UNIT II

MARKETING STRATEGY

Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable competitive
advantage. A marketing strategy should be centered on the key concept that customer satisfaction is
the main goal.

"Without a strategy, the organisation is like a ship without a rudder"

- Joel Ross and Michael Kami

In a hyper competitive marketplace, companies can operate successfully by creating and

delivering superior value to target customers and also learning how to adapt to a continuously
changing market place. So to meet changing conditions in their industries, companies need to be
farsighted and visionary, and must develop long-term strategies.

Strategic planning involves developing a strategy to meet competition and ensure longterm
survival and growth. The marketing function plays an important role in this process and it provides
information and other inputs to help in the preparation of the organisation's strategic plan.

The overall objective of strategic planning is two fold :

To guide the company successfully through all changes in the environment.

To create competitive advantage, so that the company can outperform the competitors in order to
have dominance over the market.

Strategic planning consists of developing a company mission (to give it direction),

objectives and goals (to give it means and methods for accomplishing its mission), business
portfolio (to allow management to utilise all facets of the organisation), and functional plans (plans
to carry out daily operations from the different functional disciplines).

30
 No matter how well the strategic planning process has been designed and
implemented, success depends on how well each department performs its customer-value-
adding activities and how well the departments work together to serve the customer. Value
chains and value delivery networks have become popular with organizations that are sensitive to
the wants and needs of consumers. The marketing department (because of its ability to stress the
customer's view) has become central in the implementation of most strategic plans.

Ultimately, the aim of strategic planning is to serve the company's business products, services and
communications so that they achieve targeted profits and growth.

Need for Strategic Planning

Many companies operate without formal plans. However, formal planning can provide many
benefits:

 It encourages management to think ahead systematically.

 It forces managers to clarify objectives and policies.
 It leads to better coordination of company efforts.
 It provides clearer performance standards for control.
 It is useful for a fast-changing environment since sound planning helps the company
 Anticipate and respond quickly to environmental changes and sudden developments.
 There are three different types of plans that companies might use:
 Annual plans (deal with the company's current businesses and determine how to keep them
going).
 Long-range plans (also deal with company's current businesses and determine
 how to keep them prosperous).
 Strategic plans involve adapting the firm to take advantage of opportunities in its
 constantly changing environment.

The Framework

The basic framework of strategic planning process can be described as shown in the picture
below. Stage One is a situational analysis and is the starting point of strategic planning. Stage Two
is a process of goal setting for the organisation after it has finalized its vision and mission. Stage
Three deals with the various strategic alternatives an organisation has. Stage Four and Five are the
final process of selection, implementation and control of a suitable strategy.

30
 Stage Five Introduction
How Can we Ensure Stage One
Arrival? Where are we Now?
(Control) (Beginning)

Stage Two
Stage Four
Where do we Want to
Which Way is Best?
Be?
(Evaluation)
(Ends)

Stage Three
How Might we Get
There?
(Means

A company’s strategy consists of the combination of competitive moves and business

approaches that managers employ to please customers, compete successfully, and achieve
organisational objectives.
A company's business model deals with whether the revenue - cost - profit economies of its
strategy demonstrate the viability of the enterprise as a whole.

The term strategic management refers to the managerial process of forming a strategic
vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then
over time initiating whatever corrective adjustments in the vision, objectives, strategy and
execution are deemed appropriate.

Dimensions of Strategic Decisions

 Strategic issues require top management decision.
 Strategic issues involve the allocation of large amount of company resources.
 Strategic issues are likely to have a significant impact on the long term prosperity of the
firm.
 Strategic issues are future oriented
 Strategic issues usually have major multifunctional or multi business consequences.
 Strategic issues necessitate considering factors in the firm's external environment.
Strategic Planning Control and Implementation Process

 The organisational planning takes place at several levels of the organisation - the corporate
 level, the business level and operational level.
 The corporate level consisting of the top management, deals with long term major decisions
 making such as allocation of resources, taking major risks for generating high profits.

30
  The operational level decisions are short term and less risky in nature and leads incremental
 change in organisational operation.

