What is Marketing Strategy?

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Marketing strategy is defined by David Aaker as a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage.

According to P. Kotler marketing strategy as “a set of objectives, policies and rules that guides over time firm’s marketing efforts”.

Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix and marketing mix modeling, plus performance analysis and strategic constraints.

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Learn about:-

1. Definition of Marketing Strategy 2. Classification of Marketing Strategies 3. Objectives 4. Types 5. What Should a Marketing Strategy Achieve?

6. How to Develop a Marketing Strategy? 7. Product-Marketing Strategies 8. How to Formulate Marketing Strategies?


Marketing Strategy: Definition, Classification, Objectives, Types, Achievement, Development, Formulate and Other Details

What is Marketing Strategy – Definition

Marketing strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contributes to the goals of the company and its marketing objectives.

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According to P. Kotler marketing strategy as “a set of objectives, policies and rules that guides over time firm’s marketing efforts”

Marketing strategy of a company is a policy to maintain a competitive position in the market. Management gives it a shape with strategies for each controllable of product, distribution, promotion and pricing. Management tries to balance controllable with uncontrollable factors and so shapes the market needs and wants and fulfills company goals. For this he unites product market, distribution, promotion and pricing strategies into a single overall marketing strategy.

Marketing strategy is defined by David Aaker as a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage.

Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year.

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Time horizons covered by the marketing plan vary by company, by industry, and by nation. However, time horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. Marketing strategy needs to take a long term view, and tools such as customer lifetime value models can be very powerful in helping to simulate the effects of strategy on acquisition, revenue per customer and churn rate.

Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix and marketing mix modeling, plus performance analysis and strategic constraints.

External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/ legal environment likely to impact success. A key component of marketing strategy is often to keep marketing in line with a company’s overarching mission statement.

Once a thorough environmental scan is complete, a strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. A final step in developing a marketing strategy is to create a plan to monitor progress and a set of contingencies if problems arise in the implementation of the plan.

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Marketing Mix Modeling is often used to help determine the optimal marketing budget and how to allocate across the marketing mix to achieve these strategic goals. Moreover, such models can help allocate and spend across a portfolio of brands and manage brands to create value.


What is Marketing Strategy – Classification

Marketing strategies may be classified under four heads according to nature of products (existing or new) and the nature of customers (existing or new).

1. Marketing Penetration Strategy.

2. Market Development Strategy.

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3. Product Development Strategy and

4. Market Diversification Strategy.

1. Marketing Penetration Strategy:

The object of marketing penetration strategy is that the organisation seeks to gain greater control in a market in which it has its products/service.

The achievement of objective will depend on the following factors:

(i) Reaction of competitors,

(ii) Capacity of market to increase usage or consumption by the existing or new customers;

(iii) Costs involved in gaining customers from the competitors or attracting new customers or inducing more usage or consumption.

2. Market Development Strategy:

Market development strategy seeks to introduce its existing products and services to new set of customers so as to consolidate its hold further.

Market development strategy includes the following components:

i. Reaction of the competitors.

ii. Need and purchasing pattern of new customer including their number.

iii. Organisation’s adaptability to new markets.

3. Product Development Strategy:

This strategy concentrates on creating a new product or a service for the existing customers.

This strategy will depend on the following factors:

(i) The competitive response;

(ii) The impact of the new product or service on the existing products or services;

(iii) The ability of the organisation to deliver the product or the service;

4. Diversification Marketing Strategy:

Diversification marketing strategy concentrates on offering a new product or a service to new customers.

Success of this strategy depends on the following factors:

(i) Developing sufficient knowledge about the needs of new customers;

(ii) Ensure that the new product/service is capable of meeting the needs of new customers; and

(iii) The organisation has properly trained manpower to serve the new customers.

After the determination of the basic marketing strategy, it becomes necessary to identify more specific activities to implement the strategy. These activities are known as marketing mix.

They include the following:

(i) Identification of the exact product or service to be offered (product strategy)

(ii) The channel through which the product/service to be distributed to the customer (channel strategy)

(iii) Establishing an appropriate price for the product/service (price strategy).

An appropriate marketing mix, crucial as it is for any organisation, depends on the following considerations:

i. Is the marketing mix consistent with individual elements, organisation, market and the environment?

ii. Are customers sensitive to marketing mix variables? Are the customers responsive to decrease in price and increase in advertising?

iii. What are the costs of various marketing mix activities? Whether these costs exceed the benefits in terms of customers’ responses? Further, it has to be worked out, if the organisation can afford the marketing mix expenditure.

iv. Is the marketing mix properly timed? Similarly, is promotion scheduled in such a way that the newly created demand would be met by the availability of goods and services?

Product positioning is also considered as an aid in developing a marketing strategy. Product positioning is depending on the marketing research techniques which indicate as to where the proposed or existing brands or products ought to be located in the market.

Product positioning helps the managers in the following ways:

i. Whether to leave the product and market mix alone or to reposition the product?

ii. Helps the organisation to develop marketing strategies which are oriented toward target customers. It is also known as target marketing.

Marketing consists of those activities which pertain to movement of goods or services from the producer to the consumer or the market. Marketing is primarily concerned with evolving a system to ensure that right products and services in right quantity, at right place at right time are available to the customers. With the performance of this role, the customers will feel satisfied and the whole process will yield profit to the organisation.

Marketing strategy is basically con­cerned with matching existing consumers and potential customers needs for goods and services with making the required goods and services available at right time, right place and in right quantity.

Market strategies are dependent on two sets of variables:

I. Whether the organisation is attempting to reach the existing or new customers; and

II. Whether the organisation’s products or services are existing or new.

Keeping these two sets of factors in view, the selection of strategy could be possible; we will analyse the marketing strategies for existing products or services or for new products and services.


What is Marketing Strategy – 6 Important Objectives

To match the objective of the organisation, marketing strategies will be:

1. To achieve the total sales target (highest growth rate)

2. To achieve maximum NSR (Net Sales Realisation)

3. To earn maximum foreign exchange through exports

4. To minimise the rejections to the least

5. To make least or zero customers’ complaints

6. To capture the maximum market share both in the home sales as well as exports market.

1. To Achieve the Total Sales Target (Highest Growth Rate):

In a competitive economic scenario, wherein not only home sales market is the area of concern, there are threats from the global competitors too. The imports are now easy and open even at a cheaper rate and at the same time of better quality. To achieve the sales target is a challenging task.

