27 Strategic Marketing

Kulbhushan Chandel

    1. Learning Objectives

 

After completing this module, the students will be able to:

  • Describe the concept of strategic marketing.
  • Explain the marketing fundamentals.
  • What role does marketing plays in strategic management?
  • Explain the concept of strategic marketing planning.
  • Discuss in detail the strategic customer management.
  • Explain how the competitive positioning strategy would help in the marketing?

 2. Introduction

 

With the arrival of the third millennium, marketing has become the function of the business. For a decade ago, marketing was deliberation as just selling and advertising. But today the marketing is considered as centre of identifying and satisfying customer requirements at a profit and most businesses are performed as customer oriented. As said by Webster, the successful organisation of the future will be customer-focused, not product or technology focused, supported by a market- information capability that links the voice of the customer to the entire firm’s value delivery process. Successful marketing organisations will have the skills necessary to manage multiple strategic marketing processes, many of which have not, until recently be regarded as within the domain of marketing. In case of managing the process of going to market- value definition, value development and value delivery- the goal of strategic marketing is to provide a meticulous analytical framework for developing effective marketing strategies for both present and future. A prospective process implies constant effort to increase sales.

    3. Market Orientation 

 

Market orientation involves one or more departments engaging in the activities geared towards the developing an understanding of the current and future needs of the customers and the numerous factors affecting them; sharing of this information with the other departments and the various departments connecting in activities designed to meet the needs of the selected customers. Thus, the market orientation refers to the organisation-wide generation, dissemination and responsiveness to market intelligence.

  The market orientation is concerned with the development of market understanding throughout an organisation and poses substantial challenge to the executive to develop manners to build this understanding.

Main components of market orientation are explained below:

  • Customer orientation: It means understanding customers well enough continuously to create superior value for them.
  • Competitor orientation: It means creating awareness about the short term and long term capability of the competitors.
  • Inter-functional coordination: It consists of using all the available resources of the company for creating value for the target customers.
  • Organisational culture: It provides linking employee and managerial behaviour to customer satisfaction.
  • Long term profit focus: As over-riding business objective.

    4. Marketing Fundamentals 

The following are the principles based on the value based process described by the Webster in 1997:

 

4.1 Focus on the Customer: The principle of focusing on customer of marketing materializes out of marketing concept itself. This focuses on the objectives of the company which can best be achieved by serving the customers. The quality of goods and services provided by the company to the customers would be judged by them on the basis of the satisfaction of their needs. A quality product from the view point of customer is the one which provides him maximum satisfaction as that would fit the needs and desires of the customer.

 

4.2 Only compete in that market where company can establish competitive advantage: the selection of the market where the company would launch its product is an important function to be performed by the company. There are various factors present in the environment which would influence these decisions of the company. Most important question will be the one  that whether the company is capable of competing in that market or not. Sometimes the company might find that the particular market is an attractive one but after towards the inside it, the company can come to know that it was not done on the real basis.

 

4.3 Customers do not buy products: this principle states that the customers do not buy the product; rather they buy what would satisfy their needs. The customers are very less interested in the technicalities of the product but they are more interested in the benefits which would be provided by the product for the satisfaction of the needs of the customers. For example in retail markets in grocery business, it is not what the company sells; it is what the customers want. Like the retailer sells the ready meals. For marketers it is very difficult to catalogue them, as manufacturer might classify it as potato crisps, the retailer might have categorises it as salty snacks and the customer might have categorised it as lunch. So the categorisation is generally done from the view point of the customers as what they want.

 

4.4 Marketing needs to be done outside marketing department also: while the marketing function is of marketing department only, but the function of being a marketer is the job of everybody. Marketing has to be done by everyone but it should not be left as what everyone is performing is actually being performed by nobody. Rather, it should be done by each and every person in the organisation so that the main objectives of the organisation are achieved.

 

4.5 Markets are heterogeneous: it is normally clear that markets are not homogeneous. Markets do not comprise of the customers who have same demand, needs and preferences. Rather, market is a heterogeneous place having consumers of heterogeneous nature. Due to heterogeneity in the markets, the markets have to be divided into segments and sub-segments of homogeneous customers.

 

4.6 Markets and customers are constantly changing: it is normal thing that the market and customers do not remain constant. Markets are dynamic in nature and practically all the products have a certain limited life span.

 

5. Role of Marketing in Leading Strategic Management 

 

There is a need for strategic management to cope up with the changing marketing environment to become increasingly marketing led. The role of marketing in taking a leading role in the development and implementation of strategy can be defined as follows:

5.1 Identification of Requirements of Customers: the first critical task of marketing is to identify the requirements of customers and to communicate them effectively to the organisation. It involves conducting relevant consumer research to uncover who are the customers and how to satisfy them. In some circumstances buyers could be different from the actual users. Customers may expect a degree of benefit from purchasing or using a product or service. They may actually want something more, but may be due to some reasons, like lack of budget, has to satisfy with what they bought. The organisations which can provide the customers with what they want rather than what they expect has an opportunity to go beyond customer satisfaction and can create customer delight. The needs and wants of the customers must be properly spread to those who are designing the product, who are responsible for the production of the products and those who are responsible for the delivery of the products.

