Module 1

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Marketing Strategy
• Marketing: “Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society
at large.” The latest definition of marketing approved by American
Marketing Association
• Marketing Strategy: A long-term plan that consists of activities of
selecting target markets and designing marketing mixes to satisfy the
wants and needs of the selected markets
• Many external and internal factors need to be considered when
developing a marketing strategy
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Factors to Consider When Developing
a Marketing Strategy
• Market drivers
• Resources and skills available to companies
• Strategic windows
• Competition
• Stage of market lifecycle

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Market
Drivers
• External to the company
• PEST analysis is helpful to understand what is happening in the
macro environment
o Political: Laws, political stability, election times, corruption level etc. in a country
o Economic: Economic stability, growth rate, inflation and interest rates etc. in
a country
o Socio-cultural: Cultural factors, age groups, traditions, religion etc. in a country
o Technological: Infrastructure, current and future technologies etc. in a country
• There are several variations of the PEST analysis
o e.g. PESTLE = PEST + Legal + Environmental
• “What do these factors look like now and how are they expected to
change In the future?”

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Company Resources and
Capabilities
• Internal environment
• “What resources do we have and what can we do with them?”
• The Resource-Based Theory of Competitive Advantage (Grant, 1991)
o External environment is constantly changing
o Internal factors, such as resources and capabilities offer a more stable basis to
define strategy
o Resources and capabilities lead to competitive advantage, on which
strategy should be determined

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Strategic
Windows
• Fit between external environment and internal environment
• Market is dynamic, i.e. constantly changing
• Four major groups of change (Abell, 1978)
o Development of new primary demand
o New competing technologies
o Market redefinition
o Channel changes
• “Is what we have now a good fit for the current situation of the
market?”

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Product Lifecycle
(PLC)
• A company’s strategy is affected by PLC stages
• PLC can be used to analyze brands or product categories
• Klepper (1997) discusses three stages
o Initial (Exploratory/Embryonic) Stage: Characterized by low market volume,
high uncertainty, primitive product design. Many firms enter the industry
and compete on product innovation.
o Intermediate (Growth) Stage: Characterized by high output growth,
relatively stabilized product design, declining product innovation. Entry to
the industry slows and some of the firms leave the industry.
o Mature Stage: Characterized by low output growth, low entry to
market, stabilized market shares.

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Competitors
• Competitiveness of an industry should be factored in strategy
development
• Porter’s five forces can be used to assess market competitiveness
o Rivalry among existing competitors: How many competitors are there in the
market? How strong are the competitors? What are their capabilities and
skills? etc…
o Threat of New Entrants: How difficult/easy is it for new competitors to
enter the market? Are barriers to entry (e.g. technologies, patents, financial
requirements etc.) high or low? etc...

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• Porter’s five forces cont.
o Bargaining power of buyers: Number and power of buyers in the market. Can
buyers drive prices down? Can buyers easily switch to competitors’ products?
etc…
o Threat of substitute products or services: Can your products or services
easily be substituted by competitors’ products or services? Can your
products or services be outsourced? etc…
o Bargaining power of suppliers: Number and power of suppliers in the
market. How difficult/easy is it for suppliers to drive prices up? How
difficult/easy is it to switch between suppliers? etc…

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Appropriateness of a Competitive
Strategy
 A competitive strategy is appropriate if
o Various goals and policies do not contradict each other
o Goals and policies do not contradict realities of the macro environment
o Goals and policies fit resources and capabilities available
o Goals and policies are understood and implementable

 The Three-Step Process of Formulating a Competitive Strategy

o What are we doing now?
o What is happening in the environment?
o What should we be doing?

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