Organizing Measuring results

Corporate planning

Diagnosing results

Division planning Implementing Taking corrective

action

Business planning

Product planning

Steps in Strategic Planning

Strategic planning can be defined as the process of developing and maintaining a strategic
fit between the organisation's goals and capabilities and its changing marketing opportunities.
Strategic planning sets the stage for the rest of the planning in the firm.
There are four steps to the strategic planning process, as depicted in Figure below:
a. Defining a clear company mission.
b. Setting supporting company objectives.
c. Designing a sound business portfolio.
d. Planning and coordinating marketing and other functional strategies.

30
 Key drivers of marketing strategies

1) Competition:

In most industries ,customers have choices and preferences in terms of the goods and
service that they can purchase .Thus when a firm defines the target market it will serve,it
simultaneously selects a set of competing firms .The current and future actions of the competitors
are monitored .One major problem in analyzing competition is the question of identification.

Most firms face four types of competition, which are as follows:

i. Brand competitors:

They market products with similar features and benefits to the same customers at similar prices

ii. Product competitors:

They compete in the same product class but with products that are different in features, benefits and
price

iii. Generic competitors:

They market very different products that solve the same problem or satisfy the same basic customer
need

iv. Total budget competitors:

They compete for the limited financial resources of the same customers

2) Economic growth and stability:

30
 Current and future conditions in the economy can have profound impact on marketing
strategy. A thorough examination of the economic factors requires marketing managers to gauge
and anticipate the general economic conditions of the region, nation and local area in which they
operate The general economic conditions include inflation, employment and income levels ,interest
rates ,taxes, trade restrictions ,tariffs and the current and future stages of business cycle.

3) Political trends

Organization that does business with government entities must specially attuned to political
trends. Elected officials who have negative attitudes toward a firm or its industry are more likely to
create or enforce regulations unfavorable for the firm.

A firm might need to change its marketing strategies from the current viewpoint to further because
of the latest political trends in the specific region.

4) Legal and regulatory issues:

Legal and regulatory issues might have close ties to events in the political
environment .Numerous laws and regulations have the potential to influence marketing decisions
and activities. The simple existence of these laws and regulations caused many firms to accept this
influence as a predetermined aspect of market planning. Organizations that engage in international
business should also be mindful of legal issues surrounding the trade agreements among nations.

5) Technological advancements:

Technology actually refers to the way that anyone accomplishes specific tasks or the
processes that others uses to create the things and consider as new. Of all the new technologies
computer and information technology had a greater impact on marketing.

6) Socio cultural trends:

Socio cultural factors are those social and cultural influences that cause changes in attitudes,
beliefs, norms, customs and life style. These forces profoundly affect the way that people and help
determine what, where, how and when customers buy a firms product

30
Strategies for Industrial Marketing

Business marketing is also referred to as the industrial marketing or B2B marketing.

Business marketing may be defined as the marketing of products, services, and solutions to
organisation such as big enterprises, government departments and institutions.

Business marketing is also called business to business marketing or organisational

marketing or industrial marketing

Marketing concept for the business enterprise of industrial buyer is to define the needs of a
target market and modifies the organisations product or service to satisfy those needs more
successfully than its competitors. Industrial customers like organisations-business, institutions and
government agencies having unique needs.

Branding B2B:

It is mainly of large scale .It consists of 5 things which are as follows:

i. Product (or service):Because business customers are focused on creating shareholders value
for themselves, the cost saving of products or services are important to factor in throughout the
product development and marketing cycles

ii. People (target market):The target market for a business product or service is smaller and has
more specialized needs reflective of a specific industry or niche. Regardless of the size of the
target audience ,the business customer is making an organizational purchase decision and the
dynamics of this; both procedurally and in terms of how they value what they are
buying ;differ dramatically from the consumer market.

iii. Pricing: The business market can be conceived to pay premium prices more often than the
consumer market if individual know how to structure the pricing and payment terms as
well. This price premium is particular achievable if individual support it with a strong
brand.

iv. Business/industrial advertising: Business advertising is also known as business to

business advertising; industrial advertising is the strategy of attracting the attention of
another business and convincing that company to purchase the goods and services offered
by another business

30
 v. Trade shows: Trade shows are designed to let exhibitors meet many potential customers
face to face in a brief period of time inexpensively .Exhibitors usually try to present a large
proportion of their range of products or services at these trade shows gaining in two ways.
The first gain is advertising and brand promotion. Second gain is through the direct sales
that happen in trade shows.

vi. Place (sales and distribution) The importance of knowledgeable, experienced and
effective direct sales force is often critical in the business market. If any individual sell
through distribution channel also, the number and types of sales force can vary.

