, pervasive or continuing importance to the total organization.
STRATEGIC PLANNING
 Strategic planning is an organizational management activity that is
used to set priorities, focus energy and resources, strengthen
operations, ensure that employees and other stakeholders are
working toward common goals, establish
agreement around intended outcomes/results, and assess and
adjust the organization's direction in response to a changing
environment.

 It is a disciplined effort that produces fundamental decisions and

actions that shape and guide what an organization is, who it serves,
what it does, and why it does it, with a focus on the future.

 Effective strategic planning articulates not only where an

organization is going and the actions needed to make progress, but
also how it will know if it is successful. 
KEY CHARACTERISTICS OF STRATEGIC PLANNING
1. Communication Strategy – the development of a communication
strategy is essential for the effective development and implementation of a
strategic plan.  In the communications strategy, you should determine who
will be involved in the planning process, how they will be involved and
what is being communicated to whom on the staff.

2. Strategic Planning Task Force – the development of a core team of

organizational leaders is mandatory in the effective creation of a strategic
plan.  Each task force member should represent a key business area or
department of the organization to ensure the plan has organization wide
input and buy-in. The task force meets regularly with clearly defined
 deliverables to be presented at each meeting.

3. Vision Statement – an organization’s vision statement is simply their

roadmap for the future. The direction of the organization should be broad
to include all areas of impact but narrow enough to clearly define a path.

4. Mission Statement – an organization’s mission is a definition of whom

and what they are. Often mission statements include core goals and
values of the organization.
KEY CHARACTERISTICS OF STRATEGIC PLANNING

5. Values – values are the organization’s fundamental beliefs in

how they operate. Values can provide a guideline for
management and staff for acceptable organizational behavior.
 Often values relate to the organization’s organizational culture.

6. Goals – goals are broad based strategies needed to achieve

your organization’s mission.

7. Objectives – objectives are specific, measurable, action

oriented, realistic and time bound strategies that achieve the
organization’s goals and vision.

8. Tasks – tasks are specific actionable events that are assigned to

individuals/departments to achieve. They, too, should be specific,
measurable and time bound.
KEY CHARACTERISTICS OF STRATEGIC PLANNING
9. Implementation Strategy – once the plan has been outlined, a
tactical strategy is built that prioritizes initiatives and aligns
resources. The implementation strategy pulls all the plan pieces
together to ensure collectively there are no missing pieces and
that the plan is feasible. As a part of the implementation strategy,
accountability measures are put in place to ensure
implementation takes place.

10.Monitoring of Strategic Plan – during implementation of a

strategic plan, it is critical to monitor the success and challenges
of planning assumptions and initiatives. When evaluating the
successes of a plan, managers must look objectively at the
measurement criteriaas defined in organizations goals and
objectives. It may be necessary to revise the plan and its
 assumptions if elements of the plan are off track.
STEPS IN MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESS

Step 1:  Environmental Scan

 Identify Target Market (Customers) and strengths and limitations with
respect to meeting market needs
 Identify the strengths and limitations of Key Competitors
 Identify Key Market Trends and the threats and opportunities they
present

Step 2:  Organizational Assessment

 Identify the company’s strengths and limitations at each level in
the Pyramid of Organizational Development

Step 3:  Strategic Issue Resolution

 Identify and work to resolve specific strategic issues – identified through
an analysis of information collected about the company’s environment
and internal capabilities.
 STEPS IN MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESS

Step 4:  Strategic Business Plan

This plan consists of the following components:

Business Definition/Concept Statement:  It identifies the boundaries in which the

business will operate and provides focus. The strategic issues that are dealt with are
What business are we in?, What business should we enter into?, and What is the
quantity of resources we can allocate to each of these businesses?

Mission Statement/Purpose:  Most mission statements are a combination of

purpose and vision or intended outcome. It outlines the existence of the
organization. It revolves around three fundamental concepts/questions.
What business we do?, Whom do we want to serve? How do we serve them?
 
Example -

Disney: To make people happy

Cargill: To improve the standard of living around the world
Merck: To preserve and improve human life
 STEPS IN MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESS

Step 4:  Strategic Business Plan

Vision Statement - an organization’s vision statement is simply their

roadmap for the future. The direction of the organization should be
broad to include all areas of impact but narrowenough to clearly define
a path. It is a statement of accomplishment or condition you are
seeking. It may be stated with a timeframe, e.g. “By 2025, we will be “.
It represents following questions-

What are our hopes and dreams?, What problem are we solving for the
greater good?, Who and what are we inspiring to change?

