STRATEGIC MARKETING Shivaji University Syllabus

S.M. ishWAR Page | 1
Chapter 1
Marketing strategy
Marketing strategy is the comprehensive plan formulated particularly for achieving the
marketing objectives of the organization. It provides a blueprint for attaining these
marketing objectives. It is the building block of a marketing plan. It is designed after detailed
marketing research. A marketing strategy helps an organization to concentrate its scarce
resources on the best possible opportunities so as to increase the sales.
A marketing strategy is designed by:
1. Choosing the target market: By target market we mean to whom the organization
wants to sell its products. Not all the market segments are fruitful to an organization.
There are certain market segments which guarantee quick profits, there are certain
segments which may be having great potential but there may be high barriers to
entry. A careful choice has to be made by the organization. An indepth marketing
research has to be done of the traits of the buyers and the particular needs of the
buyers in the target market.
2. Gathering the marketing mix: By marketing mix we mean how the organization
proposes to sell its products. The organization has to gather the four P’s of marketing
in appropriate combination. Gathering the marketing mix is a crucial part of
marketing task. Various decisions have to be made such as -
 What is the most appropriate mix of the four P’s in a given situation
 What distribution channels are available and which one should be used
 What developmental strategy should be used in the target market
 How should the price structure be designed
Importance of Marketing Strategy
 Marketing strategy provides organization an edge over its competitors.
 Strategy helps in developing goods and services with best profit making potential.
 Marketing strategy helps in discovering the areas affected by organizational growth
and thereby helps in creating an organizational plan to cater to the customer needs.
 It helps in fixing the right price for organization’s goods and services based on
information collected by market research.
 Strategy ensures effective departmental co-ordination.
 It helps an organization to make optimum utilization of its resources so as to provide
a sales message to its target market.
 A marketing strategy helps to fix the advertising budget in advance, and it also
develops a method which determines the scope of the plan, i.e., it determines the
revenue generated by the advertising plan.
In short, a marketing strategy clearly explains how an organization reaches its
predetermined objectives.

Strategic Intent
Strategic Intent can be understood as the philosophical base of strategic management
process. It implies the purpose, which an organization endeavors of achieving. It is a
statement that provides a perspective of the means, which will lead the organization, reach
the vision in the long run.
Strategic intent gives an idea of what the organization desires to attain in future. It answers
the question what the organization strives or stands for? It indicates the long-term market
position, which the organization desires to create or occupy and the opportunity for
exploring new possibilities.
1. Vision: Vision implies the blueprint of the company’s future position. It describes where the
organization wants to land. It is the dream of the business and an inspiration, base for the
planning process. It depicts the company’s aspirations for the business and provides a peep
of what the organization would like to become in future. Every single component of the
organization is required to follow its vision.
2. Mission: Mission delineates the firm’s business, its goals and ways to reach the goals. It
explains the reason for the existence of business. It is designed to help potential
shareholders and investors understand the purpose of the company. A mission statement
helps to identify, ‘what business the company undertakes.’ It defines the present
capabilities, activities, customer focus and business makeup.
3. Business Definition: It seeks to explain the business undertaken by the firm, with respect to
the customer needs, target audience, and alternative technologies. With the help of
business definition, one can ascertain the strategic business choices. The corporate
restructuring also depends upon the business definition.
4. Business Model: Business model, as the name implies is a strategy for the effective
operation of the business, ascertaining sources of income, desired customer base, and
financing details. Rival firms, operating in the same industry relies on the different business
model due to their strategic choice.
5. Goals and Objectives: These are the base of measurement. Goals are the end results, that
the organization attempts to achieve. On the other hand, objectives are time-based
measurable actions, which help in the accomplishment of goals. These are the end results
which are to be attained with the help of an overall plan, over the particular period.
The vision, mission, business definition, and business model explains the philosophy of
business but the goals and objectives are established with the purpose of achieving them.
Relationship of Marketing Strategy with Corporate Mission:-
The relationship between Marketing Strategy and corporate Mission can be explained
through the process of “Strategic Planning”.

