Marketing Strategy (Module 1)

 What is 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…

o Factors to Consider When Developing a Marketing Strategy:

 Market drivers
 Resources and skills available to companies
 Strategic windows
 Competition
 Stage of market lifecycle

o Market Drivers: (External to the company)

 P.E.S.T. analysis is helpful to understand what is happening in the

macro-environment:

 Political: Laws, political stability, election times, corruption

level etc. in a country

 Economic: Economic stability, growth rate, inflation and

interest rates etc. in a country

 Socio-cultural: Cultural factors, age groups, traditions,

religion etc. in a country

 Technological: Infrastructure, current and future

technologies etc. in a country

o There are several variations of the P.E.S.T. analysis

• 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)

A. External environment is constantly changing

B. Internal factors, such as resources and capabilities offer a more stable

basis to define strategy

C. Resources and capabilities lead to competitive advantage, on which

strategy should be determined

Strategic Windows
***Fit between external environment and internal environment***

 Market is dynamic, i.e. constantly changing

o Four major groups of change (Abell, 1978)

1. Development of new primary demand

2. New competing technologies

3. Market Redefinition

4. Channel changes

 “Is what we have now a good fit for the current situation of the market?”

Product Lifecycle (PLC)

 A company’s strategy is affected by PLC stages

o PLC can be used to analyze brands or product categories

 Klepper (1997) discusses three stages:

1. Initial (Exploratory/Embryonic) Stage: Characterized by low market volume, high uncertainty,

primitive product design. Many firms enter the industry and compete on product innovation.

2. 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.

3. 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:

1. Rivalry among existing competitors :

 How many competitors are there in the market?

 How strong are the competitors?

 What are their capabilities and skills, etc…?

2. 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...

3. 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…

4. 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…

5. 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:

1. What are we doing now?

2. What is happening in the environment?

3. What should we be doing?