Marketing strategy

Marketing strategy


Marketing strategy is defined by David Aaker
as a process that can allow an organization to concentrate its resources on the optimal
opportunities with the goals of increasing sales and achieving a sustainable competitive
advantage. Marketing strategy includes all basic and long-term activities in the field
of marketing that deal with the analysis of the strategic initial situation of a company
and the formulation, evaluation and selection of market-oriented strategies and therefore
contribute to the goals of the company and its marketing objectives. Developing a marketing strategy
Marketing strategies serve as the fundamental underpinning of marketing plans designed to
fill market needs and reach marketing objectives. Plans and objectives are generally tested
for measurable results. Commonly, marketing strategies are developed as multi-year plans,
with a tactical plan detailing specific actions to be accomplished in the current year. Time
horizons covered by the marketing plan vary by company, by industry, and by nation, however,
time horizons are becoming shorter as the speed of change in the environment increases.
Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned.
See strategy dynamics. Marketing strategy needs to take a long term view, and tools
such as customer lifetime value models can be very powerful in helping to simulate the
effects of strategy on acquisition, revenue per customer and churn rate.
Marketing strategy involves careful and precise scanning of the internal and external environments.
Internal environmental factors include the marketing mix and marketing mix modeling,
plus performance analysis and strategic constraints. External environmental factors include customer
analysis, competitor analysis, target market analysis, as well as evaluation of any elements
of the technological, economic, cultural or political/legal environment likely to impact
success. A key component of marketing strategy is often to keep marketing in line with a
company’s overarching mission statement. Once a thorough environmental scan is complete,
a strategic plan can be constructed to identify business alternatives, establish challenging
goals, determine the optimal marketing mix to attain these goals, and detail implementation.
A final step in developing a marketing strategy is to create a plan to monitor progress and
a set of contingencies if problems arise in the implementation of the plan.
Marketing Mix Modeling is often used to help determine the optimal marketing budget and
how to allocate across the marketing mix to achieve these strategic goals. Moreover, such
models can help allocate spend across a portfolio of brands and manage brands to create value.
Types of strategies Marketing strategies may differ depending
on the unique situation of the individual business. However there are a number of ways
of categorizing some generic strategies. A brief description of the most common categorizing
schemes is presented below: Strategies based on market dominance – In
this scheme, firms are classified based on their market share or dominance of an industry.
Typically there are four types of market dominance strategies:
Leader Challenger
Follower Nicher
According to Shaw, Eric. “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”. Market growth strategies
“In the early growth stage, the marketing manager may choose from two additional strategic
alternatives: segment expansion or brand expansion”. Market maturity strategies
“In maturity, sales growth slows, stabilizes and starts to decline. In early maturity,
it is common to employ a maintenance strategy, where the firm maintains or holds a stable
marketing mix”. 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 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”.
Early marketing strategy concepts were: Borden’s “marketing mix”
“In his classic Harvard Business Review article of the marketing mix, Borden 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'”. Smith’s “differentiation and segmentation
strategies” “In product differentiation, according to
Smith, 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, in an attempt
to shift its aggregate demand curve to the left and make it more inelastic. 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”.
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”.
Forrester’s “product life cycle” “The PLC does not offer marketing strategies,
per se; rather it provides an overarching framework from which to choose among various
strategic alternatives”. There are also corporate strategy concepts
like: Andrews’ “SWOT analysis”
“Although widely used in marketing strategy, SWOT 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”.
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”. 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 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 acquiring a food manufacturing outlet.
A more detailed scheme uses the categories:Miles, Raymond. 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, the growth-share matrix was originally created by Bruce D.
Henderson, CEO of the Boston Consulting Group in 1968. Throughout the 1970s, Henderson expanded
upon the concept in a series of short articles in the BCG newsletter titled Perspectives.
Tremendously popular among large multi-product firms, the BCG portfolio matrix was popularized
in the marketing literature by Day”. Strategic models
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 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
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 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 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. See also
Business model Corporate anniversary
Customer engagement Market segmentation
Pricing strategies Right-time marketing
References 8. Shaw, E.. “Marketing strategy: From the
origin of the concept to the development of a conceptual framework.” Journal of Historical
Research in Marketing, 4(1), 30–55. doi:10.1108/17557501211195055 Further reading
Laermer, Richard; Simmons, Mark, Punk Marketing, New York : Harper Collins, 2007 ISBN 978-0-06-115110-1,
2007)

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