Post 10: Marketing Strategies

Our second marketing workshop looked at building on the completed market research and turning this into a feasible marketing strategy i.e how to reach you customers in the most effective way. Steve discussed a number of generic marketing strategies which include:

Overall cost leadership – being able to consistently manufacture goods at lower prices than competitors due to economies of scale. For example 'Ford' motorcars selling large volumes of stock based on a lower profit margin than competitors.

Focus – operating within a niche market and having an overwhelming appeal to this audience, using a premium pricing strategy. For example 'Sunseeker' yachts who sell small volumes to a specific target audience based on a high profit margin.

Differentiation – This strategy falls into two categories, undifferentiated and differentiated. Undifferentiated markets are based around commodity products such as salt; obviously the only variables are quality and price.

Differentiated markets are those where many similar products are competing, but gain competitive advantage through positioning within the market and differentiating features such as;

1 Performance
2 Durability
3 Conformance
4 Reliability
5 Style
6 Design

For example, the range of 'ipods' from Apple, differentiated from other MP3 players through design and functionality.

By defining my products’ USPs earlier while looking at TEDA’s proposition I feel I have a clear understanding of what differentiates my VTAs from the wider market, so don’t feel it necessary to complete the suggested differentiation table.

Further reading

Unsatisfied by 'pinning all of my hopes' on such a generic marketing strategy, which seems to contradict with my experience and one of the integral learning points from other modules on the course of gaining success using a targeted marketing strategy, I decided to do further research.

I found that people often amalgamate 2 separate areas of marketing under the banner of marketing strategy when in reality they are separate. These areas are; Marketing Strategies and Marketing Management.

El-Ansary (2006:266) defines marketing strategy as "segmentation, targeting, differentiation and positioning" i.e. understanding the market, segmenting it, finding you target segment, designing your product to meet the needs of the target market, differentiating it from competitors and positioning in the customers' minds.

Marketing management is then designing a program that takes this formulated strategy and implements it to "create the value (product/price), communicating the value (promotion) and delivering the value (place)".

This suggests that my differentiation strategy above is valid as a strategy, but my focus needs to be on my marketing management, and that's where the 4 P's is appropriate:

Product

From all of the research so far I have realised the following about the VTA products:

1 Only product catering for ethnic diets – USP which must be promoted and could form an integral part of the ventures branding as an ethnic health authority.

2 Un-exploited market by competitors – avoid detection to prevent copycat products.

3 Intellectual property owned relating to diet specifications, and translations – Promote the bi-lingual feature to potential customers. Use this to develop further spin off products with reduced development costs.

4 Bespoke product folder/stand – given lead time for manufacture adequate stock levels must be maintained. Functionality and durability of product must be adequately conveyed to target audience.

5 Includes teacher guidance – convey feature and benefit to target audience.

6 Wide age appeal – monitor purchasers to constantly evaluate the most profitable target audience ultimately allowing for tailored promotion.

7 Developed by a charity with experience in this field – promote this message during sales calls to gain credibility.

8 Adaptable to new languages/formats – use client feedback to produce new versions either by request or popular demand.

9 Holistic approach to dietary advice – further develop the content of the VTA to cover wider issues such as understanding food labeling, or how to detect health issues.

10 Requires no specialist equipment – Promote this feature and benefit to target audience.

Pricing

A key area to review when formulating a marketing strategy is the price charged for goods. There are various considerations involved which include:

Pricing objective – high sales with low profit margin OR low sales with a high profit margin

Demand sensitivity – the elasticity of demand

Production costs – which in turn define the mark-up hence profit margin

Competitors pricing – setting a price will determine the market positioning of goods

Selecting the actual price – based on all of the information above

From discussion during the seminar this can be refined by using the 3 c's model:

1 costs
2 competitors pricing
3 customer assessment

The decision framework used to formulate my companies products can be seen below:



Place

Place refers to the distribution and marketing channels employed when selling goods. Selecting the correct channels has various cost implications and will ultimately define the success of the company.

If I had more money (tough for a student) or resources available to me (a sales force), The Ethnic Diet Association's product could be distributed through more channels, but from my research it is clear that 3 main areas stand out for distribution as cost effective and feasible options - Creating a website with sales facilities, cold-calling to generate leads/appointments, selling through 3rd party distributors (prevalent within the VTA market and usually done through catalogues).

In the future, trade fairs could be approached, but these require too much capital investment, time and travel to be initially feasible.

Promotion

Deciding on the types of promotion employed to market the VTAs will have a direct impact on sales of the products. Given the limited resources available at this stage, promotion channels must be selected which are low risk and involve minimal capital expenditure for maximum impact.

