[MARKETING STRATEGIES] BUSS3 - AQA
[MARKETING STRATEGIES] BUSS3 - AQA
Understanding Marketing Objectives
Marketing - The process of identifying, anticipating (predicting) and satisfying
customer needs profitably
A firm’s marketing aims and objectives are the goals or targets of the marketing
function. These must be consistent with the organisation’s corporate aims and
objectives.
Marketing objectives need to be seen as part of a hierarchy of objectives. A corporate
objective influences a marketing objective, which in turn shapes the marketing
strategies and marketing tactics employed:
Types of Marketing Objectives
Because marketing is involved in every aspect of a business, you often find that
marketing objectives are wide‐ranging. Some examples are provided below:
Objective
Example Objectives
Area
Maintaining or  Achieve revenue growth of 15% per year for the next four years
increasing
 Add 1,000 new customer accounts generating at least £100,000 per
market share
account within three years
Developing
 Launch at least 25 new products into the industrial channel in 2010 and
new products
2011
 Grow average first‐year sales of new editions by 25% in the Higher
Education sector
Meeting the
 Achieve at least a 95% excellent customer service rating each month
needs of
 Increase the proportion of sales bookings from repeat business to 45%
customers
for the summer season
Entering a
 Supply a minimum of 50,000 trial downloads per month
new market /  Increase the number of customer enquiries from the EU by 10,000 per
market
month
positioning
 Recruit five suitable distribution agents in the four target countries
[MARKETING STRATEGIES] BUSS3 - AQA
Internal Influences
Internal influences are those factors within a business, such as workforce, financial
position and resources that affect its marketing objectives.
Corporate objectives
As with all the functional areas, corporate objectives are the most important internal
influence. A marketing objective should not conflict with a corporate objective
Finance
The financial position of the business (profitability, cash flow, liquidity) directly affects
the scope and scale or marketing activities.
Human resources
For a services business in particular, the quality and capacity of the workforce is a key
factor in affecting marketing objectives. A motivated and well‐trained workforce can
deliver market‐leading customer service and productivity to create a competitive
marketing advantage
Operational issues
Operations has a key role to play in enabling the business to compete on cost
(efficiency / productivity) and quality. Effective capacity management also plays a part
in determining whether a business can achieve its revenue objectives
External Influences
External factors are those outside of a business, such as the state of the economy and
the actions of its competitors.
Competitor actions
Marketing objectives have to take account of likely / possible competitor response.
E.g. an objective of increasing market share by definition means that competitor
response will not be effective
Market dynamics
The key market dynamics are market size, growth and segmentation. Changes in any of
these undoubtedly influence marketing objectives. A market whose growth slows is
less likely to support an objective of significant revenue growth or new product
development
Technological change
Consumer and other markets are now affected by rapid technological change,
shortening product life cycles and creating great opportunities for innovation. These
have to be taken into account when setting marketing objectives.
Economic environment
This is a key factor in determining demand. E.g. many marketing objectives have been
thwarted or changed as a result of the recession. Factors such as exchange rates would
also impact objectives concerned with international marketing.
[MARKETING STRATEGIES] BUSS3 - AQA
Analysing Markets and Marketing
The challenge for any business is to gain a sufficiently detailed understanding of the
fundamentals of a market. Without this insight, it is unlikely that marketing strategies
will prove effective or that marketing objectives will be met.
By market fundamentals we mean understanding issues such as:
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How big is the market? (measured by sales, volume etc)
How fast is the market growing and what is the market growth potential?
The key social, economic, political/legal and technological factors that drive
change in the market
Who are the existing competitors and what market shares do they have?
The extent of branding and customer loyalty in the market
How the market is segmented to meet different customer needs
Customer preferences in terms of when and where they buy, what prices they
pay and which methods of promotion are effective
The potential for developing a competitive position in a market – either
through a USP or through effective price competition
The process of analysing the market should not be considered as a one‐off. An
effective marketing team is constantly searching and updating their market
knowledge. However, detailed marketing analysis is particularly important for tasks
such as forecasting sales for new products, supporting a new marketing strategy, or to
help make decisions in relation to significant organisational or operational change.
