Marketing Strategy

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Transcript of Marketing Strategy

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Marketing Strategy

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Contents:Contents:

Section 1 : Market Scope Strategy

Section 2 : Market Entry Strategy

Section 3 : Product Strategy

Section 4 : Promotion Strategy

Section 5 : Distribution Strategy

Section 6 : Pricing Strategy

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Market Scope Market Scope StrategyStrategy

1. Single Market Strategy

2. Multi Market Strategy

3. Total Market Strategy

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1. Single Market Strategy1. Single Market Strategy

• Concentration of efforts in a single

segment.

• Requirements: (a) Serve the market

wholeheartedly despite initial difficulties

(b) Avoid competition with established

firms.

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2. Multi Market Strategy2. Multi Market Strategy

• Serving several distinct markets.

• Requirements: (a) Careful selection of

segments to serve (b) Avoid

confrontation with companies serving

entire market.

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3. Total Market Strategy3. Total Market Strategy

• Serving the entire spectrum of the market by selling

differentiated products to different segments in the

market.

• Requirements: (a) Employ different combinations of

price, product, promotion, and distribution strategies

in different segments (b) Top management

commitment to embrace entire market (c) Strong

financial position.

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Market Entry Market Entry StrategyStrategy

1. First In Strategy

2. Early Entry Strategy

3. Laggard Entry Strategy

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1. First In Strategy1. First In Strategy

• Entering the market before all others.

• Requirements: (a) Willingness and ability to

take risks (b) Technological competence (c)

Strive to stay ahead (d) Heavy promotion (e)

Create primary demand (f) Carefully evaluate

strengths.

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2. Early Entry Strategy2. Early Entry Strategy

• Entering the market in quick succession after

the leader.

• Requirements: (a) Superior marketing

strategy (b) Ample resources (c) Strong

commitment to challenge market leader.

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3. Laggard Entry Strategy3. Laggard Entry Strategy

• Entering the market toward tail end of growth phase

or during maturity phase. Two modes of entry are

feasible: (a) Imitator(a) Imitator - Entering market with me-too

product (b) Initiator(b) Initiator - Entering market with

unconventional marketing strategies.

• Requirements: ImitatorImitator - (a) Market research ability

(b) Production capability. InitiatorInitiator - (a) Market

research ability, (b) Ability to generate creative

marketing strategies.

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Product Product StrategyStrategy

1. Product Positioning Strategy

2. Product Repositioning Strategy

3. Product Scope Strategy

4. Product Design Strategy

5. New Product Strategy

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1. Product Positioning Strategy1. Product Positioning Strategy

• Placing a brand in that part of the market where it

will have a favorable reception compared with

competing brands.

• Requirements: (a) Successful management of a a

single brandsingle brand requires positioning the brand in the

market so that it can stand competition from the

toughest rival and maintaining its unique position by

creating the aura of a distinctive product.the aura of a distinctive product.

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1. Product Positioning Strategy1. Product Positioning Strategy

• (b) Successful management of multiple brandsmultiple brands

requires careful positioning in the market so that

multiple brands do not compete with nor

cannibalize each other.

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2. Product 2. Product Repositioning Repositioning

StrategyStrategy

• Reviewing the current

positioning of the product and

its marketing mix and seeking

a new position for it that

seems more appropriate.

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• Requirements: (a) If this strategy

is directed toward existing existing

customerscustomers, repositioning is

sought through promotion of

more varied uses of the product

2. Product 2. Product Repositioning Repositioning

StrategyStrategy

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• (b) If the business unit wants to

reach new usersreach new users, this strategy

requires that the product be

presented with a different twist

to the people who have not been

favorably inclined toward it.

• In doing so, care should be

taken to see that, in the process

of enticing new customers,

current ones are not alienated

2. Product 2. Product Repositioning Repositioning

StrategyStrategy

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• (c) If this strategy aims at

presenting new uses of the presenting new uses of the

productproduct, it requires searching

for latent uses of the product, if

any.

• Although all products may not

have latent uses, there are

products that may be used for

purposes not originally intended.

2. Product 2. Product Repositioning Repositioning

StrategyStrategy

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3. Product 3. Product Scope Scope StrategyStrategy

• The product-scope strategy deals

with the perspectives of the product

mix of a company.

• The company may adopt a single-a single-

product strategy, a multiple-product strategy, a multiple-

product strategy, product strategy, or a system-of-a system-of-

products strategy.products strategy.

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• Requirements: (a) Single productSingle product:

company must stay up-to-date on

the product and even become the

technology leader to avoid

obsolescence (b) Multiple Multiple

productsproducts: products must

complement one another in a

portfolio of products

3. Product 3. Product Scope Scope StrategyStrategy

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• (c) System of productsSystem of products: company

must have a close understanding of

customer needs and uses of the

products.

3. Product 3. Product Scope Scope StrategyStrategy

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4. Product 4. Product Design Design

StrategyStrategy

• The product-design strategy deals

with the degree of standardization

of a product.

• The company has a choice among

the following strategic options:

standard product, customized standard product, customized

product, product, and standard product standard product

with modifications.with modifications.

