MS Module 1

MODULE 1
Marketing Strategy
Key Marketing
Business Objective Specific segment Strategies Key Marketing
objectives The approach Actions
What business wants
to achieve? The top segment of Marketing will take How and When key
focus that contribute to achieve the marketing Strategies
Ex- Total Revenue to the budget Specific segment will be executed
objectives
Module 1
 Strategy hierarchy,
 Marketing strategy and tactics,
 Marketing’s role in formulating and implementing strategies,
 Formulation of strategy – Porter’s generic competitive strategies,
 Strategic Marketing Planning – Strategic planning process
 Competitive advantage and its role in strategic marketing planning
 Developing a Marketing plan,
 Perspectives on strategic thinking,
 Elements of marketing plan,
 Structure of marketing plan,
 Tools used for developing a marketing plan
Introduction
Marketing strategy and tactics
Strategy can seem mystical and mysterious. It isn’t. It is easily defined. It is a set of choices
about winning. Again, it is an integrated set of choices that uniquely positions the firm in
its industry so as to create sustainable advantage and superior value relative to the
competition. —A. G. Lafley, CEO of Procter and Gamble1
STRATEGY HIERARCHY
A strategy is a fundamental pattern of present and planned
objectives, resource deployments, and interactions of an
organization with markets, competitors, and other
environmental factors.
Definition suggests that a strategy should specify
(1) what (objectives to be accomplished),
(2) where (on which industries and product-markets to focus),
and
(3) how (which resources and activities to allocate to each
product-market to meet environmental opportunities and threats
and to gain a competitive advantage).
STRATEGY HIERARCHY
The Components of Strategy
A well-developed strategy contains five components, or sets of issues:

 Scope. The scope of an organization refers to the breadth of its strategic domain—the number
and types of industries, product lines, and market segments it competes in or plans to enter.
Decisions about an organization’s strategic scope should reflect management’s view of the
firm’s purpose or mission. This common thread among its various activities and product-
markets defines the essential nature of what its business is and what it should be.
 Goals and objectives. Strategies also should detail desired levels of accomplishment on one or
more dimensions of performance—such as volume growth, profit contribution, or return on
investment—over specified time periods for each of those businesses and product-markets
and for the organization as a whole.
 Resource deployments. Every organization has limited financial and human resources.
Formulating a strategy also involves deciding how those resources are to be obtained and
allocated across businesses, product-markets, and functional departments and activities within
each business or product-market.
 Identification of a sustainable competitive advantage. One important part of any strategy is a
specification of how the organization will compete in each business and product- market
within its domain. How can it position itself to develop and sustain a differential
STRATEGY HIERARCHY
The three major levels of strategy in most large, multiproduct

organizations are
(1) corporate strategy,
(2) business-level strategy, and
(3) functional strategies focused on a particular product market
entry
 https://cmapscloud.ihmc.us/viewer/cmap/1VVZ50NVM-KVK9LK-1GC4
 https://cmapscloud.ihmc.us/viewer/cmap/1WCVXW7Q8-21YTJPV-27B
24046635
Strategic Marketing
Planning
The role of Business Models in Marketing
management
The term business model outlines the architecture of value creation

by defining the entities, factors, and processes involved in delivering
and capturing value in the marketplace.
Because the business model defines the essence of the value-
creation process, designing a viable and sustainable business model
is the key to market success.
The role of Business Models in Marketing management
Business models vary in generality:
Some are narrower, highlighting only the most important and unique aspect of the value-creation
process, whereas others are broader, articulating all relevant aspects of value creation. The narrow
business model describes fairly generic value-creation strategies related to a particular marketing
activity, such as pricing, promotion, and distribution.
For example, the razors-and-blades model describes a pricing strategy in which one offering is
sold at a low price (or given away for free) to facilitate sales of a complementary offering;
Freemium model describes a promotion strategy in which a basic version of the offering is given
away for free to encourage users to upgrade to a paid (premium) version;
Bricks-and-clicks model describes a distribution strategy that integrates both offline (bricks) and
online (clicks) channels;
Franchising model describes the strategy of adopting (leasing) an already existing business
model.
Despite the intuitive appeal of these narrowly defined business models, their focus on a single
aspect of the value-creation process limits their ability to serve as the basis for a more
comprehensive analysis and planning of the company’s business activities.
management
Accordingly, we need to adopt the broader view of business models that encompass all
relevant aspects of the value-creation process.
Three aspects of business models merit attention:
 Business models are value focused. The concept of value is central to any business
model and can be associated with both monetary (e.g., profits) and nonmonetary
(e.g., social welfare) outcomes. Thus, the focus on profits, albeit common, is a facet
of the more general focus on value.
 Business models are intangible. They involve an idea, a subjective representation
of reality, and as such they do not physically exist in the marketplace. Business
models represent the way in which the organization conceptualizes the value-
creation process.
 Business models are universal. There is a common misconception that only start-
ups need a business model, whereas established companies can operate without one.
This is incorrect: A viable business model is essential for the success of any
organization, be it a start-up or an established market leader.
management
From a structural perspective, business models comprise two key
components: strategy and tactics.
Strategy identifies the market in which the company operates,
defines the value exchanges among the key market entities, and
outlines the ways in which an offering will create value for the
relevant participants in the market exchange.
Tactics, on the other hand, describe a set of activities—commonly
referred to as the marketing mix—employed to execute a given
strategy by designing, communicating, and delivering specific
market offerings.
Marketing Strategy and Tactics
It is possible to fail in many ways, while to succeed is possible only
in one way.
—Aristotle, Greek philosopher
The term strategy comes from the Greek stratēgia—meaning
“generalship”—used in reference to maneuvering troops into position
before a battle.
In marketing, strategy outlines the logic of how an organization
creates market value.
Marketing strategy involves two key components: the target market
and the value proposition.
The Target Market - Identifying the Market: The 5-C Framework
 The market in which a company’s offering competes is defined by five key

factors : customers whose needs the company’s offering aims to fulfill; the
company managing the offering; collaborators working with the company on this
offering; competitors with offerings that target the same customers; and the
relevant economic, business, technological, sociocultural, regulatory, and physical
context in which the company operates. These five factors are commonly referred
to as the Five Cs and the resulting framework is referred to as the 5-C framework.
 The Five Cs are briefly outlined below.

Target customers are the potential buyers, typically defined by the needs the company aims
to fulfill with its offering(s). Target customers can be consumers (in the case of business-
to-consumer markets) and/or businesses (in the case of business-to-business markets).
Company is the organization managing the offering. In the case of organizations
comprising a diverse portfolio of offerings, the term company refers to the particular
business unit of the organization, often referred to as the strategic business unit, managing
the offering. A company’s ability to successfully compete in a given market is defined by
its resources—core competencies and strategic assets—that enable the company to fulfill
customer needs.
Collaborators are entities that work with the company to create value for target customers.
Common collaborators include suppliers, manufacturers, distributors (dealers, wholesalers,
and retailers), research-and-development entities, service providers, external sales force,
advertising agencies, and marketing research companies.
 The Five Cs are briefly outlined below. .

