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Marketing Strategy

Approach and Concept

Marketing is far more than just selling, although higher sales are obviously the ultimate aim. Rather, marketing is a whole collection of activities including advertising, selling and sales promotion, marketing research, introduction of new products, pricing, packaging, distribution and after sales service.

Approaches to Marketing
One approach to marketing is to regard it as the process of finding customers for goods which the firm has already decided to supply. In this case there is much emphasis on face to face customer contact, price cutting, heavy advertising and sales promotions. It might be assumed that customers will always want to purchase well-constructed items that are made available to them at low cost: that all a firm needs to do is offer for sale high quality, sound value product with many attractive features, provide effective after-sales service, and then the goods will ‘sell themselves’.

The Marketing Concept
Alternatively, the firm might seek to evaluate market opportunities before production, assess potential demand for the good, determine the product characteristics desired by consumers, predict the prices consumers are willing to play, and then supply goods corresponding to the needs and wants of target markets more effectively than competitors, business adopting the latter approach are said to apply the marketing concept.
Adherence to the marketing concept means the firm conceives and develops product that satisfy consumer wants. Note however that:
  • consumers demand can be and frequently is created and manipulated through advertising campaigns
  • unquestioning adoption of the concept could lead to the productions of items that are highly attractive to consumers but which nevertheless are expensive to supply and thus generate negligible profit.
Practical application of the marketing concept implies the full integration of marketing with other business activities (design, production, costing, transport, and distribution, corporate strategy and planning) so that the marketing department assumes extraordinary importance within the firm. Numerous conflicts with other functions arise from situation.


The Marketing Mix

In 1965 Professor N. H. Borden coined the phrase ‘marketing mix’ to describe the combination of marketing element used in given set of circumstances. Appropriate mixes vary depending on the firm and industry, and over time. Professor E. J. McCarty subsequently summarized the
notion under four headings (known as the ‘four Ps’ of marketing), as follows:
·         Promotion – including advertising, merchandising, public relations, and the utilization of sales people.
·         Product – design and quality of output, assessment of consumer needs choice of which products to offer for sale, after sale service.
·         Price – choice of pricing strategy, prediction of competitors’ responses to changes in the supplying firm’s prices.
·            Place – selection of distribution channels, transport arrangements.

Marketing is the primary interface between the firm and its customers, guiding resources towards appropriate product offers and facilitating the satisfaction of customer requirements. Selection of the particular mix to be used forms the basis of the firm’s marketing strategy. Examples of marketing strategy are:
  • developing new product for existing markets
  • deeper penetration of existing markets
  • entering new markets for existing product
  • attacking competitors head-on (rather than following competitors’ norms and behavior)
  • serving particular market niches

Marketing Myopia
In 1960 Theodore Levitt published in the Harvard Business Review an article entitled ‘Marketing Myopia’ in which he argued that firms should adopt broad industry orientations rather than focusing their attentions on narrowly defined product of technologies. Thus a railway company should regard itself as being in the transportation business, oil companies as in energy business, and so on. This has many implications for corporate strategy, particularly in relation to the question of diversification. Problems with Levitt’s approach are that:
  • whereas it extends the vocabulary used to describe a business’s activities, it does not necessarily alter the things the firm actually does
  • often it is easy to define a market opportunity in a widely defined industry sector, but extremely difficult (perhaps impossible) to exploit it in practice.

Market Segmentation

The term ‘market segmentation’ describes the breaking down of a market into self-contained and relatively homogeneous sub-groups of customers, each with its own special requirements and characteristics. Products and advertising message can then be altered to make them appeal to particular segments.
Markets may be segmented with respect to customers’ location, ages, incomes, social class, or other demographic variables, or according to consumer lifestyle, attitudes, interests and opinions as they affect purchasing behavior.
It does seem that many consumers buy goods that fit in with a chosen lifestyle (healthy, sophisticated, rugged, etc.) and with their perceptions of what they ought to purchase in order to pursue that lifestyle. Once the lifestyle to which potential consumers aspire is identified, advertising message can be modified in appropriate ways.

Differentiated versus undifferentiated marketing strategies
A differentiated marketing strategy requires the firm to modify its products for various market segments and to operate in all sectors. Production and promotion costs are normally higher when this approach is followed. Concentration strategies involve focusing all attention on one or just a few market segments.
Undifferentiated marketing means that the firm offers exactly the same product using identical promotional images and methods in a wide range of markets. Differences in market segments are ignored. Products are designed and advertised in order to appeal to the widest possible range of consumers.

Positioning

The term ‘market position’ describes how a product is perceived and evaluated by consumers in comparison with the products of competing firms. As a management process, positioning means finding out how customers think about the firm’s products, with a view either to modifying the product (plus associated advertising and other publicity) to make it fit in with these perceptions, or to changing the product’s position in consumers’ minds. Positions depend on the nature of the product, competing products, and on how consumers see themselves (the lifestyle to which they aspire, role models, etc.). A great deal depends on the decision where to try to position a brand relative to competitors’ outputs.
The positioning statement determines the target market groups to be contacted, the creative strategy that will underlie the campaign and the cost of the firm’s advertising effort. Firms operating in several different foreign markets need to decide whether to locate their products in similar or disparate positions in each country. Factors influencing the choice should include the following:
  • the scope of the product’s appeal: whether it sells to a broad cross-section of consumers (in relation to their ages, sex, income level, lifestyle, etc.) or only within small market niches
  • special advantages the advertised brand has to offer
  •  the extent to which a product’s selling points are perceived similarly in different nations
  •  whether the item fulfils the same consumer need in each market
  • the degree of direct and immediate substitutability between the advertised output and locally supplied brands (if this is high the appropriate position for the product should be self evident)
  •  whether the brand name and or product features need to be altered for use in different markets.
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