Chapter 2 Marketing Strategies and Plans

Marketing strategy is an explanation of the goals needed by a company to accomplish its

marketing efforts. It is shaped by the company’s business goals and objectives.
Marketing Plan is how the company is going to attain those marketing goals and objectives. It is
the application of strategy, serving as a roadmap that will guide a company from one point to
another. Strategy is the thinking and planning is doing.

The Nature of Strategy

Strategy is derived from the ancient Greek word ‘Strategos’. Its plain translation meant’ the
general’s art’. In the past it referred chiefly to military affair of an overall nature such as a major
campaign or the general conduct of a war. The practice of management, Peter Drucker made the
distinction between tactical decisions and strategic decisions.
Marketing Strategy: A Decision-Focused Approach (2003) successfully describes the term as:
‘A strategy is fundamental pattern of present and planned objectives, resource deployments, and
interactions of an organization with markets, competitors, and other environmental factors.
It says that a strategy should always be able to specify:
1. What- Objectives to be accomplished
2. Where- As in, on Which industries and product markets to focus
3. How – To allocate resources and activities, to meet environment opportunities and threats in
each product-market and gain a competitive advantage.

Components of Strategy
Strategy is a design or plan for achieving a company’s policy goals and objectives. It settles on
how the goals and objectives of a company are to be accomplished, the operational units be
prepared.
There are five components or sets of issues within a well-developed strategy:
1. Scope. The scope of an organization refers to the breadth of its strategic domain the number
and types of industries, product lines, and market segments it competes in or plans to enter.
Decisions about an organization's strategic scope should reflect management's view of the firm's
purpose or mission. This common thread among its various activities and product-markets
defines the essential nature of what its business is and what it should be.
2. Goals and objectives. Strategies should also detail desired levels of accomplishment on one or
more dimensions of performance such as volume growth, profit contribution, or return on
investment over specified time periods for each of those businesses and product-markets and for
the organization.
3. Resource deployments. Every organization has limited financial and human resources.
Formulating a strategy also involves deciding how those resources are to be obtained and
allocated, across businesses, product-markets, functional departments, and activities within each
business or product-market.
4. Identification of a sustainable competitive advantage. One important part of any strategy is a
specification of how the organization will compete in each. Business and product-market within
its domain. How can it position itself to develop and sustain a differential advantage over current
and potential competitors? To answer such questions, managers must examine the market
opportunities in each business and product-market and the company's distinctive competencies or
strengths relative to its competitors.
5. Synergy. Synergy exists when the firm's businesses, product-markets, resource deployments,
and competencies complement and reinforce one another. Synergy enables the total performance
of the related businesses to be greater than it would otherwise be the whole becomes greater than
the sum of its parts.

Hierarchy of Strategies
Strategy is at the foundation of every decision that has to be made within an organization. If the
strategy is poorly chosen and formulated by top management, it has a major impact on the
effectiveness of employees in pretty much every department within the organization. In our
previous article on ‘What is Strategy?!‘ we have already tried to define and explain what
business strategy refers to and what is NOT considered to be part of strategy. In this article, we
will dissect strategy in three different components or ‘Levels of Strategy ‘. These three levels
are: Corporate-level strategy, Business-level strategy, and Functional-level strategy.
1. Corporate Strategy - At the corporate level strategy however, management must not only
consider how to gain a competitive advantage in each of the line of businesses the firm is
operating in, but also which businesses they should be in in the first place. It is about selecting an
optimal set of businesses and determining how they should be integrated into a corporate whole:
a portfolio. Typically, major investment and divestment decisions are made at this level by top
management. Mergers and Acquisitions (M&A) is also an important part of corporate strategy.
This level of strategy is only necessary when the company operates in two or more business
areas through different business units with different business-level strategies that need to be
aligned to form an internally consistent corporate-level strategy. That is why corporate strategy is
often not seen in small-medium enterprises (SME’s), but in multinational enterprises (MNE’s) or
conglomerates.
2. Business level Strategy - The Business-level strategy is what most people are familiar with
and is about the question “How do we compete?”, “How do we gain (a sustainable) competitive
advantage over rivals?”. To answer these questions, it is important to first have a good
understanding of a business and its external environment. At this level, we can use internal
analysis frameworks like the Value Chain Analysis and the VRIO Model and external analysis
frameworks like Porter’s Five Forces and PESTEL Analysis. When good strategic analysis has
been done, top management can move on to strategy formulation by using frameworks as
the Value Disciplines, Blue Ocean Strategy and Porter’s Generic Strategies. In the end, the
business-level strategy is aimed at gaining a competitive advantage by offering true value for
customers while being a unique and hard-to-imitate player within the competitive landscape.
3. Functional Strategies - Functional-level strategy is concerned with the question “How do we
support the business-level strategy within functional departments, such as Marketing, HR,
Production and R&D?”. These strategies are often aimed at improving the effectiveness of a
company’s operations within departments. Within these department, workers often refer to their
‘Marketing Strategy’, ‘Human Resource Strategy’ or ‘R&D Strategy’. The goal is to align these
strategies as much as possible with the greater business strategy. If the business strategy is for
example aimed at offering products to students and young adults, the marketing department
should target these people as accurately as possible through their marketing campaigns by
choosing the right (social) media channels. Technically, these decisions are very operational in
nature and are therefore NOT part of strategy. Therefore, it is better to call them tactics instead
of strategies.