In this respect, there may be following areas of review and then to decide the future course of action so as to plan and achieve the sales target successfully:

Review:

i. Plan/target of previous year

ii. Actuals against target of previous year

iii. Fulfillment of target (if achieved fully to indicate)

iv. Shortfall, if any

v. Reasons analyzed for the shortfall

vi. Course of action decided to improve the deficiencies

vii. Improvements made during the current year till the planning period

viii. Course of action for the balance periods of the current year (target year)

ix. Target for the current year

x. Whether there is a change over the previous year

xi. Areas of changes with justifications

xii. Any special strategic action decided to be taken to achieve the target.

The above summary points related to previous year and for the current year would entail many challenging actions for achieving the sales target.

A detailed review of action plan and actuals on a continuous basis helps in achieving the sales target. In case of any specific situation say, “there is a doubt for achieving the sales target” the same should be immediately brought out for the information of management in advance for the necessary action after review.

Strategic action may be:

i. To increase the exports

ii. To sell semi-finished products in the situation where there is slow demand for the finished products

iii. To make all efforts to sell value added products

iv. To search new markets – domestic as well as international markets

v. To create special counters at various locations for solving on the spot the problems of customers. All efforts must be made to reduce the customer complaints to the least

vi. To offer special discounts in respective seasons to boost the sales.

2. To Achieve Maximum Net Sales Realisation (NSR):

After the first strategic action i.e., to achieve the highest sales target, efforts must be made to realise the maximum net sales realisation (NSR).

Net Sales Realisation Depends Upon:

i. Volume of sales

ii. Optimum product-mix

iii. Value added products

iv. Least rejections

v. Least secondary sales (off-graded products)

vi. Least discounts

These are the direct action plan/points which improve the net sales realisation (NSR) and hence must be attempted by direct efforts by all the agencies.

Few of the action plans listed out for improving the net sales realisation, need explanation.

These are explained as under:

I. Optimum Product-Mix:

Optimum product mix depends upon:

i. Low contribution per unit of product, but carrying more volume of sales

ii. Products which carry high contribution per unit, but have limited consumption/sales

iii. Products which are of high technology and skill

iv. Products which need more safe operation

v. Products which are more pollution creators

vi. Products which are of priority production, which must be produced, but have a low contribution. These must be produced due to national requirements

vii. Products which have market only in foreign countries but have a low contribution due to greater competition.

Thus, to make an optimum product-mix, all these factors will have to be examined and considered.

II. Optimum Sales-Mix:

This depends upon:

i. Exports

ii. Home sales

iii. Internal consumption

iv. Inter-unit transfers

v. Local sales

vi. Sales to small scale units and priority sectors.

A detailed examination of all the other factors affecting the higher sales volume must be carried out before deciding the sales-mix of products.

3. To Earn Maximum Foreign Exchange Through Exports:

This may be with the objectives:

i. To become an export leader

ii. To earn foreign exchange for the nation

iii. To avail export incentives

iv. To get advance licenses for imports at concessional rates or at zero rates.

This gives advantage for importing at a lower rate of customs duty or even at zero rate of customs duty.

To match this objective of the organisation, all efforts will be made by the organisation to make maximum export sales.

This will require:

i. More export orders to bag.

ii. To make quality products matching with the best in the global market.

iii. To be more cost effective and then competitive in the global market.

iv. To tie up for contracts on exchange basis. It means to import the products including capital goods with the understanding that foreign supplier will import the products of the organisation.

4. To Optimise the Rejections to the Least:

This is an important factor for which marketing organisation should always be active and alert in all the cycles of operation from orders booking till the dispatches are made and materials are received by the customers.

For achieving the target of least rejection, following strategies have to be adopted:

To book the orders matching with the products and production facilities including quality this can be produced and supplied.

i. To monitor the production activities in the production shops

ii. To monitor for correct specifications and their production

iii. To do correct invoicing charging correct quantity, rate, extra for quality, taxes, etc.

iv. To despatch the goods to the correct destinations.

Thus, these are the few but very important measures for efficiency and the reduction of rejection.

5. To Reduce Complaints from the Customers to the Least Level and if Possible to the Zero Level:

This is an important factor for the strategic action by the organisation through its marketing wing.

Although it may not be possible to bring down the complaints from customers to zero, as there may be many factors which may not be within the control of the organisation, still there is scope for improvements through:

i. Immediate action on receipt of complaint from the customers

ii. Authorisation fully to the zonal sales representatives/in-charges to take the decision for solving the complaints with the solutions immediately.

iii. Good customer services and making respective counters/centres at all the main points

iv. Visits to the customers regularly

v. Avoiding rejections bringing them to the least by taking various measures.

6. To Capture the Maximum Market Share:

This would be possible when the organisation is making efforts in the areas of:

i. Quality as per benchmark

ii. Best customer service

iii. Value addition in the product/service to the customers/consumers

iv. Marketing through publicity, distribution, customer services

v. Market/sales-mix.


What is Marketing Strategy – 18 Main Types

A critical strategic decision facing all marketers writing a plan is whether to build the market or steal share from competitors in order to achieve sales goals. The information regarding product awareness and attributes in your business review, and the product life cycle specifically, will help provide answers to this fundamental question.

A situation with a relatively new product where the current user base is small, the potential user base is quite large, and there is little competition often requires a “build the market” strategy. Many times, the company that creates the market maintains the largest market share long into the future. You have to develop a need for the product and then convince a target market to purchase your particular brand. Many companies intentionally take a “second to market” product development strategy. They allow someone else to invest in building the market, and then introduce their brand.

In a situation where the product is a mature one with minimal growth (i.e., few new customers entering the marketplace), stealing market share from competitors is often called for. In this situation you have to convince product category users that your product is superior to that of your competition. In some cases, the market may be growing, which allows your firm to grow along with it.

In this case, the question becomes, “Is the market growing at the same rate I want to grow?” If the answer is no, then you will still need to steal share from your competition. All of these scenarios would be described in the market share strategy.

