Marketing strategy has the fundamental goal of increasing sales and achieving a sustainable competitive advantage.Marketing strategy includes all basic, short-term, 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.
Marketing management versus marketing strategy
The distinction between “strategic” and “managerial” marketing is commonly used to distinguish “two phases having different goals and based on different conceptual tools. Strategic marketing concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial marketing is focused on the implementation of specific targets.”
Developing a marketing strategy
Strategic planning typically begins with a scan of the business environment, both internal and external, which includes understanding strategic constraints.It is generally necessary to try to grasp many aspects of the external environment, including technological, economic, cultural, political and legal aspects. Goals are chosen. Then, a marketing strategy or marketing plan is an explanation of what specific actions will be taken over time to achieve the objectives.
Plans can be extended to cover many years, with sub-plans for each year, although as the speed of change in the merchandising environment quickens, time horizons are becoming shorter.Ideally, strategies are both dynamic and interactive, partially planned and partially unplanned, to enable a firm to react to unforeseen developments while trying to keep focused on a specific pathway; generally, a longer time frame is preferred.
There are simulations such as customer lifetime value models which can help marketers conduct “what-if” analyses to forecast what might happen based on possible actions, and gauge how specific actions might affect such variables as the revenue-per-customer and the churn rate. Strategies often specify how to adjust the marketing mix; firms can use tools such as Marketing Mix Modeling to help them decide how to allocate scarce resources for different media, as well as how to allocate funds across a portfolio of brands. In addition, firms can conduct analyses of performance, customer analysis, competitor analysis, and target market analysis. A key aspect of marketing strategy is often to keep marketing consistent with a company’s overarching mission statement.
Marketing strategy should not be confused with a marketing objective or mission. For example, a goal may be to become the market leader, perhaps in a specific niche; a mission may be something along the lines of “to serve customers with honor and dignity”; in contrast, a marketing strategy describes how a firm will achieve the stated goal in a way which is consistent with the mission, perhaps by detailed plans for how it might build a referral network, for example. Strategy varies by type of market. A well-established firm in a mature market will likely have a different strategy than a start-up. Plans usually involve monitoring, to assess progress, and prepare for contingencies if problems arise. You should also write a marketing strategy when starting your own business.
The customised target strategy
The requirements of individual customer markets are unique, and their purchases sufficient to make viable the design of a new marketing mix for each customer.
If a company adopts this type of market strategy, they design a separate marketing mix for each customer.
The differentiated strategy
Specific marketing mixes can be developed to appeal to all/some of the segments when market segmentation reveals several potential targets.
Diversity of strategies
Marketing strategies may differ depending on the unique situation of the individual business. However, there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below:
Strategies based on market dominance
In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are four types of market dominance strategies:
- Leader
- Challenger
- Follower
- Nicher
Entrant strategies
According to Lieberman and Montgomery, every entrant into a market – whether it is new or not – is classified under a Market Pioneer, Close Follower or a Late follower
PIONEERS
Market Pioneers are known to often open a new market to consumers based off a major innovation.They emphasis these product developments, and in a significant amount of cases, studies have shown that early entrants – or pioneers – into a market have serious market-share advantages above all those who enter later.Pioneers have the first-mover advantage, and in order to have this advantage, business’ must ensure they have at least one or more of three primary sources: Technological Leadership, Preemption of Assets or Buyer Switching Costs, Technological Leadership means gaining an advantage through either Research and Development or the “learning curve”.
This lets a business use the research and development stage as a key point of selling due to primary research of a new or developed product. Preemption of Assets can help gain an advantage through acquiring scarce assets within a certain market, allowing the first-mover to be able to have control of existing assets rather than those that are created through new technology. Thus allowing pre-existing information to be used and a lower risk when first entering a new market. By being a first entrant, it is easy to avoid higher switching costs compared to later entrants. For example, those who enter later would have to invest more expenditure in order to encourage customers away from early entrants ).
However, while Market Pioneers may have the “highest probability of engaging in product development” and lower switching costs, to have the first-mover advantage, it can be more expensive due to product innovation being more costly than product imitation. It has been found that while Pioneers in both consumer goods and industrial markets have gained “significant sales advantages”,they incur larger disadvantages cost-wise.
CLOSE FOLLOWERS
Being a Market Pioneer can more often than not, attract entrepreneurs and/or investors depending on the benefits of the market. If there is an upside potential and the ability to have a stable market share, many businesses would start to follow in the footsteps of these pioneers. These are more commonly known as Close Followers.
These entrants into the market can also be seen as challengers to the Market Pioneers and the Late Followers. This is because early followers are more than likely to invest a significant amount in Product Research and Development than later entrants.By doing this, it allows businesses to find weaknesses in the products produced before, thus leading to improvements and expansion on the aforementioned product. Therefore, it could also lead to customer preference, which is essential in market success.
Due to the nature of early followers and the research time being later than Market Pioneers, different development strategies are used as opposed to those who entered the market in the beginning,and the same is applied to those who are Late Followers in the market. By having a different strategy, it allows the followers to create their own unique selling point and perhaps target a different audience in comparison to that of the Market Pioneers. Early following into a market can often be encouraged by an established business’ product that is “threatened or has industry-specific supporting assets”.
LATE FOLLOWERS
Those who follow after the Close Followers are known as the Late Entrants. While being a Late Entrant can seem very daunting, there are some perks to being a latecomer. For example, Late Entrants have the ability to learn from those who are already in the market or have previously entered.Late Followers have the advantage of learning from their early competitors and improving the benefits or reducing the total costs.
This allows them to create a strategy that could essentially mean gaining market share and most importantly, staying in the market. In addition to this, markets evolve, leading to consumers wanting improvements and advancements on products.Late Followers have the advantage of catching the shifts in customer needs and wants towards the products.When bearing in mind customer preference, customer value has a significant influence. Customer value means taking into account the investment of customers as well as the brand or product ,It is created through the “perceptions of benefits” and the “total cost of ownership”.
On the other hand, if the needs and wants of consumers have only slightly altered, Late Followers could have a cost advantage over early entrants due to the use of product imitation. However, if a business is switching markets, this could take the cost advantage away due to the expense of changing markets for the business. Late Entry into a market does not necessarily mean there is a disadvantage when it comes to market share, it depends on how the marketing mix is adopted and the performance of the business.If the marketing mix is not used correctly – despite the entrant time – the business will gain little to no advantages, potentially missing out on a significant opportunity.
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