Functional strategies –
Marketing
Geoff Leese November 2006,
revised July 2007, August 2008,
August 2009
1
Introduction
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Functional strategies
Business orientation
The marketing concept and approach
The marketing mix
Strategy differentiation
Positioning
Strategies
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2
Product/Price/Place (Distribution)/Promotion
Other topics
Functional Strategies
Top level or
SBU
strategy
Corporate
strategy
Manufacturing
Strategy
(week6)
Finance
Strategy
(week 7)
Marketing
Strategy
(week 7)
Examples of functional strategies:
• depends on level of SBU
• depends on type of business
• depends on organisation
3
HRM
Strategy
(week 8)
Business orientations (1)
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Production orientation
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Product orientation
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Demand exceeds supply
Needs good production engineering/financial control
Any colour you like as long as its black…..
Focus on customer perceptions of “quality”
Needs innovative R&D
Business orientations(2)
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Sales orientation
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Marketing orientation
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Finding customers for /sales teams
Focuses on customer needs
Needs well developed marketing research teams
and flexible production/delivery methods
The marketing concept
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6
Evaluate market opportunities before
production
Assess potential demand
Canvass customer priorities and desires
Assess pricing strategy
Produce and supply goods/services meeting
customer expectations
The marketing mix (four Ps)
Product
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Intrinsic or perceived properties of product or service
Price
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Pricing strategies
Place
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Delivery of goods/services
Promotion
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Advertising, merchandising, PR
Seven P model includes also
 Packaging,
Positioning, People
www.entrepreneur.com/marketing/article70824.html
7
Example marketing strategies
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New products for existing markets
New markets for existing products
New products for new markets
Existing products in existing markets
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Improve penetration
Improve market share
Added value
Market segmentation
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Breakdown of a market into segments based on
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Demographics
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Behaviour
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Age
Wealth
Geography
Social class
Lifestyle
Attitudes
Interests
Opinions and beliefs
Strategy differentiation
Undifferentiated
Market segment
Strategy
Market segment
Market segment
Concentrated
Strategy
Market segment
Market segment
Market segment
Differentiated
Strategy
Strategy
Strategy
10
Market segment
Market segment
Market segment
Positioning
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How a product or service is perceived by
consumers in comparison to it’s competitors
Issues
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Scope
Market leadership/market following?
Substitution?
Multi-national positioning?
Product strategies
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Product choice
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Product development
New product lines
Extend existing lines
Rationalisation
Standardisation
Branding
The product life cycle
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Introduction
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Growth
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Create product awareness and loyalty –
advertising important
Few competitors – technical difficulties possible
Costs are high, often losses are experienced
Early adopters attracted by novelty
Competition appears
Mainstream consumer adoption
Widen appeal, build loyalty
The product life cycle
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Maturity
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Decline
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Competition intensifies
Stabilise market share – enter new markets
Extra promotion, price cutting, widen distribution
systems, add value
Consumer tastes change/substitution/obsolescence
Sales and profits fall
Manage for profit
Discontinuation or divestment
The BCG Matrix
For strategies used for each category see
http://www.quickmba.com/strategy/matrix/bcg/
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Pricing strategies
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Penetration pricing
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Target pricing
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Varies according to stage in life cycle
Loss leading
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High price, premium version of established products
Product life cycle pricing
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Based on estimated demand/profit targets
Skimming
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Low price, aggressive advertising
Selling at less than cost- attracts custom
Pricing strategies
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Price discrimination
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Marginal cost pricing
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Prices increase when demand is high
Customary pricing
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Low prices to discourage new entry into market
Variable (stayout) pricing
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Based on ACTUAL cost of supply
Limit pricing
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Same product, different markets, different prices
Price stays the same, contents reduced
Distribution strategies
Direct
Consumer
Producer
Short chain (single intermediary)
Producer
Consumer
Retailer
Long chain (could be agents too!)
Producer
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Wholesaler
Retailer
Consumer
Choice of distribution method
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Intensity
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Cost of channel
Level of control possible/desirable
Improvement/worsening of brand image
Geographical coverage
Reliability of intermediaries
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No of outlets in each area
Product presentation
Continuity of supply
Pre sales info/after sales service
Promotion strategies
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Advertising
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Objectives
Strategy
Choice of medium
Direct marketing
Sales promotion
Other topics
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Pan-company marketing
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Marketing as a strategy driver across the firm
Internal marketing
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Marketing driving HR strategy
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Relationship marketing
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Recruitment
Training
Promotion
“Internal customers”
Establishment of long-term trading relationships with
customers
Summary
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Functional strategies
Business orientation
The marketing concept and approach
The marketing mix
Strategy differentiation
Positioning
Strategies
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22
Product/Price/Place (Distribution)/Promotion
Other topics
Further reading
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Bennett chapter 9
Butel et al Unit 4
All about Marketing - follow the link!
An alternative - follow the link!