Marketing strategy of anorganization refers to a set of activities that are designed to enable the firm to reach out to its target customers and influence their purchase decisions its favor. In other words, the marketing strategies help a company sell its products and services to the intended customers. From the organizational perspective, marketing strategies play a determining the role behind the success of a business venture. It involves deciding on the value proposition, brand communication and other operational activitiesby using key demographic data from target market.
In this article we will discuss about marketing strategies and how one can develop the right marketing strategy to foster organizational success. As a student of business management, you will often be required to propose marketing strategies for a company in your marketing essay. Therefore, it is essential for you to learn about the key factors that will determine your choice of strategy and how can help in achieving organizational mission.
Now that we have a clear idea about the definition of marketing strategy, let us now look at how you can propose the most appropriate marketing strategy in your college essay that can help an organization meet its short- and long-term goals. It is important to understand that choosing the right marketing strategies which align with the mission and vision of the organization. In the following section we have discussed some of the theoretical frameworks for creating new marketing strategies.
The segmentation,targeting and positioning (STP) strategy determines the market segment, target customers and the brand positioning of a company. Before you decide of sell certain product(s), it is important to decide which market do you want to cater to. A market, in this context, is defined as a geographic region which offer potential for running successful business. Thus, in segmentation strategy you need to choose a particular region to offer your product or services. It can be one nation, multiple nations, or even just a city. Choosing the right market segment can be facilitated by conducting an in-depth PESTLE analysis, which should give you a clear understanding of all the crucial external factors present in the chosen market that can influence your business.
Targeting refers to choosing the target customer segment, which is the group of people with certain demographic and behavioral characteristics that the company seeks to cater to. Your targeting strategy will determine which customers you want your offer your products. A company can choose to target a young customer with limited disposable income, or middle-aged customers with high disposable income. The choice of the value proposition largely depends on the target customers chosen by the company.
Positioning refers to how the company wants to position the brand. In this case, the brand positioning plays a crucial role in communicating the value proposition to the target customers and also to the competitors. A company can decide to position itself as a premium brand that caters to a niche customer base, or a regular one which appeals mostly to the mass market customers. No matter how you position your brand, it is always important to align your brand position with the needs and preferences of the target customers.
The success of your business plan depends on how well your marketing strategy aligns with your segmentation, targeting and positioning. Before you can decide on the STP strategy, you need to conduct a thorough market analysis in order to take the right decision of business expansion or market entry.
As mentioned in the definition of marketing strategy, it allows a company to reach out to its target customers in a market and influence their purchase decisions. The Ansoff Matrix enables a firm to design its future growth or expansion strategies. After you have decided on which market segment to enter, which target customers to cater and how to position your brand, you now need to decide on choosing the right business model, which can foster long term growth and sustenance.
According to the Ansoff Matrix, an organization can choose to expand its business based on four key strategies, which are market penetration, market development, product development and diversification.
Market Penetration: The market penetration strategy involves taking the existing products and selling it to the existing market. In this strategy, the company adopts a new and more aggressive strategy to sell the products that it already offers to the market where it is already operational. The core objective of this strategy is to create a stronger brand preference among the customers by offering attractive value propositions, preferably in form of attractive discounts or deals.
Market Development: The market development strategy involves taking the existing product line up and selling it to a new market location. The company chooses a new market location to expand its business, where there is potential demand for its existing products. This strategy allows the company to increase its customer base, which allows it to improve its sales and revenue generation. The market development strategy is quite crucial for a company looking forward to leverage high economies of scale.
Product Development: In case of product development strategy, the company chooses to develop and introduce new products in the existing market. In this strategy, new products are introduced to satisfy the unmet needs of the customers. By conducting a thorough market research, the company identifies the current trends in consumption and decides to introduce new products that can help to attract new customers in the existing market.
Diversification: The diversification strategy refers to bringing new products to a new market. In this case, the company identifies potential market locations and the consumption trends in the chosen markets. New products are developed which are specifically focused on that market location only. This type of strategies is helpful in expanding the customer base of the company and to diversify its sources of cash flow.
