Marketing strategy

8 August 2016

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.

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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. The marketing mix is a business tool used in marketing and by marketeers . The marketing mix is often crucial when determining a product or brand’s offer, and is often associated with the four P’s: price, product, promotion, and place. [1] In service marketing, however, the four Ps are expanded to the seven P’s [2] or eight P’s to address the different nature of services.

Category Definition Product A product is seen as an item that satisfies what a consumer demands. It is a tangible good or an intangible service. Tangible products are those that have an independent physical existence. Typical examples of mass-produced, tangible objects are the motor car and the disposable razor. A less obvious but ubiquitous mass-produced service is a computer operating system. Every product is subject to a life-cycle including a growth phase followed by a maturity phase and finally an eventual period of decline as sales falls.

Marketers must do careful research on how long the life cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product move. The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line’s depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company’s resources and how to configure the product mix so that each product complements the other.

The marketer must also consider product development strategies. [3] Price The amount a customer pays for the product. The price is very important as it determines the company’s profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well. The marketer should set a price that complements the other elements of the marketing mix. [3] When setting a price, the marketer must be aware of the customer perceived value for the product.

Three basic pricing strategies are: market skimming pricing, market penetration pricing and neutral pricing. The ‘reference value’ (where the consumer refers to the prices of competing products) and the ‘differential value’ (the consumer’s view of this product’s attributes versus the attributes of other products) must be taken into account. [3] Promotion All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organisation and sales promotion.

Advertising covers any communication that is paid for, from cinema commercials, radio and Internet advertisements through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and public relations (see ‘product’ above).

Distribution(Place) Refers to providing the product at a place which is convenient for consumers to access. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix. [3][8] Segmenting[edit] Segmenting is the process of dividing the market into segments based on customer characteristics and needs. The main activity segmenting consists of four sub activities. These are: 1. determining who the actual and potential customers are

identifying segments 3. analyzing the intensity of competitors in the market 4. selecting the attractive customer segments. The first, second and fourth steps are described as market segmentation. The third step of analyzing the intensity of the competitors is added to the process of segmenting in this process description. When different segments are identified, it is not necessary that these segments are attractive to target. A company is almost never alone in a market — competitors have a great influence on the attractiveness of entering a certain market.

When there is a high intensity of competitors, it is hard to obtain a profitable market share and a company may decide not to enter a certain market. The third step of segmenting is the first part of the topic of competitor analysis. The need for segmenting a market is based on the fact that no market is homogeneous. For one product the market can be divided in different customer groups. The variables used for this segmenting in these groups are usually geographical, psychographical, behavioral and demographic variables.

This results in segments which are homogeneous within and heterogeneous between each other. When these segments are known, it is important to decide on which market to target. Not every market is an attractive market to enter. A little filtering has been done in this activity, but there are more factors to take in account before targeting a certain market segment. This process is called targeting. Targeting[edit] After the most attractive segments are selected, a company should not directly start targeting all these segments — other important factors come into play in defining a target market.

Four sub activities form the basis for deciding on which segments will actually be targeted. The four sub activities within targeting are: 1. defining the abilities of the company and resources needed to enter a market 2. analyzing competitors on their resources and skills 3. considering the company’s abilities compared to the competitors’ abilities 4. deciding on the actual target markets. The first three sub activities are described as the topic competitor analysis. The last sub activity of deciding on the actual target market is an analysis of the company’s abilities to those of its competitors.

The results of this analysis leads to a list of segments which are most attractive to target and have a good chance of leading to a profitable market share. Obviously, targeting can only be done when segments have been defined, as these segments allow firms to analyze the competitors in this market. When the process of targeting is ended, the markets to target are selected, but the way to use marketing in these markets is not yet defined. To decide on the actual marketing strategy, knowledge of the differential advantages of each segment is needed. Positioning[edit]

When the list of target markets is made, a company might want to start on deciding on a good marketing mix directly. But an important step before developing the marketing mix is deciding on how to create an identity or image of the product in the mind of the customer. Every segment is different from the others, so different customers with different ideas of what they expect from the product. In the process of positioning the company: 1. identifies the differential advantages in each segment 2. decides on a different positioning concept for each of these segments.

This process is described at the topic positioning, here different concepts of positioning are given. The process-data model shows the concepts resulting from the different activities before and within positioning. The model shows how the predefined concepts are the basis for the positioning statement. The analyses done of the market, competitors and abilities of the company are necessary to create a good positioning statement. When the positioning statement is created, one can start on creating the marketing mix.

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