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Strategic Marketing

Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Sectorial tactics and actions
A marketing strategy can serve as the foundation of a marketing plan. A marketing plan contains a set of specific actions required to successfully implement a marketing strategy. For example: "Use a low cost product to attract consumers. Once our organization, via our low cost product, has established a relationship with consumers, our organization will sell additional, higher-margin products and services that enhance the consumer's interaction with the low-cost product or service."

Marketing practice tends to be seen as a creative industry, which includes advertising, distribution and selling. To that end, developing a marketing strategy involves a “Marketing Mix” of 4 elements (known as the 4Ps): product, price, place and promotion.

  1. Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.
  2. Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention.
  3. Placement (or distribution): refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
  4. Promotion: This includes advertising, sales promotion, publicity, and personal selling, branding and refers to the various methods of promoting the product, brand, or company.

The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services.

Additionally, the following are the new 4P's developed for the latest stage in Internet Marketing, which has been dubbed "Web 2.0":

  1. Personalization: Customization of products and services through the use of the Internet. Early examples include Dell on-line and Amazon.com, but this concept is further extended with emerging social media and advanced algorithms. Emerging technologies will continue to push this idea forward.
  2. Participation: Allows the customer to participate in what the brand should stand for; the product directions and even which ads to run. This concept is laying the foundation for disruptive change through democratization of information.
  3. Peer-to-Peer: This refers to customer networks and communities where advocacy happens. The historical problem with marketing is that it is “interruptive” in nature, trying to impose a brand on the customer. This is most apparent in TV advertising. These “passive customer bases” will ultimately be replaced by the “active customer communities”. Brand engagement happens within those conversations. P2P is now being referred to as Social computing.
  4. Predictive modeling: This refers to algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem).

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Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions.

A strategy consists of a well thought out series of tactics to make a marketing plan more effective. Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing object is. Plans and objectives are generally tested for measurable results.

A marketing strategy often integrates an organization's marketing goals, policies, and action sequences (tactics) into a cohesive whole. Similarly, the various strands of the strategy , which might include advertising, channel marketing, internet marketing, promotion and public relations can be orchestrated. Many companies cascade a strategy throughout an organization, by creating strategy tactics that then become strategy goals for the next level or group. Each one group is expected to take that strategy goal and develop a set of tactics to achieve that goal. This is why it is important to make each strategy goal measurable.

Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned.

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Customer focus

A marketing strategy is a process that can allow an organization to concentrate its (often limited) resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal.

To that end, many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.

A formal approach to this customer-focused marketing is known as SIVA (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.

The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.

The four elements of the SIVA model are:

  1. Solution (product): How appropriate is the solution to the customer's problem/need?
  2. Information (promotion): Does the customer know about the solution? If so, how and from whom do they know enough to let them make a buying decision?
  3. Value (price): Does the customer know the value of the transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward?
  4. Access (place): Where can the customer find the solution? How easily/locally/remotely can they buy it and take delivery?

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Marketing strategies may differ depending on the unique situation of the individual business. However there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below:

  • Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are three types of market dominance strategies:
    • Leader
    • Challenger
    • Follower
  • Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firm’s sustainable competitive advantage.
    • Product differentiation
    • Market segmentation
  • Innovation strategies - This deals with the firm's rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types:
    • Pioneers
    • Close followers
    • Late followers
  • Growth strategies - In this scheme we ask the question, “How should the firm grow?”. There are a number of different ways of answering that question, but the most common gives four answers:
    • Horizontal integration
    • Vertical integration
    • Diversification
    • Intensification


      A more detailed scheme uses the categories:

    • Prospector
    • Analyzer
    • Defender
    • Reactor
  • Marketing warfare strategies - This scheme draws parallels between marketing strategies and military strategies.

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Strategic models
Marketing participants often employ strategic models and tools to analyze marketing decisions. When beginning a strategic analysis, the 3Cs can be employed to get a broad understanding of the strategic environment. An Castoff Matrix is also often used to convey an organization's strategic positioning of their marketing mix. The 4Ps can then be utilized to form a marketing plan to pursue a defined strategy.

