Rajagopal. Marketing Dynamics: Theory and Practice
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Marketing Dynamics: Theory and Practice
the organization is alive and well, using its skills and resources in a broader mandate to serve societies
needs. Even companies with strong positions in the market place and with profitable businesses are
redefining mission statements to embrace the inevitable movement towards new technologies. For
example, consider GTE Directories Corp., the producer of the familiar telephone directories known
as Yellow Pages. Its basic business consists of selling advertising space, the volumes, and distributing
the directories. At one point GTE defined its business purpose and developed the following mission:
A worldwide integrated and marketing corporation of directional hard copy and electronic
advertising media and informational services.
Does the mission specifically state that the company is the producer of the Yellow pages? Not at
all. Does the statement include that product? Yes, by using the phrase” directional hard copy” , it
includes the product line of Yellow Pages. Yet the clear implication is that the manager can think
expansively of new products that may take different forms. Now consider the phrase “ electronic
advertising media”. Taking into account the evolving use of the Internet and the yet-to-be developed
technology, GTE can link up to new media that can augment its Yellow Pages or, in time, even
displace it. This portion of the mission permits managers at all levels of the company to open their
minds to new possibilities, while still remaining consistent with GTE’s basic business. Finally, the
phrase “Information services” opens the window into expansion areas as developed countries move
increasingly towards service economies and information transfer, thus building “a worldwide integrated
publishing and marketing corporation”. Yet, how far should thinking go towards a market-driven
orientation? It is the best to initially think as far toward that orientation as possible, and then come
back to a more comfortable position somewhere between the two extremes of a product-driven and
a market-driven orientation. That position is usually based on the following factors:
• Culture of the organization, with the broad range of behaviors exhibited as conservative
to aggressive.
• Availability of human, material, and financial resources for maintaining existing business
functions and for investing in future growth.
• Amount of risk that the management is willing to assume in going into debt.
• Degree of environmental change that is anticipated in market behavior.
• Threat of competitive activities and their impact on survival and growth.
On the other hand, staying rooted to a product-driven orientation is observed in stage of business
and further. The responsibility for conceptualizing a mission or strategic direction is considered to be
largely an individual effort regardless of level in the organization. Since strategic direction is a collective
process in a firm, an individual manager is no longer a victim of a narrow focus that ends up with
mature products, price wars, and other competitive conflicts. A broader market-drived viewpoint
allows thinking more expansively about business, market, and customer needs beyond products and
services of a business firm.
Primary guideline when developing objectives and goals is that they have a strategic focus. That
is, they broadly impact business, in keeping with the score of strategic direction, and that the objective
covers a time frame from three to five years. This time period is reasonable for most businesses
short enough to be realistic and achievable in an increasingly volatile market place, yet long enough
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to be visionary about the impact of new technologies, changing behavioral patterns, the global market
place, emerging competitors, and changing demographics. Specifically, objectives and goals can be
classified as quantitative and non-quantitative. For example, in quantitative statements, you include
performance expectations such as sales growth (dollars, units), market shares, return to investment
(ROI), and other quantitative measurements that are usually standard requirements of general
management or financial department. Non-quantitative objectives and goals cover areas such as
upgrading the dealer organization, expanding secondary distribution, improving marketing intelligence
system, building new specialty product lines, repositioning older commodity products, and reorganizing
to become a market-driven business.
Diverse examples of two actual companies- an auto parts manufacturer and an electric utility
company- illustrate specific ways in which quantitative and non-quantitative objectives and goals are
stated. Because of the confidential nature of these statements, the names of these two companies
are omitted and the numbers have been altered. Furthermore, these objectives are only a sampling.
The actual number of objectives ranged from 15 to 25 for each company. Other, less complex
companies could realistically have as few as 5 to 10 objectives.
Although some managers resist the use of non-quantitative objectives, there are long-term market
conditions or internal obstacles that need to be overcome, and numbers cannot always be attached to
the objectives.