 Competitors are entities with offerings that target the same customers and aim to fulfill the same customer need.
Competition is not limited to the industry in which the company operates. It also includes all entities that aim to
fulfill the same customer need, regardless of whether they are in the same industry. Accordingly, a company’s
offering competes not only with offerings from entities operating in the same industry, but also with offerings
(often referred to as substitutes) operating in different industries as long as they aim to fill the same customer
need. To illustrate, Canon competes not only with manufacturers of digital cameras, such as Sony and Nikon,
but also with manufacturers of camera-equipped mobile phones, such as Apple and Samsung. Starbucks
competes not only with other coffee shops, but also with manufacturers of caffeinated energy drinks, such as
Red Bull and Monster Energy.
 Context involves the relevant aspects of the environment in which the company operates. Six context factors are
particularly relevant for the value- creation process: economic (e.g., economic growth, money supply, inflation,
and interest rates); business (e.g., emergence of new business models, changes in the market structure, the
balance of power, and information accessibility); technological (e.g., the diffusion of existing technologies and
the development of new ones); sociocultural (e.g., demographic trends, value systems, and market-specific
beliefs and behavior); regulatory (e.g., import/export tariffs, taxes, product specifications, pricing and
advertising policies, and patent and trademark protection); and physical (e.g., natural resources, climate, and
health conditions).
The choice of target customers is fundamental to defining the other

aspects of the target market: It determines the scope of the
competition, the range of potential collaborators, the core
competencies and assets of the company that are necessary to fulfill
the needs of target customers, and the specific context factors
pertinent to the chosen target segment. Accordingly, different
customer segments tend to be served by different competitors,
require a different set of collaborators (different suppliers and
distribution channels), are managed by different business units of the
company, and operate in a different context.
The central role of target customers further implies that a change in target customers is
likely to lead to a change in all aspects of the relevant market. For example, a
company’s decision to target a new customer segment by moving upscale must not
only account for the different needs of these customers, but also might involve
collaboration with upscale retailers catering to these customers, require specialized
core competencies and strategic assets that will enable the company to successfully
serve these customers, face competition from a different set of competitors traditionally
serving these customers, and be influenced in a different way by the economic,
business, technological, sociocultural, regulatory, and physical context in which the
company operates.
Defining the Value Exchange: The 6-V
Framework
Framework
The term value exchange refers to the value-based
relationships among the different entities in a given market.
Specifically, the target market is defined by four key entities—
customers, the company, its collaborators, and its competitors
—that operate in a given economic, business, technological,
sociocultural, regulatory, and physical context. The
interactions among these four entities define the six value
relationships defining the 6-V framework.
Framework
Each of the relationships shown in Figure 2 can be viewed as a process of giving
(creating) and receiving (capturing) value. Thus, the relationship between the
company and its customers is defined by the value the company creates for these
customers as well as by the value created by these customers that is captured by
the company. In the same vein, the relationship between the company and its
collaborators is defined by the value the company creates for these collaborators
as well as by the value generated by these collaborators that is captured by the
company. Finally, the relationship between the company’s customers and its
collaborators is defined by the value these collaborators create for target
customers as well as by the value generated by the target customers that is
captured by collaborators.
Framework
Consider the relationship between a manufacturer, a retailer, and their customers. The
manufacturer (the company) partners with a retailer (the collaborator) to deliver products
(value) to target customers. Customers receive value from the products (created by the
manufacturer) they purchase as well as from the service (delivered by the retailer)
involved in the buying process, for which they offer monetary compensation that is
shared by both the manufacturer and the retailer. The retailer receives value from the
customers in the form of margins (the differential between the buying and selling price)
as well as value from the manufacturer in the form of various trade promotions. The
manufacturer receives value from customers in the form of the price they pay for its
products (net of retailer’s margin) as well as from the retailer in the form of the various
services that retailers perform on its behalf.
Framework
The three value relationships between the company, its customers, and its
collaborators, however, reflect only the company side of the value exchange. No
market exists without competitors that aim to create value for the same target
customers, often working with the same collaborators as the company. The
competitive aspect of the value exchange is symmetric to the company value
exchange, and consists of three types of relationships: those between the company’s
target customers and its competitors, between the company’s target customers and
competitors’ collaborators (some or all of whom could also be the company’s
collaborators), and between the competitors and their collaborators. Furthermore, as
with the company value exchange, each of the competitive relationships is defined
by the processes of creating and capturing value among market participants.
Developing the Optimal Value Proposition: The 3-V Principle
To succeed, an offering must create value for all entities involved in the market
exchange—target customers, the company, and its collaborators. Accordingly, when
developing market offerings, a company needs to consider three value propositions:
one defining the value for target customers, one defining the value for its
collaborators, and one defining the value for the company. The need for different
value propositions raises the question of whose value to prioritize. Surprisingly,
many companies find it difficult to reach a consensus.
Marketing departments are typically focused on creating customer value; finance

departments and senior management are focused on creating company
(shareholder) value; and the sales force is focused on creating value for
collaborators, such as dealers, wholesalers, and retailers.
The 3-V optimal value principle implies that to evaluate the market potential
of an offering a manager needs to answer three key questions:
• Does the offering create superior value for target customers relative to the
competitive offerings?
• Does the offering create superior value for the company’s collaborators
relative to the competitive offerings?
• Does the offering create superior value for the company relative to the
other options the company must forgo in order to pursue this offering?
The ability to create superior value for customers, collaborators, and the company
is the ultimate criterion for achieving market success. Failure to create superior
value for any one of the relevant market participants inevitably leads to an
inefficient marketing exchange and market failure.
The value proposition reflects the company’s expectation of the value that the
offering will create for target customers. The value proposition is an ideal
representation of the benefits that target customers will receive from the offering;
the value proposition does not physically exist in the market. The value
proposition is actualized through the specific offering(s) the company designs,
communicates, and delivers to its target customers. The key aspects of developing
an offering are discussed in the following section.
Marketing Tactics: Designing the Marketing Mix
The term tactics comes from the Greek taktika—meaning “arrangement”—used