There are a many companies especially those in the Consumer Package Goods (CPG) market that adopt the theory of running their business cent red around Consumer, Shopper & Retailer needs. Their Marketing departments spend quality time looking for "Growth Opportunities" in their categories by identifying relevant insights (both mind sets and behaviours) on their target Consumers, Shoppers and retail partners. These Growth Opportunities emerge from changes in market trends, segment dynamics changing and also internal brand or operational business challenges.The Marketing team can then prioritise these Growth Opportunities and begin to develop strategies to exploit the opportunities that could include new or adapted products, services as well as changes to the 4Ps.

Real-life marketing primarily revolves around the application of a great deal of common-sense; dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven.

Thus, for example, many new products will emerge from irrational processes and the rational development process may be used (if at all) to screen out the worst non-runners. The design of the advertising, and the packaging, will be the output of the creative minds employed; which management will then screen, often by 'gut-reaction', to ensure that it is reasonable.

For most of their time, marketing managers use intuition and experience to analyze and handle the complex, and unique, situations being faced; without easy reference to theory. This will often be 'flying by the seat of the pants', or 'gut-reaction'; where the overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing employed. This, almost instinctive management, is what is sometimes called 'coarse marketing'; to distinguish it from the refined, aesthetically pleasing, form favored by the theorists.

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Target audience

In marketing and advertising, a target audience, or target group is the primary group of people that something, usually an advertising campaign, is aimed at appealing to. A target audience can be people of a certain age group, gender, marital status, etc. (ex: teenagers, females, single people, etc.) A certain combination, like men from twenty to thirty is often a target audience. Other groups, although not the main focus, may also be interested. Discovering the appropriate target market(s) to market a product or service to is one of the most important stages involved with market research. Without knowing the target audience, a company's advertising and the selling efforts can become difficult and very expensive.

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Unique selling proposition

The Unique Selling Proposition (also Unique Selling Point) is a marketing concept that was first proposed as a theory to explain a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects.

Today, a number of businesses and corporations currently use USPs as a basis for their marketing campaigns.

Origin
In the early 1940s, Ted Bates & Company carried out extensive market research on successful advertising campaigns. In particular they identified two desirable attributes: the penetration and the usage pull.

The pattern they found among campaigns that produced a high usage pull was the basis for the theory of the USP. It may also be known as the unique selling point.

Definition
In Reality in Advertising (Reeves 1961, pp. 46–48) Reeves laments that the U.S.P. is widely misunderstood and gives a precise definition in three parts:

1. Each advertisement must make a proposition to the consumer. Not just words, not just product puffery, not just show-window advertising. Each advertisement must say to each reader: "Buy this product, and you will get this specific benefit."

2. The proposition must be one that the competition either cannot, or does not, offer. It must be unique—either a uniqueness of the brand or a claim not otherwise made in that particular field of advertising.

3. The proposition must be so strong that it can move the mass millions, i.e., pull over new customers to your product.

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Examples
Some good current examples of products with a clear USP are:

  • Head & Shoulders: "You get rid of dandruff"
  • Olay: "You get younger-looking skin"
  • Red Bull: "Gives you wiiings"

Some unique propositions that were pioneers when they were introduced:

  • Domino's Pizza: "You get fresh, hot pizza delivered to your door in 30 minutes or less -- or it's free."
  • FedEx: "When your package absolutely, positively has to get there overnight"
  • M&M's: "The milk chocolate melts in your mouth, not in your hand"
  • Wonder Bread: "Wonder Bread Helps Build Strong Bodies 12 Ways"

    Criticism of USP theory
    The perception of something being a USP is somewhat contentious. In the examples above, Head & Shoulders is not the only product on the market that will get rid of dandruff, neither is Domino's the only pizza delivery chain with a similar thirty-minute guarantee. In both instances, the specific product may be viewed to be a market leader due to its innovation of the original USP, yet has stopped being viewed as unique in the public eye. In other words, what was originally a USP has become merely a perception of superior quality, something quite different.

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Account-based marketing

Account-based marketing (ABM), also known as key account marketing, is a strategic approach to business marketing in which an organisation considers and communicates with individual prospect or customer accounts as markets of one. The popularity of this approach is growing, with companies such as BearingPoint, HP, Progress Software and Xerox reported to be leading the way.

