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Marketing is a set of activity for creating , communicating and delivering value to

customers

Focuses on needs/ wants of target


markets & delivering value
better than competitors

Strategy

The set of decisions and actions that result in the formulation and implementation of plans design
to achieve a company's objective

Marketing Strategy

A marketing strategy is a process to allow a company to focus limited resources on the best
opportunities to increase sales and thereby achieve a sustainable competitive advantage.

business goals: these are the highest-level objectives of the business, or mission statement.

marketing strategy: the high-level rules that will govern what marketing efforts you focus on.

marketing mix: plans for Product, Pricing, Place (Distribution), and Promotion.

marketing plan, which will describe the specific, detailed marketing activities that you plan on
engaging in to achieve the marketing strategies and business goals.

3 level of strategy:

Corporate Level, Business Level and Functional Level

Strategy components:
Scope Goals and objectives

Resource deployment Competitive advantage synergy

Marketings role in strategy:

- Product- market development

- Product quality

- Distribution setup

- Technology elements

- Market development

- Manufacturing process
- Strategic Capabilities necessary to compete in the marketplace:

- Capability Description

Technology leader Create solutions

Industry experience Knowledge of customers

Functional competency Understand how an industry operates

Creative Talent Ability to develop new approaches

Marketing Skill Positioning and branding

Managerial Know -How Manage business units

Knowledge of country Understand language/culture to meet specific needs

Skills in building alliances Develop agreements between firms, clients and


suppliers

Strategic thinking Recognize opportunities

- Differentiation Strategies
-
Market Share Leader The largest

Quality Leader Most reliable products/services

Service leader Most responsive

Tehnology Leader First to develop new technology

Innovative leader Most creative

Relationship Leader Most committed to customers

Prestige Leader Most exclusive

Global Leader Serving world markets with the best

Bargain Leader Lowest prices

Value Leader Best price to performance offers

Strategy drives Capabilities and Capabilities drive strategy .

Vision: Vision refers to an image or a concept. Its the ability to anticipate possible future events
and developments with imagination and wisdom. Vision in management literature, may be
defined as a mental image of a business manager for possible and desirable future of an
organization. It may also be defined as a strong belief of a manager about the specific course of
action for the business organization. To put it simply, vision refers to where an organization
wants to be in the future.

Mission: It is not that an organization is formed in a vacuum or with no purpose it stands. Of


course, it has a reason for its existence which is specific. It runs based on it. The purpose is
known as mission. It may be mentioned in a few words, such as, producing goods or providing
services and so the objectives are communicated through the mission statement. The Mission of
an organization is the base and it is that the strategies are built upon. It focuses on the purpose of
an organization through a statement describing the reason of an organizational existence - It
answers the question why the organization has been established.

Objectives: Objective in general indicates a place where you want to reach. In organizational
literature it means the aim which an organization tries to achieve. Objectives are generally in
plural form. Objectives are predetermined; they provide clear direction to the activities and
results to be obtained from the planning process. Objectives must be SMART (Specific,
measurable, achievable, realistic and timely). Objectives must be clearly defined, so that the
works become goal-oriented and the unproductive and unsystematic tasks can be avoided.

Goals: A Goal is simply something that somebody wants to achieve. The synonyms of goal
are: aim, ambition, purpose, target and objective. Simply speaking, goal refers to the purpose
towards which the efforts are made or endeavors are directed. Goal has a timeframe which is
generally long term. So, its a long term plan.

