Marketing managers must be able to use their business acumen – business knowledge, business skills and business experience – to establish different marketing strategies depending on various business situations.
What are marketing strategies?
Marketing strategies are the firm’s operational plans established for setting and achieving marketing objectives. Marketing objectives are the specific marketing goals of a business organization set to help the business achieve its aim – get where the business is going.
Marketing strategies put marketing objectives into action. To achieve its marketing objectives, the business develops marketing strategies outlining how it will deliver day-to-day on the objectives.
How to choose a marketing strategy?
Once a business organization has set its marketing objectives, a business’s marketing strategy is a plan to achieve those marketing objectives using a given level of resources available to the firm.
Marketing strategies are based on the 4Ps of the Marketing Mix – Product, Price, Place and Promotion taken together. The business must successfully combine these four decisions into an appropriate marketing strategy.
A marketing strategy can only be produced after careful market research and situational analysis conducted in the marketing audit.
Any decisions about marketing strategies will also depend on the marketing budget available, hence the marketing strategy must also contain details of the marketing budget.
Examples of marketing strategies
Examples of different marketing strategies are mainly focused around markets and products:
1. Level of market presence:
HIGH: Market Penetration or Product Development. Should we sell more to the same existing customers that the business is currently targeting?
LOW: Market Development or Diversification. Should we sell more to the new customers that the business is not currently targeting?
2. Level of market penetration:
HIGH: Mass Marketing. The level of market penetration will be high. Profit margins will be low. Should the company use mass marketing to sell to a wide market in many countries?
MEDIUM: Differentiated Marketing. The level of market penetration will be moderate. Should the company use differentiated marketing to use different Marketing Mix for different market segments?
LOW: Niche Marketing. The level of market penetration will be limited. Profit margins will be high. Should the company use niche marketing to sell to carefully selected target market?
3. Type of product offered:
NEW: Unique Selling Point (USP). To gain a first-mover advantage in establishing itself as the producer of a unique product such as Apple producing iPhones. How should we develop new products?
EXISTING: Competitive advantage. To produce more efficiently than rivals for greater profit margins such as The Coca Cola Company. How should we sell existing products?
Marketing strategies help the company to achieve its marketing objectives as they link individual marketing decisions about product, price, promotion and place into one cohesive course of action to form the marketing strategy.
‘The marketing strategy is to develop and launch a range of tasty and healthy new fruit drinks /PRODUCT/. Only 250ml and 500ml colorful glass bottles of the drinks will be produced and sold at premium level prices /PRICE/. The promotion campaign will use the Internet and social media aimed at targeting young and health-conscious corporate professionals /PROMOTION/. The fruit drinks will be distributed through uniquely-designed vending machines near the high-end office buildings, gyms and sports facilities /PLACE/.’
Once the marketing strategy is determined by the marketing manager and the marketing team, the strategic direction will then have a great impact on the tactical marketing decisions expressed in marketing tactics.
How to make marketing strategies effective?
Any marketing strategy needs to be effective.
It means that the 4Ps of the Marketing Mix are appropriately devised. Consumers needs and wants are adequately met. Businesses need to produce the right product, charged at the right price, available at the right place, and communicated through the right promotion channels. The Marketing Mix has to be clear and focused, considering competition and the consumer.
If this is not accomplished, the firm risks losses.
It must be considered that businesses will be constrained by multiple limitations when trying to achieve their marketing objectives. These constraints include both internal constraints which are within the direct control of the business as well as external constraints which are beyond the firm’s control, but come from the external environment.
The possible constraints of marketing strategies include:
A. INTERNAL CONSTRAINTS of a marketing strategy:
- Nature of the business. This mainly includes business size, its legal form and current market status of the firm. Those firms that do not have high market standing (are not market leaders or have poor reputation) might not be able to implement their marketing strategies to achieve certain marketing objectives as they are relatively unknown.
- Lack of market research. Without the correct market research, the firm not be able to set the appropriate Marketing Mix. This will result in ineffectiveness of all marketing activities leading to poor sales. For example, advertising an expensive car in a colorful children’s magazine, selling and exclusive perfume in a second-hand clothing store, a real-estate agent attempting to sell houses in a vegetable market or selling expensive concert tickets at a government housing complex.
