1 Functional strategies – Marketing Geoff Leese November 2006, revised July 2007, August 2008, August 2009.

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Presentation transcript:

1 Functional strategies – Marketing Geoff Leese November 2006, revised July 2007, August 2008, August 2009

2 Introduction n Functional strategies n Business orientation n The marketing concept and approach n The marketing mix n Strategy differentiation n Positioning n Strategies ä Product/Price/Place (Distribution)/Promotion n Other topics

3 Functional Strategies Corporate strategy Finance Strategy (week 7) Marketing Strategy (week 7) HRM Strategy (week 8) Manufacturing Strategy (week6) Top level or SBU strategy Examples of functional strategies: depends on level of SBU depends on type of business depends on organisation

4 Business orientations (1) n Production orientation ä Demand exceeds supply ä Needs good production engineering/financial control ä Any colour you like as long as its black….. n Product orientation ä Focus on customer perceptions of “quality” ä Needs innovative R&D

5 Business orientations(2) n Sales orientation ä Finding customers for /sales teams n Marketing orientation ä Focuses on customer needs ä Needs well developed marketing research teams and flexible production/delivery methods

6 The marketing concept n Evaluate market opportunities before production n Assess potential demand n Canvass customer priorities and desires n Assess pricing strategy n Produce and supply goods/services meeting customer expectations

7 The marketing mix (four Ps) n Product ä Intrinsic or perceived properties of product or service n Price ä Pricing strategies n Place ä Delivery of goods/services n Promotion ä Advertising, merchandising, PR n Seven P model includes also ä Packaging, Positioning, People

8 Example marketing strategies n New products for existing markets n New markets for existing products n New products for new markets n Existing products in existing markets ä Improve penetration ä Improve market share n Added value

9 Market segmentation n Breakdown of a market into segments based on ä Demographics –Age –Wealth –Geography –Social class ä Behaviour –Lifestyle –Attitudes –Interests –Opinions and beliefs

10 Strategy differentiation Undifferentiated Strategy Market segment Strategy Market segment Concentrated Market segment Differentiated

11 Positioning n How a product or service is perceived by consumers in comparison to it’s competitors n Issues ä Scope ä Market leadership/market following? ä Substitution? ä Multi-national positioning?

12 Product strategies n Product choice ä Product development ä New product lines ä Extend existing lines n Rationalisation n Standardisation n Branding

13 The product life cycle n Introduction ä Create product awareness and loyalty – advertising important ä Few competitors – technical difficulties possible ä Costs are high, often losses are experienced ä Early adopters attracted by novelty n Growth ä Competition appears ä Mainstream consumer adoption ä Widen appeal, build loyalty

14 The product life cycle n Maturity ä Competition intensifies ä Stabilise market share – enter new markets ä Extra promotion, price cutting, widen distribution systems, add value n Decline ä Consumer tastes change/substitution/obsolescence ä Sales and profits fall ä Manage for profit ä Discontinuation or divestment

15 The BCG Matrix For strategies used for each category see

16 Pricing strategies n Penetration pricing ä Low price, aggressive advertising n Target pricing ä Based on estimated demand/profit targets n Skimming ä High price, premium version of established products n Product life cycle pricing ä Varies according to stage in life cycle n Loss leading ä Selling at less than cost- attracts custom

17 Pricing strategies n Price discrimination ä Same product, different markets, different prices n Marginal cost pricing ä Based on ACTUAL cost of supply n Limit pricing ä Low prices to discourage new entry into market n Variable (stayout) pricing ä Prices increase when demand is high n Customary pricing ä Price stays the same, contents reduced

18 Distribution strategies Producer Direct Consumer Short chain Long chain Wholesaler Retailer (could be agents too!) (single intermediary)

19 Choice of distribution method n Intensity ä No of outlets in each area n Cost of channel n Level of control possible/desirable n Improvement/worsening of brand image n Geographical coverage n Reliability of intermediaries ä Product presentation ä Continuity of supply ä Pre sales info/after sales service

20 Promotion strategies n Advertising ä Objectives ä Strategy ä Choice of medium n Direct marketing n Sales promotion

21 Other topics n Pan-company marketing ä Marketing as a strategy driver across the firm n Internal marketing ä Marketing driving HR strategy –Recruitment –Training –Promotion –“Internal customers” n Relationship marketing ä Establishment of long-term trading relationships with customers

22 Summary n Functional strategies n Business orientation n The marketing concept and approach n The marketing mix n Strategy differentiation n Positioning n Strategies ä Product/Price/Place (Distribution)/Promotion n Other topics

23 Further reading n Bennett chapter 9 n Butel et al Unit 4 n All about Marketing - follow the link! All about Marketing - follow the link! n An alternative - follow the link! An alternative - follow the link!