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• Objectives: (a) Standard productStandard product :

to increase economies of scale of

the company (b) Customized Customized

productproduct : to compete against mass

producers of standardized

products through product-design

flexibility (c) Standard product Standard product

with modificationswith modifications : to combine

the benefits of the two previous

strategies.

4. Product 4. Product Design Design

StrategyStrategy

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5. New 5. New Product Product StrategyStrategy

• A set of operations that

introduces (a) within the within the

businessbusiness, a product new to its

previous line of products (b) on on

the marketthe market, a product that

provides a new type of

satisfaction.

• Three alternatives emerge from

the above: product product

improvement/modificationimprovement/modification,

product imitationproduct imitation, and product product

innovation.innovation.

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• Requirements: A new-product

strategy is difficult to implement

if a new product development a new product development

systemsystem does not exist within a

company.

5. New 5. New Product Product StrategyStrategy

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• Five componentsFive components of this

system should be assessed:

• corporate aspirations toward

new products

• organizational openness to

creativity

• environmental favor toward

creativity

• screening method for new

ideas, and

• evaluation process.

5. New 5. New Product Product StrategyStrategy

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Promotion Promotion StrategyStrategy

1. Promotion Mix Strategy

2. Media Selection Strategy

3. Advertising Copy Strategy

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• Determination of a judicious mix of

different types of promotion.

• Requirements :

• (a) Product factors(a) Product factors: (i) nature of

product (ii) durable versus

nondurable (iii) perceived risk (iv)

typical purchase amount

1. Promotion 1. Promotion Mix StrategyMix Strategy

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1. Promotion 1. Promotion Mix StrategyMix Strategy

• (b) Market factors:(b) Market factors: (i) position in the

life cycle, (ii); market share, (iii)

industry concentra tion, (iv) intensity

of competition, and (v) demand

perspectives

• (c) Customers factors:(c) Customers factors: (i)

household versus business

customers, (ii) number of customers,

and (iii) concentration of customers

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1. Promotion 1. Promotion Mix StrategyMix Strategy

• (d) Budget factors:(d) Budget factors: (i) financial

resources of the organization and (ii)

traditional promotional perspectives

• (e) Marketing mix factors:(e) Marketing mix factors: (i)

relative price/relative quality, (ii)

distribution strategy, (iii) brand life

cycle, and (iv) geographic scope of

the market

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2. Media Selection 2. Media Selection StrategyStrategy

• Choosing the channels

(newspapers, magazines, television,

radio, outdoor advertising, transit

advertising, and direct mail) through

which messages concerning a

product/service are transmitted to

the targets.

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2. Media Selection 2. Media Selection StrategyStrategy

• Requirements: (a) Relate media-

selection objectives to product/market

objectives (b) Media chosen should

have a unique way of promoting the

business (c) Media should be measure-

minded not only in frequency, in timing,

and in reaching the target audience but

also in evaluating the quality of the

audience

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2. Media Selection 2. Media Selection StrategyStrategy

• (d) Base media selection on factual

not artificial grounds, (e) Media plan

should be optimistic in that it takes

advantage of the lessons learned

from experience (f) Seek

information on customer profiles and

audience characteristics.

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3. Advertising 3. Advertising Copy StrategyCopy Strategy

• Designing the content of

an advertisement.

• Objective: To transmit a

particular product/service

message to a particular

target.

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3. Advertising 3. Advertising Copy StrategyCopy Strategy

Requirements:

(a) Eliminate "noise" for a clear

transmission of message

(b) Consider importance of :

• source credibility

• balance of argument

• message repetition

• rational versus emotional

appeals

• humor appeals

• presentation of model's eyes

in pictorial ads

• comparison advertising.

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Distribution Distribution StrategyStrategy

1. Distribution Scope Strategy

2. Multiple Channel Strategy

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1. Distribution 1. Distribution Scope Scope

StrategyStrategy

• Establishing the scope of

distribution, that is, the target

customers.

• Choices are exclusive exclusive

distributiondistribution (one retailer is

granted sole rights in serving

a given area), intensive intensive

distributiondistribution (a product is

made available at all possible

retail outlets), and selective selective

distributiondistribution (many but not all

retail outlets in a given area

distribute a product).

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1. Distribution 1. Distribution Scope Scope

StrategyStrategy

• Requirements: Assessment

of :• customer buying habits• gross margin/ turnover

rate• capability of dealer to

provide service• capability of dealer to

carry full product line• product styling

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2. Multiple Channel 2. Multiple Channel StrategyStrategy

• Employing two or more different channels

for distribution of goods and services.

• Multiple-channel distribution is of two

basic types: complementarycomplementary (each

channel handles a different non-

competing product or market segment)

and competitive competitive (two different and

competing channels sell the same

product).

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2. Multiple Channel 2. Multiple Channel StrategyStrategy

• Requirements: (a) Market segmentation,

(b) Cost/benefit analysis.

• Use of complementary channels prompted

by (i) geographic considerations, (ii)

volume of business, (iii) need to distribute

non-competing items, and (iv) saturation

of traditional distribution channels.

• Use of competitive channels can be a

response to environmental changes.