B2B communication methodologies:

The purpose of B2B marketing communication is to support the organization sales effort and
improve company profitability.

i. Positioning statement: This is the statement of what any individual do and how they do it
differently and better and more efficiently than the competitors.

ii. Developing the message: There is always primary message that conveys strongly to the
customers what they do and the benefit it offers to them supported by a number of secondary
messages.

iii. Building a campaign plan: Building a comprehensive business plan upfront to target audience
where customers believe they will deliver the best return on investment, and make sure that they
have all the infrastructure in place to support each stage of marketing process.

iv. Briefing an agency: Typical elements to an agency brief are –the objectives, target market,
target audience ,product ,product positioning and distribution

v. Measuring results: The real value in results measurement is in tying the marketing campaign
back to business results.

Consumer Marketing

Markets dominated by products and services designed for the general consumer. Consumer
markets are typically split into four primary categories: consumer products, food and beverage
products, retail products, and transportation products. Industries in the consumer markets often
have to deal with shifting brand loyalties and uncertainty about the future popularity of products
and services.

30
Types of market

Before delving too deep into the study of marketing, it is worth pausing to consider the
different types of market that exist.

Markets can be analysed via the product itself, or end-consumer, or both. The most common
distinction is between consumer and industrial markets.

Consumer Markets

Consumer markets are the markets for products and services bought by individuals for their
own or family use. Goods bought in consumer markets can be categorised in several ways:

• Fast-moving consumer goods (“FMCG's”)

– These are high volume, low unit value, fast repurchase

– Examples include: Ready meals; Baked Beans; Newspapers

Consumer durables

– These have low volume but high unit value. Consumer durables are often further divided into:
– White goods (e.g. fridge-freezers; cookers; dishwashers; microwaves)
– Brown goods (e.g. DVD players; games consoles; personal computers

Soft goods
– Soft goods are similar to consumer durables, except that they wear out more quickly and
therefore have a shorter replacement cycle
– Examples include clothes, shoes

Services (e.g. hairdressing, dentists, childcare)

Strategies for Consumer Marketing

A consumer marketing strategy is a kind of plan that businesses pursue to try to maximize
profit by matching their products with the individuals who are most likely to buy or use them.
A consumer marketing strategy is part of a greater marketing strategy that includes branding
opportunities, outreach, product development, multimedia marketing, and other aspects of

30
general marketing. Many businesses are adopting consumer oriented marketing strategies because
they are so often useful in leading to higher sales and profits.
Almost any company has a specialized target market for their products or services. A
consumer marketing strategy looks at how to reach these target markets through advertising or
other means. A consumer marketing strategy can include online or Internet marketing strategies, or
even new media operations through Facebook and Twitter. It can also include attention to more
traditional advertising venues.
In a consumer marketing strategy, marketers often “drill down” to identify their most loyal
customers and establish a more targeted customer base. This can include what’s called target
market segmentation. In target market segmentation, planners take the overall target market and
separate it into groups to see which of these groups are the best consumers; that is, which of them
tend to favor the company more than others according to sales figures and other available data.
Lots of marketers would say that a consumer marketing strategy helps them to “know” their
customers. This starts with increased research about the general identity patterns in a segmented
target market, and ends with feedback from attempts to measure customer satisfaction. There are
lots of different ways to find out how satisfied customers are with a company’s products and
services, from basic online or print surveys to event-driven market research.
Just as a consumer marketing strategy can include the use of technology in its implementation, new
technology can also assist in helping planners to develop these kinds of overall
advertising strategies. New software that helps in aiding human decision making can provide better
views of overall market research results. Businesses can routinely use information from their main
databases to craft new marketing strategies and future plans. This is one illustration of how
technology is changing the business world, and how a greater and more diverse availability of
information helps business leaders to go further in their interactions with a general customer base.

