Analysis Of Strategic Marketing Of Abc Company
ATHE Level 6: Diploma in Management
Analysis Of Strategic Marketing Of Abc Company
ACTIVITY 1: 4
1.1 ROLE OF STRATEGIC MARKETING IN AN ORGANISATION. 4
1.2RELATIONSHIP BETWEEN THE CORPORATE STRATEGY AND MARKETING STRATEGY 4
1.3PROCESS OF FORMULATION OF MARKETING STRATEGY 5
1.4 DECISIONS AND CHOICES AT CORPORATE LEVEL 6
1.5DECISIONS AT BUSINESS AND FUNCTIONAL LEVEL 7
1.6 COMPETITIVE POSITIONING OF AN ORGANISATION 8
1.7 CONCLUSION 9
ACTIVITY 2 10
2.1 INTRODUCTION 10
2.2 INTERNAL ENVIRONMENT ANALYSIS 10
2.3 EXTERNAL ENVIRONMENT ANALYSIS 10
2.4 INTEGRATION OF INTERNAL AND EXTERNAL FACTOR 12
ACTIVITY 3 13
3.1 INTRODUCTION 13
3.2 MARKETING STRATEGIES THAT CAN BE ADOPTED BY A COMPANY 13
3.3 ANALYSIS OF MARKETING COMMUNICATION STRATEGIES 14
3.4 APPLICATION AND IMPLEMENTATION OF MARKETING STRATEGIES 14
3.5 CONCLUSION: 15
In this part of the assignment, I am going to write about key principles of strategic marketing and its relationship with overall corporate strategy. I will also try to find out how it helps an organisation to achieve its prime competitive objective over its immediate rivals. This will cover learning outcome of section 1 and 2 and all its respective assessment criteria.
1.1 ROLE OF STRATEGIC MARKETING IN AN ORGANISATION.
According to Kotler et.al (2012. Pg38), 'Strategic planning is the process of developing and maintaining a feasible fit between the organization's objectives, skills, and resources and it's changing marketing opportunities'. In fact, strategy is a long term plan of an organisation in order to meet its objectives.
The market is very dynamic. Different products and services are developed by different organisation in order to provide best service to the customer. Strategic marketing will try to help any organisation or companies in developing product or service according to the changes that are occurring in the market. Customers demand and choices change more often. Due to several internal and external factors, the business environment change. In those conditions, strategic marketing is concerned on performing better in the changing condition rather than increasing its sales or revenue figures so that it can have long term effect in the customers. Quality of products or services that is provided to the customers in tough time is the factor that helps to determine the future of the company. Strategic marketing is focused on establishing a long-term relationship with its customer rather than selling the product for just once. Customer retention and developing a loyalty with the brand will ultimately help in boosting the revenue and profit of the organisation which ultimately makes the shareholders and other stakeholders happy. Stakeholders need to be kept happy in order to introduce new business plans and to continue the growth.
1.2RELATIONSHIP BETWEEN THE CORPORATE STRATEGY AND MARKETING STRATEGY
According to Verax Consulting (2011), 'Corporate Strategy at its most basic is like any other strategy-it's a plan or series of plans which are designed to achieve some specific objectives or goal.' Both corporate and marketing strategies are vital to an organisation. They often coincide with each other as major focus of marketing includes the strategic planning aspects of developing, pricing and distribution of product. However, corporate strategy is more concerned with profitability initiatives rather than the product or service development. In general, corporate strategy defines the overall mission of the company. It guides a particular direction for the company in which it should be guided. Corporate strategies are generally made at the strategic level of the company.
As discussed earlier, corporate strategy is focused more on profitability. It includes creating structure for the organization, reducing the debt and gearing ratio of the organisation and improving the balance sheet of the company. Similarly, corporate strategy deals with diversifying the product line, merger or major takeovers, introducing new technology in the company, diversifying the business, reduction of overhead cost and production cost and increase in the overall profit margin of the company.
