Topic 1: Introduction to Marketing Strategy

Marketing Strategy is 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.

The process generally 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.

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 An organization's strategy combines all of its marketing goals into one comprehensive plan. A
good marketing strategy should be drawn from market research and focus on the right product
mix in order to achieve the maximum profit potential and sustain the business. The marketing
strategy is the foundation of a marketing plan.

Topic 2: Strategic Importance of a Market

Two dimensions determine the strategic importance of a firm:
I. Market Potential
II. Learning Potential

I. Market Potential: Market Potential depends on the following:

i. Current Market Size
ii. Growth Expectations
II. Learning Potential: There are two drivers of learning potential:
(i) Driver 1: Pace at which relevant technologies are evolving (leading edge customers,
innovative competitors, universities, local research centres, and firms in related
industries)
(ii) Driver 2: Presence of sophisticated and demanding customers for a particular product
or service
Topic 3: Ability to Exploit a Market
i. Height of entry barriers
ii. Intensity of competition in the market
Topic 4:Foundation of Marketing Strategy
Segmentation, Targeting and Positioning

The goal of the STP process is to guide the organization to the development and implementation
of an appropriate marketing mix.
Topic 5: Segmentation:
Basic Test of Segmentation
H Homogeneity
H Heterogeneity
M Meaningful
Criteria for Effective Segmentation

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 MASDA
MAPS

MASDA MAPS
M Measurable M Measurable
A Accessible A Accessible
S Sustainable P Profitable
D Distinguishable S Sustainable
A Actionable
Topic 6: Three Basic Steps to Strategy Formulation
Step 1: Segmentation Identification
Step 2: Market Selection
Step 3: Positioning
Topic 7:Positioning IMP
What is Positioning?
Positioning is placing a product or service in the mind of consumer.

Positioning is not what you do to a product; positioning is what you do to the mind of the
consumer Al Ries and Jack Trout
Positioning is increasingly becoming critical to high technology products.
Three Level Positioning Model
Level 1: Core Product, Technical Specification, Price
Level 2: Extended Product
Distribution and Sales, Service and Support System.
Level III: Total Product, Corporate Image
Five Steps in Positioning
Documenting
Deciding
Differentiating
Designing

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 Delivering

Documenting: What benefits are the most important to your current and potential customers?
Deciding: What image do you want your current and potential customers to have of your
organization?
Differentiating: Which competitors do you want to appear different from, and what are the
factors that you will use to make your organization different from them?
Designing: How will you develop and communicate these differences?
Delivering: How will you make good on what youve promised, and how do you make sure that
you have delivered?
Topic 8: Three Step Strategy Formulation Process for Selecting Target Markets
Step 1: Identify Market Segments
Step 2: Target Market Segments
Step 3: Position the Segment

Step 1: Identify Market Segments

Market Segment A: Segment Name
-------------------------
Market Segment B: Segment Name
-------------------------
Market Segment X: Segment Name
-------------------------
Step 2: Target Market Segmentation
(Select key segments for marketing activities)
Primary Market Segment Name
---------------------------
Target Market Profiles and Needs
Secondary Market Segment Name
---------------------------
Target Market Profiles and Needs

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Step 3: Position the Segments
(Formulate a unique marketing strategy)
Primary Market ----------------------------
Segment Name
Competitive Advantage
Positioning Strategy
Secondary Market --------------------------
Segment Name
Competitive Advantage
Positioning Strategy

Topic 9: Strategies for finding Niches

1. Product /Service Modification
2. Customer Service Variations
3. Different Distribution Channels
4. Target Communications
5. Variable Pricing
Topic 10: Niche Strategy
What is a Market Niche?
A Market Niche is a small segment that offers incremental business opportunity. It is a small sub
segment in a market.
What is Nichemanship?
Nichemanship is the process whereby a company integrates marketing and managerial
activities to optimise its competitive market position.
Characteristics of a Market Niche
1. The company determines those products that it can best offer given its distinct
competencies, competition and customer needs.
2. The company designs specialised goods and services to meet identified market demands.

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 3. By only focusing its energies on specific target markets, the company is more efficient
than its large counterparts in satisfying its customer database.
4. Change is sought. Market niche companies are not looking to be like everyone else but
to seek a new and better way to conduct business.
5. A Management commitment to excellence in all endeavors is the market niche companys
underlying operating philosophy.An environment for growth is fostered.
6. These firms are trend setters/ trend spotters, Market innovators, and creative marketing
strategists.
Assessment of a Niche Marketer
1. Do you know your firms strengths, weaknesses and competitive Advantage?
2. Do you understand your customers, inside and out?
3. Is your companys dependent on one or a limited number of customers?
4. Have you developed an ongoing customer information system?
5. How well do you know your competition? (For example, why customers use your
competitors products and how can you get them to switch?)
6. What is your positioning strategy? Have you developed and communicated a clear image
for your product/product line?How is your product differentiated from that of your rivals?
7. Have you created your own safe haven in the market?
8. Are your resources spread too thin? (Watch for overexpansion , attracting too many
niches)
9. Is your marketing program synergistic? Is it consistent with
your financial, managerial, operations and R&D management?
10. Are you monitoring shifts in the markets place
and responding quickly to them?
Evaluation of A Niche
S Size
I Identifiability
G Growth
A Accessibility
A Absence of Vulnerability

