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

2. 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. 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. 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. 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. 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. 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 www.entrepreneur.com/marketing/article70824.html

8. 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. 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. 10 Strategy differentiation Undifferentiated Strategy Market segment Strategy Market segment Concentrated Market segment Differentiated

11. 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. 12 Product strategies n Product choice ä Product development ä New product lines ä Extend existing lines n Rationalisation n Standardisation n Branding

13. 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. 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. 15 The BCG Matrix For strategies used for each category see http://www.quickmba.com/strategy/matrix/bcg/

16. 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. 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. 18 Distribution strategies Producer Direct Consumer Short chain Long chain Wholesaler Retailer (could be agents too!) (single intermediary)

19. 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. 20 Promotion strategies n Advertising ä Objectives ä Strategy ä Choice of medium n Direct marketing n Sales promotion

21. 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. 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. 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!