Background and differences to traditional business marketing
Account-based marketing has grown since the mid-1990s as a demonstration of the trend away from mass marketing towards more targeted approaches. It parallels the movement in business-to-consumer marketing described by Peppers and Rogers in The One-to-One Future (1993): from mass marketing where organisations try to sell individual products to as many new prospects as possible, to 1:1 marketing where they concentrate on selling as many products as possible to one customer at a time.
So while business marketing is typically organised by industry, product/solution or channel (direct/social/PR), account-based marketing brings all of these together to focus on individual accounts.

In the marketing of complex business propositions, account-based marketing plays a key role in expanding business within existing customer accounts (where, for example, wider industry marketing would not be targeted enough to appeal to an existing customer). In scenarios where the initial sale has taken several months, it is reported that account-based marketing delivers a dramatic increase in the long-term value of the custor1. ABM can also be applied to key prospect accounts in support of the first sale. In the example of Northrop Grumman, it contributed to the completion of a successful $2 billion deal.

By treating each account individually, marketing activity can be targeted more accurately to address the audience and is more likely to be considered relevant than untargeted direct marketing activity. As research demonstrates, buyers are looking for their existing suppliers to keep them updated with relevant propositions, but are often disappointed (in UK research, existing suppliers came top of all the different information channels that IT buyers use to look for new solutions – but more than 50% felt that marketing by their suppliers was poor). The research also demonstrates how much easier it is for organisations to generate more sales from existing customers than from new customers - 77 per cent of decision-makers say that marketing from new suppliers is poorly targeted and makes it easy to justify staying with their current supplier.

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The roles of sales and marketing teams
ABM is a strong example of the alignment of sales and marketing teams proposed by Kotler, Rackham and Krishnaswamy in their seminal Harvard Business Review article, Ending the War Between Sales and Marketing. In the aligned model, the authors describe how organizations like IBM are able to unite tactical marketing efforts with defined sales goals, and use feedback from sales to identify new potential markets. For ABM to succeed, joint workshops and a close working relationship between sales and marketing are essential.

Marketing will also take an increased role in developing intelligence on key accounts – as proposed by Peppers and Rogers (1993): “When two marketers are competing for the same customer’s business, all other things being equal, the marketer with the greatest scope of information about that particular customer … will be the more efficient competitor."

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Account-based marketing and the IT industry
Organisations seeing the greatest current benefit from account-based marketing are IT, Services and Consulting companies. With complex propositions, long sales cycles and large customers, these organisations are ideal candidates for the approach.
Organisations supporting sales and marketing efforts in the IT industry – including the Information Technology Services Marketing Association (ITSM) and The Marketing Practice– have developed a great deal of the intellectual capital and practical tools shaping the direction of ABM.

Programme frameworks
There are a number of different frameworks for account-based marketing campaigns but, in general, the following approach is used:

  • Create the strategic framework: methodology for selecting the accounts that will be focused on and framework of objectives and measures for the ABM programme
  • Planning workshop: joint marketing and sales session around each account to agree goals and explore understanding of the account and relevant propositions
  • Required research: marketing activity to build a more complete picture of the structure of the target organisation and its requirements
  • Create plan: bringing together existing corporate marketing activities with new account-specific communications to achieve account-specific goals
  • Execute: build a joint sales and marketing team to deliver on the plan
  • Review: apply measures such as the value of sales, amount of potential revenue in the sales pipeline, coverage of communications in the account, perception-shifts or appointments made

In terms of specific marketing activities that form part of account-based marketing programmes, the following ‘menu’ provides a basis for selecting the appropriate tactics for any specific account

Intelligence – marketing’s role in profiling the target account and contacts within it to identify relevant propositions and communication preferences

  • Awareness – in target accounts where awareness of the supplier is low, regular communications have a role to play in creating a more favourable perception
  • Campaigning – in large target accounts, lead generation campaigns can be run to uncover opportunities and appoint meetings
  • Sales – marketing has a role to play in supporting sales bids to improve conversion rates and shorten the sales cycle
  • Advocacy – the cycle is completed when customers become advocates and are used to drive further incremental business

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Source: This information was compiled on Wikipedia and is presented largely unedited and without bias. This article may contain original research or unverified claims.

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