How do companies compete and succeed in a global market place? One part of the answer is a commitment to creating and retaining satisfied customers. Second part is adapting to a continuously changing marketplace through market-oriented strategic planning.
The aim of strategic planning is to shape and reshape the company's businesses and products so that they yield target profits and growth. Strategic planning calls for action in three key areas. The first calls for managing a company's businesses as an investment portfolio. Resources must be allocated to various businesses based profit earning potential. Second, each business has to be assessed for its market growth rate and the company's position and fit in the market. Based on this assessment objectives and goals are to be fixed for each business and strategy, that is game plan for achieving the objectives and goals is to be made for each business.
Marketing plays a key role in the company's strategic planning process. Customers' needs are the core focus of strategy. That does not mean overall strategy or marketing strategy are set up by marketing department only. In today's companies plans are developed by teams, with inputs and signoffs from every important function. In most large companies strategic plans are made at four levels: corporate level, division level, business level, and product level.
The Nature of High Performance Business
The consulting firm of Arthur D. Little proposed a model of the Characteristics of a high-performance business. The characteristics are related to stakeholders, processes, resources and organization.
Planning at the corporate level, division and business levels is an integral part of the marketing process. Businesses are engaged in delivering value at a profit to customers. This value delivery process can be initiated through a technological development and the producer hires people to make and sell. In this type of value delivery process, marketing takes place in the second half of the value delivery process.
But a more rational value delivery process is doing marketing at the beginning. There is homework or initial work to be done by marketing before a product is conceptualized or designed. The marketing staff have to identify the potential market for the likely product (product idea) and must segment the market and select the appropriate target segment and then only product can be finalized for its specific attributes. Kotler emphasized that segmentation, targeting, positioning (STP) is the essence of strategic marketing.
Once the business unit accepts to offer the value proposition supported by marketing as well as operations, further marketing activities include detailed product specifications, distribution system and price decisions. At the next stage, the value proposition is to be communicated in the market so that there are enough potential customers who are aware of the product and will be inclined to buy the product for the trial. Advertising through mass communication channels, public relations, personal selling and sales promotion campaigns are launched in this stage to make actual sales.
To carry out the three marketing activities outlined at the three stages, marketing managers follow the marketing process.
The marketing process consists of analyzing marketing opportunities, developing marketing strategies, planning marketing programs, and managing the marketing effort. (Kotler)
Analyzing Marketing Opportunities
Periodically, marketing managers have to analyze the long-run opportunities in the market or economic environment for improving the unit's performance. These opportunities can be for new products. Marketers have to conduct formal research using secondary sources followed by personal, phone, mail surveys, which are further supported by focus groups (primary sources). The data collected is analyzed by statistical tools to identify the effects of various marketing activities. In the marketing research, information related to long-term activities of competitors is also to be collected understood.
Developing Marketing Strategies
The information collected from the marketing research process to support marketing strategy decisions has to be analyzed to find stable and distinct market segments. The needs and potential of each segment needs to estimated and the segment that the market can serve best and make optimal profit is to be determined. For this selected target segment, differentiation decision for the product offered is to be arrived at and positioning strategy has to finalized. While differentiation can be in multiple attributes, position strategy calls for one or two features to be emphasized in communications so that position is associated with the company's product whenever a potential user thinks of the product.
The differentiation decision gives the signal for full development of the new product. Marketing has further role to play in the new product development process. The marketing strategy related to the product gets modified based on the life cycle stages: introduction, growth, maturity, and decline. The marketing strategy is also influenced by the position the product gets in the competitive market place: leader, challenger, follower and niche player. Internationalization and globalization may become possible or may become necessary at some stage in the product life cycle and marketing strategy may need to redeveloped taking into consideration the expanded market.
Marketing strategy decisions have to be converted into marketing allocations of budget and manpower for the marketing tools of the marketing mix.
Marketing mix is a key concept in marketing management and allows orderly thinking of the marketing process.
*Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. (Kotler)
There are large number of marketing tools. McCarthy provided a categorization for them in terms of four Ps of marketing: Product, price, place and promotion. Under each P, there are number of tools. Some choices are possible in short term frames while some choices may take longer-time. A choice to develop a new product can be implemented in long-term only. To make budget allocations to various possible marketing tools, sales-response functions are developed. The functions indicate how sales would be affected by the various incremental amounts spent on each specific tool.
Product related marketing tools can be related to quality, design,packaging, branding etc.
Price related options or marketing tools would be commissions to wholesalers and retailers, discounts and credit terms.
Place options are related to distribution outlets - online sales, home shopping, mail order shopping, retail stores in neighborhoods and giant malls etc. Multi-brand stores versus single brand stores is also a choice.
Promotion includes personal sales, as well as choice of mass media, events to support and now social media activities.
Marketing strategy making and marketing programs development form the marketing process. Of course these activities are subjected to managerial oversight which is under the activity of managing the marketing effort.
To sum it up Marketing Strategy activity is divided into:
Differentiating and Positioning the Market Offering
Developing New Products
Managing Life-Cycle Strategies
Designing Appropriate Competitive Strategies (Leader, Challenger,, Follower, Nicher)
Designing Global Marketing Strategy
Marketing Programs are explained under
Product related programs
Marketing channel decisions
Kotler and Keller - 14 Edition Marketing Management Brief
30 Day MBA Self Study Course - Free Notes
February Management Knowledge Revision Plan
Planned Revision schedule for marketing chapters is in February and March
Updated 23 Feb 2015, 14 Jan 2015, 12 Dec 2011