Marketing Strategy - Part 3 - Management Essay Example
According to Shaw, Eric (2012). Marketing Strategy: From the Origin of the Concept to the Development of a Conceptual Framework. Journal of Historical Research in Marketing. , there is a framework for marketing strategies. Market introduction strategies “At introduction, the marketing strategist has two principle strategies to choose from: penetration or niche” (47). Market growth strategies “In the early growth stage, the marketing manager may choose from two additional strategic alternatives: segment expansion (Smith, Ansoff) or brand expansion (Borden, Ansoff, Kerin and Peterson, 1978)” (48).
Market maturity strategies
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In maturity, sales growth slows, stabilizes and starts to decline. In early maturity, it is common to employ a maintenance strategy (BCG), where the firm maintains or holds a stable marketing mix” (48). Market decline strategies At some point the decline in sales approaches and then begins to exceed costs. And not just accounting costs, there are hidden costs as well; as Kotler (1965, p. 109) observed: ‘No financial accounting can adequately convey all the hidden costs. ‘ At some point, with declining sales and rising costs, a harvesting strategy becomes unprofitable and a divesting strategy necessary” (49).
Early marketing strategy concepts were: Borden’s “marketing mix” “In his classic Harvard Business Review (HBR) article of the marketing mix, Borden (1964) credits James Culliton in 1948 with describing the marketing executive as a ‘decider’ and a ‘mixer of ingredients. ‘ This led Borden, in the early 1950s, to the insight that what this mixer of ingredients was deciding upon was a ‘marketing mix'” (34). Smith’s “differentiation and segmentation strategies” “In product differentiation, according to Smith (1956, p. 5), a firm tries ‘bending the will of demand to the will of supply.
That is, distinguishing or differentiating some aspect(s) of its marketing mix from those of competitors, in a mass market or large segment, where customer preferences are relatively homogeneous (or heterogeneity is ignored, Hunt, 2011, p. 80), in an attempt to shift its aggregate demand curve to the left (greater quantity sold for a given price) and make it more inelastic (less amenable to substitutes). With segmentation, a firm recognizes that it faces multiple demand curves, because customer preferences are heterogeneous, and focuses on serving one or more specific target segments within the overall market” (35).
Dean’s “skimming and penetration strategies” “With skimming, a firm introduces a product with a high price and after milking the least price sensitive segment, gradually reduces price, in a stepwise fashion, tapping effective demand at each price level. With penetration pricing a firm continues its initial low price from introduction to rapidly capture sales and market share, but with lower profit margins than skimming” (37). Forrester’s “product life cycle (PLC)” “The PLC does not offer marketing strategies, per se; rather it provides an overarching framework from which to choose among various strategic alternatives” (38).
There are also corporate strategy concepts like: Andrews’ “SWOT analysis” “Although widely used in marketing strategy, SWOT (also known as TOWS) Analysis originated in corporate strategy. The SWOT concept, if not the acronym, is the work of Kenneth R. Andrews who is credited with writing the text portion of the classic: Business Policy: Text and Cases (Learned et al. , 1965)” (41). Ansoff’s “growth strategies” “The most well-known, and least often attributed, aspect of Igor Ansoff’s Growth Strategies in the marketing literature is the term ‘product-market. The product-market concept results from Ansoff juxtaposing new and existing products with new and existing markets in a two by two matrix” (41-42).
Porter’s “generic strategies” 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. 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. * Product differentiation ** Cost leadership ** Market segmentation * 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: ** Pioneers ** Close followers ** 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: Horizontal integration Vertical integration Diversification
Intensification These ways of growth are termed as organic growth. Horizontal growth is whereby a firm grows towards acquiring other businesses that are in the same line of business for example a clothing retail outlet acquiring a food outlet. The two are in the retail establishments and their integration lead to expansion. Vertical integration can be forward or backward. Forward integration is whereby a firm grows towards its customers for example a food manufacturing firm acquiring a food outlet. Backward integration is whereby a firm grows towards its source of supply for example a food outlet cquiring a food manufacturing outlet. A more detailed scheme uses the categoriesMiles, Raymond (2003).
Organizational Strategy, Structure, and Process. Stanford: Stanford University Press. ISBN 0-8047-4840-3. : Prospector Analyzer Defender Reactor Marketing warfare strategies – This scheme draws parallels between marketing strategies and military strategies. BCG’s “growth-share portfolio matrix” “Based on his work with experience curves (that also provides the rationale for Porter’s low cost leadership strategy), the growth-share matrix was originally created by Bruce D.
Henderson, CEO of the Boston Consulting Group (BCG) in 1968 (according to BCG history). Throughout the 1970s, Henderson expanded upon the concept in a series of short (one to three page) articles in the BCG newsletter titled Perspectives (Henderson, 1970, 1972, 1973, 1976a, b). Tremendously popular among large multi-product firms, the BCG portfolio matrix was popularized in the marketing literature by Day (1977)” (45). Strategic models This article needs additional citations for verification.
Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (June 2008) 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.
Marketing Mix Modeling is often used to simulate different strategic flexing go the 4Ps. Customer lifetime value models can help simulate long term effects of changing the 4Ps, e. g. ; visualize the multi-year impact on acquisition, churn rate, and profitability of changes to pricing. However, 4Ps have been expanded to 7 or 8Ps to address the different nature of services. 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. An organization’s strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan.