Marketing Strategy

University Assessment MMS(Marketing) SEM-III

SYLLABUS
Marketing strategy Overview Pillars of Marketing STPD strategies Market situation strategy - Leaders, challengers, followers, nichers Competition analysis Porter's 5 forces model for competitive environment, Benchmarking exercise, understanding competitive moves and postures Sustainable competitive advantage Porter's generic strategies Portfolio models BCG and GE McKinsey matrix New product strategies Innovation, Market entry, Product line extension Communications strategy Managing communications mix for products, brands Advertising and sales promotion strategy - campaigns Brand building FMCG, Consumer durables & Services cases Distribution strategy Designing of channel systems, Managing multichannel systems Pricing strategy Value pricing, Optimisation of pricing Marketing Planning - Introduction, growth and mature markets, Pruning of products

Reference Books
Marketing Strategy Boyd, Walker & Larreche Marketing Strategy- Stephen Schnaars Strategic Market Management- David Aaker

Strategic marketing texts & cases Cravens

Marketing Strategy An Overview

What is strategy?
"Strategy is the direction and scope of an organization over the long-term: Which achieves advantage for the organisation through its configuration of resources within a challenging environment, To meet the needs of markets and to fulfill stakeholder expectations".

In other words, strategy is about:

Where is the business trying to get to in the long-term (direction) Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope) How can the business perform better than the competition in those markets? (advantage)? What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)? What external, environmental factors affect the businesses' ability to compete? (environment)? What are the values and expectations of those who have power in and around the business? (stakeholders)

STRATEGY V/S TACTICS

Strategy without tactics is the slowest route to victory Tactics without strategy is the noise before the defeat (Sun Tzu, The Art of War) Strategy: the broad approach to achievement of objectives over the long term Tactics: detailed filling-in of measures designed to contribute to the strategy Designed to achieve short term goals

Strategy
The annual business plan specifies actions needed to implement the strategy Strategy is the broad approach to the achievement of objectives It starts with the identification and evaluation of strategic objectives And then summarizes how to fulfill the objectives Strategic options can be analyzed by using Ansoffs matrix and Porters generic strategies

Tactics
Tactics are designed for the short term Tactics are the details within the overall the strategy The details include what, where and how activities will take place to accomplish a goal

LEVELS OF STRATEGY
Organizations have to formulate strategies at three major levels: Corporate, Business and Functional.

Corporate Strategy
Determines the business or businesses in which the firm will or should compete and how it will fundamentally conduct the business or businesses. Corporate strategy answers these questions: Does the organization have a strategic advantage? Does the company want to compete or find a niche? Does the company seek to concentrate on one product or product line, or on multiple products or products line? Will the corporation be innovative? Does the company want or need to grow, stabilize, reduce its investment, turn company fortunes around, or defend itself against a takeover?

Business (SBU) Strategy:

Answers the question, how do we compete in this business? Once the organization has determined what business it wants to be in and how it will conduct each business that is once it has formulated its corporate strategy, then it must determine how it will compete each businessits business strategy.

Functional level strategies

Supports other strategies and answers the question, How do we obtain the most effective and efficient use of our resources?
Economic Functional strategies
Marketing Operations-production or service generation Finance Human Resource management Information Systems/Research and Development/Other significant areas

Contents:
Section 1 : Market Scope Strategy Section 2 : Market Entry Strategy Section 3 : Product Strategy Section 4 : Promotion Strategy Section 5 : Distribution Strategy Section 6 : Pricing Strategy

Section 1 Market Scope Strategy

Single Market Strategy Multi Market Strategy Total Market Strategy

Single Market Strategy MARKET SCOPE STRATEGY Multi Market Strategy Total Market Strategy

Single Market Strategy

Concentration of efforts in a single segment. Requirements: Serve the market wholeheartedly despite initial difficulties Avoid competition with established firms.

Multi Market Strategy

Serving several distinct markets. Requirements: Careful selection of segments to serve Avoid confrontation with companies serving entire market.

Total Market Strategy

Serving the entire spectrum of the market by selling differentiated products to different segments in the market. Requirements: Employ different combinations of price, product, promotion, and distribution strategies in different segments Top management commitment to embrace entire market Strong financial position.

