MARKETING STRATEGY

Definition of Strategy
 It means planning business activities with an objective of achieving long-term goals
 Strategy is different from planning; while planning is concerned with day-to-day
activities, strategy is concerned with long-term goals
 The basic questions that a good strategy needs to answer are:
 What needs to be achieved?
 Where it needs to be achieved?
 How it needs to be achieved?
 Strategy helps a business to:
 Develop and sustain its competitive advantage
 Build a brand image
 Enhance performance
 Define market position
Create a unique selling proposition (USP
Levels of Strategy
 Strategy can be broadly classified into:
1) Corporate level strategy
(It’s an overall objective – a game plan of the Company)
2) Business level strategy
(Company’s plan of action to compete with in its industry)
3) Functional level strategy
(the focus here is on the smallest unit of a business i.e. product or market
So, What is Marketing Strategy
 It’s the process of discovering, expecting, and suiting the customer needs and at the same
time making profits.
 It is to know and understand the customer so well that the product or service fits him and
sells itselfThis involves broader activities ranging from:
 Market research
 Product development
 Sales and
  Customer Management
Strategic Marketing Process
 The strategic marketing process involves:
 Marketing Analysis (internal)
 Analysis of Marketing Situation (external)
 Formulating Marketing Strategy
 Marketing Program Development
 Implementation, Evaluation, Control
and Correction
Marketing Analysis
(Internal analysis of the organization)
 Market audit
(Current market situation, Operations, Ability to cop with the changes, Past marketing
successes and failures)
 SWOT analysis
(Organization’s strengths and weaknesses)
 Marketing Costs & Financial analysis
(Identifying available resource and using them optimally, Marketing cost analysis,
Customer profitability analysis, Financial situation analysis, Identifying the key financial
ratios, Contribution analysis
Formulating Marketing Strategy
 The insights about the internal and external environment act as inputs for the formulation
of a marketing strategy
• Segmenting markets
• Targeting and Positioning strategies
(using various combination of P’s)
• Generic Strategies (cost leadership strategy, focus strategy and differentiation
strategy)
• New Product Strategies
• Relationship Strategies
Implementing and Managing Marketing Strategy
• Address the organizational issues in marketing
• Design an effective marketing organization
• Marketing strategy implementation, evaluation, control and corrective action

Pillars of marketing-STPD
 Segmentation
(divide the market into distinct subunits of customers with similar needs)
 Targeting
(Identify the most profitable segments that its products and services can cater to)
 Positioning
(create and image or a specific identity for the product or brand in the minds of
customers called positioning)
 DIFFERIENTIATION : Giving someting unique & innoviative
Why Segmentation
 Facilities proper choice of market
 Adapting offer to the Target
 Marketing efforts more efficient & economic
 Benefits to customer
 Consumer markets can be segmented based on the:
 Geographic
 Demographic
 Psychographic and
 Behavioral characteristics of customers
Segmentation
 Geographic:
1. Nation
2. State
3. Region
4. City
 5. Climate
6. Density (urban/rural)
Demographic
1. Age/Family size/Life cycle
2. Education
3. Income
4. Religion/Race/Generation
5. Nationality/Social class
6. GenderOccupation
Psychographic
1. Lifestyle – culture, sports, outdoor, Page 3 etc
2. Personality – introvert, extrovert, compulsive, ambitious, authoritarian etc
Behavioral
1. Occasions – regular, special
2. Benefits
3. User status – non user, regular
4. Usage rate – light, heavy
5. Loyalty status – medium, strong
6. Readiness stage – unaware, aware
7. Attitude toward product – positive, indifferent
TARGETING
 Targeting involves taking decisions regarding the choice of the segments on which the
limited resources (include the marketing skills, managerial capabilities, technological
innovations, and the cost advantages) are to be focused.
 The smart choice for the company to decide how it can deploy its resources to optimize
efficiency, sales and profitability
 For example, HUL started selling shampoos in sachets in order to tap the
potential in rural markets
 Targeting
 Single segment concentration – small car only
 Selective specialization – FM channel targeting all age groups with different programs
 Product specialization – one product selling to different segments (paint)
 Market specialization – many needs of 1 group – selling only to schools
 Full market coverage - Coke
Positioning
 Positioning is a term introduced by Jack Trout and Al Ries in 1969, means creating an
image in the perception of the buyer in the target market about the product or service of a
company with an advantage over the competition
 It is a combination of both market and psychological positioning
Positioning Concept
 A company can position its product based on various factors:
 Positioning by attribute
 Positioning by price/quality
 Positioning by use or application
 Positioning by with respect to a competitor
 Revamped Positioning Strategy
 Assumption is that customers focus on the basic product or service and do not
give much importance to the added features
 E.g. Air Deccan
(provides only the basic)
 Break Free Positioning Strategy
 According to this strategy, the product must be positioned in such a way that it
escapes from categorization
E.g. Dettol Soap
 Michael E. Porter has developed his ‘Five Forces Model’ to help managers to analyze the
business environment. It discuss namely:
 The Threat of new entrants
 The Bargaining power of buyers
  The Bargaining power of suppliers
 The Rivalry among existing players and
 The Threat of substitute products