Corporate Strategies and Marketing

The classic understanding describes corporate strategy as a planned package of measures for the
company to achieve its long-term goals. It focuses on how to manage resources, risk, and
return across the business. Think of it like a blueprint, with a mid- to long-term perspective, that
ensures your business will focus on its core activities and goals over the coming years without
taking too many risks along the way.
The corporate strategy is the highest-level document in your business, dealing with the most
fundamental aspect of why you are in business. All the plans, budgets, concepts, and projects
your teams might draw up to deal with short-term objectives are subordinate to the corporate
strategy, because the strategy lays the foundation for how the business will be run.
A marketing strategy focuses on how to attract and retain customers for the goods and services
your business offers. In this document, you are going to take the high-level corporate objective
("become a market leader among the 18-35 demographic") and brainstorm some ways to make it
happen through effective marketing techniques. The marketing strategy asks:
Who is the ideal customer? What does this customer need and how does your business satisfy
that need? How will you go about attracting this customer? How can you talk to this customer
to get them interested in your product?
A marketing strategy is not a marketing plan. The marketing plan is the functional-level strategy
that tells the marketing team what to do: which platforms to use, which promotions to run, what
social media messages to use and so on. Rather, the marketing strategy is your middle
layer, linking marketing and corporate strategies to help you put your vision into action.
Your corporate objectives are high level and complex since they are geared towards the
company's long-term growth. Unfortunately, this means they do not translate well into concrete
tasks that tell staff what they should be doing each day. The stuff you put in job descriptions –
the specific projects, tasks, and benchmarks you assign to people – are called functional-level
strategies. This is where the rubber hits the road.
For instance, if your corporate strategy is to expand your food product range to capture the vegan
market, one of your functional-level strategies might be for your R&D team to create a soy-based
vegan burger.
For smaller businesses, having a corporate strategy and a series of functional strategies may be
enough. Most times though, you are going to need something that takes the high-level corporate
vision and translates it into more focused objectives before you can develop task-specific jobs at
the functional level. The layer in the middle is called a business-level strategy. This is where
your marketing strategy sits.

What is Corporate Strategy?

Corporate strategy focuses primarily on profitability. Corporate Strategies include creating an
organizational structure, debt reduction to improve the company’s balance sheet, diversifying the
product or service line to increase profits or decrease dependence on one product, merging with
or buying another business to create economies of scale, accessing new technology and
increasing sales volume, reducing overhead costs and reducing overall operating expenses.
A company Strategy should include short- and long-term goals and should explain how those
goals will be achieved. It is focused on present actions and outcomes needed to move closer to
achieving the mission. Company strategies evolve and are updated over time to adjust for current
factors such as local economic conditions and company needs.