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Pricing StrategyPricing Strategy

1. Pricing Strategies for New Products

2. Pricing Strategies for Established Products

3. Price Flexibility Strategy

4. Price Leadership Strategy

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1. Pricing for 1. Pricing for New ProductsNew Products

• Skimming Pricing Strategy

• Penetration Pricing Strategy

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Skimming Pricing Skimming Pricing StrategyStrategy

• Setting a relatively high price during

the initial stage of a product's life.

• Objectives: (a) To serve customers

who are not price conscious while

the market is at the upper end of the

demand curve and competition has

not yet entered the market

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• (b) To recover a significant portion of

promotional and research and

development costs through a high

margin.

Skimming Pricing Skimming Pricing StrategyStrategy

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• Requirements: (a) Heavy

promotional expenditure to introduce

product, educate consumers, and

induce early buying (b) Relatively

inelastic demand at the upper end of

the demand curve (c) Lack of direct

competition and substitutes.

Skimming Pricing Skimming Pricing StrategyStrategy

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Penetration Pricing Penetration Pricing StrategyStrategy

• Setting a relatively low price during

the initial stages of a product's life.

• Objective: To discourage

competition from entering the market

by quickly taking a large market

share and by gaining a cost

advantage through realizing

economies of scale.

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Penetration Pricing Penetration Pricing StrategyStrategy

• Requirements: (a) Product must

appeal to a market large enough to

support the cost advantage (b)

Demand must be highly elastic in

order for the firm to guard its cost

advantage.

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2. Pricing for 2. Pricing for Established ProductsEstablished Products

• Maintaining the Price

• Reducing the Price

• Increasing the Price

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Maintaining the PriceMaintaining the Price

• Objectives: (a) To maintain position

in the marketplace (i.e., market

share, profitability, etc.) (b) To

enhance public image.

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Maintaining the PriceMaintaining the Price

• Requirements: (a) Firm's served

market is not significantly affected by

changes in the environment (b)

Uncertainty exists concerning the

need for or result of a price change

(c) Firm's public image could be

enhanced by responding to

government requests or public

opinion to maintain price.

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Reducing the PriceReducing the Price

• Objectives: (a) To act defensively

and cut price to meet the

competition (b) To act offensively

and attempt to beat the competition

(c) To respond to a customer need

created by a change in the

environment.

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Reducing the PriceReducing the Price

• Requirements: (a) Firm must be

financially and competitively strong

to fight in a price war if that becomes

necessary (b) Must have a good

understanding of the demand

function of its product.

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Increasing the PriceIncreasing the Price

• Objectives: (a) To maintain

profitability during an inflationary

period (b) To take advantage of

product differences, real or

perceived (c) To segment the

current served market.

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Increasing the PriceIncreasing the Price

• Requirements: (a) Relatively low

price elasticity but relatively high

elasticity with respect to some other

factor such as quality or distribution,

(b) Reinforcement from other

ingredients of the marketing mix

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3. Pricing 3. Pricing Flexibility Flexibility

StrategyStrategy

• One Price Strategy

• Flexible Pricing Strategy

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One Price One Price StrategyStrategy

• Charging the same price to all

customers under similar conditions

and for the same quantities.

• Objectives: (a) To simplify pricing

decisions (b) To maintain goodwill

among customers.

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One Price One Price StrategyStrategy

• Requirements:

• Detailed analysis of the firm's

position and cost structure as

compared with the rest of the

industry

• Information concerning the cost

variability of offering the same

price to everyone

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One Price One Price StrategyStrategy

• Knowledge of the economies of

scale available to the firm

• Information on competitive

prices; information on the price

that customers are ready to

pay.

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Flexible Pricing StrategyFlexible Pricing Strategy

• Charging different prices to different

customers for the same product and

quantity.

• Objective: To maximize short-term profits

and build traffic by allowing upward and

downward adjustments in price depending

on competitive conditions and how much the

customer is willing to pay for the product.

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Flexible Pricing StrategyFlexible Pricing Strategy

• Requirements: Have the information needed

to implement the strategy.

• Usually this strategy is implemented in one

of four ways: (a) by market (b) by product (c)

by timing (d) by technology.

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Flexible Pricing StrategyFlexible Pricing Strategy

• Other requirements include :

• a customer-value analysis of the product,

• an emphasis on profit margin rather than

just volume, and

• a record of competitive reactions to price

moves in the past.

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4. Price Leadership 4. Price Leadership StrategyStrategy

• This strategy is used by the leading

firm in an industry in making major

pricing moves, which are followed by

other firms in the industry.

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4. Price Leadership 4. Price Leadership StrategyStrategy

• Objective: To gain control of pricing

decisions within an industry in order

to support the leading firm's own

marketing strategy (i.e., create

barriers to entry, increase profit

margin, etc.).

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4. Price Leadership 4. Price Leadership StrategyStrategy

• Requirements:

• An oligopolistic situation

• An industry in which all firms are

affected by the same price

variables (i.e., cost, competition,

demand),

• An industry in which all firms

have common pricing objectives

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Source of Reference:

Subhas Jain, Marketing Planning and StrategyMarketing Planning and Strategy, Prentice

Hall International.