GROWTH STRATEGIES
While objectives and goals indicate what you want to accomplish, growth strategies deal with
how, or what actions you are going to take to achieve those objectives. The major guideline is
this: Each objective must have a corresponding strategy. Strategies are divided into two categories:
internal and external. Internal strategies relate to marketing, manufacturing, R&D, distribution,
and pricing, as well as to existing, and new products, market research, packaging, customer
services, credit, finance, sales activities, and organizational changes. External strategies refer
to such possibilities as joint ventures, licensing agreements, new distribution network, emerging
market segments, and any opportunities for diversification, if that diversification fits the company’s
strategic direction.
Examples of the some companies on their internal and external strategy processing would
help in understanding the application of strategic marketing. The issues of internal and
external strategies of the companies are discussed as under:
Auto Parts Manufacturer
Internal Strategies
• Install an internal computerized program that links the top 80 distributors inventories
with independent repair shops ordering requirements.
• Complete the upgrade of Memphis, TN depot, and launch just in time delivery service
to distribute within 125 miles of the facility.
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• Execute a new warranty administration program that is equitable to the company,
distributors, and end-user customer, with a timing of 15 days for the claims disposition,
compared with the current 21 days.
• Implement a quality improvement program consisting of continuing education programs,
and establish indices of performance levels in accordance with new corporate objectives.
External Strategies
• Establish quality teams at distributors to review causes of errors and recommend
corrective actions.
• Form joint venture with (name of company) to increase total market shares in selected
fuel and cooling systems components, resulting in sales of $ 17 million and 22%
market share.
• Establish an image for high-performance parts in the after-market by establishing 125
new performance center dealers in key segments of the U.S. and Canada.
• Establish teleconferencing broadcasting sessions to the field to maintain competitive
advantage.
Electric Utility Company
Internal Strategies
• Establish a corporate lighting group to plan marketing programs and serve as technical
support for all lighting activities.
• Establish a central promoting group to develop and produce literature and sales aids;
plan and coordinate trade show activities; develop advertising themes and positioning
strategies; and coordinate public campaigns.
• Operate an ongoing training activity to introduce product and share information with
company employees, contractors, dealers, retailers, and customers on equipment features,
applications, benefits, sales, and service techniques. Develop a performance-type
housing construction rating system to certify and endorse properly insulated and
weatherized homes.
External Strategies
• Construct and manage a network of insulation, westernization materials, and electric
heating equipment distributors to support builder design and construction activities.
• Develop and invent an active call program targeted at key builders in prime market
areas identified for long-term urban redevelopment.
• Develop joint working relationships with electric equipment manufacturers to work on
applications involving high temperature and environmental concerns.
It is also appropriate here to distinguish between a strategy and a tactic. A strategy is a
long-term objective, with wider implications for company than does a tactic. A strategy
usually affects the function of organization such as manufacturing, product development,
and finance. It concerns the broader aspects of new markets and distribution systems. On
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the other hand, a tactic is a shorter-term action to achieve a short-term objective. It is a
subset of a strategy and is usually concerned with local issues of more limited impact,
such as a single product being launched in a target market segment with specific
promotional activities. In practice, a single objective could be accomplished through four
or five strategies and with six to ten related tactics.
A business portfolio contains a listing of all existing markets and products, and all potential new
markets and products that are feasible within the next three to five years and matching company’s
strategic direction. The central guideline is that strategic direction has tangible meaning only, if it
translates into viable markets and products. The following case illustrates the usefulness of a business
portfolio plan to balance short-term earnings with long-term growth, still maintaining a competitive
advantage.
The case of Foster Beer in India would reveal the business portfolio issues associated with
the strategic marketing. Australians and their supposed lifestyle shot to fame only after
Foster’s came along. At least that’s the image of Australia that Foster’s is trying to project as
a typical beer-drinking country. ‘How to speak Australian,’ the television campaign’s sign
off; ‘Foster’s. Australian for beer’, tries to equate Australia with Foster’s. The Managing
Director, Foster’s India Ltd, says that “This is what we’ve been looking at as step one in our
strategy, and have been consciously focused on from day one.” Last year, Foster’s chalked
up sales of Rs 250 Million and sold 1.58 million cases in India, making it a significant player
in the Indian market for beer.Foster’s entered India in July 1998, amidst much fanfare. The
objective of the company is to create the segment of international beer in India. Just as five
years ago, vodka brands co-existed in the domestic market till Smirnoff came along and
similarly, rum brands till Bacardi came in, Foster’s is looking at creating a new up market
segment. Pre-launch, Foster’s sponsored the Aussie cricket team’s tour of India to build
hype for the brand.However, creating a category, especially in liquor, is not an easy job, more
so in an environment where there is restricted advertising and other communication platforms.