in reference to the deployment of troops during battle from their initial strategic
position. In marketing, tactics refer to a set of specific activities, commonly
referred to as the marketing mix, employed to execute a given strategy.
The Seven Tactics Defining the Marketing Mix
Tactics are defined by seven key elements, often referred to as the marketing mix: product,
service, brand, price, incentives, communication, and distribution. The tactics represent the
key marketing decisions that embody an offering’s marketing strategy. The seven marketing
mix factors can be summarized as follows:
The product aspect of the offering reflects its key functional characteristics. Products
typically change ownership during purchase; once created, they can be physically separated
from the manufacturer and distributed to buyers via multiple channels.
The service aspect of the offering also reflects its functional characteristics but, unlike
products, services typically do not imply a change in ownership; instead, customers obtain
the right to use the service for a period of time. Because they are simultaneously created and
consumed, services are inseparable from the service provider and cannot be inventoried.
The Seven Tactics Defining the Marketing Mix
The brand involves a set of unique marks and associations that identify the offering and create
value beyond the product and service aspects of the offering.
The price refers to the amount of money the company charges its customers and collaborators for
the benefits provided by the offering.
Incentives are tools used to selectively enhance the value of the offering for its customers,
collaborators, and/or employees. Incentives may be monetary— such as volume discounts, price
reductions, coupons, and rebates—and nonmonetary, such as premiums, contests, and rewards.
Communication refers to the process of informing current and potential buyers about the
specifics of the offering.
Distribution defines the channel(s) through which the offering is delivered to customers.
Consider the decisions that Starbucks had to make when launching its retail
outlets. It had to decide on the product assortment it would carry and the specific
attributes of each product (e.g., the type of coffee, roasting and brewing processes,
and noncoffee ingredients), the type and level of service offered, the identity and
the meaning of its brand, the set price for its offerings, the monetary and
nonmonetary incentives offered to stimulate sales, ways to make customers aware
of its offering, as well as store locations to make its products and services
available to customers. Decisions based on these seven factors defined Starbucks’
market offerings.
Thus, the product aspect of Starbucks’ offerings is the virtually endless variety of coffee
drinks, complemented by a number of food items and noncoffee beverages. The service
involves addressing customer inquiries and concerns and providing customers with an
environment in which to consume the purchased foods and beverages. The brand includes
Starbucks’ identity, such as its name and logo, as well as the associations that Starbucks’
identity invokes in customers’ minds. The price is the monetary amount that Starbucks
charges customers for the offering. Incentives are the variety of promotional tools that aim
to provide additional value for customers, such as Starbucks’ loyalty program rewarding its
frequent customers, coupons, and temporary price reductions. Communication is the
Starbucks-specific information disseminated via different media channels, including
advertising, social media, and public relations.
Finally, distribution encompasses the channels though which Starbucks’ offerings are
delivered to its customers, including Starbucks-owned stores, franchised stores, as well as
retail outlets licensed to carry Starbucks’ products.
Tactics as a Process of Designing, Communicating, and Delivering Value
The seven marketing tactics—product, service, brand, price, incentives,

communication, and distribution—are not a list of unrelated activities managers
use to create value. On the contrary, the marketing tactics are interrelated
because they represent different aspects of the same value-creation process. In
this context, the relationships among the individual marketing tactics can be
represented as a process of designing, communicating, and delivering value.
Here, product, service, brand, price, and incentives compose the value-design
aspect of the offering; communication captures the value-communication aspect;
and distribution reflects the value-delivery aspect of the offering.
The last two aspects of the value-creation process—communication and distribution—are

conceptually different from the first five aspects in that they serve as channels for the other
marketing mix variables. Thus, communication can inform customers of the functionality of a
product or service, share the meaning of its brand, publicize its price, apprise buyers about
current incentives, and advise them about the availability of the offering.
In the same vein, distribution can involve delivering a company’s products through a series of
retail outlets, delivering service through dedicated service centers, delivering its brand by
offering customers a first hand experience of the brand, delivering its price by collecting
customer payments and processing refunds, and delivering communications through various
channels, including television, radio, print, point of purchase, personal selling, and online. The
view of the seven marketing tactics as a process of designing, communicating, and delivering
value
The different nodes in the value-creation process depicted in Figure 5 represent the specific
decisions to be made in designing the offering’s tactics. Thus, for each of the five factors—
product, service, brand, price, and incentives—managers have to make three separate
decisions concerning the design, communication, and delivery of the offering. In this context,
product and service management calls for identifying the specific product/service attributes
(value design), deciding how to communicate these attributes and the corresponding benefits
to target customers (value communication), as well as determining how to deliver the product
to these customers (value-delivery).
In the same vein, brand management calls for identifying the key brand identity elements and
associations and deciding how they will be communicated and delivered to target customers.
Likewise, managing price involves not only deciding on the price level but also on how price
will be communicated and money will be collected from customers and then delivered to the
company. Finally, managing incentives involves defining the specific incentives, such as price
discounts, coupons, and loyalty programs, as well as ways to communicate these incentives
and deliver them to target customers.
Marketing’s role in formulating and implementing
strategies
The essence of strategic planning at all levels is identifying threats to avoid and
opportunities to pursue. The primary strategic responsibility of any manager is to look
outward continuously to keep the firm or business in step with changes in the
environment. Because they occupy positions at the boundary between the firm and its
customers, distributors, and competitors, marketing managers are usually most familiar
with conditions and trends in the market environment. Consequently, they not only are
responsible for developing strategic plans for their own product-market entries, but also
are often primary participants and contributors to the planning process at the business
and corporate levels as well.
strategies
The study found that, on average, marketing and sales executives exerted significantly
more influence than managers from other functions on strategic decisions concerning
traditional marketing activities, such as advertising messages, pricing, distribution,
customer service and support, and measurement and improvement of customer satisfaction.
Interestingly, though, the influence of sales executives was perceived to be even greater
than that of marketing managers on some of these decisions. One reason—particularly in
the industrial goods firms selling electronic equipment and machinery—may be that sales
managers have more detailed information about customer needs and desires because they
have direct and continuing contact with existing and potential buyers.
strategies
 Marketing managers also were perceived to wield significantly more influence than
managers from other functional areas on cross-functional, business-level strategic
decisions. While the views of finance and operations executives carry more weight in
approving major capital expenditures, marketing and sales managers exert more
influence on decisions concerning the strategic direction of the business unit,
expansion into new geo- graphic markets, the selection of strategic business partners,
and new product development. Marketing managers tend to have greater strategic
influence in firms that spend relatively heavily on R&D and that seek a competitive
advantage based extensively on innovative product and service offerings. Similarly,
marketing is more influencial in firms that have strong “customer-connecting”
capabilities, especially when marketing has responsibility for the sales force.7
http://www.socialsamosa.com/2020/10/flipkart-amazon-india-sale-day-strategies/
Recent Developments Affecting the Strategic Role of Marketing
The following changes are rapidly altering the context in which marketing
strategies are planned and carried out and the information and tools that
marketers have at their disposal. These developments include –
(1) the increased globalization of markets and competition,
(2) the growth of the service sector of the economy and the importance of
service in maintaining customer satisfaction and loyalty,
(3) the rapid development of new information and communications
technologies, and
(4) the growing importance of relationships for improved coordination and
increased efficiency of marketing programs and for capturing a larger portion of
customers’ lifetime value.
https://www.martechadvisor.com/articles/customer-experience-2/covid-19-marketing-strategy/
Formulation of strategy – Porter’s generic competitive
strategies
 These three approaches are examples of "generic strategies," because they can be applied
to products or services in all industries, and to organizations of all sizes. They were first
set out by Michael Porter in 1985 in his book, "
Competitive Advantage: Creating and Sustaining Superior Performance.”
 Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation"
(creating uniquely desirable products and services) and "Focus" (offering a specialized
service in a niche market). He then subdivided the Focus strategy into two parts: "Cost
Focus" and "Differentiation Focus."
BUSINESS LEVEL STRATEGIES
Porter's Generic Competitive Strategies (ways of
competing)
Amul Orient
Tip:
The terms "Cost Focus" and "Differentiation Focus" can be a little confusing, as they could be interpreted as meaning "a focus on cost" or "a
focus on differentiation." Remember that Cost Focus means emphasizing cost-minimization within a focused market, and Differentiation
Focus means pursuing strategic differentiation within a focused market.
Strategic Marketing Planning – Strategic planning
process
Strategic Marketing plan defines the set of choices made regarding how business/brand will generate
profitable growth by creating better( relative to competitors)solutions to address consumer problem.
There are three important principles associated with Strategic Marketing Plan.
1st strategy requires that you decide what to do and what not to do. One of the most difficult
challenges is to identify the fewest number of strategies that will ensure you achieve goals. To do this
you must make tradeoffs that identify what you have choosen not to do.
2nd the specific strategies the CMO chooses must have a complementary interaction i.e. it must fit
with other strategies.
3rd the strategic marketing plan must work with strategic plans created by other functions/business
units. The CEO’s strategic plan sets boundary and priority for the firm. Strategic plan set forth by
other top management leaders, work in synchronization with one another to deliver the CEO’s
strategic plan, and so forth throughout each level of organization.
As a result, the Strategic Marketing plan sits at the intersection of the firm’s strategic plan and
marketing operations sering a s a roadmap for defining the few critical, marketing related choices that
must be excellently executed to help marketing and the firm achieve their goals.
Strategic Marketing Plan
Purpose—
1. It is used to guide the marketing department’s efforts and to connect functional
actions with corporate goals.
2. The output strategic marketing plan doc beyond aligning marketing priorities with
those of broader organization also serves three additional purposes-
- It is useful tool for communicating marketing plans with channel partners, board
members, strategic partners, peers and other stakeholders
- It serves as roadmap to guide departmental actions, and
- It serves as a loose form of contract against which the CEO can hold the CMO
accountable
Strategic Marketing Planning – Who creates?
The individual who manages the marketing function will be responsible for creating a
departmental strategic plan. But this may vary across firms.
In case the firms are organized by product or geography and not by function. In this case
the divisional leaders are likely to create a strategic plan and a component of it may be
related to marketing.
process
Strategic Plan
Firm’s Capability Marketing intelligence Resources
inputs -🡪
CEO firm’s
strategic plan
Functional CMO-Strategic
strategic plans -> CTO COO Etc.
Marketing plan
Customer
Within strategic insights, Media
plan -> plan etc.
process
The amount of time to go through this process may vary. Some firms have an elaborate
database approach which can take upto six months to compete. Other firms may have a
less sophisticated process that only takes a few days.
The lack of strategic planning process can make firm vulnerable to competitors for
several reasons:
- The firms TMT (Top management team) isn’t aligned on strategic priorities
- Individual departments may operate at cross purposes because they aren’t tethered
together by any central strategic plan and
- The firm wastes resources (both money and labor) as individual TMT leader works
on departmental priorities rather than organizational priorities.
The G-STIC Framework for Market Planning
An offering’s marketing plan delineates the specific activities by which an offering