Market Analysis: the study of market conditions to assist a firm’s plans
Market analysis can be either quantitative or qualitative:
 Quantitative Analysis examines statistical information in order to draw
conclusions about the nature of the market (e.g. who is the market leader, how
much growth is there?)
 Qualitative Analysis considers the reasons why certain actions take place (e.g.
why internet sales are growing)
Market analysis helps a business to understand its existing markets. The data and
understanding gathered also allows a business to prepare for the future, by enabling it
to forecast sales and other data. This will give the company the ability to effectively
coordinate other functional departments and means they can anticipate trends so that
they are prepared and can respond effectively to changes within the market.
[MARKETING STRATEGIES] BUSS3 - AQA
Quantitative Forecasting
There are several quantitative methods of analysing a market which are in common
use. The following methods are covered in the following sections:
1. Test marketing
2. Extrapolation and Moving Averages
3. Correlation
Test Marketing
One way to gather information about the revenue potential for a new or improved
product is to trial it in a test market. Test marketing involves launching the product in
small part (usually geographic) of the target market in order to gauge the viability of a
product or service in the target market prior to a main roll‐out or launch. The aim of
the test marketing is to gather as much information as possible about the elements of
the marketing mix, including:
• The product itself
• The promotional message and media spend
• The distribution channels
• The price
The main benefits and disadvantages of test marketing can be summarised as follows:
 Data provided is from actual
customer spending
 Reduces the risk of a full‐scale launch
– if the product fails a test then
significant costs may be saved
 Provides a way to tweak the
marketing mix before full launch
 Danger of the competition learning
about the product and coming up with a
response before the full launch
 Test market may not be representative
of the full target market
 Costly and time‐consuming to
administer
Extrapolation and Moving Averages
These two methods make extensive use of sales and other data to make predictions
about the future.
A moving average takes a data series and “smoothes” the fluctuations in data to show
an average. The aim is to take out the extremes of data from period to period. Moving
averages are often calculated on a quarterly or weekly basis.
Extrapolation involves the use of trends established by historical data to make
predictions about future values. The basic assumption of extrapolation is that the
pattern will continue into the future unless evidence suggests otherwise.
 A simple method of forecasting
 Not much data required
 Quick and cheap
 Unreliable if there are significant
fluctuations in historical data
 Assumes past trend will continue
 Ignores qualitative factors (e.g.
changes in tastes & fashions)
[MARKETING STRATEGIES] BUSS3 - AQA
Correlation
Correlation looks at the strength of a relationship between two variables. For
marketing, it might be useful to know that there is a predictable relationship between
sales and factors such as advertising, weather, consumer income etc. Correlation is
usually measured by using a scatter diagram. For example, a data point might measure
the number of customer enquiries that are generated per week (x‐axis) against the
amount spent on advertising (y‐axis). This is illustrated below:
If the data suggests strong correlation, then the relationship might be used to make
marketing predictions.
The big danger with correlation is of believing there is really a causal link between two
variables when, in fact, they are not related. It is logical to believe that there is a causal
link between the daily temperature and sales by ice‐cream vans. However, is there a
link between increasing childhood obesity and increasing disposal incomes for
households? Both these variables have risen over the long‐term, but they are probably
not directly related.
Qualitative Forecasting
Many marketing managers like to use methods that do not rely on data to help make
forecasts. These methods are called “qualitative” forecasting techniques, in the sense
that they make use of judgements and opinions. The main qualitative techniques are
summarised below:
Hunch
A forecast based on a hunch is likely to be influenced by the experience of the
forecaster, perhaps influenced by market research or from discussions he/she has had
with others in the market.
Delphi
The Delphi method involves getting a group of market experts to provide an opinion
on the forecasting task – e.g. to estimate future sales growth in a market. The method
involves a series of steps where the experts first give a confidential opinion on the task
and then revise their forecasts based on the submissions of each expert to the group.
Ultimately the aim of the Delphi method is to reach a “consensus” forecast.