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 S - Size: Is the size of the niche big enough to serve customers
profitability?
I -Identifiability: Is the niche easily identifiable in the market?
G - Growth Does the niche has adequate growth potential?
A - Accessibility Is the niche accessible through different media at
low cost?
A -Absence of Vulnerability: Is the niche hospitable without any
easy attack by competitors?
Topic 11: Basics of Marketing Plan
1. Market Research
Collect, organize, and write down data about the market that is currently buying the product(s) or
service(s) you will sell. Some areas to consider:
Market dynamics, patterns including seasonality
Customers - demographics, market segment, target markets, needs, buying decisions
Product - what's out there now, what's the competition offering
Current sales in the industry
Benchmarks in the industry
Suppliers - vendors that you will need to rely on
2.Target Market
Find niche or Target markets for your product and describe them.
3. Product
Describe your product. How does your product relate to the market? What does your market
need, what do they currently use, what do they need above and beyond current use?
4. Competition
Describe your competition. Develop your "unique selling proposition." What makes you stand
apart from your competition? What is your competition doing about branding?
5. Mission Statement
Write a few sentences that state:
"Key market" - who you're selling to
"Contribution" - what you're selling
"Distinction" - your unique selling proposition

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6. Market Strategies
Write down the marketing and promotion strategies that you want to use or at least consider
using. Strategies to consider:
Networking - go where your market is
Direct marketing - sales letters, brochures, flyers
Advertising - print media, directories
Training programs - to increase awareness
Write articles, give advice, become known as an expert
Direct/personal selling
Publicity/press releases
Trade shows
Web site
7. Pricing, Positioning and Branding
From the information you've collected, establish strategies for determining the price of your
product, where your product will be positioned in the market and how you will achieve brand
awareness.
8. Budget
Budget your dollars. What strategies can you afford? What can you do in house, what do you
need to outsource.
9. Marketing Goals
Establish quantifiable marketing goals. This means goals that you can turn into numbers. For
instance, your goals might be to gain at least 30 new clients or to sell 10 products per week, or to
increase your income by 30% this year. Your goals might include sales, profits, or customer's
satisfaction.
10. Monitor Your Results
Test and analyze. Identify the strategies that are working.
Survey customers
Track sales, leads, visitors to your web site, percent of sales to impressions
By researching your markets, your competition, and determining your unique positioning, you
are in a much better position to promote and sell your product or service. By establishing goals
for your marketing campaign, you can better understand whether or not your efforts are
generating results through ongoing review and evaluation of results.
Topic 12: Marketing Audit

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A Marketing Audit is often used by a company reviewing its business strategy. A marketing
audit can inform management with an invaluable customer and market insight, vital to help them
set realistic business objectives.
Conducting a Marketing Audit Factors to be considered
1. Are you a narrowly focused company or diversified company?
2. How are your products and services positioned in the market place?
3. Are you trying to reposition any of your products or services?
4. What are the list of products and services that you offer in the market place?
5. What is your short-range and long-range marketing strategy?
6. Have you conducted a SWOT analysis?
7. What are your market share objectives in the next year and five years from now?
8. Who are your major customers and what are their characteristics?
9. What is your unique selling proposition and are your customers aware of it?
10. What are your competitors strategic profiles?
11. Do you have any specific market research techniques to keep track of market
fluctuations?
12. What does your company want to accomplish in the next year and the next five years?
13. Has your company made any customer satisfaction analysis?
14. What strategic moves do you expect your competitors to make and how will they impact
their company?
15. How active are your competitors in the areas of pricing, distribution and promotion?
16. What plans does your company have to offset competitive actions taken by others?
17. What media has you used in the past? How effective is it in the past?
18. Do you access to low cost media that can convey persuasive messages to your customers?
19. What modes of free publicity can your company use?
20. Do you have any specific marketing strategies aimed at tackling changing customer
attitudes and preferences?
21. Are all your operations in compliance with government agencies?
22. Are there no trade laws and consumerlaws that pose a threat to your business?
23. Are the insurance policies not too expensive?
Topic 13: 7 Key areas of Marketing Capability
1. Alignment
2. Value
3. Innovation
4. Managing Insight
5. Engaging Customers

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6. Telling the Stories.
7. Executing the Plan.
Do we have alignment? A firm's visions, goals, and objectives need to align across divisions
and functions, and permeate into its daily tactical operations. Where possible, firms need to align
with their suppliers and customers to maintain consistency of purpose.
Where is the value? What is it that makes your brand valuable in the hearts and minds of your
customers, suppliers, investors, and the local community? What do you stand for?
What's coming next? Firms that don't innovate... die. How are you managing the evolution of
the customer experience? Remaining relevant and central to customers' hearts and minds is the
central focus of any good chief marketing officer.
Managing insight. Knowledge is a powerful asset. How do you gather and disseminate
information to the areas of the business that need it most? What are the opportunities open to
your marketing team, how are they integrated into the mix, and who is best suited to help you
succeed? How are you engaging your customers in the process of building management insight?
Engaging customers in the firm's creative process. Ownership of the customer is everyone's
responsibility. Customers must be engaged in the creative and delivery process of the business to
maximize the experiential opportunities.
Telling the stories. The conversations that occur at all levels in the company need to be
consistently aligned with the values and mission of the business. One of the biggest problems
facing most firms is the multiplicity of differing stories heard in the public arena.
Executing the Plan. It is the role of the entire business to jointly create, support, and deliver the
plan. A good audit will review the processes for engaging and including the whole organization
in the marketing plan.
Topic 14: Value Proposition
A Value Proposition is a promise of value to be delivered and acknowledged and a belief from
the customer that value will be delivered and experienced. A value proposition can apply to an
entire organization, or parts thereof, or customer accounts, or products or services.
Topic 15: Value Proposition Builder
Stage 1: Market: for which market is the value proposition being created?
Stage 2: Value Experience or Customer Experience: What does the market value most? The
effectiveness of the value proposition depends on gathering real customer, prospect or employee
feedback.
Stage 3: Offering: which products or services are being offered?
Stage 4: Benefits: what are the benefits the market will derive from the product or service?
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Stage 5: Alternatives and differentiation: what alternative options does the market have to the
product or service?
Stage 6: Proof: what evidence is there to substantiate your value proposition?
Topic 16: Applications of Value Proposition
1. Customers: To explain why a customer should buy from a supplier
2. Partners: to persuade them to forge a strategic alliance or joint venture.
3. Internal departments: to influence the outcome of business decisions. For example,
an IT department may use a value proposition to convince its board to support funding its
projects.
4. Employees: to "sell" the company when recruiting new people, or for retaining and
motivating existing employees. This is sometimes called the HR or employee value
proposition.
5. Suppliers: To explain why a supplier should want to be a supplier to an organization or
customer.
Topic 17: Customer Engagement
Customer Engagement is the depth of the relationship a customer has with a brand.
Customer Engagement (CE) is the engagement of customers with one another, with a
company or a brand.
The initiative for engagement can be either consumer- or company-led and the medium
of engagement can be on or offline.
Hollebeek defined a Customer's Engagement (CE) with a specific brand as "the level of a
customers cognitive, emotional and behavioral investment in specific brand interactions
Eric Peterson defined a customer engagement as follows:
"Engagement is an estimate of the degree and depth of visitor interaction against a clearly
defined set of goals.
Three CE dimensions
1. Immersion (Cognitive),
2. Passion (Emotional)
3. Activation (Behavioral)
Topic 18: Business Model