Step 1:- Mission & Objectives: - The process of strategy formulation starts with
determination of mission and objectives of the organization. Based upon the mission and
objectives now the marketing strategies are formulated. Mission Statement is a brief
description of a company's fundamental purpose. It answers the question, "Why does
business exist? The mission statement describes the company’s business vision including the
unchanging values and purpose of the firm and forward looking visionary goals that guides
the pursuit of future opportunities. Mission statements are explicitly used in company’s
marketing campaigns.
Step 2:- Environmental Scan: - The environmental scan includes following components
1. Internal Analysis of the firm
2. Analysis of the firm’s Industry
3. Analysis of the external Macro Environment.
The environmental scanning is done in the light of the mission statement.
Step 3:- Strategy Formulation: - Given the information from the environmental scan the
firm should match its strengths to the opportunities that it has identified. While addressing
its weakness and external threats.
Step 4:- Strategy Implementation: - The selected strategy is then implemented by means of
programs, budgets and Procedures. Implementation involves the organization of firm’s
resources and motivation to the staff to achieve objectives.
Thus mission statement is the foundation on which the entire edifice of Marketing
Strategy is erected.
Mission & Objectives
Environmental Scanning
Strategy Formulation
Strategy Implementation

The Role of Strategic Marketing
Strategic marketing is a method through which an organisation differentiates itself from its
competition by focusing on its strengths to provide better service and value to its customers. In a
nutshell, the goal of strategic marketing is to make the most of an organisation’s positive
differentiation over its competition through the consumers’ perspective.
The implementation of strategic marketing involves three questions, which include:
 Where to compete;
 How to compete;
 When to compete.
Once these questions have been answered, then the strategic marketing planning phase can
begin.
Phases involved in the strategic marketing planning process:
 Planning phase: In this phase, the various aspects of an organisation, such as its strenghts,
weaknesses and technology are assessed. The overall state of the organisation is also
presented to the management. This phasecomprises of four components, which include:
 SWOT analysis: This method analyses the strengths, weaknesses, opportunities and threats
related to the organisation. The results of this analysis help in developing a strategic marketing
proposal for the organisation.
 Marketing mix strategy: Once the SWOT analysis has been conducted, a proper marketing mix
strategy is then prepared. Marketing mixstrategy consists of combining and analysing a variety
of components that help in strengthening a company’s brand and in selling its products or
services.
 Set product and marketing goals: Setting product goals is one of the best methods for
obtaining success with new products. The productshould be marketed in such a way that
it becomes indispensable for the consumers.
 Four P’s of marketing: Once the product goals are set, the four P’s of marketing; price,
place, product and promotion strategy, come into the picture.
 Implementation phase: The strategic marketing plan is implemented in this phase, and it
consists of four components:
 Collecting resources: raising the capitalrequired to develop and promote new products;
 Marketing hierarchy: A marketing hierarchy should be put in place to ensure the proper
implementation of plans;
 Formulating schedules: Preparing schedules in which specific time periods are allocated
to tasks;
 Executing the plan: this needs to be in an extremelyefficient manner.
 Evaluation phase: In this phase, the plan is crosschecked with the product goals to
determine if they are aligned. If that is not the case, the marketing team will have to edit
and improve the plan until there are no deviations between the plan and the goals.

The importance of strategic marketing in an organisation:
 Helps in evaluating the current environment: Strategic marketing helps in assessing the
positioning and performance of an organisation. It is important to know what resources are at
the disposal of an organisation at any given time. The data that is collected helps in
understanding how well an organisation is performing within the overall competitive
environment. This will also help the organisation in planning for future strategic marketing
activities or plans.
 Helps in establishing clear marketing objectives: Having a strategic marketing plan in place
helps in establishing achievable marketing objectives. The objectives should have a specific
time-frame and should be measurable.
 Streamlines product development: Strategic marketing helps in creating products andservices
that provide the organisation with high profits. This is becausestrategic marketing starts off by
conducting a SWOT analysis of the organisation, a market analysis of the consumers and the
existing trends in the market. This information is then used to create the optimal products and
services for the consumers.
Difference between strategic marketing and a marketing strategy
Although people sometimes use these two terms interchangeably, they are in fact very different
and mean different things. To understand this better, here are some of the differences between
strategicmarketing and a marketing strategy:
Strategic marketing Marketing strategy
Strategic marketing is a method through
which an organisation differentiates itself
from its competition by focusing on its
strengths to provide better service and
value to its customers
This is an organisation’s plan to target
people and convert them into consumers of
the organisation’s products and services.
This is a planning process and it involves
three phases
This plan is an implementation of a
predefined strategy

