consolidated slide for marketing strategy

7/27/2019 Consolidated Slide for Marketing Strategy

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PriceHigh Medium Low

Quality

High

1- Premium

(Bose)

2- High value 3- Penetration

(Amul)

Medium

4- Overcharging

(Pricey Hotels )

5- Medium value 6- Good value

Low

7- Skimming

(Reliance Mobile)

8- False economy 9- Economy

(Nirma)

PRICE QUALITY RELATIONSHIP


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Pricing strategies for New Products

1. Skimming Pricing

2. Penetration Pricing

Price Strategies for Established Products

1. Maintaining the Price2. Reducing the Price

3. Increasing the Price

Price-Flexibility Strategy

1. One-Price Strategy

2. Flexible-Pricing Strategy1. By market,

2. By product,

3. By timing,

4. By technology

Product Mix - Pricing Strategy1. Product-line pricing,

2. Optional-feature pricing,

3. Captive-product pricing,

4. Two-part pricing,

5. By-product pricing,

6. Product-bundling pricing.


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PRICE DISCOUNTS AND ALLOWANCES

1. Cash Discount

2. Quantity Discount

3. Functional Discount

4. Seasonal Discount5. Allowance

PROMOTIONAL PRICING

1. Loss-leader pricing

2. Special-event pricing

3. Cash rebates4. Low-interest financing

5. Longer payment terms

6. Warranties and service contracts

7. Psychological discounting


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DEALING WITH COMPETITION


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Competitive Strategies for Market Leaders.

Expanding the Total Market

NEW CUSTOMERS

MORE USAGE

Defending Market Share

POSITION DEFENSE

FLANK DEFENSE

PREEMPTIVE DEFENSE

COUNTEROFFENSIVE DEFENSE

MOBILE DEFENSECONTRACTION DEFENSE

Expanding Market Share


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Other Competitive Strategies

Market-Challenger Strategies

DEFINING THE STRATEGIC OBJECTIVE AND OPPONENT(S)

-It can attack the market leader

-It can attack firms of its own size that are not doing the job

and are underfinanced.-It can attack small local and regional firms

CHOOSING A GENERAL ATTACK STRATEGY

- Frontal Attack

- Flank Attack

- Encirclement Attack

- Bypass Attack- Guerrilla Warfare

CHOOSING A SPECIFIC ATTACK STRATEGY

- Price discount.

- Lower price goods.

- Value-priced goods and services

- Prestige goods- Product proliferation.

- Product innovation.

- Improved services

- Distribution innovation.

- Manufacturing-cost reduction.

- Intensive advertising promotion.


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1) Counterfeiter

2) Cloner

3) Im i tato r

4) Adap ter

Because the follower is often a major target of attack by challengers, it

must keep its manufacturing costs low and its product quality and

services high. It must also enter new markets as they open up. The

follower has to define a growth path, but one that does not invite

competitive retaliation.

Four broad strategies can be distinguished:

Market-Follower Strategies


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Nichers have three tasks:

Creating niches,

1) Expanding niches, and2) Protecting niches.

Niching carries a major risk in that the market niche might dry up or be

attacked. The company is then stuck with highly specialized resources

that may not have high-value alternative uses.

Because niches can weaken, the firm must continually create new ones.

The firm should "stick to its niching" but not necessarily to its niche. That

is why multiple nichingis preferable to single niching. By developing

strength in two or more niches, the company increases its chances forsurvival.

Firms entering a market should aim at a niche initially rather than the whole

market.

Market-Nicher Strategies


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CONSUMER-ORIENTED SALES PROMOTION TECHNIQUES

Sampling

Door-to-door,

Direct-mail,

In-store, and

On-package approaches.

Couponing

Premiums

Free Premiums

Self-Liquidating Premiums

Contests and Sweepstakes

Refunds and Rebates

Bonus Packs

Price-Off Deals

Frequency Programs


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TRADE-ORIENTED SALES PROMOTIONS TECHNIQUES

1) Contests and incentives,

2) Trade allowances,

Buying allowances,

Promotional or display allowances, and

Slotting allowances.

