Marketing strategy

y Marketing strategy is a method of focusing an

organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market.

Alternative Growth Strategies

Present Products I. Growth in existing product markets Present Markets
Increase market share Increase product usage
Increase the frequency used Increase the quantity used Find new applications for current users

New Products II. Product Development

Add product features, product refinement Expand the product line Develop a new generation product Develop new products for same market

New Markets

III. Market Development

Expand geographically Target new segments

V. Diversification involving new products and new markets

Related Unrelated

Vertical Integration

IV. Vertical Integration Strategies

Forward integration Backward integration
Figure 13.1

Growth in Existing Product Markets

y Increasing Market Share y Increasing Product Usage y Revitalize the Brand y New Applications for Existing Product Users

Increasing Market Share

y To increase market share a business has to take customers

from its competitors or attract new customers. Achieving this requires a thorough understanding of both your own customer base and that of rival businesses. y Ways t I cr as Mar t har s
y Sell More to Current Customers y Get Back Former Customers y Try Different Types of Channels y Target a New Market Segment y Diversify

Increasing Product Usage

y Provide Reminder Communications e.g. reminder e-mails y Position for Regular or Frequent Use

e.g.3 glasses of milk per day, brushing twice or thrice a day to increase usage of tooth paste.

y Make the Use Easier - e.g., microwaveable containers, prepared foods y Provide Incentives e.g., offers like buy one get one free, free samples y Reduce Undesirable Consequences of Frequent Use e.g., shampoo,

low fat, sugar, calorie, sodium foods

Revitalize the Brand

y Building a strong brand takes time, commitment, and hard work, but the result is one of the most valuable assets a company can own. y Instant identification in the mind of the customer, a reputation for competence and quality, the knowledge that the promises of the brand are genuine and not just slogansthe list of benefits goes on.

Contd

Examples

New Applications for Existing Product Users

y An actively managed branded feature, service,

program or ingredient that provides meaningful differentiation to the parent brand

y McDonalds is always within the fast-food industry, but

frequently markets new burgers. y Whirlpool refrigerator

Product Development for the Existing Market

y y
y

Line Extensions e.g, Nimbus Developing New-Generation Products e.g., Apple with iPod
Incumbents Curse
1.

2.

Even if new technology is successful may be making investment just to maintain same level of sales and profits Need to improve costs, quality, and service for existing offering, which leaves little time to explore new technologies.

Product Development for the Existing Market

y Expand the Product Scope e.g., lifebuoy y New Products for the Existing Markets e.g., handwash

Product Line Expansions

y y y y

Will customers benefit from a systems capability or service convenience made possible by a broad product line? Do potential manufacturing, marketing, or distribution cost efficiencies exist from an expanded product line? Can assets or competencies be applied to a product-line expansion? Does a firm have the needed competencies and resources in R&D, manufacturing, and marketing to add the various products proposed?

Market Development Using Existing Products Expanding Geographically

yWhen were thinking about expanding, first think about where we want to cultivate new business. yWe have options: other regions, nationally, or internationally. yGeographical expansion works well for a company that wants to expand its service territory because it needs a physical location to serve its customers. yClearly our ability to expand is subject to our ability to finance such as expansion. yMany of the big boys of business, including McDonalds, Wal.Mart, and Home Depot, have exported their operations to other countries.

Expanding into New Market Segments

y Market expansion can also occur when we identify new

groups of target customers in our current region.E.g McDonald's.

Count
Increase present customers rate of use: y Increasing the size of purchase y Maximizing the rate of product obsolescence y Finding new uses for your product y Advertising other uses y Offering incentives for increased use

Evaluating Market Expansion Alternatives

Is the market attractive? Do the resources and will exist to make the necessary

commitment in the face of uncertainties? Can the business be adapted to the new market? Can the assets and competencies that are at the heart of the business success be transferred into the new business environment?

Why Diversification ?
y Advantages y Control of inputs, leading to continuity and improved quality. y Control markets by guaranteeing sales and distribution. y Take advantage of existing expertise, knowledge and resources in the companywhen expanding into new activities. y Disadvantages y Cost y Synergy

Diversification
y Diversification is achieved in following ways y Vertical integration
y y

Forward integration Integrating Distribution Backward integration - Integrating Suppliers e.g.:

y Related y Unrelated

 Related(Concentric) Diversification
y Here we can take the best example of the concept of

maggi because of addition of various flavours. y This is only possible because of technology related concentric diversification
y Eg. Maggi noddles

Samsung Unrelated(Conglomerate) Diversification

y 1954 Woolen Mill y 1960 Electronic Division y 1980 - Acquired Hanguk Jeonja Tongsin manufacturing

Telecommunication devices y Largest chip producer after INTEL y Largest Memory Chip Supplier y Manufactures aircraft engines.
y Samsung Group Diversification

Vertical Integration Strategies

y A business situation where a company expands by buying up its suppliers or its

customers, thus controlling all the processes of production, from raw materials through to the sale of the final product. profits made by them are kept in the firm.

y The advantages for a company are that, since it owns its suppliers or customers, the y Owning suppliers should ensure delivery of the materials and components they

produce, and owning customers guarantees a market for the firm's products.

y The major disadvantage is that management may not have expertise in all stages. y A current example is the oil industry, in which a single firm commonly owns the oil

wells, refines the oil, and sells gasoline at roadside stations.

Three types
y There are three varieties: backward (upstream) vertical integration, forward

(downstream) vertical integration, and balanced (both upstream and downstream) vertical integration. produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product. It was the main business approach of Ford and other car companies in the 1920s, who sought to minimize costs by centralize the production of cars and car parts.

y A company exhibits backward vertical integration when it controls subsidiaries that

y A company tends toward forward vertical integration when it controls distribution

centers and retailers where its products are sold.

y Balanced vertical integration means a firm controls all of these components, from raw

materials to final delivery.

Questions:
1. What are the ways to increase market shares? 2. State advantages and disadvantages of diversification? 3. How are related and unrelated diversification also

referred as? 4. What are the three types of vertical integration? 5. State true or false:
a)
b)

Strategy for new Market and present product is Diversification involving new products and new markets . Strategy for present market and new product is Product Development

Thank you!!!