Marketing strategies - buss3


Understanding marketing objectives.

Marketing objectives:

  • The specific, focused targets of the marketing function within an organisation.

A business may have the following marketing objectives:

  • To maintain or increase market share.
  • To broaden its range of products to improve its market standing.
  • To break into a new market (or market segment).

Influences - internal:

  • Corporate objectives - marketing objectives should assist business in achieving its overall objs.
  • The size and type of firm - Large firms have high degrees of marketing power than new entrants
  • Financial position - profitable/strong cash-flow may have better marketing campaigns.
  • Possession of a USP - May differentiate and increase market share, set objs accordingly.


  • Position in the market - dominant buss may break through into new market segments.
  • Expected response of competitors - will rivals match any actions taken.
  • The state of the economy - slowly/not growing may mean conservative objectives.
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Reasons for market analysis

  • Gathering evidence for devising a new strategy - test its feasibility.
  • Identify significant patterns in sales - gain competitive advantage over rivals.

Businesses can take 2 approaches to decision making:

  • Decisions based on hunch/instinct - conduct little or no research and rely on their own knowledge of the market; possibly beneficial for rapidly changing markets.
  • Scientific marketing decisions - gather as much evidence as possible through market analysis; less risky.
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Extrapolation: analyses the past performance of a variable such as sales and extends the trend into the future.

Can assist managers in identifying market segments that are likely too experience growth or decline so that they can plan accordingly.


  • Work out how much sales rose by between the first and last year/month.
  • Divide this figure by the number of years/months = annual increase.
  • Add this figure onto the previous years total to gain the forcasted amount for future years/months.

Can be inaccurate, especially if used for environments that are subject to rapid change.

Assumes changes will continue into the future.

It ignore qualitative factors such as changes in taste/fashion.

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Correlation - A statistical technique used to establish the extent of a relationship between two variables e.g. level of sales and advertising.

Types of correlation:

  • Postive
  • Negative
  • Perfect
  • Weak/low
  • Strong/high
  • No apparent correlation

Only shows the possible correlation, sales may rise at the same time  firm increases its expenditure on advertsing however, it doesn't mean that they are related.

Can help to identify key factors that influence the level of sales achieved and assist the marketing managers in taking well-informed decisions that are more likely to be accurate.

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Moving averages

Moving averages - A series of calculations designed to show the underlying trend in a series of data. They can be calculated over various periods of time.

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Limitations of quantitative forecasting

  • Past trends do not always continue into the future.
  • External influences e.g. competitors' actions vary over time.
  • Market research used for forecasts may lack reliability.
  • Ignore specialist understanding of the market
  • Correlation changes over time - e.g. the major influence on sales might change from the price to the amount spent on advertising.
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Qualitative forecasting

Methods: Brainstorming, individual hunch, oracle technique (firm asks individual experts for their views).

Reasons for qualitative forecasting:

  • For a new product/business - no previous info on which to base predictions.
  • If there is no clear statistical indication of future sales.
  • If trends have changed - unwise to predict on the basis of past statistics.
  • When factors influencing sales are not easy to quantify (measure in terms of numbers).


  • Unlikely experts will understand all aspects of the market.
  • Many trends/relationships are broadly consistent over time - forecasts based on quantitative data are usually more accurate.
  • Easier to persuade manager if forcasts are based on scientific methods.
  • Ignoring statistical info may leave a manager open to criticism if the predictions turn out to be incorrect.
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Use of IT in analysing markets

IT allows a businesses to gather, analyse and distribute a wealth of data, often quickly and cost effectively.

  • IT-based system can complete quantitative forecating calculations almost instantaneously.
  • Time saved by IT allows bussiness to compare a number of different strategies - improve quality of planning.
  • Can link sales records to databases - everytime an item is sold it is registered immediately. Any sudden changes in trends/patterns of sales can be detected quickly and action taken.
  • Allows firms to improve internal/external communications - improves efficiency.
  • Loyalty cards allow firms to accumulate info on the buying habits of customers - can tailor products to customers needs.
  • Intranet - more data can be stored cheaply and accessed more quickly by many individuals.
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Porter's generic strategies: cost leadership

Cost leadership: firm hopes to become the lowest-cost producer in the industry, by producing on a large scale and gaining economies of scale, but keeping prices close to industry average.

Problem - if customers perceive quality to be lower than competitors - force buss to reduce prices.

Opportunities to reduce costs: (often only temporary as competitors are able to copy).