3) Displays and point-of-purchase materials,

4) Sales training programs

5) Trade shows, and

6) Co-op advertising.


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ADVERTISING STRATEGY


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SETTING THE OBJECTIVES

Informative advertising:Aims to create brand awareness and knowledge of new

products or new features of existing products.

Persuasive advertising: Aims to create liking, preference, conviction, and

purchase of a product or service

Reminder advertising: Aims to stimulate repeat purchase of products and

services.

Reinforcement advertising:Aims to convince current purchasers that they made

the right choice. Automobile ads often depict satisfied customers enjoying specialfeatures of their new car.


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THERE ARE FIVE SPECIFIC FACTORS TO CONSIDER WHEN SETTING THE

ADVERTISING BUDGET:

1. Stage in the produc t l if e cycle- New products typically receive large advertisingbudgets to build awareness and to gain consumer trial. Established brands usually

are supported with lower advertising budgets as a ratio to sales.

2. Market share and con sum er base- High-market-share brands usually require less

advertising expenditure as a percentage of sales to maintain share.

3. Competi t ion and c lut ter - In a market with a large number of competitors and high

advertising spending, a brand must advertise more heavily to be heard.

4. Adver t is ing frequency- The number of repetitions needed to put across the brand's

message to consumers has an important impact on the advertising budget.

5. Product subst i tu tabi l i ty - Brands in less-well-differentiated or commodity-likeproduct classes require heavy advertising to establish a differential image.


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DEVELOPING THE ADVERTISING CAMPAIGN

In designing and evaluating an ad campaign, it is important to distinguish the

message strategyor positioning of an ad (what the ad attempts to conveyabout the brand) from its creative strategy (how the ad expresses the brand

claims) and who should say (message source)

Advertisers go through three steps:

1) Message generation and evaluation, (MessageStrategy )

2) Creative development and execution, (Creative Strategy)

3) Message source

4) Legal & social issues.


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CREATIVE STRATEGY

Communications effectiveness depends on how a message is being expressed as

well as the content of the message itself.

Creative strategies can be broadly classified as involving either "informational" or

"transformational" appeals. These two general categories each encompass several

different specific creative approaches.

Informational Appeals

An informational appealelaborates on product or service attributes or benefits.

Examples in advertising are

Hovland's research at Yale has shed much light on informational appeals and their

relation to such issues as:

Conclusion drawing,

One-versus two-sided arguments, and

Order of argument presentation.


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Transformational Appeals

A transformational appealelaborates on a non-product-related benefit or image.

1. Negative Emotions

2. Positive Emotions

3. Comparison


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MESSAGE SOURCE

Three factors that underlie source credibility are expertise, trustworthiness, and

likability of the source

Expertiseis the specialized knowledge the communicator possesses to back the

claim.

Trustworthiness is related to how objective and honest the source is perceived

to be. Friends are trusted more than strangers or salespeople, and people who

are not paid to endorse a product are viewed as more trustworthy than people

who are paid.

Likabilitydescribes the source's attractiveness. Qualities like candor, humor, and

naturalness make a source more likable.

The most highly credible source would be a person who scores high on all three

dimensions.


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DECIDING ON THE MEDIA

After choosing the message, the advertiser's next task is to choose media to carry

it. The steps here are deciding on

1) Desired reach, frequency, and impact

2) Choosing among major media types

3) Selecting specific media vehicles

4) Deciding on media timing; and

5) Deciding on geographical media allocation.


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Evaluating Advertising Effectiveness

Good planning and control of advertising depend on measures of advertising

effectiveness.

Most advertisers try to measure the communication effect of an adthat is, itspotential effect on awareness, knowledge, or preference. They would also like to

measure the ad's sales effect.


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PRODUCT STRATEGIES


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PRODUCT-OVERLAP STRATEGY

The product-overlap strategy refers to a situation where a company decides to

compete against its own brand.