This is related to the management level as it
involves determining budgets, allocation of
resources and improving product quality.
This strategy does not involve the higher
management, as it only includes creating
marketing strategies for a particular product
or service. The strategies could consist of a
promotional plan, distribution and price of
the product.
This covers the marketing goals of the
organisation as a whole and includes all
products.
This is restricted to the marketing goals and
strategy of a single product or service.
This a process that is put in place to achieve
organisational goals.
This is a part of one of the functional
strategies that help in achieving
organisational goals.
Strategic marketing analyses various factors
such as organisation performance,
competition environment, competitors and
demographic behaviour of customers in
order to achieve organisationalgoals.
A marketing strategy focuses on the
products andservices of an organisation and
their positioning in relation to attracting
customers.

Formulating and implementingmarketing strategy
1. Interrelationships betweendifferentlevels of strategy:
Marketing strategy should be aligned with corporate and business level strategies .
The marketing program for an individual product must be consistent with the strategic
direction, competitive thrust and resources allocations decided on at a higher management
level.
2. Market Opportunity Analysis:
A major factor in the success or failure of a strategy at any level is whether it fits the
realities of the firm’s external environment. Thus, the first step is to monitor and analyze
the opportunities and threats posed by factors outside the organization.
2.1 Environmental, industry and competitoranalysis:
We must first attempt to identify and predict the impact of broad trends in the economic
and social environment.
2.2 Customer analysis: segmentation, targeting and positioning.
The primary purpose of any marketing strategy is to facilitate and encourage exchange
transactions with potential customers. Hence, we need to analyse the motivations and
behaviours of present and potential customers. Not every potential customer will have the
same needs, seek the same product benefits, or be influenced in the same way by the same
marketing program. Hence, we must determine whether there are multiple market
segments that will respond differently to our products/services and marketing programs,
and how to best define, identify and appeal to those segments. Not every segment market
will be equally attractive for the firm. Hence, the next step is to target and position the
product/service in the target segment relative to competitive offering.

3. Formulating strategies for specific market situations:
The strategic marketing program for a particular product/market entry should reflect
market demand and the competitive situation within the target market. As demand and
competitive conditions change over time, the marketing strategy should be adjusted
accordingly.
4. Implementation and Control:
A final critical determinant of a strategy’s success is the firms’ ability to implement it
effectively. This, in turn, depends on whether the strategy is consistent with the firm’s
resources, Organisational structure, coordination and control systems, and skills and
experience of its people.
Identification of attractive markets
 Competitors: Look at your competitor analysis. Are you better than the competition?
Is the competition getting better or worse at meeting the needs of customers in this
segment?
 Company resources: Do you have the right strengths to compete in this segment?
Do you have weaknesses that need to be improved and are they fixable? Review
your company’s strengths and weaknesses. Look at the culture of your organization.
Is it consistent with serving this segment?
 Segment size: The sales potential of the segment, in terms of number of units of
your product that can be sold or number of customers served, is important in making
a segment attractive. Is it big enough to bother with? Remember, size is relative.
What may be too small to one company may be huge to another. Evaluate where the
segment is big enough based on your requirements.
 Segment growth rate: To reduce the risk of losing money when entering a new
market, find one that’s growing, not shrinking. Although this idea may seem obvious,
many companies enter markets that are shrinking. Ideally, you should create a
market strategy that allows you to serve a market for a good length of time,
recouping marketing expenses and any product or service modifications.
 Segment profitability: You need to know whether focusing on this customer group is
feasible. A segment’s profitability is important in making a segment attractive.
Knowing how profitable is profitable is subject only to your company’s requirements.
You can estimate revenue for one year with a simple formula:
Number of customers @@ts average sale per customer @@ts number of sales per
customer per year = revenue

