Boone /Kurtz/MacKenzie/Snow ~ Contemporary Marketing, Second Canadian Edition
Part Three of the Marketing Plan
Contemporary Marketing, Second Canadian Edition
Boone/ Kurtz/MacKenzie/Snow
PART THREE OF THE MARKETING PLAN
Marketing Strategies
In this section of the marketing plan you will develop your marketing strategies. The end result of this process will be a plan that possess both internal and external fit – i.e., leverage the organization’s strengths, minimize the effect of or eliminate its weaknesses, take advantage of the external opportunities, and minimize the effect of, or avoid, market threats. The first step in the process is to identify the segment(s) in the market you want to target. Next, the optimal positions of your product mix, product lines, and individual product items are selected. From this point forward, you will plan how to support the sales of your products via promotional, distribution, and customer service efforts.
The strategic dimensions can be viewed via a continuum ranging from inadequate, adequate, to leadership. This perspective is meant to provide a basis from which to compare the relative strategic targets (not necessarily “positions,” as strategy is more about where you want to be, than where you actually are) of the industry players (i.e., your competitors). The “relative” consideration is important because it implies that the target is judged by how it stacks up against competitors in the consumers’ mind (i.e., your place in the market). This is to say that you can spend an extremely high amount of money, time, effort, resources, attention, etc., on a particular dimension and still not be seeking a leadership position because others in the industry are targeting the same position (i.e., level of focus). In other words, your focus could be considered adequate, as this level of focus on a particular dimension is the “cost of doing business” (i.e., what is expected by consumers and required to compete in this industry given your overall comprehensive business strategy and it’s corresponding fit and trade-off requirements, as well as the industry forces). Similarly, a leadership position might be somewhat “easily” achieved if other players in the industry are not (or can’t) focused on this dimension. It is important to note that “adequacy” is not necessarily a “bad thing.” Rather, it implies that a firm is focusing on (doing) what at least minimally (and perhaps optimally) needs to be done to compete with respect to a particular dimension. An inadequate strategy (position) is by its nature, a “bad thing,” as it implies that a firm is not focusing on (doing) what minimally needs to be done to compete with respect to a particular dimension. As such, a recommendation will need to be made to elevate this status to at least adequate, if not to pursue a leadership focus/position.
Leadership is literally defined as surpassing all other competitors on a particular dimension. While a sole position in front of all other competitors is a good metric to start with, one does not have to limit oneself to a categorical delineation (i.e., there is only one leader). For some (if not most or all) dimensions in some (most/all) industries, there may incidences in which a couple, or a perhaps a few firms hold a significant “lead” over most of the other competitors, but there is not necessarily a significant difference between these leaders.
The first important point is that one recognize who, how and why these firms conduct business via this strategy/position to compete, relative to each of the other leaders and versus the other non-leaders. Of course, the debate is contingent upon how the industry/market is defined in the first place. In the end, the important point is not to spend an inordinate amount time debating sole leadership (however, the debate process can be an insightful exercise); rather, the key is to gain a better understanding of how and why the relevant industry players conduct business.
The second important point is that a firm should either pursue a leadership or an adequate position – not a position somewhere along the continuum. The reason for this is the nature of the definition of “adequate.” That is, this is what is minimally required to “adequately” compete. Any more than this is viewed as a waste of resources, unless a firm is seeking, and can justify via a cost/benefit analysis, a leadership position (a competitive advantage is to be gained, if it is affordable, by pursuing it). Otherwise, a strategy of adequacy is appropriate. It is important to note, then, that adequate is not one finite position; rather, it should be viewed as a minimal necessary range to compete (one could consider this the “price of entry” or the “cost of doing business”), and it is a function of the competitors’ strategies and their actual efforts, considered, in addition, within the context of the strategy and resources of the firm itself. Any strategy and actual effort less than this minimal target range is considered to be “inadequate,” and must be addressed.
Of course, while a firm’s strategy should only target to be adequate or to be a leader on a dimension, a firm’s actual position on the position may be, and is often, somewhere in between. This can be explained by two possibilities. The first possibility is that the firm is strategically targeting a leadership position and is in the process of attaining this (i.e., allocating resources), and the change (i.e., movement along the continuum) can take time due to necessary expenditures, technological or logistical developments, and/or the perceived position in consumer’s minds. Conversely, a firm could be attempting to move from a leadership position to an adequate position (e.g., because they do not have the resources to maintain the leadership position or perhaps they no longer consider the leadership position as a worthwhile advantage given the ROI or its synergy, or the lack thereof, with its targets for the other strategic dimensions). The second explanation for this “actual” middle-ground position is that the firm is not strategically grounded. That is, they lack a solid, justifiable direction. In other words, they are wasting resources that could otherwise be allocated to other strategic dimensions to more effectively compete and to achieve the overall organizational mission, objectives, and goals. This often occurs because of a lack of strategic planning that is not integrated across all of the functions of an organization.
The judgment of whether or not a strategic focus/position is optimal is of course a function of the analysis of, interpretation of, and decisions regarding the comprehensive business strategy, the firm’s focus on the other strategic dimensions, the firm’s resources, the industry forces and environmental influences, and the relative strategic focus/positions and capabilities of the competitors. As such, an adequate or leadership position may be the optimal choice (strategy) for a particular dimension. It is important to note that leadership is not required in all or most of the dimensions, or even any leadership focuses/positions for the dimensions within one particular strategy. In fact, it is quite likely that no firm would be able to financially support this combination of strategies; nor is it likely that it would be necessary to compete and/or succeed. The key is in designing a combination of strategies that optimally fits the internal and external environments, leverages the firm’s resources, and targets a position that provides a sustainable competitive advantage relative to the strategic targets and actual strategic positions of the other industry players.