THE BUSINESS ENVIRONMENT FOR COMPETITIVE STRATEGY

THE BUSINESS ENVIRONMENT
An integral understanding of the business environment will make the executives
understand the present and future of the firm's direction and growth. the general business
environment is composed of dimensions in the broader society that influence and industry and
the firms within it. the industry environment is a set of factors that directly influence the
company and its competitive actions. the profit potential of the company is determined by the
different factors in the environment that influence its operational competitive advantage. the
corporate challenge is to identify the present firms position against the environmental factors
and develop strategies that will successfully overcome their competitive influence. the success
of the business operation is dependent on the capacity to favorably influence the business
environment and earn the desired profit.
Competitive analyses refer to the gathering and interpreting of information and data
about the business environment and how the other competitors are doing in the wide landscape
of business. understanding the playing field complements the insights and study of the firm's
position within the total environment that will generate possible alternatives in the conduct of
business operation. the focus of analyses is on three important factors.
1. The general environment
the general environment focus is seeing the industry in the future and how it will
affect present and future operations. the general business landscape is wide and open
for exploration, and seeing the business condition miles ahead is an important factor in
the survival of business.
2. The industry environment
it refers to the analysis of the firm's conditions of profitability within the industry.
the analysis will generate data on the firm's capability to compete within the business
industrial community on his products and services based on the program vision and
mission
3. The competitor
Analyses of the competitors are focused on predicting the dynamics of
competition is related to their operational actions, responses, and intentions. seeing
how the competitors operate will give insights on what Strategies will most likely
overcome the market competition.
combining the results of the analysis of the three elements, the fear movie able to understand
the external environment that will influence its strategic intent, vision, and mission in the
strategic
actions. the firm's performance in the field of business from into the three elements are
integrated as they see the total effect of the external environment in their corporate operations.
ANALYSIS OF THE EXTERNAL ENVIRONMENT
The environment as business in the words landscape is highly turbulent, complex and
uncertain. the firm must have the complete data and information by which to base them
forecasts and program of operation to stay afloat in their business operation. An
important objective is to study the general environment in terms of the corporate opportunities
and threats. opportunities or conditions in the general environment that make the company
competitive while teach are conditions that hinder the company to overcome strategic
competencies of the various competitor’s external environment analysis includes four important
activities.
1. Scanning
the process entails the study of all segments in the general environment. it is
identifying the signals of potential changes in the environment that pose threats or
opportunities that needed immediate actions. scanning is generally important in highly
volatile business environment. it is important to analyze the data carefully as the source
of information is usually incomplete and unconnected.
2. Monitoring
it is the process of carefully observing the changes in the environment and
seeing the effects from the scanning of information. it is important to detect meanings in
the changes of events and trends. the trends and events or opportunities that should be
explored by the firm and determine the degree of corporate adjustments. monitoring the
changes in technological innovations are important as today's business changes so
rapidly with new technology in the production of products and services.
3. Forecasting
forecasting is the result of scanning and monitoring. for derived analysis
analysis of the changes in the environment. for is the process of developing projections
of what might happen in how quickly the company develop strategies to be competitive
in the changing business landscape. timely actions and immediate response is
necessary as innovations change rapidly in the market competition. it may deal in the
changes and training of the workforce, and development of new marketing strategies to
reach the consumers before the competitors get the market niche.
4. Assessing
it is the process of determining the timing and significance of the effects of the
environmental changes and trends on the strategic management of the company. the
objective is to the general environment and to specify the actions that will be
implemented to adjust to the changes in the environment. the absence of assessment
will leave the data useless as the unknown competitive relevance is not properly taken
advantage by the firm.
SEGMENTATION OF THE GENERAL ENVIRONMENT
The general environment is composed of segments that are external to the firm. the
degree of impact varies in different industry and the firm must scan, monitor, forecast and
assess.
The levels and degrees of its effect on the company's operational profitability. the
company must be able to recognize the environmental changes, trends, of opportunity and
firm's core competencies to take advantage of the changing environment.
There are six segments that affect the operation of the firm.
1. The demographic segment
It is concerned with a population size age structure geographic distribution
system ethnic groups and economic index. For strategic competency, the demographic
segment should be analyzed on the global basis as it has potential effects across
countries. globalization becomes the workings not only of big corporations but also
small companies with borderless operations.
a. Population size
the world's population is still in the rise except in the United States and in
some European countries where couples are averaging with two children. India
and China have the biggest population index but by the year 2050, the grow in
population is expected to narrow down as population control begins to take
effect. Countries are beginning to realize that the land area to produce food is
not enough to feed the growing population. the grow and decline a corporate to
production of goods at levels that will supply the Needs of the population in the
years to come.
b. Age structure
there are more babies born in developing countries like the Philippines.
the great raid in population is still between 2.5% to more than 3% driving growth
to 100 million people in 2014. the middle age group the dominate the population
of most countries and this are challenges to the corporate business to provide
them not only their basic needs but also some of their wants. While in some can,
the population lifespan Increases due to advancement in medical care and better
lifestyle the challenges our focus on providing senior citizens with lower price
products.
c. geographic distribution
the devil development of more urban centers and the migration of people
from the rural areas to urban centers are both opportunities for corporate
strategies. The employment opportunities for most people in the urban Areas are
signals for increase production of more goods and services. the grow of
communication linkages due to increase in speed of technology in the computer
age would enable the people to work at home. The world's Become attached of
the finger and movement become lessor as linkages become faster.
