Differentiation Focus Strategy

Coursework

Marketing strategies

 

 

Instrusctor: Ramiz Akhmedov

Prepared by: Assel Magizova

Group: Finance 2 B

 

Almaty 2010
Contents

Introduction

1.Marketing strategy

1.1. Key part of the general corporate strategy.

1.2. Marketing mix

1.3. 4 P’s

2. Tactics and actions

2.1. Advertising

2.2. Channel marketing

2.3. Internet marketing

2.4. Promotion

2.5. Public relations

3.Types of strategies

3.1.Porter generic strategies

3.2.Real-life marketing

3.3.Strategic models

3.4. Marketing plan and it’sobjectives

Conclusion

References

Introduction

Marketing strategies explain how the marketing function fits in with the overall strategy for a business. Examples of marketing strategies could be. Once a strategy has been identified, then the business must develop an action to turn the strategy into reality. The starting point for this plan is the setting of marketing objectives.

Marketing objectives are the specific targets for marketing set by the business to achieve their corporate objectives. It is important for a business to set marketing objectives because managers can then have targets for their work. They can then measure more effectively the success or failure of their marketing strategies to achieve these objectives.

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Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal.

Key part of the general corporate strategy

Marketing strategy is a method of focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the choice of target market segments, positioning, marketing mix, and allocation of resources. It is most effective when it is an integral component of overall firm strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena corporate strategies, corporate missions, and corporate goals. As the customer constitutes the source of a company's revenue, marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement.

Marketing mix

The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients", who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried. A prominent marketer, E. Jerome McCarthy, proposed a Four P classification in 1960, which has seen wide use. The Four P's concept is explained in most marketing textbooks and classes.

Four P's

Elements of the marketing mix are often referred to as the "Four P's":

  • Product - It is not a tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are service based like the tourism industry & the hotel industry or codes-based products like cellphone load and credits. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. Packaging also needs to be taken into consideration. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market, product differentiation is required and is one of the strategies to differentiate a product from its competitors.
  • Price – The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product.
  • Place – Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.
  • Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from cinema commercials, radio and Internet adverts through print media and billboards. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product above).

Any organization, before introducing its products or services into the market; conducts a market survey. The sequence of all 'P's as above is very much important in every stage of product life cycle Introduction, Growth, Maturity and Decline.

 

Tactics and actions

A marketing strategy can serve 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 consists of a well thought out series of tactics to make a marketing plan more effective. Marketing strategies serve as the fundamental underpinning by marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results.

A marketing strategy often integrates an organization's marketing goals, policies, and action sequences (tactics) into a cohesive whole. Similarly, the various strands of the strategy , which might include advertising, channel marketing, internet marketing, promotion and public relations can be orchestrated. Many companies cascade a strategy throughout an organization, by creating strategy tactics that then become strategy goals for the next level or group. Each one 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.

Advertisingis a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideas, or services. It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These messages are usually paid for by sponsors and viewed via various media. Advertising can also serve to communicate an idea to a large number of people in an attempt to convince them to take a certain action.

Commercial advertisers often seek to generate increased consumption of their products or services through branding, which involves the repetition of an image or product name in an effort to associate related qualities with the brand in the minds of consumers. Non-commercial advertisers who spend money to advertise items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public service announcement.

Modern advertising developed with the rise of mass production in the late 19th and early 20th centuries. Mass media can be defined as any media meant to reach a mass amount of people. Different types of media can be used to deliver these messages, including traditional media such as newspapers, magazines, television, radio, outdoor or direct mail; or new media such as websites and text messages.

Channels

A number of alternate 'channels' of distribution may be available:

  • Distributor, who sells to retailers,
  • Retailer (also called dealer or reseller), who sells to end customers
  • Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alice from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. rocess of transfer the products or services from Producer to Customer or end user.

There have also been some innovations in the distribution of services. For example, there has been an increase in franchising() and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas

 

Internet marketing, also referred to as i-marketing, web-marketing, online-marketing or e-Marketing, is the marketing of products or services over the Internet.

The Internet has brought media to a global audience. The interactive nature of Internet marketing in terms of providing instant responses and eliciting responses are the unique qualities of the medium. Internet marketing is sometimes considered to be broad in scope because it not only refers to marketing on the Internet, but also includes marketing done via e-mail and wireless media. Management of digital customer data and electronic customer relationship management (ECRM) systems are also often grouped together under internet marketing.

Internet marketing ties together creative and technical aspects of the Internet, including: design, development, advertising, and sales.

Internet marketing also refers to the placement of media along many different stages of the customer engagement cycle through search engine marketing (SEM), search engine optimization (SEO), banner ads on specific websites, e-mail marketing, and Web 2.0 strategies.

Promotion is one of the four elements of marketing mix (product, price, promotion, distribution). It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision.

The following are two types of Promotion:

  • Above the line promotion: Promotion in the media (e.g. TV, radio, newspapers, Internet, Mobile Phones, and, historically, illustrated songs) in which the advertiser pays an advertising agency to place the ad
  • Below the line promotion: All other promotion. Much of this is intended to be subtle enough for the consumer to be unaware that promotion is taking place. E.g. sponsorship, product placement, endorsements, sales promotion, merchandising, direct mail, personal selling, public relations, trade shows

The specification of five elements creates a promotional mix or promotional plan. These elements are personal selling, advertising, sales promotion, direct marketing, and publicity. A promotional mix specifies how much attention to pay to each of the five subcategories, and how much money to budget for each. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image. Fundamentally, however there are three basic objectives of promotion. These are: to present information to consumers as well as others, to increase demand, to differentiate a product.

