Marketing Strategy Principles

Marketing Strategy

• Strategy refers to the efficient allocation of resources to achieve long-term competitive objectives, while adapting to changes in the external environment.
• A firm's strategy is defined as its theory about how to gain competitive advantage.
• A good strategy actually generates such advantages.

Strategy Matters

• A solid understanding of strategy concepts helps set one apart from other job candidates.
• The strategy process can identify and exploit differences between individuals.
• The strategy process can help determine if an individual wants to stay with a company.
• Strategy differentiates between success and failure, mediocrity and excellence.
• Strategy differentiates between great and average managers.
• Strategy differentiates between a life of stumbling and moving ahead with purpose.

Principles of Strategy

• Strategic Direction: Define a clear and focused long-term vision.
• Sustainable Competitive Advantage: Develop internal capabilities that are rare and difficult to imitate.
• Resource Allocation: Distribute resources efficiently to maximize value creation.
• Adaptability: Remain flexible and responsive to changes in the market.

Marketing Strategy

• Strategic marketing is a process that involves creating market strategies.
• Marketing strategy is based on an in-depth analysis of the marketing environment.
• Marketing strategy considers the company's environment.
• Marketing strategy considers customer needs.
• The marketing strategy specifies a target market and the marketing mix to be used.
• Target market: A relatively homogeneous group of customers to whom the company wishes to appeal.
• Marketing mix: The controllable variables that the company brings together to reach and satisfy the target group.
• Corporate-level strategic plans are different from marketing strategies.
• Both strategies need to be consistent
• The marketing strategy needs to align with the corporate strategy.
• Marketing strategy focuses specifically on how the firm interacts with its customers.

Corporate Strategy

• Encompasses the overall scope and direction of a firm.
• Determines how various business operations work together to achieve specific goals.
• Considers the company's mission/vision.
• Assesses factors affecting cash flow.
• Addresses legal considerations affecting the business.
• Outlines personnel policies.

Marketing Strategy Focus

• Decisions and actions focus on building a sustainable differential advantage.
• Aims to create value for stakeholders in the minds of customers.
• Identifies target customers.
• Determines what value to provide customers.
• Determines what value to earn from customers.
• Both corporate and marketing strategy influence human resources, operations, and R&D.

Different Strategy Levels

• Corporate Strategy: Decides where the company operates and its scope.
• Corporate Strategy: Sets the overall vision and direction for the organization.
• Corporate Strategy: Crafted by top leadership, focusing on long-term goals of 3-5 years.
• Business Strategy: Aims to gain a competitive edge in chosen markets.
• Business Strategy: Focuses on achieving goals for specific business units.
• Business Strategy: Includes decisions like differentiation or cost leadership.
• Functional Strategy: Ensures alignment with broader business objectives.
• Functional Strategy: Develops strategies for individual departments.
• Functional Strategy: Tackles specific challenges and seizes opportunities within departments.

First Principles of Marketing Strategy and Key Marketing Decisions

• All customers differ: Manage customer heterogeneity.
• All customers change: Manage customer dynamics.
• All competitors react: Manage sustainable competitive advantage.
• All resources are limited: Manage resource trade-offs.

Sources of Customer Heterogeneity

• Individual differences: A person's stable way of responding to the environment.
• Examples of Individual differences: favorite colors, Big Five personality traits such as openness, conscientiousness, extraversion, agreeableness, and neuroticism.
• Life experiences: Events and experiences unique to a person's life.
• Life experiences have a lasting impact on the value and preferences they place on products and services.
• Functional needs: Personal decision weightings across functional attributes based on personal circumstances.
• Self-identity/image: Customers actively seek products that support or promote their desired self-image.
• Marketing activities: Firms attempt to build linkages between their brands and prototypical identities or meanings.

Sources of Customer Dynamics

• Individual Level.
• Discrete life events: First-time parents change preferences.
• Typical lifecycle or maturation: As people age, their focus changes.
• Product learning effects: Customers might desire specialized features.
• Product Market Level.
• Product lifecycle: Consumers may purchase new features early but become price-sensitive later.
• Environmental Level.
• Changes in economy, government, industry, or culture are an example.

Market-Based Sources of Sustainable Competitive Advantage (SCA)

• Brands: Brand images reside in consumers' minds.
• Brands make it difficult to duplicate, facilitates habitual buying through awareness, and provides identity benefits to customers.
• Offerings: Cost benefits, performance advantages, and access to distribution channels.
• Relationships: Leads to trust, commitment, interpersonal reciprocal bonds that are hard to build or duplicate.

Sources of Resources Trade-Off

• Limited resources and resource slack: Firms have a limited level of usable resources that can be diverted.
• Market segmentation provides a description of the industry segments.
• Changes in the lifecycle stage of a firm's products: Firms try to balance product portfolios to keep products in all lifecycle stages and thus balance resource needs.
• Changes in the product market landscape, due to the entry and exit of competitors: When the firm moves into an advantageous market position, competitors quickly make a countermove.
• Changes in the effectiveness of marketing activities changes.

Components of Strategic Marketing

• Customer is at the center, surrounded by product, price, distribution, and promotion
• Competitive forces, Sociocultural forces, Technological forces, Economic Forces, Political Forces, Legal and Regulatory Forces

Marketing Strategy Premises

• Knowledge of the External Environment.
• Knowledge of the Internal Environment, which includes evaluating the capabilities, resources, and organizational culture.
• Competitor Monitoring.

