A concept of Marketing Strategy

I. Differentiations a. Strategy vs Tactics i. Military Context In the military context, strategy is the science or art of military command as applied to the overall planning and conduct of large-scale combat operations. Tactics, on the other hand, is the plan of action resulting from the practice of this science. Strategy here denotes a plan for the deployment and use of military forces and material over a certain terrain to achieve certain objectives. And this so-called plan had to be based on what was known about the enemys strength and positioning, the physical characteristics of the battleground, the friendly or hostile nature of those who occupied the territory, and the strength and character of resources at the command of the military official. Even time and the ability to anticipate changes are considered. Tactics here means the expedient for achieving the goal, or a maneuver. It is the execution of the plan (or in this case the stratagem) through a series of interrelated maneuvers. These definitions, however need not apply only to the military. And so this strategy-tactics art or skill has been applied in politics, business, courtship and the like.

ii. Business Context

In business, strategy is similar in principle in the following aspects: The terrain, which under the context of the military, may or may not be the commanders choosing, is the marketplace. Or in general, it is the political, social, legal and technological environments. As the military has forces and materials to deploy and use, so does business in that the latter has resources (i.e. human, material and financial) such as personnel, factories, laboratories, transportation systems and financial assets, even goodwill.

b. Objective vs Strategy

Objective is a desired end. In other words, it is an end that can be reasonably achieved within an expected timeframe and with available resources. Objectives are a basic tools that underlying all planning and strategic activities. They serve as the basis for policy and performance appraisals. Strategy is the plan for achieving the set objective. It is a method or plan chosen to bring about a desired future, or as earlier defined, a set objective. Several levels of objectives and strategies exist in a business enterprise. They are charted out as follows: i. In the corporate level Long term: Objectives rates of long term growth return on investments Growth Profitability Cash generation goals Market share Strategies Definition of broad corporate purpose and direction Business mix Asset deployment Financial strategies

Short term (i.e. annual):

For strategies to be effective, however, they have to be communicated and implemented throughout the organization. That means operations in various departments at various levels have to create their own strategies and plans that align with, and execute, top level strategies. This is accomplished though training, policies, procedures, and implementing best practices an excellent starting point for internal control.

ii. In the division or business level

Objectives (derived from overall corporate goals) Objectives vary with respect to each divisions target growth rates, market share goals, level of profitability, expected cash generation Strategies (focus on the allocation of resources among the range of product/market opportunities) 1. m arketing 2. m anufacturing 3. research & development 4. fin ancial 5. ot hers

What divisions or business levels should be looking at in each of the functional components of strategies are:

1. Marketing strategy 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.2 In other words, these are the plans developed to address the marketing mix (i.e. product, price, promotion, and place). Questions related to marketing strategies would be: a. What market segments will we enter with what products? b. How hill they be prices, distributed and promoted? c. How will such marketing resources as sales force time, promotional funds, and managerial personnel be allocated across and within product groups?

This strategy that integrates an organization's marketing goals into a cohesive whole. Ideally drawn from market research, it focuses on the ideal product mix to achieve maximum profit potential. The marketing strategy is set out in a marketing plan.

2. Manufacturing strategy a pattern of decisions,

both structural and infrastructural, which determine the capability of a manufacturing system and specify

how it will operate to meet a set of manufacturing objectives which are consistent with overall business objectives. 3 Manufacturing objectives should be derived from business objectives, and then manufacturing policies developed to address these objectives. Manufacturing objectives cover such things as cost, quality, delivery and flexibility and usually there are trade-offs between them. Trade-off decisions are also required in a number of key areas in order to support the manufacturing objectives. The five decision areas are: 1) 2) 3) 4) 5) plant and equipment; production planning and control; labour and staffing; product design / engineering; and organisation and management.

Sample questions to ask are: a. What will the business make and what to purchase from outside suppliers? b. How will the business configure production resources of plant size, design and location? c. How will the business recruit, train and manage manufacturing personnel?

3. Research and Development strategy denotes the

businesss intention of advancement which could only be achieved through research and development. Research and development (R&D) needs to be carefully planned and managed to succeed. It is easy to waste money on developing ideas that go nowhere, but getting it right can lead to business stability, security and long-term profits. 4 To plan out the strategies in this aspect, and their positioning amid market players, questions such as follows are raised: a. Will we attempt to be a technical leader in our field or will we depend on others for new developments? b. Will we undertake basic or applied research? c. In what fields of technology will we work? d. What overall level of research and development spending will we seek to sustain? e. How will development funds be allocated among different product/market opportunities?

4. Financial strategy are practices that a firm adopts

to pursue its economic objectives. It denotes financial analysis, competitive scrutiny, corporate finance, accounting and reporting, financial controls, etc. Questions here include: a. What capital allocations will the business seek from corporate management and for what purposes? b. What amounts of available working capital will be invested in work-in-process and finished goods inventories? c. What financial terms will the business offer customers? d. What credit risks are the business prepared to take? e. How will we manage payables and cash balances?