creates market value. The core of the marketing plan is the offering’s business model,
which articulates the strategy and tactics of the offering to outline the logic of the
value-creation process and define the specifics of the market offering. In this context,
an offering’s marketing plan can be defined by five key activities: setting a goal,
developing a strategy, designing the tactics, defining an implementation plan, and
identifying a set of control metrics to measure the success of the proposed action. These
five activities comprise the G-STIC (Goal-Strategy-Tactics- Implementation-Control)
framework, which is the cornerstone of market planning and analysis
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C-11JQM6D-2QF

 The goal identifies the ultimate criterion for success that guides all company marketing
activities. Setting a goal involves two decisions: identifying the focus of the company’s
actions and defining the specific quantitative and temporal performance benchmarks to be
achieved.
 The strategy outlines the logic of the company’s value-creation model. Defining the strategy
involves two decisions: identifying the target market and developing the offering’s value
proposition. Identifying the target market involves identifying five key factors (the Five Cs):
customers whose needs the company’s offering aims to fulfill, the company managing the
offering, collaborators working with the company on this offering, competitors with
offerings that target the same customers, and the relevant context in which the company
operates. The value proposition, on the other hand, defines the value that an offering aims to
create for the relevant participants in the market— target customers, the company, and its
collaborators. The development of a value proposition also involves the development of a
positioning that singles out the most important aspect(s) of the offering’s value proposition
to create a distinct image of the offering in customers’ minds.
 The tactics outline a set of specific activities employed to execute a given strategy. The
tactics define the key aspects of the company’s offering (often referred to as the marketing
mix): product, service, brand, price, incentives, communication, and distribution. These
seven tactics are the means that managers have at their disposal to execute a company’s
strategy and create the optimal value proposition for the target market.
 The implementation outlines the logistics of executing the company’s strategy and tactics.
Defining the implementation involves three key components: defining the business
infrastructure, designing business processes, and setting the implementation schedule.
 The control defines criteria for evaluating the company’s goal progress. Control involves
two key processes: evaluating the company’s progress toward its goal and analyzing the
changes in the environment in which the company operates.
The G-STIC Action-Planning Flowchart
Setting a Goal
 The action plan is formulated to achieve a particular goal; it starts with

defining a goal and outlines a course of action that will enable the company
to achieve this goal. The goal guides all the company’s marketing activities;
without a well-defined goal, an organization cannot design an effective
marketing strategy or evaluate the success of its current activities. Setting a
goal involves two decisions: identifying the focus of the company’s actions
and defining the specific performance benchmarks to be achieved.
Goal Focus
The focus identifies the key criterion for a company’s success; it is the metric describing
the desired outcome. Based on their focus, two types of goals can be distinguished:
Monetary goals involve monetary outcomes and typically focus on maximizing net
income, earnings per share, and return on investment. Monetary goals are common for
offerings managed by for-profit companies.
Strategic goals involve nonmonetary outcomes that are of strategic importance to the
company. Nonmonetary goals are common for nonprofit organizations, which aim to
achieve nonmonetary outcomes, such as promoting social welfare. Nonmonetary goals are
also common in for-profit organizations by facilitating the achievement of other profit-
related goals. Thus, an offering that is not profitable by itself might benefit the company
by facilitating the sales of other, profit-generating offerings. An offering might also benefit
the company’s bottom line by enhancing the corporate culture, by boosting employee
morale, and by facilitating talent recruitment and
Performance Benchmarks
 Performance benchmarks define the ultimate criteria for success. The two types of performance
benchmarks—quantitative and temporal—are discussed in more detail below.
 Quantitative benchmarks define the specific milestones to be achieved by the company with
respect to its focal goal. For example, goals such as “increase market share by 2%,” “increase
retention rates by 12%,” and “improve the effectiveness of marketing expenditures by 15%”
include benchmarks that quantify the set goal. Quantitative benchmarks can be expressed in either
 relative terms (e.g., increase market share by 20%) or absolute terms (e.g., achieve annual sales of
one million units).
 Temporal benchmarks identify the time frame for achieving a particular milestone. Setting a
timeline for achieving a goal is a key strategic decision, because the strategy adopted to
implement these goals is often contingent on the time horizon. The goal of maximizing next-
quarter profitability will likely require a different strategy and tactics than the goal of maximizing
long-term profitability.
Market Objectives
 Unlike the ultimate goal, which is typically defined in terms of a company- focused
outcome, market objectives delineate specific changes in the behavior of the relevant
market factors—customers, the company, collaborators, competitors, and context—that
will enable the company to achieve its ultimate goal. The different types of market
objectives are outlined below.
 Customer objectives aim to elicit changes in the behavior of target customers (e.g.,
increasing purchase frequency, switching from a competitive product, or making a first-
time purchase in a product category) that will enable the company to achieve its ultimate
goal. To illustrate, the company goal of increasing net revenues can be associated with the
more specific objective of increasing the frequency with which its customers repurchase
the offering. Because the customers are the ultimate source of a company’s revenues and
profits, a company’s ultimate goal typically involves a customer-focused behavioral
objective.
 Collaborator objectives aim to elicit changes in the behavior of the company’s
collaborators, such as providing greater promotional support, better pricing terms, greater
systems integration, and extended distribution coverage. To illustrate, the company goal of
increasing net revenues can be associated with the more specific collaborator objective of
increasing the shelf space for the offering in distribution channels.
Market Objectives
 Company (internal) objectives aim to elicit changes in the company’s own
actions, such as improving product and service quality, reducing the cost of
goods sold, improving the effectiveness of the company’s marketing actions,
and streamlining research-and-development costs.
 Competitive objectives aim to change the behavior of the company’s
competitors. Such actions might involve creating barriers to entry, securing
proprietary access to scarce resources, and circumventing a price war.
 Context objectives are less common and usually implemented by larger
companies that have the resources to implement changes in the economic,
business, technological, sociocultural, regulatory, and/or physical context in
which the company operates. For example, a company might lobby the
government to adopt regulations that will favorably affect the company by
offering tax benefits, offering subsidies, and imposing import duties on
competitors’ products.
Market Objectives
 Defining market objectives is important because without a change in the

