Marketing Strategy Assignment 684r6l

Student ID :

CGSSO00001201

Student Name :

YASIN HASSAN YUSUF

Course Code :

BMMS5103

Course Name : Program :

MARKETING STRATEGY SU-S

Semester : Assignment : Facilitator :

MAY SEMESTER 2013 Professor BASHIR ABDI ELMI

Date due :

July 24, 2013

Submission Date:

July 20, 2013

Contents INTRODUCTION....................................................................................................................................... 1 1.

STRATEGIC DIMENSIONS ............................................................................................................ 1 1.1.

Market-Scope Strategy ............................................................................................................... 1

1.2.

Market-geography strategy ........................................................................................................ 4

1.3.

Market-Entry Strategy ............................................................................................................... 5

1.4.

Market-Commitment Strategy .................................................................................................. 6

1.5.

Market-Dilution Strategy ........................................................................................................... 7

1.6.

Usefulness of Strategy Dimensions ............................................................................................ 8

2.

STRATEGY EVALUATION ON THE SELECTED PRODUCT ................................................. 9

3.

IMPLICATIONS OF THE RECOMMENDED STRATEGY...................................................... 11

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INTRODUCTION

In this study, the researcher has discussed in detail developing marketing strategies as well as how developing marketing strategy relate to corporate strategic planning. In this essay the researcher has explained the five strategic dimensions of marketing strategy with examples and their appropriateness to a particular product or services. In addition to that the essay has provided implications of the recommended strategy to the selected product or service. 1. STRATEGIC DIMENSIONS

In our discussion in Dimension of Marketing Strategy we begin by defining Marketing Strategy, because its definition is pertinent to strategic dimensions. For example one study cited that marketing strategy in its broad definition is the paramount and the centerpiece of marketing function (Greenley, 1989). Marketing strategy is not only the centerpiece of the Marketing Function, but there is a great body of evidence that if adopted effectively business can achieve competitive advantage (Griffith, 1997) and (Petri Parvinen, 2007). In the following sections the researcher will elaborate these strategic dimensions of marketing strategy and their applicability to various products and/or services.

1.1. Market-Scope Strategy

Market-Scope Strategy defines your market coverage that you want to serve for. This dimension has a lot to do with the competition; therefore, the organization has to carefully plan its MarketScope Strategy. For example one study found that that competition is a predecessor of the company’s scope of its products/customer. Therefore:

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“…The more competitive the action of the main competitor, the more limited the customer scope of the firm if it operates in a mature market. The impact of the main competitor’s scope is robust across all market contexts. Furthermore, the broader the product scopes of the firm, the better the financial performance if the firm operates in a growing market.” (Pehrsson, 2010, p. 418).

Market-Scope Strategy can be approached in three different ways. Jain explained them in his book as: “…Three major alternatives in market-scope strategy are single-market strategy, multimarket strategy, and total-market strategy.” (Jain, 2009, p. 334).

The first alternative in market-scope strategy is single-market strategy. Businesses choose single market strategy in order to concentrate their resources and energies on a single segment of the market. Businesses also adopt this strategy to avoid direct competition with large competitors. They often find and target a particular niche in the market and service this niche (Jain, 2009).

However, there is no single unified rule for selecting a segment in the market; but business should perform market analysis and find a segment that deserves to be served. Business that are planning to devise that strategy as single market strategy should also consider a segment that big competitors see as too small to enter too risky to approach (Jain, 2009).

The main reason that compels business to adopt this strategy is necessity. Because in times of lack of enough resources both human and financial resources business often tend to fit into a small niche in the market (Jain, 2009).

The second alternative is multimarket strategy. Business prefer this strategy when businesses are not in a short supply of resources, they have another alternative in their market-scope strategy. Business can pursue multimarket strategy. In this strategy companies are able to choose and serve for more than one segment in which they can still avoid those competitors that serve the entire market. Multimarket strategy can be achieved in either of two ways

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“…The multimarket strategy can be executed in one of two ways: either by selling different products in different segments or by distributing the same product in a number of segments.” (Jain, 2009, p. 336).