Industrial Markets

Industrial markets involve the sale of goods between businesses. These are goods that are not aimed
directly at consumers. Industrial markets include

• Selling finished goods

– Examples include office furniture, computer systems

• Selling raw materials or components

– Examples include steel, coal, gas, timber

30
• Selling services to businesses
– Examples include waste disposal, security, accounting & legal services

Industrial markets often require a slightly different marketing strategy and mix. In particular, a
business may have to focus on a relatively small number of potential buyers (e.g. the IT Director
responsible for ordering computer equipment in a multinational group). Whereas consumer
marketing tends to be aimed at the mass market (in some cases, many millions of potential
customers), industrial marketing tends to be focused

Service marketing

Services marketing typically refer to both business to consumer (B2C) and business to business
(B2B) services, and includes marketing of services like telecommunications services, financial
services, all types of hospitality services, car rental services, air travel, health care services and
professional services. The range of approaches and expressions of a marketing idea developed with
the hope that it be effective in conveying the ideas to the diverse population of people who receive
it.

Services are economic activities offered by one party to another. Often time-based, performances
bring about desired results to recipients, objects, or other assets for which purchasers have
responsibility. In exchange for money, time, and effort, service customers expect value from access
to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take
ownership of any of the physical elements involved

Service is the action of doing something for someone or something. It is largely intangible (i.e. not
material). You cannot touch it. You cannot see it. You cannot taste it. You cannot hear it. You
cannot feel it. So a service context creates its own series of challenges for the marketing manager
since he or she must communicate the benefits of a service by drawing parallels with imagery and
ideas that are more tangible.

A product is tangible (i.e. material) since you can touch it or own it. A service tends to be an
experience that is consumed at the point where it is purchased and cannot be owned since it quickly
perishes. A person could go to a café one day and enjoy excellent service, and then return the next
day and have a poor experience. Marketers talk about the nature of a service as being inseparable,
intangible, perishable, Hetergenous and variable.

30
Nature of service:

Inseparable

Inseparable - from the point where it is consumed, and from the provider of the service. For
example, you cannot take a live theatre performance home to consume it (a DVD of the same
performance would be a product, not a service). The consumer is actually involved in the
production process that they are buying at the same time as it is being produced, for example an eye
test or a makeover. One benefit would be that if you are unhappy with you makeover you can tell
the beautician and that instant feedback means that the service quality is improved. You can't do
that with a product. Another attribute is that services have to be close to the person consuming them
i.e. goods can be made in a central factory location which has the benefits of mass production. This
localization means that consumption is inseparable from production.

Intangible

Intangible - cannot have a real, physical presence as does a product. For example, motor insurance
may have a certificate, but the financial service itself cannot be touched i.e. it is intangible. This
makes it tricky to evaluate the quality of service prior to consuming it since there are fewer
attributes of quality in comparison to a product. One way is to consider quality in terms of search,
experience and credence.

Search quality is the perception in the mind of the consumer of the quality of the product prior to
purchase through making a series of searches. So this is simple in relation to a tangible product
because you might look at size or colour for example. Therefore search quality relates more to
products and services.

Experience quality is easier to assess. In terms of service you need to taste the food or experience
the service level. Therefore your experiences allow you to evaluate the level and nature of the
service. You remember a great vacation because of the food or service, but by the same token you
remember an awful vacation because of the hopeless food or poor service.

Credence quality is based upon the credibility of the service that you undertake. This is down to the
reputation of a dentist or of a decorator. Credence is used where you have little knowledge of the
topic and where you rely upon the professionalism of the expert.

Perishable

Perishable - in that once it has occurred it cannot be repeated in exactly the same way. For example,
once a 100 meters Olympic final has been run, there will not be another for 4 more years, and even
then it will be staged in a different place with many different finalists. You cannot put service in the
warehouse, or store in your inventory. An interesting argument about perishability goes like this,

30
once a flight has taken off you cannot sell that seat again, hence the airline makes no profit on that
seat. Therefore the airline has no choice but to price at peak when it sells a seat at busy times in
order to make a profit. That's why restaurants offer vouchers to compensate for quieter times, and it
is the same for railway tickets and matinees in Broadway during the middle of the week.