behavior of the relevant market entities, the company’s ultimate goal is
unlikely to be achieved. Indeed, if there is no change in any of the five market
factors (the Five Cs), the company is unlikely to make progress toward its
goals. To illustrate, a company’s ultimate goal of increasing net income by $1B
by the end of the fourth quarter can involve different objectives. A customer-
specific objective might involve increasing market share by 10% by the end of
the fourth quarter. A collaborator-related objective might involve securing 45%
of the distribution outlets by the end of the fourth quarter. An internal objective
might involve lowering the cost of goods sold by 25% by the end of the fourth
quarter. In this context, market objectives help the company articulate the
course of action aimed at achieving its ultimate goal.
Defining the Implementation
 The implementation component of market planning delineates the logistics of
executing the offering’s strategy and tactics. Implementation involves three key
components: defining the business infrastructure, designing business processes, and
setting the implementation schedule.
 Business Infrastructure
The business infrastructure reflects the organizational structure and the relationship
among relevant entities involved in creating and managing the offering. For example, a
company can form the business unit managing the offering by organizing employees
based on their function (e.g., research and development, manufacturing, marketing,
accounting/finance, and human resources). Alternatively, a company might organize
employees based on the type of product or market involved, such that each division is
responsible for a certain product or market and is represented by different functions.
Finally, a company might use a matrix approach by combining the functional and
divisional approaches in a way that preserves the functional structure while
simultaneously creating specialized teams responsible for a particular product or
market
Business Processes
 The business processes depict the specific actions needed to implement an
offering’s strategy and tactics. These processes involve managing the flow of
information, goods, services, and money. In this context, there are three common
types of implementation processes: market planning, resource management, and
marketing mix management.
 Market planning includes activities involved in the development of the marketing
plan. These processes involve gathering market intelligence, defining the
company’s goal(s), developing the strategy and tactics for achieving that goal,
defining the implementation plan, and identifying a set of control measures to
monitor goal progress.
 Resource management involves activities focused on acquiring and managing
human resources (e.g., recruiting, evaluation, compensation, and professional
development), functional resources (e.g., manufacturing capacity), and financial
resources required for the implementation of a given offering.
Business Processes
 Marketing mix management involves activities focused on managing the

marketing tactics. This includes designing (e.g., identifying the key attributes),
manufacturing (e.g., procurement, inbound logistics, and production), and
executing (e.g., installation, support, and repair activities) the product and
service aspects of the offering; designing (e.g., determining brand identity) and
managing an offering’s brand, price setting (e.g., setting retail prices and
wholesale price schedules) and price management (e.g., modifying existing
prices) activities; designing and managing (e.g., processing coupons and
implementing price discounts) an offering’s incentives; designing (e.g.,
identifying the message, media, and the creative solution) and managing (e.g.,
producing the advertisement and placing it in the appropriate media channel)
an offering’s communications; and designing (e.g., determining the optimal
channel structure) and managing (e.g., warehousing, order fulfillment,
transportation) an offering’s distribution system.
Implementation Schedule
 The process of setting an implementation schedule involves deciding on the timing and the
optimal sequence in which individual tasks should be performed to ensure effective and
cost-efficient completion of the project. The implementation schedule can also identify the
key personnel involved in managing individual tasks and delineate the time frame for
beginning and completing these tasks.
 Identifying Controls
 The uncertainty and dynamics associated with most business markets necessitate that
companies continuously evaluate their performance and monitor changes in the
environment. Accordingly, marketing controls serve two key functions: to evaluate the
company’s progress toward its goal and analyze the changes in the environment in which
the company operates.
 Performance Evaluation
 Performance evaluation involves evaluating the outcomes of the company’s actions vis-à-
vis its goals. Performance can be evaluated on a variety of metrics, such as net income,
market share, and unit sales. Performance evaluation can lead to one of two outcomes:
either a company is making adequate goal progress or there is a discrepancy (performance
gap) between the desired and the actual performance. In cases when performance evaluation
reveals a gap, the existing action plan needs to be modified to put the company back on
track toward achieving its goal. The key principle in modifying a company’s action plan is
that the changes should be directly linked to the cause of the performance gap.
Environmental Analysis
 Environmental analysis involves monitoring the environment in which the company
operates to ensure that the company’s action plan remains optimal, and adjusting the
action plan as necessary to take advantage of new opportunities (e.g., favorable
government regulations, a decrease in competition, or an increase in consumer
demand) and counteract potential threats (e.g., unfavorable government regulations,
an increase in competition, or a decline in consumer demand). Once the key
 opportunities and threats have been identified, the next step involves modifying the
current action plan to take advantage of the opportunities and counteract the impact of
threats. The basic principle in modifying the action plan is that the changes should
directly address the identified opportunities and threats.
Writing a Marketing Plan
 The executive summary is the “elevator pitch” for the marketing plan—a
streamlined and succinct overview of the company’s goal and the proposed course
of action. The typical executive summary is one or two pages long, outlining the
key problem faced by the company (e.g., a market opportunity/threat or a
performance gap) and the proposed action plan
 The situation analysis section of the marketing plan aims to provide an overall
evaluation of the company and the environment in which it operates, as well as
identify the markets in which it will compete. Accordingly, the situation analysis
involves two sections: (1) the company overview, which outlines the company’s
strategic goals and current progress toward these goals, its core competencies and
strategic assets, and its portfolio of offerings, and (2) the market overview, which
outlines markets in which the company operates and/or could potentially target.
 The G-STIC section is the core of the marketing plan. It identifies (1) the goal the
company aims to achieve, (2) the offering's strategy, which defines its target market
and value proposition, (3) the offering's tactics which define the product, service,
brand, price, incentives, communication, and distribution aspects of the offering, (4)
the implementation aspects of executing an offering’s strategy and tactics, and (5)
control procedures employed in evaluating the company’s performance and
analyzing the environment in which it operates.
 Exhibits help streamline the logic of the marketing plan by separating the less
important and/or more technical aspects of the plan into a distinct section in the
form of tables, charts, and appendices.
Updating the Marketing Plan
There are two common reasons to consider updating the marketing plan:
(1) the presence of a performance gap reflecting a discrepancy between the
company’s expected and desired performance and
(2) changes in the target market.
(3) new opportunity or threat in the environment.
Performance gaps involve a discrepancy between a company’s desired and actual
performance on a key metric, such as net income, profit margins, and sales revenues.
Performance gaps typically stem from three main sources:
(1) inaccurate information and/or assumptions about the target market, including
unforeseen market changes,
(2) logic flaws in the marketing plan, and
(3) implementation errors, which involve poor execution of a viable marketing plan.
Inaccurate information/assumptions.
 When developing the marketing plan, managers rarely have all the necessary
information at their fingertips.
 It is often the case that, despite the voluminous amount of available information,
certain strategically important pieces of information are not readily available (e.g.,
information about competitors’ strategies, technological developments, and
forthcoming government regulations). As a result, managers must fill in the
information gaps by making certain assumptions.
 Because assumptions reflect uncertainty, updating the plan to reduce the uncertainty
can increase its effectiveness.
Logic flaws.
Another common source of performance gaps is the presence of logic flaws in the design of
the marketing plan.
 For example, the proposed strategy might be inconsistent with the set goal, whereby an
otherwise viable strategy might not produce desired results.
 In the same vein, the offering’s tactics might be inconsistent with the desired strategy,
whereby product attributes might not create value for target customers, the price might
be too high, and/or communication and distribution channels might be inadequate.
Implementation errors.
 Performance gaps can also stem from implementation errors, which involve poor
execution of an otherwise viable marketing plan.
 This type of error is due to the fact that managers do not adhere to the actions
prescribed by the marketing plan (e.g., because they are unfamiliar with the plan),
because their intuition based (erroneously) on prior experience contradicts the proposed
course of action, or
 because of lack of discipline (often imbued in a company’s culture) to systematically
implement the agreed- on marketing plan.
Changes in the target market involve changes in one or more of the Five Cs:
(1) changes in target customers, such as changes in customer demographics, buying
power, needs, and preferences;
(2) changes in the competitive environment, such as a new competitive entry, price cuts,
launch of an aggressive advertising campaign, and/or expanded distribution;
(3) changes in the collaborator environment, such as a threat of backward integration from
the distribution channel, increased trade margins, and consolidation among retailers;
(4) changes in the company, such as the loss of strategic assets and competencies; and
(5) changes in the market context, such as an economic recession, the development of a
new technology, and new legal regulations.
Updating a marketing plan involves modifying the company’s current course of action and
might involve-
 the need to reevaluate the current goal;
 redesign the existing strategy (e.g., identify new target markets, and/or modify the
overall value proposition of the offering for customers, company, and/or
collaborators);
 change the tactics (e.g., improve the product, enhance the service, reposition the brand,
modify the price, introduce new incentives, streamline communication, and introduce
new channels of distribution);
 Improve the infrastructure, processes, and/or schedules underlying implementation;
and/or develop alternative controls (e.g., use more accurate performance metrics).
The key principle in updating the action plan is that the changes in the plan should address
the inefficiencies in the existing marketing plan and/or changes in the market environment.
Competitive advantage and its role in strategic marketing planning
A small business builds a competitive advantage by providing a better overall value to

