Mapping the Marketing Landscape - Essay Example

Mapping the Marketing Landscape Any company that wishes to place a product at a competitive advantage will rely on marketing strategy. The strategy will guide the business in its acquisition of customers, price determination, and product exposure. Strategy involves placing the product in an advantageous position in respect to the competitors. It will help the company understand the product's position in the marketplace and define potential customers. Once the company has formed a marketing strategy that defines the product's position, a marketing plan can be written. The marketing plan will be used to isolate, segment, and locate potential customers. It will shape the product features based on cost considerations. The marketing plan will allocate resources where they will gain the best return. Packaging, advertising, and distribution will all be a part of the marketing plan. To begin writing an effective marketing plan first requires a detailed marketing strategy based on a number of strategic criteria. Market Strategies Market Power Market power is the degree of penetration that a company or product currently has in the market. If a company has a large market share, or market dominance, they can benefit from the ability to set prices and less competition. If a company has a small market share they will be forced to follow the pricing plan of the market leaders. Market dominance can also be attained if there are barriers to entry for other companies. Dominance can also be acquired if the product has a sufficient profit margin to allow pricing competition. If a product has low market share, easy entry to the market, and a low profit margin the marketing will be from the aspect of low market power. This will be a consideration when placing the product in the market. The product may opt to challenge the market leader or find a niche market. The company may also place the product as a market follower or suitable substitute for the market leader. Innovation Strategies Innovation strategies determine the extent that a company or product will lead or follow the market in new product development. This can be very important in technology companies where products have a limited life cycle due to obsolescence. Continual innovation and product improvement is mandatory. Other products may not be as influenced by innovation and consumers may prefer proven reliability rather than innovation. Innovation strategies also extend to the distribution and customer base of the product or company. New uses for an existing product is innovation. Finding new outlets, markets, and generating new customers is also an innovative strategy. Growth Strategies One of the most basic measurements of a firm's success is its growth rate. Aside from selling more of an existing product, a company may decide to grow vertically or horizontally. The company that employs vertical integration seeks to control the raw material, production, transportation, and marketing of their product ("Vertical Integration"). In this strategy, the firm profits from every step in the product's life. Horizontal integration is the acquisition of additional processes or markets that are similar to the existing base. An oil company that acquires additional refinery capability through purchase or mergers is employing horizontal integration. Products can be marketed to targeted and segmented markets with this strategy. A firm can likewise grow through either diversification or specialization. Kraft Food has benefited by offering a wide range of food products. A firm can also benefit from specializing in a product and becoming the market maker for the item. Kleenex and Xerox were both known for their focused product and expertise. Aggressiveness Strategies Part of the business plan will be plans for future expansion. The strategy will determine how fast and in what ways the firm will grow. These factors will be determined by the ability to take risks, financial leverage, level of bureaucracy, and aggressiveness. A company is generally thought to be a prospector, defender, analyzer, or reactor ("Aggressiveness Strategies"). The prospector is the most aggressive strategy as the firm seeks out new products and markets. They have substantial resources as well as risk tolerance. The defender has an established market, which they attempt to protect. The analyzer measures the market reaction to other firms and carefully acts upon that information. They place themselves in a less risky position than the prospector, but do not benefit from being the innovator or first to market. The reactor lacks any aggressive strategy and responds to market conditions and events as they occur. Warfare Strategies Marketing strategies that use military metaphors are known as warfare strategies. Here, the market is the battlefield and the "product manager is like a warrior or a general at war." (Lien 92). The warfare strategy is defined in terms of offensive and defensive. The plan may have speed and precision. The strategy may involve flanking the competition and the manager may be required to spearhead a tactical