Marketing Strategy

Hierarchy of goals and objectives

Porter’s Economic Theory of Profits Barriers to Entry

Competition

Substitutes

Customers

Suppliers

Marketing Strategy

Generic Marketing StrategiesCost Leadership

Lower costs of production and distribution

Differentiation

Unique product or brand

Focus

Focus on customer needs in a few segments

Marketing Strategy

What business are you in?Statement of marketing strategy

Mission statement

Indicates product, market scope

Shows growth factor

Shows differential advantage

Shows management orientation

Marketing Strategy

Product Mix StrategiesMarket penetration versus market skimming

QualityHigh

Medium

Low

Price

High Medium Low

PremiumGoods

Penetra-tion

SuperBargain

Over-Pricing

AverageQuality

Bargain

Hit andRun

ShoddyGoods

CheapGoods

Marketing Strategy

Product Market Growth Strategies

Market Penetration(increase usage)

Product Development(new uses)

Market Development(new users)

Diversification(new users, new uses)

Markets

Products

Old

Old

New

New

Marketing Strategy

Boston Consulting Group Strategy:Relative Market Share

Market Growth Rate

Problems with BCG Approach

Difficult to estimate relative market share in rapidly growing markets

Marketing Strategy

BCG Matrix:

StarsSome cash use

Future cash cow

Cash CowsGenerate cash for

?, Stars

DogsLow or no cash use

When to divest

?High cash use

? Is to build or not

Relative Market Share10x 1..5x .1x (log scale)

Market GrowthRate

22%

10%

0%

Marketing Strategy

Market Leader StrategiesIncrease Size of Total Market

Product-Market Growth Strategies

Protect Market Share

Fortification

Assortment of brands, sizes

Innovation

Best defense is a good offense

Counteroffensive

Marketing Strategy

Market Leader Strategies (cont.)Increase Market Share

BCG

Antitrust constraints

Market Share

Marketing Effort ($)

100%

Marketing Strategy

Market Challenger StrategiesFrontal Attack

Out-innovate leader

Tough to do, easier to defend

Flanking/Bypass Attack

Attack where leader is not looking

Find a new market segment

Price Discount Strategy

Buyers are sensitive to price

Works if leader does not cut price

Marketing Strategy

Market Challenger Strategies (cont.)Cheaper Goods Strategy

Lower quality but much lower price

Vulnerable to still cheaper goods

Prestige Goods Strategy

Increase both quality and price

Marketing Strategy

Market Follower StrategiesConscious Parallelism

Similar products, prices

Avoid unprofitable segments

Market Niche

Specialize in a very small group of customers

Concentrated segmentation strategy……

Marketing Strategy

Attacker(smaller)

Defender(bigger)

PositionDefense

PreemptiveDefense

Counteroffensive

ContractionDefense

Flanking Defense

Mobile Defense

Flank Attack

Frontal

Attack

Encirclement

Bypass

Guerilla Attack

eMarketing

Is eMarketing anything new?…or just an adaptation of existing strategy?

Addressability – ability to identify customer prior to purchase

Marketers could always do this.

So why is web different? Is it more efficient…?

…only if you do not delete your cookies…?…or they keep extensive files on you…

eMarketing

Interactivity – customers can express their needs and wants directly to the firm

Marketers could always do this too. So what is new?

…another efficiency argument…?

Memory – ability to access individual customer profiles and purchase histories

This is probably valid. Information existed before butwas hard to access

eMarketing

Control – customer’s ability to control flow and sequence of information

Pull versus push medium…web versus television.Who control’s the flow?

Definitely an eMarketing characteristic, but a two-edged sword.

Why? Customers control the flow……

Accessibility – ability to obtain information…..

“Retrieving info from the Internet is like trying to drink from a

fire hose.” You could always do this, web may be easier for some users.

eMarketing

Digitilization – can the product or benefits be represented digitally?

Does the media match the product’s attributes?

…a problem for all media…?

So, does eMarketing exist? Maybe, or maybe it is just another information flow/distribution system touse in designing a marketing strategy to meet customer needs…(and maximize profits).

Marketing Strategy

Bear Theory

Differential versus Absolute Advantage