  • New method of production.
  • New source of supply that is cheaper than that available to competitors.
  • New technology.
  • New method of distribution - lowers costs of transportation.
  • Improvements in productivity - reduces unit costs.

Permanent cost leadership opportunities:

  • A patent on the process that allows the business to reduce unit costs.
  • Achievement of economies of scales as a result of the business' scale.
  • Creating barriers to entry - prevent competitors from eroding market.
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Porter's generic strategies: differentiation

Differentiation: The degree to which consumers see a particular brand as being different from other brands.

Differentiation can be based on a number of characteristics such as -

  • Superior performance
  • Product durability
  • After-sales service
  • Design, branding and packaging - improve attractiveness of product.
  • Promotional and advertising campaings to boost brand image and sales.
  • Different distribution methods.

Pursuing a policy of differentiation can add value by creating a USP: A feature of a product or service that allows it to be differentiated from other products.

This can be real e.g. different design/components, or it may be based on image/branding.

Key to success: reduce costs in areas that do not affect the uniqueness of the product.

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Porter's generic strategies: focus

Cost leadership and differentiation are applied to firms in mainstream mass markets.

A strategy of focus can be applied to firms operating in niche markets.

A firm picks a segment of the market that is poorly served by the main players in the industry and adopts either a cost leader or differentiation strategy to target the segment or niche.

A firm must choose one of Porter's strategies in order to remain successful otherwise it risks becoming stuck in the middle, ending up with no competitive strategy.

What kind of competitive advantage does the business seek to develop? Is it cost leadership, differentiation, focused cost leadership or focused differentiation?

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Ansoff's matrix: market penetration and developmen

Market penetration: Marketing existing products to existing customers more strongly.

  • Increasing brand loyalty
  • Encouraging customers to use the product more often - more frequent purchases.
  • Encouraging the customer to use more of the product on each occation e.g. sale of larger packs.

Limits - rivals are likely to fight back. Once the market approaches saturation, a new strategy must be pursued to enable growth.

Market development: Targeting existing product range at potential customers in new markets.

  • Seeking new geographical territories.
  • Promoting new uses for the existing product.
  • Entering new market segments.

More risky than market penetration as the firm will not be familiar with the needs/wants of the new market.

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Ansoff's matrix: product development/diversificati

Product development: New products marketed to existing markets.

  • May involve substantial modifications/additions to a product range in order to maintain competitive position,
  • Useful in competitive markets - firms need to maintain product differentiation.
  • Products can be changed completely or 'spin offs' are developed e.g, Mars Ice Cream and KitKat Kubes.

May require extensive research and development funding but buss have security of operating from established customers - appropriate if firm's strengths are related to customers than product.

Diversification: Launching new products to new markets.

  • High-risk - require product and market development and may be outside competencies of firm.
  • Good choice if high-risks are balanced by chance of a high rate of return.
  • Can be organic growth, vertical/ horizontal integration or into new & unrelated markets through conglomerate integration.
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Effectiveness of marketing strategies

Porter's generic strategies examines: Assess effectiveness of a marketing strategy.

  • Whether the strategy provides a significant advantage to the business compared with competitors.
  • Whether the strategy can be maintained over a long period of time - will their be sufficient time in which the business can reap the reward?
  • Whether the strategy appeals to sufficient number of customers to allow the business to reach its targets.

Ansoff's matrix: Assess the degree of risk involved in a particular marketing strategy.

  • Market penetration/consolidation - least risky option
  • Product development and market development - increase the level of risk facing the business.
  • Diversification - considered the most risky strategy of all.


Ansoff's matrix can oversimplify the level of risk. Diversification into a new market with similar features to an existing market, and selling a new product that is slightly modified from the original may not present a huge risk.

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Methods of expanding into international markets

Exporting direct to international customers: Manaufactured in home country, sold abroad. Incurs relatively few additional costs, least risky. If the business is unable to sell its products, it can always sell the same product in its country of origin.

Selling via overseas agent/distributor: 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. Marketing control often passes out of manufacturers hands.

Opening an operation overseas: Involves physically setting up one or more business locations in the target markets. Can be formed via organic growth or the takeover of a foreign business. Saves transport costs and avoids tariff barriers imposed by free-trade areas.

Joint ventures: When 2 or more companies agree to act as one organisation in launching a product or providing a service. Popular in emerging markets - may lack technology and financial resources but possess a much greater understanding of local market conditions. Can prove a very effective combination of strengths but can lead to conflict and communication problems.

