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• Marketing strategy

Definitions of Marketing Strategy

"The marketing strategy lays out target markets and the value proposition that will be offered based on an analysis of the best market opportunities." (Philip Kotler & Kevin Keller, Marketing Management, Pearson, 14th Edition)“An over-riding directional concept that sets out the planned path.” (David Aaker and Michael K. Mills,

Strategic Market Management,

2001, p. 11)"Essentially a formula for how a business is going to compete, what its goals should be and what policies will be needed to carry out these goals." (Michael Porter,

Competitive Strategy: Techniques for Analyzing Industries and Competitors ,

NY, Free Press, 1980)"The pattern of major objectives, purposes and goals and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in. (S. Jain,

Marketing Planning and Strategy,

1993)"An explicit guide to future Behaviour.” (Henry Mintzberg, “ Crafting Strategy,”

Harvard Business Review,

July–August, 1987 pp. 66–74)Strategy is "reserved for actions aimed directly at altering the strengths of the enterprise relative to that of its competitors... Perfect strategies are not called for. What counts is... performance relative to competitors.” (Kenichi Ohmae,

The Mind of the Strategist,

1982, p. 37)Strategy formulation is built on "the match between organizational resources and skills and environmental opportunities and risks it faces and the purposes it wishes to accomplish." (Dan Schendel and Charles W. Hofer,

Strategy Formulation: Analytical Concepts,

South-Western, 1978, p. 11)

Marketing management versus marketing strategy

The distinction between “strategic” and “managerial” marketing is used to distinguish "two phases having different goals and based on different conceptual tools. Strategic marketing concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial marketing is focused on the implementation of specific targets."[4] Marketing strategy is about "lofty visions translated into less lofty and practical goals [while marketing management] is where we start to get our hands dirty and make plans for things to happen."[5] Marketing strategy is sometimes called higher order planning because it sets out the broad direction and provides guidance and structure for the marketing program.

Strategy typologies

Developing competitive strategy requires significant judgement and is based on a deep understanding of the firm's current situation, its past history and its operating environment. No heuristics have yet been developed to assist strategists choose the optimal strategic direction. Nevertheless, some researchers and scholars have sought to classify broad groups of strategy approaches that might serve as broad frameworks for thinking about suitable choices.

Strategy types

In 2003, Raymond E. Miles and Charles C. Snow, based on an in-depth cross-industry study of a sample of large corporations, proposed a detailed scheme using four categories:[100][101]

• Prospectors: proactively seek to locate and exploit new market opportunities

• Analyzers: are very innovative in their product-market choices; tend to follow prospectors into new markets; often introduce new or improved product designs. This type of organisation works in two types of market, one generally stable, one subject to more change

• Defenders: are relatively cautious in their initiatives; seek to seal off a portion of the market which they can defend against competitive incursions; often market highest quality offerings and position as a quality leader

• Reactors: tend to vacillate in their responses to environmental changes and are generally the least profitable organizations

Strategic marketing planning: An overview

The strategic gap

Marketing strategy involves mapping out the company's direction for the forthcoming planning period, whether that be three, five or ten years. It involves undertaking a 360° review of the firm and its operating environment with a view to identifying new business opportunities that the firm could potentially leverage for competitive advantage. Strategic planning may also reveal market threats that the firm may need to consider for long-term sustainability.[12] Strategic planning makes no assumptions about the firm continuing to offer the same products to the same customers into the future. Instead, it is concerned with identifying the business opportunities that are likely to be successful and evaluates the firm's capacity to leverage such opportunities. It seeks to identify the strategic gap; that is the difference between where a firm is currently situated (the strategic reality or inadvertent strategy) and where it should be situated for sustainable, long-term growth (the strategic intent or deliberate strategy).[13]

Strategic planning seeks to address three deceptively simple questions, specifically:[7]: 34 

* Where are we now? (Situation analysis)* What business

should

we be in? (Vision and mission)* How should we get there? (Strategies, plans, goals, and objectives)

A fourth question may be added to the list, namely 'How do we know when we got there?' Due to the increasing need for accountability, many marketing organizations use a variety of marketing metrics to track strategic performance, allowing for corrective action to be taken as required. On the surface, strategic planning seeks to address three simple questions, however, the research and analysis involved in strategic planning is very sophisticated and requires a great deal of skill and judgement.

Strategic analysis: tools and techniques

Strategic analysis is designed to address the first strategic question, "Where are we now?" [7]: 34  Traditional market research is less useful for strategic marketing because the analyst is not seeking insights about customer attitudes and preferences. Instead, strategic analysts are seeking insights about the firm's operating environment with a view to identifying possible future scenarios, opportunities, and threats.

