Marketing Strategy

Strategic Marketing Planning

 

    The essence of developing a marketing strategy for a company is to

ensure that the company’s capabilities are matched to the
competitive market environment in which it operate
 
Strategic planning attempts to answer three basic questions. 

• What is the business doing now?

• What is happening in the environment?
• What should the business be doing?
 
 Process Three

Formulating
Product-Market Strategies
Ansoff’s matrix
 Market Penetration
Strategy
Seeking a larger market share in a market in
which organization already has an offering
 Market Development
Strategy

Introducing its existing offerings to markets

other than those that the organization is
currently serving.
 Product Development
Strategy

This approach may be taken for:

Product Innovation – develop totally new

offerings

Product Augmentation – enhance the value

to customers of existing offerings

Product line extension broaden the existing

line of offerings by adding different sizes,
forms, flavors, etc.
 Diversification Strategy

Development or acquisition of offerings new to the

organization and introducing those offerings to publics not
previously served by the organization.
 Porter’s Competitive Forces Model
(to determine how attractive is the industry)

Threat of
New Entrants

Bargaining The Existing Bargaining

Power Rivalry Power of
Firm Competitors
Of Suppliers Buyers
The Industry

Threat of
Substitute
Products or
from Competitive Advantage: Services
Creating and Sustaining
Superior Performance
by Michael Porter,
 Porter’s Generic Strategy:
Overall Cost Leadership

• At a given level of quality and large market

• Economy of scale possible, win on volume
• Process efficiency, unique access to low cost
materials and manpower, vertical integration, cost
avoidance, access to capital, skill in process design,
efficient outlet channels
• Risks – matching services, price war, equalizing
technology, market consolidation

cf. slide 3.9

 Porter’s Generic Strategy:
Differentiation

• Unique service valued by customer – better or

different from competitors – brand loyalty
• Maybe able to charge premium, pass on higher
costs, cannot be easily copied, barrier to entry
• Strong R&D; innovative service; strong marketing
and sales to convey the message; reputation is
important
• Risks – imitation; change in taste/need; slow
growth

cf. slide 3.10

 Porter’s Generic Strategy:
Focus
• Concentrate on a market segment – niches, specialization to
achieve cost or differentiation
• Enlarge market - globalization
• Need customer loyalty as barrier to entry
• Usually low volume – subject to supplier power
• Higher costs can be passed on – charge premium
• R&D and marketing important, need to know the market
well and substitution is easy
• Risks – imitation; change in taste/need; large competition
can enter segment easily; others might also focus on smaller
segment

cf. slide 3.11

 Generic Strategies and Industry
Forces
Generic Strategies
Industry
Force Cost
Differentiation Focus
Leadership
Ability to cut price in Customer loyalty can Focusing develops core
Entry retaliation deters potential discourage potential competencies that can act
Barriers entrants. entrants. as an entry barrier.

Large buyers have less Large buyers have less

Buyer Ability to offer lower price power to negotiate power to negotiate
Power to powerful buyers. because of few close because of few
alternatives. alternatives.
Suppliers have power
because of low volumes,
Better able to pass on
Supplier Better insulated from
supplier price increases to
but a differentiation-
powerful suppliers. focused firm is better able
Power customers.
to pass on supplier price
increases.
Customer's become
Threat of Can use low price to Specialized products &
attached to differentiating
defend against core competency protect
attributes, reducing threat
Substitutes substitutes.
of substitutes.
against substitutes.

Rivals cannot meet

Better able to compete on Brand loyalty to keep
Rivalry price. customers from rivals.
differentiation-focused
customer needs.
 Product Portfolios:
the BCG Matrix
High

Problem
Star child
Market
Growth

Cash
cow Dog
Low

High Relative Market Share Low