There are alternative ways in which the product-overlap strategy may beoperationalized. Principal among them are having

1) Competing brands,

2) Doing private labeling, and

3) Dealing with original-equipment manufacturers.


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PRODUCT-SCOPE STRATEGY

The product-scope strategy deals with the perspective of the product mix of a

company (i.e. the number of product lines and items in each line that the

company may offer).

The three variants of product-scope strategy that will be discussed in this

section are

1)Single-product strategy,

2)Multiple-products strategy, and

3)System-of-products strategy


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PRODUCT-DESIGN STRATEGY

A business unit may offer a standard or a custom-designed product to each individual

customer.

Standard Products:Offering standard products leads to two benefits. First, standardproducts are more amenable to the experience effect than are customized products;

consequently, they yield cost benefits. Second, standard products can be

merchandised nationally much more efficiently.

Customized Produc ts :Customized products are sold on the basis of the quality of

the finished product, that is, on the extent to which the product meets the customers

specifications. The producer usually works closely with the customer, reviewing the

progress of the product until completion. Unlike standard products, price is not a

factor for customized products. A customer expects to pay a premium for a

customized product.

Standard Produ cts w i th Mod i f icat ions

The strategy of modifying standard products represents a compromise between

the two strategies already discussed. With this strategy, a customer may be given

the option to specify a limited number of desired modifications to a standard

product.

PRODUCT ELIMINATION STRATEGY


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PRODUCT-ELIMINATION STRATEGY

Marketers have believed for a long time that sick products should be eliminated.

It is only in recent years that this belief has become a matter of strategy.

The three alternatives in the product-elimination strategy are

1) Harvesting,

2) Line simplification, and

3) Total-line divestment.

Harvest ing:Harvesting refers to getting the most from a product while it lasts. It is

a controlled divestment whereby the business unit seeks to get the most cashflow it can from the product. The harvesting strategy is usually applied to a

product or business whose sales volume or market share is slowly declining.

Line Simpl i f icat ion:Line-simplification strategy refers to a situation where a

product line is trimmed to a manageable size by pruning the number and variety

of products or services offered. It is hoped that the simplification effort will

restore the health of the line.

Total-Line Divestment :Divestment is a situation of reverse acquisition.


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NEW-PRODUCT STRATEGY

New-product development is an essential activity for companies seeking

growth.

By adopting the new-product strategy as their posture, companies are better

able to sustain competitive pressures on their existing products and make

headway.

The term new productis used in different senses. For our purposes, the new

product strategy will be split into three alternatives:

(a)Product improvement/modification,

(b)Product imitation, and

(c)Product innovation.


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DIVERSIFICATION STRATEGY

Diversification refers to seeking unfamiliar products or markets or both in the

pursuit of growth. Essentially, there are three different forms of diversification a

company may pursue:

1)Concentric diversification,

2)Horizontal diversification, and

3)Conglomerate diversification.

Diversification Technology required to

make the new product

Customer

Concentric Old New

Horizontal New Old

Conglomerate New New


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PORTERS FIVE FORCES MODEL


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PORTERS 5 FORCES AND PROFIT

Force Profitability will be

higher if:

Profitability will be

lower if:

Bargaining power of

suppliers

Weak suppliers Strong suppliers

Bargaining power of

buyers

Weak buyers Strong buyers

Threat of new

entrants

High entry barriers Low entry barriers

Threat of substitutes Few possiblesubstitutes Many possiblesubstitutes

Competitive rivalry Little rivalry Intense rivalry


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BCG AND GE MATRIX


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The product lifecycle approach determines the life status of different

products and whether the company has enough viable products to

provide desired growth in the future.

If the company lacks new products with which to generate growth in

coming years, investments may be made in new products.

If growth is hurt by the early maturity of promising products, the

strategic effort may be directed toward extension of their life cycles.