Depending on the nature of the business, other dimensions of strategy might also be considered. II. Focusing on Marketing Strategies the marketing planning process Marketing strategy is at the heart of any overall business strategy. They serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year. Time horizons covered by the marketing plan vary by company, by industry, and by nation, however, time horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. 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: Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are four types of market dominance strategies: i. Leader ii. Challenger iii. Follower iv. Nicher
a.

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 firms sustainable competitive advantage. The generic strategy framework (porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and low-cost leadership each with a dimension of Focus-broad or narrow. i. Product differentiation (broad) ii. Cost leadership (broad) iii. Market segmentation (narrow) c. 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: i. Pioneers ii. Close followers iii. Late followers d. 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: i. Horizontal integration ii. Vertical integration iii. Diversification iv. Intensification e. A more detailed scheme uses the categories: i. Prospector ii. Analyzer iii. Defender iv. Reactor
b.

Marketing strategy involves careful scanning of the internal and external environments which are summarized in a SWOT analysis (letters a,b and c). Note, however, besides SWOT analysis, portfolio analyses such as the GE/McKinsey matrix or COPE analysis can be performed to determine the strategic focus. a. Environmental factors assessment Broad categories of relevance in environmental analysis include: 1. economic includes rates of inflation and tax levels in different countries, currency exchange rates, and price trends and supply limitations for key resources, e.g. energy.

2. demographic includes population growth rates and

composition across age groups, occupation, income levels, ethnic backgrounds, trends in the geographic distribution of population, i.e. urban-rural mix.

3. technical

include communications, information processing, transportation, health care, manufacturing, and agriculture. 4. regulatory factors in other words governments, shape market opportunities and the attractiveness of markets within countries and transnationaly. Regulation of business affects pricing, product design, plant design, location, operations, wage rates, conditions of employment, and even the number and type of competitors that will be permitted to operate within a countrys borders. b. Business strength and weaknesses evaluation What business count as strength includes customer base, breadth and quality of product lines, market shares in the segments in which it competes, manufacturing complex and cost structure, R&D capabilities, customer technical; services facilities, financial resources, reputation among customers, the respect in which it is held by competitors, and its supply and resource system. What could be sources of strength however, may also be areas of vulnerability, e.g. management skills and depth, organization and control systems, and managerial processes.

c. Product/market opportunities identification

External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. Even the analysis of stage in market growth is to be considered.

d. Product/market strategy development

Once a thorough environmental scan is complete, a strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. As noted earlier, market needs and competitive conditions vary over the stages or market growth, consequently, strategies may be conditioned to fit to: Market introductory phase Objective Create primary demand Strategy -focus on market education, communicating with potential buyers of the new end product regarding its uses and

i. rapid-growth phase

Expand primary demand

leveling-off stage

Maximize selective demand

market maturity

- become market leader (preserve and expand market share); or

- become a competitive follower (survive)

its advantages over the conventional product it is intended to replace - charge high price to customer groups for whom the product has high value -patent protection if possible - prolong buyer education particularly at the point of purchase - product differentiation -competitive pricing and consequently manufacturing cost reduction - expand distribution systems - maximize product differentiation -tailored-to-use products -ease-of-purchase -supply availability -communicate with the market -broaden sales volume - lessen prices if possible -stress service to distribution channels and user-customers -gain technical leadership - target specific market segments and concentrate on serving them well -operate on low overheads -invest in new technical developments

e. Strategic plan feasibility evaluation At this point, management attempts to measure the levels of commitment required by a product/market opportunity against estimates of potential rewards or profits. This may be done through breakeven analysis where fixed commitments, e.g. investment in R&D, production facilities and equipment, market studies, sales organizations and promotional outlays are assessed vis--vis the businesss ability to recoup them based on estimates of market size, forecasts on sales volume and calculations of the amount that each unit sold might contribute to the amortizing front-end investments. A final step in developing a marketing strategy is to create a plan to monitor progress and a set of contingencies if problems arise in the implementation of the plan. Strategic planning is an iterative process. Market analysis leads to the formulation of strategic scenarios that in turn may be tested through economic analysis. Economic analysis is then likely to lead to revisions in strategy that may in turn be tested to assess its viability given what is known about the market and competition. At higher levels, the assessment of strategic market opportunities in the light of availably resources, the businesss strengths and weaknesses, and the environmental trends lead often to recasting overall business goals and strategies. Such realignment in turn influences corporate direction. References: 1. A concept of marketing strategy, Harvard Business School 2. http://en.wikipedia.org/ 3. http://www.ifm.eng.cam.ac.uk 4. http://www.businesslink.gov.uk 5. http://www.ehow.com 6. http://www.Businessdictionary.com