MARKETING STRATEGY

Marketing strategy has two interrelated components: the target market and the
marketing mix.
The target market is a fairly homogeneous group of people or organizations to
whom a company wishes to appeal. The target market profile is defined after a specific
market segment is chosen. Chapter 2 will expand on the subject of the target market
and market segmentation. The marketing mix is a set of controllable and interrelated
variables composed of product, placement, price and promotions that the company
assembles to satisfy a target group better than competition. Chapter 3 will discuss the
concept of the marketing mix while each of the marketing mix elements will be
discussed in subsequent chapters.
In formulating marketing strategies and tactics, consider the important factors
defined in exhibit 1-9 based on the 3Cs of marketing.
Exhibit 1-9: Factors to consider in formulating
marketing strategies and tactics

Customers
Market-emerging
opportunities
Industry-impending
threats

Competition
Competitors strategies
and tactics
Competitors strengths
and weaknesses
Competitors strategic

focus

Company
Companys
strengths
and weaknesses
Industry structure and
the firms competitive
position
Personal values and
preferences
of
key
owners and executives
Societal expectations

Note in exhibit 1-10 that both the strengths and weaknesses of the company and
its competitors should be considered in strategy formulation. This is because strategy
uses the companys strengths against the competitors weaknesses to serve customer
needs and wants.

Exhibit 1-10: Companys relative strengths are critical

to strategy formulation
Companys
Strengths

Competitors
Weaknesses

Customers
Needs and Wants
While a company focuses on its strength when formulating marketing strategies,
it must also look into solving its weaknesses. Competitors will use their strengths over
another firms weaknesses in their marketing strategy formulation. As an example:

Whisper used superior Dri Weave technology and better imaging to take the
leadership in the sanitary protection market in the early 1990s.

Not to be outdone, Modess made a big comeback in the late 1990s by launching
a comparable product while uplifting its reputation from masa based advertising
to its present sosyal imaging. Its market shares grew from a little over one-fifth
to over one-third of the market within two years after launching its new marketing
effort.

Charmee was launched early 2000 and relaunched in 2004 to target young
females between 16 to 25 years old from socio economic classes C and D. It is
second in the feminine product market in the supermarket level as of 2009.

Personal values and societal expectations must also be factored into the
marketing strategy formulation. A strategy of pirating direct competitors key sales
managers may not stand a chance of being approved by ethical owners of companies
who value loyalty. The societal expectations of government, the church, and the
general public are also critical. For instance:

Starting in late 1992 and 1993, the highly popular former health secretary and
later senator Dr. Juan Flavier mounted an aggressive campaign for the use of
condoms in fighting the deadly AIDS disease. This, of course, did not sit well
with the Catholic Church as well as politicians belonging to the conservative
Opus Dei sect who associate the use of condoms with promiscuity and a
license for sexual indulgence. The same is true in 2010 when sex education

was supposed to be taught in the elementary and secondary levels but was
opposed by the more conservative blocks of society.

The Philippine government began importing basic medicines from abroad in late
2000 after realizing that sourcing medicines from abroad is a much, much
cheaper alternative to buying them from some companies locally. This benefitted
the many government projects for the poorest of the poor.

Marketing as a Management Function

We learned from basic management that marketing is part of four key
management functions marketing, production, finance, and personnel.
Exhibit 1-11: Management functions
MANAGEMENT
Marketing

Production

Finance

Personnel

In reality, there is really no distinction between marketing and business because

marketing is a companys profit center while the rest are cost centers. As early as 1954,
legendary management guru Peter Drucker noted that marketing is not really a separate
management function but rather the whole business seen from the customers point of
view.
Exhibit 1-12: Marketing as center of the management functions

MARKETING
FINANCE
What is the relationship between marketing and each of the other management
functions? Lets take a look at each one.

Marketing and Production

In an income statement for a manufacturing company, we usually see the
following equation:
Exhibit 1-13: Gross profit equation
Sales
Cost of Sales
Gross Profit

xxx,xxx
xxx,xxx
xx,xxx

Cost of sales may be raw materials used for production or finished products for
resale purposes. This is the production side of the equation. The topmost line or sales
is the marketing side of the equation.
Exhibit 1-14: Marketing link to production
Sales
Cost of Sales

<- Marketing
<- Production

Products manufactured or supplied to customers must therefore be consistent

with customer specifications. In other words, production should only produce products
that are able to satisfy customers needs and wants. Gone are the days of productionoriented firms who believe in the better mousetrap (better product) concept which
states that customers will always but a product so long it is a better mousetrap
regardless of cost. One must clearly understand this analogy because the competitive
frame customers have in considering buying a mousetrap includes an exterminator,
spray, or even an electronic pest repellant.
An exception of this production-concept is when the explicit needs and wants of
the customer are unclear and the firms creative abilities can be put to use. For
instance:

In the medical profession, it is the doctors task to assess the specific product
needs of the patient who usually does not know what he is feeling. This does not
mean that the doctor is not being customer-centric. The doctors unique
offering is his special capability to identify and satisfy the patients needs even
though the patient does not know what is needed.