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A successful business model results from business level strategies that create a competitive
advantage over its rivals. A profitable business model depends on providing the customer with
the most value while keeping cost structures viable.
To develop a successful business model, strategic managers must devise a set of strategies that
determine:
How to DIFFERENTIATE their product?
How to PRICE their product?
How to SEGMENT their markets?
How WIDE A RANGE of products to develop?
The term business model has been used in a variety of contexts and has been defined in many
different ways. Business model is the method by which a firm builds and uses its resources to
offer its customer better value and to make money in doing so. The business model describes the
content, structure, and governance of transactions designed so as to create value through the
exploitation of business opportunities. A business model can be defined as a concise
representation of how an interrelated set of decision variables in the areas of venture strategy,
architecture and economics are addressed to create sustainable competitive advantage in defined
markets. A business model articulates the logic, the data and other evidence that supports a value
proposition for the customer, and a viable structure of revenues and costs for the enterprise
delivering that value.

A business model has the following six fundamental components:

i. Value Proposition
ii. Customer
iii. Internal Processes/Competencies
iv. External Positioning
v. Economic Model
vi. Personal/Investor factors.

Topic 19: Industry Environment

Different industry environments present different opportunities and threats.
A companys business model and strategies have to change to meet the environment.

Companies must face the challenges of developing and maintaining a competitive strategy in:
Fragmented Industries
Mature Industries
Embryonic Industries
Declining Industries

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 Growth Industries
A Company must decide on:
1. Customer needs WHAT is to be satisfied
2. Customer groups WHO is to be satisfied
3. Distinctive competencies HOW customers are to be satisfied
These decisions determine which strategies are formulated &
implemented to put a business model into action.

Topic 20: Transition from Introduction to Maturity

A strong business model enables a smooth transition from introduction to maturity.
An investment strategy determines the type of resources and capital human, functional
and financial that must be spent to configure a companys value chain so that it can
successfully pursue a business model over time.
A companys investment depends on the level of competition and source of the companys
competitive advantage.
1. Competitive Advantage of companys business model
2. Stage of the industry life cycle
Managers must evaluate the potential return (on investment) by investing in a particular
business model against the cost
Two factors are crucial in choosing investment strategy
i. CA that can be obtained in an industry from a business model relative to its competitors
ii. Stage of the industrys life cycle in which the company is competing
Topic 21: Strategies during Embryonic Stages
i. Share Building Strategies
ii. Development of distinctive competencies and competitive advantage
iii. Requires capital to develop R&D and sales/service competencies.
Topic 22: Strategies during Growth Stages
i. Maintain relative competitive position
ii. Strengthen business model to prepare to survive industry shakeout
iii. Requires investment to keep up with rapid growth of the market

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 Topic 23: Strategies during Mature/Shakeout Stage
Increase share during fierce competition
Invest in share-increasing strategies at expense of weak competitors.
Weak companies should exit the industry during the harvest stage.
Maturity stage hold-and-maintain to defend business model
Dominant companies want to reap the reward of prior investments.

Topic 24: Strategies to Deter Competitors in Maturity Stage

1) Product Proliferation
2) Price Cutting
3) Maintaining Excess Capacity
Topic 25: Factors Affecting Growth Rate
1. Relative advantage
2. Compatibility
3. Availability of Complimentary Products
4. Complexity
5. Observability
6. Trialability
Topic 26: Decline Stage
Industry decline because of the following reasons:
1. Technological Changes
2. Social Trends
3. Changing Demographics
Examples: Rail Road, Steel, Tobacco, Lime Stone
Topic 27: Strategies during Decline Stage
1. Divesting
2. Harvesting
Harvesting

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Harvesting suits companies
That foresee a steep decline and intense competition
That does not have resources to fight the competition
That intend to exit a declining industry and optimise cash flow

Divesting suits those companies

That spot decline before it becomes detrimental and when the assets of the company are
still valued by others
Recover most of its investment by selling early

Topic 28: Pricing Strategies

A business can use a variety of pricing strategies when selling a product or service. The price can
be set to maximize profitability for each unit sold or from the market overall. It can be used to
defend an existing market from new entrants, to increase market share within a market or to enter
a new market. Businesses may benefit from lowering or raising prices, depending on the needs
and behaviors of customers and clients in the particular market. Finding the right pricing strategy
is an important element in running a successful business.
Absorption pricing

Method of pricing in which all costs are recovered.The price of the product includes the variable
cost of each item plus a proportionate amount of the fixed costs.

