11.2 Creating a Marketing Strategy

Marketing strategy is the backbone of successful business operations. It encompasses the crucial components of the marketing mix: product, price, place, promotion, and people. These elements work together to create a cohesive approach that meets customer needs and drives business growth.

Environmental scanning is a vital part of marketing strategy, helping businesses identify opportunities and threats. By analyzing macro and micro-environmental factors, companies can adapt their strategies to changing market conditions and stay ahead of the competition. This proactive approach is essential for long-term success.

Marketing Strategy Components

Components of marketing mix

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• Product
  • Goods or services offered to target market
  • Includes features, quality, packaging, branding
  • Must satisfy customer needs and wants (reliable smartphone with long battery life)
• Price
  • Amount charged for product
  • Considers production costs, competition, perceived value
  • Impacts demand and profitability (premium pricing for luxury brands)
• Place
  • Distribution channels used to make product available
  • Includes physical stores, online platforms, logistics
  • Ensures product accessibility and convenience for customers (Amazon's extensive distribution network)
• Promotion
  • Communication strategies used to inform and persuade customers
  • Includes advertising, public relations, sales promotions, personal selling
  • Aims to create brand awareness, generate interest, stimulate demand (Coca-Cola's iconic advertising campaigns)
• People
  • Individuals involved in delivering product or service
  • Includes employees, salespeople, customer service representatives
  • Plays crucial role in shaping customer experience and satisfaction (Apple's knowledgeable store associates)

Environmental scanning for opportunities

• Process of gathering and analyzing information about external business environment
• Macro-environment factors (PESTEL)
  • Political: government policies, regulations, stability (changes in trade agreements)
  • Economic: economic growth, inflation, interest rates, consumer spending (recession impacting disposable income)
  • Social: demographic trends, cultural values, lifestyle changes (aging population requiring healthcare services)
  • Technological: emerging technologies, innovation, digital disruption (rise of mobile payments)
  • Environmental: climate change, sustainability, resource scarcity (demand for eco-friendly products)
  • Legal: laws, regulations, industry standards (data privacy regulations like GDPR)
• Micro-environment factors
  • Customers: needs, preferences, buying behavior (shift towards online shopping)
  • Competitors: strengths, weaknesses, strategies (new entrant offering lower prices)
  • Suppliers: reliability, quality, bargaining power (disruption in supply chain due to natural disaster)
  • Intermediaries: distributors, retailers, partners (exclusive partnership with major retailer)
• Identifying opportunities
  • Unmet customer needs or wants (demand for healthier snack options)
  • Emerging market segments or niches (growing interest in plant-based diets)
  • Technological advancements or innovations (AI-powered customer service chatbots)
  • Changing consumer trends or preferences (increasing focus on sustainability and ethical consumption)
• Identifying threats
  • Intense competition or new entrants (established brand launching similar product)
  • Changing regulations or legal requirements (stricter environmental regulations increasing costs)
  • Economic downturns or shifts in consumer spending (rising unemployment rates)
  • Technological disruptions or obsolescence (new technology rendering current products outdated)

Market Analysis and Segmentation

• Market segmentation: Dividing the market into distinct groups of buyers with different needs, characteristics, or behaviors
• Target market: Selecting one or more market segments to focus marketing efforts on
• Positioning: Creating a unique image for the product or brand in the minds of consumers
• Marketing research: Gathering and analyzing data to inform marketing decisions and strategies
• Customer relationship management (CRM): Managing interactions with current and potential customers to improve relationships and drive sales

Competitive Advantage

Types of competitive advantage

• Cost leadership
  • Offering products at lowest price in market
  • Achieved through economies of scale, efficient operations, cost control
  • Attracts price-sensitive customers and increases market share (Walmart's everyday low prices)
  • Potential for long-term success if costs remain low and demand is stable
• Differentiation
  • Offering unique or superior products that command premium price
  • Achieved through innovation, quality, brand image, customer service
  • Attracts loyal customers willing to pay more for perceived value (Apple's innovative design and user experience)
  • Potential for long-term success if differentiation is sustainable and valued by customers
• Focus
  • Targeting specific market segment or niche with tailored offerings
  • Achieved through specialization, customization, localization
  • Attracts customers with specific needs or preferences (Lululemon's focus on high-quality yoga apparel)
  • Potential for long-term success if segment is large enough and focus is maintained
• Combination
  • Pursuing combination of cost leadership and differentiation
  • Achieved through operational efficiency and unique value proposition
  • Attracts broad range of customers seeking both value and quality (Toyota's reliable and affordable vehicles)
  • Potential for long-term success if balance between cost and differentiation is maintained
• Brand equity: The value and power that a brand name holds in the marketplace
• Customer value proposition: The unique combination of benefits that a company offers to its target customers