Importance of Marketing

Marketing is an integral component of any

organization’ss 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
Ineffective Effective

Efficient Die
Thrive
(slowly)
Tactics
T

Die
Inefficient (quickly) Survive

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

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

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

High
Niche Cost & Value

Value Advantage
Strategy Leadership
Real Unit
Cost

Commodity Cost

Low
Marketing Leadership

Low High
Cumulative output Productivity Advantage

The Experience Curve Strategic Direction

Characteristics of Strategy
CLEARLY DEFINES
TARGET CUSTOMERS
AND THEIR NEEDS

INTERNALLY
CONSISTENT CREATES A
COMPETITIVE
ADVANTAGE
STRATEGY

DERIVED
TO ACHIEVE INCURS
PRODUCT MARKET ACCEPTABLE
OBJECTIVES RISK

RESOURCE AND
MANAGERIALLY
SUPPORTABLE

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 Marketing Strategy
A process of achieving overall corporate objectives through proper
identification of market opportunities and effective deployment of
company’s 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: How are we going to get there?

CONTROL: How do we ensure arrival?

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 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

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 Strategic Window

Attractiveneess
Strategy
Market
M

Business Position

Marketing Assets

• Marketing Knowledge (skills, systems and information)

• Brands ((strongg brands often earn premium
p prices
p and can
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)

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 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 Liabilities Assets Liabilities
- Land - Shares - Land - Shares
- Buildings - Loans - Buildings - Loans
- Plant - Overdrafts - Plant - Overdrafts
- Vehicles etc. - Vehicles etc.
etc. etc.

Rs. 200 million Rs. 200 million Rs. 200 million Rs. 1000 million

Marketing Assets Assets Liabilities

• Brand Name - Land
L d - Shares
• Distribution Network - Buildings - Loans
• Customer Loyalty - Plant - Overdrafts
• Market Share - Vehicles etc.
• Supplier Relationship - Goodwill
• Customer Relationship
• Technology Base
Rs. 1000 million Rs. 1000 million

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 Identifying Opportunities
Market Long-term trends, size, etc .
Analysis

Customer Segments, buying processes, etc .

Analysis

Competitive Relative strengths & weaknesses, etc .

Analysis

Environmental Opportunities & treats, etc .

Analysis

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?

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 Customer Analysis
Segmentation: Most markets are subdivided into smaller sectors based on
differences between customers, either by their characteristics or by the way
theyy respond
p to market stimuli.

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 Potential
• capital requirement
• switching costs
Entrants
• access to distribution channels Threat of new entrants
• cost disadvantages addition to scale
• government policy
• entry deterring price
• experience
Industry Competitors
Intense rivalry if:
• numerous or similar sized competitors
Suppliers • slow industry growth rate Buyers
• high fixed costs
Bargaining Power • lack of differentiation Bargaining Power
• diverse nature of competitors
• high strategic stakes Powerful if
Powerful if
• high exit barriers • large proportion of seller’s sales
• few suppliers
• large proportion of buyer’s costs
• no substitutes
• undifferentiated pproducts
• industry not important customer
• low buyer switching costs
of supplier group
• threat of backward integration
• supplier group’s products are
• seller’s product not important to
differentiated
• threat of forward integration
Substitutes quality of buyer’s product.
Threat of substitute
Products/Services

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 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 company’s 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 company’s marketing strategy.

Framework of Marketing-Conceptions
Nature of the three levels:

Philosophy
Objectives
Increasing
operational
Structure Strategies meaning

Process Mix

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 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 Company
Environment Analysis
Where are we now?
Concentration Concentration

Merging

Crystallization Point

Where do we want to go?

Objectives

How do we get there?

Strategies

What do we have to do?

Mix

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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’

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