A good Marketing Plan includes these 10 elements:

1. Describe Your Business

2. Conduct a Situation Analysis

3. Define Your Customer

4. Strategize Your Market Entry

5. Forecast your Sales or Demand Measurement

6. Define Your Marketing Budget

7. Integrate Your Marketing Communication

8. Identify Sales Channels

9. Track Marketing Activities

10. Evaluate Your Progress


Growth stage:

Improve product quality


Add new models
New market segments
Increase distribution
Product awarness to product preference
Lower price

Maturity

Market modification
Product modification
Do nothing
Marketing mix modification
Decline stage

Continue with original product


Continue products with improvements
Drop the product
Increase investment
divesting
Segmentation

The growing importance of CRM integrate all the information about customer into single
location provide opportunity to learn about customer need and actual behavior

Role of Market Segmentation in Marketing Strategy


Generic level,
product type,product
variant
Segmentation
variables,
Charactrscs of ppl
and orgn, product
use situatn segt,
buyers need n
pref, Purchase
behaviour

Micro
segmentation,
mass
customization,
variety seeking
I. Positioning Strategies:

Marketers can follow several positioning strategies:

Position of specific attributes

Position directly against a competitor

Position for different classes

II. Choosing and implementing a Positioning Strategy:

- Identify possible competitive advantages

- Choose an effective communication platform

- Select differentiation in positioning


Market Leaders:

Recognized to be the leader has the largest market share

Provides the benchmark for other companies in the industry.

Market leadership, although often associated with size, is in reality a more complex concept and
should instead be seen in terms of an organizations ability to determine the nature and bases of
competition within the market.

Market Challengers and Followers

Firms with a slightly smaller market share can adopt one of two stances.

1. They may choose to adopt an aggressive stance and attack other firms, including the
market leader, in an attempt to gain share and perhaps dominance (market challengers),

2. They may adopt a less aggressive stance in order to maintain the status quo (market
followers).

Market Nichers

Virtually every industry has a series of small firms that survive, and indeed often prosper, by
choosing to specialize in parts of the market that are too limited in size and potential to be of
real interest to larger firms.
Market Leader Strategies:

Defense strategies
Market Challenger Strategies:

By attacking the market leader

By attacking other firms of the same size

By attacking smaller firms


Market-Follower Strategies:

Cloner, emulates leader - e.g. Coka-Cola instead of Coca-cola.

Imitator , copies some features - e.g. car manufacturers imitate the style of one another

Adapter, improves on leader - 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

McKinseys 7s Model:

Strategy, Structure, Systems

Skills, Staff, Styles are influenced by Shared Values

Michael porter 5 forces model:


Putting the Four Components Together-The Competitor Response Profile

OFFENSIVE MOVES

Defensive Moves
Market Growth Rate
BCG Matrix

BCG matrix is used to evaluate the strategic position of the brand portfolio and its potential. It
classifies business portfolio into four categories based on (industry attractiveness) growth rate of
that industry and (competitive position) relative market share.

Relative market share - One of the dimensions used to evaluate business portfolio is relative
market share. Higher corporate market share results in higher cash returns. This is because a firm
that produces more, benefits from higher economies of scale.

Market growth rate - High market growth rate means higher earnings and sometimes profits
but it also consumes lots of cash, which is used as investment to stimulate further growth.

Stars operate in high growth industries and maintain high market share. Stars are both cash
generators and cash users. They are the primary units in which the company should invest its
money, because stars are expected to become cash cows and generate positive cash flows. Yet,
not all stars become cash flows. This is especially true in rapidly changing industries, where new
innovative products can soon be outcompeted by new technological advancements, so a star
instead of becoming a cash cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market penetration, market
development, product development

Dogs hold low market share compared to competitors and operate in a slowly growing market. In
general, they are not worth investing in because they generate low or negative cash returns. But
this is not always the truth. Some dogs may be profitable for long period of time, they may
provide synergies for other brands or SBUs. Therefore, it is always important to perform deeper
analysis of each brand or SBU to make sure they are not worth investing in or have to be
divested.
Strategic choices: Retrenchment and liquidation

Cash cows are the most profitable brands and should be milked to provide as much cash as
possible. The cash gained from cows should be invested into stars to support their further
growth. According to growth-share matrix, corporate should not invest into cash cows to induce
growth but only to support them so they can maintain their current market share. Again, this is
not always the truth. Cash cows are usually large corporations or SBUs that are capable of
innovating new products or processes, which may become new stars. If there would be no
support for cash cows, they would not be capable of such innovations.
Strategic choices: Product development, diversification, divestiture, retrenchment

