Importance of Marketing

Marketing is an integral component of any

organizationss profitability.
organization
profitability
The sole purpose of marketing is therefore,
to get more people to buy more of your
product, more often, for more money.

Importance of Strategy
Strategy is Essential for Survival and Success of an Organization

Strategy

T
Tactics

Efficient

Inefficient

Ineffective

Effective

Die
(slowly)

Thrive

Die
(quickly)

Survive

Dimensions of Strategy
Successful companies either have a Productivity advantage or they have
Value advantage or combination of both.

Real Unit
Cost

High
Low

Value Advantage

The productivity advantage gives a lower-cost profile and the value

g ggives the pproduct a differential pplus over competition.
p
advantage

Niche
Strategy

Commodity
Marketing

Low

Cumulative output

Cost & Value

Leadership

Cost
Leadership
High

Productivity Advantage

Strategic Direction

The Experience Curve

Characteristics of Strategy
CLEARLY DEFINES
TARGET CUSTOMERS
AND THEIR NEEDS
INTERNALLY
CONSISTENT

CREATES A
COMPETITIVE
ADVANTAGE

STRATEGY
DERIVED
TO ACHIEVE
PRODUCT MARKET
OBJECTIVES

INCURS
ACCEPTABLE
RISK
RESOURCE AND
MANAGERIALLY
SUPPORTABLE

Marketing Strategy
A process of achieving overall corporate objectives through proper
identification of market opportunities and effective deployment of
companys marketing assets.
Marketing Assets are defined as those assets of company that contribute
directly or indirectly to profitable sales, some of these are:

Brand Name
Distribution Network
Customer Loyalty
Market Share
Supplier Relationship
Customer Relationship
Technology Base

Strategic Marketing Planning

ANALYSIS:

Where are we now?

PLANNING:

Where do we want to be?

IMPLEMENTATION:

CONTROL:

How are we going to get there?

How do we ensure arrival?

Strategy Development Process

Corporate Mission
What Businesses are we in?
What businesses can we be in?
What businesses should we be in?

Marketing Strategy
Market Penetration
Market Development
Product Development
Diversification

Strategic Direction
Cost Leadership
Differentiation
Focus

Market Positioning
Segmentation Strategy
Marketing Mix Strategy

Corporate Mission Statement

A mission statement should:

be specific to have an impact on every individual in the business

be focused on customer need satisfaction
reflect the distinctive competence of the business
recognize opportunities & threats in competitive environment
be realistic and attainable
be flexible

Market
M
Attractiveneess

Strategic Window

Strategy

Business Position

Marketing Assets
Marketing Knowledge (skills, systems and information)
p
prices
p
and can
Brands ((strongg brands often earn premium
be enduring cash generators)
Customer Loyalty (loyal customers buy more, are cheaper
to serve, are less price sensitive and refer new customers)
Strategic Relationships (channel partners provide access to
new products and markets)

Investment in Marketing Assets

Whilst accountants do not measure intangible assets, the discrepancy
between market and book values shows that investors do.
Expenditures to develop marketing assets make sense if the sum of the
discounted cash flow they generate is positive.

Marketing Assets in Balance Sheet

Assets
- Land
- Buildings
- Plant
- Vehicles
etc.

Rs. 200 million

Marketing Assets
Brand Name
Distribution Network
Customer Loyalty
Market Share
Supplier Relationship
Customer Relationship
Technology Base

Liabilities
- Shares
- Loans
- Overdrafts
etc.

Rs. 200 million

Assets
- Land
L d
- Buildings
- Plant
- Vehicles
- Goodwill

Rs. 1000 million

Assets
- Land
- Buildings
- Plant
- Vehicles
etc.

Rs. 200 million

Liabilities
- Shares
- Loans
- Overdrafts
etc.

Rs. 1000 million

Liabilities
- Shares
- Loans
- Overdrafts
etc.

Rs. 1000 million

Identifying Opportunities
Market
Analysis
Customer
Analysis

Competitive
Analysis

Environmental
Analysis

Long-term trends, size, etc

.
.

Segments, buying processes, etc

Relative strengths & weaknesses, etc

Opportunities & treats, etc

.
Identify Market
Opportunities
Asset Base Appraisal

Market Analysis
Size (Value, Volume): What is the market we serve?
Growth: Annual growth rate of the market, past history and future
projections.
projections
Diversity: Is the market served by few or many offerings?
Is the market fragmented?
Channels: What is the upstream and downstream channel of
distribution and supply? Where does the relative power lie?
What is the strength of buyers and the strength of customers?

Customer Analysis
Segmentation: Most markets are subdivided into smaller sectors based on
differences between customers, either by their characteristics or by the way
p
to market stimuli.
theyy respond
Buyer behaviour: Who are the customers and who are the consumers?
What are the important buying criteria? Who makes the decisions? What are
the primary motivations for purchase? What are the principal benefits sought
from the product?
Sensitivity: How does the market react to price, to promotion, to service, to
product quality etc. This information is necessary to understand the customer
sensitivity to the individual elements of the marketing mix.

Competitive Analysis
Barriers to entry
economies of scale
product differentiation
capital requirement
switching costs
access to distribution channels
cost disadvantages addition to scale
government policy
entry deterring price
experience

Potential
Entrants
Threat of new entrants

Industry Competitors

Suppliers
Bargaining Power
Powerful if
few suppliers
no substitutes
industry not important customer
of supplier group
supplier groups products are
differentiated
threat of forward integration

Intense rivalry if:

numerous or similar sized competitors
slow industry growth rate
high fixed costs
lack of differentiation
diverse nature of competitors
high strategic stakes
high exit barriers

Substitutes

Buyers
Bargaining Power
Powerful if
large proportion of sellers sales
large proportion of buyers costs
undifferentiated pproducts
low buyer switching costs
threat of backward integration
sellers product not important to
quality of buyers product.

Threat of substitute
Products/Services

Environmental Analysis
Government: The legislative and regulatory framework within which
the company operates affects most marketing decisions either directly or indirectly.
Price controls, quality standards, advertising standards, competition policy will
affect the business.
Economy: Every business will have linkages with broader macro-economy.
Interest rates impact not only costs but customers ability to buy. Exchange rate
fluctuations have similar impact. Inflation, unemployment, taxation etc. are part
of macroeconomic environment and must be considered while strategy development.
Society: Consumer movements on ecology, pollution, quality and service issues have
considerable impact on the companys business strategy and therefore must not
be ignored.
Technology: Rapid changes in technology is leading to shorter product life-cycles
and higher risks of failure. It is important to anticipate technology changes
to suitably modify companys marketing strategy.

Framework of Marketing-Conceptions
Nature of the three levels:

Philosophy
Objectives

Structure

Process

Strategies

Increasing
operational
meaning

Mix

Marketing Conceptions
Conception Level

Visual Equivalent

1. Marketing-Objectives

Place: Where do we want to go?

2. Marketing-Strategies

Way: How do we get there?

3. Marketing-Mix

Transport function: What do we have to do?

Environmental & Company Analysis

Analysis of
Environment

Company
Analysis
Where are we now?

Concentration

Concentration

Merging

Crystallization Point
Objectives

Strategies

Where do we want to go?

How do we get there?
What do we have to do?

Mix

10

Marketing Conception Analysis Steps

1. Situation analysis (internal external)
2. Future developments the analysis of the company's
environment
3. Chance-risk-analysis :end of the strategic analyzing
process, point of crystallization

11