Various options are available and include:

1 Personal selling
2 Direct marketing
3 Sales promotion
4 Advertising
5 Branding

Decisions about the final choice of promotion methods can be seen below;


Building up a brand will be very important for me, as I have the potential to become the authority and point of reference for ethnic dietary advice due to the lack of competition. If I manage this, it will then create high barriers to entry into the market for any new competitors through my brand and reputation.

At the minute this pressure to create a formidable brand is down to me and my sales abilities. Usually companies would put together a large advertising campaign to promote a new brand, but this requires too much investment - I shall be relying on my skills, website and 'word of mouth advertising', wish me luck!

Recommended Links:

• Role of price – www.bizpeponline.com (software used to calculate price)
• Advertising – www.ipa.co.uk (Institute of Practitioners in Advertising) and www.adassoc.org.uk (The Advertising Association)
• Internet marketing – www.adventivemarketing.com and www.wilsonweb.com

Post 9: Marketing Introduction

The first of the workshops on marketing provided by Steve of VFM business advisers opened with a group discussion about what the term marketing actually means. The general consensus was that marketing is often misconceived as only focussing on the advertising and promotion of a company’s goods.

Steve went on to define marketing as:

“A process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives.”

This definition encompasses many different core business functions and suggests that marketing is in fact one of the most important functions of any modern business. This concurs with the views of McCarthy (1964) who defined a framework, the 'Marketing Mix' or 4Ps which is still widely used today as a tool for decision making in marketing. I will refer back to this in a later post, but there is various 'groundwork' to do first...

Steve went onto show a diagram explaining the marketing process overview shown below:


Analysis – Market Research

The first stage of designing any marketing campaign is gathering market research which can later be used to analyse:

1 The marketing environment
2 Buying behaviour
3 Competitors

There are two types of market research data, primary and secondary. Primary data is that gathered by directly asking questions using focus groups, questionnaires, or interviews. Secondary data comes from third party sources such as government reports, internet research, commercial data or websites such as Mintel or Emerald.

Making the right decisions about what market research to gather and from where can be complex, however using the table provided by Steve, I have identified the following for my business:


External Environmental Analysis - PEST

Market research should highlight key areas of the Macro factors affecting an organisation, as these factors have significant influence over the success and growth of new and established companies. A traditional method of analysing the Macro environment for a company is a PEST analysis, this covers the following factors:

Political – legislation, enforcement, trends

Economic - spending patterns, industry growth, demand for goods/services

Social – demographic, trends, culture

Technological – new technologies and the pace of change

Market research completed for my business The Ethnic Diet Association shows the following:


Business Buyer Behaviour

Steve suggested that business to consumer, and business to business (b2b) sales differ in terms of the selling process. As my business is b2b this market is defined by:

1 Few purchasers
2 Larger buyers
3 Close relationships with suppliers
4 Inelastic demand
5 Professional purchasing
6 Several buying influences

Competitive Sweep

Understanding the competition is essential for any business, and market research can offer some excellent insights into the strategies others employ, ultimately allowing for an appropriate market entry strategy to be formulated in the case of new entrants.

Key issues Steve suggested need consideration are:

1 The number of sellers – how many competitors

2 Degree of differentiation – how different are the products

3 Entry and mobility barriers – is this a difficult market to get into due to cost or qualifications?

4 Cost structures- comparing the costs of you and your competitors.

5 Vertical integration – are you able to penetrate a market.

Using the research techniques explained previously the following findings have been found for competing companies for my business, The Ethnic Diet Association:


Market Segmentation

Irrelevant of industry or size, companies should always segment the market in order to ultimately ascertain their target audience, i.e. those who are most likely to purchase their product or service. Basic methods of market segmentation include:

1 Geographic location
2 Area of operation
3 Purchasing potential

How best to segment, enter a market and gain competitive advantage leading to profit is often determined by assessing competitors within a market, and how influence/power from different areas affect levels of competition. This theory was devised by Porter (1985) as his 5 forces theory, see below:


Having established that for my product there are no directly competing products, although the threat of substitutes is high due to copyright infringement, I concluded that there would few barriers to entry, relatively low level of competition within the ethnic niche, although competing with larger established brands will be difficult at first, due to a lack of credibility and reputation.

Recommend Links:

• Market research – www.britishchambers.org.uk (Chamber of Commerce) and www.marketresearch.org.uk
• Data Sources – www.statistics.gov.uk and www.mintel.co.uk and www.yell.com
• Marketing – www.cim.co.uk (Chartered Institute of Marketing)