Unit - V - Marekting Strategies

7/28/2019 Unit - V - Marekting Strategies

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UNIT - V

SEMESTER - II


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Strategic

Target marketing

decisions

Value proposition

Analysis of

marketing

opportunities

Tactical

Product features

Promotion Merchandising

Pricing

Sales channels

Service

A marketing plan is the central instrument

for directing and coordinating the

marketing effort. It operates at a strategic

and tactical level.

Levels of a Marketing Plan


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Strategic Development

Product Life Cycle

Bowmans Competitive Strategy Options

New Product Development (NPD)


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Strategic Development Process


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1. Product development - sales are zero, investment costs are high

2. Introduction - profits do not exist, heavy expense of product introduction3. Growth - rapid market acceptance and increasing profits

4. Maturity - slowdown in sales growth. Profits level-off.

5. Decline - sales fall-off and profits drop

6. Withdrawal Sales and Profits Drop


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Bowmans Strategy Clock


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1 Low price/low added value Likely to be segment specific

2 Low price Risk of price war and low

margins/need to be cost leader

3 Hybrid Low cost base and reinvestment in

low price and differentiation

4 Differentiation

(a) Without price premium Perceived added value by user,

yielding market share benefits

(b) With price premium Perceived added value sufficient to bear price premium

5 Focused differentiation Perceived added value to a

particular segment, warranting price premium

6 Increased price/standard

Higher margins if competitors

do not value follow/risk oflosing market share

7 Increased price/low value

Only feasible in monopoly

situation

8 Low value/standard price

Loss of market share

The Strategy Clock: Bowmans Competitive Strategy Options


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Three Vs Approach to Marketing

Define the value segment

-(Customers & their needs)

Define the value proposition

-(The product or Service)

Define the value network

-(The network used to deliver the promised service)


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The value chain is a tool for identifying ways to create more customer value

because every firm is a synthesis ofprimary and support activities performedto design, produce, market, deliver, and support its product.

Primary Activities:1. Inbound Logistics (bringing material into the business)2. Operations (turn into final product)3. Outbound logistics (Shipping & warehousing)4. Marketing (marketing & sales activities)

5. Servicing (service after the sale)

Support Activities:6. Procurement (Processing supplies)7. Technology Development8. Human Resource Management9. Firm Infrastructure

Value Chains 9 Strategic Activities


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What is Holistic Marketing?Holistic marketing sees itself as integrating the value exploration, value creation, and valuedelivery activities with the purpose of building long-term, mutually satisfying relationshipsand cooperation among key stakeholders.

1. Value Exploration- How a company identify new value opportunities.

2. Value Creation- How a company efficiently create more promising new value offering.

3. Value Delivery- How a company uses its capabilities to deliver new value offerings.


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Marketing Mix

A marketing mix includes those controllable factors that have been chosen to satisfy

customer needs.

The eight controllable factors are product, price, place, promotion, packaging,

programming, partnership, and people.

These are also know as the 8 Ps.

Relationship Marketing and Strategic Alliances

Relationship Marketing

Placing an emphasis on building, maintaining, and enhancing long-term relationships with

customers, suppliers, travel trade intermediaries, and perhaps even competitors.

Strategic Alliances

Special long-term marketing relationships formed between two or more hospitality and

travel organizations, or between a hospitality and travel organization and one or more

other types of organizations (e.g., KLM and Northwest, STAR alliance).


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Steps Required for Effective Positioning

(the five Ds)

DocumentingDeciding

Differentiating

Designing

Delivering

Positioning is the development of a service and a marketing mix to occupy a specific

place in the mindsof customers within target markets.

Positioning


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Segmented Marketing Strategies

Approaches that recognized the differences among target markets by using

individualized marketing mixes for each of the target markets selected by a

hospitality or travel organization. Also known as a differentiated strategy.

The three alternative segmented strategies are:

1. Single-target-market strategy

2. Concentrated marketing strategy

3. Full-coverage marketing strategy

Undifferentiated Marketing Strategy

A strategy that overlooks segment differences and uses the same marketing mix forall target markets.


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Alternative Strategies for Product Life Cycle Stages Introduction Stage

a. Rapid-skimming strategy (high price/high promotion).

b. Slow-skimming strategy (high price/low promotion).c. Rapid-penetration strategy (low price/high promotion).

d. Slow-penetration strategy (low price/low promotion).

Growth Stage

a. Improve service quality and add new service features and elements

b. Pursue new target marketsc. Use new channels of distribution

d. Lower prices to attract more price-sensitive customers

e. Shift some advertising emphasis away from building awareness to creating desire

and action

Maturity Stage

a. Market-modification strategy

b. Product-modification strategy

c. Marketing-mix modification strategy Decline Stage

a. Reduce costs and milk the company

b. Sell off or get out of the business


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Alternative Strategies by Industry Position

Market Leaders

a. Expand the size of the total market

b. Protect market share

c. Expand market share

Market Challengers

a. Take on or attack the market leader

Market Followers

a. Shy away from any attacks on market leaders

Market Nichers

a. Specialize in a particular market segment


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Sun Tzes defensive strategy

Do not assume the enemy will not come

but be prepared for his coming

Do not presume he will not attack,

but instead make your own position unassailable.