However, marketing strategies involves in making plans of making or selling a product. Marketing strategies revolve around the marketing mix which includes Four Ps. The four Ps of marketing mix are product, price, place and promotion. Considering the marketing mix marketing strategies of the company involves in creating a product which has unique selling benefit. The product is targeted in a particular geography for a particular group of people. Suitable pricing strategy is developed in order to maximize the profit of the company. Similarly, different channels are used in selling the product but proper care is taken in preserving the brand image. Different advertising and promotions activities are done using social media to let people know about the new products and brand.
There should be proper monitoring from the executive level of the company to know whether the company's marketing strategy are moving with the company's corporate strategy. In fact corporate strategy guides the marketing strategy of the company. Let us take an example of high profile clothing chain Burberry which purchases another retail clothing chain Primark in order to capture both high profile customers and price-sensitive customers. This is the corporate strategy of the company. The marketing department of the company will suggest the management of the company not to merge the two companies but operate separate brands using centralized Administrative services. If the company merge the two products and sell under the same name, it would confuse both sets of consumers and finally damage the brands. Burberry customers which are usually high profile will hesitate to go back to the store and the Primark customer which are usually price-sensitive assumes that the price has gone up which they cannot afford. Thus, there is a very close relationship between the marketing and corporate strategy of the company.
1.3PROCESS OF FORMULATION OF MARKETING STRATEGY
According to Alex Saez of Demand Media, 'Marketing Strategy formulation is the process of defining an organisation marketing goals and objectives'. The formulators will create a guide through this. In this process they examines the market and use the information received in determining the approaches that should be taken in reaching the clients and encourage them to use the product or service.
In the process of formulation of marketing strategy, the first step that should be considered is the determination of what a company or person want to achieve in terms of marketing. Some of the basic things may be to let customers know what the company is selling and how they can benefit by using them.
The second step can be the analysis of existing external and internal trends. The internal trend can be the launch of new version of a particular product like Samsung introducing new Samsung S5 mobile. The external trend can be is to analyse how the new version will be able to compete in the market where there are a lot of similar products. It is like to analyse how Samsung new version of mobile will be able to compete with new brand of iPhone and Sony Ericsson mobiles.
The third step in the process is to assign a value to the outcome of the strategy which is to calculate how much revenue or profit the marketing strategy will be able to generate over a period of time. If the value is not cost effective, the product may not be suitable for the company to produce. Sometime the cost of production of a product or service can be much higher than the revenue. At that time, other alternatives must be chosen. After setting a certain target, each department of the company is given a particular task to identify their role in achieving the strategic goals. This will help company to know what will be the position of the company after the implementation of the strategy in terms of size and revenue.
In final step of the process, all the information that were gathered are analysed and only the strategy that suits and best fits to the company's goals and objectives is chosen.
1.4 DECISIONS AND CHOICES AT CORPORATE LEVEL
Fig: 1.4 Strategic Pyramids (Onproductmanagement.net)
In the strategic pyramid of a company, corporate strategy level always comes at the apex of the pyramid. At this level, most of the major decisions of the company are taken. Ansoff matrix will help the management level in determining the marketing strategy that the company should adopt. It can be better understood by the following figure.
Fig: Ansoff matrix (Source: Business Analysis, ACCA)
If the company wants to increase the share in the current market of its existing product, it can take a strategy to reduce the price of the product so that more people buy it. Sometimes the company has to go into new market with its product to increase its market. Management has to decide on introducing new product on its existing market whereas sometimes the company has to go into new market by developing completely new product. All the major decisions are taken at corporate level.
Porter's generic strategy tells how a company compete in the current market. Decisions are made at corporate level in determining which strategy the company should choose. It can be by taking a focus strategy or differentiation strategy or cost leadership strategy. In focus strategy, the management focus particularly on niche market. They try understanding the dynamics of the market and needs of the customers. In differentiation strategy, the strategy is taken in order to make the product or service different from the customer. They try to introduce attractive product to the customers. Similarly, in cost leadership strategy, strategies are made in order to reduce the cost of the product and selling at lower price than that of competitors. These type of strategies and decisions are made at corporate level. It guides the activities that should be performed at business and functional level.