Question marks are the brands that require much closer consideration. They hold low market
share in fast growing markets consuming large amount of cash and incurring losses. It has
potential to gain market share and become a star, which would later become cash cow. Question
marks do not always succeed and even after large amount of investments they struggle to gain
market share and eventually become dogs. Therefore, they require very close consideration to
decide if they are worth investing in or not.
Strategic choices: Market penetration, market development, product development, divestiture

GE Matrix

GE-McKinsey matrix is a strategy tool that offers a systematic approach for the multi business
corporation to prioritize its investments among its business units.

Industry attractiveness indicates how hard or easy it will be for a company to compete in the
market and earn profits. The more profitable the industry is the more attractive it becomes.
Industry attractiveness consists of many factors growth rate, Industry size, trend of prize, macro
environment factors and so on.
Along the X axis, the matrix measures how strong, in terms of competition, a particular business
unit is against its rivals. Following factors determine the competitive strength of a business unit:
Total market share, brand strength, customer loyalty, product differentiation and so on.

Invest/Grow box. Companies should invest into the business units that fall into these boxes as
they promise the highest returns in the future. These business units will require a lot of cash
because theyll be operating in growing industries and will have to maintain or grow their market
share. It is essential to provide as much resources as possible for BUs so there would be no
constraints for them to grow. The investments should be provided for R&D, advertising,
acquisitions and to increase the production capacity to meet the demand in the future.
Selectivity/Earnings box. You should invest into these BUs only if you have the money left
over the investments in invest/grow business units group and if you believe that BUs will
generate cash in the future. These business units are often considered last as theres a lot of
uncertainty with them. The general rule should be to invest in business units which operate in
huge markets and there are not many dominant players in the market, so the investments would
help to easily win larger market share.

Harvest/Divest box. These are units in an unattractive industry with no sustainable competitive
advantage. They are not able to achieve any advantage and perform under expectations. If the
company has surplus cash, then there can be investment in those units who manage to make
enough cash to break even and there is some strategic advantage to keeping them around. If this
is not the case, then the units should be divested and liquidated.

New Product Development

New product development is a process which is designed to develop, test and consider the
viability of products which are new to the market in order to ensure the Growth or survival of the
organisation.

Types of NPD:

Innovative product

New product line

Additions to existing lines

Improvements and revision of existing products


Repositioned products

Cost reduction

Success factors

Operating Philosophy

Organization Structure

The Experience Effect

Management Style
NPD process

Idea Generation

Idea Screening

Concept development and testing

Market strategy development

Business Analysis

Test marketing

Commercialization

Challenges To New Product Development

1. Global competition

2. Time

3. Market potential

4. Technological change

5. Distribution

6. New features

7. Price
8. Critical unmet needs

9. Promotion

10. Resistance To Change

11. Market size

Promotional Mix:

Advertising

Sales promotion

Public relations

Personal selling

Direct marketing

Integrated marketing communication calls for recognizing all contact points where the customer
may encounter the company and its brands.

Setting the Total Promotion Budget

Affordable budget method

Percentage-of-sales method

Competitive-parity method

Objective-and-task method

Steps in developing effective communication

1. Identify the target audience


2. Determine the communication objectives

3. Design a message

4. Choose media

5. Select the message source

6. Collect feedback

Advertising objectives- Informative, reinforcements and reminder

Advertising budget deciders-


Stage in the product life cycle
Market share and consumer base
Competition and clutter
Advertising frequency
Product substitutability

PR tools:
Publications, events, sponsorships, news, speeches, public service activities,
identity media

Managing Mass Communication:


