Marketing Strategy

Marketing strategy as a key part of the general corporate strategy

A marketing strategy is most effective when it is an integral component of corporate strategy, defining how the organization will engage customers, prospects and the competition in the market arena for success. It is partially derived from broader corporate strategies, corporate missions, and corporate goals. They should flow from the firm's mission statement. They are also influenced by a range of micro environmental factors.

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Marketing strategy and sectorial tactics and actions

A marketing strategy also serves as the foundation of a marketing plan. A marketing plan contains a set of specific actions required to successfully implement a marketing strategy. For example: "Use a low cost product to attract consumers. Once our organization, via our low cost product, has established a relationship with consumers, our organization will sell additional, higher-margin products and services that enhance the consumer's interaction with the low-cost product or service."

A strategy consist of well thought out series of tactics. While it is possible to write a tactical marketing plan without a sound, well-considered strategy, it is not recommended. Without a sound marketing strategy, a marketing plan has no foundation. Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives[3]. It is important that these objectives have measurable results.

A good marketing strategy should integrate an organization's marketing goals, policies, and action sequences (tactics) into a cohesive whole. Many companies cascade a strategy throughout an organization, by creating strategy tactics that then become strategy goals for the next level or group. Each group is expected to take that strategy goal and develop a set of tactics to achieve that goal. This is why it is important to make each strategy goal measurable.

Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned

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Types of marketing strategies

Every marketing strategy is unique, but if we abstract from the individualizing details, each can be reduced into a generic marketing strategy. There are a number of ways of categorizing these generic strategies. A brief description of the most common categorizing schemes is presented below:

1. Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are three types of market dominance strategies:
   Leader
   Challenger
   Follower

2. Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firm’s sustainable competitive advantage.
   Cost leadership
   Product differentiation
   Market segmentation

3. Innovation strategies - This deals with the firm's rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types:
   Pioneers
   Close followers
   Late followers

4. Growth strategies - In this scheme we ask the question, “How should the firm grow?”. There are a number of different ways of answering that question, but the most common gives four answers:
   Horizontal integration
   Vertical integration
   Diversification
   Intensification

5. A more detailed schemes uses the categories:
   Prospector
   Analyzer
   Defender
   Reactor

6. Marketing warfare strategies|Warfare based strategies- This scheme draws parallels between marketing strategies and military strategies.

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Strategic Marketing Models

Marketing participants often employ strategic models and tools to analyze marketing decisions. When beginning a strategic analysis, the 3C's can be employed to get a broad understanding of the strategic environment. An Ansoff Matrix is also often used to convey an organization's strategic positioning of their marketing mix. The 4P's can then be utilized to form a marketing plan to pursue a defined strategy.

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Marketing Practice

In practice, as opposed to theory, research has indicated that the outstanding problems facing marketers lie in the use of specific functions. Most senior managements have committed to the philosophy, even though their junior managers may be cynical about the degree of that commitment. Unfortunately, there is little evidence to show that this new-found belief has led to positive action. Indeed, if we look at the marketing activities they do subscribe to, using the 4Ps framework say, there is little evidence that marketing practice (as opposed to the theory) has been widely embraced. In particular, pricing is largely on a cost-plus or competitive basis, promotional budgets are small (and spent more on sales promotion than advertising or PR), 'place' is - in any case - not relevant, and marketing research is almost all second-hand.

 

Coarse Marketing
The marketer, in real life, does not face each decision with a copy of a text-book in his or her hand - ready to work through the various lessons. The marketer starts with a quite specific environment; which will immediately limit the range of factors to be explored to a small subset of the literally hundreds explored in this book. To the perceptive marketer the range of options to be explored will usually be obvious. Beyond this, the position will be further constrained by the resources available to deal with them.For instance, theory always says that the first step is marketing research, but if your competitor has just made a major change in strategy you may have just days to react - where research may take months.

Real-life marketing primarily revolves around the application of a great deal of common-sense; dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven.

Thus, for example, new products will emerge from irrational processes and the rational development process may be used (if at all) to screen out the worst non-runners. The design of the advertising, and the packaging, will be the output of the creative minds employed; which management will then screen, often by 'gut-reaction', to ensure that it is reasonable.

Indeed, the most successful marketer is often the one who trains his or her 'gut-reaction' to simulate that of the average customer!

For most of his or her time the marketing manager is likely to be using his or her considerable intelligence to analyze and handle the complex, and unique, situations being faced; without easy reference to theory. This will often be 'flying by the seat of the pants', or 'gut-reaction'; where the overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing employed!

This, almost instinctive management, is what is sometimes called 'coarse marketing'; to distinguish it from the refined, aesthetically pleasing, form favored by the theorists. It is often relatively crude and would, if given in answer to a business school examination, be judged a failure of marketing. On the other hand, it is the real-life world of most marketing!

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Example of marketing strategies

Product

   product mix (lining) vs. product bundling
   product strengths and weaknesses
   perceptual mapping
   Product Life Cycle Management (PLM) and New Product Development (NPD)
   Brand name, brand image, and brand equity
   the augmented product
   product portfolio analysis
   B.C.G. Analysis
   Contribution margin analysis
   G.E. Multi Factor analysis
   Quality Function Deployment

 

Market share objectives

   by products,
   by customer segments,
   by geographical markets

 

Price

   pricing objectives
   pricing method (eg.: cost plus, demand based, or competitor indexing)
   pricing strategy (eg.: skimming, or penetration)
   discounts and allowances
   price elasticity and customer sensitivity
   price zoning
   break even analysis at various prices

 

Promotion

   promotional goals
   promotional mix
   advertising reach, frequency, flights, theme, and media
   sales force requirements, techniques, and management
   sales promotion
   publicity and public relations
   electronic promotion (eg.: Web, or telephone)

 

Distribution

   geographical coverage
   distribution channels
   physical distribution and logistics
   electronic distribution

 

Market Analysis

   market definition
   market size
   market segmentation
   industry structure and strategic groupings
   Porter 5 forces analysis
   competition and market share
   competitors' strengths and weaknesses
   market trends

 

Consumer Analysis

   nature of the buying decision
   participants
   demographics
   psychographics
   buyer motivation and expectations
   loyalty segments