1.5DECISIONS AT BUSINESS AND FUNCTIONAL LEVEL
After the decisions are made at corporate level, it comes to the business level where unlike the corporate level, they focus on particular business. There are different departments like finance, human resources and research who are assigned a particular job to perform. Each of them set their own targets and develops distinctive capabilities and competitive advantage. They try to identify the product or market opportunities. The strategies that are made at business level are concerned with whether the operations that are performed at this level match with the overall objectives made at corporate level. Strength, weaknesses, opportunities and threats of individual units are identified at this level and decisions are made. They guide the functional level in performing their duty.
Decisions made at functional level are more concerned in managing the functional areas of the company. In fact, functional level is assigned the duty to convert the decision made at corporate level and business level into deeds. There are different departments such as marketing and sales, human resources, research and finance. Each function contributes towards achieving the targets. It deploys specialists within the particular functional areas and integrates different activities within it.
1.6 COMPETITIVE POSITIONING OF AN ORGANISATION
In order to compete in a market, an organisation should have clear sets of goal or objectives. Only clear sets of goals give a proper direction to the company. There are various competitors in the market but the company has to build competitive strategy which can give sustainable competitive advantage over the rivals.
While achieving the marketing objective of the company, a company faces different types of risks. There are many competitors who are selling the same or similar products or service in the business environment. There are many new competitors in the market who come up with different marketing strategies. Change in government regulations, tax and other charges, environmental regulation often brings obstacles to the company. The risk should be tried to be minimized or avoided. Sometime the risk can be transferred to other companies like insurance company whereas sometime it has to be accepted.
A company can introduce itself in the market by being a market leader. In that case, it has to minimize the price of the product. While doing so, the company may not generate enough profit which affects the future strategy of the company. In order to reduce the cost of the product, the production cost should be minimized. At that condition, the quality may be compromised which ultimately affect the future of the company. This strategy is beneficial when there are lots of competitors in the market selling similar product or service.
Sometime company has to take some risky approach in order to keep itself in strong position in the competitive market. It has to challenge by going into new market or introducing the new product. Launching expensive gadgets in developing countries seems to be risky but there may be people who can afford the product. In those conditions, company can benefit by challenging the market.
There are conditions when company has to simply follow competitors. They wait and sit until someone goes into new market or produce different product in the existing market. Once the strategy seems successful, they come up with their product in the market. They don't want to take risk. Many hospitality business runs on this basis.
Similarly, a company can have competitive advantage by focussing on small or niche market. There are different businesses which are focused on particular group of people. Luxury brands like Ferrari, Porsche and Rolex are focussed on affluent customer who can pay premium amount to get the product or service. Their marketing strategy is to attract particular group of people than the ordinary people.
To sum of the principles of strategic marketing, strategically developed marketing strategies are the building block of overall corporate strategy. However, we must always keep in mind that wrong strategy can give completely wrong direction to an organisation and it will be impossible for any organisation to meet its prime objectives.
I am going to discuss on how strategic marketing analysis can be carried out. I have prepared slides which I am going to discuss in this presentation.
2.2 INTERNAL ENVIRONMENT ANALYSIS
At the beginning, on the first slide, I am going to make an evaluation on internal environment of the company which is considered as a vital for making any strategy for a company. Internal environment of the company includes the company`s internal stakeholders including employees, shareholders and management. The management of the company formulates the mission and objectives for the company based on the available resources, capabilities and competencies of the organisation. While doing the internal analysis, the management can identify how its strength can assist in achieving its goals and how its weaknesses may hampers the plans. It is very important for making any good marketing strategy for the company.
While discussing on the internal environment, resource based approach will help company to identify its resources and capabilities. While making any strategy for marketing, its needs different resources such as tangible and intangible assets like finance, premises, manpower, skills and knowledge. These resources will assist the company to react in the dynamic condition. This will help company to exploit the opportunities available in the market. If the company doesn't have enough funds to invest in new project or doesn't have skilled manpower to identify the opportunities available in the market, then the company faces problems of growth and expansion. Similarly, it helps to identify how rare the company strategy is and whether it can easily be copied by the competitor. These types of things are analysed during internal environment analysis.