Added to that, beer consumption in India is a minuscule 0.5 liters per capita, per annum.
Compare this with neighboring China, where it’s at 16 liters per capita, per annum. Among
developed countries, the consumption is much higher, with the Czech Republic topping the
list at 156 liters per capita, per annum. Even Vietnam is about eight liters per capita.
Foster’s is banking on the trend that more people will move to beer from hard liquor on
one hand, while some will graduate from soft drinks to viewing beer as a soft drink on
the other. In fact, India is one of the few markets where beer is actually classified under
‘alcohol’ and faces the same level of taxes and excise duty as other spirits. The size of
the beer market and the size of the spirits market is almost the same in India. However,
the market dynamics are slowly changing. The distribution of alcohol is a State-controlled
activity. So much so, that the taxes and duties vary significantly from state to state,
making it virtually impossible to follow a uniform strategy.Currently, Foster’s is strong in
Maharashtra, with an 80-percent coverage of the 5,000 retail outlets in the state. In Delhi,
a market it just entered, it covers about 80-odd retail outlets. Pondicherry and Hyderabad
are the other markets in India where it is present. The company feels to plan and execute
a slightly different strategy for each state. That is the next step of the strategy, to move
into other metros as well, with tailor-made strategies. Meanwhile, Foster’s is looking to
consolidate its presence in its existing markets
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STRATEGIC MARKETING PLANNING
Planning is the approach to making decisions concerning systematic allocation of resources. It is
worth emphasizing that planning is a process, not an event. It is organic and ongoing and it is a key
element of the overall management process. Planning is a way of defining your own future and if you
don’t like what you see, you are able to change your plan. With the above in mind, it is possible to
define a strategic plan as a formal written document of what you intend your firm to become, the
vision of its future position and value. A strategic plan is a detailed, specific declaration of your
intentions with regard to customers, competitors, suppliers, investors, equipment, location, employees
and the future of your firm. It is a way of getting commitment from management, key employees and
other key persons associated with your firm. Strategic planning is systematic way of making the firm
successful through the discipline of strategic thinking and vision used as a framework for all other
decisions in the firm. Strategic planning requires an honest evaluation of the company’s current
situation and where it has been in the past. Finally, strategic planning demands the commitment of the
owner/CEO for it to be successful. It requires commitment of resources, both financial and personnel,
for its development. It demands complete follow up. A plan that is not carried out due to lack of
leadership or the required tools needed for completion is a total failure and a waste of time and
money.
Common Problems
• Failure to develop an understanding of what strategic planning really is.
• Failure to accept and balance interrelationships among intuition, judgment, managerial
values, and the formality of the planning system.
• Failure to encourage managers to do effective strategic planning through an appropriate
rewards system.
• Failure to tailor and design the strategic planning system to the unique characteristics of
the company.
• Failure of top management to spend sufficient time on the strategic process.
• Failure to modify the strategic planning system as conditions within the company change.
• Failure to mesh properly the process of strategic planning from the highest levels of
management to its complete implementation.
• Failure to keep the planning system simple.
• Failure to secure within the company a climate for strategic planning.
• Failure to link the major elements of strategic planning and the implementation process.
Core Activities in Strategic Marketing Process
o Force an integrated look at total commitments.
o Generate new data about the future.
o Extend time horizons being considered by managers.
o Involve more people in longer-term thinking.
o Develop a systematic method for communication about the future.
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o Provide a valuable framework within which to evaluate individual proposals and budget
options.
o Allow more effective management of operations.
o Establish mutually agreed-upon commitments.
o Contain sufficient information to lend credibility to its promise.
o Maintain strategic focus.
o Foster awareness of options and their likely consequences.
o Identify critical issues, choices and priorities on which management attention must be
focused.
o Provide linkage to the system for allocating and committing capital funds.
o Keep paperwork manageable.
o Accommodate a plurality of managerial and planning styles.
o Become woven into the fabric of the organization to become a natural part of getting the
job done.
o Most importantly the process can be effectively used to:
o Generate critical information in an orderly and timely manner.
o Identify issues and possible crisis points.
o Improve communications.
o Reinforce teamwork
o Enhance decision-making.
