MARKETING

STRATEGY
By

Manishkumar N. Varma

Faculty
Department of Management Sciences (PUMBA)
University of Pune
Pune – 411 007
Eight M’s of Management
» Men
» Money
» Materials
» Machines
» Methods
» Market
» Milieu - An environment or a setting.
» Minutes

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 “Optimum Utilization
of these resources (8 M)
is
Management .”

3
 Marketing Strategy
STRATEGY

A strategy is a fundamental pattern of present and planned

objectives, resource deployments and interactions of an
organization with markets, competitors and other environmental
factors.

Strategy should specify

• What
• Where
• How 4
 Components of Strategy

Components or Sets of issues:

• Scope
• Goals and Objectives
• Resource deployments
• Identification of sustainable competitive advantage.
• Synergy- The interaction of two or more agents or
forces so that their combined effect is greater than
the sum of their individual.

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 Hierarchy of Strategy
Environmental
factors Corporate Mission
Corporate
Strategy
Corporate goals
Corporate Development
& Objectives Deployment of resources
Strategy

SBU – I SBU – II SBU - n

Business
Strategy
Deployment of Resources
Business Unit’s Across product-markets
Competitive Strategy
Objectives And functions

Marketing strategy
For product R&D HRM Operation
Market entry Strategy & Strategy & Strategy &
Plans Plans plans Functional
Strategy
Tactical marketing
Plan for product
Market entry

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 Porter Model of Competitive
Industry Structure
New Entrants

Threat of
New Entrants

Industry
Bargaining Competition Bargaining
Suppliers Buyers
Power of Intensity of Power of
Suppliers Rivalry Buyers

Threat of
Substitutes

Substitute

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 Threat of New Entrants

• Economies of Scale.
• Capital requirements
• Switching costs
• Access to distribution
• Expected retaliation
• Brand equity

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 Bargaining Power
of Suppliers
• Many buyers and few sellers
• Differentiated supplies
• Crucial supplies
• Forward Integration
• Backward Integration
• Level of dependence

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 Bargaining Power
of Customers
• Few dominant customers
• Non-differentiated products
• Small portion of customer’s total purchase
• Backward integration
• Forward integration
• Key supplies

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 Threat of Substitutes
• Buyer’s willingness to substitute
• Relative price and performance of
substitutes
• Cost of switching over to substitutes

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 Industry competitors
• Structure of Competition
• Structure of costs
• Degree of differentiation
• Switching Costs
• Strategic objectives
• Exit barriers

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COMPETITOR
ANALYSIS
 Answer five key question

1. Who are the competitors?

2. What are their strengths and weakness?
– Identify key factors for success in the
industry
– Rate one’s company and competitors on
each key success factor using a rating scale
– Consumer implications for competitive
strategy

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 Answer five key question

3. What are the strategic objectives and

thrusts of competitors?
4. What are their strengths?
5. What are their response patterns?

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COMPETITIVE ADVANTAGE
by
COMPETITIVE STRATEGY
 Creating A
Differential Advantage

• Product
• Distribution
• Promotion
• Price

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Hierarchy of goals and objectives

Porter’s Economic Theory of Profits

– Barriers to Entry

– Competition

– Substitutes

– Customers

– Suppliers

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Generic Marketing Strategies
– Cost Leadership
• Lower costs of production and distribution

– Differentiation
• Unique product or brand

– Focus
• Focus on customer needs in a few segments

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Product Mix Strategies
Market penetration versus market skimming

Premium Penetra- Super

High Goods tion Bargain
Quality
Over- Average Bargain
Medium Pricing Quality

Low Hit and Shoddy Cheap

Run Goods Goods

High Medium Low

Price

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Product Market Growth Strategies

Old Market Penetration Product Development

(increase usage) (new uses)

Markets

New Market Development Diversification

(new users) (new users, new uses)

Old New

Products 21
Boston Consulting Group Strategy:
Relative Market Share

Market Growth Rate

Problems with BCG Approach

Difficult to estimate relative market share in rapidly growing
markets

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BCG Matrix:

22%

Stars ?
Some cash use High cash use
Future cash cow ? Is to build or not

Market Growth 10%

Rate

Cash Cows Dogs

Generate cash for Low or no cash use
?, Stars When to divest

0%
10x 1..5x .1x (log scale)
Relative Market Share 23
Market Leader Strategies
Increase Size of Total Market
Product-Market Growth Strategies

Protect Market Share

Fortification

Assortment of brands, sizes

Innovation

Best defense is a good offense

Counteroffensive

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Market Leader Strategies (cont.)
Increase Market Share
BCG
Antitrust constraints

100%

Market Share

Marketing Effort ($)

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Market Challenger Strategies
Frontal Attack
Out-innovate leader
Tough to do, easier to defend
Flanking/Bypass Attack
Attack where leader is not looking
Find a new market segment
Price Discount Strategy
Buyers are sensitive to price
Works if leader does not cut price

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Market Challenger Strategies (cont.)
Cheaper Goods Strategy
Lower quality but much lower price
Vulnerable to still cheaper goods

Prestige Goods Strategy

Increase both quality and price

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Market Follower Strategies
Conscious Parallelism
Similar products, prices
Avoid unprofitable segments

Market Niche
Specialize in a very small group of customers
Concentrated segmentation strategy……

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 Encirclement

Flanking Defense

Preemptive
Defense
Contraction
Frontal
Defender Defense
Attacker (bigger)
(smaller)
Attack
Position
Counteroffensive Defense
Guerilla Attack

Mobile Defense

Flank Attack

Bypass 29
 eMarketing

Is eMarketing anything new?

…or just an adaptation of existing strategy?

Addressability – ability to identify customer prior to purchase

Marketers could always do this.

So why is web different? Is it more efficient…?

…only if you do not delete your cookies…?

…or they keep extensive files on you…

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 eMarketing

Interactivity – customers can express their needs and wants

directly to the firm

Marketers could always do this too. So what is new?

…another efficiency argument…?

Memory – ability to access individual customer profiles

and purchase histories

This is probably valid. Information existed before but

was hard to access

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 eMarketing

Control – customer’s ability to control flow and sequence of information

Pull versus push medium…web versus television.

Who control’s the flow?

Definitely an eMarketing characteristic, but a two-edged sword.

Why? Customers control the flow……

Accessibility – ability to obtain information…..

“Retrieving info from the Internet is like trying to drink from a

fire hose.” You could always do this, web may be easier
for some users.
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 eMarketing

Digitilization – can the product or benefits be represented digitally?

Does the media match the product’s attributes?

…a problem for all media…?

So, does eMarketing exist? Maybe, or maybe it is just

another information flow/distribution system to
use in designing a marketing strategy to meet
customer needs…(and maximize profits).

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 Marketing Strategy

Bear Theory

Differential versus Absolute Advantage

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