Similarly, it is considered vital to do value-chain analysis. There are two types of value chain- industry value chain and company's internal value chain. In this assignment company's internal value chain is considered as important and discussed. There are four steps while evaluating the company's internal value chain which are identification of value chain, determination of strategic activities, tracing costs to activities and improving the management of value chain activities. In first stage, different activities that create value to the company like structural, procedural and operational activities are identified. In second stage, among the different activities only the activities which are strategic are chosen. Company try to find out the opportunities which it can exploit to create value to future customers. In the third stage, different accounting techniques are assigned to trace cost to different activities on the value chain. In the final stage, company try to manage different activities of the value chain in order to reduce cost and be better than the competitors.
2.3 EXTERNAL ENVIRONMENT ANALYSIS
After the internal analysis, it is really important to find out the external factors that affect the company's marketing strategy. External environment can be divided into micro and macro environment. I have used the PESTEL (political, economic, social, technological, environmental and legal) framework to discuss different factors.
Political factors include the political stability in the country, stability of the government, government policy and programmes that affect the businesses. Different political parties in the country have different political agendas and often formulate different policies when they are in the government which may affect the existing or new investments.
Along with political factor, economic factor is also key in determining the marketing strategy for the company. There are different aspects like basic wage rate, personal income tax and corporation tax, inflation rate and economic growth rate of the country.
Technological factor is also considered as very important. Technological development has made life very easy and competitive. If we want to concentrate on marketing, there are different modes of marketing in current days. Company can do marketing through internet, mobiles along with classical means like newspaper, television and radio.
Environmental issues are also considered as very important factors. Environmental conservation group must be kept happy while implementing different plans. Different regulations must be followed.
Legal factors are also considered important. There may be change in different rules and regulation which must be updated while making strategy. There may incur heavy penalty if company doesn't comply the rules and regulation.
Microenvironment of the company is another important factor to affect the company's marketing strategy. Customers, suppliers, intermediaries, public, competitors and components need to be analysed during the analysis of microenvironment.
Customers are the users of the product or service. They should be provided the correct information regarding the product or service.
Suppliers need to be kept happy. Different Medias are the suppliers during the marketing. They need to be paid on time.
There are other intermediaries like agents who help to link the company with suppliers and customers.
Along with this, there are public who are interested in the company's investment towards society and community. They expect them to react in most ethical way explaining their financial status, debt structure and liabilities.
Customers often come with different product and services. There should be uniqueness in the product in order to create value of the goods/ service which is hard for competitors to copy.
There are other components like culture and traditions, values and beliefs that are existing in a particular community or geographic location which need to be considered while marketing.
In the next slide I am going to discuss on the analysis of the competitor. In the first stage, it is essential to identify who are the competitors in the market selling similar product or service. Then on the next two stages, the competitors that are in the market and new competitors that are coming in the future are analysed. After that they are ranked according to their effect to the company. In the next stage, the analysis in the market is done. Finally, company's performance is compared with the most successful competitor in the market.
2.4 INTEGRATION OF INTERNAL AND EXTERNAL FACTOR
Although internal and external environment are discussed separately, it is not possible to make decision or strategy based on the analysis of only one component. Both the internal and external environment should be integrated. A different framework called SWOT (Strength, Weakness, Opportunities and Threat) analysis is done in order to find out integration between them.
Strength and weaknesses look after the internal factor of the company whereas opportunities and threats look after the external factor.
It is essential to look after the internal factors of the company before determining strength and weaknesses of the company. Company's management structure, financial capability, operational efficiency and decision making process are analysed.
There can be different strength of a company. Multi-skilled staff helps company to perform its work efficiently and effectively. Low cost has always been the strength of any company. Fewer management levels help in quick decision making process. Enough resources and financial capabilities help company to make new investments
There may be many weaknesses in a company which stops company in moving forward. Heavy reliance on external environment is considered as weaknesses. Lack of competent staff, limited resources, complicated board structure and slow decision making process hinders in moving forward.