PRODUCT LIFE CYCLE


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EXHIBIT B


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EXHIBIT B

EXHIBIT C


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EXHIBIT C

EXHIBIT D


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EXHIBIT D

High Low

Low

High

EXHIBIT E


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EXHIBIT E

High Low

Low

High


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The Industry Attractiveness-BusinessPosition Matrix

Bus

inesss

competitiveposition

High

Low

Medium

Industry attractivenessHigh Medium Low

1 1 2

1 2 3

2 3 3

1 Invest/grow

2 Selective

investment/ maintain

position3 Harvest/divest

Variables that might be used to evaluate:

Businesss competitive positionSize

Growth

Relative share

Customer loyalty

Margins

Distribution

Technology

Marketing skills

Patents

Industry attract ivenessSize

Growth

Price levels

Competitive

intensity

Profitability

Technological

sophistication

Government

regulations


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DISTRIBUTION STRATEGIES


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I. Channel -Str uc tu re Str at egy

Direct

Indirect

II. Di st ri but ion -Scope St rategy

Exclusive

Selective

Intensive

I II Mult i ple-Channel Strategy

Complementary

Competitive

IV. Chann el-Con trol Strategy

V. Con fl ict- Management Strategy


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IDENTIFYING MARKET SEGMENTS

AND

TARGETS

Bases for Segmenting Consumer Markets

Geographic Segmentation


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Geographic Segmentation

Urban and rural

Demographic Segmentation

AGE AND LIFE-CYCLE STAGE

LIFE STAGE

GENDER

INCOME

GENERATION

SOCIAL CLASS

Psychographic Segmentation

Behavioral Segmentation

DECISION ROLES

Init iato r, Influ encer, Decid er, Buyer

BEHAVIORAL VARIABLES

Occasions

BenefitsUser Status

Usage Rate

Buyer-Readiness Stage

Loyalty Status

Attitude

THE CONVERSION MODEL


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Bases for Segmenting Business Markets

Business markets can be segmented with some of the same variables

used in consumer market segmentation, such as geography, benefitssought, and usage rate, but business marketers also use other variables

Demographic


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Indust ry :Which industries should we serve?

Company size:What size companies should we serve?

Locat ion:What geographical areas should we serve?

Operating Variables

Technology:What customer technologies should we focus on?

User or non user status: Should we serve heavy users, medium users, light users,

or nonusers?

Purchasing Approaches

Purchasing -func t ion organizat ion: Should we serve companies with highly

centralized or decentralized purchasing organizations?

Power structure:Should we serve companies that are engineering dominated,

financially dominated, and so on?Nature of exist ing relat ion ships: Should we serve companies with which we have

strong relationships or simply go after the most desirable companies?

General purc hase po l ic ies: Should we serve companies that prefer leasing?

Service contracts? Systems purchases? Sealed bidding?

Purchasing cr i ter ia:Should we serve companies that are seeking quality?Service? Price?

Selecting the Market Segments


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Selecting the Market Segments

After evaluating different segments, the company can consider five

patterns of target market selection.

Single segment concentration

Selective specialization


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Selective specialization


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Product specialization

M k t S i li ti


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Market Specialization

Full market coverage


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g

Segment- by- segment invasion plan


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A company would be wise to enter one segment at a time.

Competitors must not know to what segment(s) the firm will move

next


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DIFFERENTIATION

Product Differentiation


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Brands can be differentiated on the basis of a number of different product or service

Dimensions:

Product form,

Features,

Performance,

Conformance,

Durability,

Reliability,

Reparability, Style, and

Design,

Service dimensions as

Ordering ease,

Delivery, Installation,

Customer training,

Customer consulting, and

Maintenance and repair.

Product differentiation is based on - Tangible product attributes.


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1) Ingredient and formula

2) Functional Features

3) Differentiation based on Additional features

.

4) Differentiation on Packaging

5) Differentiation through product design/Styling

6) Differentiation on product quality/ Technology

7) Differentiation on customer care and service

Product differentiation is based on - Intangible product attributes.