1. Using 5Ms in Developing & Advertising Program:
Mission, Money, Message, Media, Measurement,
1. Setting the GOAL!
Connect with Customer
Differentiate brand with Competitors - Broad & Flexible
Communicate to Media
3. SCAMP factors affecting budget decision:
Stage of Product life cycle, Competition & Clutter, Advertising Frequency, Market Share &
Consumer Base, Product Substitutability
4. Developing the Advertising Campaign
3 Important Steps of developing
5. The 3-Key Print Ad Component : Picture, Headline, Copy
6. Choosing Major Media Types:
Media type selection depends on target audience media habits, product & message
characteristics and cost
7. Evaluate Advertising Effectiveness include 4 Shares
Share of Expenditures
Share of Voice
Share of Mind & Heart
Share of Market
8. Utilizing Sales Promotion
3 tools in salespromotion that can benefit: Marketers, Manufacturers, Consumers,
Retailers
9. Manage Event Properly
Events are able to extend the relationship of Sponsor and Target Market
10. Support Marketing Public Relation
It can increase product awareness & credibility, boost sales and cut promotion
costs

Corporate governance is the system of rules, practices and processes by which a company is
directed and controlled. Corporate governance essentially involves balancing the interests of a
company's many stakeholders, such as shareholders, management, customers, suppliers,
financiers, government and the community.

Business ethics (also known as corporate ethics) is a form of applied ethics or


professional ethics that examines ethical principles and moral or ethical problems that arise in
a business environment. It applies to all aspects ofbusiness conduct and is relevant to the
conduct of individuals and entire organizations.

Social responsibility is an ethical framework and suggests that an entity, be it an organization or


individual, has an obligation to act for the benefit of society at large. Social responsibility is a
duty every individual has to perform so as to maintain a balance between the economy and the
ecosystems.

Assignment Questions:

1. Marketing Director is interested in understanding how the marketing


planning can enhance the organisations level of market orientation. using
relevant academic theory and framework, evaluate how effective marketing
planning can improve the organisations market orientation.

Ans- good marketing plan constitutes, covered above

2.Analyse extent to which organisations vision and mission support the market
orientations.
Ans-
Peter Drucker stated that mission statements of firms answer what is our business?
What should it be for the enterprise as a -conceived mission statement defines the
fundamental, unique purpose that sets a company apart from other firms of its type and
identifies the scope products (including services) offered and markets served.
The mission statement is generally viewed as important to the long-term interests and
survival of the firm. The Mission Statement is crucial for developing strategic plan and
represents its organizational existence. Mission statement answers two basic questions
that the stakeholders might ask about a company: identity of company, differences from
the others and what the company does. Vision describes what the organization would
like to become. Also, strong visions have been described as inspiring, and greater levels
of optimism, confidence and the importance of followers' contribution, and the intrinsic
rewards associated with company achievement. Vision statements and aspirations and
are intended to capture the heart and mind of each vision tends to be enduring while its
mission can change in light of changing environmental conditions. A vision statement
tends to be relatively short and concise, making it easily remembered.

Market Orientation: A market orientation is a business culture in which all employees