The decision of whether to build the market or steal share must be made up front in your marketing strategy section, as this is a very fundamental strategic decision that will affect all other areas of the marketing plan. A stealing share strategy, such as “steal market share from the leading competitor,” requires that your company’s target market definitions closely approximate those of the current market leader’s customer profile.

Also, the advertising will most likely communicate benefits or an image of your product that the market leader doesn’t possess. To the contrary, a “build the market” strategy often requires first educating new customers about the benefits of product usage and then convincing them to use your company’s products.

Type # 1. National, Regional, and Local Market Strategies:

This marketing strategy category is often overlooked by the national and regional marketer. This strategy helps the marketer determine whether there will be a core national marketing plan or a combination of national, regional, and local marketing plans. Having a combination of plans requires a lot of work, but it is usually worth the effort. This strategy recognises regional DMA (Designated Market Area or television viewing area) and even local trading area differences by allowing for the application of specific territorial marketing programmes.

If you are a retailer, for example, you may have a national marketing programme as an overlay, with special DMA plans and specific local marketing programmes for each store.

If you are a national package goods company, it may be that, to accomplish your marketing objective of increasing new trial by 10 percent, you need to develop a national marketing programme. However, to help guarantee your success, you will place special marketing and spending emphasis on specific markets that have demonstrated the potential to grow at far greater rates when given local, tailored types of marketing programmes. These local marketing programmes often have their own plans with specific marketing objectives and strategies.

Type # 2. Seasonality Strategies:

Strategic decisions must be made about when to advertise or promote your product or store. Here, the seasonality portion of the sales section in your business review becomes useful. Several issues are important. The first is whether there are times of the year when your product category as a whole does significantly better than your company does. If so, why? Can you do something to increase sales during that period when customers of your product category are naturally purchasing at increased rates?

The second issue is whether you are going to advertise and promote all year, during stronger selling periods, or during weaker selling periods. If you have a limited budget, it is recommended that you concentrate only on those times of the year when sales are highest and attempt to capture as many purchases during that period as possible. Often, retail companies utilise in-store promotion strategies, such as bounce-back coupons, during stronger selling periods to entice customers back during down periods, thus using high-volume months to help promote lower-volume months.

Third, you need to decide if you are going to advertise and promote prior to, during, or between peak selling periods. In retail, for example, the holiday seasons are heavy purchasing periods. A strategic decision must be made on whether you are going to advertise earlier than your competitors, throughout the whole selling season, or just during the peak selling weeks.

It is often recommended to lead the selling season, because there will be less competitive advertising clutter, and you can build awareness just prior to the heavy shopping period. An alternative strategy that is also successful is to concentrate advertising during the heaviest weeks of the holiday shopping period. Thus, the advertiser can dominate a critical selling period and be visible when it counts most.

Finally, you must consider your resource and production capacity. If your current seasonal sales peaks already have you operating near capacity, you’re not going to be able to increase sales much in this period. This is true regardless of your product or service. For a restaurant, it may mean space, tables, and wait staff availability. For a package goods producer, it may be the availability of ingredients. Your marketing expenditures and activities may be used effectively to stimulate demand to accommodate your production or resource limitations.

Type # 3. Spending Strategies:

Spending strategies outline how the marketing money will be spent. To achieve your marketing objectives, you need to decide on spending strategies regarding issues such as investment spending for a new product; whether to increase sales of weaker-selling brands, stores, or regions of the country; or whether to attract more customers to your stronger brands or stores. In order to make these decisions, you need to determine spending levels by brand, store, or regions of the country.

In most situations you can’t increase sales of a weaker-selling brand without making an incremental budget commitment to the brand. We know that one way to increase short-term sales is to place emphasis on a company’s strengths. However, there comes a point when strong brands, stores, or markets can’t be expected to provide additional growth. Long-term success requires building weaker brands, stores, and sales territories, and this requires some investment spending.

Overall spending should also be addressed. Does your company plan to spend at a percent of sales for marketing and advertising consistent with past years? Or, because of new aggressive sales projections and marketing objectives, do you need to increase marketing spending from, for example, 5 percent of gross sales to 8 percent? The actual spending detail will be highlighted in the budget section of the marketing plan.

Type # 4. Competitive Strategies:

There is often need for a competitive strategy. The business review may reveal that a single competitor is almost totally responsible for your company’s decline in market share, a new competitor is entering the market, or a single company or group of competitors may have preempted your unique positioning in the marketplace. If this is the case, you will need to develop a competitive marketing strategy in your marketing plan.

Competitive strategies vary depending upon the situation. Competitive strategies sometimes use an anti-category strategy, establishing your company as better than all competitors in the category. To achieve this, a company often takes a common, consumer-perceived problem in the industry (such as lack of customer service attention in retail or delayed flights in the airline business), establishes the problem as inherent to the industry, and then tries to set itself apart as better than the competition in this area of concern.

Sometimes competitive strategies focus on one competitor or a group of specific competitors. You may need to reestablish your product attribute dominance relative to a specific competitor, or a competitor may have done a better job of creating a lifestyle image in tune with the heavy-user consumer in your category.

In both of these situations, you might consider developing competitive strategies that require comparison advertising or advertising that counters specific competitive claims. You might also consider a competitive media tactic of advertising within the same time frames and media as your competition. Or you might try to dominate a medium that is lightly used, or perhaps not used at all, by the heavy user of your industry category.

Another common competitive situation occurs when a strong competitor starts doing business in your trading area or in a market you previously dominated. We developed a competitive strategy for a retail client when an aggressive, nationally known competitor announced it was moving into one of our client’s important markets. The competitive strategy centered around taking advantage of the fact that our client was already in business and the new competitor wasn’t.

To implement the strategy, our client ran a half-price sale for two months prior to the opening of the competitor’s stores. This was intended to get customers to purchase prior, to the anticipated grand opening of the competing stores. The week of the competitor’s grand opening, we mailed a promotional piece to consumers in the five-mile trading area surrounding the competitor’s store. We continued heavy promotion during the competitor’s grand opening by having a grand opening of our own to celebrate the opening of the 240th store in our client’s chain of stores.

This competitive plan resulted in our client’s stores being up 40 percent during the promotional period and maintaining market share over the long run.

