Lecture #1

THE ROLE OF
MARKETING STRATEGY
Lecture goal =

to understand why organizations need marketing strategy

and what it is
MARKETING =

the science and art of exploring, creating, and delivering

value to satisfy the needs of a target market at a profit.
Marketing identifies unfulfilled needs and desires. It defines,
measures and quantifies the size of the identified market and
the profit potential

MARKETING STRATEGY =

the marketing logic by which the business unit hopes to

achieve its marketing objectives
LET`S MAKE IT EASIER!
WHY DO WE NEED
MARKETING?
IN GLOBAL TERMS = to create a middle class and have a
better life

WHY? = because it creates desire to have something

and than ...

IN COMMERCIAL TERMS = make companies earn more money

again and again ... or not?
For millions of years, natural competition involved no
strategy. By chance and the laws of probability, competitors
found the combinations of resources that best matched their
different characteristics. This was not strategy but Darwinian
natural selection, based on adaptation and the survival of
the fittest. The same pattern exists in all living systems,
including business.
Business and biological competition would follow the same
pattern of gradual evolutionary change except for one thing.

Business strategists can use their imagination and ability to

reason logically to accelerate the effects of competition and
the rate of change. In other words, imagination and logic
make strategy possible.
If every business could grow indefinitely, the total market
would grow to an infinite size on a finite earth.

It has never happened.

Competitors perpetually crowd each other out. The fittest

survive and prosper until they displace their competitors or
outgrow their resources.

What explains this evolutionary process?

Gause’s
Principle/Competitive
Exclusion Principle
 Gause’s
Principle/Competitive
Exclusion Principle

Competitors that make their living in the same way cannot

coexist—no more in business than in nature. Each must be
different enough to have a unique advantage. The continued
existence of a number of competitors is proof per se that
their advantages over each other are mutually exclusive.
They may look alike, but they are different species.
What differentiates competitors in business may be purchase
price, function, time utility (the difference between instant
gratification and “someday, as soon as possible”), or place
utility (when your heating and cooling system quits, the
manufacturer’s technical expert is not nearly as valuable as
the local mechanic). Or it may be nothing but the customer’s
perception of the product and its supplier. Indeed, image is
often the only basis of comparison between similar but
different alternatives. That is why advertising can be
valuable.
What differentiates competitors in business may be purchase
price, function, time utility (the difference between instant
gratification and “someday, as soon as possible”), or place
utility (when your heating and cooling system quits, the
manufacturer’s technical expert is not nearly as valuable as
the local mechanic). Or it may be nothing but the customer’s
perception of the product and its supplier. Indeed, image is
often the only basis of comparison between similar but
different alternatives. That is why advertising can be
valuable.
Since businesses can combine these factors in many different
ways, there will always be many possibilities for competitive
coexistence.

But also, many possibilities for each competitor to enlarge

the scope of its advantage by changing what differentiates it
from its rivals.

Can evolution be planned for in business?

That is what strategy is for.

The basic elements of strategic competition:

(1) ability to understand competitive behavior as a system in

which competitors, customers, money, people, and resources
continually interact;

(2) ability to use this understanding to predict how a given

strategic move will rebalance the competitive equilibrium;
(3) resources that can be permanently committed to new uses
even though the benefits will be deferred;

(4) ability to predict risk and return with enough accuracy

and confidence to justify that commitment;

(5) willingness to act.

That is why we need strategy.

Than what for marketing strategy?

Let`s see typical mistakes

Marketing Myopia
 Marketing myopia is a situation when a company has a
narrow-minded marketing approach and it focuses mainly
on only one aspect out of many possible marketing
attributes.

A brand focusing on the development of high-quality

products for customers who disregard quality and only focus
on the price is a classic example of marketing myopia.
"Every major industry was once a growth industry. But some
that are now riding a wave of growth enthusiasm are very
much in the shadow of decline. Others that are thought of as
seasoned growth industries have actually stopped growing.

In every case, the reason growth is threatened, slowed, or

stopped is not because the market is saturated. It is because
there has been a failure of management"
 The railroads serve as an example of an industry whose
failure to grow is due to a limited market view.

Those behind the railroads are in trouble not because the

need for passenger transportation has declined or even
because that need has been filled by cars, airplanes, and
other modes of transport. Rather, the industry is failing
because those behind it assumed they were in the railroad
business rather than the transportation business.

They were railroad oriented instead of transportation

oriented, product oriented instead of customer oriented.
Marketing myopia strikes in when the short term marketing
goals are given more importance than the long term goals.

Some examples are:

More focus on selling rather than building relationships
with the customers.
Predicting growth without conducting proper research.
Mass production without knowing the demand.
Giving importance to just one aspect of the marketing
attributes without focusing on what the customer actually
wants.
Not changing with the dynamic consumer environment.
Business, according to Levitt, is actually a customer satisfying
institution and hence should be based on customers’ needs
and desires.

Moreover nowadays. Now is era of CUSTOMER ORIENTED

MARKETING
If you ever think there is an absence of future problems,
there can be a problem in your thinking.
Heraclitus, a Greek philosopher, is quoted as saying "change
is the only constant in life."
 Changes are assured but growth is never assured.

The business environment is everchanging and so should be a

business. Businesses that don’t assess their own capabilities,
competitors, customers’ needs, and changing trends, always
tend to get trapped in a self-deceiving cycle.
ARE YOU CONVINCED NOW THAT COMPANIES NEED
MARKETING STRATEGY?
 The ultimate goal of a marketing strategy is to achieve and
communicate a sustainable competitive advantage over rival
companies by understanding the needs and wants of its
consumers.
WHAT ARE THE ELEMENTS OF MARKETING STRATEGY?
MARKETING MIX

PRODUCT
PRICE
PLACEMENT

PROMOTION
Marketing Mix

4P`s
"Developing the ‘right’ product and making it available
at the ‘right’ place with the ‘right’ promotion and at
the ‘right’ price, to satisfy target consumers and still
meet the objectives of the business"
(E. Jerome McCarthy Basic marketing. A Managerial
Approach)
 MARKETING MIX

PRODUCT
Product is the first P in the marketing mix
and is defined as physical goods or services
sold to make a profit for the business.
MARKETING MIX

PRODUCT

What is your product?

What does your product do? Does the product meet an

unfilled need or provide a novel experience?

Who is your product’s target audience?

How is your product different from what others offer?

MARKETING MIX

PRICE
What is the price range of your product’s competitors?

What is the price range of your target audience?

What price is too high for your audience? What price is too
low?

What price best fits your target market?

 MARKETING MIX

PRICE

Price is the cost of a product or service.

Price that is simultaneously accessible to

the target market and meets a business’s
goals.
 MARKETING MIX

PLACE

Place is where you sell your product and

the distribution channels you use to get it to
your customer.
MARKETING MIX

PLACE

Where will you sell your product?

Where does your target audience shop?

What distribution channels are best to reach your target

market?
 MARKETING MIX

PROMOTION
Promotion is how you advertise your
product or service. Through promotion,
you will get the word out about your
product with an effective marketing
campaign that resonates with your target
audience.
MARKETING MIX

PROMOTION
What is the best time to reach your target audience?

What marketing channels are most effective for your target

audience?

What advertising approaches are most persuasive to your

target audience?