are committed to the continuous creation of superior value for customers. Kohli and
Jaworski (1990) define market orientation as the organization wide information
generation, dissemination and appropriate response related to current and future
demonstrated relationships with financial performance and innovation. Market-oriented
businesses are committed to understanding both the expressed and latent needs of
their customers, the capabilities and plans of their competitors through the processes of
acquiring and evaluating market information in a systematic and anticipatory manner.
They continuously create superior customer value by sharing the knowledge broadly
throughout the organization and by acting in a coordinated and focused manner.
Compared to customer-led businesses, market oriented businesses scan the market
more broadly, have a longer-term focus, and are much more likely to be dimension to
market orientation. Customers are the most frequently
mentioned stakeholder in these large corporations and providing a quality product or
service to them is the most commonly included goal or objective. Employees and
stockholders follow customers as most typically included stakeholders. Conducting
global operations and ethical behaviour are two other critical goals in these countries.
Finally, to a lesser extent, the goals of growth, profitability, and leadership are also
significant.
Globalization and the accompanying technological developments, has increased the
competition among the firms more than ever. Companies easily monitor the activities of
others and copy the products and services of their competitors. Consumers reach to
information about the products and companies with little effort has also affected their
decision-making criteria. However, such a tough competition offers companies a chance
for strategy changes through various ways. In today's fast changing conditions having
solid strategic plans has become the sine qua non-of sustainable businesses growth
and keeping competitive advantages as the first steps in strategic planning, mission and
vision statements are becoming important communication tools for businesses. Mission
and vision statements reflect the company strategies and express themselves clearly to
their customers and stakeholders. These statements affect the formation of attitudes of
customers and community towards the companies. Analysis show that mission
statements of companies reveal a customer orientation. Companies appear to be more
customer-oriented and focused on customer satisfaction. But, after-sales services which
is essential from the point of customer satisfaction, hardly takes place in the mission
statements. When the vision statements are examined, competition-orientation
becomes dominant. Businesses, when defining their future, strategy and the markets
they will serve, focus on creating competitive advantage. This results with a difference
between vision and mission statements. However, again, similar to the mission
statements clear distinction could not be founded in many cases regarding to vision
statements. Companies focus on expanding their market shares. Innovation is one of
the tools of today's most important competitive businesses. Innovation makes
differentiation easier. Providing a significant competitive advantage, innovation has
become an important element of strategic management process. The items related to
innovation in the mission / vision statements of the companies were found to be lower
than expected. Another interesting result is that innovation is largely perceived as
product innovation. Mission and vision statements although may be perceived as simple
expressions, they have significant importance and implications. When mission and
vision statements embody hard or impossible goals to reach and
objectives, they lose their meanings and become hollow. In this respect, it is possible to
say that these statements are insufficient to direct the strategic plans. Companies
should always bear in mind that mission and vision statements describe the purpose of
existence and the roadmap for the future positions. Otherwise, the vision and mission
statements will not mean anything in terms of use of strategic management principles
and will not make any sense to related parties.

3. Access and explain the critical success factor will have the greatest impact on
the successful implementation of plan
Engagement
Communication
Innovation
Project Management
culture

4. Discuss the importance of the price quality relationship in formulating

marketing strategies.
5. What does the term strategy mean in the context of channel

management?

A channel strategy is a vendor's plan for moving a product or a service through the
chain of commerce
to the end customer

Product manufacturers and service providers face a number of channel options.


The simplest
approach is the direct channel in which the vendor sells directly to the customer.

The vendor may maintain its own sales force to close deals with customers or sell
its products or
services through an e-commerce website. Direct selling via catalogue represents
another possibility,
although this business has been largely subsumed by e-commerce.

Vendors can also pursue sales via indirect channels involving one or more
intermediaries. Indirect
sales models include retail, which can involve selling through a brick-and-mortar
business or an online
e-tailing company

In addition, vendors can sell through value-added resellers (VARs), companies


that bundle a vendor's
product or service with other products and services to provide an overarching
solution for customers

The vendor-to-VAR-to-customer channel is sometimes referred to as a one-tier


distribution strategy.
In two-tier distribution, the vendor sells to a distributor, which, in turn, provides the
vendor's products
and services to a network of VARs

A vendor pursuing indirect channels will often create a partner program to


manage relationships with
its business allies.

When devising a channel strategy, a vendor must make decisions about which
channel or channels to
use and the types of partners it will seek to cultivate.

The appropriate strategy can vary from one product or service to another. A
vendor that builds a
channel strategy around both direct and indirect sales channels must take care to
avoid channel
conflict.
Channel partners will soon become disgruntled if a vendor's direct sales force
competes with them
for customer business. Thus, a channel strategy may involve market segmentation

For example, a vendor could target only large enterprises with its direct sales
force, while reserving
small and mid-sized businesses for its channel partners.

