Marketing management versus marketing strategy
The distinction between "strategic" and "managerial" marketing is used to distinguish "two phases having different goals and based on different conceptual tools. Strategic marketing concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial marketing is focused on the implementation of specific targets." Marketing strategy is about "lofty visions translated into less lofty and practical goals hile marketing managementis where we start to get our hands dirty and make plans for things to happen." Marketing strategy is sometimes called ''higher order'' planning because it sets out the broad direction and provides guidance and structure for the marketing program.History
Marketing scholars have suggested that strategic marketing arose in the late 1970s and its origins can be understood in terms of a distinct evolutionary path: : Budgeting Control (also known as ''scientific management'') : Date: From the late 19th century : Key Thinkers: Frederick Winslow Taylor, Frank andOverview
Marketing strategy involves mapping out the company's direction for the forthcoming planning period, whether that be three, five or ten years. It involves undertaking a 360° review of the firm and its operating environment with a view to identifying new business opportunities that the firm could potentially leverage for competitive advantage. Strategic planning can also reveal market threats that the firm may need to consider for long-term sustainability. Strategic planning makes no assumptions about the firm continuing to offer the same products to the same customers in the future. Instead, it is concerned with identifying the business opportunities that are likely to be successful and evaluating the firm's capacity to leverage such opportunities. It seeks to identify the ''strategic gap'', which is the difference between where a firm is currently situated (the ''strategic reality'' or ''inadvertent strategy'') and where it should be situated for sustainable, long-term growth (the ''strategic intent'' or ''deliberate strategy''). Strategic planning seeks to address three deceptively simple questions, specifically: * Where are we now? (Situation analysis) * What business ''should'' we be in? (Vision and mission) * How should we get there? (Strategies, plans, goals, and objectives) A fourth question may be added to the list, namely 'How do we know when we got there?' Due to the increasing need for accountability, many marketing organizations use a variety of metrics to track strategic performance, allowing for corrective action to be taken as required. On the surface, strategic planning seeks to address three simple questions, however, the research and analysis involved in strategic planning is very sophisticated and requires a great deal of skill and judgement.Tools and techniques
Strategic analysis is designed to address the first strategic question, "Where are we now?" TraditionalVision and mission statements
The vision and mission address the second central question, 'Where are we going?' At the conclusion of the research and analysis stage, the firm will typically review its vision statement, mission statement and, if necessary, devise a new vision and mission for the outlook period. At this stage, the firm will also devise a generic competitive strategy as the basis for maintaining a sustainable competitive advantage for the forthcoming planning period. A vision statement is a realistic, long-term future scenario for the organization. (Vision statements should not be confused with slogans or mottos.) A vision statement is designed to present a realistic long-term future scenario for the organization. It is a "clearly articulated statement of the business scope." A strong vision statement typically includes the following: * Competitive scope * Market scope * Geographic scope * Vertical scope Some scholars point out the market visioning is a skill or competency that encapsulates the planners' capacity "to link advanced technologies to market opportunities of the future, and to do so through a shared understanding of a given product market. A mission statement is a clear and concise statement of the organization's reason for being and its scope of operations, while the generic strategy outlines how the company intends to achieve both its vision and mission. Mission statements should include detailed information and must be more than a simple ''motherhood statement''. A mission statement typically includes the following: * Specification of target customers * Identification of principal products or services offered * Specification of the geographic scope of operations * Identification of core technologies and/or core capabilities * An outline of the firm's commitment to long-term survival, growth and profitability * An outline of the key elements in the company's philosophy and core values * Identification of the company's desired public imageGeneric competitive strategy
The generic competitive strategy outlines the fundamental basis for obtaining a sustainable competitive advantage within a category. Firms can normally trace their competitive position to one of three factors: * Superior skills (e.g. coordination of individual specialists, created through the interplay of investment in training and professional development, work and learning) * Superior resources (e.g. patents, trade-mark protection, specialized physical assets and relationships with suppliers and distribution infrastructure.) * Superior position (the products or services offered, the market segments served, and the extent to which the product-market can be isolated from direct competition.) It is essential that the internal analysis provide a frank and open evaluation of the firm's superiority in terms of skills, resources or market position since this will provide the basis for competing over the forthcoming planning period. For this reason, some companies engage external consultants, often advertising or marketing agencies, to provide an independent assessment of the firm's capabilities and resources.Porter approach