Variable

Variability- since the human involvement in service provision means that no two services will be
completely identical, they are variable. For example, returning to the same garage time and time
again for a service on your car might see different levels of customer satisfaction, or speediness of
work. If you watch your favourite/favorite music group on DVD the experience will be the same
every time you play it, although if you go to see them on tour when they are live no two
performances will be identical for a whole variety of reasons. Even with the greatly standardized
McDonalds experience, there are slight changes in service, often through no fault of the business
itself. Sometimes Saturday lunchtime will be extremely busy, on other days you may have to wait
to go via the drive through. So services tend to vary from one user experience to another.

Heterogeneous

Heterogeneity is where services are largely the same (the opposite of variability above). We
considered McDonald's above which is a largely heterogeneous service, so now let's look at KFC
and Pizza Hut. Both of these businesses provide a heterogeneous service experience whether you
are in New York, or Alaska, or even Adelaide. Consumers expect the same level of service and
would not anticipate any huge deviation in their experience. Outside of the main brands you might
expect a less heterogeneous experience. If you visit your doctor he or she might give one
interpretation, whereas another doctor might offer a different view. Your regular hairdresser will
deliver a style whereas a hairdresser in the next town could potentially style your hair differently.
Therefore standardization is largely embodied by the large global brands which produce services.

Right of ownership is not taken to the service, since you merely experience it. For example, an
engineer may service your air-conditioning, but you do not own the service, the engineer or his
equipment. You cannot sell it on once it has been consumed, and do not take ownership of it.

Western economies have seen deterioration in their traditional manufacturing industries, and a
growth in their service economies. Therefore the marketing mix has seen extended and adapted to
create the services marketing mix, also known as the 7P's or the extended marketing mix - physical
evidence, process and people.

30
Marketing Strategies for Service Firms
Services firms require attention additional 3Ps according to Booms and Bitner. The
additional 3Ps are people, physical evidence and process.
The marketing department or function has a say and a view on these additional Ps. In a
service business companies employees are in direct contact with the customer and hence their
behavior with the customer has an influence on customer satisfaction. Ideally employees should
exhibit competence, a caring attitude, responsiveness, initiative, problem solving ability, and
goodwill. So they have to be trained to exhibit appropriate behavior. The employees must have
authority to solve problems that arise in service encounters without much delay and contacting
various levels of supervisors. This is empowerment of service employees.
The physical facilities are important because customers come there and have the service.
Hence the design and maintenance of the facility becomes a marketing issue.
The processes used to deliver the services are marketing issues. If the customer does not like the
process he will not come back. Hence market research has to find out the customer‘s likes and
dislikes about the processes.
Hence the idea that service marketing requires internal marketing or involvement of
marketing function in internal aspects of the company or the firm emerged. Internal marketing
describes the work done by the company and marketing department to convey the needs of the
potential customers to the service employees and the effort to train them and motivate them to
provide exceptional service to customers.
Another concept in services marketing is interactive marketing. It refers to the skill of
employees to interact with the client in serving the client. Clients judge services by technical
quality as well as the interaction quality. Whether the surgeon has done the operation properly or
not is the technical quality. Whether he has shown concern and inspired confidence or not is
interaction quality. Service providers must provide high touch along with high tech.

Managing the Differentiation

What are sources for differentiating in service businesses?
Service offer: while the core service could be the primary service package, a firm can come out
with secondary service features that provide differentiation. We always have to remember that an
additional feature added to a product must be valued by the customer and has to be profitable to the
company. Hence marketers are involved to find those features which are valued by the customers
and operations or process specialists are involved to deliver the feature at a cost that is profitable to
the company.

30
Delivery: Reliability in service can be differentiating feature. Many firms find it difficulty to
provide reliability.
Image: Developing an image that inspires trust is a differentiating feature.

