Marketing Strategies
A company's marketing strategies - sets of principles designed to achieve long-term objectives -obviously depend on its size and position in the market. Other determining factors are the extent of the company's resources, the strategies of its competitors, the behaviour of the consumers in the target market, the stage in the product life-cycle of the products it markets, and the overall macro-economic environment.
The aim of a market leader is obviously to remain the leader. The best way to achieve this is to increase market share even further. If this is not possible, the leader will at least attempt to protect its current market share. A good idea is to try to find ways to increase the total market. This will benefit everyone in the field, but the market leader more than its competitors. A market can be increased by finding new users for a product, by stimulating more usage of a product, or by exploiting new uses, which can sometimes be uncovered by carrying out market research with existing customers.
To protect a market share, a company can innovate in products, customer services, distribution channels, cost reductions, and so on; it can extend and stretch its product lines to leave less room for competitors; and it can confront competitors directly in expensive sales promotion campaigns.
Market challengers can either attempt to attack the leader, or to increase their market share by attacking various market followers. If they choose to attack the leader, market challengers can use most of the strategies also available to market leaders: product innovation, price reductions, cheaper or higher quality versions, improved services, distribution channel innovations, manufacturing cost reduction, intensive advertising, and so on.
Market followers are in a difficult position. They are usually the favourite target of market challengers. They can reduce prices, improve products or services, and so on, but the market leader and challenger will usually be able to retaliate successfully. A market follower that takes on a larger company in a price war is certain to lose, given its lesser resources.
In many markets, market followers fall in the middle of a V-shaped curve relating market share and profitability. Small companies focusing on specialised narrow segments can make big profits. So can the market leader, with a high market share and economies of scale. In between come the less profitable market followers, which are too big to focus on niches, but too small to benefit from economies of scale
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One possibility for followers is to imitate the leaders' products. The innovator has borne the cost of developing the new product, distributing it, and making the market aware of its existence. The follower can clone this product (copy it completely), depending on patents and so on, or improve, adapt or differentiate it. Whatever happens, followers have to keep their manufacturing costs low and the quality of their products and services high.
Small companies that do not establish their own niche - a segment of a segment — are in a vulnerable position. If their product does not have a "unique selling proposition," there is no reason for anyone to buy it. Consequently, a good strategy is to concentrate on a niche that is large enough to be profitable and that is likely to grow, that doesn't seem to interest the leader, and which the firm can serve effectively. The niche could be a specialised product, a particular group of end-users, a geographical region, the top end of a market, and so on. Of course unless a nicher builds up immense customer goodwill, it is vulnerable to an attack by the market leader or another larger company. Consequently, multiple niching - developing a position in two or more niches - is a much safer strategy
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Promotional Tools
Marketing is often defined as a matter of identifying consumer needs and developing the goods and services that satisfy them. This involves developing the right product, pricing it attractively, and making it available to the target customers, by persuading distributors and retailers to stock it. But it is also necessary to inform potential consumers of the product's existence, its features, and its advantages, and to persuade them to try it. There are generally several stages involved in a consumer's decision to buy a new product. A well-known acronym for this process is AIDA, standing for Attention, Interest, Desire, and Action. According to the familiar "4 P's" formulation of the marketing mix - product, price, place and promotion - attracting attention, arousing interest, and persuading the consumer to act are all part of promotion. Marketing textbooks conventionally distinguish four basic promotional tools: advertising, sales promotion, public relations, and personal selling, which together make up the marketing communications mix.
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For consumer goods, the most important tool is generally advertising. As well as advertising particular brands, companies also carry out prestige or institutional advertising, designed to build up the company's name or image. Advertising is often combined with sales promotions, such as free samples, coupons and competitions.
For industrial goods, particularly specialised ones, the most important tool is often personal selling. Sales reps can build up relationships with company buyers, and can be very useful in persuading them to choose a particular product.
The fourth promotional tool is public relations (frequently abbreviated as PR): activities designed to improve or maintain or protect a company's or a product's image. Public relations includes things like company publications, most notably the annual report, sponsorship, community relations programmes, the lobbying of politicians, and the creation of news stories, all designed to get publicity for the company or a particular product. Unlike paid advertising, publicity is any (favourable) mention of a company's products that is not paid for, in any medium received by a company's customers or potential customers. Companies often attempt to place information in news media to draw attention to a product or service. Quite apart from financial considerations, the advantage of publicity is that it is generally more likely to be read and believed than advertising. It can have a great impact on public awareness that could not even be achieved by a massive amount of advertising.
Within the limits of their budget, marketers have to find the optimal communications mix of advertising, sales promotion, personal selling, and publicity, without neglecting the other elements of the marketing mix, i.e. the possibility of improving the product, lowering its price, or distributing it differently.
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