Finally, competitive strategies also include the development of new or improved product, packaging, selling, or merchandising techniques to counter competitive strengths.

Type # 5. Target Market Strategies:

Your target market section detailed primary and secondary target markets. You must now discuss the emphasis you will place against the various target markets and how you will market to them based on your marketing objectives, which defined the purchase behavior you intend to gain from the target.

For example, you may decide to target the heavy user through the use of a specific product in your product line that has proven appeal to heavy users or through in-store changes that appeal to heavy users. You may target a secondary target market only through in-store incentives or point-of-purchase promotional techniques, saving all mass media expenditures for the primary target market. Your company may have recently revised your primary target market to include the heavy user who may have shopped your product only as a second choice in the past.

A target market strategy must reflect this change in target market description. This strategy to primarily target the heavy user in all marketing mix decisions affects all subsequent marketing strategies and individual marketing mix tool plans.

Type # 6. Product Strategies:

You must make strategic decisions regarding new products, product line extensions, product improvement, product elimination, and/or whether to build or improve weaker product lines or continue to maximise stronger- selling product lines.

If repeat purchase rates are low and your company’s product ranks poorly across product attributes, you must decide how to improve the product in order to meet your marketing objectives. Another area to consider is expanding alternate uses of the product.

This is a viable strategy when you have a mature product with a static or limited customer base. An example is the expansion of the use of baking soda as a refrigerator deodoriser. This was a successful marketing strategy designed to meet the marketing objectives of increasing the purchase and usage rates by current customers and providing a reason for new customers to try the product.

The development of new products or new extensions of your existing product line should be addressed if they are necessary to meet marketing objectives. If you are developing new products, you need to establish a new product strategy. Describe in general terms the type of product you will be developing, including the new product’s features and attributes. You will also have to address a programme to develop a brand or name for the product.

Again, remember that these should be general strategies that provide overall marketing direction. You should develop a strategy addressing whether you are going to emphasize stronger or weaker product, categories/brands in your marketing plan. Selling and emphasizing the products/brands with the greatest potential is particularly viable when growth potential still exists. This strategy can also be used to attract customers through product or store strengths and then cross-sell to weaker-selling categories via promotions or discounts.

Many times a specific target market can also be attracted through the use of loss leaders or a specific strong-selling brand in the product mix. You may have a marketing objective of building new trial among heavy shoe purchasers, women 35 to 44 with children. The problems and opportunities section may point out that women 35 to 44 shop your shoe store not for themselves but for their children.

Therefore, your strategy may be to initiate trial by promoting children’s shoes to heavy-user women and then cross-sell to the women’s shoe department. Other incentives and merchandising techniques could also be created to encourage the purchase of women’s shoes once trial is established.

Alternatively, building weaker product categories/ brands is often attempted when it is felt that the company’s strengths have been fully exploited. This strategic decision requires more initial money, as it is always more difficult to improve a weakness than to build upon a strength. However, this approach is worthwhile if it provides a company with more products that contribute more equally to profits. This also protects a company from major fluctuations resulting from having only one or two strong-selling products.

Finally, finding more efficient ways to produce the product might also be a viable strategy to help ensure success of a marketing objective if the improved efficiency can permit you to achieve a price advantage. In addition, the improved efficiency might provide greater gross margins, which can help achieve greater profitability or can be invested in stronger marketing programmes.

Type # 7. Naming Strategies:

If you are going to introduce a new product or line extension, you will want to provide direction for the naming of these products. Should the new product stand by itself or be under the umbrella of the family name? Should the name target current customers exclusively or current and new customers?

If you are going to enter a new channel, you might want to change the name of your product line to appeal to different targets, or you might need a new name for stores carrying your products in discount outlet malls versus regional malls. Strategy Example – Develop a new product name appealing to existing customers first and potential customers second. Rationale – The largest segment of total purchasers is existing customers.

Type # 8. Packaging Strategies:

If you are going to develop a packaging plan later in the marketing plan, establish a general direction for your packaging strategy.

Here you will need to consider and address the following issues regarding your product’s packaging, referring to your problems and opportunities for direction:

i. Function – Is your product’s packaging serving its primary function of holding or protecting the product?

ii. Value-added – Does your packaging add value to the product purchase and enhance its use experience for the consumer?

iii. Communication – Does your packaging stand out in the retail environment compared to competitors? Does it communicate the inherent drama of the product?

A problem identified in the problems and opportunities summaries may point out that the company’s packaging makes usage difficult. Therefore, a change in packaging might help achieve the marketing objective of increasing repeat usage and consumption among current customers.

Type # 9. Pricing Strategies:

Pricing strategies should also be discussed. One area to address is whether you will use high or low prices relative to your competition, or simply match the competition’s price and depend upon service or superior product attributes for a competitive edge. Will you maintain margins with high-price strategies, or will you allow for lower margins and lower prices to develop trial?

Also include whether your pricing will be uniform nationally or vary market by market, store by store, or customer by customer. Finally, if you are going to use price to help communicate a positioning, state this intent in this section. Some companies, for example, follow a premium-price strategy to help establish a premium positioning relative to the competition.

Type # 10. Distribution of Product/Penetration or Coverage Strategies:

The strategic decisions that must be made in this area for consumer goods and business-to-business firms differ for retailers and service firms. Consumer goods and business-to-business firms must decide in what areas of the country to target their distribution efforts. They also must decide on the type of channels/outlets that will carry their product and on the desired market coverage among the targeted outlet category.

Retailers and service firms must strategically decide if marketing objectives can be achieved through existing outlets, whether new stores need to be added in existing markets without cannibalising existing stores, or whether new stores need to be added through entering new markets.

If sales per store have not been maximised in low-penetrated markets, one way to build sales is to add new stores in existing markets. This allows for greater leverage of store operation and advertising. However, if sales have been maximised in current markets and the markets have been fully penetrated to the point where additional stores products could cannibalise existing sales, then a realistic strategy is to expand to new markets.

Type # 11. Personal Selling/Service/Operation Strategies:

You need to determine whether you want to address a structured personal selling programme through this marketing plan. You may want to address basic elements of that sales programme, including whether you will use sales incentives; establish sales goals relative to pure money objectives, a particular product, or target market emphasis in terms of calls made, etc.; and define a sales methodology (e.g., soft sell versus hard sell).