Managing Service Quality

Quality is a differentiator. Parasuraman, Zeithaml, and Berry formulated a service-quality model
that highlights the main requirements for delivering high service quality.
They identified possible five gaps that result in poor service.
1. Gap between consumer expectation and management perception
2. Gap between management perception and service quality specification
3. Gap between service quality specification and service delivery
4. Gap between service deliver and external communication
5. Gap between perceived service and expected service
The same researchers identified five determinants of service quality.
According to the order of preference of the variables is:
 Reliability
 Responsiveness
 Assurance
 Empathy
 Tangibles

Competitor Analysis

In formulating business strategy, managers must consider the strategies of the firm's
competitors. While in highly fragmented commodity industries the moves of any single competitor
may be less important, in concentrated industries competitor analysis becomes a vital part of
strategic planning. Competitor analysis has two primary activities, 1) obtaining information about
important Competitors, and 2) using that information to predict competitor behavior. The goal of
competitor analysis is to understand:
 With which competitors to compete,
 Competitors' strategies and planned actions,
 How competitors might react to a firm's actions,
 how to influence competitor behavior to the firm's own advantage.

30
Casual knowledge about competitors usually is insufficient in competitor analysis. Rather,
competitors should be analyzed systematically; using organized competitor intelligence-gathering
to compile a wide array of information so that well informed strategy decisions can be made.

Competitor Analysis Framework

Michael Porter presented a framework for analyzing competitors. This framework is based on the
following four key aspects of a competitor:

 Competitor's objectives
 Competitor's assumptions

 Competitor's strategy
 Competitor's capabilities

Objectives and assumptions are what drive the competitor, and strategy and capabilities are
what the competitor is doing or is capable of doing. A competitor analysis should include the more
important existing competitors as well as potential competitors such as those firms that might enter
the industry, for example, by extending their present strategy or by vertically integrating.

Competitor's Current Strategy

The two main sources of information about a competitor's strategy is what the competitor says and
what it does. What a competitor is saying about its strategy is revealed in:

30
  Annual shareholder reports
 10K reports
 Interviews with analysts
 Statements by managers
 Press releases
However, this stated strategy often differs from what the competitor actually is doing. What the
competitor is doing is evident in where its cash flow is directed, such as in the following tangible

actions:

 hiring activity
 R & D projects
 Capital investments
 Promotional campaigns
 Strategic partnerships
 Mergers and acquisitions

Competitor's Objectives
Knowledge of a competitor's objectives facilitates a better prediction of the competitor's reaction to
different competitive moves. For example, a competitor that is focused on reaching short-term
financial goals might not be willing to spend much money responding to a competitive attack.
Rather, such a competitor might favor focusing on the products that hold positions that better can
be defended. On the other hand, a company that has no short term profitability objectives might be
willing to participate in destructive price competition in which neither firm earns a profit.
Competitor objectives may be financial or other types. Some examples include growth rate, market
share, and technology leadership. Goals may be associated with each hierarchical level of strategy -
corporate, business unit, and functional level. The competitor's organizational structure provides
clues as to which functions of the company are deemed to be the more important. For example,
those functions that report directly to the chief executive officer are likely to be given priority over
those that report to a senior vice president. Other aspects of the competitor that serve as indicators
of its objectives include risk tolerance, management incentives, backgrounds of the executives,
composition of the board of directors, legal or contractual restrictions, and any additional
corporate-level goals that may influence the competing business unit. Whether the competitor is
meeting its objectives provides an indication of how likely it is to change its strategy.