d. the ethnic mix
in the Philippine business community, some Muslim business
businessmen dominate the retail trade in some small shopping centers. the
educated ethnic group begins to move from their mountain residence to the
more populated centers to a make living. Workforce diversity is sociological
issue. The migration of Filipinos to work abroad is a corporate challenge for a
more effective management system that will integrate the heterogeneous talents
of mix group of workers. Technical Filipino workers abroad are admired for them
talents and dedication at work.
e. Income distribution
The income distribution Across population is of interest to firms as it is not
determinants of purchasing power for products and services.
people in the world have increase over time due to dual career of husband and
wife, and effect there buying habits more goods and services. Of interest to the
firms are the average income of households and individuals. The economic
condition of the population determines the development of business opportunities
for the firms.
2. The economic segment
the economic segment refers to the nature and directions of the country in them
economic development. Companies operate profitably in a country with economic stability.
the globalization of business considers the economic stability of the host country. the other a
nation aircon spurs economics perspectives are the other firm’s consideration as the barriers
to business communication became within the touch of the finger.
There is the domino effect when the economy of one country slows down. nations
depend on other countries for material inputs in the production of good. nations depend on
other countries for material inputs in the production of good. the recession in one country
affects the other country in general as businesses in the global market become stagnant. while
the United States economic recession did not hurt much the economies of the Asian region, the
other business communities are in a standstill position.
3. The political and legal segments
It is the arena in which business organization operates and interest groups compete for
attention and resources. It also deals with the voice of overseeing the implementation of the
laws of the country which has something to do with trade and commerce. This segment
represents how a business organization Tries to influence the government and how the
government influences the flow of trade and commerce. this segment constantly changes as
government passed laws that protect the interest of their local industries and the flow of
revenue for imported products.
The world bank and international monetary fund (IMF) that grant loans to developing
nations also play a great role in the imposition of tariff laws. they favor the imposition of lower
tariffs as it poses Barrier to free trade between nations. on the other hand, Developing nations
who are not represented in this world organizations believe that it is the protection of the
developing nations against the small players who cannot compete with highly develop industries
of the rich countries. in related development, some countries believe that the e-commerce
should be regulated by the government as the world of business transactions are done through
the internet. this issue is under study by most government as competition plays a great role.
4. the social and cultural segments
this area is concerned with the society's attitudes and cultural values. Attitudes and
values differ among Nation, and these play as the cornerstone of the society as they drive the
demographic, economic, and technological condition and change. In rich countries the
government allocates 10 to 15 percent of gross domestic product (GDP) for health care and
retirement benefits. In the present, the national of the Philippines for the cash transfer program
allocates about 60 billion for the poorest of the poor to encourage better education and help
alleviate the living condition. Some countries allocate their retirement program as high as 10 to
45 percent for the government to generate savings for the growing elderly population.
Employment that is usually dominated by male workers is now being done by female
workers. This work diversity in the increase of female workers in the industries is important
indicator.
They are highly valuable source of productive workforce as they increase the
economic potential of the household. The growing cultural diversity to the working environment
creates challenges and opportunities by combining the men’s and women’s traditional styles of
leadership for the firms benefits. This will also identify ways to facilitate employee’s
contribution
to the firm. Women entrepreneurs are awakened that their line of expertise could contribute to
the
economic growth not only of their family but also to the economic development of the country.
This cultural and social diversity poses a challenge to strategic management.
5. The advancement in technology segments
Our social and business activities have been pervasive and diversified in scope due to
the advancement in technology. The advent of new technology has great effects in the
development of new products, processes and materials required to produce new kinds of goods.
This involved the development of new knowledge base that institutions and higher learning
institutions must cope weed to strategically answer the demand of the industry for new
kind of workforce. it is vital for business organization to study the changes in technology to
develop competitive advantage and business organizations that develop new technology and new
products have the greater advantage in higher market share & earn considerable advantage. the
role of top executives is to scan and monitor the development of new technology and endeavor to
identify
the possible substitute for new system and products that will give them the higher competitive
market share. the emerging fast faces of communication through the internet open the
business highway for the marketing of product and service. companies and individual customers
could have an easy access to information and make easy transactions using the information
highway. this has greatly changed the medium of business communication, and this poses a
great challenge in the creation of greater competitive advantage.
6. The world of business segments
The globalization of the business market creates both opportunities and challenges. The
present scenario in trade and commerce is the creation of borderless floe of product and
services. In the Asian region countries are grouping together to create a free flow not only of
information but the product and services with less barriers on tariffs and fees. the same is true
in European union and other regions of the globe as they believe globalization will help in the
development of the world economy. it is a great challenge not only for the firm but also for the
country in general, as globalization needs the development of infrastructure. transport facilities
must be developed and the necessary investment in the development of economic structures
must be put in place the nations development of industries and creation of investments for the
production of goods are challenges not only for the firm but also for the government. the
investment climate must be conducive to investors through transparent transactions, and this
needs government
incentives while protecting the interests of its nationals. effective governance and political well
pose the challenges to national leadership as well as those in the rural sectors were new
industries could be developed. industrialization and globalization are two important components
of development as the creation of more job opportunities and increase income of the labor force
create new tax base for the important government social services in health and education.