If you are a retailer, note whether your subsequent selling plan should include specific sales ratios (e.g., develop sales ratio of purchasers versus walkers based upon history and future expectations). Like retailers, manufacturers also need to decide whether they are going to establish specific sales ratios. If they choose to do so, a statement such as “establish specific sales ratios (number of prospects that become customers) to monitor the results of the sales force” should be included as a strategy in this section.

Additionally, you should consider whether you are going to establish service standards such as the number of days it takes to fill back orders or, for a retailer, the percentage of customers who are greeted as they walk in the door. Finally, if necessary, this section should include a strategy for implementing your marketing department’s performance. An example would be to create a marketing liaison between purchasing and marketing to assure the proper inventory levels are maintained during peak promotional times that correspond with heavy media and marketing efforts, as well as historically strong seasonal buying periods.

Type # 12. Promotion/Event Strategies:

Promotions should be channeled to meet specific needs and must be incorporated into the overall marketing plan in a disciplined fashion. These promotion strategies will set the areas of emphasis for the specific promotion plan later in the marketing plan, providing direction for the promotional efforts aimed at addressing specific marketing objectives. A retailer may have the marketing objective of increasing the number of units per transaction from the target market by 10 percent over the next twelve months.

A marketing strategy to achieve this would be to encourage multiple purchases through promotional incentives. This strategy would then be expanded upon in the promotion section of the marketing plan, but the fact that transaction increases are going to come from multiple-purchase promotional incentives would have been established up front.

Type # 13. Advertising Message Strategies:

The marketer needs to provide an overall focus for the advertising and communication. It is important to state up front in your marketing strategy section how you are going to use advertising, to fulfill your marketing objectives. Are you going to develop image advertising and build long-term sales, or will your advertising promote short term sales through a harder-sell, promotional emphasis? Do you plan to vary your advertising message by region? Perhaps you will have both a national advertising programme and a localised, market-by-market programme.

Type # 14. Advertising Media Strategies:

The strategies developed in this section should be consistent with the direction established in the product, competitive, and spending marketing strategies. The primary goal in establishing an overall media strategy is to provide direction for the upcoming media plan and to establish geographic and product spending emphasis. You may decide upon a strategy that varies media spending by market or that spends more in markets with greater potential.

You may invest in new markets to establish awareness and generate trial. You may consider developing a national media plan or developing both national and local media plans in order to support a dual marketing strategy. You may also address target market reach strategies by identifying how media will be utilised to reach the primary and/ or secondary target market, influencers, etc.

Type # 15. Internet Media Strategies:

Your Internet media strategies can center on the Web and E-commerce. The Internet and intranets can be considered as alternative channels of distribution, communication tools, and sales tools. We’ve found that companies that have a clear direction for the Internet medium for its own purposes will prepare the most effective Internet media strategies.

Type # 16. Merchandising Strategies:

A strategy is needed to set the tone for what will be done from a merchandising standpoint. This applies to all non- media communication; for example, in-store signage for retailers, point-of-purchase displays for package goods firms, and personal presentation sales aids such as brochures and sell sheets for business-to-business firms.

An opportunity identified under problems and opportunities might tell you that 80 percent of purchase decisions are made in-store. Thus, the marketing strategy in this situation might be to utilise extensive point-of purchase merchandising to affect in-store decision making.

Type # 17. Public Relations Strategies:

At this point in your plan development, you should determine if you are going to make public relations part of your marketing plan, as you will need to consider PR opportunities when you develop the other specific tactical tool segments of your plan. For example, you might consider supplementing your overall advertising and promotion communication programme with publicity, or you might use media cosponsors of planned promotional events or a charity “tie-in” to generate publicity. You may decide to develop an extensive public relations programme to take advantage of new product development or ongoing trade show opportunities for your company.

Type # 18. Marketing R & T (Research and Testing) Strategies:

Change is often important in generating trial and retrial of a company’s product. A disciplined programme to initiate this change is critical. In most businesses there is a need to continually expand and/or refine the company’s product offering and marketing in order to continually build incremental sales. This can be accomplished through a planned and disciplined researching and testing programme.

Marketing R & T is the lifeblood for perpetuating the success of your business. It takes time, money, work, planning, and perseverance to research, test, and produce readable results. But it is always worth it!

Research can help define your product’s problem(s) and help determine the potential and needs of the target market, optimum pricing, effective advertising messages, and much more.

If you plan to conduct primary research, now is the time to establish a research strategy. You may develop a research strategy to solve a specific problem that will help you to build sales and accomplish a marketing objective. Or you may decide to conduct an ongoing awareness, attitude, and behavior tracking study to assist with next year’s plan and to provide a benchmark to evaluate the results of current and future marketing plans.

Testing keeps you ahead of the competition and helps you avoid costly mistakes. It can help you develop a new product or marketing activity, make it better, provide evidence of your programme’s effectiveness, and eliminate those ideas that aren’t going to work before a costly investment has been made. You can test any part of a marketing programme, from a product change and price increase to a new promotion, television commercial, or store format.

Once you have committed to some form of marketing R&T, should be used to define what you will be researching and testing-new products, services, merchandising programmes, store layouts, packaging, media strategies, advertising messages, pricing, promotions, etc. Incorporate what you will research and test in the appropriate plan segments later in the marketing plan.


What is Marketing Strategy – What Should a Marketing Strategy Achieve? (With Examples)

Your strategy will depend on where you want your business to go – it forms part of your overall business aims.

The following are examples of what your overall business aim might be, and marketing strategies that you could use to achieve it:

1. Increase sales

2. Bring in new customers

3. Get existing customers to buy more

4. Introduce a new product or service

5. Increase market share

6. Better establish your brand

7. Improve customer loyalty

8. Launch an advertising campaign

9. Launch a PR campaign

10. Encourage word of mouth

11. Increase market share

12. Retain existing profitable customers

13. Make customers feel more valued

14. Offer existing customers exclusive offers

15. Ensure business stays fresh and new

16. Whatever your marketing strategy covers, you should definitely put it down in writing.

17. Make everything simple to understand, realistic, and with a clear path of action.

18. It will then become part of your longer and more detailed marketing plan – which is the document that deals with a more overarching and long-term view of your business (and so makes up a section of your business plan).