Strategic Marketing Plan

• Strategic marketing planning defines the strategic direction of the company.
• It plays a key role in achieving long-term objectives such as increased sales/market share.
• You should also select the appropriate marketing mix to reach and influence current and potential customers.

Marketing Strategy vs. Strategic Marketing Plan

• The marketing strategy defines the "why" and serves as the basis for diversions, marketing actions, and activities.
• The strategic marketing plan defines the "how" and specifies the set of actions to be taken to achieve the marketing objectives in advance.

Strategic Marketing Plan Success

• Companies fail when they do not adapt to changes
• Changes like Technology and Consumers' needs, Competition, and New opportunities.
• Strategic planning is the process of developing and maintaining a strategic fit between the organization's goals and capabilities.

Strategic Marketing Planning

• Strategic Market Planning, the broader company strategy must be customer focused
• Strategic Market Planning steps are:
  • Define the company mission
  • Setting company objectives and goals
  • Designing the business portfolio
  • Plan marketing and other functional strategies

Strategic Planning | Corporate's Mission Statement

• The Mission statement is a clear, concise, and enduring statement of the reasons for an organization's existence
• The Mission statement should provide actionable implications for all employees
• A firm's mission and strategy are central to its ability to maintain a clear direction about where it wants to go and how it can get there.
• A mission statement should be Clear, concise, and enduring
• A misssion statement should provide actionable implications for all employees
• A mission statement should state what it wants to be and how to move forward.
• A mission statement should Focus on a limited number of specific goals.
• A mission statement should Stress the company's major policies and values.
• A mission statement should Define the major markets that the company aims to serve
• A mission statement should Take a long-term view, and be short, memorable, and meaningful as possible.
• Keep a mission statement short and able to be fit on a coffee mug
• Keep in simple, and for everyone to learn and understand
• Make it applicable to every individual in any company
• Make mission statements specific to tell everyone what the business does
• Establish measurable goals that develop a metric for every part of the statement.
• "IKEA's mission is to create a better everyday life for many people by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them"

Strategic Planning | Corporate's Vision

• The the entrepreneur's dream, it is like looking into a fortuneteller's crystal ball
• A company's vision includes:
  • Vision abou the environment
  • Identity of the company
  • Long term objectives
• The vision Keeps the future in mind and defines where the ompany wants to go
• It directly motivates your company's direction and purpose
• The most important part of the vision is to indicate what the company means to the customer, and what values does the company want to provide
• A vision should contain a clear motivational aim, which the entire staff within a company can agree with.
• IKEA: “To create a better everyday life for the many people”. This vision goes beyond home furnishing. We want to have a positive impact on the world – from the communities where we source our raw materials to the way our products help our customers live a more sustainable life at home.

Strategic Planning | Corporate's Goals

• Defining a goal that the company aims to achieve sets the marketing plan is motion
• Two key decisions are involved in setting a goal:
  • identify the focus of the companies actions
  • Specifying the performance benchmarks to be achieved.
• A goal should be focus
  • Monetary goals
  • Strategies goals
• A goal performance includes
  • Quantitative benchmarks
  • Temporal benchmarks

Main Strategic Approaches

• Resource-Based View (RBV) is a strategic theory developed to explain how companies can gain a sustainable competitive advantage
• Approach popularized by Jay Barney (1991) and suggests that valuable, rare, hard-to-imitate, and adequately organized resources are the key to differentiation and long-term success
• The RBV strategic approach is focused on internal resources
• It assesses how a company's tangible and intangible assets can be leveraged to create a competitive advantage in the market.
• A wine company can use its geographical location and tradition as unique resources to differentiate itself in the global market.
• RBV is Valuable when they allow opportunities to be exploited and/or neutralize threats
• RBV is Rare when competitors do not have them, they are not imitable, nor do they have equivalent strategic substitutes
• RBV means that competing organizations are competing to acquire them in the market, the Organization

Customer-Centric Marketing

• An approach that puts the customer at the center of all strategic and tactical marketing decisions
• It derives from theories such as Marketing 3.0 (Philip Kotler), which emphasizes the role of the consumer as a human being with feelings, values, and motivations that go beyond mere functional needs
• Customer Centric strategic marketing approach
• It uses deep insights into consumer behavior to create products and campaigns that translate their desires and preferences, results in greater loyalty and engagement.
• Key elements are Customization, Customer experience, and Loyalty
• Characteristics of customer-centric and non-customer-centric marketing:
  • Non customer-centric:
    • Product driven, Mass marketing, Process oriented, Reacting to competitors, Hierarchical organization
  • Customer Centric:
    • Market driven, Customer focused, Outcome oriented, Making competitors irrelevant, Value driven and Teamwork

Data-Driven Marketing

• A modern approach that uses big data, predictive analytics, and technological tools like CRM (Customer Relationship Management) to make more informed and personalized marketing decisions
• Directly related to Business Intelligence (BI) and Analytical Marketing models, as discussed by authors such as Thomas Davenport in his studies on competitive analysis.
• Data-centric strategic approach, the model uses digital tools and consumer and consumer data to optimize targeting strategies, and to personalize campaigns
  • Tools and examples of Data-Driven marketing:
    • CRM to Manage customer relationships in insights
    • Data to capture patterns of behavior and predict future trends
  • Benefits from Data-Driven marketing:
    • Better customer segmentation
    • More accurate forcasts
    • Abilit to Adjust campaigns in real time