what is marketing strategy definition


Updated on:

marketing strategy definition

marketing strategy definition .

Marketing, more than any other business function, deals with customers. Although we will soon explore more-detailed definitions of marketing, perhaps the simplest definition is this one: Marketing is managing profitable customer relationships. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction. For example, McDonald’s fulfills its “i’m lovin’ it” motto by being “our customers’ favourite place and way to eat” the world over, giving it nearly as much market share as its nearest four competitors combined.

Large for-profit firms, such as Google, Procter & Gamble, Toyota, and Microsoft, use market- ing. But so do not-for-profit organizations, such as uni- versities, hospitals, museums, symphony orchestras, and even churches. You already know a lot about marketing—it’s all around you.

Marketing comes to you in the good old traditional forms: You see it in the abundance of prod- ucts at your nearby shopping mall and in the ads that fill your TV screen, spice up your magazines, or stuff your mailbox. But in recent years, marketers have assembled a host of new marketing approaches: everything from imaginative websites and mobile phone apps to blogs, online videos, and social media.

These new approaches do more than just blast out messages to the masses.

Walmart has become the world’s largest retailer—and the world’s second-largest company—by delivering on its promise, “Save Money. Live Better.” Facebook has attracted more than a billion active web and mobile users worldwide by helping them to “connect and share” with the people in their lives.Sound marketing is critical to the success of every organization.

Yet there is much more to marketing than meets the con- sumer’s casual eye. Behind it all is a massive network of people and activities competing for your attention and purchases.

They reach you directly, personally, and interactively. Today’s marketers want to become a part of your life and enrich your experiences with their brands to help you live their brands. Whether at home, at school, where you work, or where you play, you see marketing in almost everything you do.

In the first four steps, companies work to understand consumers, create customer value and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value.

By creating value for consumers, they in turn capture value from consumers in the form of sales, profits and long-term customer equity. In this chapter and the next, we will examine the steps of this simple model of market- ing. In this chapter, we review each step but focus more on the customer relationship steps – understanding customers, engaging and building relationships with customers, and capturing value from customers.

They include basic physical needs for food, clothing, warmth and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. Marketers did not create these needs; they are a basic part of the human make-up.

Customer needs, wants and demands The most basic concept underlying marketing is that of human needs. Human needs are states of felt deprivation.

A trite example of a person in Papua, New Guinea, needs food but wants taro, rice, yams and pork. A similarly clichéd Englishman needs food but wants cucumber sandwiches and gallons of insipid tea.

Wants are shaped by one’s so- ciety and are described in terms of objects that will satisfy those needs. When backed by buying power, wants become demands.Wants are the form human needs take as they are shaped by culture and individual person- ality. If you’ll excuse the stereotypes – used for illustrative purposes only – a German consumer needs food but wants a sauerkraut, sausage and beer.

Given their wants and resources, people demand products and services with benefits that add up to the most value and satisfaction.

P&G brand managers routinely spend a week or two living on the budget of low-end consumers to gain insights into what they can do to improve customers’ lives.

Outstanding marketing companies go to great lengths to learn about and understand their customers’ needs, wants and demands. They conduct consumer research, analyse mountains of customer data, and observe customers as they shop and interact, offline and online.

People at all levels of the company – including top management – stay close to customers. For example, James Averdiek, founder and MC of extraordinarily amazing Gü Chocolate Puds, argues that a core tenet of any successful business is getting close to your customers by finding out what they are doing and taking part in it. At P&G, executives from the chief executive officer down spend time with customers in their homes and on shopping trips.

customer Value and satisfaction Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many market offerings? Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others.

Marketers must be careful to set the right level of expectations. If they set expecta- tions too low, they may satisfy those who buy but fail to attract enough buyers. If they set expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships.

A political candidate, for instance, wants votes; a church wants membership; an orchestra wants an audience; and a social action group wants idea acceptance.

exchanges and relationships Marketing occurs when people decide to satisfy their needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return.

In the broadest sense, the marketer tries to bring about a response to some market offering. The response may be more than simply buying or trading products and services.

Markets The concepts of exchange and relationships lead to the concept of a market. A market is the set of actual and potential buyers of a product or service. These buyers share a particular need or want that can be satisfied through exchange relationships.

Marketing means managing markets to bring about profitable customer relationships. How- ever, creating these relationships takes work.

Sellers must search for and engage buyers, identify their needs, design good market offerings, set prices for them, promote them, and store and de- liver them. Activities such as consumer research, product development, communication, distribu- tion, pricing and service are core marketing activities.

