Chapter One

Overview of Marketing Strategy

Marketing (management) is the process of planning and
Marketing Management

performing the conception, pricing, promotion, and

distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational
goals.
Marketing management is the practical application of
marketing techniques.
Marketing management is the process of planning,
implementing and control of marketing activities.
It is the analysis, planning, implementation, and control of
programs designed to create, build, and maintain mutually
beneficial exchanges with target markets.
Marketing Strategy
“Marketing Strategy is a series of integrated actions leading
to a sustainable competitive advantage.”

is an explanation of the goals firms need to achieve with their

marketing efforts.
The "what" has to be done?
It includes:
 a definition of your business,
 a description of your products or services,
 a profile of your target users or clients, and
 defines your company's role in relationship to the
competition.
Is a document that firm use to judge the appropriateness and
effectiveness of their specific marketing plans.

is a summary of your company's products and position in

relation to the competition.
involves careful and precise scanning of the internal and
external environments.
Internal environmental factors include the marketing mix and
marketing mix modeling, plus performance analysis and
strategic constraints.
External environmental factors include customer analysis,
target analysis, as well as evaluation of any elements of the
technological, economic, cultural or political/legal
environment likely to impact success.
Why studying Strategic Marketing
Management
Changes in Market structure
Competition
Cultural dynamics
Micro & Macro Factors
Impact of Technology
Marginal Propensity to Save/Consume
Changes in Buyers’ Behavior
 Understanding the buying decision process
 Determining the needs and wants of existing and
prospective customers
 Research techniques for understanding customers and
prospects
 Heterogeneity
Components of marketing
strategy/Developing MS
Stage one: Defining strategic marketing objectives
These will to a large extent be determined by corporate
strategy, and will answer such questions as:

 which markets should we compete in?

 What should be our targets, in terms of market share and

profitability in these markets?

The answer to the first question will be determined by the

inherent attractiveness of the market and our ability to
compete in it.
Contd.
A market may be attractive for a number of reasons:
 because there are high profits to be made in it;
 because it is growing;
 because it fits in well with or fills a gap in our existing
portfolio.

It is useful at this stage to carry out some structured analysis

using a framework such as Michael Porter's Five Forces of
Competition or SWOT analysis.
It is crucial, however, to ask not just whether the market is
inherently attractive, but whether it matches our capability
profile

in other words, do we have particular strengths which will

give us an advantage in the market?

A good marketing strategy may be determined as much by

those markets we choose not to enter as by those we do.
Targets will be expressed in terms of market share or
profitability, or possibly both.

For example, in an early stage of the stage in the market life

cycle, an organization may concentrate on building share at
the expense of profitability, or at a later stage may be content
for share to remain static whilst profits are high.
Stage two: Determining strategic focus
Having decided which markets to compete in, the question of
how to compete can be addressed.

Should the focus be on growing the overall size of the market,

or on taking a bigger share of an existing market
(penetration)?

In order to do this:

 should we be concentrating on getting existing customers to
use more of our product, or
 on finding new customers or even new segments? Or
 can we only increase share by taking customers from our
competitors?
Contd.
The answers to these questions will depend largely on what
stage has been reached in the life cycle of the market for this
product.
This in turn will determine whether the market is fairly
homogeneous or divided into segments or sub-segments.

The more mature the market, the more fragmented it tends to

be.
The first step in defining customer targets will be to
Stage three: Defining customer targets

understand the structure of the market in terms of:

 what segments exist and
 what alternative ways of segmenting the market might be
possible.
In seeking to gain a better understanding of different
customers' perception of value, marketers may see certain
customers with similar characteristics and perceptions as
belonging together as a distinct segment.

but unless those similarities actually exist, the segmentation

and the target will be meaningless.
Contd.
Customers within one segment should be similar to each other
in ways which are important for how, when, what and why
they buy, and different from customers in other segments.

Once we have a clear view of market structure, we need to

decide which segment or segments to target.

Certain elements will tend to make a segment attractive: size,

growth, profitability, fit with company strengths and relative
weakness of competition.

The issue of customer economics, or choosing the right

customer portfolio, is vital.
Contd.
As part of this stage, it will be decided whether to target only
one segment, or several segments at once.

Clearly this decision will be influenced by such factors as: ƒ

 Available resources.

 Danger of brand contamination/infectivity/pollution.

 Opportunity for economies of scale in manufacturing, marketing

or distribution.
Stage Four: Competitive Analysis
In practice, it is clear that the analysis of competitors and the
selection of customer targets will go hand in hand, since the
one will exert a strong influence on the other.

The decisions to be taken at this stage will relate to competitive

positioning and competitive strategy.

Competitor analysis is a big topic and has an important role to

play at the level of corporate strategy as well as in the
marketing strategy process.
In the context of developing a marketing strategy, there are
particular areas of competitor analysis to be considered.
Contd.
The specific questions which competitor analysis must answer
at this market specific level are:

What does the customer buy when they does not buy my
product?

What is their perception of these alternatives and how does it

compare with their perception of my product?

What do I know or what can I infer about my competitors'

strategies in relation to their products?
 Differential advantage, or competitive advantage, describes the
Stage five: Differential advantage

ways in which one organization’s offering is different from

and better than another's.
This gives the company an advantage over its competition.

Differential advantage may come from a variety of sources:

superior position, superior skills or superior resources.
Superior position
E.g. lower costs (perhaps due to location); incumbent position
(eg distribution network); relationships
Superior skills
E.g. specialized knowledge, technical expertise, organizational
skills such as flexibility
Contd.
Superior resources
E.g. financial resources, geographical coverage, exclusive
ingredients, experienced people

Whatever the source of differential advantage, it must offer real

value to the customer in that it meets his/her needs in a distinctive
way.
It is the meeting point of the three C's of customer, competition
and company resources.
Differential advantage is at the heart of a marketing strategy and
should be based on all of the preceding analysis.
It can then be translated into a practical marketing plan covering
the four P's of the marketing mix.
Stage six: Marketing mix

The "marketing mix" refers to the various elements of a

company's offering in the market place:
 the product or service itself, including its packaging;
 the price, including any discounts or payment terms;
 the place, or distribution method; and
 the promotional mix by which the offering is communicated to
the market place.

In addition to the traditional "four Ps" there are also physical
evidence, process and people, particularly where service
products are concerned.
Stage seven: Implementation

The implementation of marketing strategy demands good

communication between the marketing function and the other
parts of the organization.
the elements involved in implementing the strategy are
consistent with each other and with the strategy itself. The
"seven S's" are:
Strategy itself - supported by
Skills-what distinctive core tasks (functional or organizational)
is the company good at performing?
Shared values - what is the culture of the company? What
behavior or achievements are rewarded?
Contd.
Style - what is the management style? How do things get done
round here?
Staff - what are the people like? What is their educational or
business background? What is likely to motivate them?
Systems - what formal systems are in place that may help or
hinder implementation? (these could be reward systems,
monitoring systems, customer service systems?) What about
the informal systems?
Structure - what structures are in place that may help (or
hinder) implementation? Is there a flat management structure?
Are there (for example) project management teams, or is the
organization structured along purely functional lines?
Stage eight: Monitoring market performance
Ideally a marketing plan should also include performance
targets in terms of sales and contribution, customer
satisfaction, or any other measures deemed appropriate.
There is a trend towards the use of non-financial measures in
monitoring company performance.

The information needed for such measurements is often

difficult to obtain, but as feedback mechanisms showing
whether or not a strategy is being successfully implemented,
they may be more useful than traditional quantitative measures.

the learning guide on performance management has more

information about the balanced scorecard approach.