Splash Manufacturing has Extract in the astringent market dominated by Eskinol.

But instead of defending their market shares, it decided to use its unique R&D
capabilities and introduced a new product called an exfoliant priced 250% higher
than astringent. Today, the transformational success of Extraderm (and Maxi-

Peel) expoliant is adding hundreds of millions of pesos in annual sales revenues

for Splash.
The marketing concept focuses on the marketers ability to serve customers
better than competition. This does not mean, however, that marketers can disregard
the unique capabilities and resources of their company when deciding how to best serve
customers needs and wants.
Certain industries with parity products and firms targeting price sensitive markets
like Cebu Pacific Air and Zest-O must understandably be cost efficient to remain a
viable business within their price threshold.

Cebu Pacifics continuous quest for cost efficiency is attained, among others, by
having a uniform plane model (DC9) for all its domestic flights when they started.
This means lesser parts inventory as well as uniform training for its technical
personnel. Cebu Pacific Air also flies more frequently to a particular popular
destination to maximize its ground handling and ticketing manpower as well as
other fixed costs. Lower costs realized through savings are passed on to the
customers by way of lower air fares.

Zest-O operates four efficient and fully integrated plants to control production
costs. It also has 13 distribution centers nationwide to save on distribution costs.
This setup is designed to bring down costs to a level that maintains the
acceptable selling price of its ready-to-drink juice brand. Today, Zest-O is being
exported and is the worlds second largest user of doy packs.

When firms do not have the economies of scale to be a cost efficient

manufacturer, they can consider an alliance among friendly competitors in forming a
cooperative like those in the feeds industry located in the southern Tagalog region.
Similar arrangements can be done by smaller players in the supermarket business or in
the printing business to access not only lower buying cost but also state-of-the-art
technology.
Marketing and Personnel
Have you ever noticed that in the retailing industry, many firms have identifcal
product ranges, prices, and locations? These stores have an identical marketing mix.
Why then are some stores growing faster that others? What could account for this
difference?
Good marketing strategy by itself cannot produce good results. A company also
needs good people to implement these strategies. A good marketing plan means

nothing if the people who execute the plan are not committed to the idea. Organization
is a source of competitive advantage.
A companys corporate culture can play a major role in the outcome of a
companys operations. Corporate culture is the pattern of values and beliefs shared by
people in an organization. It is the way people in an organization think, feel, and
behave in a given situation. An organizations positive corporate culture can be a
source of competitive advantage. For instance, some executives of a firm can be
pirated by competition. The competing firm, however, cannot just match the corporate
culture of the former firm so easily. A passionate corporate culture takes long years to
build, nurture and develop.
Corporate culture is not the same as corporate climate. Corporate climate
relates to how people in an organization perceive the extent to which the organization is
fulfilling their expectations. Early authors on corporate culture have linked good
corporate culture and strategy as two important elements responsible in creating and
maintaining excellence in an organization.
STRATEGY +

CULTURE = EXCELLENCE

The lesson for business is simple. If a businessman can master the art of
satisfying and retaining both his customers and his employees, he will never go wrong.
Such perfection, however, is difficult but not impossible to attain. Consider the following
examples.

Abenson belongs to a highly competitive appliance retailing industry. As part of

its expansion, it has launched other successful retailing concepts like
ElectroWorld (office automation), WalterMart (community center) and HomePlus
(furniture). It also has no labor union, a rare advantage in the retailing industry.

Avon is known as the University of Direct Sales in the Philippines, having been
the top-of-mind source of general managers of local and multinational firms
entering the local direct selling market. Yet, while some of their executives join
other direct selling companies, Avon has been able to continuously grow even
under the worst economic conditions most of the time.

Marketing and Finance

One of the most frequent conflicts in a company is between sales and finance.
Sales people are trained to be risk-takers while people in finance, including those in
credit and collection, are by training, more cautious. A merger of these two opposing
points of views may be difficult to reconcile in the case of clients with doubtful capacities
to pay. The Wealth Conversion principle will allow us to appreciate these seemingly
irreconcilable differences.