Six Stages

Stage 1: The Mission Statement

The first stage in strategic marketing is the development of a mission statement. A mission statement is a brief description of a company, generally no more that a few lines, that describes where the company is and where it wants to go. A good mission statement should contain:

• target customers/markets

• principal products/services

• geographic domain

• core technologies used

• commitment to survival, growth and profitability

• key parts of the company’s philosophy

• company self-concept

• company’s desired images

Do not expect a mission statement to be developed quickly. It generally takes various revisions before a complete mission statement is written.

 

Stage 2: Overall Company Objectives

Once a mission statement has been created, the company can develop objectives. Objectives are specific goals to be achieved by the business. They are plans that will help a company move toward the mission statement. A business normally creates both one- and three-year objectives. Examples of company objectives are:

• To earn at least 20% after-tax rate of return on our net investment during this year

• To make our cookies the best selling cookies in terms of units sold in Kansas

 

Types of Objectives

1. Profitability

• Net profit as a percent of sales

• Net profit as percent of total investment

• Net profit per share of common stock

2. Volume

• Market share

• Percentage growth in sales

• Sales rank in the market

• Production capacity utilization

3. Stability

• Variance in annual sales volume

• Variance in seasonal sales volume

• Variance in profitability

4. Nonfinancial

• Maintenance of family control

• Improved corporate image

• Enhancement of technology or quality of life

Each objective should meet the following basic criteria:

Suitable: Do they fit with the corporate mission?

Measurable: What will happen and when?

Feasible: Are they possible to achieve?

Acceptable: Do they fit with the values of the company and the employees?

Flexible: Can they be adapted and changed should unforeseen events arise?

Motivating: Are they neither too difficult nor too easy to achieve?

Understanding: Are they stated simply?

Commitment: Are people committed to doing what is necessary to achieve them?

Participation: Are the people responsible for achieving the objectives included in the objective-setting process?

Companies need to ensure that they do not set too many objectives. When too many objectives are set, the company runs the risk of having objectives contradict and interfere with each other.

 

Stage 3: Competitive Strategies

Once a company has determined objectives a competitive strategy can be developed. A competitive strategy is developed so that a company can create advantages over the competition.

Examples of creating a competitive strategy include:

• offering buyers a standard product at a lower price; or

• making the product different than the competition on attributes considered important to the customer.

Types of Competitive Strategies

Overall Cost Leadership This refers to being a low-cost manufacturer and should not be confused with setting low prices. Cost leadership can be achieved by:

• producing on a large scale

• designing products that are easy to manufacture

• accessing low-cost raw materials

• predicting a broad range of products

• pursuing cost reductions in production, marketing, research and development, customer service, and the avoidance of marginal accounts

Differentiation

Differentiation involves changing the product so it is perceived as unique

Change can be based on:

• technical superiority

• quality

• customer support services

• the appeal of more value for the money

Niche Marketing

Niche marketing occurs when a product is sold to a small number of total potential customers. The specialty market is often referred to as niche marketing, since products are marketed to a very small group of buyers. Niche marketing requires the business owner to identify customers with similar demands and serve their needs extremely well. Niche marketing implies that a company will take a lower overall market share, but possibly with higher profits on the product. Higher profits may be achieved by having higher prices or producing at lower costs.

 

Stage 4:Marketing Objectives

Marketing objectives can only be developed after stages one through three have been completed  Marketing objectives are designed to help a company attain overall objectives. The five basic marketing objectives are:

• to achieve a viable level of sales or market share

• to increase market share

• to maintain market share

• to maximize cash flow

• to sustain profitability

Market share is a common term used in developing marketing objectives. It refers to the percentage of the total industry sales your company attains. For example, if a company sells 100 units of product, but total consumption for the good is 100,000 units, the market share is 1% (100/100,000).

 

Stage 5:Marketing Strategies

Marketing strategies outline exactly how marketing objectives will be achieved. For example, if the marketing objective is to increase market share, the marketing strategy states exactly how the market share increase will occur. A marketing strategy is a way to give marketing orientation to a business by deciding to position a product or service in terms of buyer needs and wants. Inexperienced business people often make decisions based on what they like or want, leaving the customer out of the picture. A marketing orientation brings the customer into the center of the picture. The marketing objectives for profits, cash flow and market share can be achieved by increasing the number of users, increasing the rate of purchase,

retaining existing customers or acquiring new customers. The following are examples of various types of marketing strategies.

I. Increase the number of users by:

• building willingness to buy

• increasing ability to buy

II. Increase the rate of purchase by:

• broadening usage occasions for the product

• increasing level of consumption

• increasing rate of replacement

III. Retain current customers by:

• maintaining satisfaction

• meeting what competition offers

• developing or increasing relationship marketing

IV. Acquire new customers by:

• line extensions (variations of existing products designed for existing markets)

• leaders (lower prices on certain products to increase the sale of more expensive complements)

• bundling (selling products - together, usually at a lower price than if bought separately)

• head-to-head market dominance

• head-to-head price/cost leadership

• differentiating the product

• serving a narrowly defined target market

• flankers (new brands designed to serve new segments)

 

Stage 6:Marketing Programs

Marketing programs are the detailed approaches to the four P’s. (products, place, promotion and pricing). The approach for making decisions for each of the four P’s should closely follow the mission statement, company objectives, competitive strategies, marketing objectives and marketing strategies.