customers than competitors are able to do. During the annual planning process, the business
owner and her management team develop marketing plans to maximize the revenues that
result from this advantage.
Long-term success in business requires building a sustainable competitive advantage -- one
that endures despite new competitors entering the market or existing competitors improving
their own products or services.
 Align Products with Customer Needs

A small business owner must have a keen understanding of his customers’ needs. An
objective of his marketing plan is to identify the customer groups that can benefit the most
from the products and services he offers. These are the individuals most likely to become his
customers. The marketing planning process helps narrow the target customers to those most
likely to buy. This allows the company to use its finite marketing resources to reach out to
these prime customer targets and not waste resources attempting to sell to customers who
don’t view the product as something they urgently need.
 Attack New Markets
In the marketing plan, the company’s management team identifies new markets the company
could enter and gain a foothold before competitors do -- sometimes termed "first to market"
advantage. Companies particularly adept at marketing planning develop a capacity to spot
these emerging markets, which occur as a result of factors like population shifts, changes in
consumer taste or technological innovations that could be turned into new products. Effective
marketing planning requires the ability to select the potentially most profitable opportunities
among the many opportunities available
 The first mini van was introduced by Chrysler. Today Chrysler has 10 percent
of the car market and 50 percent of the mini van market. Is the essence of
car marketing making better cars or getting into the market first?
 The first desktop laser printer was introduced by a computer company,
Hewlett-Packard. Today the company has 5 percent of the personal computer
market and 45 percent of the laser printer market.
 Gillette was the first safety razor. Tide was the first laundry detergent.
Hayes was the first computer modem. Leaders all.
 Clearly Express the Advantages

A sound marketing plan includes a carefully crafted message that presents the company’s competitive advantages
in a concise and compelling way. The most effective messages express not only why the company’s products are a
better solution than those offered by competitors but are the ideal solution. Customers don’t have to comparison
shop with factors such as price because they don’t see the competitors’ solutions as being in the same class.
 Expand Distribution Channels

A small business can increase the odds of making a sale to target customers by increasing the opportunities for the
customer to see the product. This means adding distribution channels. A southwestern barbecue restaurant, for
example, could add a food truck that rotates locations around the city. The company might also leverage its brand
by creating a line of frozen barbecue entrees that are distributed through specialty grocery stores. When preparing
the marketing plan, the business owner identifies all the possible distribution channels the company could use and
the market potential of each one. Having your products more widely available is a powerful way to build your
brand awareness -- a key component of competitive advantage.
 Emphasize Customer Service

 Owners should include strategies for raising customer service levels. Keeping a
customer satisfied produces both repeat business from that customer and the opportunity
to send word-of-mouth endorsements to other potential customers. Turning customer
service into a competitive advantage is accomplished through such tactics as addressing
their concerns promptly, having a person available to speak with them, and taking the
time to get to know customers as individuals and finding out how the company can
improve its product or service offering. A small business’s strategies of being accessible
and interacting with customers can create a formidable advantage relative to its larger
competitors and their sometimes impersonal or inattentive approach to service.
Marketing Strategy Planning Tools
1. Define Company Mission and Objectives
 2. Analyze Current Position

 a. SWOT Analysis
 b. Porter’s 5 Forces Analysis
 c. Customer Journey Map
 d. Perceptual Map / Positioning Maps
 e. BCG Matrix
 f. Market Segmentation Chart
Marketing Strategy
Planning Tools
 a. SWOT Analysis
Marketing Strategy
Planning Tools
 b. Porter’s 5 Forces Analysis

 c. Customer Journey Map
 c. Perceptual Map
Marketing Strategy
Planning Tools
BCG Matrix
f. Market Segmentation Chart

Define marketing strategies
Segment Attractiveness and Resource
Strength Framework by Hooley
Strategy: Keller’s Brand Equity Model
Define marketing strategies Strategy: Ansoff Matrix
https://99designs.com/blog/resources/brand-identity-prism/

