Marketing Strategy An Overview

Raymond Corey, HBS Note 9-500-005, 1999

TakeAway Points

Strategy At Multiple Levels

Corporate Divisional Business Unit (Function) Department

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Marketing Strategy:
How to deliver products & services to markets

Product / market selection

Which markets with what products?

Price
Level, structure

Distribution systems
Wholesale & retail channels

Communications
Advertising plus

Pre- & Post-sales Service, Branding, Location

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Marketing Mix
Varies
From on product to another Over stages of growth Among competitors

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Product / Market Selection

Market: a pocket of latent demand A vein of ore in the ground Product: total package of attributes (tangible and intangible, direct & indirect, positive & negative) that a customer obtains when making a purchase Perceived value = potential value + education Segment: potential customers alike in the way they perceive value, their buying behavior, and the way they use the product
Common bases: Demographic, psychographic, geographic, use & application

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Product / Market Selection

Selection Criteria
Product value: segments that value the product the most Long-run growth potential: Core plus follow-on profitability Resource commitment: R&D, marketing, production Competitive positioning: entry sequence, core competencies Company fit: competencies, cannibalization

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Price Elements
Base level Structure Discounts Terms & conditions Promotions
Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Price Factors
Supply & demand
Generally macro, except monopoly conditions

Production & overhead costs (set the floor)

Current-future, fixed-variable, scale Efficient manufacturing & distribution and the realization of scale economies are often the foundation of market success

Competition (sets the ceiling)

Interbrand, Intrabrand (among channel members) Differentiation = quasi-monopoly status, local monopoly

Buyer bargaining power

Relative importance, options, switching costs

Product value to potential customers

Variable across segments, differentiable

Success factors: low cost, differentiation, price leadership

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Price Strategies
Penetration- skimming
Penetration higher risk: free of defects, fast adoption, adequate capacity

High/low or everyday low (EDLP)

EDLP = no promotions

One price or customized

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Factors Affecting Price Levels

Price Depressors Relatively high supply Intense competition Intrabrand competition High buyer power Flexible costing Black markets Price Boosters Controlled supply High product value Product differentiation Buyer dependency High switching costs Price leadership

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Distribution
Direct-indirect Owned-franchised-open Selective-intense

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Distribution: Supplier Strength

Selective vs. intense (intrabrand competition) Superior line breadth & depth (single source) High interdependency (% business done) Presence at retail (sales support) End market development (pull)
Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999

Market Communications Objectives

Create awareness Establish product superiority Indicate where to buy Reinforce purchase decision Suggest follow-ons

Marketing Strategy An Overview, Raymond Corey, HBS Note 9-500-005, 1999