[MARKETING STRATEGIES] BUSS3 - AQA
Using ICT to Analyse Markets
Information Technology is of particular significance in market analysis because it allows
businesses to gather, analyse and distribute a wealth of data, often quickly and cost
effectively. Some examples of how it is used are shown below:
 An IT based system can complete quantitative forecasting calculations almost
instantaneously, saving time and money for a business
 The time saved by IT allows a business to compare a number of different
strategies, thus improving the quality of planning in the business
 Organisations are able to link their sales records to other databases, so that
every time an item is sold it is registered immediately, meaning trends in sales
patterns can be detected quickly and necessary action taken
 IT allows firms to improve both internal and external communications,
improving efficiency and the firm’s understanding of its market
 The growing use of loyalty cards allows firms to accumulate information on the
buying habits of their customers. Organisations can use this data to tailor
services or products to customer’s needs
 The internet or a company intranet allows more data to be stored more
cheaply and accessed quickly by a wide range of individuals
Difficulties in Analysing Marketing Data
Businesses rely on accurate forecasting in their business planning. If sales are
overestimated, there is likely to be a waste of resources as the firm will produce too
much. The cost to the firm will depend on whether the products are perishable and
how expensive they are to store. Underestimations also cause problems. The
opportunity cost of lost sales is high, especially if customer goodwill is undermined.
Although sales forecasts cannot be fully relied upon, they do give direction and targets
for a company. Ideally, they should arise from a mixture of qualitative and quantitative
techniques. Sales forecasts are likely to be more accurate when:
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The product is well established and the market is known
External factors are predictable and there is stability in tastes ad competitor
actions
The forecasts are made by and agreed with those in regular contact with the
market
The organisation has undertaken detailed and reliable market research
[MARKETING STRATEGIES] BUSS3 - AQA
Selecting Marketing Strategies
Two different strategic approaches to marketing need to be considered:
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Porter’s Generic Strategies

Ansoff’s Matrix
Porter’s Generic Strategies
The challenge for a marketing strategy is to find a way of achieving a sustainable
competitive advantage over the other competing products and firms in a market. A
competitive advantage is an advantage over competitors gained by offering consumers
greater value, either by means of lower prices or by providing greater benefits and
service that justifies higher prices. To make this competitive advantage a sustainable
one, it needs to find a basis that can be defended against Porter’s Five Competitive
Forces: New Entrants, Substitute Products, the Power of Buyers, Power of Sellers and
the Level of Competition.
Porter suggested four "generic" business strategies that could be adopted in order to
gain competitive advantage. The strategies relate to the extent to which the scope of a
business' activities are narrow versus broad and the extent to which a business seeks
to differentiate its products.
The differentiation and cost leadership strategies seek competitive advantage in a
broad range of market or industry segments.
By contrast, the differentiation focus and cost focus strategies are adopted in a narrow
market or industry.
[MARKETING STRATEGIES] BUSS3 - AQA
Cost Leadership:
With this strategy, the objective is to become the lowest‐cost producer in the
industry. The traditional method to achieve this objective is to produce on a large scale
which enables the business to exploit economies of scale.
Many (perhaps all) market segments in the industry are supplied with the emphasis
placed on minimising costs. If the achieved selling price can at least equal (or near) the
average for the market, then the lowest‐cost producer will (in theory) enjoy the best
profits.
This strategy is usually associated with large‐scale businesses offering "standard"
products with relatively little differentiation that are readily acceptable to the
majority of customers. A strategy of cost leadership requires close cooperation
between all the functional areas of a business. To be the lowest‐cost producer, a firm
is likely to achieve or use several of the following:
• High levels of productivity
• High capacity utilisation
• Use of bargaining power to negotiate the lowest prices for production inputs
• Lean production methods (e.g. JIT)
• Effective use of technology in the production process
Differentiation Leadership:
With differentiation leadership, the business targets large markets and aims to achieve
competitive advantage across the whole of an industry through having a particularly
good USP. The key to success with this strategy is to try to reduce costs in areas that
do not affect the uniqueness of the product and to identify the features that add value
to the product without a significant increase in costs.