In 1980, Michael Porter developed an approach to strategy formulation that proved to be extremely popular with both scholars and practitioners. The approach became known as the ''positioning school'' because of its emphasis on locating a defensible ''competitive position'' within an industry or sector. In this approach, strategy formulation consists of three key strands of thinking: analysis of the five forces to determine the sources of competitive advantage; the selection of one of three possible positions which leverage the advantage and the value chain to implement the strategy. In this approach, the strategic choices involve decisions about whether to compete for a share of the total market or for a specific target group (competitive scope) and whether to compete on costs or product differences (competitive advantage). This type of thinking leads to three generic strategies: * Cost leadership – the firm targets theResource-based view (RBV)
During the 1990s, the ''resource-based view'' (also known as the ''resource-advantage theory'') of the firm became the dominant paradigm. It is an inter-disciplinary approach that represents a substantial shift in thinking. It focuses attention on an organization's internal resources as a means of organizing processes and obtaining a competitive advantage. The resource-based view suggests that organizations must develop unique, firm-specific core competencies that will allow them to outperform competitors by doing things differently and in a superior manner. Barney stated that for resources to hold potential as sources of sustainable competitive advantage, they should be valuable, rare, and imperfectly imitable. A key insight arising from the resource-based view is that not all resources are of equal importance nor possess the potential to become a source of sustainable competitive advantage. The sustainability of any competitive advantage depends on the extent to which resources can be imitated or substituted. Barney and others point out that understanding the causal relationship between the sources of advantage and successful strategies can be very difficult in practice. Barney uses the term "causally ambiguous" which he describes as a situation when "the link between the resources controlled by the firm and the firm's sustained competitive advantage is not understood or understood only very imperfectly". Thus, a great deal of managerial effort must be invested in identifying, understanding, and classifying core competencies. In addition, management must invest in organizational learning to develop and maintain key resources and competencies. Market Based Resources include: * Organizational culture e.g. market orientation, research orientation, culture of innovation, etc. * Assets e.g. brands, Mktg IS, databases, etc. * Capabilities (or competencies) e.g. market sensing, marketing research, relationships, know-how, tacit knowledge, etc. After more than two decades of advancements in marketing strategy and in the resource-based view paradigm, Cacciolatti & Lee (2016) proposed a novel resource-advantage theory based framework that builds on those organizational capabilities that are relevant to marketing strategy and shows how they have an effect on firm performance. The capabilities-performance model proposed by Cacciolatti & Lee (2016) illustrates the mechanism whereby market orientation, strategic orientation, and organizational power moderate the capabilities-performance relationship. Such a logic of analysis was implicit in the original formulation of RA theory and although it was taken into consideration by several scholars, it was never been articulated explicitly and tested empirically. In the resource-based view, strategists select the strategy or competitive position that best exploits the internal resources and capabilities relative to external opportunities. Given that strategic resources represent a complex network of inter-related assets and capabilities, organizations can adopt many possible competitive positions. Although scholars debate the precise categories of competitive positions that are used, there is general agreement, within the literature, that the resource-based view is much more flexible than Porter's prescriptive approach to strategy formulation. Hooley et al., suggest the following classification of competitive positions: * Price positioning * Quality positioning * Innovation positioning * Service positioning * Benefit positioning * Tailored positioning (one-to-one marketing)Other approaches
The choice of competitive strategy often depends on a variety of factors including: the firm's market position relative to rival firms, the stage of the product life cycle. A well-established firm in a mature market will likely have a different strategy than aGrowth strategies
Growth of a business is critical for business success. A firm may grow by developing the market or by developing new products. The Ansoff product and market growth matrix illustrates the two broad dimensions for achieving growth. The Ansoff matrix identifies four specific growth strategies:Market position and strategy
In terms of market position, firms may be classified as market leaders, market challengers, market followers or market nichers. : ''Market leader'': The market leader dominates the market by objective measure of market share. Their overall posture is defensive because they have more to lose. Their objectives are to reinforce their prominent position through the use of PR to develop corporate image and to block competitors brand for brand, matching distribution through tactics such as the use of "fighting" brands, pre-emptive strikes, use of regulation to block competitors and even to spread rumours about competitors. Market leaders may adopt unconventional or unexpected approaches to building growth and their tactical responses are likely to include: product proliferation; diversification; multi-branding; erecting barriers to entry; vertical and horizontal integration and corporate acquisitions. : ''Market challenger'': The market challenger holds the second highest market share in the category, following closely behind the dominant player. Their market posture is generally offensive because they have less to