ANALYSIS OF THE INDUSTRIAL ENVIRONMENT

The industry is a group of firms producing products that are similar or close substitutes.
they are competing for the share of the market pie, and have influence on the strategy of the
firms industries include a rich mix of competitive strategies in pursuing their own goals of
greater returns. advancement in technology plays a greater role in the competitive advantage of
the firm not only in terms of product innovation but also in the use of internet communication to
penetrate the more affluent market. the industry environment has a more direct effect on the
firm's strategic competencies and the above average return on investments.
The intensity of market competition in the industry profit potential could be measured in
terms of long-run return of investment. in the traditional strategy, the firm concentrated on the
competitors in the same product line or category. does the strategy competence have changed?
the landscape of competitions as the firm search more broadly to identify current and potential
competitors and the customers that the firm is serving them. in the market microstructure to
customers are influenced by the location of firm and its capabilities to serve their needs.
THE FIVE FORCES THAT AFFECT FIRM’S COMPETITIVENESS
1.THE THREAT OF NEW ENTRANTS
Firms must always be on watch with possible new entrants in the industry as it will
affects their market share and at the same time their profitability. New entrants usually bring in
additional production capacity and make modifies products that may be the same or more
superior to the existing product of the firm. New entrants usually have a keen interest in gaining
a larger market share and force competitors to more efficient and effective in the delivery of
goods to their customers.
The threat of new entrants could be avoided with the following strategies.
a. Economies of scale
It refers to the marginal improvement in efficiency that the firm experiences as it
incrementally increases in size. When the quantity of product produced overtime
increases, the cost of production per unit decreases, hence the firm can lower the
price or maintain a higher return on investment. This will drive new entrants to
penetrate the market as competition will make it difficult for them to make the
desired profit. Competitive retaliation will make big or small-scale entrants face
the risk of the economies of scale.
b. Product differentiation
It is the customers perception that the product entering the market first is unique
and thus, captures customers loyalty and patronage. An example is jollibee chicken joy
that has captured the taste of children. In cars, the honda brand was perceived to be
superior in quality and workmanship and has the higher resale value than any other
brand. Customers valuing product uniqueness tend to become loyal to the product and
the company that produces it. Intensive advertising and promotion has inculcated in the
mind of the customers the product attributes and this will make new entrants difficult to
erase the customers perception.