BSAD 4340: DEVELOPING MARKETING STRATEGIES
BSAD 4340: DEVELOPING MARKETING STRATEGIES
Term Project – Spring 2019
Strategic Marketing Plan
The student’s project requirement is to complete a strategic marketing plan for a small business. This marketing strategy will include the implementation steps for the marketing plan. The results of this project will be presented in a typed 7-10 page report inAPAformat.
The difference between a marketing strategy and a marketing plan:
The marketing strategy is shaped by the overall business goals, provides a definition of the business, describing the target market and the role of competition. This is a summary of the business’ products and position.
The marketing plan is the specific actions to be implemented in order to achieve the goals of the marketing strategy. This includes details about the business’ unique selling proposition, pricing, plans for advertising and promotions and the choice of distribution channels. Each team is expected to do a brief verbal presentation of their written plan.
This is a research project not a book report; therefore, numerous quality sources are required. Be sure to properly cite work and provide a reference section. No footnotes required.
The paper written in accordance toAPAformat: Cover page, 1-inch margins, double space, indent first sentence of each paragraph. Grammatically correct sentences and well structured paragraphs. There should be no use of first person references. Please refer to the APA guidelines attached to this syllabus.
Marketing Strategy Considerations:
There are two major components to the marketing strategy:
- How the business will address the competitive marketplace.
- How the business will implement and support the day to day operations.
In today`s very competitive marketplace a strategy that insures a consistent approach to offering the business’ product or service in a way that will outsell the competition is critical. In addition to defining the marketing strategy there must also be a well defined methodology for the day to day process of implementation. A marketing strategy is of little value if the business lacks either the resources or the expertise to implement the strategy.
Marketing strategies take into consideration numerous factors for pricing, distribution, promotion, advertising and market segmentation. Factors such as market penetration, market share, profit margins, budgets, financial analysis, capital investment, government actions, demographic changes, emerging technology, cultural trends, and competition are also addressed.
Begin the creation of the marketing strategy by deciding what the overall objective of the business should be. In general this falls into one of four categories:
- If the business is one of the strongest in the industry and the market is very attractive, then the business will want to invest its best resources in support of the business’ offering.
- If the business is one of the weaker ones in the industry and the market is very attractive, then the business will need to concentrate on strengthening the enterprise, using its offering as a stepping stone toward this objective.
- If the business is one of the strongest in the industry and the market is not especially attractive, then an effective marketing and sales effort for the business’ offering will be good for generating near term profits.
- If the business is one of the weaker ones in the industry and the market is not especially attractive, then the business should promote its offering only if it supports a more profitable part of the business (for instance, if this segment completes a product line range) or if it absorbs some of the overhead costs of a more profitable segment. Otherwise, the business should determine the most cost effective way to divest this offering.
Market attractiveness should be measured in terms of market growth rate, market size, degree of difficulty entering market, number and types of competitors, technological requirements, profit margins, and any other relevant factors (Etzel, Walker, Stanton, 2007, p.575).
Business position includes market share, business size relative to the market, strength of differential advantage, research and development capabilities, production capacity, cost controls, and strength of management (Etzel, et al., 2007, p. 575).
Having selected the direction most beneficial for the overall interests of the business, the next step is to choose a strategy for the offering that will be most effective in the market. This means choosing one of the following `generic` strategies (Porter, 1985):
COST LEADERSHIP STRATEGY - based on the concept that one can produce and market a good quality product or service at a lower cost than your competitors. These low costs should translate to profit margins that are higher than the industry average. Some of the conditions that should exist to support a cost leadership strategy include an on-going availability of operating capital, good process engineering skills, and close management of labor, products designed for ease of manufacturing and low cost distribution.
DIFFERENTIATION STRATEGY - one of creating a product or service that is perceived as being unique "throughout the industry". The emphasis can be on brand image, proprietary technology, special features, superior service, a strong distributor network or other aspects that might be specific to the industry. This uniqueness should also translate to profit margins that are higher than the industry average. In addition, some of the conditions that should exist to support a differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation.
FOCUS STRATEGY - designed to address a "focused" segment of the marketplace, product form or cost management process and is usually employed when cost leadership or differentiation is inappropriate. Based on the concept of serving a particular target in such an exceptional manner, that others cannot compete. Usually this means addressing a substantially smaller market segment than others in the industry, but because of minimal competition, profit margins can be very high.
Goals & Objectives
Provide history, goals, and mission statement:
OBJECTIVES - a statement of what is to be accomplished through marketing objectives
- Be realistic, measurable, and time specific
- Marketing objectives need to be consistent with and reflect the overall organizational goals
Mission StatemenT - “What business are we in”
- Analysis of existing and potential customer benefits
- Analysis of current and anticipated environmental conditions
- Focus on the market or the market attempting to serve
- Long-term thinking required
- Try NOT to beTOOSPECIFIC – avoid MARKETING MYOPIA (narrow vision)
which is defining in terms of product or services and not in terms of customers.