19. Be ready to adapt your marketing strategy as and when necessary – there are an infinite number of factors that could require a change. It’s flexibility that’ll keep you ahead of the competition.


What is Marketing Strategy – How to Develop a Marketing Strategy? (Step-by-Step Process)

Step # 1. Research:

You need to carry out detailed analyses of these three areas:

i. Market analysis – The size of your market, how quickly it’s growing, your customers and their spending and lifestyle habits.

ii. Competitor analysis – Monitor both direct and indirect competition and how they compare with you on every aspect of sales and marketing (their customers, their brand, price, convenience of location, sales channels, and so on).

iii. Company analysis – Your overall business objectives, how you are going to achieve them, your strengths and weaknesses and those of your products or services.

Step # 2. Customers:

Next you need to identify your target customers, using the information you’ve gathered from your research and, if needed, more detailed customer research.

Then you have to:

i. Segment them – Split your existing and target customers into groups, according to what they need from your business – which will differ. Some will want cost-effectiveness, some quality, some great customer service, and so on.

ii. Positioning – How you compare to your competitors for each of your customer segments – are you the fastest, do you have the best customer service, are you the third most popular, and so on.

iii. Product – Now you need to examine your product or service with the aim of working out how you’re going to market it and outdo competitors.

iv. USPs – What it can offer that no other product or business can.

Benefits to the Customer:

From your USPs, draw out what benefits your product or service offers to the customer. These may well vary between your various customer segments. You need to look very closely at what the customer actually sees, while Starbucks sells coffee, the benefit to the customer is a place to relax and have a chat with a friend or a place to sit with a laptop.

Your USP may be that you deliver pizza faster than competitors to people in your area, but the benefit to the customer is that they don’t have to cook and can receive a ready-made meal quickly. The way you define the benefits will shape your marketing message.

Communication:

How you are now going to communicate the benefits of buying your product or service or using your business to your target customers (again, this may well vary between your various customer segments).

Marketing Mix:

The combination of all the marketing tools you are going to use to communicate your benefits to your customers, including and for example, advertising, PR, word of mouth, distribution channels, pricing, promotion, which products you’ll sell to them, display in a shop, website, and so on.

Remembering four P’s can be useful when you’re putting your marketing mix together, Product, Placing, Pricing, and Promotion.

Step # 3. The Marketing Plan:

Having developed your strategy, you can now write it into a marketing plan. The plan goes into the logistical details of executing your strategy, such as budgets, more detailed timescales, who within your company will manage the various points of the strategy, the logistics of various distribution channels and their incumbent costs and so on.

As such, it is of course a longer and more detailed document.

Your marketing plan is typically a more live document than your strategy (meaning you will tweak and update it more regularly). As costing, market conditions, economic conditions and other factors change, you’ll need to adjust your plan to accommodate them – whereas your strategy could well remain the same.

For both your strategy and your plan to be useful, you need to closely monitor the results of marketing activity, and be ready to adapt both as necessary.

Step # 4. Using the MDSC:

The MDSC works like a checklist. You must identify the first element on the list before moving on to the second element, and so on. Each element is based on preceding assumptions-modifying assumptions about one element will affect assumptions about subsequent elements. Although elements will change as your product category enters different stages of the technology adoption life cycle (TALC), the MDSC remains valid in each stage.

Elements of the MDSC:

i. The target customer (e.g., economic buyer, technical buyer, end user) is the starting point-the source of money. It influences all subsequent elements of the strategy statement.

ii. The compelling reason to buy (CRTB) explains the buyer motivation (customer pain)-the source of demand.

iii. The whole product helps you to meet the demand by addressing the customer’s motivation (i.e., solving the customer’s pain).

iv. Partners and allies may be required to provide those parts of the whole product that you cannot provide yourself.

v. The design of the distribution channels is a function of both the solution and marketing complexity of delivering the whole product.

vi. Determining the pricing and revenue model is a function of the target customer’s perceived value of using the product.

vii. Both reference and economic competition must be considered when analyzing potential competition for the target customer’s budget.

viii. Positioning must establish your product as more attractive than the competition’s in the eyes of the target customer.

ix. The next target (i.e., the next target customer) can be described according to geographies, user profiles or profitability. However, keep in mind that the next target is always your company’s next move as it relates to your product category’s place on the TALC-

Early Market = next visionary customer

Chasm = first niche segment

Bowling Alley = next niche segment that builds upon efforts in whole product development and/ or customer references.


What is Marketing Strategy – Product-Marketing Strategies

A product is anything a business has to sell, whether this be a physical good or a service. “New” products could be completely freshens innovations, or modifications of existing products, or copies of other firms products. Branding a product means giving it a trade name and / or logo and then seeking via advertising and other sales promotions to associate certain attractive characteristics with the branded item.

Customer then recognize the product and having once been satisfied by it, need not subsequently re-evaluate worth. Thus, little fresh information about the product has to be provided to the customer after it has been branded.

A successful market must develop its products and markets, if it is to avoid eventual extinction. This calls for strategic decisions about product-market development and manufacturing.

Ansoff drew up a growth vector matrix, describing a combination of a firm’s activities in current and new markets, with existing and new products. He was mainly interested in growth, but firms in declining industries may wish to scale down their operations in existing markets or product areas.

The matrix identifies four different kinds of product market strategy that the organisation can pursue, depending on whether the firm concentrates on existing products and/or markets or embraces upon new ventures.

a. Market penetration involves trying to milk more from existing products and existing markets. If the market as a whole is growing, this might appear a fairly low risk strategy to adopt. Where the market is stagnant, market penetration might involve increasing market share at the expense of other producers.

b. Market development uses existing products in new markets. Exporting is perhaps an example of this strategy. This might be attractive if the firm has to achieve high sales volumes to utilise capacity efficiently.

c. Product development involves offering new products to existing markets. Firms with an expensive distribution network may choose this to make most efficient use of it by marketing more products through.

d. Diversification involves moving into new market with new products. However, this need not always be as risky as it sounds, especially if the products and/or markets have some similarities to existing ones. Conglomerate diversification can sometimes be justified on the existence of synergies.