To determine profit from the segment, subtract the estimated costs associated with
producing the product or service and reaching the segment.
 Segment accessibility: Identifying an attractive segment is possible, but there’s no
cost effective way to reach it. An attractive segment requires that you can reach this
group through clear communication channels. To reach the people in this group, you
first have to find them. A good indicator of segment accessibility is how easy or hard
it is to dig up information in your market research efforts.
 Segment differentiation: Uniqueness is a characteristic of an attractive segment.
Will this group respond to product and service offerings differently than other
groups you’ve identified? If not, consider combining two segments. Segment
differentiation tends to be obvious. You either see a clear difference or you don’t.
But you may need to additionally research or test-market your product or
promotional message to make sure.
Industry Analysis
Industry analysis is a tool that facilitates a company's understanding of its position relative
to other companies that produce similar products or services. Understanding the forces at
work in the overall industry is an important component of effective strategic planning.
Industry analysis enables small business owners to identify the threats and opportunities
facing their businesses, and to focus their resources on developing unique capabilities that
could lead to a competitive advantage.
A market assessment tool designed to provide a business with an idea of the complexity of a
particular industry. Industry analysis involves reviewing the economic, political and market
factors that influence the way the industry develops. Major factors can include the power
wielded by suppliers and buyers, the condition of competitors, and the likelihood of new
market entrants.
The Importance Of Industry Analysis
A comprehensive industry analysis requires a small business owner to take an objective view
of the underlying forces, attractiveness, and success factors that determine the structure of
the industry. Understanding the company's operating environment in this way can help the
small business owner to formulate an effective strategy, position the company for success,
and make the most efficient use of the limited resources of the small business. "Once the
forces affecting competition in an industry and their underlying causes have been
diagnosed, the firm is in a position to identify its strengths and weaknesses relative to the
industry," Porter wrote. "An effective competitive strategy takes offensive or defensive
action in order to create a defendable position against the five competitive forces." Some of
the possible strategies include positioning the firm to use its unique capabilities as defense,
influencing the balance of outside forces in the firm's favor, or anticipating shifts in the

underlying industry factors and adapting before competitors do in order to gain a
competitive advantage.
a. Porter’s five forces analysis
Michael Porter mentioned in his book ‘Competitive strategy’, the techniques to analyse
industries and competitors. He proposed that the attractiveness of an industry depends on
these five forces. He also mentioned that these five forces are the reasons for the rivalry
between competitors. The five forces are:
i) The potential for new competitors to enter the market: This determines the ease of entry
for a new entrant. It determines how easy or difficult it is for a new investor to enter a
certain market. Some of the barriers to the ease of entrant are economies of scale, huge
capital requirements, cost of switching to the consumers, accessibility to the distribution
channels, degree to which the product can be differentiated, customer’s brand loyalty,
Government policies pertaining to the sector etc.
ii) The bargaining power of buyers: Often, the future of an industry is dependent on the
buyers. Buyers sometimes, have the power to influence the industry by asking for more
discount, better quality, additional features etc. Also, a single buyer is very important to
some sectors of the market. The buyer has many options available, the cost of switching to
other product is relatively less.
iii) The bargaining power of suppliers: Just like buyers, suppliers also have a bargaining
power. Pertaining to which, they may affect the overall industry. Supplier power exists when
there are very few suppliers, there are no substitutes to the supplier’s products, the
switching costs of suppliers is higher, when the suppliers are more resourceful etc.
iv) The availability of substitutes: If a certain product of the same quality is available in the
market, at a lower price, consumers tend to buy the product with lesser cost. This is how
substitutes influence the industry. They tend to reduce costs and thus profits. The only way
this effect can be encountered is by product differentiation.
v) The competitors and nature of competition: The main factors affecting the competition in
an industry are the number of well-established competitors in the industry, high fixed costs,
no product differentiation, relatively slow rate of growth etc. The competition can be seen
in the form of price competitions, ad campaigns, new products introduction, extra services
being offered etc. The barriers to exit an industry along with high customer loyalty etc. also
give rise to competition.
b. Ratio analysis
Various ratios like ‘profit per employee’ can be determined using your own industry’s
information and can be compared to the industries average as a whole. These ratios can
help determine the progress of the individual unit.
Industry analysis is very important for an entrepreneur. Investing or diversifying without
doing the industry analysis is like shooting a bird when one is blind folded.