Strategies; Brand Identity Prism
Strategy: Customer/ Strategy/
Resource Matrix by Hooley
Control: Marketing Data Dashboard
Control: Balanced
Scorecard
Porter's Generic Competitive Strategies (ways of competing)
The Cost Leadership Strategy

Porter's generic strategies are ways of gaining competitive advantage – in other words,
developing the "edge" that gets you the sale and takes it away from your competitors.
There are two main ways of achieving this within a Cost Leadership strategy:
•Increasing profits by reducing costs, while charging industry-average prices.
•Increasing market share by charging lower prices, while still making a reasonable profit
on each sale because you've reduced costs.
Case-How Ghari challenged the Detergent Giants and emerged as ...
Note:
Remember that Cost Leadership is about minimizing the cost to the organization of delivering products and services.
The cost or price paid by the customer is a separate issue!
/
This can include:
• Building state of art efficient facilities (may make it costly for

competition to imitate)
• Maintain tight control over production and overhead costs
• Minimize cost of sales, R&D, and service.
Another company that pioneered low margin, high volume, cost leadership kinds of
services, McDonald's.
The speedy system, their operational system that they themselves use to refer to as a
penny margin operation, very small product margins, very high volumes.
Now, McDonald's has launched a campaign they call McCafe. This is fancy coffee at
higher prices than their regular coffee. They're influenced by seeing what Starbucks has
been able to do, how much profitability Starbucks has been able to earn on a cup of
coffee.

Now there's a nice quote from Daniel Pink who is a book author and an interesting
spokesperson on a number of topics. He says, that for businesses, it's no longer
enough to create a product that's reasonably priced and adequately functional.
Anybody can do that.
Today, it must also be beautiful, unique and meaningful. That's why people buy
Michael Graves toilet brushes,
Karim Rashid trash cans, and Philippe Starck flyswatters.
In an age of abundance, appealing simply to rational, logical and functional needs is
insufficient.
Porter's 5 Forces Model
Earlier we discussed Porter's Model. A cost leadership strategy may help to remain profitable even
with: rivalry, new entrants, suppliers' power, substitute products, and buyers' power.
Rivalry – Competitors are likely to avoid a price war, since the low cost firm will continue to earn
profits after competitors compete away their profits (Airlines).
Customers – Powerful customers that force firms to produce goods/service at lower profits may
exit the market rather than earn below average profits leaving the low cost organization in a
monopoly positions. Buyers then loose much of their buying power.
Suppliers – Cost leaders are able to absorb greater price increases before it must raise price to
customers.
Entrants – Low cost leaders create barriers to market entry through its continuous focus on
efficiency and reducing costs.
Substitutes – Low cost leaders are more likely to lower costs to entice customers to stay with their
product, invest to develop substitutes, purchase patents.
• How to Obtain a Cost Advantage?

Determine and Control Cost
• Reconfigure the Value Chain as Needed
Risks
• Technology
• Imitation
• Tunnel Vision
Value Chain – A framework that firms can use to identify and evaluate the ways in which
their resources and capabilities can add value. The value of the analysis lays in being able to
break the organization's operations or activities into primary (such as operations, marketing
& sales, and service) and support ( staff activities including human resources management
& procurement) activities. Analyzing the firm's value-chain helps to assess your
organizations to what you perceive your competitors value-chain, uncover ways to cut
costs, and find ways add value to customer transactions that will provide a competitive
advantage.
The Cost Leadership strategy is exactly that – it involves being the leader in terms of cost in your
industry or market. Simply being amongst the lowest-cost producers is not good enough, as you leave
yourself wide open to attack by other low-cost producers who may undercut your prices and therefore
block your attempts to increase market share.
You, therefore, need to be confident that you can achieve and maintain the number one position before
choosing the Cost Leadership route. Companies that are successful in achieving Cost Leadership
usually have:
• Access to the capital needed to invest in technology that will bring costs down.
• Very efficient logistics.
A low-cost base (labor, materials, facilities), and a way of sustainably cutting costs below those of other
competitors.
The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not
unique to you, and that other competitors copy your cost reduction strategies. This is why it's important
to continuously find ways of reducing every cost. One successful way of doing this is by adopting the
Japanese Kaizen philosophy of "continuous improvement."
Why Business strategies should be right?
Jet and Kingfisher committed cardinal branding errors by renaming their low-cast
carriers in their own image.
While Jet renamed Sahara as Jet Lite, consumers wondered what the difference was.
Kingfisher converted Air Deccan into Kingfisher Red - and duly landed deeper in the
red.
The issue is simple: when two brands-one full-service with all the frills of flying, and
another, with low fares-are given the same or similar names, how is the consumer to
know the difference? It is easy to assume that Kingfisher Red's service is no different
from Kingfisher's, when the fares of the former are far lower. If Rolex were to buy
Titan and name the latter Rolex Lite, will Rolex's sales go up or Titan's?
It is more than likely that many air passengers downtraded to the LCCs due to this
brand confusion.
Let’s face it Walmart dominates many retail categories and competes against stores like
Target and Kmart and Costco and Acme. Walmart’s overall strategy is cost leadership.
Their concept is to attract the largest number of customers while providing the lowest-
cost general merchandise. They have been effective in doing so as they have the cost
advantage and they control their cost drivers and constantly seek efficiencies out of their
supply chain. Walmart works closely with suppliers who dominate the brands in their
industry and who provide full lines of products for Walmarts stores. A large part of
Walmart’s strategy is to meet with vendors and truly understand their vendors costs to
learn how a vendor could cut down its costs in order to capture win-win relationships
for both parties.
The company has grown by opening stores in smaller towns that surround a targeted
metropolitan area and then saturating that are before they move into a new and
saturates each territory. The chain has often put smaller retailers out of business
when they enter a new market. In foreign markets, Walmart has done acquisition as
well as store expansion and carries products that will match the tastes and
preferences of the local buyers there.
Walmart is a company that experiments with different merchandise, changes
displays, alters promotions, and shifts the store layout as well. Instead of remaining
stagnant Walmart met customer needs with four different retailconcepts including
discount stores, Supercenters, Sam’s Clubs and Neighborhood markets.
Walmart is one of the fastest growing companies and also has a high-profit rate and
great financials.
What can we learn from Walmart? Of course, that cost leadership is a driving force
and Sam Walton’s guiding principles of low-cost leadership can be super effective if
well executed.
The Differentiation Strategy

Differentiation involves making your products or services different from and more
attractive than those of your competitors. How you do this depends on the exact
nature of your industry and of the products and services themselves, but will
typically involve features, functionality, durability, support, and also brand image
that your customers value.
To make a success of a Differentiation strategy, organizations need:
•Good research, development and innovation.
•The ability to deliver high-quality products or services.
•Effective sales and marketing, so that the market understands the benefits offered
by the differentiated offerings.
Large organizations pursuing a differentiation strategy need to stay agile with their
new product development processes. Otherwise, they risk attack on several fronts
by competitors pursuing Focus Differentiation strategies in different market
segments.
Like the cost leadership strategy, the differentiation strategy also carries risks such
as the following:
• Customers may decide that the cost of uniqueness is too high. In other words,
the price differential between the standardized and differentiated product is too
high. Perhaps the firm provides a greater level of uniqueness than customers are
willing to pay for.
• The firm’s means of differentiation no longer provides value to customers. For
instance, what is the value of prestige or exclusivity?
• And, how long will they last as customers become more sophisticated?
Customer learning may reduce the customer’s perception of the value of the
firm’s differentiation. Through experience, customers may learn that the extra
price for a differentiated good is no longer a value.
• A fourth risk is concerned with counterfeiting. Increasingly, counterfeit goods
(products that attempt to convey differentiated features to customers at
significantly reduced prices) are a concern for many firms using the
differentiated strategy.
The strategy Starbucks has used is known as differentiation strategy.