Contribution margin-based pricing

Contribution margin-based pricing maximizes the profit derived from an individual product,
based on the difference between the product's price and variable costs (the product's contribution
margin per unit), and on ones assumptions regarding the relationship between the products
price and the number of units that can be sold at that price. The product's contribution to total
firm profit (i.e. to operating income) is maximized when a price is chosen that maximizes the
following: (contribution margin per unit) X (number of units sold).

In cost-plus pricing, a company first determines its break-even price for the product. This is done
by calculating all the costs involved in the production such as raw materials used in it
transportation etc., marketing and distribution of the product. Then a markup is set for each unit,
based on the profit the company needs to make, its sales objectives and the price it believes
customers will pay. For example, if the company needs a 15 percent profit margin and the break-
even price is $2.59, the price will be set at $2.98 ($2.59 x 1.15).

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Creaming or skimming

In most skimming, goods are sold at higher prices so that fewer sales are needed to break even.
Selling a product at a high price, sacrificing high sales to gain a high profit is therefore
"skimming" the market. Skimming is usually employed to reimburse the cost of investment of
the original research into the product: commonly used in electronic markets when a new range,
such as DVD players, are firstly dispatched into the market at a high price. This strategy is often
used to target "early adopters" of a product or service. Early adopters generally have a relatively
lower price-sensitivity - this can be attributed to: their need for the product outweighing their
need to economise; a greater understanding of the product's value; or simply having a higher
disposable income.

This strategy is employed only for a limited duration to recover most of the investment made to
build the product. To gain further market share, a seller must use other pricing tactics such as
economy or penetration. This method can have some setbacks as it could leave the product at a
high price against the competition.

Decoy pricing

Method of pricing where the seller offers at least three products, and where two of them have a
similar or equal price. The two products with the similar prices should be the most expensive
ones, and one of the two should be less attractive than the other. This strategy will make people
compare the options with similar prices, and as a result sales of the more attractive high-priced
item will increase.

Freemium

Freemium is a revenue model that works by offering a product or service free of charge
(typically digital offerings such as software, content, games, web services or other) while
charging a premium for advanced features, functionality, or related products and services. The
word "freemium" is a portmanteau combining the two aspects of the business model: "free" and
"premium". It has become a highly popular model, with notable success.

High-low pricing

Methods of services offered by the organization are regularly priced higher than competitors, but
through promotions, advertisements, and or coupons, lower prices are offered on key items. The
lower promotional prices are designed to bring customers to the organization where the customer
is offered the promotional product as well as the regular higher priced products.

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Limit pricing

A limit price is the price set by a monopolist to discourage economic entry into a market, and is
illegal in many countries. The limit price is the price that the entrant would face upon entering as
long as the incumbent firm did not decrease output. The limit price is often lower than the
average cost of production or just low enough to make entering not profitable. The quantity
produced by the incumbent firm to act as a deterrent to entry is usually larger than would be
optimal for a monopolist, but might still produce higher economic profits than would be earned
under perfect competition.

The problem with limit pricing as a strategy is that once the entrant has entered the market, the
quantity used as a threat to deter entry is no longer the incumbent firm's best response. This
means that for limit pricing to be an effective deterrent to entry, the threat must in some way be
made credible. A way to achieve this is for the incumbent firm to constrain itself to produce a
certain quantity whether entry occurs or not. An example of this would be if the firm signed a
union contract to employ a certain (high) level of labor for a long period of time. In this strategy
price of the product becomes the limit according to budget.

Loss leader

A loss leader or leader is a product sold at a low price (i.e. at cost or below cost) to stimulate
other profitable sales. This would help the companies to expand its market share as a whole.

Marginal-cost pricing

In business, the practice of setting the price of a product to equal the extra cost of producing an
extra unit of output. By this policy, a producer charges, for each product unit sold, only the
addition to total cost resulting from materials and direct labor. Businesses often set prices close
to marginal cost during periods of poor sales. If, for example, an item has a marginal cost of
$1.00 and a normal selling price is $2.00, the firm selling the item might wish to lower the price
to $1.10 if demand has waned. The business would choose this approach because the incremental
profit of 10 cents from the transaction is better than no sale at all.

Market-oriented pricing

Setting a price based upon analysis and research compiled from the target market. This means
that marketers will set prices depending on the results from the research. For instance if the
competitors are pricing their products at a lower price, then it's up to them to either price their
goods at an above price or below, depending on what the company wants to achieve.

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Odd pricing

In this type of pricing, the seller tends to fix a price whose last digits are just below a round
number (also called just-below pricing). This is done so as to give the buyers/consumers no gap
for bargaining as the prices seem to be less and yet in an actual sense are too high, and takes
advantage of human psychology. A good example of this can be noticed in most supermarkets
where instead of pricing at INR 100, it would be written as INR 99.95.

Pay what you want

Pay what you want is a pricing system where buyers pay any desired amount for a given
commodity, sometimes including zero. In some cases, a minimum (floor) price may be set,
and/or a suggested price may be indicated as guidance for the buyer. The buyer can also select an
amount higher than the standard price for the commodity.

Giving buyers the freedom to pay what they want may seem to not make much sense for a seller,
but in some situations it can be very successful. While most uses of pay what you want have
been at the margins of the economy, or for special promotions, there are emerging efforts to
expand its utility to broader and more regular use.