Five Forces Model

Intensity of Rivalry among firms
 When rivalry among firms is high, it leads to price wars, advertising battles, launches of
new products and increased customer services and warranties
Threat of Substitutes
 Substitutes affect the level of competition in an industry
 E.g. tea, soft drinks, juices, etc. can be a substitutes for coffee
 If coffee prices are hiked, customers have the option of switching over to tea or soft
drinks.
 At the same time, the switching costs are negligible
Bargaining Power of Buyers
 The following circumstances in which the bargaining power of buyers will be higher:
 When there are many suppliers and a few large buyers
 When the buyers purchase in large quantities
 When a supplier is depend heavily on a buyer for a large percentage of its total
orders
 When the buyers can switch orders between supply companies at a low cost,
thereby playing companies off against each other to force down prices
 When it is economically feasible for the buyers to purchase the input from several
companies at time
 When buyers can use the threat of vertical integration as a device for forcing
down prices
Bargaining Power of Suppliers
 Suppliers too exert power, when they are only few, at the same time there are many
buyers
 The suppliers can get together and decide on the price which is most profitable to them
 Intel – Computer chips
  Opec – Oil suppliers
 Suppliers are powerful under the following circumstances:
 When the product they sell has few substitutes
 When no single buyer is a major customer for the suppliers
 When products are differentiated to such an extent that they are not easily
substitutable and it is costly for a buyer to switch from one supplier to another
 To raise prices, the supplier can use the threat of vertically integrating forward
into the industry and competing directly with the buying company
 The buying companies cannot use the threat of vertically integrating backward
and supplying their own needs as a means to reduce input prices


Market Situation Strategy – Leaders, Challengers, Followers and

nichers
Market Leader Strategies
 A market leader has
 Considerable market share
 Significance presence in the industry and
 Acknowledged as the leader by other firms
 A market leader has to guard itself from competition
 Competitors will always try to attack the leader at its weak spot or challenge in its
strong area
 Therefore they need to remain in that position by adopting certain strategies:
 Eg. Microsoft Gillete LG Hero Honda
Dealing with competition - market leader
 Expanding total market –
1. New users – market penetration, new-market segment, geographical expansion
2. New uses – Vaseline petroleum
3. More usage - shampoo
Dealing with competition - market leader
  Expanding market share – Best example is P&G, thru:
1. Customer knowledge
2. Product innovation
3. Quality
4. Line/Brand extension/Multibrand
5. Heavy advertising/sales promo
6. Aggressive sales force etc

Dealing with competition - market leader

 Defending market share –
1. Position defense – Building superior brand power make the brand impregnable
(Nascafe)
2. Preemptive defense – Attack is best defense SBI with more than 10k branches, has
left nothing to chance!
3. Counteroffensive defense – In case of price cut by competitor ,Eg. HLL made a
counter attack by reducing the price for its detergent brands Surf Excel and Surf
Excel Blue
loss 1.5 billion
Dealing with competition - market leader
4 Flank defense – should erect outpost
5 Mobile defense – through a) broadening (Reliance from petrochemicals to petrol, LPG
etc) & b) diversification into unrelated industries (ITC)
6 Withdrawl defense – Withdrawing from non core areas (P&G from super soker from
detergent etc.)

Dealing with competition – market challenger

1. Frontal attack ;Amul
2. Flank attack ; Target enemy’s weak spot by geographical & segmental attack eg;
LG
3. Encirclement attack – grand offensive on several fronts
 4. Bypass attack – diversifying into unrelated products/new markets/new technologies
eg ; google over yahoo
5. Guerilla warfare - Shivaji

Market follower Strategies

 Market followers prefer to follow the leader rather than attack it. Most follower firms
manufacture products leveraging on the product innovations of the market leaders.
 If the follower attacks a market leader with the same quality offerings and at the same
price, it might have to face severe attacks from the market leader.
 So, unless the follower firm has some strong point in its armor, it will not dare attack the
market leader
Market follower
1. . Counterfeiter – Duplicate leaders market & sell in black market eg. Pirated product
2. Cloner – emulates with slight variations eg . LAVIS
3. Imitator – Copies Something but maintain differentiation
4. Adapter – adapts from leader & improves
Market nicher
 Before you look for a niche in the market, make sure there is a market in the niche.
 Instead of being a follower in a large market, it is sometimes better to be a leader in a
small market
 Example – Logitech has become the king of niche markets by making every variation of
computer mouse!