Structure of Marketing Plan
o Mission Statement/Objectives
o Product-Service/Market Matrix
o Industry Attractiveness and Market Structure
Market/Customer Group Analysis*
o Business Segment Analysis
Business Segment Performance Analysis
Business Segment Contribution Margin Analysis
Generic Competitive Strategies
Business Segment Competitive Analysis
Detailed Individual Competitor Strategies *
Competitive Analysis - Major Competitor Summary *
Competitive Analysis - Points of Sale/Contact
Business Segment Strategic Plans
Detailed Product/Service Analysis
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Product/Service Line Review
Product Life Cycle
New Product Evaluation Matrix
Product/Services Competitive Analysis
o Technology Plan
o Human Resource Planning
o Organizational Chart
Time Allocation *
Function Reassignment Plan *
Management Depth Chart *
Personnel Plan Summary
Personal Goals*
o Management System Analysis
o Benchmarking/Continuous Improvement *
o Strategic Financial Data
o Financial Pro-Forms
o APPENDIX
Company History
Company Profile
Key Corporate Values
Major thrust of the strategic marketing is to identify the markets, understand the competition
therein and plan for sustainable approaches for survival of business. The marketing process is complex
and emerges from the interplay of three forces – customer, competition and corporation in a given
business environment. The formation of a successful marketing strategy requires varieties of
information from the internal and external sources. The internal information is sourced from top
management policies and activities market operations. The external information pertains to social,
technological, economic and political (STEP) and product market environment. The effectiveness of
the marketing perspectives of the corporation is another input to the strategic marketing.
DEVELOPING ACTIVITY SCHEDULE
Marketing is one of the pre-requisites of the economy irrespective of its status - developed or
developing in different parts of the world. In rural areas of the developing countries the marketing
activity has a major role to perform in generating employment and income among the manufacturing
and marketing firms. However, it is found through reviewing the contemporary literature on rural
marketing that there exists a gulf between the ethics and logistics of business in true sense. It has
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been observed over the period that marketing is a complex phenomenon and need a planned effort
to venture into the various vital issues of the business. Indeed, it is a synchronized approach of
buying and selling for the sake of the economic interest of the producers as well as the traders -
may be an individual or an institution.
Consumption System
Activity Scheduling
Step 1: Conduct market survey of existing consumption patterns with reference to competitor’s
products and their attributes, production potential,actual quantity produced, trade channels, distribution
and logistics, pricing methods , infrastructure, gross earnings , net profit and the related economic
issues.
Step 2: Identify demand for your product, supply gap, scope for penetration, Networking retail
and carrying and forwarding agents, factors influencing trade channels.
Step 3: Analyse logistics,I dentify prospective traders, draft plan for linkages with respect to
credit, production, designing, skill development and extension services.
Step 4: Discuss with strategic business partners, get consensus, official approvals, work-out
competitive international brand alliance, if the competitor is very strong, schedule the firm and
commodity for marketing purposes, provide designs, market requirements, assist in availing inputs,
watch production and competitors’ moves.
Step 5: Schedule plans for production and operations management, generate confidence among
the partners and stake holders in the business.
Identifying Business Opportunities
Since the entire marketing opportunities, depend on obtaining favourable buying decisions from
different segments of prospective consumers, It is essential to well acquaint with the opportunities
existing in the given spatial and business conditions. The activities in this connection need to be
scheduled as under:
Activity Scheduling
Step 1: Appraise market situation in terms of consumer segmentation, with reference to the
aspects of demography, product design and purchasing power (income groups). Penetrate the
product and services in both competitors segment, and the new segment exclusively selected
for launching.
Step 2: Appraise market situation in terms of product acceptability, product design and appearance,
response to quality, reliability, price, substitution attitude.