Penetration pricing

Penetration pricing includes setting the price low with the goals of attracting customers and
gaining market share. The price will be raised later once this market share is gained.

Predatory pricing

Predatory pricing, also known as aggressive pricing (also known as "undercutting"), intended to
drive out competitors from a market. It is illegal in some countries.

Premium decoy pricing

Method of pricing where an organization artificially sets one product price high, in order to boost
sales of a lower priced product.

Premium pricing

Premium pricing is the practice of keeping the price of a product or service artificially high in
order to encourage favorable perceptions among buyers, based solely on the price. The practice
is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that

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expensive items enjoy an exceptional reputation, are more reliable or desirable, or represent
exceptional quality and distinction.

Price discrimination

Price discrimination is the practice of setting a different price for the same product in different
segments to the market. For example, this can be for different classes, such as ages, or for
different opening times.

Price leadership

An observation made of oligopolistic business behavior in which one company, usually the
dominant competitor among several, leads the way in determining prices, the others soon
following. The context is a state of limited competition, in which a market is shared by a small
number of producers or sellers.

Psychological Pricing

Pricing designed to have a positive psychological impact. For example, selling a product at $3.95
or $3.99, rather than $4.00. There are certain price points where people are willing to buy a
product. If the price of a product is $100 and the company prices it as $99, then it is called
psychological pricing. In most of the consumers mind $99 is psychologically less than $100. A
minor distinction in pricing can make a big difference in sales. The company that succeeds in
finding psychological price points can improve sales and maximize revenue.

Target pricing business

Pricing method whereby the selling price of a product is calculated to produce a particular rate of
return on investment for a specific volume of production. The target pricing method is used most
often by public utilities, like electric and gas companies, and companies whose capital
investment is high, like automobile manufacturers.

Target pricing is not useful for companies whose capital investment is low because, according to
this formula, the selling price will be understated. Also the target pricing method is not keyed to
the demand for the product, and if the entire volume is not sold, a company might sustain an
overall budgetary loss on the product.

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Time-based pricing

A flexible pricing mechanism made possible by advances in information technology, and

employed mostly by Internet-based companies. By responding to market fluctuations or large
amounts of data gathered from customers - ranging from where they live to what they buy to
how much they have spent on past purchases - dynamic pricing allows online companies to
adjust the prices of identical goods to correspond to a customers willingness to pay. The airline
industry is often cited as a dynamic pricing success story. In fact, it employs the technique so
artfully that most of the passengers on any given airplane have paid different ticket prices for the
same flight.

Value-based pricing

Pricing a product based on the value the product has for the customer and not on its costs of
production or any other factor. This pricing strategy is frequently used where the value to the
customer is many times the cost of producing the item or service. For instance, the cost of
producing a software CD is about the same independent of the software on it, but the prices vary
with the perceived value the customers are expected to have. The perceived value will depend on
the alternatives open to the customer. In business these alternatives are using competitors
software, using a manual work around, or not doing an activity. In order to employ value-based
pricing you have to know your customer's business, his business costs, and his perceived
alternatives.It is also known as Perceived-value pricing.

Topic 29: Competitor Profiling

The strategic rationale of competitor profiling is powerfully simple. Superior knowledge of rivals
offers a legitimate source of competitive advantage. The raw material of competitive advantage
consists of offering superior customer value in the firms chosen market. The definitive
characteristic of customer value is the adjective, superior. Customer value is defined relative to
rival offerings making competitor knowledge an intrinsic component of corporate strategy.
Profiling facilitates this strategic objective in three important ways. First, profiling can reveal
strategic weaknesses in rivals that the firm may exploit. Second, the proactive stance of
competitor profiling will allow the firm to anticipate the strategic response of their rivals to the
firms planned strategies, the strategies of other competing firms, and changes in the
environment. Third, this proactive knowledge will give the firms strategic agility. Offensive
strategy can be implemented more quickly in order to exploit opportunities and capitalize on
strengths. Similarly, defensive strategy can be employed more deftly in order to counter the
threat of rival firms from exploiting the firms own weaknesses.

Clearly, those firms practicing systematic and advanced competitor profiling have a significant
advantage. As such, a comprehensive profiling capability is rapidly becoming a core competence
required for successful competition. An appropriate analogy is to consider this advantage as akin

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to having a good idea of the next move that your opponent in a chess match will make. By
staying one move ahead, checkmate is one step closer. Indeed, as in chess, a good offense is the
best defense in the game of business as well.

A common technique is to create detailed profiles on each of your major competitors. These
profiles give an in-depth description of the competitor's background, finances, products, markets,
facilities, personnel, and strategies. This involves:

Background

location of offices, plants, and online presences

history key personalities, dates, events, and trends

ownership, corporate governance, and organizational structure

Financials

P-E ratios, dividend policy, and profitability

various financial ratios, liquidity, and cash flow

profit growth profile; method of growth (organic or acquisitive)