There are several ways to achieve this since there can be several bases
of differentiation. It can vary from product to product, service to
service and industry to industry. Mostly the primary bases of
differentiation are quality, durability, functionality and in several cases
customer support and the brand’s image. Starbucks has differentiated
its products based on quality and set an entirely distinct customer
experience. Apart from these things, it has created a distinct brand
image which is also a basis of differentiation and helps it market its
brand better than competitors.
The Focus Strategy

Companies that use Focus strategies concentrate on particular niche markets and, by
understanding the dynamics of that market and the unique needs of customers within it,
develop uniquely low-cost or well-specified products for the market. Because they serve
customers in their market uniquely well, they tend to build strong brand loyalty amongst
their customers. This makes their particular market segment less attractive to
competitors.
As with broad market strategies, it is still essential to decide whether you will pursue
Cost Leadership or Differentiation once you have selected a Focus strategy as your main
approach: Focus is not normally enough on its own.
But whether you use Cost Focus or Differentiation Focus, the key to making a success of
a generic Focus strategy is to ensure that you are adding something extra as a result of
serving only that market niche. It's simply not enough to focus on only one market
segment because your organization is too small to serve a broader market (if you do, you
risk competing against better-resourced broad market companies' offerings).
The "something extra" that you add can contribute to reducing costs (perhaps through
your knowledge of specialist suppliers) or to increasing differentiation (though your deep
understanding of customers' needs).
Tip:
Generic strategies apply to not-for-profit organizations too.
A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting
donations and achieving more for its income, while one pursuing a Differentiation
strategy will be committed to the very best outcomes, even if the volume of work it does,
as a result, is smaller.
Local charities are great examples of organizations using Focus strategies to get
donations and contribute to their communities.
Your choice of which generic strategy to pursue underpins every other strategic
decision you make, so it's worth spending time to get it right.
But you do need to make a decision: Porter specifically warns against trying to
"hedge your bets" by following more than one strategy. One of the most important
reasons why this is wise advice is that the things you need to do to make each type
of strategy work appeal to different types of people. Cost Leadership requires a very
detailed internal focus on processes. Differentiation, on the other hand, demands an
outward-facing, highly creative approach.
So, when you come to choose which of the three generic strategies is for you, it's
vital that you take your organization's competencies and strengths into account.
BMW has concentrated in using differentiation focus where they design different and
unique automobile products that compete with the competitors in the market. Most
importantly, the company uses advanced technologies and designs that serve the
clientele satisfactorily unlike competitors. Also, the production of motorcycles with
different capacities enables the customers to have a variety of choices to make before
selecting that which they feel is the best (Kiley, 2004). Additionally, BMW uses cost
focus strategy on certain automobiles and motorcycles. They sale the products to
specific markets at lower prices than their competitor companies while still making the
profits. This is made possible by the reduced cost in the chain of production which
finally ensures that the company makes a profit at the end of the tunnel (Kiley, 2004).
BWM focuses on different classes of people in their manufacturing of the vehicles, for
instance, the 2012 BMW 328i sedan is luxurious car for high class people, and it
contains features that make one feel comfortable in the drive.
Step 1:
For each generic strategy, carry out a SWOT Analysis of your strengths and
weaknesses, and the opportunities and threats you would face, if you adopted
that strategy.
Having done this, it may be clear that your organization is unlikely to be able to
make a success of some of the generic strategies.
Step 2:
Use Five Forces Analysis to understand the nature of the industry you are in.
Step 3:
Compare the SWOT Analyses of the viable strategic options with the results of
your Five Forces analysis. For each strategic option, ask yourself how you could
use that strategy to:
•Reduce or manage supplier power.
•Reduce or manage buyer/customer power.
•Come out on top of the competitive rivalry.
•Reduce or eliminate the threat of substitution.
•Reduce or eliminate the threat of new entry.
Select the generic strategy that gives you the strongest set of options.
Tip:
Porter's Generic Strategies offer a great starting point for strategic decision-
making.
Once you've made your basic choice, though, there are still many strategic
options available.
Key Points
According to Porter's Generic Strategies model, there are three basic strategic
options available to organizations for gaining competitive advantage. These are:
Cost Leadership, Differentiation and Focus.
Organizations that achieve Cost Leadership can benefit either by gaining market
share through lowering prices (whilst maintaining profitability) or by maintaining
average prices and therefore increasing profits. All of this is achieved by reducing
costs to a level below those of the organization's competitors.
Companies that pursue a Differentiation strategy win market share by offering
unique features that are valued by their customers. Focus strategies involve
achieving Cost Leadership or Differentiation within niche markets in ways that are
not available to more broadly-focused players.
Porter's Generic Competitive Strategies (ways of
competing)
Don't get stuck in the middle
Which strategy is your firm working towards? It’s not uncommon for firms
to successfully pursue more than one strategy, especially if your industry is
growing and profitable. However, as industries mature, the companies who
are unclear about their strategy often see their profits dwindle. When
companies fail to focus their efforts into any one of these 3 strategies they
are, as Porter calls it, “stuck in the middle”. Companies who are stuck in the
middle lack the investment and resolve needed to be a cost leader, the
unique product offering to pursue differentiation, and the attention required
to pursue focus… in the long run, it’s a losing strategy.

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MODULE 1

A well-developed strategy contains five components, or sets of issues:

The three major levels of strategy in most large, multiproduct

The term business model outlines the architecture of value creation

 The market in which a company’s offering competes is defined by five key

 The Five Cs are briefly outlined below.

 The Five Cs are briefly outlined below. .

The choice of target customers is fundamental to defining the other

Marketing departments are typically focused on creating customer value; finance

The term tactics comes from the Greek taktika—meaning “arrangement”—used

The Seven Tactics Defining the Marketing Mix

The Seven Tactics Defining the Marketing Mix

The seven marketing tactics—product, service, brand, price, incentives,

The last two aspects of the value-creation process—communication and distribution—are

An offering’s marketing plan delineates the specific activities by which an offering

 The action plan is formulated to achieve a particular goal; it starts with

 Defining market objectives is important because without a change in the

 Marketing mix management involves activities focused on managing the

A small business builds a competitive advantage by providing a better overall value to

 Align Products with Customer Needs

 Clearly Express the Advantages

 Expand Distribution Channels

 Emphasize Customer Service

 2. Analyze Current Position

 b. Porter’s 5 Forces Analysis

f. Market Segmentation Chart

Define marketing strategies

The Cost Leadership Strategy

This can include:

• Building state of art efficient facilities (may make it costly for

Porter's 5 Forces Model

• How to Obtain a Cost Advantage?

Why Business strategies should be right?

The Differentiation Strategy

The strategy Starbucks has used is known as differentiation strategy.

The Focus Strategy

Don't get stuck in the middle

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