Example-
Microsoft’s vision early on: “A Computer on Every Desk in Every
Home”.
Stanford University in the 1940’s:“To become the Harvard of the West”.
 STEPS IN MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESS

Step 4:  Strategic Business Plan (Cont.)

Values: Values are the organization’s fundamental beliefs in how they operate.
Values canprovide a guideline for management and staff for acceptable
organizational behavior. Often values relate to the organization’s organizational
culture.

Core Strategy:   A Core Strategy (or what might be thought of as an organization’s

“success formula”) should reflect the factors that differentiate or will differentiate the
company from those with whom it competes for customers.  It defines how the
organization will compete to “win the game” in its market. These factors should be
truly unique. Core strategy always driven from core values

Example: Nordstrom:
Service to customer above all else
Hard work and individual productivity
Never being satisfied
Excellence in reputation; being part of something special
 STEPS IN MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESS

Step 4:  Strategic Business Plan (Cont.)

Key Result Areas/Key Performance Indicators (KRAs/KPIs): 

Areas of an organization’s operation in which performance has a
critical impact on the achievement of the overall Strategic Mission. 

Goals:  goals are broad based strategies needed to achieve your

organization’s mission. These are the broad statements of what an
organization wants to achieve in the long run (that is, by the Strategic
Mission’s due date).  In a sense, Goals reflect the strategy that the
organization is adopting with respect to each Key Result Area (KRA). 
Each KRA will have one or more Objectives.
 
Objectives: Objectives are specific, measurable, action oriented,
realistic and time boundstrategies that achieve the organization’s
goals and vision. 
STEPS IN MANAGEMENT SYSTEMS’
STRATEGIC PLANNING PROCESS
Step 5:  Budgeting

 Identifies how financial resources will be invested to help the

organization achieve its plan.
 Involves translating the overall strategic plan into financial
terms. It should be noted that the development of a strategic
plan and budget is an iterative process – it may be that an
organization will need to adjust its strategic plan, depending
upon the financial resources available to support it.
 Budgeting is the responsibility of an organization’s “CFO.” 
STEPS IN MANAGEMENT SYSTEMS’
STRATEGIC PLANNING PROCESS
Step 6:  Management Review

 A half- to full-day meeting each quarter during which

management:
• Reviews progress being made against Goals.
• Celebrates successes with respect to achieving Goals.
• Identifies any problems or anticipated problems with respect to
achieving Goals and develops plans to address these problems.
• Discusses and works to resolve any other issues that might affect
organizational performance.  These include new opportunities or
threats presented by the market and changes to the company’s
internal operations.
Characteristics of Effective Planning
System
Characteristics # 1 - It is Based on Clearly Defined
Objectives:

 A good plan is based upon clear, well-defined and easily

understood objectives.
 General objectives like improving morale or increasing profits
are ambiguous in nature and do not lend to specific steps
and plans.
 If possible, objectives must be quantified for sake of
simplicity.
Characteristics of Effective Planning
System
Characteristics # 2 - It is Simple

 A goods plan must be simple and comprehensive.

 When the plan is simple, all employees of the organization
can know its significance and it can be easily put into
operation, which leads to achieve objective.
Characteristics of Effective Planning
System
Characteristics # 3 - It Provides for a Proper Analysis
and Classification of Action

 It provides for a proper analysis and classification of action

i.e., it establishes standards.
 A good plan should establish standard. Comparing actual
results with standards can make a proper analysis. It leads to
effective control.
Characteristics of Effective Planning
System
Characteristics # 4 - It is Flexible

Planning should be flexible enough to incorporate any

changes in the resources, if necessary.
Additionally, it should be responsive to changed conditions so
that if future events do not follow the anticipation, the same
plan can be modified and adopted to the altered situation.
Characteristics of Effective Planning
System
Characteristics # 5 - It is Balanced, Practicable and
Suitable According to the Size and form of the Business

 A good plan should be well balanced so that the existing

resources are properly utilized for all functions and short-
term gains are not at the cost of long-term gains and vice-
versa.
.
Characteristics of Effective Planning
System
Characteristics # 6 - It is Time-Bound

 The time period allowed for achieving goals should be

reasonable even though planning is an attempt to anticipate
the future.
 Long-range planning are more uncertain. Hence, the time
period covered should be reasonable and reasonably stable.
Characteristics of Effective Planning
System
Characteristics # 7 - It uses Available Resources to the
Utmost before Creating New Authorities and New
Resources

 A good plan strives for optimal utility of physical as well as

human resources in unison and harmony
Characteristics of Effective Planning
System
Characteristics # 8 - Participation by Subordinates
 Planning should not be an exclusive responsibility of top
management. Subordinates will not be responsible if a plan
is imposed upon them.
 Also subordinate participation generally ensures the sincere
and serious effort on their part to make the plan successful.
Characteristics of Effective Planning
System
Characteristics # 9 - Unity

 Planning is initiated by different managers of different

divisions at different times.
 It is necessary that a good plan should incorporate all these
departments, maintaining the consistency, and centralized
objective must be the focus.
Characteristics of Effective Planning
System
Characteristics # 10 - It is Comprehensive

 It is comprehensive and includes each and every aspect of

the objectives.
Unit 3
Shell Directional Policy Matrix
 The essence of strategy is that it is a choice between two or
more good options.