BCG Matrix
GE / McKinsey Matrix
 The GE/McKinsey Matrix was developed by the management consulting firm McKinsey
& Co. as a tool to screen General Electric’s large portfolio of strategic business units
(SBUs).
 The idea behind the matrix is to use multiple factors to evaluate businesses along two
composite dimensions: industry attractiveness and industry strength.
 Conceptually, this matrix is similar to the BCG Growth-Share Matrix
The GE/McKinsey Matrix improves on the BCG approach in two ways:
 It utilizes more comprehensive axes (the BCG matrix uses market growth rate as a
proxy for industry attractiveness and relative market share as a proxy for the
strength of the business unit); and
 It consists of nine-cells rather than four, allowing for greater precision by placing
a business unit in one of the nine cells of the matrix based on attractiveness and
business strength scores.
 The various Business Strength factors taken into consideration are:
 Market size and growth rate
 Intensity of competition
 Technological requirements
 Capital requirements
 Entry and Exit barriers
 Emerging industry threats and opportunities
 Historical and projected industry profitability
 The various Industry Attractiveness index consists of factors like:
 Industry size and growth prospects
 Relative market share
 price
 Profit Margin
 competitiveness
 product quality
 Economies of scale
  Degree of seasonal and cyclical fluctuations
 Industry cost structure
 Market knowledge
 Caliber of management
 sales effectiveness, and Geographic advantages
GE Matrix

 The Green Zone consists of the three cells. If the SBU falls in this zone, it’s in a
favorable position with relatively attractive growth opportunities.
 This position indicates a "green light" to invest and grow this SBU.
The Yellow Zone consists of the three diagonal cells. A position in the yellow zone is
viewed as having medium attractiveness.
 Management must therefore exercise caution when making additional investments in this
SBU.
 The suggested strategy is to protect or allocate resources on a selective basis rather than
growing or reducing share.
 The Red Zone consists of the three cells. A harvest strategy should be used in the two
cells just below the three-cell diagonal. These SBUs shouldn’t receive substantial new
resources.
 The SBUs in the lower left cell shouldn’t receive any resources and should probably be
divested or eliminated from a firm’s portfolio.
 Sustainable Competitive Advantages – Porter’s Generic Strategy
Porter’s Generic Competitive Strategies
 A firm can perform profitably, if it employs its resources optimally even though the
industry is not lucrative
 Michael Porter suggests that a firm can gain strategic advantage and meet its target if it
adopt the following generic strategies. They are:
 Cost leadership
 Differentiation and
 Focus strategy
Cost Leadership Strategy
 Porter suggests that a firm can gain cost leadership in an industry when:
 Its cost of production is lower than that of its competitors
 By managing its processes and resources efficiently and effectively
 Developing efficient methods of production
 Curbing overhead and Administrative costs
 Procuring materials at low prices and
 Monitoring costs of promotion, distribution and service
 Such cost advantages will help firm:
 To offer its products and services at lower prices
 Can reap higher profits while the competitors are bound to make losses
 Gains an edge over its competitors
 Protects itself in the event of a price war
Differentiation Strategy
 It is basically the skill and ability to differentiate the product from that of the competitors
by providing some attributes
 How does firm adopt this strategy
 By advanced scientific research
 Using highly skilled labor force
  Effective customer communication strategies
 By Product design
 By Brand image
 By product features
 By product benefits
 E.g.
 Coca-Cola – brand image
 Cadillac – features
 Intel microprocessors – technology
By using the differentiation strategy, a firm is able to influence the perception of
customers that the product or the service is unique, rather than having to reduce
its costs to attract customers
Focus Strategy
 Pursue or serve a specific segment instead of catering the entire market. It may be:
 A special group of customers
 A specific geographic area
 A particular product or service line
 The advantage being
 Niche market
 Loyal set of customers
 Entry of competitors become difficult
 Higher pricing possible
Generic Strategy Mix
 Porter suggests that, to be successful over the long-term, a firm must select only one of
these three generic strategies
 Otherwise, with more than one single generic strategy the firm will be left nowhere and
will not achieve a competitive advantage.
 However, those firms that are able to succeed at multiple strategies often do so by
creating separate business units for each strategy.
  By separating the strategies into different units having different policies and even
different cultures, a firm is less likely to be left in the dark