- Business finance. Implementation of marketing strategies is normally expensive. These funds are generated from sales revenue for the most part, so any fall in demand will negatively affect the marketing budget. And it is always the marketing budget of a business organization that determines the range of marketing activities that shall be undertaken to achieve business objectives.
- Cost of production. The firm’s cost of manufacturing products will determine whether it can compete on price with rival businesses. And its abilities to benefit from economies of scale. Any unexpected increases in the costs of raw materials or utilities will negatively affect the Marketing Mix, in particular price.
- Quality of human resources. Recruitment and training of high-quality sales force are expensive and very time consuming for the HR manager. This may reduce the ability of the firm to meet its marketing objectives as selling products is one of the most important activities of the whole business organization. Additionally, high labor turnover may reduce the skills base of a business which will affect levels of product quality and after-sale services.
B. EXTERNAL CONSTRAINTS of a marketing strategy:
- Competition. After the business launches its marketing campaign, rival businesses will most likely take certain actions to respond to it. Competitors may amend their Marketing Mix. They may launch new products or improve their current products which will seriously hinder success of the firm’s marketing strategy. Competitors may also respond by engaging in price wars. Hence, reactions of competition must be considered when preparing a marketing strategy.
- Time issues. Implementation of marketing strategies will take time. Firstly, the firm will need to pay for its marketing activities. Then, it will experience the time lag as weeks or month will pass by before there is any impact on customers. This delay may cause liquidity problems for the firm as will need to incur higher costs related to the new marketing strategy before any significant increase in sales is reported.
- Social issues. The attitude of people in the society will have a big impact on the level of success of any marketing strategy. Tastes and fashions. Fashion items are transitory and tastes can change dramatically in the short-term. This may be the result of some good or bad news story or simply because the market believes it is time for a change. Certain products may not be accepted because of culture, religion or ethics while short-term shifts in tastes and fashion can dramatically affects the effectiveness of marketing strategies.
- State of the economy. The current condition of the economy may be either positive or negative for the business depending on what products it produces. Cheap staple products sold for low prices will do well during economic recession, hence it will be more difficult for producers of basic goods to achieve its marketing objectives during economic boom. Whereas demand for luxury products will most likely increase during economic boom, hence it will be more difficult for producers of luxuries to achieve its marketing objectives during economic recession.
- Political and legal environments. New governments will come into power with their own agenda supported through new legislation (rules and regulations) and government spending plans. New rules and regulations can either limit or encourage the extent to which marketers can achieve their marketing objective. And government spending can increase or decreases business activity in the country.
The final marketing strategy will depend greatly on the company’s vision statement and mission statement, the overall corporate objectives, the marketing audit, the marketing budget and other resources of the business.
Impact of legal controls on marketing strategies
Legal controls are laws and regulations that control the business activity against certain actions that are not allowed in a country. There are certain legal controls that apply to marketing activities in order to protect users of products.
While legal controls vary from country to country, the most common legal controls on business activity related to the marketing function include those that protect consumers from:
- Misleading advertising. The businesses are not allowed by law to promote their products using any false or inaccurate information, or create any impression of a good or service that is not true. If they do so, they will be required to withdrawn the adds, or even issue a statement of apology published on their website or in the mass media. In serious cases, companies will be fined or may even be shut down entirely by the government, if they harm public interests.
- Dangerous products. Any faulty product needs to be fixed or replaced by the producer. The law requires businesses to ensure that all their products meet quality, health and safety standards.
- Exploitation by monopolists. The law shall protect consumers from being exploited by the largest company that dominates the market – the monopolist. The exploitation can be in the form of charging exorbitant prices or manufacturing products of inferior quality. In markets where there is little or no competition, the legal controls will be written down in anti-trust law or competition laws.
All of these legal actions to protect consumers will impact on businesses as they will increase businesses’ costs.
In conclusions, as a marketing manager, you should never underestimate the importance of market research in developing marketing strategies.
The need for a clear marketing objective(s) must be aligned with the corporate objectives, careful consideration of each element of the Marketing Mix, the constraint placed on a marketing strategy by the external environment as well as the marketing budget.
By monitoring strategy the business will make sure that it is leading to the achievement of the marketing objective(s).