Products

products offered, depth and breadth of product line, and product portfolio balance

new products developed, new product success rate, and R&D strengths

brands, strength of brand portfolio, brand loyalty and brand awareness

patents and licenses

quality control conformance

reverse engineering or deformulation

Marketing

segments served, market shares, customer base, growth rate, and customer loyalty

promotional mix, promotional budgets, advertising themes, ad agency used, sales

force success rate, online promotional strategy

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 distribution channels used (direct & indirect), exclusivity agreements, alliances,
and geographical coverage

pricing, discounts, and allowances

Facilities

plant capacity, capacity utilization rate, age of plant, plant efficiency, capital
investment

location, shipping logistics, and product mix by plant

Personnel

number of employees, key employees, and skill sets

strength of management, and management style

compensation, benefits, and employee morale & retention rates

Corporate and marketing strategies

objectives, mission statement, growth plans, acquisitions, and divestitures

Marketing Strategies

Media Scanning

Scanning competitor's ads can reveal much about what that competitor believes about marketing
and their target market. Changes in a competitor's advertising message can reveal new product
offerings, new production processes, a new branding startegy, a new positioning strategy, a new
segmentation strategy, line extensions and contractions, problems with previous positions,
insights from recent marketing or product research, a new strategic direction, a new source of
sustainable competitive advantage, or value migrations within the industry. It might also indicate
a new pricing strategy such as penetration, price discrimination, price skimming, product
bundling, joint product pricing, discounts, or loss leaders. It may also indicate a new promotion
strategy such as push, pull, balanced, short term sales generation, long term image creation,
informational, comparative, affective, reminder, new creative objectives, new unique selling
proposition, new creative concepts, appeals, tone, and themes, or a new advertising agency. It
might also indicate a new distribution strategy, new distribution partners, more extensive
distribution, more intensive distribution, a change in geographical focus, or exclusive
distribution. Similar techniques can be used by observing a competitor's search engine
optimization targets and practices. For example, by conducting keyword research, one may be
able to determine a competitor's target market, keywords, or products. Other metrics allow for

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detection of a competitor's success. Little of this intelligence is definitive: additional information
is needed before conclusions should be drawn.

A competitor's media strategy reveals budget allocation, segmentation and targeting strategy, and
selectivity and focus. From a tactical perspective, it can also be used to help a manager
implement his own media plan. By knowing the competitor's media buy, media selection,
frequency, reach, continuity, schedules, and flights, the manager can arrange his own media plan
so that they do not coincide.

Other sources of corporate intelligence include trade shows, patent filings, mutual customers,
annual reports, and trade associations.

Some firms hire competitor intelligence professionals to obtain this information. The Society of
Competitive Intelligence Professionals maintains a listing of individuals who provide these
services.

New Competitors

In addition to analysing current competitors, it is necessary to estimate future competitive

threats. The most common sources of new competitors are:

Companies competing in a related product/market

Companies using related technologies

Companies already targeting your prime market segment but with unrelated products

Companies from other geographical areas and with similar products

New start-up companies organized by former employees and/or managers of existing

companies

The entrance of new competitors is likely when:

There are high profit margins in the industry

There is unmet demand (insufficient supply) in the industry

There are no major barriers to entry

There is future growth potential

Competitive rivalry is not intense

Gaining a competitive advantage over existing firms is feasible

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 Topic 30 Competitive Intelligence

is the action of defining, gathering, analyzing, and distributing intelligence about products,
customers, competitors, and any aspect of the environment needed to support executives and
managers making strategic decisions for an organization.

Competitive intelligence essentially means understanding and learning what is happening in the
world outside the business so one can be as competitive as possible. It means learning as much as
possible, as soon as possible, about one's industry in general, one's competitors, or even one's
county's particular zoning rules. In short, it empowers anticipating and facing challenges head
on.

Key points of this definition:

1 Competitive intelligence is an ethical and legal business practice, as opposed to industrial

espionage, which is illegal.

2 The focus is on the external business environment.

3 There is a process involved in gathering information, converting it into intelligence and

then using it in decision making. Some CI professionals erroneously emphasise that if the
intelligence gathered is not usable or actionable, it is not intelligence.

A more focused definition of CI regards it as the organizational function responsible for the early
identification of risks and opportunities in the market before they become obvious. Experts also
call this process the early signal analysis. This definition focuses attention on the difference
between dissemination of widely available factual information (such as market statistics,
financial reports, newspaper clippings) performed by functions such as libraries and information
centers, and competitive intelligence which is a perspective on developments and events aimed at
yielding a competitive edge.]

The term CI is often viewed as synonymous with competitor competitor analysis, but
competitive intelligence is more than analyzing competitors: it is about making the organization
more competitive relative to its entire environment and stakeholders: customers, competitors,
distributors, technologies, and macroeconomic data.

Strategic Intelligence (SI) focuses on the longer term, looking at issues affecting a company's
competitiveness over the course of a couple of years. The actual time horizon for SI ultimately
depends on the industry and how quickly it's changing. The general questions that SI answers
are, Where should we as a company be in X years?' and 'What are the strategic risks and
opportunities facing us?' This type of intelligence work involves among others the identification
of weak signals and application of methodology and process called Strategic Early Warning
(SEW), first introduced by Gilad, followed by Steven Shaker and Victor Richardson, Alessandro
Comai and Joaquin Tena, and others. According to Gilad, 20% of the work of competitive
intelligence practitioners should be dedicated to strategic early identification of weak signals
within a SEW framework.

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Tactical Intelligence: the focus is on providing information designed to improve shorter-term
decisions, most often related with the intent of growing market share or revenues. Generally, it is
the type of information that you would need to support the sales process in an organization. It
investigates various aspects of a product/product line marketing:

Product what are people selling?

Price what price are they charging?

Promotion what activities are they conducting for promoting this product?

Place where are they selling this product?

Other sales force structure, clinical trial design, technical issues, etc.

With the right amount of information, organizations can avoid unpleasant surprises by
anticipating competitors' moves and decreasing response time. Examples of competitive
intelligence research is evident in daily newspapers, such as the Wall Street Journal, Business
Week, WSJ, Business week and Fortune.Major airlines change hundreds of fares daily in
response to competitors' tactics. They use information to plan their own marketing, pricing, and
production strategies.

