In this article on business basics, we cover the following topics – Marketing strategy, market segmentation, the marketing mix, go to market strategy, digital/online marketing strategies.
Definition of Marketing Strategy
A marketing strategy helps a business identify various ways to communicate with its audience and focus on the most effective methods to achieve its marketing goals.
For example, if the business aims to increase its customer base by 10%, its marketing strategy would involve planning, market research and arriving at a marketing mix that helps to achieve this goal. A marketing strategy helps a business determine what to say, whom to say it to, how to say it and when.
The marketing mix is a good starting point for a marketing strategy and plan as it helps define the marketing elements that go into positioning the product or service.
The Marketing Mix | 4 Ps of Marketing
The marketing mix consists of the 4 Ps of marketing: Product, Place, Price and Promotion. The business can directly control these variables.
The 4 Ps, along with target market selection, form the foundation of the marketing strategy and can be leveraged in combination to cater to customer needs.Knowledge of the target market, the needs of potential prospects and competition analysis enables a business to create its marketing mix based on its own competitive advantage.
Clearly, a marketing strategy is a continuous process that creates consistent value and comprises of the following elements:
As the first step in creating a market strategy, market segmentation involves analysing the market and grouping it into smaller sections.
After segmenting the market the one that is most suitable for the company’s products in relation to its strengths and competitive advantages is chosen.
Take the hotel industry, for example. A hotel chain would target its budget hotels in a tourist location towards the leisure traveller while its business hotels would be aimed at the frequent business traveller.
Its premium properties would be marketed to top level executives. Market segmentation makes it possible to manage the market in a more focused manner and create an appropriate marketing strategy for each segment. This enables the business to make better use of its funds.
Just as a construction project begins with a blueprint, building a profitable business requires a strong marketing strategy based on a well thought out marketing plan.
This lets the business channel its activities in such a way that they are consistent with business goals and maximize its return on investment.
Market research and competition analysis
Businesses do not operate in isolation. They exist in a competitive market and must keep abreast of industry trends and stay a step ahead of the competition.
Market research is critical for a business to make informed decisions. Since marketing involves directing resources and activities geared to satisfy customer needs, market research helps identify those needs and find ways to create the ideal marketing message.
It also helps in modifying and keeping track of various elements in the marketing strategy. Thus, market research helps understand the competition and leverage that knowledge to improve the business.
Selling a product at a specific price involves the creation of value, which is the customer’s perception of the product’s ability to meet her needs.
Consumers are intelligent and select the product that satisfies them. Often pricing is the value a customer places on a service or product.
There is a strong relationship between price and quality where a higher priced product is perceived to be of higher quality. This usually happens with services.
Marketers frequently enter the market with a higher price and as demand decreases, lower the price. This pricing strategy is generally used while introducing unique new products. When competition heats up, prices begin to fall and stabilize at the market rates.
Some marketers use a price penetration strategy where they enter the market with a low price to capture the market share.
In either case, pricing is a powerful marketing strategy that bears in mind the business’s resources. Very low prices can result in losses while high pricing can kill the demand and sales.
For a customer to buy a product, it must be easily available. Placement or distribution facilitates the buying process.
The business must have the logistics in place to connect the customer with its products and services as accessibility determines the sales of the product.
The marketing mix, segmentation, strategy, research and competition analysis, pricing and placement together form a value chain that contributes to the marketing plan’s effectiveness.
It encompasses a range of activities starting with the acquisition of raw materials, managing the product creation process, distribution and logistics, marketing and sales, customer service and human resource management.
While marketing goals reveal a business’s intentions, marketing strategy provides the roadmap for achieving these goals.
Types of marketing strategies
According to Michael Porter, marketing strategies can be divided into overall cost leadership, differentiation and focus.
- With overall cost leadership, the business focuses on minimizing production and distribution costs and sells at a price lower than the competition to increase its market share. This strategy, however, has it flaws as another competitor might enter with an even lower price. This can be detrimental to the business if its marketing strategy is based on cost leadership.
- Differentiation,where the business seeks to excel in a specific aspect such as superior service or technology that directly benefits the customer.
- Focus, where the business concentrates on a particular market segment or niche and specializes in catering to their needs.
Another emerging marketing strategy today is the ‘go to market’ strategy.
Go to market strategy
A go-to-market strategy (or GTM strategy, in short) is a plan of action that details how the business will reach its customers and gain a competitive advantage.
The goal of this strategy is to create a blueprint to deliver its products and value proposition to the customer, keeping in view various criteria such as pricing and distribution.
Usually used in product launches, GTM also explains the strategies required to steer customer interactions for existing products.
GTM strategy starts with the target market definition for a specific product or service. For new product launches, the business analyses its existing market to gauge whether it is prospective or whether it must explore new markets.
It also identifies its buyer profile and the benefits they receive from the new product or service. Once this value proposition is determined, a pricing strategy is worked out followed by marketing and promotional strategies to reach the target market.
GTM is used as a long-term strategy to reinforce a business’s position in the market, revenue growth, cost reduction and enhance customer experience.
With the growth of the World Wide Web, more and more businesses are adopting online marketing strategies to leverage the internet to reach wider markets, increase their ROI and achieve measurable results.
Digital / online marketing strategies
As consumers spend more time online and seek information on the internet, companies are realizing the value of including digital marketing as part of their marketing mix.
Some of the most popular online marketing strategies used by businesses to build their brands and attract newer markets are:
- Affiliate marketing where businesses promote their products via affiliates and pay them a commission on sales
- Email marketing, similar to direct mailing where information and marketing messages are sent via email
- Display advertising where banners and advertisements are placed on other websites.
- Inbound marketing using content marketing in the form of blogs, social media updates and podcasts to gain customers
- Pay per click advertising or search engine marketing where advertisements are placed on search engines websites such as Google, Yahoo and Bing
- Search Engine Optimization where the business attracts its target market by using the same keywords and phrases used by themto appear at the top of the search engine results.
- Social Media Marketing where the business promotes itself via social media platforms such as Facebook, Twitter, Google Plus and Pinterest. The business creates profiles on each of these sites to attract followers and convert them into buyers.
An organization’s strategic goals are founded on knowledge, insight and in-depth analysis. Without a strategic plan of action, it will end up directing its resources on activities that do not generate revenue.
To maximize its ROI, its marketing plan must be based on its understanding of its market and its customer needs and merge with its strategic plan, creating a blueprint for the firm’s success, leading to better decision making and sustainable growth.
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