Although we normally think of marketing as being carried out by sellers, buyers also carry out marketing. Consumers market when they search for products, interact with companies to obtain information, and make their purchases. In fact, today’s digital technologies, from online sites and smartphone apps to the explosion of social media, have empowered consumers and made marketing a truly two-way affair.

Thus, in addition to customer relationship management, today’s marketers must also deal effectively with customer-managed relationships. Marketers are no longer asking only ‘How can we influence our customers?’ but also ‘How can our customers influence us?’ and even ‘How can our customers influence each other?’ the main elements in a marketing system. Marketing involves serving a market of final consumers in the face of competitors.

The company and competitors research the market and interact with consumers to understand their needs. Then they create and exchange market offerings, messages and other marketing content with consumers, either directly or through marketing intermediaries.

Marketing management orientations

Marketing management wants to design strategies that will engage target customers and build profitable relationships with them. But what philosophy should guide these marketing strategies? What weight should be given to the interests of customers, the organisation and society? Very often, these interests conflict.

There are five alternative concepts under which organisations design and carry out their marketing strategies: the production, product, selling, marketing and societal marketing concepts. The production concept The production concept holds that consumers will favour products that are available and highly affordable.

Companies adopting this orientation run a major risk of focusing too nar- rowly on their own operations and losing sight of the real objective – satisfying customer needs and building customer relationships. The product concept The product concept holds that consumers will favour products that offer the most in quality, performance and innovative features. Under this concept, marketing strategy focuses on making continuous product improvements.

Therefore, management should focus on improving production and distribution effi- ciency. This concept is one of the oldest orientations that guides sellers. The production concept is still a useful philosophy in some situations. For example, both per- sonal computer maker Lenovo and home appliance maker Haier dominate the highly competitive, price-sensitive Chinese market through low labour costs, high production efficiency and mass distribution.

However, although useful in some situations, the production concept can lead to marketing myopia.

Product quality and improvement are important parts of most marketing strategies. However, focusing only on the company’s products can also lead to marketing myopia. For example, some manufacturers believe that if they can ‘build a better mousetrap, the world will beat a path to their doors’. But they are often rudely shocked.

The selling concept Many companies follow the selling concept, which holds that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort. The selling concept is typically practised with unsought goods – those that buyers do not normally think of buying, such as life insurance or blood donations. These industries must be good at tracking down prospects and selling them on a product’s benefits. Such aggressive selling, however, carries high risks.

Buyers may be looking for a better solution to a mouse problem but not necessarily for a better mousetrap. The better solution might be a chemi- cal spray, an exterminating service, a housecat, or something else that suits their needs even better than a mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages and prices it attractively; places it in convenient distribution channels; brings it to the attention of people who need it; and convinces buyers that it is a better product.

Customer relationship levels and tools Companies can build customer relationships at many levels, depending on the nature of the target market. At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. For example, Häagen-Dazs does not phone or call on all of its consum- ers to get to know them personally. Instead, Häagen-Dazs creates relationships through brand- building advertising, public relations, its newsletter, its website and via over 300,000 Facebook followers. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers. For example, Häagen-Dazs sales representatives work closely with Tesco, Carrefour and other large retailers. In between these two extremes, other levels of customer relationships are appropriate.

Beyond offering consistently high value and satisfaction, marketers can use specific marketing tools to develop stronger bonds with customers. For example, many companies offer frequency marketing programmes that reward customers who buy frequently or in large amounts. Airlines offer frequent-flyer programmes, hotels give room upgrades to their frequent guests, and supermar- kets give patronage discounts to ‘very important customers’.

For example, KLM Airways and Air France offer their Flying Blue members frequent-flyer points they can use on any seat on any KLM or Air France flight. Flying Blue promises its members that ‘As you travel more and more with us, we reward your loyalty by offering more and more services you can enjoy, to make every trip that much more special.

By simply showing your Flying Blue card, you can access countless extra services and make your travels, or even your waiting time at the airport, smoother, easier and more pleasant.’16 These days almost every brand has a loyalty rewards programme. However, some innova- tive loyalty programmes go a step beyond the usual. Other companies sponsor club marketing programmes that offer members special benefits and create member communities.

For exam- ple, BMW sponsors the BMW Car Club, which gives BMW drivers a way to share their driv- ing passion. BMW Car Club membership benefits include a quarterly magazine, discounts on BMW servicing, parts and accessories, the club shop stocks BMW books, clothing, model cars and other BMW merchandise at discount prices. The club also organises track events and BMW festivals.