External factors provide opportunities and threats for a company.
Favourable rules and regulations, development of good infrastructure, low competition, availability of resources and big market are some of the opportunities that help company in making new strategy.
Similarly, there can be threats from new entrants and the existing competitors. Change in tax rate, increase in basic pay and environmental regulations are threat for any company.
Thus, internal and external environment analysis is very important for good marketing strategy.
To: The Manager, Millie's Cookies
From: ABC Marketing Solutions
Subject: Strategic Marketing Analysis of Millie's Cookies
Date: 24 February 2014
We are very happy to develop a marketing strategy for Millie`s Cookies. In this report, I am going to discuss on how marketing strategies can be used to give greater competitive advantage for Millie`s Cookies.
3.2 MARKETING STRATEGIES THAT CAN BE ADOPTED BY A COMPANY
Since Millie's cookie is one of the best retailers of cookies in London, there are many marketing strategies that the company can adopt to maintain and promote its business. It can use STP (Segmentation, Targeting and Positioning) approach.
Segmentation: Market Segmentation is a process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviour that might require separate products or marketing programs (Kotler and Armstrong, 2012). Since, Millie's cookies are found all over the UK, it is better to segment the customer based on the age group. Cookies consumption is different on different age group. So, I have tried to segment the consumer based on the group. Different age group like children, youth, adult and old is made.
Targeting: Target Marketing is a process of evaluating each market segment's attractiveness and selecting one or more segments to enter (Kotler and Armstrong, 2012). It is not possible for the entire segment to accept one strategy. Only a particular segment can be targeted to focus. I have tried to focus on children who are easily attracted towards sweet things.
Positioning: It is the process of arranging a product to occupy a distinctive, clear, desirable place relative to competing products in order to increase sales. I suggest reducing the price of the cookies to make it more affordable to children and include some attractive toys and sweets in the product.
Relationship Strategies: it is the strategy to foster loyalty of customer, interaction with them and maintain the long-term engagement. It focuses on customer acquisition, retention and extension. Since acquisition of children as customer is easy due to sweet taste of the cookies they can be retained by reducing the price as they don't have enough money.
Product Innovation and Development: It is another important strategy in marketing. Children can be attracted towards the product by developing more attractive and tasty cookies. Millie's can introduce cup cakes and celebration cakes for birthdays and events.
Branding: According to American Marketing Association(AMA), ' Brand is a name, term, sign, symbol design or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from other sellers.' Millie's can use its brand name to exploit its opportunities. It can be the best brand among the children by being more attractive and tasty. Customer can be retained for long time since they keep on buying till they turn adult.
Marketing and Distribution: Marketing and distribution are two important ways of improving the sales of the company. Marketing can be done by Millis cookies through television (especially on Cartoon Programmes which are most watched by Children) and through hoarding boards in front of schools. Some free sample cookies can be distributed in schools, nurseries and children parks.
Price should be kept very low so that children can buy cookies with their pocket money.
3.3 ANALYSIS OF MARKETING COMMUNICATION STRATEGIES
According to Felicia Greene of Demand Media, 'Marketing communication helps to develop brand awareness, which means that consumers translate product information into perceptions about the product's attributes and its position within the larger market'. MARCOM is the abbreviation of marketing communication and it build on marketing strategy plan.
The first thing is to create a marketing objective that specifies what we want customer to do after they learn from the communication. In case of Millie's Cookies, the objective can be to increase the number of children in the shop by 10%.
Different electronic Medias and other means like children books can be used in messaging the product of Millie's cookies among the children. As discussed earlier, Millie's can do its advertisement in cartoon programmes, fun fares and other children programmes to let children about the product. A good relation can be set with the public by investing little of the profit on children park in maintenance can help to generate goodwill of Millie`s among the parents.
After choosing a suitable communication vehicle, cost of the process should be matched with the budget and adjusted. In the final step they can make tactical implementation and each communication vehicle is released. Frequency of the advertisement in TV can be kept at minimum during the week days and maximum at weekends when children are staying at home watching TVs. When there are many festivals during summer in different part of UK, advertisement can be done on those places. Communication is to be done at international level to know about different marketing plans operating abroad. Millie's should keep its competitive advantage over its rival by being cheaper and affordable for children.