 

5.2 Deciding about the Competitive Positioning: markets are heterogeneous and are made up of numerous market segments having different requirements from essential similar offerings which lead to the need to clearly decide which target market the organisation want to seek. That decision is made on the basis of the two main sets of factors, attractiveness of the  targets and how well that could be served by the company in comparison to its competitors.

 

5.3   Implementing the Marketing Strategy: the third important task of marketing is to marshal all the relevant organisational resources to plan and execute the delivery of customer satisfaction. It involves ensuring that all the members of the organisation are co-ordinated in their efforts to satisfy the customers and that no actual or potential gap exists between the offer design and actual production and delivery of the product.

 

6. Strategic Marketing Planning 

 

The need of developing the marketing strategy for a company is to ensure that the abilities of the company are matched with the competitive marketing environment in which the company works. For a commercial organisation strategic marketing planning means ensuring that the resources of the company and its capabilities matches with the requirements of the market. For non-commercial organisation strategic marketing planning means achieving a fit between its abilities to serve and requirements of public. Strategic planning basically answers following three questions:

  • What is the business doing now?
  • What is happening in the environment?
  • What should the business be doing?

    Strategy is concerned with the effectiveness rather than efficiency. The fundamental to strategic thinking is the concept of strategic fit. For any strategy to be effective it needs to be well tuned both to needs and requirements of the customers and the resources of the company. Marketing philosophy is needed to be adopted throughout the organisation so that it goes beyond the marketing management. The strategic profile of the company needs to be developed giving it a strategic focus. A marketing orientation must infuse the whole organisation but the strategic marketing plan is just one of the several functional plans that feed into the overall strategic plan of the company.

 

The strategic marketing planning process is as follows:

 

6.1 Defining the Business Purpose:

 

For organisations a starting point in strategy formulation is to define its mission and purpose. Formulating the mission into a brief and concise statement that can be communicate across the organisation can help engender a sense of common purpose and also provide guidelines for how decisions will be made and resource allocations prioritised in the future. The mission statement should spell out the following:

  • Strategic intent or vision of here the organisation wants to be in the foreseen future. The vision of the organisation such as university might be preserved in the achievement of the set of worthy goals.
  • The values of the organisation should be spelled out to set the ethical and moral tone to guide operations.
  • The distinctive competencies of the organisation should be articulated clearly stating what differentiate the organisation from its competitors.
  • The mission should also spell out what the organisation is and what position it wants in the market.

    6.2 Marketing Strategy Process:

 

Once the purpose of the organisation has been defined now the marketing strategy can be crafted. The establishment of an effective marketing strategy starts with a detailed and creative assessment of the strengths and weaknesses of the organisation in relation to its competitors and the opportunities and threats posed by the environment. On the basis of this analysis, the core strategy of the company would be decided, identifying the market objectives and the broad focus on the achievement of it. Then, the market targets are identified. And the company’s differential advantage is defined as how the company would serve the target market better than its competitors. Then at the time of implementation, a marketing organisation which would be capable of its implementation is created. The design of the marketing organisation would be crucial to the success of the strategy.

 

6.3 Establishing the Core Strategy:

 

The core strategy is both a statement of the company’s objectives and the broad strategies that will be used for its achievement. For establishing a core strategy a company needs a detailed account of resources available with the organisation and the market in which the company would operate.

 

For this, the following steps are taken:

 

6.3.1 Analysis of the Organisational Resources: Any organisation can create a long list of the resources at its disposal, in defining the core strategy the organisations attempt to define the distinctive resources that serve to define the organisation. In this the product portfolio is made. Product portfolio is the foundation for making important choices for investment and for strategic direction.

 

6.3.2 Analysis of the Market Served: An analysis of the markets in which the organisation would work can serve to focus on opportunities and threats focused by the company. Those opportunities and threats come from two main areas, i.e., customers and competitors. Increasing competition both internal and external is the main game in the markets. With the increase in competition in the market, the companies need to improve its marketing activates.

 

6.3.3 SWOT Analysis: the purpose of SWOT analysis is twofold. The first purpose is to identify the most significant factors both internal and external which are affecting the organisation and the markets. It provides a quick and executive summary of both the issues. Secondly, by looking at various strengths and weaknesses the company can align the opportunities and threats which can help in strategy formulation.