Essential to understand the market segment(s) as defined by the prospect characteristics you have selected as the target for your offering. Factors to consider include:
- The potential for market penetration involves whether you are selling to past customers or a new prospect, how aware the prospects are of what you are offering, competition, growth rate of the industry and demographics.
- The prospect`s willingness to pay higher price because the offering provides a better solution to their problem.
- The amount of time it will take the prospect to make a purchase decision is affected by the prospects confidence in your offering, the number and quality of competitive offerings, the number of people involved in the decision, the urgency of the need for your offering and the risk involved in making the purchase decision.
- The prospect`s willingness to pay for product value is determined by their knowledge of competitive pricing, their ability to pay and their need for characteristics such as quality, durability, and reliability, ease of use, uniformity and dependability.
- Likelihood of adoption by the prospect is based on the criticality of the prospect`s need, their attitude about change, the significance of the benefits, barriers that exist to incorporating the offering into daily usage and the credibility of the offering.
The factors that establish products/services as strong contenders in the marketplace include:
- Whether some or all of the technology for the offering is proprietary to the enterprise.
- The benefits the prospect will derive from use of the offering.
- The extent to which the offering is differentiated from the competition.
- The extent to which common introduction problems can be avoided such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.
- The potential for product obsolescence as affected by the enterprise`s commitment to product development, the product`s proximity to physical limits, the ongoing potential for product improvements, the ability of the enterprise to react to technological change and the likelihood of substitute solutions to the prospect`s needs.
- Impact on customer`s business as measured by costs of trying out your offering, how quickly the customer can realize a return from their investment in your offering, how disruptive the introduction of your offering is to the customer`s operations and the costs to switch to your offering.
- The complexity of your offering as measured by the existence of standard interfaces, difficulty of installation, number of options, requirement for support devices, training and technical support and the requirement for complementary product interface.
Having defined the overall offering objective and selecting the generic strategy one must then decide on a variety of closely related operational strategies. One of these is how the business prices the offering. A pricing strategy is mostly influenced by business’ requirement for net income and its objectives for long term market control. There are three basic strategies one can consider.
- SKIMMING STRATEGY- if the business’ offering has enough differentiation to justify a high price and quick cash is desired while having minimal desires for significant market penetration and control, thus set prices very high.
- MARKET PENETRATION STRATEGY - If near term income is not so critical and rapid market penetration for eventual market control is desired, thus set prices very low.
- COMPARABLE PRICING STRATEGY - If one is not the market leader in related industry then the leaders will most likely have created a `price expectation` in the minds of the marketplace. In this case, price offerings comparable to those of the competitors.
Effective promotion and advertising is needed to sell an offering. There are two basic promotion strategies:
- PUSH STRATEGY - maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing the need for advertising.
- PULL STRATEGY - requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.
There are many strategies for advertising an offering. Some of these include:
- Product Comparison Advertising – used in a market where the offering is one of several others providing similar capabilities, if one’s offering stacks up well when comparing features then a product comparison advertisement can be beneficial.
- Product Benefits Advertising – used to promote the offering without comparison to competitors. This is especially beneficial when introducing a new approach to solving a user need and comparison to the old approaches is inappropriate.
- Product Family Advertising - If the offering is part of a group or family of offerings that can be of benefit to the customer as a set, then the product family advertisement can be of benefit.
- Corporate Advertising – if there is a variety of offerings and the market is fairly broad, this advertisement is often beneficial to promote the enterprise’s identity rather than a specific offering.
One must select the distribution method(s) to be used in order to get the offering to the end customer. These include:
- On-premise Sales - involves the sale of the offering using a field sales organization that visits the prospect`s facilities to make the sale.
- Direct Sales - involves the sale of the offering using a direct, in-house sales organization that does all selling through the Internet, telephone or mail order contact.
- Wholesale Sales - involves the sale of the offering using intermediaries or "middle-men" to distribute the product or service to the retailers.
- Self-service Retail Sales - involves the sale of the offering using self service retail methods of distribution.
- Full-service Retail Sales - involves the sale of the offering through a full service retail distribution channel.
Of course, making a decision about pricing, promotion and distribution is heavily influenced by some key factors in the industry and marketplace. These factors should be analyzed initially to create the strategy and then regularly monitored for changes. If any of them change substantially the strategy should be reevaluated.
Knowing who the competition is and understanding their strengths and weaknesses is essential. Factors to consider include:
- Each of the competitor`s experience, staying power, market position, strength, predictability and freedom to abandon the market must be evaluated.