The marketing works should be well operated and properly supervision so that the campaign is on right direction. Measurement of the progress is to be recorded and analysed. Work should be evaluated by using external consultants.
3.4 APPLICATION AND IMPLEMENTATION OF MARKETING STRATEGIES
The marketing strategy focusing on the children can be applicable for Millie`s cookies. Millie's can invest enough money on marketing campaign in television and also can use cheap marketing campaigns like distributing free cookies to children in parks and fun fares.
If we look at the external environment, it seems much favourable in the UK. People are affluent can invest any amount on food and luxury items. Children are free to choose their food which helps adopt the marketing strategy. Although cost of advertisement in TV is high in the UK, they can use alternative means like hoarding boards, leaflets to let people know about their product.
Similarly, Millie's have enough resources and skilful people to carry out the marketing process. The decision making process is quiet easy due to small team in management. Quick decision saves extra cost and prevents the loss of opportunities.
If the above marketing strategy is implemented by the company, then, the company can achieve its objective within very short period of time. It can have a competitive advantage over its rivals.
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The Role of a Quality of the Product in the Marketing Strategy
If the product is of a low quality, all marketing efforts will fail. A nice packaging, attractive promotion or even a lower price of competitors cannot replace a quality. The successful marketing strategy is the one that has all elements balanced. This is the only way to attract customers and hold them in a long-run.
Marketing strategy includes all activities aimed at the increase in sales and a sustainable competitive advantage based on the selected marketing mix that consists of 4 Ps or product, price, place and promotion (McCarthy). All elements of the marketing mix are equally important and must be harmonized in order to achieve the marketing goals. The product is what sells to customers and the base of the business operations. It must have an adequate price which is determined by costs and must be brought to the consumer through selected distribution channels. Customers also must be informed about the product that is offering. In services marketing is added three more elements – process, people and physical environment, which makes the 7 Ps (Booms et. al.).
Although all elements of the marketing strategy are important, the quality of the product is crucial because creates a customer satisfaction (Singh 5). Even when all other elements of the marketing strategy are in line with the market, if the quality of the product is low, the customers will not be satisfied and will stop buying the product. The quality of the product also creates value (Singh 5). Furthermore, product quality has a direct and positive influence on ROI, market share and price (Jacobson and David 32). Customers are willing to pay higher prices for higher quality. Also, a quality product will easier enter the market and increase market share. In return, higher prices and market share have a positive feedback effect on increasing the quality and all together increase ROI (Jacobson and David 42). It is enough to look the well-known brands, such as iPhone, Mercedes, Nike or Armani to see that with high quality always goes high price, a huge market and enormous business success. However, customers will buy only what they want, so the company must find the right mix of all elements.
Therefore, though all four elements of the marketing strategy are important, without a quality product a company cannot survive in the market, even if has the greatest competitive advantages in other aspects of marketing. Very often a quality of the products is the crucial factor in the decision to purchase a product because it determines customer satisfaction.
Booms, Bernard H. and Bitner, Mary Jo. “Marketing Strategies and Organization Structures for Service Firms.” Marketing of Services. American Marketing Association,1981, pp. 47–51.
Jacobson, Robert, and David A. Aaker. “The Strategic Role of Product Quality.” Journal of Marketing, vol. 51, no. 4, 1987, pp. 31–44., doi:10.2307/1251246. Accessed 16 Feb. 2017.
McCarthy, E. Jerome. Basic Marketing, IL: Richard D. Irwin, 1964.
Singh, Meera. “Marketing Mix of 4P’S for Competitive Advantage.” IOSR Journal of Business and Management, vol. 3, no. 6, 2012, pp. 40–45., doi:10.9790/487x-0364045. http://www.ijbmi.org/papers/Vol(2)6/Version-2/B02620508.pdf. Accessed 17 Feb. 2017.
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