Public relations(PR) is a field concerned with maintaining a public image for businesses, non-profit organizations or high-profile people, such as celebrities and politicians.

An earlier definition of public relations, by The first World Assembly of Public Relations Associations held in Mexico City in August 1978, was "the art and social science of analyzing trends, predicting their consequences, counseling organizational leaders, and implementing planned programs of action, which will serve both the organization and the public interest."

Others define it as the practice of managing communication between an organization and its publics. Public relations provides an organization or individual exposure to their audiences using topics of public interest and news items that provide a third-party endorsement and do not direct payment. Once common activities include speaking at conferences, working with the media, crisis communications and social media engagement and employee communication.

The European view of public relations notes that besides a relational form of interactivity there is also a reflective paradigm that is concerned with publics and the public sphere; not only with relational, which can in principle be private, but also with public consequences of organizational behavior. A much broader view of neo-ubiquitous interactive communication using the Internet, as outlined by Phillips and Young in Online Public Relations Second Edition (2009), describes the form and nature of Internet-mediated public relations. It encompasses social media and other channels for communication and many platforms for communication such as personal computers (PCs), mobile phones and video game consoles with Internet access.

 

Types of strategies

There are five significant strategies to consider when planning your marketing approach. Position yourself as a market leader, challenger, follower and niche marketer or form an alliance to attack the market with increased power. Consider a mix of strategies to make the most of your strengths and take advantage of your competitors' weaknesses.

Market Leader

1. According to a white paper published by Iowa State University, maintain your position as market leader in one of three ways. First, expand the total market by increasing the total number of users. Lead the way by finding a new market or creating a new use for an old product. Look for new markets in other demographics or expand into more locations.

Second, defend your current share of the market. You can enhance your product offerings. Another option like a leader is to reduce weak products or services and build up the strongest ones.

Third, expand your market share by aggressively attacking your competitor through a variety of strategies. Offer coupons, promote sales and advertise benefits your competitor doesn't have, such as longer shop hours or more personalized service.

Market Challenger

2. If you are the challenger in the market, look for a small, unmet need that your business can fill. As an e-books reseller, you may have quite a bit of competition. As an e-books reseller who specializes in books on basketball, you have significantly fewer competitors.

Market Follower

3. As a market follower, capitalize on a market already identified and researched by your competitors. Watch your competitors for weaknesses, and then provide better solutions such as longer store hours or free training. Good examples include full-service restaurants offering take-out or delivery, interior design service included with furniture purchase or two hours of technical support included with the purchase of new software.

Market Niche

4. Becoming a niche marketer enables you to research and respond better to a smaller, fine-tuned segment. This works especially well for small companies who are nimble and able to make quick decisions in reaction to market trends. Serve the demographic of women ages 55 to 70. As a consultant, choose the niche of selling only to engineering consulting firms in the $3 to $5 million revenue range.

Alliance Marketing

5. Strengthen your marketing by partnering with a product, service or company that is compatible with, but not a competitor of, your business. Your child care center may partner with any number of after-school activities to offer an enriched experience. Talk with karate studios, dance studios and gyms. Plan your marketing strategies well and you will ensure financial success.

Marketing strategies may differ depending on the unique situation of the individual business. However there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below:

  • 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 Strategy

Businesses that want to gain a market share by being able to offer low prices while maintaining their margins use the "cost leadership" strategy. In order to do this, a business must be able to produce its product or service in a cost-efficient way. This often means outsourcing production to overseas countries--thereby paying lower worker wages--and offering a limited selection in order to make production more efficient.

Differentiation Strategy

"Differentiation" is what is referred to as a "non-price strategy." Rather than offering the cheapest product or service, a business differentiates its offerings through other means. These can include service quality, delivery speed or fashionableness, among many others. Differentiation allows businesses to demand higher prices because they are offering additional features that cost leaders don't.

Low-Cost Focus Strategy

A "focus strategy" is commonly referred to as "niche marketing." In order to follow this strategy, a business must pick a specific market segment and then direct its product/service marketing directly to it. This is an effective strategy for smaller businesses that are competing against larger companies.
The low-cost version of the focus strategy involves targeting a niche market and offering the cheapest product or service to fit that market's specific needs.

Differentiation Focus Strategy

The second version of the focus strategy is the "differentiation focus strategy." This version of the focus strategy also involves picking a specific market segment. However, instead of offering this market a product or service at the lowest price, the business offers a differentiated product. Customization is the focus of this strategy: Individual customers have products or services customized to meet their specific needs. Customization differentiates between a niche service and price.

 

· 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 such as Pioneers Close followers , and Late followers

 

· 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 like Horizontal integration, Vertical integration, Diversification Intensification.

 

Strategic models

Marketing participants often employ strategic models and tools to analyze marketing decisions. When beginning a strategic analysis, the 3Cs 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 4Ps can then be utilized to form a marketing plan to pursue a defined strategy.

There are many companies especially those in the Consumer Package Goods (CPG) market that adopt the theory of running their business centered around Consumer, Shopper & Retailer needs. Their Marketing departments spend quality time looking for "Growth Opportunities" in their categories by identifying relevant insights (both mindsets and behaviors) on their target Consumers, Shoppers and retail partners. These Growth Opportunities emerge from changes in market trends, segment dynamics changing and also internal brand or operational business challenges. The Marketing team can then prioritize these Growth Opportunities and begin to develop strategies to exploit the opportunities that could include new or adapted products, services as well as changes to the 7Ps.

Real-life marketing

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, many 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.

For most of their time, marketing managers use intuition and experience 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.

 

Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving Competitive Advantage strengthens and positions a business better within the business environment.