Step 3: Appraise market situation in terms of mode of buying to analyse attitude of payments for
purchases made viz. cash, credit, monetary instruments (cheques, drafts, credit cards etc.). Provide
relatively better services to the customers as compared to the competitor.
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Step 4: Appraise the market situation to find available, distribution network, delivery points,
suitability for the type of trade (retailing, wholesaling, exports etc.) and season of demand, replenish-
ment schedule and inventory management.
Step 5: Appraise the market situation to find out the scope of sales promotion and the facilities
for advertisement, media response, coverage and the comparative advantages of similar products in
the operational area of market.
Step 6: Do scaling of operations for time and quantity for procurement, sales and turnover at the
present prices.
Step 7: Analyse the prospects of business through planning distribution network, procurement
scheduling and sales.
Step 8: Workout price brackets, managerial costs, price spread, marketing margins and costs of
communication. Offer competitive margins to the trade channels and have long terms goal of operating
on volume.
Step 9 : Prepare draft business plan, analyze marketing budget, discuss at various managerial
levels and finalize.
Step 10 : Review the plan, get plan approved and draw interim implementation plan for venturing
into business.
Step 11 : Allocate tasks to personnel, schedule time spread implement a pilot business, observe
the business pulse.
Step 12: Draw conclusions, complete business infrastructure and do periodical monitoring of
business outlets and consumer preferences.
Market Segmentation
Aspects of product distribution and market segmentation have close coherence with each
other.Markets are segmented for two broad reasons - product accessibility to the consumers and
selecting better approaches for the product sales. We need to perform a set of activities scheduled as
below :
Activity Scheduling
Step 1 : Make decision on marketing approach basing on consumer segmentation done according
to the demographic density and purchasing power.
Step 2 : Make decision on having the type of business viz. exclusive retail outlet, wholesale,
mixed outlets, etc franchisees etc. Find suitable name for the outlets e.g. Opera, Heritage etc. which
could always be on the top of the mind of customers.
Step 3: Set locations for business, demarcate operational area, ensure transport, parking and
communication facilities at the outlets for the customers.
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Step 4: Develop business infrastructure, consumer amenities viz. parlors, kids corner etc. for
making the customers ore comfortable while transacting the business.
Step 5: Identify feasible distribution approaches viz. self management, regional distributors, dealers
etc., fix-up security- turnover ratios and sales - margin ratios with the distributors. Appoint supply
chain managers to look into these aspects more technically.
Step 6: Plan product indenting approaches for the outlets, plan contemporary and appealing
product displaying styles at outlets, approachable sites of customers, dealers and distributors.
Step 7: Schedule product delivery time, check complaints, define delivery route, plan transport
for intensive and extensive distribution.
Step 8: Select aggressive sales approach in the introductory state and later gradually turn to
defensive mechanism retaining the customers , use quality products in the outlets, provide incentives
to consumers.
Step 9: Plan for periodical sales monitoring, contact consumers periodically through structured
checklists and provide incentives to the dealers viz.cash awards,certificates etc.in long - run
performance.
Step 10: Analysing the long run performance of the business and consumers’ acceptability of
products or specific product plan for product segmentation to create specialised market.
Product Pricing
There are three principal ways of product pricing, namely (i) value pricing (ii) pricing with the
demand trend and (iii) penetration pricing. It is required to understand the pricing concepts well
before venturing into the product marketing. The activities which need to be scheduled during this
operation are detailed as below :
Activity Scheduling
Step 1: Identify demand for the products to be launched in the market, review the price structure
of the similar products.
Step 2: Decide the pricing approach, keep near to the competitor’s prices, consider the customer
inclination in final price structure.
Step 3: Follow methodological approach in pricing, keep tentative price and term it as inaugural
offer, launch the product, watch the price response on consumers, set it for a gradual increase, fix the
price at an optimum point.
Step 4: Watch market reaction ,reserve decisions, experience value pricing approach in high
income and economy approach in middle income brackets.
Step 5: Watch competitive breakthroughs and breakdowns, reserve alternate prices, to gain
accreditation of consumers go for dumping price, give short span for fluctuation.
Step 6: Stabilise prices. get consumers’ accreditation and introduce periodical innovations in
products with five percent change in previous prices.