Section 2 Market Entry Strategy

First In Strategy Early Entry Strategy Laggard Entry Strategy

Market Entry Strategy

First In Strategy

Early Entry Strategy

Laggard Entry Strategy

First In Strategy
Entering the market before all others. Requirements: Willingness and ability to take risks Technological competence Strive to stay ahead Heavy promotion Create primary demand Carefully evaluate strengths

Early Entry Strategy

Entering the market in quick succession after the leader. Requirements: Superior marketing strategy Ample resources Strong commitment to challenge market leader.

Laggard Entry Strategy

Entering the market toward tail end of growth phase or during maturity phase. Two modes of entry are feasible: Imitator - Entering market with me-too product (b) Initiator Initiator - Entering market with unconventional marketing strategies. Requirements-Imitator Market research ability Production capability . Requirements-Initiator Market research ability, Ability to generate creative marketing strategies

Section 3 Product Strategy

Product Positioning Strategy Product Repositioning Strategy Product Scope Strategy Product Design Strategy New Product Strategy

Product Strategy

Product Positioning Strategy

Product Repositioning Strategy

Product Scope Strategy

Product Design Strategy

New Product Strategy

Product Positioning Strategy

Placing a brand in that part of the market where it will have a favorable reception compared with competing brands. Requirements: Successful management of a single brand requires positioning the brand in the market so that it can stand competition from the toughest rival and maintaining its unique position by creating the aura of a distinctive product.

Product Positioning Strategy

Successful management of multiple brands requires careful positioning in the market so that multiple brands do not compete with nor cannibalize each other

Product Repositioning Strategy

Reviewing the current positioning of the product and its marketing mix and seeking a new position for it that seems more appropriate.

Product Repositioning Strategy

Requirements: If this strategy is directed toward existing customers , repositioning is sought through promotion of more varied uses of the product If the business unit wants to reach new users , this strategy requires that the product be presented with a different twist to the people who have not been favorably inclined toward it. In doing so, care should be taken to see that, in the process of enticing new customers, current ones are not alienated

Product Repositioning Strategy

If this strategy aims at presenting new uses of the product , it requires searching for latent uses of the product, if any. Although all products may not have latent uses, there are products that may be used for purposes not originally intended.

Product Scope Strategy

The product-scope strategy deals with the perspectives of the product mix of a company. The company may adopt a single- product strategy, a multiple- product strategy, or a system-of- products strategy.

Product Scope Strategy

Requirements: Single product company must stay up-to-date on the product and even become the technology leader to avoid obsolescence Multiple products Must complement one another in a portfolio of products System of products : company must have a close understanding of customer needs and uses of the products

Product Design Strategy

The product-design strategy deals with the degree of standardization of a product. The company has a choice among the following strategic options: Standard product, Customized product, and Standard product with modifications.

Product Design Strategy

Objectives: Standard product to increase economies of scale of the company Customized product : to compete against mass producers of standardized products through product-design flexibility Standard product with modifications : to combine the benefits of the two previous strategies.

New Product Strategy

A set of operations that introduces within the business A product new to its previous line of products on the market , A product that provides a new type of satisfaction. Three alternatives emerge from the above : Product improvement/modification , Product imitation , and Product innovation.

New Product Strategy

Requirements: A new-product strategy is difficult to implement if a new product development system does not exist within a company

New Product Strategy

Five components of this system should be assessed: Corporate aspirations toward new products Organizational openness to creativity Environmental favor toward creativity Screening method for new ideas, and Evaluation process.

Section 4 Promotion Strategy

Promotion Mix Strategy Media Selection Strategy Advertising Copy Strategy

Promotion Mix Strategy Promotion Strategy Media Selection Strategy

Advertising Copy Strategy

Promotion Mix Strategy

Determination of a judicious mix of different types of promotion. Requirements : Product factors: Nature of product Durable versus nondurable Perceived risk Typical purchase amount

Promotion Mix Strategy

Market factors

Customers factors

Budget factors

Marketing mix factors

Promotion Mix Strategy

Market factors: Position in the life cycle, Market share, Industry concentra-tion, Intensity of competition, and Demand perspectives Customers factors: Household versus business customers, Number of customers,and Concentration of customers

Promotion Mix Strategy

Budget factors: Financial resources of the organization and Traditional promotional perspectives Marketing mix factors: Relative price/relative quality, Distribution strategy, Brand lifecycle, and Geographic scope of the market

Media Selection Strategy

Choosing the channels (newspapers, magazines, television, radio, outdoor advertising, transit advertising, and direct mail) through which messages concerning a product/service are transmitted to the targets.