The pursuit of an optimal combination of the strategic targets for these market dimensions is a key to success (i.e., a sustainable competitive advantage). Again, the optimal combination is a function of its fit with the internal and external environments, the firm’s resources, and current and future effects of the industry structure and forces, relative to the strategic targets and actual strategic positions of the other industry players. Don’t let the concept of one (sole) industry leader, nor a rigid absolute categorical definition of leadership, or even the dimensions themselves bind your thinking/analytical and strategic recommendation process. The important point to remember is that you should use these frameworks as a means to help you better understand the intent (strategy/choice) of the industry players and their potential effect on each other and market conditions. A strategy should attempt to be adequate or a leader (within some given range, not necessarily a specifically defined, immobile point), and it should be revisited because market conditions are dynamic, not static; as such, strategies should be, too, when necessary (i.e., there is some limit to how often and how much a strategy should change, as there is a benefit to be realized by keeping on target and focusing on execution, rather than a continuous strategy development process). Once again, don’t target a middle of the road strategy (i.e., between adequate and leadership), as this is a waste of resources (but keep in mind the actual position might be in the middle, as explained earlier due to the process of achieving the adequate or leadership strategy) – it is here that your analysis will have to help you decide which way and how to go forward.
1.1. Target Market(s) Selection
Based on the market segments identified in the previous section, you need to determine which one(s) you will target as individual, unique and separate segments. By selecting these segments you are acknowledging that you will treat them differently with respect to one or more of components of your marketing strategies; and therefore, as you develop your plan via the remaining parts of this framework outline, be sure to address how each component will be constructed to meet the needs, wants, and characteristics of each of your targeted segments. Listed immediately below are some questions to consider for this section. (Keep in mind that you can include other information you deem relevant and beneficial for the reader.)
o Using the labels of the segments you identified in the previous section, list the market segment(s) you will target in which to sell your product.
o Discuss why this segment (these segments) is (are) targeted?
§ What are the unique product features(in terms of performance, price, and brand status) that this targeted segment needs/wants, and how can your product(s) fulfill these needs?
§ What are the unique characteristics of this segment that make it appealing to your organization and why/how does it fit with your product offering?
1.2. Product Portfolio Mix
The combination of products (i.e., goods and services) that a business unit sells is called its “product mix.” The level of intensity refers to the “breadth and depth” of this mix, wherein breadth is defined by the number of product “lines,” and depth is defined by the number of product “items/models” within a product line. Typically, breadth is represented horizontally on a product-mix chart/diagram, and depth is depicted vertically. The key question for this dimension is to determine the optimal mix of product offerings. The breadth and depth decision is a function of a firm’s internal resources, its overall comprehensive business strategy, and the strategies and capabilities of its competitors, as well as industry forces, consumer trends of needs and wants, and how the market is segmented. The goal is to better understand how each firm attempts to compete, and the relative advantages of each strategy, given the existing marketplace conditions. A firm may want more product lines if it wants to address needs and wants across a variety of product uses within a market. This strategy can help the firm to gain and leverage the brand name, if a family brand (i.e., the same brand name) is uses for all of the product lines. A firm may want more product items with a product item if the market has targeted segments that are quite diverse in terms of it needs and wants, as well as other driving factors (e.g., demographics) that would cause each segment to want significantly different attributes from the product type/line. While giving the target market more choice of product lines/items (which is an obvious result of more breadth and depth – i.e., this approach allows a firm to “cover more ground”), more choice is not always a good thing. An answer to the question “Is there too much choice?” should be considered. There can be such a thing as “too much choice,” wherein the result might be one of the following conditions: confusing the consumer; product lines/items not seen as being significantly different; or the sub-segments with different preferences not being large enough to justify special attention. There are, of course, other strategic considerations when making breadth and depth decisions. If a firm wants more breadth and depth, it will need to consider the cost and benefit requirements of and impact on other strategic dimensions. Finally, does the division of product lines make sense in terms of fit within the organizational structure? Listed immediately below are some questions to consider for this section. (Keep in mind that you can include other information you deem relevant and beneficial for the reader.)
o How many product lines and items are needed to fulfill the needs of the market segments targeted? Why?
o Do you have the internal resources to financially support and manage this product mix?
o What synergies can be achieved by this product combination?
o What are the potential drawbacks to this product mix combination?
§ Cannibalization?
§ Consumer Confusion?
§ Other?
1.3. Product Positioning Strategy
A product’s position is the function of how consumers view it in terms of its quality, value, and status. The product dimensions of performance, price, and brand address these three benefits respectively. For each product you must decide how/where to position it on all three dimensions. The combination of these dimensions will result in the overall product position (i.e., the consumer’s opinion of the product). This positioning decision is, of course, predicated on the needs, wants, and characteristics of the market segments targeted for this product, the external business environment, the positions of products in the competitors’ product mixes, the positions of other products in your product mix, and the financial and managerial capabilities of supporting this mix of product positions via the sales support strategies that follow in this section.