The Ansoff model is a framework for discussing alternative directions. It cannot take decision, only managers can.

i. Market penetration may not be possible if the markets are mature; only examination of the specifics will identify which is a the best approach.

ii. Obviously, it is too general on its own to suggest which markets should be targeted.

Johnson and Scholes suggested the following principles and guidelines for product market planning:

i. The potential for improvement and growth – It is one thing to eliminate unprofitable products but will there be sufficient growth potential among the products that remain in the product range?

ii. Cash generation – New product require some initial capital expenditure. Retained profits are by far the most significant sources of new funds for companies. A company investing in the medium to long term which does not have enough current income from existing products, will go into liquidation, in spite of its future prospects.

iii. The timing decision for killing off existing products. There are some situations where existing products should be kept going for a while longer, to provide or maintain a necessary platform for lunching new model.

iv. The long-term rationale or product or market development.

v. Diversification by acquisition. It might pay to buy product ranges or brands in a takeover deal. If the product-market strategy includes a policy of diversification, then the products or services, which the expanding company should seek to acquire should provide definite benefits.

The aim of product-market strategies is to close the profit gap that is found by, gap analysis. A mixture of strategies may be needed.

Product Marketing Strategy – Implications

A major product strategy input relates to the degree, if any, of change in the basic characteristics of the product that may seem desirable at a particular time. These alternatives range from no change to an entirely new product, and the impact of each depends upon the degree of other marketing change taking place at the same time. It shows nine different combinations of the product market strategies that a company might consider using to improve its profitability.

Notice that each product strategy is associated with some market strategy and that each has important implications for the other:

1. No Product Change — No Market Change:

This is the least complex product-market strategy. There are two main versions – simplifying the product’s design and altering the amount of integration in product’s manufacturing materials instead or buying them. Both seek to improve profitability mainly through cost reduction, and both involve selling essentially the same product to the same market.

2. No Product Change — Improved Market:

This strategy aims to improve the product’s market and profitability by increasing sales to present markets. This process of remerchandising, in other words, leads basic features of the physical product unchanged but changes the accompanying services.

3. No Product Change —New Market:

This product-market strategy is especially significant for companies with products already in, or about to enter, the market maturity stage of the life cycle. During this stage, industry sales tend to reach a plateau and then gradually fall off.

But some companies explore the possibility of rejuvenating the product’s sales and profit growth rates through finding new markets. In searching for new market segments for a product approaching saturation in its present market, management should consider both possible new users and new uses.

4. Product Change — No Market Change:

The three versions of this strategy are product line simplification and product discontinuance, new models (really new or improved products), and planned obsolescence (designing a new modification that makes the consumer want to replace the old model, such as an annual model change). Strategies involving product line simplification and product discontinuance envision profit increases through cost reductions. Those involving either new models or planned obsolescence seek profit increases through growth in sales volume.

5. Product Change — Improved Market:

The two main, types of the strategy, are product customization (tailoring product specifications very closely to buyer needs), and product systems (combining a series of separated operations into a system as in the automatic washing machine). Both aim to improve profitability through increasing sales volume.

6. Product Change — New Market:

This strategy seeks increased profitability through additional sales volume generated by changing certain features of the product and selling it to a new market segment, so companies often must change certain product features to match them better with the individualized needs of new target market segments. Trading up and trading down are the main forms of this strategy.

7. New Product — Improved Market:

This strategy aims to increase profitability through adding sales volume gained from new products sold to the same market segments. Often the new products are extensions of the present product line, for example, the ready-to- eat cereal added to a line of regular cereals or the addition of new flavours to an old product line, as was done by Ovaltine. Sometimes the new product are members of related product lines sold to the same market segments as present products, for example, the pet food added by a marketer of breakfast cereals.

8. New Product — No Market Change:

This strategy seeks increased profitability through selling a new product to the same market segment, the new product replacing an older product sold for the same general purpose. Thus, product replacement strategy aims at retaining the level of sales now coming from a particular market segment where an older product’s sales are being endangered by competitor’s new products serving the same uses. Examples of new products that replaced old ones are numerous.

A few of them are automobiles, which replaced carriages, diesel carriages, diesel locomotives, which replaced steam locomotives, jet planes, which replaced piston-driven aircraft, the transistor, which replaced the vacuum tube, and the ballpoint pen, which largely replaced the fountain pen. For companies having products in the market maturity stage, new products should be waiting in the wings, ready for market introduction at the proper time.

9. New Product — New Market:

This strategy to increase profitability through greater sales volumes obtained from selling new products in new markets. Thus, it involves product mix diversification —selling unrelated product lines to entirely different markets. Companies adopt this strategy for reasons such as an unexpected research breakthrough or discoveries of profitable opportunities to develop products for new markets.


What is Marketing Strategy – How to Formulate Marketing Strategies?

It is convenient to divide the planning process into several steps or stages. The divisions used here are not necessarily standard or universal.

Other writers and practitioners may prefer other breakdowns perhaps good or better than this one. It should also be recognized that the chronological implication of this sequence of steps found here is largely false. In a typical planning opera­tion, a number of them may be going on simultaneously and at least one of them—the collection of marketing information—must go on all the time if it is to be done properly.

Nor is the planning process itself so distinct from operation in either timing or nature as its treatment here would imply. While carrying out the current plan, management must be preparing others for the future and, at the same time, making such amendments to current ones as may be demanded by changing conditions and newly discovered information.

Preliminary Analysis:

Before one can do intelligent planning about anything, he must know about it. This is true even of the simplest situation. The more complex the situation the more detailed the knowledge concerning it must be in order to plan for it realistically.

The technical nature of most industrial goods complicates market planning for them. For example, the demand for a material, component, supply item, or piece of equipment may be changed profoundly and abruptly by changes in technology.

An improve­ment in the technique of making castings may increase the demand for castings and reduce that for machined parts and the equipment that machines them; technical developments in making and using plastics may take business away from metals; electronic transistors largely destroyed the market for tubes; the development of synthetic fibers has eroded the market for natural fibers, and on and on.

This uncertainty of total demand for the individual firm is aggravated by the small number of large users which characterize many industries. A shift in patronage by any one buyer can subtract heavily from the sales volume of one supplier and add substantially to that of another. Moreover, the derived demand for industrial goods subjects the industrial marketer to all the uncertainties that beset the marketer of consumer goods whom he supplies.