Resources, such as the Internet, have made gathering information on competitors easy. With a
click of a button, analysts can discover future trends and market requirements. However
competitive intelligence is much more than this, as the ultimate aim is to lead to competitive
advantage. As the Internet is mostly public domain material, information gathered is less likely to
result in insights that will be unique to the company. In fact there is a risk that information
gathered from the Internet will be misinformation and mislead users, so competitive intelligence
researchers are often wary of using such information.

As a result, although the Internet is viewed as a key source, most CI professionals should spend
their time and budget gathering intelligence using primary researchnetworking with industry
experts, from trade shows and conferences, from their own customers and suppliers, and so on.
Where the Internet is used, it is to gather sources for primary research as well as information on
what the company says about itself and its online presence (in the form of links to other
companies, its strategy regarding search engines and online advertising, mentions in discussion
forums and on blogs, etc.). Also, important are online subscription databases and news
aggregation sources which have simplified the secondary source collection process. Social media
sources are also becoming importantproviding potential interviewee names, as well as
opinions and attitudes, and sometimes breaking news (e.g., via Twitter).

Organizations must be careful not to spend too much time and effort on old competitors without
realizing the existence of any new competitors. Knowing more about your competitors will allow
your business to grow and succeed. The practice of competitive intelligence is growing every
year, and most companies and business students now realize the importance of knowing their
competitors.

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Market intelligence (MI) is industry-targeted intelligence developed in real-time aspects of
competitive events taking place among the four Ps of the marketing mix (pricing, place,
promotion and product) in the product (or service) marketplace to better understand the market's
attractiveness. A time-based competitive tactic, MI is used by marketing and sales managers to
respond to consumers more quickly in the marketplace. Fleisher suggests it is not distributed as
widely as some forms of CI, which are also distributed to non-marketing decision-makers.
Market intelligence has a shorter time horizon than other intelligence areas, and is measured in
days, weeks, or (in slower-moving industries) months.

Market research is a tactical, method-driven field consisting of neutral, primary research of

customer data (beliefs and perceptions) gathered in surveys or focus groups, and is analyzed with
statistical-research techniques. CI draws on a wider variety (primary and secondary) of sources
from a wider range of stakeholders (suppliers, competitors, distributors, substitutes and media) to
answer existing questions, raise new ones and guide action.

Topic 31: Marketing Effectiveness

Marketing Effectiveness is the measure of how effective a given marketer's go to market strategy
is toward meeting the goal of maximizing their spending to achieve positive results in both the
short- and long-term. It is also related to marketing ROI and return on marketing
investment (ROMI).

Marketing expert Tony Lennon believes marketing effectiveness is quintessential to marketing,

going so far as to say It's not marketing if it's not measured.

Factors driving marketing effectiveness

Corporate: Each company operates within different bounds. These are determined by
their size, their budget and their ability to make organizes act in similar ways leading to the
need to segment them. Based on these segments, they make choices based on how they value
the attributes of a product and the brand, in return for price paid for the product. Consumers
build brand value through information. Information is received through many sources, such
as, advertising, word-of-mouth and in the (distribution) channel often characterized with
the purchase funnel, a McKinsey & Company concept. Lastly, consumers consume and make
purchase decisions in certain ways.

Exogenous Factors: External factors such as weather, interest rates, government

regulations, etc. that lie outside of marketers' immediate control and may impact marketing
effectiveness. Understanding the impact these factors have on consumers can help in
designing programs that take advantage or mitigate the risk of these factors and the impact
they may have on a marketing campaigns. Therefore, exogenous factors often influence how
marketers strive to improve their results such as leveraging the factors noted above (i.e.
seasonality, interest rates, regulatory environment) in an effort to improve marketing
effectiveness.

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 Marketing Strategy: Improving marketing effectiveness can be achieved by employing
a superior marketing strategy. By positioning the product or brand correctly, the
product/brand will be more successful in the market than competitors products/brands. The
match-up between the product, the consumer lifestyle, and the endorser is important for
effectiveness of brand communication. Even with the best strategy, marketers must execute
their programs properly to achieve extraordinary results.

Marketing Creative: Even without a change in strategy, better creatives can improve
results. Without a change in strategy, AFLAC was able to achieve stunning results with its
introduction of the Duck (AFLAC) campaign. With the introduction of this new creative
concept, the company growth rate soared from 12% prior to the campaign to 28% following
it. (See references below, Bang). Creatives are an integral part of any marketing campaign, as
it establishes the corporate identity and plays a significant role in brand recollection. These
may include designing point of purchase displays, brochures or even product packaging.
Apart from communicating the brand, consistency in design across various mediums helps
reinforce a specific offering in the minds of the audience. Using typography, imagery and
color, marketing creatives evoke emotion related to a brand.

Marketing Execution: By improving how marketers go to market, they can achieve

significantly greater results without changing their strategy or their creative execution. At the
marketing mix level, marketers can improve their execution by making small changes in any
or all of the 4-Ps (Product, Price, Place and Promotion) (Marketing) without making changes
to the strategic position or the creative execution marketers can improve their effectiveness
and deliver increased revenue. At the program level marketers can improve their
effectiveness by managing and executing each of their marketing campaigns better. It's
commonly known that consistency of a Marketing Creative strategy across various media
(e.g. TV, Radio, Print and Online), not just within each individual media message, can
amplify and enhance impact of the overall marketing campaign effort. Additional examples
would be improving direct mail through a better call-to-action or editing web site content to
improve its organic search results, marketers can improve their marketing effectiveness for
each type of program. A growing area of interest within (Marketing Strategy) and Execution
are the more recent interaction dynamics of traditional marketing (e.g. TV or Events) with
online consumer activity (e.g. Social Media). Not only direct product experience, but also
any stimulus provided by traditional marketing, can become a catalyst for a consumer brand
"groundswell" online as outlined in the book Groundswell.

