Strategic Marketing

Table of contents

I. Introduction Competing for the future

II. Marketing

III. To close the Gap

IV. Ansoff Matrix

V. Other options
a) BCG
b) McKinsey
c) Porter / competitive forces
d) From PEST to SWOT
e) PLC

VI. Implementation

a) TQM

b) BLC

VII. Conclusion

VIII. Reference

I. Introduction - Competing for the future

Today organizations have to find answers to questions that might be asked in near future by both: customers and competitors.

In his book On Marketing¹by Kotler written in 1999, the author is drawing a dramatic picture of the future, for the competitive situation in 2005: Companies are unable to sustain competitive advantages (outside of patents)².

Although his scenario maybe came not true , the point is interesting: How do companies find the right way to respond to new developments (e-business, globalization etc.).

Strategy is about the long term development. Organizations need to collect information of the market, they have to define strategies and difficulty enough, they need to implement the strategies.

In order to remain a market leader, Hamel and Pralahad advise their reader in an article from 1994³to pause for a moment and ask questions like:

-Who are the customers today and who will be the customers in the future?

-Who are presently our competitors and who will compete with us in the future?

-What is our competitive advantage today and what will make us a leader in the future?

Models like Ansoffs matrix or Porters 5 Forces make todays situation visible and allow to formulate strategic options.

The task is to find and implement strategic options, that allow the best allocation of recourses in the future.

II. Marketing

According to Kotler, there are two wrong views of Marketing:

Marketing is selling and Marketing is mainly a department⁴. For him its the job of Marketing to understand the markets and to formulate strategies how to dominate target markets. According to Stender-Mohemius⁵, Kotler is following here a broader (modern) definition of marketing, which is also promoted by the AMA⁶.

I understand marketing as a corporate function, that deals with two components:

The marketing system (the company itself, resources provided by the firm, suppliers and distributors) and the external environment⁷. Whereas the first part can be controlled and planned to some extend, the external environment (demographic factors, the society and development etc) is hard to control or to predict.

Marketing has to understand the external environments and formulate strategies (that are later to be broken down to tactics and operationable goals).

There are many definitions out there for marketing, however there is not one correct approach of marketing⁸.

III. To close a gap

In his famous book Corporate Strategy Ansoff offered a new way, to close the gap between the companys objectives and the forecasted performance.⁹

The literature distinguishes between the operative gap (potential basis business ./. basis business) and the strategic gap (development limit ./.expected new business). The strategic gap might be closed by either downsizing the expectation or by using the Ansoff matrix.

Or as Kotler puts it: Either the company will have to reduce its sales (and profit) goal or find breakthrough ideas to fill the remaining strategic gap.¹⁰

IV. Ansoff Matrix

After working for some years for the RAND corporation and Lockheed, Russian emigrant Igor Ansoff started to teach at the Carnegie Mellon university 1963¹¹. In 1965 he published a book called Corporate Strategy, within this publication, he offered a grid, later was called The Ansoff Matrix¹². The grid has two dimensions: present and new and a product axis and a market axis.

Abbildung in dieser Leseprobe nicht enthalten

source: http://www.tutor2u.net/business/strategy/ansoff_matrix.htm

The grid offers 4 strategic options:

1. Market penetration

In order to make use of the market potential, the organization will have to enhance the marketing efforts. Stender-Monhemius¹³sees three ways:

a) find new customers (who currently use the competitor’s products) through price reduction or improvement of the product

Intensifying the use of the products among the existing customers. In order to do that, the company has to create new applications for the product.

c) Find new customers, who do not (other than option a) use the product at all. This can be achieved through samples, ore trying new distribution.

2. Market development

Market development means to find new markets for existing products. New markets could be:

a) regional (stretch to national, international ) or

b) Enter a new market through product differentiation. One example I have seen was convenience food. In the past the packages were rather big, then companies paid attention to new trends like the growing amount of single households, then these customers were offered smaller packages of convenience food. Before these customers might have hesitated to buy such a big bag of frozen Paella for example.

3. Product development

The organization will develop new products for existing markets. New products could mean:

a) real innovation (novelty to the market) or

b) Stretching the existing product range by creating additional product versions.

4. Diversification

Diversification calls for a simultaneous departure from the present product line and the present market structure.¹⁴

Diversification seems to be the most risky option for a company¹⁵, as entering a new market with a new product means, that the company has no record or experience in that field.

There a three ways of diversification:

a) Horizontal diversification

This is a rather soft option, because there will be still some connection to the known and existing markets. Imagine the sportswear company NIKE would start offering fine suits to men.

[...]

¹Kotler, On Marketing, 1999

²Kotler, On Marketing, page 16

³Competing for the future, by Gary Hamel and C.K. Prahalad Harvard business review julyaugust 1994 page 2 of 9

⁴Kotler, On Marketing, page 19

⁵Stender-Mohemius, Marketing: Grundlagen mit Fallstudien, page 1

⁶The American Marketing Association : Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas ,goods, and services to create exchanges that satisfy individual and organizational objectives, www.bsu.edu/marketing/

⁷See also Module MN7002/D, Strategic Marketing, Edition 10, University of Leicester page 2.3

⁸Module MN7002/D, Strategic Marketing, page 1.12

⁹See also http://www.market-modelling.co.uk/MATRIX/MATRIX_Step11_1.htm

¹⁰Kotler, On Marketing, page 44

¹¹See also : http://www.thgweb.de/lexikon/Harry_Igor_Ansoff#Weblinks

¹²He already talked about the for strategies before, see for example: Strategies for Diversification By H. Igor Ansoff published in Harvard Business Review; Sep/Oct57, Vol. 35 Issue 5

¹³Stender-Mohemius, Marketing: Grundlagen mit Fallstudien, page 98

¹⁴Strategies for Diversification By H. Igor Ansoff published in Harvard Business Review; Sep/Oct57, Vol. 35 Issue 5, page 113

¹⁵See also Module MN7002/D, Strategic Marketing, page 5.11