Strategic planning focuses on the 3C's, namely: Customer, Corporation, and Competitors. A detailed analysis of each factor is key to the success of strategy formulation. The 'competitors' element refers to an analysis of the strengths of the business relative to close rivals, and consideration of competitive threats that might impinge on the business's ability to move in certain directions. The 'customer' element refers to an analysis of any possible changes in customer preferences that potentially give rise to new business opportunities. The 'corporation' element refers to a detailed analysis of the company's internal capabilities and its readiness to leverage market-based opportunities or its vulnerability to external threats.[14]

The BCG Matrix is just one of the many analytical techniques used by strategic analysts as a means of evaluating the performance of the firm's current stable of brands

Perceptual mapping assists analysts to evaluate the competitive performance of brands

A product evolutionary cycle helps to envision future directions for product development

Porter's five forces

Mintzberg suggests that the top planners spend most of their time engaged in analysis and are concerned with industry or competitive analyses as well as internal studies, including the use of computer models to analyze trends in the organization.[15] Strategic planners use a variety of research tools and analytical techniques, depending on the environment complexity and the firm's goals. Fleitcher and Bensoussan, for instance, have identified some 200 qualitative and quantitative analytical techniques regularly used by strategic analysts[16] while a recent publication suggests that 72 techniques are essential.[17] No optimal technique can be identified as useful across all situations or problems. Determining which technique to use in any given situation rests with the skill of the analyst. The choice of tool depends on a variety of factors including: data availability; the nature of the marketing problem; the objective or purpose, the analyst's skill level as well as other constraints such as time or motivation.[18]

The most commonly used tools and techniques include:[17]

Research methods

• Environmental scanning[19]

• Marketing intelligence (also known as competitive intelligence)[16][20][21]

• Futures research[22]

Analytical techniques

• Brand Development Index (BDI)/ Category development index (CDI)[23]: 31–35 

• Brand/ Category penetration [23]: 17-66 

• Benchmarking[24]

• Blindspots analysis[25]

• Functional capability and resource analysis[26]

• Impact analysis[27]: 79–81 

• Counterfactual analysis[28]

• Demand analysis[29]

• Emerging Issues Analysis[30]

• Experience curve analysis[31]

• Gap analysis

• Herfindahl index[23]: 1-16 

• impact analysis[32]

• Industry Analysis (also known as Porter's five forces analysis)[27]: 139-140 [27]: 88-94 [33]: 368–382 

• Management profiling

• Market segmentation analysis[34]

• Market share analysis

• Market Segmentation analysis[35]

• Perceptual mapping[36]

• PEST analysis and its variants including PESTLE, STEEPLED and STEER (PEST is occasionally known as Six Segment Analysis)

• Portfolio analysis, such as BCG growth-share matrix or GE business screen matrix[27]: 38-39  [27]: 361-376 

• Precursor Analysis or Evolutionary analysis[37]

• Product life cycle analysis and S-curve analysis (also known as technology life cycle or hype cycle analysis)

• Product evolutionary cycle analysis[38][39]

• Scenario analysis[27]: 81-83 

• Segment Share Analysis

• Situation analysis[7]: 80 

• Strategic Group Analysis[7]: 82 

• SWOT analysis[40]

• Trend Analysis[27]: 143-145 [41]

• Value chain analysis[27]: 142-143 [42]

Brief history of strategic marketing

Marketing scholars have suggested that strategic marketing arose in the late 1970s and its origins can be understood in terms of a distinct evolutionary path:[6][7]: 50–56 [8]

Budgeting Control

(also known as

scientific management

)

Further information: Scientific management

Date: From late 19th centuryKey Thinkers:

Frederick Winslow Taylor

,

Frank

and

Lillian Gilbreth

,

Henry L. Gantt

,

Harrington Emerson

Key Ideas: Emphasis on quantification and scientific modelling, reduce work to smallest possible units and assign work to specialists, exercise control through rigid managerial hierarchies, standardize inputs to reduce variation, defects and control costs, use quantitative forecasting methods to predict any changes.

[9]

Long Range Planning

Further information: Long-range planning

Date: From 1950sKey Thinkers:

Herbert A. Simon

Key Ideas: Managerial focus was to anticipate growth and manage operations in an increasingly complex business world.

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Strategic Planning

(also known as

corporate planning

)

Further information: Strategic management

Date: From the 1960sKey Thinkers:

Michael Porter

Key Ideas: Organizations must find the right fit within an industry structure; advantage derives from industry concentration and market power; firms should strive to achieve a monopoly or quasi-monopoly; successful firms should be able to erect barriers to entry.

Strategic Marketing Management

It refers to a business's overall game plan for reaching prospective consumers and turning them into customers of the products or services the business provides.Date: from late 1970sKey thinkers: R. Buzzell and B. GaleKey Ideas: Each business is unique and that there can be no formula for achieving competitive advantage; firms should adopt a flexible planning and review process that aims to cope with strategic surprises and rapidly developing threats; management's focus is on how to deliver superior customer value; highlights the key role of marketing as the link between customers and the organization.

Resource Based View (RBV)

(also known as

resource-advantage theory

)

Further information: Resource-based view

Date: From mid 1990sKey Thinkers:

Jay B. Barney

,

George S. Day

,

Gary Hamel

,

Shelby D. Hunt

, G. Hooley and

C.K. Prahalad

Key Ideas: The firm's resources are financial, legal, human, organizational, informational and relational; resources are heterogeneous and imperfectly mobile, management's key task is to understand and organize resources for sustainable competitive advantage.

[11]