Marketing Infrastructure (also known as Marketing Management): Improving the

business of marketing can lead to significant gains for the company. Management of
agencies, budgeting, motivation and coordination of marketing activities can lead to
improved competitiveness and improved results. The overall accountability for brand
leadership and business results is often reflected in an organization under a title within a
(Brand Management) department.

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 Topic 32: Marketing Performance Measurement (MPM)

This is also called Marketing Performance Management, is the systematic management of

marketing resources and processes to achieve measurable gain in return on investment and
efficiency, while maintaining quality in customer experience.

Marketing performance management is a central facet of the marketing operations function

within marketing departments.

Marketing performance management relies on a set of measurable performance standards, a

pointed focus on outcomes, and clear lines of accountability (i.e. roles and consequences).
Measurement management is based on six success factors: 1) alignment, 2) accountability, 3)
analytics, 4) automation, 5) alliances, and 6) assessment.

Alignment

Alignment of marketing activities and investments to business outcomes occurs when a

marketing organization establishes a direct connection between marketing activities, investments
and business outcomes.

Alignment begins with customer insights, to ensure that the marketing performance management
approach will be rewarded by the marketplace. Alignment with enterprise objectives ensures that
marketing efforts are in sync with what the company is striving to achieve. Enterprise goals can
be cascaded to the business unit level and then to the department level to maintain consistency
and drive synergy both horizontally and vertically. Marketing objectives that are developed this
way can be cascaded to all of the marketing sub-functions for alignment.[3]

Accountability

Accountability is the monitoring and measurement of the achievement a person, group, or

organization makes to deliver specific, defined results relating to the enterprises objectives. This
requires selecting the right metrics, integrating performance targets, and producing actionable
reports

Accountability includes making a commitment to a particular action, accepting responsibility for

completing that action, and then disclosing the level of performance against your commitment.
Accountability requires commitments, metrics, and consequences (positive and negative).

Metrics

Measurable performance standards are called metrics, which are the cornerstone of
accountability. They encompass Activity, Output, Operational, and Outcome categories:

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 "Activity metrics" relate to the number of things done in a process, such as the number of
new blog posts or the number of events.

"Output metrics" relate to the result of a process, such as website traffic, media mentions,
or event participants.

"Operational metrics" relate to the efficiency and effectiveness of a process, such as cost
per lead, revenue per customer, revenue per sales representative, cost per customer, or leads
per sales representative.

"Outcome metrics" relate to the consequences of a process outcomes, such as revenue,

profit, win rate, pipeline contribution, share of preference, share of wallet, or share of
market.
Indicators

To manage causes and effects, managers identify Leading Indicators and Lagging Indicators:

"Leading indicators" are metrics that a manager can monitor before stakeholders see
results. They are in-process metrics and process-input metrics that serve as warning signals
of output, operational, and outcome metrics. Within a workflow diagram, the questions
represented by a diamond are typical sources of leading indicators. They indicate whether
there will be re-work, scrap, waste, or delays in what the process is meant to achieve. They
are actionable and predictive. By monitoring leading indicators, managers can intervene to
attain higher performance.

"Lagging indicators" are metrics that a managers stakeholders see. They are post-process
metrics (i.e. output, operational, or outcome metrics). Lagging indicators are important for
seeing the big picture, but they are not actionable in and of themselves.
Reporting

Marketing performance can be reported in a wide variety of formats (verbal, pictorial, graphic,
tabular, text, dashboard), which are used for accountability and decision-making. Ideally, reports
revisit past commitments or forecasts, to enable learning and refinements for future performance.

Dashboards are particularly important in marketing performance management, visually

displaying multiple metrics on a single screen or page. This allows managers to monitor
performance at a glance, and to be alerted when performance varies significantly above or below
expected levels. Ideally, dashboards show the relationships between leading and lagging
indicators. This can empower people at every managerial level.

Analytics

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Analytics seeks to identify patterns in data by organizing it and applying mathematical and
statistical tests. This foster fact-based, data-driven customer, product, market and performance
decisions and develop models to support scenario analysis and predict potential outcomes.

Marketing analytics is used to create models to understand, monitor, and predict customer
behavior, such as likelihood to defect or predisposition to purchase. It can help managers
quantify performance, make and optimize channel and mix decisions, or understand the impact
of a campaign on a sales list,.

Analytical technologies can help marketers quickly synthesize data from various sources.
Analytics convert data to actionable information and models that guide strategic investments and
decisions that drive marketing performance.[5]

Automation

Automation of marketing processes reduces manual labor, errors, and inconsistency. It enables
timely, personalized messaging to customers, prospects, and other stakeholders.

Automation provides infrastructure for marketing performance management. It spans marketing

resource management, campaign automation, business intelligence, data management, reporting
platforms, and scenario analysis tools.[6]

Alliances

Alliances are arrangements between companies to create additional value together. Distributors,
resellers, marketing agencies, and other companies may co-develop, co-promote, and/or co-
deliver various parts of the marketing mix (product, price, promotion, placement).

Marketing performance management requires information transparency, clear roles, and smooth
handoffs between alliance members, both externally and internally. A spirit of alliance among the
work groups across the marketing organization, and with other support functions and business
units shapes the ecosystem that nurtures or hinders marketing performance. Collaboration cross-
functionally is essential to marketing efficiency and effectiveness.[7]

Assessment

Assessment is the evaluation of strengths, weaknesses, and opportunities in marketing

performance management. Assessment is typically conducted by benchmarking other
organizations or comparing performance to a standard. Ideally, assessment is supported by a

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culture of genuine concern, dedication, and willingness among management and employees to
continually improve performance.

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