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Benefits of international marketing

  • Achieving growth - may become difficult to sustain growth in domestic market due to level of competition or limited customer base.
  • Boosting profitability - due to increased growth/companies products or services may provide greater opportuniy for profitability because of the nature of the overseas market.
  • Spreading risks - may reduce firm's dependence on a single market.
  • Helping international competitiveness - Countries with large domestic markets provide their industries with potential for growth. This enables domestic companies to achieve greater economies of scale, allowing them to reduce their costs and improve their efficiency. A UK firm trying to match these economies of scale will need to spread into other countries to produce on a very large scale and lower its unit costs.
  • Improving understanding of markets - e.g. developments in both products and markets; ideas from other countries can be used to introduce new products and recognise global changes in consumer tastes. 
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Risks of international marketing

Cultural, social and language factors - need to understand local culture in order to sell products effectively - is the product still viewed as a basic comodity overseas? Can the business market its product effectively in the local language?

Legislation - legislation varies widely in overseas markets and will affect how to sell into them.A UK business must ensure that it adheres to the law.

Economic - influenced greatly by economic variables such as exchange rates - may have a huge impact on the profitability of international marketing

Poltical factors - will seek advice from UK authorities to establish the level of political risk involved in transactions in a certain country

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Components of a marketing plan

  • Marketing plan - a document setting out the strategy a business will use to achieve its marketing objectives.

SWOT analysis

Forecasting sales and market analysis - will advise business of expected outcomes of its plan.

SMART objectives - will be based on market research and SWOT analysis. Will also take into account capabilities of other functional areas. 

Agreeing marketing strategies - e.g. low cost, product development or diversification etc.

Allocating a marketing budget 

Implementing marketing tactics through the marketing mix - product, price, promotion, place

Control and review - monitors progress against marketing objectives established in the plan. Ensures complete integration of all elements within the plan.

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Internal influences on marketing plan

  • Operational issues: It is vital that operations can manufacture products to meet the requirement of the marketing objectives.
  • Finance: Need to make sure finance department have the necessary funding to achieve the marketing objectives and the marketing plan. They must also allocate sufficient money to each department that is supporting the marketing effort.
  • Human resource management (HRM):  Need to coordinate their activities as successful marketing strategies need people to deliver them. Staff in the marketing department must be recruited effectively and the workforce planning is essential if each department is to have the right number of qualified, skilled staff. Customer service training will influence the marketing plan and its operation.

Ultimately they are all striving to achieve the same corporate objectives.

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External influences on marketing plan

Market factors: needs to include details of the market research required to understand the market

Competitors' actions: flexibility needs to be incorporated to respond to changes from rivals.

Technological change: developed understanding of markets via loyalty cards - accurately plan.

Suppliers: capability of suppliers to provide what the business believes can be sold.

Political factors: especially international marketing.

Social factors: businesses must adapt to new circumstances e.g. internet taking over television.

Legal factors: may be a threat - to comply with the law may increase cost of production. However, a business that monitors legal changes can benefit by adapting its marketing strategy ahead of its competitors.

Environmental factors: environmental considerations are of growing importance, most businesses will be adapting their marketing plans to demonstrate to consumers that they produce environmentally friendly products in an efficient manner.

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Methods of setting and factors affecting the marke

  • According to marketing objectives - more ambitious = greater budget.
  • According to competitors' spending - may have to match the spending of its rivals.
  • Financial position of the business - e.g. rising profits - may be able to fund higher levels of expenditure on marketing budget. However, some business may opt to spend more on marketing aat less successful times to increase sales and profits.

Factors affecting the marketing budget:

  • Cost of advertising
  • Nature of the market - monopoly may need less money spent on marketing.
  • Consumer expectations - some customers expect their marketeers to communicate with them in certain was and through certain media.
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Benefits and issues of marketing planning

  • Help to give a clear sense of direction to all employees - everyone is aiming towards same goal
  • Business's managers can assess effiency by comparing actual outcomes with the plan and discovering reasons for the differences.
  • Planning encourages managers to think ahead and weigh up the options open to the firm as well as to consider the threats and opportunities.


  • Takes up excessive time and resources - in rapidly changing markets this may not be the optimal approach as quick decisions may be required. - Brake on progress.
  • Plan might encourage managers to be inflexible and not respond to changes in the marketplace. 
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