30
Competitor's Assumptions
The assumptions that a competitor's managers hold about their firm and their industry help to
define the moves that they will consider. For example, if in the past the industry introduced a new
type of product that failed, the industry executives may assume that there is no market for the
product. Such assumptions are not always accurate and if incorrect may present opportunities. For
example, new entrants may have the opportunity to introduce a product similar to a previously
unsuccessful one without retaliation because incumbent firms may not take their threat seriously.
Honda was able to enter the U.S. motorcycle market with a small motorbike because U.S.
manufacturers had assumed that there was no market for small bikes based on their past experience.
A competitor's assumptions may be based on a number of factors, including any of the following:

 Beliefs about its competitive position

 past experience with a product
 Regional factors
 Industry trends
 Rules of thumb

Competitor's Resources and Capabilities

Knowledge of the competitor's assumptions, objectives, and current strategy is useful in

Understanding how the competitor might want to respond to a competitive attack. However, its
Resources and capabilities determine its ability to respond effectively.
A competitor's capabilities can be analyzed according to its strengths and weaknesses in various
Functional areas, as is done in a SWOT analysis. The competitor's strengths define its capabilities.
The analysis can be taken further to evaluate the competitor's ability to increase its capabilities in
certain areas. A financial analysis can be performed to reveal its sustainable growth rate. Finally,
since the competitive environment is dynamic, the competitor's ability to react swiftly to change
should be evaluated. Some firms have heavy momentum and may continue for many years in the
same direction before adapting. Others are able to mobilize and adapt very quickly. Factors that
slow a company down include low cash reserves, large investments in fixed assets, and an
organizational structure that hinders quick action.

30
Analysis of consumer and industrial market

Mass Advertising. Normally focused on technical media. Not Often suitable and used
normally TV. including TV, Radio and
mass circulation print
advertising.

Direct Mail. Often very suitable due to small numbers Sometimes not viable due
to high numbers & low
value.

Face to face selling by Often very suitable for company specialists Rarely suitable for
specialists. individual items to end
users, except in retailing
by retailers own staff.
(note B2B element of B2C
companies selling via
retailers)

Hospitality Very suitable because of often high Not often used for end
business value per decision maker consumers, used however
as in industry where retail
decision makers are
concerned (the B2B aspect
being similar to industry).

Editorial. Very suitable in targeted print media. Sometimes suitable.

Publicity. Suitable Suitable

Loyalty schemes. Rarely suitable because split between buyer Often suitable, decision

30
 (individual) and payer (company) creates maker and person making
ethical problems. payment are often the
same person. Loyalty
schemes often act like
simple loyalty discount.

Discounting. Often to reward volume customers. Discount sales are often

used for sales promotion.

Specialist exhibitions Often used for high and lower value items. Mainly suitable for higher
and or trade shows. value items unless selling
consumer wares to retail
buyers.

Opinion polling. Sometimes but total market population is Often used because of
invariably much smaller. difficulty of addressing
whole population high
levels of statistical
analysis are required from
representative samples of
the population.

Focus groups. Not needed, can address the whole Often used to infer views
population. and preferences of a
population.

Pilot schemes. Rarer than in consumer markets because of Often used for example
smaller market size. test areas for new product
trials.

Point of sale displays Not often used except where distribution Extensive use.
and communications. involves trade counters and on some small
qty packaging.

30
Summary: Consumer marketing is characterized by greater use of mass communication and
research techniques than industrial marketing because it is harder (due to the numbers of
consumers) for companies to be close to actual market participants.

Viable routes to market in each sector:

Industry Consumer

Direct sales force Often used in industry to sell Used where needed to sell to resellers
direct to buyers and more than to actual consumers.
specifying engineers.

Wholesalers Sometimes used. Often used in chain before retailers

especially in export markets.

Distributors Often used. Sometimes used.

Catalogues Form part of distribution Form part of distribution chains.

chains.

Commissioned Agents Often used. Sometimes used.

E-Commerce via Becoming more prevalent to Becoming more prevalent at retailers,

Internet cut out the middle man and less so for manufacturers because of
reduce stocks. their narrow ranges.

Multi-level marketing Rarely used. Used for some specialities.

including party plan.

Summary: There are fewer differences on first view in the routes to market between industrial and
consumer goods, but the variety of items falling into each of these large categories does not help
differences to show through on this aspect.

30
The key difference between industrial and consumer markets is the much greater number of buyers
in consumer or end markets. This means consumer marketers are by necessity more involved in
polling type research to infer information about the population of consumers.