1. Overt-offensive strategy

To knock out a business rival so as to take over his company

To knock out a competing product so as to take over its market share

2. Covert-offensive strategy

Keep as low a profile as possible while making offensive moves

Sun Tzes Offensive Strategies


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Strategies for Market Leaders

Market Leaders objectives:

Expand the total market by

Finding new users Creating new uses, and

Encouraging more usage

Protect its current market share by

Adopting defense strategies (see following slides)

Increase its market share

Note the relationship between market share and profitability

Defense Strategy A market leader should generally adopt a defense strategy

Six commonly used defense strategies

1. Position Defense2. Mobile Defense

3. Flanking Defense

4. Contraction Defense

5. Pre-emptive Defense

6. Counter-Offensive Defense

f ( d)


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Defense Strategy (continued)

1. Position Defense

Least successful of the defense strategies

A company attempting a fortress defense will find itself retreating from lineafter line of fortification into shrinking product markets. Saunders (1987)

e.g. Mercedes was using a position defense strategy until Toyota launched afrontal attack with its Lexus.

2. Mobile Defense

By market broadening and diversification For marketing broadening, there is a need to

Redefine the business (principle of objective), and

Focus efforts on the competition (the principle of mass)

e.g. Legend Holdings, the top China PC maker Legend has announced a joint venturewith AOL to broaden its business to provide Internet services in the mainland

3. Flanking Defense:

Secondary markets (flanks) are the weaker areas and prone to being attacked

Pay attention to the flanks

e.g. San Miguel introduced a flanking brand in the Philippines, Gold Eagle, as adefense against APBs Beerhausen

f S ( i d)


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Defense Strategy (continued)

4. Contraction Defense

Withdraw from the most vulnerable segments and redirect resources to those that are

more defendable By planned contraction or strategic withdrawal

e.g. Indias TATA Group sold its soaps and detergents business units to Unilever in 1993

5. Pre-emptive Defense

Detect potential attacks and attack the enemies first

Let it be known how it will retaliate

Product or brand proliferation is a form of pre-emptive defense

e.g. Seiko has over 2,000 models

6. Counter-Offensive Defense

Responding to competitors head-on attack by identifying the attackersweakness and then launch a counter attack

e.g. Toyota launched the Lexus to respond to Mercedes attack


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Market Challenger Strategies

The market challengers strategic objective is to gain market share and to

become the leader eventually

How? By attacking the market leader

By attacking other firms of the same size

By attacking smaller firms

Types of Attack Strategies

1. Frontal attack

2. Flank attack

3. Encirclement attack

4. Bypass attack

5. Guerrilla attack


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1. Frontal Attack

Seldom work unless

The challenger has sufficient

fire-power (a 3:1 advantage)and staying power, and

The challenger has clear

distinctive advantage(s)

e.g. Japanese and Korean firms

launched frontal attacks in variousASPAC countries through quality,

price and low cost



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2. Flank attack

Attack the enemy at its weak

points or blind spots i.e. its

flanks

Ideal for challenger who does

not have sufficient resources

e.g. In the 1990s, Yaohan

attacked Mitsukoshi and

Seibus flanks by opening

numerous stores in overseas

markets



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3. Encirclement attack

Attack the enemy at many

fronts at the same time

Ideal for challenger having

superior resources

e.g. Seiko attacked on fashion,

features, user preferences and

anything that might interest

the consumer



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4. Bypass attack

By diversifying into unrelated

products or markets

neglected by the leader

Could overtake the leader by

using new technologies

e.g. Pepsi use a bypass attack

strategy against Coke in China

by locating its bottling plants

in the interior provinces



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Guerrilla attack

By launching small,

intermittent hit-and-run

attacks to harass and

destabilize the leader

Usually use to precede astronger attack

e.g. airlines use short

promotions to attack the

national carriers especially

when passenger loads incertain routes are low



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Which Attack Strategy should a Challenger

Choose?

Use a combination of several strategies to improve market share over time

Market-Follower Strategies

Theodore Levitt in his article, Innovative Imitationargued that a product imitation

strategy might be just as profitable as a product innovation strategy

e.g. Product innovation--SonyProduct-imitationPanasonic

Each follower tries to bring distinctive advantages to its target market--location, services,

financing

Four broad follower strategies:

1. Counterfeiter (which is illegal)

2. Cloner e.g. the IBM PC clones

3. Imitator e.g. car manufacturers imitate the style of one another

4. Adapter e.g. many Japanese firms are excellent adapters initially before

developing into challengers and eventually leaders


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Market-Nicher Strategies

Smaller firms can avoid larger

firms by targeting smaller markets

or niches that are of little or nointerest to the larger firms

e.g. Logitech--mice

Microbrewers--special

beers

Nichers must create niches,expand the niches and protect

them

e.g. Nike constantly created

new niches--cycling, walking,

hiking, cheerleading, etc

What is the major risk faced by

nichers?

Market niche may be attacked

by larger firms once they

notice the niches are

successful


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Multiple Niching

[A] firm should `stick to its niching but not necessarily to its niche. That is why

multiple niching is preferable to single niching. By developing strength in two or

more niches the company increases its chances for survival.Philip Kotler


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Factors Affecting Likelihood of Attack

Quality exists when the firms goods or

services meet or exceed customers

t ti

First Mover

Second Mover

Quality

Late Mover

OrganizationalSize Large firms are likely to initiate more

strategic actions during a given timeperiod

Late mover responds to a

competitive action only after

considerable time has elapsed.

Second mover responds to the

first movers competitive action.

First mover: A firm that takes an

initial competitive action to build or

defend its competitive advantages or

to improve its market position.

Documents

Unit - V - Marekting Strategies