lose and more to gain by taking risks. They will compete head to head with the market leader in an effort to grow market share. Their overall strategy is to gain market share through product, packaging and service innovations; new market development and redefinition of the product to broaden its scope and their position within it. : ''Market follower'': Followers are generally content to play second fiddle. They rarely invest in R & D and tend to wait for market leaders to develop innovative products and subsequently adopt a “me-too” approach. Their market posture is typically neutral. Their strategy is to maintain their market position by maintaining existing customers and capturing a fair share of any new segments. They tend to maintain profits by controlling costs. : ''Market nicher'': The market nicher occupies a small niche in the market in order to avoid head to head competition. Their objective is to build strong ties with the customer base and develop strong loyalty with existing customers. Their market posture is generally neutral. Their strategy is to develop and build the segment and protect it from erosion. Tactically, nichers are likely to improve the product or service offering, leverage cross-selling opportunities, offer value for money and build relationships through superior afteEntry strategies
Marketing strategies may differ depending on the unique situation of the individual business. According to Lieberman and Montgomery, every entrant into a market – whether it is new or not – is classified under a Market Pioneer, Close Follower or a Late follower=Pioneers
= Market pioneers are known to often open a new market to consumers based on a major innovation. They emphasize these product developments, and in a significant number of cases, studies have shown that early entrants – or pioneers – into a market have serious market-share advantages above all those who enter later. Pioneers have the first-mover advantage, and in order to have this advantage, business’ must ensure they have at least one or more of three primary sources: Technological Leadership, Preemption of Assets or Buyer Switching Costs. Technological Leadership means gaining an advantage through either Research and Development or the “learning curve”. This lets a business use the research and development stage as a key point of selling due to primary research of a new or developed product. Preemption of Assets can help gain an advantage through acquiring scarce assets within a certain market, allowing the first-mover to be able to have control of existing assets rather than those that are created through new technology. Thus allowing pre-existing information to be used and a lower risk when first entering a new market. By being a first entrant, it is easy to avoid higher switching costs compared to later entrants. For example, those who enter later would have to invest more expenditure in order to encourage customers away from early entrants. However, while Market Pioneers may have the “highest probability of engaging in product development” and lower switching costs, to have the first-mover advantage, it can be more expensive due to product innovation being more costly than product imitation. It has been found that while Pioneers in both consumer goods and industrial markets have gained “significant sales advantages”, they incur larger disadvantages cost-wise.=Close followers
= Being market pioneer can, more often than not, attract entrepreneurs and/or investors depending on the benefits of the market. If there is an upside potential and the ability to have a stable market share, many businesses would start to follow in the footsteps of these pioneers. These are more commonly known as Close Followers. These entrants into the market can also be seen as challengers to the Market Pioneers and the Late Followers. This is because early followers are more than likely to invest a significant amount in Product Research and Development than later entrants. By doing this, it allows businesses to find weaknesses in the products produced before, thus leading to improvements and expansion on the aforementioned product. Therefore, it could also lead to customer preference, which is essential in market success. Due to the nature of early followers and the research time being later than Market Pioneers, different development strategies are used as opposed to those who entered the market in the beginning, and the same is applied to those who are Late Followers in the market. By having a different strategy, it allows the followers to create their own unique selling point and perhaps target a different audience in comparison to that of the Market Pioneers. Early following into a market can often be encouraged by an established business’ product that is “threatened or has industry-specific supporting assets”.=Late entrants
= Those who follow after the Close Followers are known as the Late Entrants. While being a Late Entrant can seem very daunting, there are some perks to being a latecomer. For example, Late Entrants have the ability to learn from those who are already in the market or have previously entered. Late Followers have the advantage of learning from their early competitors and improving the benefits or reducing the total costs. This allows them to create a strategy that could essentially mean gaining market share and most importantly, staying in the market. In addition to this, markets evolve, leading to consumers wanting improvements and advancements on products. Late Followers have the advantage of catching the shifts in customer needs and wants towards the products. When bearing in mind customer preference, customer value has a significant influence. Customer value means taking into account the investment of customers as well as the brand or product. It is created through the “perceptions of benefits” and the “total cost of ownership”. On the other hand, if the needs and wants of consumers have only slightly altered, Late Followers could have a cost advantage over early entrants due to the use of product imitation. However, if a business is switching markets, this could take the cost advantage away due to the expense of changing markets for the business. Late Entry into a market does not necessarily mean there is a disadvantage when it comes to market share, it depends on how the marketing mix is adopted and the performance of the business. If the marketing mix is not used correctly – despite the entrant time – the business will gain little to no advantages, potentially missing out on a significant opportunity. The differentiated strategy The customized target strategy The requirements of individual customer markets are unique, and their purchases sufficient to make viable the design of a new marketing mix for each customer. If a company adopts this type of market strategy, a separate marketing mix is to be designed for each customer. Specific marketing mixes can be developed to appeal to most of the segments when market segmentation reveals several potential targets.Developing marketing goals and objectives