Media Selection Strategy

Requirements: Relate media- selection objectives to product/market objectives Media chosen should have a unique way of promoting the business Media should be measure- minded not only in frequency, in timing, and in reaching the target audience but also in evaluating the quality of the audience

Media Selection Strategy

Base media selection on factual not artificial grounds, Media plan should be optimistic in that it takes advantage of the lessons learned from experience Seek information on customer profiles and audience characteristics.

Advertising Copy Strategy

Designing the content of an advertisement. Objective: To transmit a particular product/service message to a particular target.

Advertising Copy Strategy

Requirements: Eliminate "noise" for a clear transmission of message Consider importance of : Source credibility Balance of argument Message repetition Rational versus emotional appeals Humor appeals Presentation of model's eyes in pictorial ads Comparison advertising.

Section 5 Distribution Strategy

Distribution Scope Strategy Multiple Channel Strategy

Distribution Strategy

Distribution Scope Strategy

Multiple Channel Strategy

Distribution Scope Strategy

Establishing the scope of distribution, that is, the target customers. Choices are Exclusive distribution (one retailer is granted sole rights in serving a given area), Intensive distribution (a product is made available at all possible retail outlets), and Selective distribution (many but not all retail outlets in a given area distribute a product).

Exclusive distribution Distribution Scope Strategy Intensive distribution Selective distribution

Distribution Scope Strategy

Requirements: Assessment of : Customer buying habits gross margin/ turnover rate Capability of dealer to provide service carry full product line Product styling

Multiple Channel Strategy

Employing two or more different channels for distribution of goods and services. Multiple-channel distribution is of two basic types : Complementary (each channel handles a different non-competing product or market segment) and Competitive (two different and competing channels sell the same product).

Multiple Channel Strategy

Requirements: Market segmentation, Cost/benefit analysis. Use of complementary channels prompted by Geographic considerations, Volume of business, Need to distribute non-competing items, and Saturation of traditional distribution channels. Use of competitive channels can be a response to environmental changes.

Section 6 Pricing Strategy

Pricing Strategies for New Products Pricing Strategies for Established Products Price Flexibility Strategy Price Leadership Strategy

Pricing Strategy

Pricing Strategies for New Products

Pricing Strategies for Established Products

Price Flexibility Strategy

Price Leadership Strategy

Pricing for New Products

Skimming Pricing Strategy Penetration Pricing Strategy

Skimming Pricing Strategy

Pricing for New Products Penetration Pricing Strategy

Skimming Pricing Strategy

Setting a relatively high price during the initial stage of a product's life. Objectives: To serve customers who are not price conscious while the market is at the upper end of the demand curve and competition has not yet entered the market

Skimming Pricing Strategy

To recover a significant portion of promotional and research and development costs through a high margin

Skimming Pricing Strategy

Requirements: Heavy promotional expenditure to introduce product, educate consumers, and induce early buying Relatively inelastic demand at the upper end of the demand curve Lack of direct competition and substitutes.

Penetration Pricing Strategy

Setting a relatively low price during the initial stages of a product's life. Objective: To discourage competition from entering the market by quickly taking a large market share and by gaining a cost advantage through realizing economies of scale

Penetration Pricing Strategy

Requirements: Product must appeal to a market large enough to support the cost advantage Demand must be highly elastic in order for the firm to guard its cost advantage.

Pricing for Established Products

Maintaining the Price Reducing the Price Increasing the Price

Maintaining the Price Pricing for Established Products Reducing the Price

Increasing the Price

Maintaining the Price

Objectives: To maintain position in the marketplace (i.e., market share, profitability, etc.) To enhance public image.

Maintaining the Price

Requirements: Firm's served market is not significantly affected by changes in the environment Uncertainty exists concerning the need for or result of a price change Firm's public image could be enhanced by responding to government requests or public opinion to maintain price.

Reducing the Price

Objectives: To act defensively and cut price to meet the competition To act offensively and attempt to beat the competition To respond to a customer need created by a change in the environment.