The STP strategy and the Ansoff matrix framework can help you decide on which market and customer base to target, along with which business model to adopt for future growth. However, when you write papers on marketing strategy, you also need to integrate the marketing mix model to highlight the product, price, place and promotional strategy, to achieve your mission.
The marketing mix model also called the 4Ps of marketing, consists of four key areas of strategy development, which are as follows:
Product: The product strategy of a company determines the actual goods and services offered to the target customers for purchasing. The choice of the products should align with the needs and preferences of the customers that you have decided to cater to in the STP strategy. An organization typically identifies the potential for a product category and the current trend of consumption, so that the value offered to the customers are attractive to them.
Pricing: The pricing strategy determines the monetary cost that the customers are asked to bear for purchasing the product. The pricing of the product also determines the value offered to the customers. A company from choose from various pricing strategies such as competitive pricing, premium pricing, price skimming, etc. It is important to note that the pricing of the product should appeal to the target customers.
Place: The place strategy determines how the intended product is to be distributed in the market and made available for thecustomers. A company can choose its product to be available all throughout the target market through e-commerce platforms or through physical retail outlets such as a supermarket or a convenience store. No matter how attractive the product is, the company needs to ensure that it is easily available for the customers to purchase, which is crucial for revenue generation.
Promotion: The promotional strategy refers to the strategy for marketing communication, where the value proposition and other details of the offered product is communicated to the target audience. The core objective of this strategy is to create attract the customers towards the brand and convince them to make a purchase. Companies often choose to adopt aggressive promotional campaigns through traditional (TV, print) and digital media (social media, search engine ads).
At this point, you should be able to devise your own marketing strategy for your college essay, where you can implement your own marketing mix model, along with STP and Ansoff matrix model. However, it is important to you to understand that not every marketing strategy can succeed the test of time. Your chosen marketing strategies should be able to foster a strong competitive advantage for the company, which sets it apart from other rival market players. So, let us look at how a marketing strategy can yield competitive advantage.
According to the Porter's generic strategy, a company can choose to achieve competitive advantage through four different ways which are cost leadership, differentiation, cost focus and differentiation focus.
Cost Leadership: The cost leadership strategy allows a company to become a low-cost producer in the entire industry. It is a broad scope strategy, where the company caters to a wide target customer base while ensuring that it can offer the intended value through least possible production cost. Thus, the cost leadership strategy allows a company to increase its profitability by lowering its cost and catering to large customer base.
Differentiation: The differentiation strategy refers to offering value to a wide customer base which sets the company apart from other market players. The company creates a product which is unique and easily distinguishable in the market. The distinguishing factor attract the customers to favor the offered product from the rival products.
Cost Focus: In case of cost focus strategy, the company decides to cater to narrow or niche market segment while trying to remain a low-cost producer. In this case, the company identifies and caters to a niche customer base with highly streamlined needs and preferences, while adopting technologies and processes which can help it to achieve a much higher profit margin.
Differentiation Focus: The differentiation focus strategy involves offering highly differentiated products to a narrow or niche market segment. In this case, the company relies on its distinguishing factor and is committed to the needs of a very small target customer group only.
The product strategy of a company can be broadly segregated into types: localization and standardization. These strategies are extremely crucial especially in the contemporary era of globalization, where a company operates in multiple locations. When you write an essay on marketing strategy for a globally operational company, you need to choose between localization or standardization.
Localization: The localization approach involves strategies which are tailor fitted to one particular market location only. The marketing mix strategy is reshaped to fit the needs and preferences of the host market. The company identifies the local trends and behavior of the customers, and designs its strategies so that they properly fit the chosen market.
Standardization: The standardization (also called globalization) approach is the exact opposite of the localization strategy. In this case, the company adopts the same standardized strategy in all market locations irrespective of the varying needs and preferences of the customers. This type of strategy is most viable for companies, that has a strong positive brand reputation all across the world and its products are sought after by almost everyone.
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