Marketing strategy

Strategy is about doing the right things: tactics is about doing thingsright. Strategy is about where the firm is going: tactics is about how to get there.

The intention of marketing strategy is to place the company in the appropriate position relative to competitors and thus to gain competitive advantage: it therefore relates strongly to positioning (in the mind of the consumer) because marketing is customer-centered.

Creating competitive advantage is the basis of all business strategy: the marketing strategy may or may not be the same as the corporate strategy, depending on the degree to which the company is marketing oriented.

Michael Porter (1980) is the key thinker on strategy. He suggests that there are three winning strategies and one losing strategy, as follows:

1. Overall cost leadership: only one company in the market can have the lowest costs of production and distribution: this company will offer the cheapest products.

2. Differentiation: the company seeks to serve a number of market segments, each with a different product, and aims to become industry leader.

3. Focus: the company concentrates on one or two niche markets.

4. Middle-of-the road: this is the falling strategy, an attempt to follow more than one of the above strategies will result in failure, or at least a less- the-optimum performance.

Tactics for each of this strategy differ. Market leaders stand to gain most from expanding the total market, and perhaps by increasing share still further. Market challengers set out to attack the market leader, either directly or by guerrilla tactics (picking off the segments which are not well-served by the leader). Market followers do not challenge the leader (because a direct attack might breed retaliation).

A recent development is hypercompetition, which is competition that breaks all the rules. In hypercompetition environment, firms deliberately try to disrupt the market, using hit-and-run tactics to disorientate the leaders and throw long-term plans out of order.

Strategic planning begins with one of two elements:

1. A mission statement: this is a statement about the purpose of the organization. It will state what business the company is in, who the customers are, what the firm is in business for, and what sort of business we are.

2. A vision statement: this is about the values of the organization, the corporate culture, or the «personality» of the organization.

Mission statements and vision statements are not mutually exclusive.

II. Discuss the following questions:

1. How is called the intention to do things right?

2. What is the difference between strategy and tactics?

3. What is the aim of the marketing strategy?

4. What does Michael Porter suggest?

5. What is the aim of overall cost leadership?

6. How is called the marketing strategy when company seeks to serve a number of market segments?

7. What is the chief aim of market leaders?

8. What do firms do in hypercompetition environment?

9. How many elements does strategic planning include?

III. Rewrite these sentences taken from the text Marketing strategy with the words in the correct order. The first word is underlined. There are sometimes two possibilities.

Example: The firm sets its basic marketing objectives.

0. objectives, the, its, marketing, firm, sets, basic.

1. strategy, each, for, of, this, differ, tactics.

2. elements, one, planning, of, two, strategic, with, begins.

3. the, not, followers, leader, do, market, challenge.

4. Michael Porter, strategy, key, is, the, thinker, on.

5.statements, and, mission, vision, exclusive, are, mutually, not, statements.

IV. A classic way to create a marketing strategy is to begin to looking at a company’s Strengths, Weaknesses, Opportunities and Threats. Expo Marketing Consultants carried out a SWOT analysis of a GUBU toys LTD. Put their findings in the correct boxes to complete the SWOT analysis.

1. Reliable and committed workforce.

2. Use of wood- seen as `good for the environment`.

3. High labor costs.

4. Location-far from population centers /far from new markets.

5. Beautiful hand-made toys.

6. Poor communications systems/limited technological skills.

7. Internet as potential marketing tool/e-commerce.

8. Lack of it training in staff.

9. Declining interest in domestic markets for traditional toys.

10. Potentially strong demands in Germany and Scandinavia.

11. Competition in Germany and Scandinavia/Baltic countries.

12. Increased competition from mail order companies.

13. Selling by new channels, e.g. mail order.

Expo Marketing Consultants SWOT analysis of a GUBU toys LTD
Strengths	Weaknesses
Opportunities	Threats

NB.Strengths and Weaknesses are concerned with things inside the company which it can directly control. Opportunities and Threats are outside factors.

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