Whereas the vision and mission provide the framework, the "goals define targets within the mission, which, when achieved, should move the organization toward the performance of that mission." ''Goals'' are broad primary outcomes whereas, ''objectives'' are measurable steps taken to achieve a goal or strategy. In strategic planning, it is important for managers to translate the overall strategy into goals and objectives. Goals are designed to inspire action and focus attention on specific desired outcomes. Objectives, on the other hand, are used to measure an organization's performance on specific dimensions, thereby providing the organization with feedback on how well it is achieving its goals and strategies. Managers typically establish objectives using the '' balanced scorecard'' approach. This means that objectives do not include desired financial outcomes exclusively, but also specify measures of performance for customers (e.g. satisfaction, loyalty, repeat patronage), internal processes (e.g., employee satisfaction, productivity) and innovation and improvement activities. After setting the goals marketing strategy or marketing plan should be developed. The marketing strategy plan provides an outline of the specific actions to be taken over time to achieve the objectives. Plans can be extended to cover many years, with sub-plans for each year. Plans usually involve monitoring, to assess progress, and prepare for contingencies if problems arise. Simultaneous such as customer lifetime value models can be used to help marketers conduct "what-if" analyses to forecast what potential scenarios arising from possible actions, and to gauge how specific actions might affect such variables as the revenue-per-customer and the churn rate.Strategy typologies
Developing competitive strategy requires significant judgement and is based on a deep understanding of the firm's current situation, its past history and its operating environment. No heuristics have yet been developed to assist strategists choose the optimal strategic direction. Nevertheless, some researchers and scholars have sought to classify broad groups of strategy approaches that might serve as broad frameworks for thinking about suitable choices.Strategy types
In 2003, Raymond E. Miles and Charles C. Snow, based on an in-depth cross-industry study of a sample of large corporations, proposed a detailed scheme using four categories: * Prospectors: proactively seek to locate and exploit new market opportunities * Analyzers: are very innovative in their product-market choices; tend to follow prospectors into new markets; often introduce new or improved product designs. This type of organisation works in two types of market, one generally stable, one subject to more change * Defenders: are relatively cautious in their initiatives; seek to seal off a portion of the market which they can defend against competitive incursions; often market highest quality offerings and position as a quality leader * Reactors: tend to vacillate in their responses to environmental changes and are generally the least profitable organizationsMarketing strategy
Marketing warfare strategies are competitor-centered strategies drawn from analogies with the field of military science. Warfare strategies were popular in the 1980s, but interest in this approach has waned in the new era of relationship marketing. An increased awareness of the distinctions between business and military cultures also raises questions about the extent to which this type of analogy is useful. In spite of its limitations, the typology of marketing warfare strategies is useful for predicting and understanding competitor responses. In the 1980s, Kotler and Singh developed a typology of marketing warfare strategies: * Frontal attack: where an aggressor goes head to head for the same market segments on an offer by offer, price by price basis; normally used by a market challenger against a more dominant player * Flanking attack: attacking an organization on its weakest front; used by market challengers * Bypass attack: bypassing the market leader by attacking smaller, more vulnerable target organizations in order to broaden the aggressor's resource base * Encirclement attack: attacking a dominant player on all fronts * Guerilla warfare: sporadic, unexpected attacks using both conventional and unconventional means to attack a rival; normally practiced by smaller players against the market leaderRelationship between the marketing strategy and the marketing mix
Marketing strategy and marketing mix are related elements of a comprehensive marketing plan. While marketing strategy is aligned with setting the direction of a company or product/service line, the marketing mix is majorly tactical in nature and is employed to carry out the overall marketing strategy. The 4P's of the marketing mix (Price, Product, Place and Promotion) represent the tools that marketers can leverage while defining their marketing strategy to create a marketing plan.See also
References
Further reading
* Laermer, Richard; Simmons, Mark, ''Punk Marketing'', New York: Harper Collins, 2007 (Review of the book by Marilyn Scrizzi, in ''Journal of Consumer Marketing'' 24(7), 2007)External links
* {{DEFAULTSORT:Marketing Strategy