Marketing Strategy

Having stated where the firm is and where it wants to go, the marketing plan should state how it is going to get there. The problems confronting most marketing planners are how to integrate marketing mix elements into the marketing planning process.

Integrated Marketing Mix

Integrating marketing mix elements into the marketing planning process. When writing a marketing plan, managers are often not sure exactly what to ’say’ about the various marketing mix elements in the written marketing plan. We will try to highlight the important issues in the written marketing plan by discussing each mix element briefly, and then referring to a set of questions on the mix element. Answer these questions carefully and you will find that you have a lot of the ‘content/body’ of the marketing strategy section of your marketing plan.

Product Plan

The strategy which an organisation adopts towards its product or service, is the most important factor in its long-term success, but continued success will also depend on the ability to adjust to changes in the market place.

Products make profits for an organisation by effectively providing customers with the benefits they look for within carefully-controlled cost and revenue parameters. Here the concept of the product life cycle is useful, for it can be used to assess just where a product is in terms of growth, maturity, or decline. This allows for the development of proper marketing strategies.

Decisions on product-market strategy should aim to maintain a product portfolio with a balance of growth products, mature products and declining products. This will provide a sound base on which to plan for future development, particularly the development of new products.

Answer these questions about the product:

• What needs do our products/services satisfy?
• Who are our current markets?
• Will these groups be similar demographically, attitudinally or in behaviour?
• What are the sales trends for our products /services and the industry?
• What are our competitor’s strengths in comparable products/services?
• What marketing mix elements are important to the sale of our product/service?
• What changes will we make to existing products/services, in terms of such issues as quality, features, packaging, range and branding?
• What new products/services will we launch in the planning period?

Distribution Plan

The available outlets determine where customers buy products or services. Distribution planning should be based on a careful assessment of the market requirements and the ability of the organisation to meet them. The marketing channel through which products or services move is a network of institutions which themselves are linked by a series of mutually beneficial relationships.

The marketing channel itself is dynamic, as are the markets it serves. Decisions about the choice of channel should be seen as an integral part of the organisation’s marketing strategy, subject to adjustment in the light of circumstances.

Getting the product or service to the customer cannot be viewed by marketing management as the concern of others. The distribution activity of the organization is as much a part of its marketing mix as are pricing, promotion, and product decisions. The key to the successful development of the organisation’s distribution is the adoption of a total systems approach, in which an integrative view is taken of the various activities involved in distribution.

The output of such an integrated system is customer service. The task implicit in the management of customer service is to achieve a balance between the cost of service and direct customer benefits. The proper level of availability, which is the principle component of customer service, depends not only on profitability, but also on the product market competition and the channels used.

Answer these questions about distribution:

• What types of intermediaries are available for products/services similar to ours? What services do they perform?
• How broad is the market coverage of the different types of intermediaries?
• What are the financial and technical capabilities of current intermediaries?
• Who has the power within current distribution channels? What is their basis of power? How do they exercise their power?
• How are intermediaries motivated to cooperate with each other and with manufacturers for products/services similar to ours?
• What amount of communication is needed to keep distribution tasks running smoothly for similar products/services?
• Are there standard margins or pricing techniques for resellers of products/services similar to ours? If so, are they sufficient to motivate out intermediaries?
• What is the average time for products/services to move from producers to customers in this market? How will this effect product design and distribution of our products/services?
• What intensity of market exposure do WE want?
• What are the channels of distribution and types of resellers used by our competitors?
• What types of intermediaries and how many do we want to get adequate market coverage given our sales and market share goals?
• What form of support can we expect from our intermediaries? How will we supplement this support?
• What factors will motivate intermediaries to buy and support our products/services.
• What margins will be expected by intermediaries and will these be sufficient to compensate them for service we expect them to perform?
• How will these margins affect our competitiveness in the market?
• Who will oversee distribution?

Five areas, namely facilities, inventory, transport, communications, and unitisation, constitute the total cost of distribution within an organisation.

Decisions about facilities involve the number and location of warehouse and plant.

Decisions about inventory involve how much inventory to hold in view of the problems of interest charges, deterioration, shrinkage, insurance, and administration bearing in mind that the idea is to provide optimum availability.

Decisions about transport involve owning or leasing vehicles, delivery schedules and so forth.

Decisions about communications in the distribution system involve ensuring best customer support, which depends on optimum communications support.

Unitisation concerns the way in which products and packages are grouped for handling.

Objectives in Distribution Plan

Four basic sets of objectives in a distribution plan:

• Objectives related to outlet penetration
• Objectives related to inventory
• Objectives related to distributor sales and promotional activities
• Objectives related to customer-development programmes (e.g. incentives for distributors)

Pricing Plan

Pricing decisions are the most important part of marketing strategy. The price should always be related to the achievement of corporate and marketing objectives. The role of price must therefore be established in relation to such factors as the product life cycle; the requirements of the total product portfolio and sales and market share objectives.

The methods used to achieve these goals are as dependent on the market and competitive circumstances as they are on costs. Indeed, the market-orientated approach to pricing sees costs as a constraint which may determine a lower limit to price, rather than as a basis from which price is determined.

Getting the price right has a direct effect on revenue and profits. The price of a product determines the profit margin, that is, the difference between the cost of producing an item and the price at which it is sold. But price also affects the quantity of product sold, since a higher price may reduce demand, while a lower price can lead to increased sales. The margins given to intermediaries in the marketing channel should be viewed in terms of the value added by them.

In return for various functions necessary in the completion of the exchange process, the organisation will be willing to share some of the total ‘channel’ margin available to it. The various types of margins commonly encountered are trade, quantity, promotional and cash discounts.

The price of a product depends on costs, on its perceived value and on the method of distribution. Pricing should never be done in isolation from other products.

Answer these questions about pricing:

• What will our overall pricing objectives be?
• What are our costs?
• What are competitor prices for similar products?
• What is the perceived relationship between our prices and product quality?
• Are there any legal restrictions on out pricing policies?
• What control do we have, or do we want over final prices that customers pay?
• What ability do we have to react to competitors’ price changes?