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1) Prestige/ Status

2) Sentiments

3) Beliefs

Image Differentiation

Marlboro's "macho cowboy" image has struck a responsive chord with much of

the cigarette-smoking public. Wine and liquor companies also work hard to

develop distinctive images for their brands.

Identity and image need to be distinguished. Identityis the way a company aims

to identify or position itself or its product. Image is the way the public

perceives the company or its products.

Personnel Differentiation


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1. McDonald's people are courteous,

2. IBM people are professional, and Disney people are upbeat.

3. The sales forces of such companies as General Electric, Cisco, Frito-Lay,

Northwestern Mutual Life, and Pfizer enjoy an excellent reputation.4. L&T, the engineering firm, recruits engineers with excellent qualification & claims

superiority on executing projects.

5. Singapore Airlines enjoys an excellent reputation in large part because of its flight

attendants.

Better-trained personnel exhibit six characteristics:

1) Competence: They possess the required skill and knowledge

2) Courtesy. They are friendly, respectful, and considerate

3) Credibility. They are trustworthy

4) Reliability. They perform the service consistently and accurately

5) Responsiveness: They respond quickly to customers' requests and problems

6) Communication: They make an effort to understand the customer and

communicate clearly

Channel Differentiation


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Companies can achieve competitive advantage through the way they design their

distribution channels' coverage, expertise, andperformance.

Caterpillar's success in the construction-equipment industry is based partly on

superior channel development. Its dealers are found in more locations than

competitors' dealers, and they are typically better trained and perform more reliably.

Catterpillar , the global leader in earth moving equipment, made a mark through its

distribution efficiency and top class maintenance service.

Dell in computers and Avon in cosmetics distinguish themselves by developing and

managing high-quality direct-marketing channels


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POSITIONING


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A number of positioning strategies might be employed in developing a promotional

program.

Positioning by

Product attributes,

Price/quality,

Use,

Product class,

Users, and Competitor.

Positioning by cultural symbols.


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PORTERS GENERIC STRATEGY


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Generic Strategy Framework

Cost leadership

Ryan Air, Walmart,, Dell

computers, DeccanAirways

Differentiation

McDonalds, BMW,

Apple, Nike, Mercedes

Cost focus

South West Airlines

Differentiation focus

Ferrari, Rolls Royce

StrategicScope

Broad

Narrow

Low cost Differentiation


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MARKETING STRATEGY

Corporate Strategy


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At the corporate level, managers must coordinate the activities of

multiple business units.

Decisions about the organization's scope and resource deployments

across its divisions or businesses are the primary focus of the

corporate strategy. The essential question at this level are

1) What business(es) are we in?

2) What business(es) should we be in? and

3) What portion of our total resources should we devote to each of these

businesses to achieve the organization's overall goals and objectives?

Thus, top-level managers at IBM decided to pursue future growth primarily

h h h d l f W b b d i d f h h


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through the development of Web-based services and software rather than

computer hardware.

They shifted substantial corporate resourcesincluding R&D expenditures,marketing and advertising budgets, and vast numbers of salespeopleinto

the corporation's service and software businesses to support the new

strategic direction.

Attempts to develop and maintain distinctive competencies at the corporate

level focus on

1) Generating superior human, financial, and technological resources.

2) Designing effective organizational structures and processes.

3) Seeking synergy among the firm's various businesses.

Synergy can provide a major competitive advantage for firms where related

businesses share R&D investments, product or production technologies,

distribution channels, a common sales-force, and/or promotional themes

as in the case of IBM.


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Strategic

Planning

Gap

Figure illustrates the strategic-planning gap for a major manufacturer of

blank compact disks called Musicale (name disguised).

The lowest curve projects the expected sales over the next five years from

the current business portfolio. The highest curve describes desired sales

over the same period. Evidently, the company wants to grow much faster

than its current businesses will permit. How can it fill the strategic-planning

gap?