There are several ways in which this can be achieved, though it is not easy and it
requires substantial and sustained marketing investment. The methods include:
• Superior product quality (features, benefits, durability, reliability)
• Branding (strong customer recognition & desire; brand loyalty)
• Industry‐wide distribution across all major channels
• Consistent promotional support – often dominated by advertising, sponsorship etc
Focus:
Cost leadership and differentiation have so far been applied to firms in mainstream
mass markets. Porter also identified the comparable approaches to firms operating in
niche markets. This focus may depend on cost leadership or differentiation, and is the
basis of success for most smaller and medium sized firms.
By pursuing focus as a strategy, a firm picks a segment of the market that is poorly
served by the main players in the industry and then adopts either differentiation or
cost leadership strategy in order to target the niche.
Porter also suggests that firms must make a conscious
choice over which type of competitive advantage it seeks to
develop. If it tries to have very low costs as well as a
differentiated product, it will be stuck in the middle with
average costs and little differentiation, giving it no overall
competitive advantage.
[MARKETING STRATEGIES] BUSS3 - AQA
Ansoff’s Matrix
The Ansoff Growth matrix is another marketing planning tool that helps a business
determine its product and market growth strategy. Ansoff’s product/market growth
matrix suggests that a business’ attempts to grow depend on whether it markets new
or existing products in new or existing markets.
Increasing
Risk
Increasing Risk
The output from the Ansoff product/market matrix is a series of suggested growth
strategies which set the direction for the business strategy. These are described below:
Market penetration:
Market penetration is the name given to a growth strategy where the business focuses
on selling existing products into existing markets. Market penetration seeks to achieve
four main objectives:
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Maintain or increase the market share of current products – this can be
achieved by a combination of competitive pricing strategies, advertising, sales
promotion and perhaps more resources dedicated to personal selling
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Secure dominance of growth markets
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Restructure a mature market by driving out competitors; this would require a
much more aggressive promotional campaign, supported by a pricing strategy
designed to make the market unattractive for competitors
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Increase usage by existing customers – for example by introducing loyalty
schemes
Though a company’s main aim will be to penetrate the market, they must also keep in
mind that the best option in this market may be to consolidate/withdraw from the
market, or decide against entering it in the first place.
[MARKETING STRATEGIES] BUSS3 - AQA
Market development:
Market development is the name given to a growth strategy where the business seeks
to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including:
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New geographical markets; for example exporting the product to a new
country
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New product dimensions or packaging
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New distribution channels (e.g. moving from selling via retail to selling using
ecommerce and mail order)
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Different pricing policies to attract different customers or create new market
segments
Market development is a more risky strategy than market penetration because of the
targeting of new and unknown markets.
Product development:
Product development is the name given to a growth strategy where a business aims to
introduce new products into existing markets. This strategy may require the
development of new competencies and requires the business to develop modified
products which can appeal to existing markets.
A strategy of product development is particularly suitable for a business where the
product needs to be differentiated in order to remain competitive. A successful
product development strategy places the marketing emphasis on:
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Research & development and innovation
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Detailed insights into customer needs (and how they change)
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Being first to market
Diversification:
Diversification is the name given to the growth strategy where a business markets new
products in new markets. This is an inherently more risk strategy because the business
is moving into markets in which it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea
about what it expects to gain from the strategy and an honest assessment of the risks.
However, for the right balance between risk and reward, a marketing strategy of
diversification can be highly rewarding.
[MARKETING STRATEGIES] BUSS3 - AQA
International Markets
A Board of Directors studying the options offered by the Ansoff Matrix might well be
tempted to focus on the bottom‐left quadrant (market development) and try to enter
international markets as part of the growth strategy.