Environmental factors positively or negatively impact the industry and the market growth potential of one’s product/service. Factors to consider include:
- Government actions - can support or detract from one’s strategy. Consider subsidies, safety, efficacy and operational regulations, licensing requirements, materials access restrictions and price controls.
- Demographic changes - may support or negatively impact the growth potential of the industry and market. This includes factors such as education, age, income and geographic location.
- Emerging technology - may or may not favor the actions of the business.
- Cultural trends – such as fashion trends and life style trends may or may not support the offering`s penetration of the market.
Examine internal Strengths and Weaknesses
Focus on organizational resources: production costs, marketing skills,
financial resources, company image, employee capabilities, and available
Examine external Opportunities and Threats
Analyze aspects of marketing environment (environmental scanning – collecting and analyzing information about the forces* that affect the future of an organization).
An honest appraisal of the strength of the business is a critical factor in the development of the strategy. Factors to consider include:
- Business’ capacity to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale, management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.
- The business’ ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate one’s offering from the competition.
- The business` ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the `learning curve` faced by the prospect.
- The prominence of the business.
- The competence of the management team.
- The adequacy of the business’ infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
- The freedom of the business to make critical business decisions without undue influence from distributors, suppliers, unions, creditors, investors and other outside influences.
- Freedom from having to deal with legal problems.
Goals & Objectives
The marketing objectives should be closely related to the company-wide goals and strategies. For example, to reach an organizational objective of 10% growth next year, one organizational strategy might be to increase marketing efficiency by 10%. This business goal becomes a marketing goal. Goals are timely, measurable, ambitious yet achievable.
IMPLEMENTATION - Process that puts the plan into action and may involve: job assignments, activity descriptions, timelines, budgets, communications plan.
Evaluation & Control - Mechanism to compare actual results to objectives. Marketing Audit is a thorough, systematic, periodic evaluation of objectives, strategies, structures, and performance of marketing organization
MARKETING & SALES: The marketing and sales organization its strengths and current activities. Factors to consider when making recommendations may include:
- Experience of Marketing/Sales manager including contacts in the industry (prospects, distribution channels, media), familiarity with advertising and promotion, personal selling capabilities, general management skills and a history of profit and loss responsibilities.
- The ability to generate good publicity as measured by past successes, contacts in the press, quality of promotional literature and market education capabilities.
- Sales promotion techniques such as trade allowances, special pricing and contests.
- The effectiveness of the distribution channels as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with the offering.
- Advertising capabilities including media relationships, advertising budget, past experience, how easily the offering can be advertised and commitment to advertising.
- Sales capabilities including availability of personnel, quality of personnel, location of sales outlets, ability to generate sales leads, relationship with distributors, ability to demonstrate the benefits of the offering and necessary sales support capabilities.
- The appropriateness of the pricing of the offering as it relates to competition, price sensitivity of the prospect, prospect`s familiarity with the offering and the current market life cycle stage.
CUSTOMER SERVICES: The strength of the customer service function has a strong influence on long term market success. Factors to consider when making recommendations may include:
- Experience of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product documentation, sales and marketing.
- The availability of technical support to service the offering after it is purchased.
- One or more factors that causes one’s customer support to stand out as unique in the eyes of the customer.
- Accessibility of service outlets for the customer.
- The reputation of the enterprise for customer service.
MARKET PENETRATION - This is an analysis of the factors that will influence the costs to achieve significant market penetration. Factors to consider include:
- Business’ marketing strength.
- Access to low cost materials and effective production.
- The experience of the business.
- The complexity of introduction problems such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.
- The effectiveness of the enterprise infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
- Distribution effectiveness as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with the offering.
- Technological efforts likely to be successful as measured by the strength of the development organization.
- The availability of adequate operating capital.
PROFIT POTENTIAL - This is an analysis of the factors that could influence the potential for generating and maintaining profits over an extended period. Factors to consider include:
- Potential for competitive retaliation is based on the competitors’ resources, commitment to the industry, cash position and predictability as well as the status of the market.
- The business’ ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
- The intensity of competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the rapidity of market growth.
- The ability of the business to limit suppliers bargaining power.
- The business’ ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the `learning curve` faced by the prospect.
- The availability of substitute solutions to the prospect`s need.
- The prospect`s bargaining power as measured by the ease of switching to an alternative, the cost to look at alternatives, the cost of the offering, the differentiation between the offering and the competition and the degree of the prospect`s need.
- Market potential for new products considering market growth, prospect`s need for the offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customer`s daily operations.
- The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, investors and other outside influences
After defining the marketing strategy use the information gathered to determine whether this strategy will achieve the objective of making the business competitive in the marketplace. Summarize key points made throughout the strategy.
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