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Market Penetration Strategies

Increase market share Increase product usage

Increase frequency of use

Increase quantity used

New application

Product development strategies

Product Improvement

Product line extension

New product for the same

markets

Market development strategies

Expand Markets for existing

products

Geographic expansion

Target new segment

Diversification Strategies

Vertical Integration

Forward integration

Backward integration

Horizontal integration

Diversification into related business

( Concentric diversification)

Diversification into unrelated business

( Conglomerate diversification)

Current Products New Products

Current

Markets

New

Markets

Integrative

Growth strategies

Business-Level Strategy


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How a business unit competes within its industry is the critical focus of

business-level strategy. What distinctive competencies can give the business

unit a competitive sustainable advantage? And which of those competenciesbest match the needs and wants of the customers in the business's target

segment(s)?

For example, a business with low-cost sources of supply and efficient,

modern plants might adopt a low-cost competitive strategy. One with a strong

marketing department and a competent sales force may compete by offering

superior customer service.

Another important issue a business-level strategy must address is

appropriate scope: how many and which market segments to compete in,

and the overall breadth of product offerings and marketing programs toappeal to these segments.

Finally, synergy should be sought across product-markets and across

functional departments within the business.

Business Unit Strategic Planning


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The Business Mission

SWOT Analysis

Goal Formulation

Strategic Formulation

Program Formulation and Implementation

Feedback and Control


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Marketing Strategy

The primary focus of marketing strategy is to effectively allocate and

coordinate marketing resources and activities to accomplish the firm'sobjectives within a specific product-market.

Therefore, the critical issue concerning the scope of a marketing strategy is

specifying the target market(s) for a particular product or product line. Next,

firms seek competitive advantage and synergy through a well-integratedprogram of marketing mix elements (primarily the 4 Ps of product, price,

place, promotion) tailored to the needs and wants of potential customers in

that target market.


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BENCHMARKING

Firms Use Certain Tools in Diagnosing and Building CA


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(Competitive advantage )

Two useful tools in identifying and building competitive advantage are:

(i) Benchmarking

(ii) Value chain analysis

Benchmark ing

Benchmarking can be described as the process of improving one'sperformance by locating benchmarks/ standards in other firms and replicating

them in one's own organization.

It is a learning process, by which a firm seeks to identify best practices that

produce superior results in other firms, and to replicate them to enhance its own

competitive advantage.

McKinsey & Co views benchmarking as a skill, an attitude and a practice that

ensures excellence, instead of mere improvement.

Benchmarking has larger scope than inter-firm comparison


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Benchmarking is larger than inter-firm comparison.

First, benchmarking does not stop with comparison. It helps the firm secure a

model for emulation.

Second, in benchmarking, companies go a step beyond inter-firm comparison and

trace the best practices across industries and across countries, gathering still

higher standards for emulation.

Third, unlike with inter-firm comparison, with benchmarking, firms encourage theirinternal departments to benchmark against one another and upgrade their

performance.

Analyzing other players and locating the best practices is the first task in

benchmarking. The firm then identifies and quantifies the performance gap .The

gap between its own performance and the benchmark. And, then, it bridges the

gap. This externally oriented approach makes people in the firm aware of the

distance they have to travel in achieving excellence. It has an eye-opening effect

on them.

Types of benchmarking


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Firms resort to four different types of benchmarking:

1) Internal,

2) Functional,

3) Competitive

4) Generic.

The distinction among them lies essentially in the scope of comparison.

Internal benchmarking means comparisons within the organization, typically,

between related divisions, site-to-site and department-to-department

comparisons.

Functional benchmarking refers to comparison of the firm's performance in a

specific functional area with other firms.

Competitive benchmarking is the comparison of a company's performanceagainst the best in the same industry, i.e. against direct competitors.

Generic benchmarking refers to comparison across companies and industries on

the universal level; here, the firm's performance in a universal work process

(example: billing) is compared with that of the best anywhere in the world, in

any industry.


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