Communication Strategy (managing communication mix for

products, brands)
Types of Communication Channels
 Communication channels are classified into:
 Personal channels
 Non-personal channels.
Personal Channels
 This include:
 Face-to-face interactions
 Telephone conversations
 Mailers, e-mails etc
 Here the message can be personalized to the audience’s tastes and preferences
Promotional Tools
 The promotional tools that are widely used by organization for their marketing activities
are:
 Advertising
 Sales promotion
 Publicity
 Public relations
 Personal selling and
 Direct marketing
 All these tools communicates the intended message at different levels and through
different formats
Developing Communication Strategy
 Decide and select the best and cost effective promotional tool that can reach to the
desired target i.e.
  The right audience
 At the right time
 At the right place
 A promotional tool should help maximize its sales
Objectives of the Communication Strategy
 The marketers must know exactly in what stage the consumers is in order to decide what
type of communication to be used at what stage.
 The message should create awareness, enhance image, increase knowledge, linking,
preference, conviction and stimulate demand, finally end-up in buying the product
ADVERTISEMENT
 Promotion is an important component of the marketing mix. The key components of
promotion include:
 Personal selling
 Direct marketing
 Advertising
 Sales promotion and
 Public relations
 Advertising is a persuasive communication, to its target audience
Advertising Strategy
Advertising strategy is defined as “a statement setting forth the competitive frame, target market,
and message argument to be used in an advertising campaign for a specific product or service
 An advertising campaign can have different objectives and they are:
 Inform
 Persuade
 Remind
Developing an Advertising Strategy
1. An advertising strategy is developed in light
of its advertising objectives
2. Advertising objectives depend on the
marketing objectives
 3. Which in turn depend on the overall organizational objectives
4. Once the advertising objectives have been set, the advertising budgets are finalized
5. The next step involves finalizing the
creative strategy and media strategy
6. Finally, evaluating the effectiveness of the advertising strategy
Advertising Budget
 Advertising budget is the amount of money allocated by a firm for its advertising
campaigns for a specific period of time
 It means the specific amount spent on:
 Media costs
 Creative costs
 Production costs
 The most common methods used for setting advertisement budgets include the:
 Objective and task method
 Percentage of sales method
 Affordability method and
 Competitive parity method
Spending a lot on advertising does not automatically guarantee success.
What is important here is the creativity
Creative Strategy
 Advertising creativity is the skill to create new, distinctive, and suitable ideas that can be
used as solutions to communications problems.
 The level of creativity in an advertisement consists of:
 Logo trademark or firm’s name
 Headlines/ Headings
 Body text, Punch line, Baseline
 Color, Graphics, Image and emotion
 Quality of sound and visuals
 Jingles etc.
Media Strategy (the vehicle of communication)
 Media strategy is a plan of action by an advertiser for bringing advertising messages to
the attention of the consumers through the use of appropriate media.
 Different types of media are used like:
 Television
 News paper
 Radio
 Internet and Mobile phones
 The firm need to find answers to the following important question before selecting a
vehicle for advertising
 Who are the target audience
 Where are they located
 What is the message that has to be delivered
 When do we run the advertising campaign
 The media cost
 The right medium
 The time schedule
 Number of insertions etc
 Frequency

Sales Promotion
 Sales promotion is defined as the media and non-media marketing pressure applied for a
predetermined, limited period of time at the level of consumer, retailer, or wholesaler in
order to stimulate trial, increase consumer demand and boost the sales of a product.
 A sales promotion aimed at consumer is termed as ‘pull strategy’ and it encourages
customers to purchase more.
A sales promotion aimed at distribution channels is known as ‘push strategy’ and it encourages
channels to stock more products
Purpose of Sales Promotion
 Sales promotion also helps in achieving the following purposes:
  Encourage the customer trials
 Attract new customers
 Make the customer brand loyal
 Encourage channel’s support for the product
 Counter a competitors’ promotional activities
 Sales promotion can be in the form of either
 Consumer Sales Promotion or
 Trade Sales Promotion
 Dealer
 Distributor
 Stockist
 Wholesaler
 Retailer
Consumer Sales Promotion
 Sales promotions offered to consumers take the form of offering:
 Discounts
 Coupons
 Premiums
 Door-to-door selling
 Telemarketing etc
Trade Sales Promotion
 Trade sales promotions involve activities aimed at channel members to encourage and
support for the product or service in the form of:
 Displays
 Shows
 Demonstrations
 Distribution of samples
 Offering free gifts etc