Partner Relationship Management

When it comes to creating customer value and building strong customer relationships, today’s marketers know that they can’t go it alone. They must work closely with a variety of marketing partners. In addition to being good at customer relationship management, mar- keters must be good at partner relationship management—working closely with others inside and outside the company to jointly bring more value to customers. Traditionally, marketers have been charged with understanding customers and repre- senting customer needs to different company departments.

However, in today’s more connected world, every functional area in the organization can interact with customers. The new thinking is that—no matter what your job is in a company—you must under- stand marketing and be customer focused. Rather than letting each department go its own way, firms must link all departments in the cause of creating customer value. Marketers must also partner with suppliers, channel partners, and others outside the company.

Marketing channels consist of distributors, retailers, and others who connect the company to its buyers. The supply chain describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers

Capturing Value from Customers The first four steps in the marketing process outlined in involve building cus- tomer relationships by creating and delivering superior customer value. The final step involves capturing value in return in the form of sales, market share, and profits. By cre- ating superior customer value, a firm creates highly satisfied customers who stay loyal and buy more. This, in turn, means greater long-run returns for the firm. Here, we discuss the outcomes of creating customer value: customer loyalty and retention, share of market and share of customer, and customer equity. Creating Customer Loyalty and Retention Good customer relationship management creates customer satisfaction. In turn, satisfied customers remain loyal and talk favourably to others about the company and its products.

Studies show big differences in the loyalty of customers who are less satisfied, somewhat satisfied, and completely satisfied. Even a slight drop from complete satisfaction can cre- ate an enormous drop in loyalty

. Thus, the aim of customer relationship management is to create not only customer satisfaction but also customer delight. Keeping customers loyal makes good economic sense. Loyal customers spend more and stay around longer. Research also shows that it’s five times cheaper to keep an old customer than acquire a new one.

Conversely, customer defections can be costly. Losing a customer means losing more than a single sale. It means losing the entire stream of purchases that the customer would make over a lifetime of patronage.

Through supply chain management, companies today are strengthening their connections with part- ners all along the supply chain. They know that their fortunes rest on more than just how well they perform. Success at delivering customer value rests on how well their entire supply chain performs against competitors’ supply chains.

The Digital age

More than 3 billion people—42 percent of the world’s population—are now online; 58 percent of all American adults own smartphones. These numbers will only grow as digital technology rockets into the future.29 Most consumers are totally smitten with all things digital. For example, accord- ing to one study, 44 percent of Americans keep their mobile phone next to them when they sleep—they say it’s the first thing they touch when they get up in the morning and the last thing they touch at night.

online, Mobile, and social Media Marketing The explosive growth in digital technology has fundamentally changed the way we live— how we communicate, share information, access entertainment, and shop.

In just the past few years, people in the United States averaged more time per day with digital media (5.25 hours) than viewing traditional TV (4.5 hours).30 The consumer love affair with digital and mobile technology makes it fertile ground for marketers trying to engage customers. So it’s no surprise that the Internet and rapid advances in digital and social media have taken the marketing world by storm.

Digital and social media marketing involves using digital marketing tools such as Web sites, social media, mobile ads and apps, online video, email, blogs, and other digital platforms to engage consumers anywhere, anytime via their computers, smartphones, tablets, Internet- ready TVs, and other digital devices. These days, it seems that every company is reaching out to customers with multiple Web sites, newsy Tweets and Facebook pages, viral ads and videos posted on YouTube, rich-media emails, and mobile apps that solve consumer problems and help them shop. At the most basic level, marketers set up company and brand Web sites that provide information and promote the company’s products.

Many companies also set up branded community sites, where customers can congregate and exchange brand-related interests and information. For example, Petco’s Pet Talk Place site is a place where pet lovers can “connect, share, and learn” via discussions boards dedicated to dogs (“the bark”), cats (“the purr”), fish (“the splash”), birds (“the chirp”), reptiles (“the hiss”), and other types of pets. At cosmetics seller Sephora’s Beauty Talk community site, like-minded members discuss, debate, and compare makeup, hair, fragrance, or skin care products to find the best match for them. And site serves as a social hub for PlayStation PS4 game enthusiasts. It’s a place where fans can follow social media posts about PS4, watch the latest PS4 videos, discover which PS4 games are trending on social networks, share content, and interact with other fans—all in real time has earned more than 4.5 million page views, curated more than 3.3 million pieces of social content, and featured 75,000 fans.

error: Content is protected !!