The following example better demonstrates how businesses set up their market-scope strategy. “…For example, the women’s movement motivated Smith and Wesson Corp. to launch Lady Smith in 1989, a line of guns specifically designed for women. The result: sales to women jumped from 5 percent of the company’s total to nearly 20 percent. Despite the cutthroat competition from mass merchandisers such as Toys “R” Us, FAO Schwartz continues to successfully operate by targeting upscale children.” (Jain, 2009, p. 335)

The third alternative in market-scope strategy is total-market strategy. As its name implies companies adopt this strategy when they are able to serve the market in its entirety. However, there are contributing factors that enable companies to pursue this strategy. For example, Jain Subash wrote in his book that: “…A company using the total-market strategy serves an entire spectrum of a market by selling different products directed toward different segments of the market. The strategy evolves over a great number of years of operation.” (Jain, 2009, p. 338)

In of suitability, market-scope strategy is suitable to those businesses that are very keen to select appropriate market-scope strategy. For example, single-market scope strategy is suitable to local restaurant business; while total-market strategy is suitable to large corporations such as general trading companies that can serve for different segments of the market such as finance, telecommunication and consumer products.

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1.2. Market-geography strategy

Geography has widely been considered as a very important variable when devising marketing strategy. For instance, many businesses started their businesses domestically and then reached global fortress. “…History provides many examples of how businesses started locally and gradually expanded nationally, even internationally. Automobiles, telephones, televisions, and jet aircraft have brought all parts of the country together so that distance ceases to be important, thus making geographic expansion an attractive choice when seeking growth.” (Jain, 2009, p. 338)

However, market-geography strategy has various alternatives. These alternatives namely are local-market strategy, regional-market strategy, national-market strategy and internationalmarket strategy.

The first alternative of market geography strategy is local-market strategy. Just few industries tend to adopt this strategy such as retailers and, service companies. In the past there were laws that govern the geographical footprint of business; but in the present deregulations helped organizations choose outside markets other than domestic or local markets. “…In many cases, the geographic dimensions of doing business are decided by law. For example, until recently, an airline needed permission from the Civil Aeronautics Board (which was dissolved in 1983 after the airline industry deregulation) to change the areas it could cover. By the same token, banks traditionally could only operate locally.” (Jain, 2009, p. 338)

The second alternative is regional-market strategy, in this strategy regional expansion stands halfway between doing business locally and going national coverage. Regional-market strategy ensures geographical diversity of the business. For example if one business doesn’t perform well in one city, others will cover their costs and probably could generate revenues.

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Additionally, regional-market strategy is easier to handle than an entire country in of logistics and other operations.

The third market-geography strategy is national-market strategy. When companies are in a growth stage they tend to go for national-market strategy. This strategy opens up a lot of opportunities for growth. For example, Mr. Jain took as example in his Marketing Planning and Strategy book that: “…be illustrated with reference to Borden, Inc. A dairy business by tradition, in the 1980s Borden decided to become a major player in the snack food arena. It acquired seven regional companies, among them Snack time, Jays, and Laura Scudder’s, to compete nationally, to grow, and to provide stiffer competition for PepsiCo’s Frito-Lay division.” (Jain, 2009)

The fourth alternative of market-geography strategy is international-market strategy. Since the deregulation and the globalization that has followed started corporations have adopted international-market strategy. This strategy gave corporations an unprecedented growth, because simply they operate worldwide.

The following example may be better illustrated market-geography strategy with the reference of Marriott International Inc. “…We are delighted to grow our footprint in Paris with this timeless property,” said Amy Mherson, president and managing director of Marriott International in Europe. “There has never been a more exciting time to introduce our fourth Marriott property to the market with the many transformative changes happening within our signature brand. Paris is one of the most dynamic and sought after cities in the world and we look forward to being ready to host the next generation of travelers.” (Marriott, 2013) 1.3. Market-Entry Strategy Market-entry strategy is one of the most important dimensions of market strategy.