Selling into international markets is increasingly attractive for UK businesses. For
example because of:
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Stronger economic growth in emerging economies such as China, India and Brazil
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Market saturation and maturity (slow or declining sales) in domestic markets
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Easier to reach international customers using e‐commerce
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Greater government support for businesses wishing to expand overseas
The four main methods of investing in international markets are:
Exporting direct to
international
customers
The UK business takes orders from international customers and
ships them to the customer destination
Selling via overseas
agents or
distributors
A distribution or agency contract is made with one or more
intermediaries
Distributors & agents may buy stock to service local demand
The customer is owned by the distributor or agent
Opening an
operation
overseas
Involves physically setting up one or more business locations in
the target markets
Initially may just be a sales office – potentially leading onto
production facilities (depends on product)
Joint venture or
buying a
business overseas
The business acquires or invests in an existing business that
operates in the target market
Whatever method is used, a business looking at international expansion needs to
consider some specific risk factors:
Cultural differences: a business needs to understand local cultural influences in order
to sell its products effectively. For example, a product may be viewed as a basic
commodity at home, but not in the target overseas market. The sales and marketing
approach will need to reflect this.
Legislation: legislation varies widely in overseas markets and will affect how to sell into
them. A business must make sure it adheres to local laws.
Economic Factors: international markets can be heavily influenced by changes in
economic growth, interest rates and exchange rates.
Language issues: although the common business language worldwide is now English,
there could still be language issues. Can the business market its product effectively in
the local language? Will it have access to professional translators?
[MARKETING STRATEGIES] BUSS3 - AQA
Developing and Implementing
Marketing Plans
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A statement of the organisation’s current marketing position and future
strategies, and a detailed examination of the tactics that it will use to achieve
its objectives.
The extent to which each part of the above process needs to be carried out depends
on the size and complexity of the business.
From the diagram, the main components of a marketing plan can be summarised as:
Component
Description
Mission statement
A meaningful statement of the purpose and direction of the business
Corporate
objectives
Marketing audit
The overall business objectives that shape the marketing plan
Market analysis
SWOT analysis
Marketing
objectives
Marketing budget
Action plan
The way the information for marketing planning is organised. Assesses the
situation of marketing in the business – the products, resources,
distribution methods, market shares, competitors etc
The markets the business is in (and targeting) – size , structure, growth etc
An assessment of the firm’s current position, showing the strengths &
weaknesses (internal) and opportunities and threats (external)
What the marketing function wants to achieve and how it intends to do it
Usually a detailed budget for the next year and an outline budget for the
next 2‐3 years
The detailed implementation plan
[MARKETING STRATEGIES] BUSS3 - AQA
Factors Affecting the Marketing Plan
The marketing plan will be influenced by internal factors such as:
The Financial Position of the Business:
This is a fundamental issue. A business suffering from cash flow problems or low
profitability will normally have to restrict its marketing budget along with cost
reductions in other functional areas
Operational Issues:
The marketing objectives must be consistent with the production department’s
approach. The marketing department and the production department need to liaise in
order for them to work towards the same goals, and so that they produce a product of
sufficient quality that fits the marketing mix.
Human Resources:
Successful marketing strategies need people to deliver them. Consequently, HRM and
marketing need to coordinate their activities. Staff in the marketing department must
be recruited effectively, and the workforce planning of the business is essential if each
department is to have the right number of suitably qualified staff with the required
skills. Customer service training is also very important.
It will also be influenced by external factors such as:
Competitor actions:
A business whose competitors are significantly increasing their marketing spending
may need to respond in order to maintain market share. Flexibility needs to be
incorporated into the marketing plan so that the business can respond to any changes
in a marketing strategy adopted by a competitor.
The demand for, and price of marketing services:
The budget needs to take account of the cost of marketing activities. For example, the
economic slowdown in 2008/09 in the UK significantly reduced the cost of advertising
because of a reduction in demand.
Benefits and Problems of Marketing Planning
The main benefits and problems of marketing planning can be summarised as follows:
 Provides clear sense of direction for
management
 Marketing options are evaluated and
prioritised
 Allocates scarce resources more effectively
 Encourages coordination with other
departments
 Provides a basis for assessing actual results
 Makes marketing dept responsible
 Can be time‐consuming
 Constant change in the market makes
assumptions difficult
 Danger of either being too simplistic or
too complicated
 The plan can be ignored as
circumstances take over