 

6.3.4 Core Strategy: On the basis of the above analysis the company seeks to define the key factors for success. Key factors for success in the industry are those factors which are crucial for doing the business and these are identified through examining the differences between the winners and losers. They often represent the factors where the greatest leverage can be exerted.

 

6.4 Creation of Competitive Positioning:

 

The competitive positioning of the company is the statement of the market targets, i.e., where the company will compete and how the company will compete. The positioning is developed to achieve the objectives laid down in the core strategy.

 

6.4.1 Market Targets: A number of factors need to be considered in choosing the market target. Broadly, they fall into two targets, assessing the market attractiveness and evaluating the company’s current strengths and potential strengths for serving the markets. All markets are vulnerable to the extent to external uncontrollable conditions like government policies. Some markets are more vulnerable than others. This is the case of international markets. Having selected the target market on the basis of the market attractiveness and current business strength in serving the market, the company creates the differential advantage in serving the market.

 

6.4.2 Differential Advantage: A differential advantage can be created out of the strengths and distinctive competencies of the company in relation to its competitors.

 

6.5 Implementation :

 

Once the core strategy is decided, the next comes is its implementation. The three basic elements of implementation are as follows:

 

6.5.1 Marketing Mix: The marketing mix of the products, price, promotion and place is the means by which the company translates its strategy from a statement to the market place. Each of the elements of the mix should be designed to add up to the positioning required.

 

6.5.2 Organisation: At a very basic level, it is essential for the required manpower and financial resources to be made available. Provided the resources, their organisation can also affect their ability to implement the strategy effectively. The functional management and the product management are done under it.

 

6.5.3 Control: As the marketing strategy is being executed an important role of the marketing department is to monitor and control the effort. Performance can be monitored in two ways: on the basis of market performance and on the basis of financial performance. On the basis of market performance, the things measured are sales, market share, customer attitudes and loyalty. In financial measurement the performance is measured through a monitoring of product contribution relative to the resources employed to achieve it. Often a basic conflict can arise between the marketing performance and financial performance.

 

7. Tools and Approaches of Strategic Marketing 

 

Numerous tools and techniques can be developed in strategic planning by the companies. Some of them are as follows:

  • SWOT Analysis: SWOT means strengths, weaknesses, opportunities and threats and this analysis helps a company to know about its internal strengths and weaknesses and about the external opportunities and threats present for the company.
  • PEST Analysis: PEST analysis helps a company to know about its external environment as the name suggest PEST- political, economic, social and technological. It helps company to understand about the external situation properly.
  • PORTER’s Five Forces Analysis: This model identifies five forces that shapes every industry and helps in identification of every industry’s strengths and weaknesses. The five main forces are threats of new entrants, threats of substitute products, bargaining power of customers, bargaining power of suppliers and intensity of competitive rivalry.
  • Balanced Score Card and Strategy Map: It helps a company in creation of systematic framework which would help in measurement and controlling of the strategies.
  • Scenario Planning: Scenario planning helps a company to analyse the future scenarios.
  • Growth Share Matrix: It comprises of the portfolio decisions of the company, portfolio about the businesses of the company i.e. which unit the company should continue and which one should be shut down. It helps a company to shut its loss making units.

    8. Summary

 

The marketing is considered as centre of identifying and satisfying customer requirements at a profit and most businesses are conducted as customer oriented. The successful organisation of the future  will be customer-focused, not product or technology focused, supported by a market-information competence that links the voice of the customer to the entire firm’s value delivery process. Successful marketing organisations will have the skills necessary to manage multiple strategic marketing processes, many of which have not, until recently be regarded as within the domain of marketing. Market orientation involves one or more departments engaging in the activities geared towards the developing an understanding of the current and future needs of the customers and the numerous factors affecting them; sharing of this information with the other departments and the various departments engaging in activities designed to meet the needs of the selected customers’ needs. Thus, the market orientation refers to the organisation-wide generation, dissemination and responsiveness to market intelligence. There is a need for strategic management to cope up with the changing marketing environment to become increasingly marketing led. Strategic marketing planning involves deciding  on the core strategy, creating the competitive positioning of both the company and its offerings and implementing that strategy. For a single product firm and for conglomerate firms, the extra dimension consists of the portfolio planning ensuring that the mix of businesses within the total corporation is suitable for achieving the overall corporate objectives.

 

Suggested Readings (Books and Websites)

  1. Ghosh PK, Sales Management- Text and Cases, Himalaya Publishing House, 2010.
  2. Jobber David and Lancester Geoff, Selling and Sales Management, Pearson Education, Sixth Edition.
  3. McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
  4. Needham, Dave (1996). Business for Higher Awards. Oxford, England: Heinemann.
  5. Kotler, Philip (2012). Marketing Management. Pearson Education. Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA
  6. McCarthy, Jerome  E.  (1975)”Basic  Marketing:  A  Managerial  Approach,”  fifth  edition, Richard D. Irwin