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“…Market-entry strategy refers to the timing of market entry. Basically, there are three market-entry options from which a company can choose: (a) be first in the market, (b) be among the early entrants, or (c) be a laggard.” (Jain, 2009, p. 342)

The entry time of the market should align the right product or services at the right time. “…If it is announced too early, the manufacturer will suffer a drop in revenues and will lose customers to the competition. To be the first in the market with a product provides definite advantages.” (Jain, 2009, p. 342)

This strategy gives the first entrant a leap ahead of its followers. First entrant of the market will lead its followers in of technology and branding as the following example illustrates.

For example Apple pioneered Smart phones; therefore, it gave a competitive advantage to Apple. Apple’s iphone is the most popular smart phone in the market.

The suitability and unsuitability of this dimension is that for example, first entrants of the market will find themselves in a favorable position; while laggards or latecomer will find themselves in an inferior position unless they come up with transformational shifts. For instance, when Apple launched its first smart phone known as iphone it gave it a leading position ahead of Nokia or Blackberry, however, when Samsung followed with its Galaxy series it block the smart phone market from new entrants. Therefore, a any new entrant or comer in the touch screen based smart phone will find himself in a very inferior position.

1.4. Market-Commitment Strategy

Market-commitment strategy relates to the degree of involvement in which companies seek in a particular market. This involvement can be in the form of financial recourses, managerial input or both (Jain, 2009). The main reason behind market-commitment strategy is that it is widely believed that customers are all not equally important; therefore, companies often make varying commitments to different customer groups (Jain, 2009). 6

Market-commitment strategy is divided into three sub-strategies such as strong marketcommitment, average market-commitment and light market-commitment.

However, this strong-market strategy may be better explained with the following example: “… This point may be illustrated with reference to the Polaroid Corporation. The company continues to do research and development to stay ahead of the field. The original Land camera, introduced in 1948, produced brown-and-white pictures. Thereafter, the company developed film that took truly black-and-white pictures with different ASA speeds. Also, the time involved in the development of film was reduced from the original 60 seconds to 10 seconds. In 1963 the company introduced color-print film with a development time of 60 seconds; in the early 1970s, the company introduced the SX-70 camera, which made earlier Polaroid cameras obsolete. Since its introduction, a variety of changes and improvements have been made both in the SX-70 camera and in the film that goes into it. A few years later, the company introduced yet another much-improved camera, Spectra.” (Jain, 2009, pp. 347-348).

The suitability of market-commitment strategy depends on the type of the commitment itself. For example, if the commitment level of a particular company is high then it should be on the continues move such as technology companies. Technology companies produce new devices or software each year in order to improve. Another example of high level commitment is that carmakers. Carmakers such as Toyota and Porsche continuously develop new models of card every year. The unsuitability aspects of this strategy is that if the company doesn’t produce high tech products or products that require continues development; such companies should not provide high commitment in that market.

1.5. Market-Dilution Strategy

In many situations, businesses find reducing some of their business strategically other than expanding them. This strategy is called market-dilution strategy. 7

“…The market-dilution strategy works out well when the overall benefit that a company derives from a market, either currently or potentially, is less than it could achieve elsewhere. Unsatisfactory profit performances, desire for concentration in fewer markets, lack of top management knowledge of the market, negative synergy vis-à-vis other markets that the company serves, and lacks of resources to develop the market fully are other reasons for diluting market position.” (Jain, 2009, p. 350)

Market-dilution strategy has four sub strategies. Namely de-market strategy, pruning-of-marginal markets strategy, key-marketing strategy and harvesting strategy.

The following example may better explain market-dilution strategy: “…Market-dilution strategy may be better illustrated as: Shell Oil followed this route toward the end of 1978 when a gasoline shortage occurred. Each customer was sold a maximum of 10 gallons of gasoline at each filling.” (Jain, 2009, p. 350).

Market-dilution strategy is suitable when companies want to increase their return on investment. For example retail companies can close more stores in order to increase their Return on Interment (ROI). Another example where market-dilution strategy could be appropriate is that when companies want to de-market some of their products. For example, Telecommunication companies may de-market their Landline service, because customers are now using Mobile phones more than Landline.

1.6. Usefulness of Strategy Dimensions

Each one of the five dimension of strategy is useful in a particular angle of the market. For example, Market-scope dimension is useful determine the scope of your products and services. Without determining what market-scope you are going to serve you can’t product or sell any product or service.