 In developing a marketing strategy the choice to be made is

of which segments of the market you should develop tactics
to pursue.

 The Shell Directional Policy Matrix (DPM) is another

refinement upon the Boston Consultancy Group (BCG
Matrix).

 Developed by Shell international Chemical Company to

identify the areas in which they should operate
Shell Directional Policy Matrix
 The Directional Policy Matrix (DPM) is a tool for helping you
determine what your preferred segments are. In completing
a DPM you understand what you should invest in and the
direction your organisation should take.

 The directional policy matrix helps you determine whether

decisions made in the day-to-day running of the organisation
are in it’s best interest.

 The Directional Policy Matrix measures the attractiveness of

a segment and the capability of the organisation to support
that segment.
Shell Directional Policy Matrix
The horizontal axis measures business sector
profitability which includes the size of the
market, expected growth, lack of competition,
profit margins within the market and other
favorable political and socio-economic
conditions.

The vertical axis measures the company’s

competitive capability which is determined by
the sales volume, the products reputation,
reliability of service and competitive pricing. 
Shell Directional Policy Matrix
 Shell considered that creating a single strategy plan did not
work in the changing environment.

 It tried to develop many scenarios based on a number of

assumptions about the future environment, these could be
optimistic, pessimistic and straight-line.

 Depending upon events different scenario was used.

The Directional Policy Matrix measures the attractiveness of a segment and the
capability of the organization to support that segment.

Attractiveness of a Market Segment

Evaluating the attractiveness of a segment should include but not be limited to,
these variables:

Size of the segment (number of customers, units or $ sales)

Growth rate of the segment (a very important variable)

Profit margins of the segment to the sales organisation

Ongoing purchasing power of the segment

Attainable market share given promotional budget, fragmentation of the market

and competitors’ promotional expenditures

Required market share to break even.

Capability of the organisation

Evaluating the capability of the organisation to meet the needs of the

segments should include, but not be limited to, these variables
analysed against the competition:

Competitive capability of the organisation against the marketing mix

(product/service, place, price and promotion)

Access to distribution channels

Capital and human resource investment required to serve the

segment

Brand association of the organisation in the eyes of the segment

Current market share/likely future market share.

Scoring the Directional Policy Matrix

To score the DPM you need to know the goal of your

marketing strategy. This may be, but not limited to:

1. Profit lift
2. Market share lift
3. Value of the organisation if it were for sale.
Complete scoring the directional policy matrix in four steps:

1. Weight the relative importance of each factor of attractiveness

and capability in terms of its contribution to the goal of the
marketing strategy out of 1.

2. Allocate the respective weight of a total score of 48 points to

each factor. e.g. if the weighting for a factor was 0.2 then the
total points available for that factor is 0.2X48=10 (rounded up)

3. Score each segment relative to the other segments in how much

each segment meets the criteria of the factor. e.g. For the
attractiveness factor ‘Size of segment’, in the example Table 1,
score the largest segment 10 and the smallest segment 1.

4. Plot the resultant score in excel and create a bubble chart graph
where the size of the bubble represents the size of the segment
for greater visual clarity when it comes to interpreting the
analysis.
Interpreting the Directional Policy Matrix
Positions in Shell’s Matrix
Each of the zones in Shell’s Directional Policy Matrix is described as follows:

 Try harder: SBU’s could be vulnerable over a longer period of time, but fine
for now. They need additional resources to strength their capabilities. The
corporate try harder to exploit the business prospects thoroughly.

 Cash Generator: Even more like a cash cow, milk here for expansion
elsewhere. SBU’s may continue their operations, at least for generating
strong cash flows and satisfactory profits. No further investments are made.

 Growth: Grow the market by focusing just enough resources here. These
SBU’s need funds to support product innovations, R&D activities etc.