Consequently, the analysis which precedes the formulation of market­ing strategy includes both the situation analysis and the analysis of potential markets.

Situation Analysis:

The situation audit, together her with the evaluation of alternative missions and ways (strategies) of pursuing them, is in­dispensable because this identifies the needs which a marketer is capa­ble of fulfilling with the greatest competitive advantage. Since this determines the direction of strategic planning, the data generated by a situation audit are basic inputs to marketing strategy.

Market Identification:

Various market identification techniques can be employed to identify broad categories of customers with needs that match the marketer’s capabilities, and to subdivide them into measurable subgroups or segments.

The selection of target markets by weighing the profile, trends, demand potential, and problems of each segment pro­vides the subjects on which strategic planning must focus if it is to be effective.

Analysis of Target Markets:

In order to decide which elements of the marketing strategy should be employed, the relative emphasis each should receive, and how they should be linked with each other, more specific intelligence about each target market is usually desirable. It is especially important to know as thoroughly as possible the production system in which one’s products will be used.

The marketer needs to know how his products are used, the techniques employed in their ap­plication, the difficulties users have encountered with them, and how they have overcome or adjusted to these difficulties. It is also important for him to keep abreast of changes in the technology of his target markets that may affect the application or performance of his products or they will soon be out of date.

In addition to intelligence related to product adaptability, applica­tion, and performance in his target markets, the strategy planner needs information about customer and prospective-customer firms themselves. He needs to know what individuals within a firm exercise buying authority, or influence those who do, as well as the selling appeals most likely to motivate them.

The planner also needs to investigate the in­ternal politics of important or potentially important buyers to discover shifts in power and influence that are taking place or likely to occur. An especially important category of customer intelligence is that concern­ing new end-products in the planning or development stage which may result in a demand for new materials or equipment.

Another important strategy input is intelligence concerning available channels through which products can be moved to customers. Changes constantly occur in the marketing services rendered by individual outlets or types of outlets, and in the struggle for power and influence that incessantly goes on among them.

General trends do not supply enough insight on which to base strategy decisions. The planner needs to know the behavior and performance of individual outlets.

By the same token, knowledge about individual competitors is another valuable strategy input particularly that concerning product quality, uses, and appeals. Equally significant, though, is intelligence about a competitor’s delivery and service performance and his reputation for being helpful to customers and keeping his promises.

This knowledge and that generated by other measures of marketing performance, notably sales and cost analysis and the relevant economic indicators, round out the intelligence needs of the planner.

Choice of Strategy Components:

The central problem in choosing the components of a marketing strategy is to find that combination of components which will produce the maximum net revenue. In principle, the solution of such a problem is relatively simple.

It involves the application of marginal analysis; that is, the use of each component should be pushed to the point where the return from an additional dollar spent on it exactly equals the return from an additional dollar spent on any one of the others.

A top limit is placed by the maximum amount of money the management of a firm feels it can afford to spend, or by the point at which an additional dollar spent on any one or all of the components will not bring in a cash flow of more than a dollar; usually, it is the former. While this principle is simple, any attempt to apply it is bound to be infinitely complex.

This complexity arises not so much from the mathematical problems involved as from the difficulty of forecasting results of the use of the different components. If the results of applying each element of strategy could be accurately foreseen, a mathematical formula can be developed that would make the principle readily workable.

But it is very difficult to forecast the results of taking any given marketing action unless these results can be measured. This is possible with only such strategy components as direct mail advertising or promo­tional material designed to bring in orders or inquiries. With most of them, though, the measurement of results is at the present time largely a process of more or less intelligent guessing and the exercise of seat-of- the-pants judgment.

In spite of the lack of adequate means to forecast the results of marketing action, or even to measure them, the marketing manager cannot avoid trying to do so. Unless he does, he cannot plan.

During recent years, much study has been devoted to attempts to im­prove both measurement and forecasting in this area. One may expect that during the coming years, these efforts will be continued and prob­ably intensified.

At this point, what appears to be the most promising approach to the problem is that of measuring the preliminary or intermediate, rather than the end, results of marketing effort.

For example, most attempts to measure the effectiveness of magazine and trade journal advertising have sought to discover whether a given advertisement was noticed, read, or remembered. Radio and TV rating services report the number of people who listened to or viewed a pro­gram.

This is only the beginning of the story. In order to be effective, advertising copy must call attention to itself so that prospective cus­tomers or persons who influence buying will read it or listen to it.

It must get its message across to the buying or influencing group in a way which motivates them to adopt a pattern of thought or action desired by the advertiser. The objective of an advertisement is conviction or ac­tion. But none of the usual tests of effectiveness even approach this point.

Part of the reason for this state of affairs is that the objectives of many advertising pieces and campaigns are not clearly stated or even envisaged by those who prepare them. When they are, the objective of each advertisement tends to differ from that of every other one, with the result that it is impossible to measure all of them with a single standard. This suggests that the task of measuring the effectiveness of any marketing action should begin when its use is planned.

For example, when an advertising or sales promotion effort is planned, its objectives should be stated in the most specific terms possible. If this is done, there is some chance that a method of verifying its results can be devised.

Suppose the objective of an advertising effort is to generate inquiries. One might ask how many inquiries could be expected and how much business they should produce. The planner must have some figures in mind in order to decide whether the advertising will be worth its cost. It should not be too difficult to establish a system of records and analysis that would indicate how near the campaign came to achieving its goal.

Consider a less tangible objective, such as creating or changing cus­tomer attitudes or company image. If it is decided to do this by adver­tising, the marketing manager must believe that the change in attitude, once achieved, will be worth more than the cost of the advertising.

Once the decision has been made as to what the change is really worth, attitude surveys can be used to determine the degree to which change was actually effected and the return which was realized on money spent.

It is true that all such dollar appraisals are made on nebulous grounds, but if estimated with care they are apt to be accurate enough to provide a reasonable measure of results. Once management has accumulated some experience with estimates of this type, it is often possible to predict outcomes with sufficient confidence to formulate strategies effectively.

The stage should now be set for a meaningful discussion of the dif­ferent components of marketing strategy and the factors which in­fluence the nature of their contribution to the strategy.


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