Reducing the Price

Requirements: Firm must be financially and competitively strong to fight in a price war if that becomes necessary Must have a good understanding of the demand function of its product

Increasing the Price

Objectives: To maintain profitability during an inflationary period To take advantage of product differences, real or perceived To segment the current served market.

Increasing the Price

Requirements: Relatively low price elasticity but relatively high elasticity with respect to some other factor such as quality or distribution, Reinforcement from other ingredients of the marketing mix

Pricing Flexibility Strategy

One Price Strategy Flexible Pricing Strategy

One Price Strategy

Charging the same price to all customers under similar conditions and for the same quantities. Objectives: To simplify pricing decisions To maintain goodwill among customers

One Price Strategy

Requirements: Detailed analysis of the firm's position and cost structure as compared with the rest of the industry Information concerning the cost variability of offering the same price to everyone

One Price Strategy

Knowledge of the economies of scale available to the firm Information on competitive prices; information on the price that customers are ready to pay

Flexible Pricing Strategy

Charging different prices to different customers for the same product and quantity. Objective: To maximize short-term profits and build traffic by allowing upward and downward adjustments in price depending on competitive conditions and how much the customer is willing to pay for the product.

Flexible Pricing Strategy

Requirements: Have the information needed to implement the strategy. Usually this strategy is implemented in one of four ways: By market By product By timing By technology

Flexible Pricing Strategy

Other requirements include : A customer-value analysis of the product, An emphasis on profit margin rather than just volume, and A record of competitive reactions to price moves in the past.

Price Leadership Strategy

This strategy is used by the leading firm in an industry in making major pricing moves, which are followed by other firms in the industry.

Price Leadership Strategy

Objective: To gain control of pricing decisions within an industry in order to support the leading firm's own marketing strategy (i.e., create barriers to entry, increase profit margin, etc.).

Price Leadership Strategy

Requirements: An oligopolistic situation An industry in which all firms are affected by the same price variables (i.e., cost, competition, demand), An industry in which all firms have common pricing objectives

Warfare based Strategies

This scheme draws parallels between marketing strategies and military strategies. There are many types of marketing warfare strategies, but they can be grouped into: Offensive Marketing Warfare Strategies Defensive Marketing Warfare Strategies Flanking Marketing Warfare Strategies Guerrilla Marketing Warfare Strategies

COMPETITIVE MARKETING STRATEGIES

Developed from customers point of view rather than competitors. They have roots of Military strategy. The aim of military strategies is to exert well over the enemy. Kotler has identified Five offensive and Five defensive competitive strategies named after military terms.

COMPETITIVE MARKETING STRATEGY

OFFENSIVE

DEFENSIVE

FIVE OFFENSIVE STRATEGIES

Frontal attack Flank attack Encirclement attack Bypass attack Guerrilla Warfare

 Frontal attack: attacking strengths rather than weaknesses. In a pure frontal attack, the attacker matches its opponents product, advertising, price and distribution. Example: Razor-blade manufacturer in Brazil attacked Gillette the market leader. Flank attack: You are engaging in competitors market where they are weak or no presence at all. Flanking is in the best tradition of modern marketing, which holds that the purpose of marketing is to discover needs and satisfy them.

FIVE OFFENSIVE STRATEGIES (General attack strategy for challenger).

 Encirclement attack: This is an attempt to capture a wide slice of the enemys territory through a blitz. It involves launching a grand offensive on several fronts. Example: Seiko Company who has 400 watch types and 2300 models worldwide. Bypass attack: No confrontation with competitors but moving into new uncontested markets and product. This is most indirect assault strategy. Diversifying into unrelated products Diversifying into new geographical markets Guerrilla Warfare: small attack in different market segment. Intermittent attacks to harass and demoralize the opponent. They use both conventional and unconventional means of attack.

FIVE DEFENSIVE STRATEGIES

Position defense Mobile defense Flank position defense Preemptive defense Counteroffensive defense

FIVE DEFENSIVE STRATEGIES (Leader defending market share)

Position defense: retaining market share. Coca Cola Mobile defense: It spreads through market broadening and market diversification. Flank position defense: In this position you should occupy position of potential feature. Create position for counterattack. Preemptive defense: Take the imitative and move the first into the market. Attack before the enemy starts its offense. Counteroffensive defense: If the competitors reduce their price you should do this.