They are also more involved in mass communication such as print, television and radio advertising
than their industrial counterparts. This is in part because the consumer situation features informal
purchasing procedures and no formal buying groups. There are usually fewer individuals involved
in consumer decisions. This means mass communication in consumer markets can have less focus
on utility than would be needed in industry. In industry personal relationship building must be used
alongside utility and cost advantage (to overcome switching costs).As there is a much smaller
group of possible buyers in industry marketing and selling can often be carried out face to face by
individuals doing both marketing and selling tasks.This creates an interesting arguments which is
that in industry there may be no difference between marketing and selling. In consumer markets it
could be argued that there remains a big distinction between marketing: research, creative idea
production (dreaming up these advertising promotional angles which I hope do fit some
demographic and target style identifiers), packaging, point of sale, loyalty schemes etc, and retail
sales staff who book shelf space or man counters and checkouts.

The key difference between industrial and consumer marketing may be therefore the reduced face
to face interaction between organizations and customers in consumer markets with greater use of
mass or delegated communications, compared to increased face to face communications in industry
with greater blurring between marketing and selling.

Strategic Marketing mix components:

Definition:

The marketing mix is the set of controllable tactical marketing tools – product, price, place,
and promotion – that the firm blends to produce the response it wants in the target market.
(Kotler and Armstrong (2010).)

The 'four Ps' consist of the following:

Product - A product is seen as an item that satisfies what a consumer needs or wants. It is a
tangible good or an intangible service. Intangible products are service based like the tourism

30
industry & the hotel industry or codes-based products like cellphone load and credits. Tangible
products are those that can be felt physically. Typical examples of mass-produced, tangible objects
are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is
a computer operating system.

Every product is subject to a life-cycle including a growth phase followed by a maturity phase and
finally an eventual period of decline as sales falls. Marketers must do careful research on how long
the life cycle of the product they are marketing is likely to be and focus their attention on different
challenges that arise as the product moves through each stage.

The marketer must also consider the product mix. Marketers can expand the current product mix by
increasing a certain product line's depth or by increase the number of product lines. Marketers
should consider how to position the product, how to exploit the brand, how to exploit the
company's resources and how to configure the product mix so that each product complements the
other. The marketer must also consider product development strategies.

Price – The price is the amount a customer pays for the product. The price is very important as it
determines the company's profit and hence, survival. Adjusting the price has a profound impact on
the marketing strategy, and depending on the price elasticity of the product, often, it will affect the
demand and sales as well. The marketer should set a price that complements the other elements of
the marketing mix.

When setting a price, the marketer must be aware of the customer perceived value for the product.
Three basic pricing strategies are: market skimming pricing, marketing penetration pricing and
neutral pricing. The 'reference value' (where the consumer refers to the prices of competing
products) and the 'differential value' (the consumer's view of this product's attributes versus the
attributes of other products) must be taken into account.

Promotion - represents all of the methods of communication that a marketer may use to provide
information to different parties about the product. Promotion comprises elements such as:
advertising, public relations, personal selling and sales promotion. [1]

Advertising covers any communication that is paid for, from cinema commercials, radio and
Internet advertisements through print media and billboards. Public relations is where the
communication is not directly paid for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word-of-mouth is any apparently informal
communication about the product by ordinary individuals, satisfied customers or people

30
specifically engaged to create word of mouth momentum. Sales staff often plays an important role
in word of mouth and public relations

Place - refers to providing the product at a place which is convenient for consumers to access.
Place is synonymous with distribution. Various strategies such as intensive distribution, selective
distribution, exclusive distribution and franchising can be used by the marketer to complement the
other aspects of the marketing mix.[1]

The marketing mix elements called product, price, place, and promotion these are called the
four elements of marketing mix and also called 4ps of the marketing mix

Limitation of Marketing Mix Analysis (4Ps of Marketing)

Despite the fact that marketing mix analysis is used as a synonym for the 4Ps of Marketing,
it is criticised (Kotler & Armstrong, 2004) on the point that it caters seller's view of market analysis
not customers view. To tackle this criticism, Lauter born (1990) attempted to match 4 Ps of
marketing
with 4 Cs of marketing to address consumer views:
Product – Customer Solution
Price – Customer Cost
Placement – Convenience
Promotion – Communication

30