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The usefulness of the second dimension of market strategies is geographical dimension. This dimension is particularly useful in of the geographical coverage of your products or services. For example is your geographical dimension local, regional, national or international.

The third dimension is market-entry. This dimension is useful to take decision on the entry time of the market. For example if the market is already full companies that have the same products or services as you, you had better not enter that market.

The fourth dimension of market strategies is market-commitment strategy. This strategy is particularly useful to shape the commitment level of the company. If the company shows high commitment in that market it could probably provide positive results.

The usefulness of the fifth (market-dilution strategy) strategy is that it helps companies opt their exit strategy. For example, companies want to increase their Return on Investment they could opt de-marketing or harvesting market strategy.

2. STRATEGY EVALUATION ON THE SELECTED PRODUCT

In this short essay, we have chosen Bookshop. The bookshop is called Star Bookshop Company. Star Bookshop Company buys and sells Textbooks to university level students. However, the bookshop owners have developed marketing strategy for their business. Their marketing strategy considers five strategic dimensions such as market-scope of the text books, market-geography, market-entry time of the product, market-commitment of the management and their marketdelusion strategy. The following table summarizes strategic planning of the bookshop. 9

Market-scope strategy -

Market-geography strategy

The market-scope strategy of this -the market-geography strategy of local. This product is single-market strategy. The means that Star Bookshop will sell its company

sells

its

Textbooks

to Textbooks to those students who live and study

university level students. Therefore, in Mogadishu. Therefore, the company opt this bookshops targeted university level local-market strategy. students segment Market-entry strategy -

Market-commitment strategy

The company is not the first one to -the market-commitment of high. Because the enter the market. It’s the second to company wants to enter the market with enter the market. However, they have aggressive marketing idea and new products. entered the market with different and Therefore, Star Bookshop Company have new Products (Textbooks). Their books developed

a

high-market

commitment

are coloured instead of black and strategy. white. Market-delusion strategy -

Finally,

the company have opted

market-pruning

strategy.

Star

Bookshop selected this strategy to increase its return on investment while maintaining growth. The company is seeking new alternative market to do so. these markets include regional markets such as Hargaysa, Bossasso and Kismayo Markets.

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3. IMPLICATIONS OF THE RECOMMENDED STRATEGY

The implications of the recommended strategies is that if Star Bookshop Company sticks to its plans and maintains this strategy the Company will see substantial growth. Star Bookshop will also get quicker return on investment if they maintain their market-pruning strategy and seek for new markets in order to expand. However, the evolution of these strategies on Textbook product is as follows. First, the local-market scope is suitable to this product, because their market-geography is localmarket geography which as Mogadishu markets. Secondly, the market-entry strategy as follower is also suitable, because the company was not the first to enter in this market. Therefore, they have added new value to Textbooks that are already existed in the market. They come up with COLORFUL TEXTBOOKS. Thirdly, they’re market commitment strategy is appropriate and suitable, because Star Bookshop Company want to enter the market aggressively so that they can get enough market share to serve for. Finally, the Company opted pruning-market strategy in order to increase its return on investment and maintain their market growth.

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REFERENCES Greenley, g. E. (1989). An understanding of Marketing Strategy. Eruopean Journal of Marketing , Vol. 23, Iss. 8 , 45-58. Griffith, D. S. (1997). Combining corporate and marketing strategy for global competitiveness. Marketing Intelligence & Planning Vol. 15, Iss. 4 , 173–178. Jain, S. C. (2009). marketing planning and strategy 6th edition. Marriott. (2013, June 27). http://news.marriott.com/. Retrieved July 12, 2013, from www.marriott.com:

http://news.marriott.com/2013/06/marriott-international-continues-rapid-

growth-in-europe-with-iconic-hotel-in-paris.html Pehrsson, A. (2010). Product/customer scope Competition antecedents, performance effects and market context moderations. European Business Review Vol. 23 No. 5 , 418-433. Petri Parvinen, H. T. (2007). Corporate strategic marketing: a new task for top management. USINESS STRATEGY SERIES VOL. 8, Iss. 2 , 132-141.

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