maneuver. This strategy is generally used to ignite motivation and a spirit of competition (Lien 92). Porter's Generic Strategies Marketing guru Michael Porter has come with a wide variety of strategies for analyzing and entering a market. Porter evaluates a market in terms of scope and strength. The overall goal is to plan for sustainable competitive advantage. He contends that this is accomplished by product differentiation, market segmentation, and cost leadership. Studies have indicated that in general firms with a large market share or a small market share are the most profitable. Those in the middle are less profitable. Porters strategies explain this by showing that the firm with a large share is a cost leader and is able to control costs by focusing on key accounts and reaping economies of scale (Kermally 66). The small producer has a focused market segment that they have targeted. The companies in the middle do not benefit from either of these strategies. Market differentiation can make a product stand out from the competition such as dolphin safe tuna. Marketing Models The Four Ps The four Ps of marketing are product, place, price, and promotion. It is generally accepted that these are the most important characteristics of a marketing model. Price determines the price that can be charged for a product. Place is the method of distribution and the sales outlets. Promotion is the generation of product awareness, desire, and action (Kermally 15). Product is the item that is brought to market. Each of these marketing features can be enhanced for added value. Price can be optimized. Distribution and promotion can be matched to the product's intended market segment. The product can be tailored for wider market appeal. The Three C's Market opportunities are assessed by analyzing what is known as the three C's; customers, competitors, and company. By successfully analyzing the marketplace a firm can uncover hidden opportunities. This is a method to help understand the landscape of the market. Ansoff Matrix The Ansoff Matrix has been in use for nearly 50 years and is used to analyze a firm's growth objectives. It has four main categories. Market penetration involves increasing sales to existing customers. Market development means selling the same product to a new customer base. Product development requires the development of a new product that will increase sales to the existing customers. Diversification means developing a new product to be sold to a new customer base. These aspects provide a framework to plan a strategy for growth. Customer Behavior Customer behavior is studied to determine what factors will influence a customer to make a purchase. There may be psychological issues that are used in advertising. A product's look and feel may be found to appeal to certain market segments. Where and why a customer may choose to buy or select a given product is the task of studying buyer behavior. Analyzing the audience for demographics, age, gender, race, and attitudes all enter into the behavior equation. No matter what product is being marketed, understanding the behavior of the customers is one of the most important aspects of marketing. Conclusion Before a firm can make a marketing plan, they need to develop a marketing strategy. This will entail identifying their potential customers and placing themselves in respect to their competition. It will require risk assessment to determine how aggressive they will pursue the market. The marketer can use well-established tools such as the 4 P's and 3 C's to establish product placement and uncover hidden opportunities. A strategy may be defensive or become aggressive to the point of war like. No matter which strategy is employed, or what tool is used to analyze the market, the most valuable aspect of marketing is knowing the customer and predicting their buying behavior. Summary Market Power: Dominance. Leader, Follower, Challenger, Nicher Innovation Strategies: Pioneers, Close Followers, Late Followers Growth Strategies: Vertical Integration, Horizontal Integration, Diversification, Specialization Aggressiveness Strategies: Prospector, Analyzer, Defender, Reactor Warfare Strategies: Offensive, Defensive, Flanking, Tactical Porter's Generic Strategies: Cost Leadership, Product Differentiation, Market Segmentation Four P's: Price, Place, Product, Promotion Three C's: Customers, Competitors, Company Ansoff Matrix: Market Development, Product Development, Market Penetration, Diversification Customer Behavior: Analyzing the potential customer base for behavior patterns. Studies age, location, gender, race, attitudes etc. to determine what causes them to select and purchase a product. Works Cited "Aggressiveness Strategies." Answers. 2006. Answers Corporation. 10 Jan. 2007 . Kermally, Sultan. Gurus on Marketing. London, GBR: Thorngood, 2004. Lien, Marianne Elisabeth. Marketing & Modernity. Oxford, GBR: Berg Publishers, 1997. "Market Power and Dominance." ICT Industry and Markets. Washington State University. 10 Jan. 2007 . "Vertical Integration." Politics of International Oil. 13 Dec. 1996. University of Texas at Austin. 10 Jan. 2007 . Read More