Channel Segmentation
With ever-increasing pressures around managing the cost of sales, around
increasing the level of
service provided to customers as well as around competing fiercely with rivals for a
dwindling
number of potential clients, companies need to dive head-first into channel
segmentation

A few years ago, a prime example of this was realized when an international
software vendor
utilized channel segmentation as the basis for boosting its partner program

The objective was to optimize the performance of its over 250,000 partners the
result? The
company realized an over 300% increase in return on marketing investments
(compared to preprogram
performance)

The approach is not limited to retailers, with companies that have a reliance on
brick and mortar
investing in channel segmentation (banks, for example, 64% of which, according to
a recent Asian
Banker survey, have plans for segmenting branches) as well

Channel segmentation can allow for improvement to be made in and around:


Lead Management Better matching leads with channels which could
serve their needs
more effectively and efficiently, so that cost of acquisition is minimized while
conversion
rates are maximized
Product Management Optimization of assortment by channel, based on
location
potential and channel capabilities, decreasing cost of stock and logistics
while increasing
local revenues
Price Management Facilitating local price differentiation based on
channel and market
specifics
Promotion Management Better localization of promotions as well as
marketing
messages and materials based on channel capabilities and customer
portfolio
Operational Efficiency Avoiding waste of time and resources on
channels with low
performance and limited potential, while addressing the exact needs of each
channel (in
terms of training, support, etc.) separately
Performance Management More realistic and fair evaluation, with
increased ability to
differentiate local market conditions and compare more similar channels with
each
other

Channel Segmentation can be optimized in the following steps :


Collecting Data
As in all analytics activities, channel segmentation relies heavily on availability and
accuracy of the right
data (about channel partners and their customers) as well as the socio-demographic
profile of the regions they serve. Various organizations with independent sales
channels (such as sky) already do this, utilizing platforms such as partner portals.

Segmenting & Profiling Partners


Once the data is available for segmentation, using various data mining algorithms,
partners can be
clustered into micro and macro segments. The key success factor for this
segmentation is to utilize various dimensions describing different characteristics of
channels separately, each dimension serving a different strategic or tactical
purpose. The output from this approach is a 360-degree view of each channel,
enabling customization of management across all required dimensions.
Matching Partner & Customer Segments
For companies with an already existing customer segmentation output, channel
segmentation provides
an immediate opportunity to identify and address mismatches between the needs
of customer segments and what each channel has to offer. If the location where
certain customer segments shop can be traced, then opportunities around
migrating them can be identified as well the example below shows such a
situation, whereby Tech Savvy customers are shopping at Minimalist partner
shops (a strong mismatch)

Strategizing & Optimizing Channel Mix


Once the segmentation effort has been completed, the next step is to design micro
and macro segment specific strategies; the objective here is to customize how each
segment is being treated, supported,
enhanced, etc. This must translate into specific actions and initiatives across the
channel lifecycle, as well as customizations in product, promotions, and price mix
for each segment.
An example of the kind of enhancements we are talking about here is being utilized
by Bank Audi in
some of their branches, a video-conferencing solution is in place with tellers
connecting to customers
remotely; this allows the bank to virtually manage inconsistent demand levels in
certain branches (such
would be a concept that can be tapped into for a retail bank branch that is in the
Irregular Peaks
operations segment).

6. How might the accuracy of communication be influenced by noise or

distortion which enters into both the message and the channel?
Distractionsi.e., noisecan disrupt the flow of information between any of these five
stages. That is to say, issues in communication pertaining to distraction could affect the
sender, the message itself, the channel it is being sent through, or the recipient of that
message.
Communicative Interference
Every organization faces certain barriers to communication. Shannon and Weaver
argue there are three particular layers of communication problems:
Technical: How accurately can the message be transmitted? Semantic: How
precisely can the meaning be conveyed? Efficacy-related: How effectively does the
received meaning affect behaviour?
These layers relate to a variety of types of noise that can interfere with communication.
Environmental Noise
Environmental noise is noise that physically disrupts communication, such as very loud
speakers at a party or the sounds from a construction site next to a classroom.
Physiological-Impairment Noise
Physical conditions such as deafness or blindness can impede effective communication
and interfere with messages being clearly and accurately received.
Semantic Noise
Semantic noise refers to when a speaker and a listener have different interpretations of
the meanings of certain words. For example, the word "weed" can be interpreted as an
undesirable plant in a yard or as a euphemism for marijuana.
Syntactical Noise
Communication can be disrupted by mistakes in grammar, such as an abrupt change in
verb tense during a sentence.
Organizational Noise
Poorly structured messages can also be a barrier. For example, a receiver who is given
unclear, badly worded directions may be unable to figure out how to reach their
destination.
Cultural Noise
Making stereotypical assumptions, such as unwittingly offending a non-Christian person
by wishing them a "Merry Christmas," can also detract from communication. Because of
this, it is important that each side of a conversation understands the culture of the other
party.
Psychological Noise
Certain attitudes can also make communication difficult. For instance, significant anger
or sadness may cause someone to lose focus on the present moment.
By acknowledging and adjusting to noise, a communicator can make it more likely that
their message will be received as intended.

