UNIT - V

SEMESTER - II

Levels of a Marketing Plan

A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level.

Strategic Target marketing decisions Value proposition Analysis of marketing opportunities

Tactical Product features Promotion Merchandising Pricing Sales channels Service

Strategic Development
Product Life Cycle Bowmans Competitive Strategy Options New Product Development (NPD)

Strategic Development Process

1. Product development - sales are zero, investment costs are high 2. Introduction - profits do not exist, heavy expense of product introduction 3. Growth - rapid market acceptance and increasing profits 4. Maturity - slowdown in sales growth. Profits level-off. 5. Decline - sales fall-off and profits drop 6. Withdrawal Sales and Profits Drop

Bowmans Strategy Clock

The Strategy Clock: Bowmans Competitive Strategy Options

1 2 Low price/low added value Likely to be segment specific Low price Risk of price war and low margins/need to be cost leader

Hybrid

Low cost base and reinvestment in low price and differentiation

4 Differentiation (a) Without price premium Perceived (b) With price premium Perceived 5 Focused differentiation Perceived particular segment, warranting 6 Increased price/standard

added value by user, yielding market share benefits added value sufficient to bear price premium added value to a
price premium

Higher margins if competitors do not value follow/risk of losing market share 7 Increased price/low value

Only feasible in monopoly

situation 8 Low value/standard price

Loss of market share

Three Vs Approach to Marketing

Define the value segment -(Customers & their needs) Define the value proposition -(The product or Service) Define the value network -(The network used to deliver the promised service)

The value chain is a tool for identifying ways to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.

Value Chains 9 Strategic Activities

Primary Activities: 1. Inbound Logistics (bringing material into the business) 2. Operations (turn into final product) 3. Outbound logistics (Shipping & warehousing) 4. Marketing (marketing & sales activities) 5. Servicing (service after the sale) Support Activities: 6. Procurement (Processing supplies) 7. Technology Development 8. Human Resource Management 9. Firm Infrastructure

What is Holistic Marketing?

Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and cooperation among key stakeholders.

1. Value Exploration- How a company identify new value opportunities. 2. Value Creation- How a company efficiently create more promising new value offering. 3. Value Delivery- How a company uses its capabilities to deliver new value offerings.

Marketing Mix
A marketing mix includes those controllable factors that have been chosen to satisfy customer needs.
The eight controllable factors are product, price, place, promotion, packaging, programming, partnership, and people. These are also know as the 8 Ps.

Relationship Marketing and Strategic Alliances

Relationship Marketing Placing an emphasis on building, maintaining, and enhancing long-term relationships with customers, suppliers, travel trade intermediaries, and perhaps even competitors.
Strategic Alliances Special long-term marketing relationships formed between two or more hospitality and travel organizations, or between a hospitality and travel organization and one or more other types of organizations (e.g., KLM and Northwest, STAR alliance).

Positioning
Positioning is the development of a service and a marketing mix to occupy a specific place in the mindsof customers within target markets.

Steps Required for Effective Positioning (the five Ds)

Documenting Deciding Differentiating Designing Delivering

Segmented Marketing Strategies

Approaches that recognized the differences among target markets by using individualized marketing mixes for each of the target markets selected by a hospitality or travel organization. Also known as a differentiated strategy.
The three alternative segmented strategies are: 1. 2. 3. Single-target-market strategy Concentrated marketing strategy Full-coverage marketing strategy

Undifferentiated Marketing Strategy

A strategy that overlooks segment differences and uses the same marketing mix for all target markets.

Alternative Strategies for Product Life Cycle Stages

a. b. c. d. Introduction Stage Rapid-skimming strategy (high price/high promotion). Slow-skimming strategy (high price/low promotion). Rapid-penetration strategy (low price/high promotion). Slow-penetration strategy (low price/low promotion).

a. b. c. d. e. a. b. c.

Growth Stage Improve service quality and add new service features and elements Pursue new target markets Use new channels of distribution Lower prices to attract more price-sensitive customers Shift some advertising emphasis away from building awareness to creating desire and action Maturity Stage Market-modification strategy Product-modification strategy Decline Stage Marketing-mix modification strategy a. Reduce costs and milk the company b. Sell off or get out of the business

Alternative Strategies by Industry Position

a. b. c.
a. a.

Market Leaders Expand the size of the total market Protect market share Expand market share
Market Challengers Take on or attack the market leader Market Followers Shy away from any attacks on market leaders

a.

Market Nichers Specialize in a particular market segment

Sun Tzes defensive strategy

Do not assume the enemy will not come but be prepared for his coming Do not presume he will not attack, but instead make your own position unassailable.