 Market Leadership: Major resources are focused upon the SBU. It must
receive top priority.
Positions in Shell’s Matrix
Each of the zones in Shell’s Directional Policy Matrix is described as follows:

 Divest: SBU’s running in losses with uncertain cash flows. They should be

divested as the situation is not likely to improve in the near future. These
liquidate or move thee assets.

 Phased withdrawal: SBU’s with weak competitive position in a low growth

market with very little chance of generating cash flows. They should be
phased out gradually. The cash realized should be invested in more profitable
ventures.

 Double or quit: Gamble on potential major SBU’s for the future. Either
invests more to use the prospects presented by the market or else better to
quit the business.

 Custodial: SBU’s are just like a cash cow, milk it and do not commit any
more resources. The corporate has to bear with the situation by getting help
from other SBU’s or get out of the scene so as to focus more on other
attractive business.
Positions in Shell’s Matrix
The tactics for each sector descriptor are:

 Leader – Focus your resources on segments in this sector.

 Growth leader – grow the market by focusing just enough resources here.

 Cash Generator – Even more like a cash cow, milk here for expansion
elsewhere.

 Phased withdrawal – move cash to SBU’s with greater potential.

Positions in Shell’s Matrix
 Double or quit – Invest in your capability or get out of segments in this sector.

 Divest – Liquidate or move assets used in segments in this sector as fast as

you can.

 Double or quit – gamble on potential major SBU’s for the future.

 Divest – Liquidate or move assets used in segments in this sector as fast as

you can.
Example of Petroleum Sector
 Business Sector Prospects
(Horizontal x-Axis)
Profitability prospects (or attractiveness) for businesses in the petroleum sector are judged on four
criteria

1. Market Growth Rate – market growth is necessary for the growth of sector profits but sectors with
the highest growth rate are not necessarily those with the largest profit growth. Shell advocated a
rating system for this factor where the midpoint was the average growth rate for the industry. A star
rating system was used rating the growth rate from a one star to a five star.

2. Market Quality – this is a difficult concept to quantify and to get to a rating for the sector. A number
of questions must be answered – (Shell questions)

 Has the sector a record of high, stable profitability?

 Can margins be maintained when manufacturing capacity exceeds demand?
 Is the product resistant to commodity pricing behaviour?
 Is the technology of production freely available or is it restricted to those who developed it?
 Do relatively few producers supply the market?
 Is the market free from domination by a small group of powerful customers?
 Has the product high added value when converted by the customer?
 In the case of a new product, is the market destined to remain small enough not to attract too many
producers?
 Business Sector Prospects
(Horizontal x-Axis)
Is the product one where the customer has to change his formulation or even his machinery if he
changes supplier?
Is the product free from the risk of substitution by an alternative synthetic or natural product?
A business sector rating yes on all or most of these questions would score a four or five star
rating.

3. Industry Feedstock Situation

Expansion of productive capacity is often hindered by the uncertainty of feedstock supply.
If the feed stocks in the sector have a strong pull towards an alternative use or are difficult to
assemble in large quantities then this is a plus for sector prospects and the rating is better than
average.
If the feedstock is a by-product of another process and the main product consumption is growing
at a faster rate than that of the by-product, pressure might result due to low prices or direct
investment by the by-product producer to increase its consumption. This would be given a lower
than average rating.

4. Environmental (Regulatory) Aspects

Business sector prospects can be affected by restrictions on manufacture, transportation and
marketing of a product. If this has not been built into the forecast of market growth, it must be
assessed separately. Strong positive or negative environmental pr regulatory influences must be
taken into account.
 Competitive Capabilities
(Vertical y- Axis)
A petroleum company can be judged as strong, average or weak on three major criteria. Shell
recommended reviewing these criteria in relation to significant competitors in the relevant
business sector. (this axis is similar to the Business Strength axis on the GE-McKinsey
matrix)

Market Position
 The percentage share of the total market as well as the degree to which this share is secure
is of primary importance. Shell looked at this factor in terms of a relative market leadership
position rather than market share and rated this factor on a 5 star rating scale as follows:
  Leader – 5 stars – this type of company has market leadership and technical leadership
usually accompanies this.
  Major Producer – 4 stars – this occurs where no single company is leader but there are two
to four competitors are closely placed.
  Viable Producer -3 stars – this type of company has a strong viable stake but falls below the
top league
  Minor- 2 stars - businesses in this category are less than able to support research and
development in the long term
  Negligible- 1 star – companies with a negligible position in the market fall into this category
Shell’s Vs BCG
 BCG has problem with market share as it may not include viable and
minor producers, as well as leaders and majors.
 Shell’s is based on the concept of market leadership instead of
market share.
 In this, one can select criteria for different industry sector’s and
situations.