7. Suggest some of the kinds of objectives that might be set for marketing

communications. How might these objectives be pursued in practice?


all three objectives are, Inform, Persuade, and Remind.
1. Inform your target audience about your brand 2. Persuade your target audience to
purchase your product or use your service 3. Remind your target audience about your
brand and encourage them to make the purchase

8. Three important marketing communication tools are advertising, selling

and sales promotion. To what extent are they:

(a) complementary

(b) mutually exclusive as promotional tools?

9. Discuss the value of the Internet as a vehicle for marketing goods and

services.
Convenience
Reach
Cost
Personalization
Relationships
Social
Lower operational cost
Tracking results
Demographic targeting
Global Marketing

10 What is meant by competitive strategy? How should an organization set

about determining its competitive strategy?


Competitive Strategy is defined as the long term plan of a particular company in order to gain
competitive advantage over its competitors in the industry. It is aimed at creating defensive position
in an industry and generating a superior ROI (Return on Investment). Such type of strategies play a
very important role when industry is very competitive and consumers are provided with almost
similar products. One can take example of mobile phone market.

Before devising a competitive strategy, one needs to evaluate all strengths, weaknesses,
opportunities, threats in the industry and then go ahead which would give one a competitive
advantage.

Types of competitive strategies by Porter

According to Michael Porter, competitive strategy is devised into 4 types:

1. Cost Leadership

Here, the objective of the firm is to become the lowest cost producer in the industry and is achieved
by producing in large scale which enables the firm to attain economies of scale. High capacity
utilization, good bargaining power, high technology implementation are some of factors necessary
to achieve cost leadership. e.g Micromax phones
2. Differentiation leadership

Under this strategy, firm maintains unique features of its products in the market thus creating a
differentiating factor. With this differentiation leadership, firms target to achieve market leadership.
And firms charge a premium price for the products (due to high value added features). Superior
brand and quality, major distribution channels, consistent promotional support etc. are the
attributes of such products.E.g. BMW, Apple

3. Cost focus

Under this strategy, firm concentrates on specific market segments and keeps its products low
priced in those segments. Such strategy helps firm to satisfy sufficient consumers and gain
popularity. E.g. Sonata watches

4. Differentiation focus

Under this strategy, firm aims to differentiate itself from one or two competitors, again in specific
segments only. This type of differentiation is made to meet demands of border customers who
refrain from purchasing competitors products only due to missing of small features. It is a clear
niche marketing strategy. E.g. Titan watches

Without following anyone of above mentioned competitive strategies, it becomes very difficult for
firms to sustain in competitive industry.

Examples of competitive strategy

There can be several examples based on the four parameters given by Michael Porter. Some
examples are given below:

1. Cost leadership: Micromax smart phones and mobile phones are giving good quality products at
an affordable price which contain all the features which a premium phone like Apple or Samsung
offers
2. Differentiation leadership: BMW offers cars which are different from other car brands. BMW cars
are more technologically advanced, have better features and have got personalized services

3. Cost focus: Sonata watches are focused towards giving wrist watches at a low cost as compared to
competitors like Rolex, Titan, Omega etc

4. Differentiation focus: Titan watches concentrates on premium segment which includes jewels in
its watches.