Sun Tzes Offensive Strategies

1. Overt-offensive strategy To knock out a business rival so as to take over his company To knock out a competing product so as to take over its market share 2. Covert-offensive strategy Keep as low a profile as possible while making offensive moves

Strategies for Market Leaders

Market Leaders objectives:
Expand the total market by Finding new users Creating new uses, and Encouraging more usage Protect its current market share by Adopting defense strategies (see following slides) Increase its market share Note the relationship between market share and profitability

Defense Strategy
A market leader should generally adopt a defense strategy Six commonly used defense strategies 1. Position Defense 2. Mobile Defense 3. Flanking Defense 4. Contraction Defense 5. Pre-emptive Defense 6. Counter-Offensive Defense

Defense Strategy (continued)

1. Position Defense
Least successful of the defense strategies A company attempting a fortress defense will find itself retreating from line after line of fortification into shrinking product markets. Saunders ( 1987) e.g. Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus.

2. Mobile Defense
By market broadening and diversification For marketing broadening, there is a need to Redefine the business (principle of objective), and Focus efforts on the competition (the principle of mass) e.g. Legend Holdings, the top China PC maker Legend has announced a joint venture with AOL to broaden its business to provide Internet services in the mainland

3.

Flanking Defense: Secondary markets (flanks) are the weaker areas and prone to being attacked Pay attention to the flanks e.g. San Miguel introduced a flanking brand in the Philippines, Gold Eagle, as a defense against APBs Beerhausen

Defense Strategy (continued)

4. Contraction Defense
Withdraw from the most vulnerable segments and redirect resources to those that are more defendable By planned contraction or strategic withdrawal e.g. Indias TATA Group sold its soaps and detergents business units to Unilever in 1993

5.

Pre-emptive Defense Detect potential attacks and attack the enemies first Let it be known how it will retaliate Product or brand proliferation is a form of pre-emptive defense e.g. Seiko has over 2,000 models

6. Counter-Offensive Defense Responding to competitors head-on attack by identifying the attackers weakness and then launch a counter attack e.g. Toyota launched the Lexus to respond to Mercedes attack

Market Challenger Strategies

The market challengers strategic objective is to gain market share and to become the leader eventually How? By attacking the market leader By attacking other firms of the same size By attacking smaller firms

Types of Attack Strategies 1. Frontal attack 2. Flank attack 3. Encirclement attack 4. Bypass attack 5. Guerrilla attack

Types of Attack Strategies

1. Frontal Attack
Seldom work unless The challenger has sufficient fire-power (a 3:1 advantage) and staying power, and The challenger has clear distinctive advantage(s) e.g. Japanese and Korean firms launched frontal attacks in various ASPAC countries through quality, price and low cost

Types of Attack Strategies

2. Flank attack
Attack the enemy at its weak points or blind spots i.e. its flanks Ideal for challenger who does not have sufficient resources e.g. In the 1990s, Yaohan attacked Mitsukoshi and Seibus flanks by opening numerous stores in overseas markets

Types of Attack Strategies

3. Encirclement attack

Attack the enemy at many fronts at the same time Ideal for challenger having superior resources e.g. Seiko attacked on fashion, features, user preferences and anything that might interest the consumer

Types of Attack Strategies

4. Bypass attack
By diversifying into unrelated products or markets neglected by the leader Could overtake the leader by using new technologies e.g. Pepsi use a bypass attack strategy against Coke in China by locating its bottling plants in the interior provinces

Types of Attack Strategies

Guerrilla attack
By launching small, intermittent hit-and-run attacks to harass and destabilize the leader Usually use to precede a stronger attack e.g. airlines use short promotions to attack the national carriers especially when passenger loads in certain routes are low

Which Attack Strategy should a Challenger Choose?

Use a combination of several strategies to improve market share over time
Market-Follower Strategies
Theodore Levitt in his article, Innovative Imitation argued that a product imitation strategy might be just as profitable as a product innovation strategy e.g. Product innovation--Sony Product-imitationPanasonic Each follower tries to bring distinctive advantages to its target market--location, services, financing Four broad follower strategies: 1. Counterfeiter (which is illegal) 2. Cloner e.g. the IBM PC clones 3. Imitator e.g. car manufacturers imitate the style of one another 4. Adapter e.g. many Japanese firms are excellent adapters initially before developing into challengers and eventually leaders

Market-Nicher Strategies
Smaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no interest to the larger firms e.g. Logitech--mice Microbrewers--special beers Nichers must create niches, expand the niches and protect them e.g. Nike constantly created new niches--cycling, walking, hiking, cheerleading, etc What is the major risk faced by nichers? Market niche may be attacked by larger firms once they notice the niches are successful

Multiple Niching
[A] firm should `stick to its niching but not necessarily to its niche. That is why multiple niching is preferable to single niching. By developing strength in two or more niches the company increases its chances for survival. Philip Kotler

Factors Affecting Likelihood of Attack

First Mover

Second Mover Late Mover Organizational Size

Quality

First mover: A firm that takes an initial competitive action to build or defend its competitive advantages or to improve its market position. Second mover responds to the first movers competitive action.
Late mover responds to a competitive action only after considerable time has elapsed.

Large firms are likely to initiate more strategic actions during a given time period
Quality exists when the firms goods or services meet or exceed customers expectations