Sustainable Competitive Advantage
Sustainable competitive advantages are company assets, attributes, or abilities that are
difficult to duplicate or exceed; and provide a superior or favorable long term position over
competitors
Types and Examples of Sustainable Competitive Advantages
Low Cost Provider/ Low pricing
Economies of scale and efficient operations can help a company keep competition out by
being the low cost provider. Being the low cost provider can be a significant barrier to entry.
In addition, low pricing done consistently can build brand loyalty be a huge competitive
advantage
Market or Pricing Power
A company that has the ability to increase prices without losing market share is said to have
pricing power. Companies that have pricing power are usually taking advantage of high
barriers to entry or have earned the dominant position in their market.
Powerful Brands
It takes a large investment in time and money to build a brand. It takes very little to destroy
it. A good brand is invaluable because it causes customers to prefer the brand over
competitors. Being the market leader and having a great corporate reputation can be part of
a powerful brand and a competitive advantage.
Strategic assets
Patents, trademarks, copy rights, domain names, and long term contracts would be
examples of strategic assets that provide sustainable competitive advantages. Companies
with excellent research and development might have valuable strategic assets.
Barriers To Entry
Cost advantages of an existing company over a new company is the most common barrier to
entry. High investment costs (i.e. new factories) and government regulations are
common impediments to companies trying to enter new markets. High barriers to entry
sometimes create monopolies or near monopolies (i.e. utility companies).
Adapting Product Line
A product that never changes is ripe for competition. A product line that can evolve allows
for improved or complementary follow up products that keeps customers coming back for
the “new” and improved version (i.e. Apple iPhone) and possibly some accessories to go
with it.
Product Differentiation
A unique product or service builds customer loyalty and is less likely to lose market share to
a competitor than an advantage based on cost. The quality, number of models, flexibility in
ordering (i.e. custom orders), and customer service are all aspects that can positively

differentiate a product or service.
Strong Balance Sheet / Cash
Companies with low debt and/or lots of cash have the flexibility to make opportune
investments and never have a problem with access to working capital, liquidity, or solvency.
The balance sheet is the foundation of the company.
Outstanding Management / People
There is always the intangible of outstanding management. This is hard to quantify, but
there are winners and losers. Winners seem to make the right decisions at the right time.
Winners somehow motivate and get the most out of their employees, particularly when
facing challenges. Management that has been successful for a number of years is a
competitive advantage.
Chapter 2
Product Life Cycle
Product passes through four stages of its life cycle. Every stage poses different opportunities
and challenges to the marketer. Each of stages demands the unique or distinguished set of
marketing strategies. A marketer should watch on its sales and market situations to identify
the stage in which the product is passing through, and accordingly, he should design
appropriate marketing strategies. Here, strategy basically involves four elements – product,
price, promotion, and distribution. By appropriate combination of these four elements, the
strategy can be formulated for each stage of the PLC. Every stage gives varying importance
to these elements of marketing mix. Let us analyze basic strategies used in each of the
stages of the PLC, as described by Philip Kotler.
Marketing Strategies for Introduction Stage:
Introduction stage is marked with slow growth in sales and a very little or no profit. Note
that product has been newly introduced, and a sales volume is limited; product and
distribution are not given more emphasis. Basic constituents of marketing strategies for the
stage include price and promotion. Price, promotion or both may be kept high or low
depending upon market situation and management approach.
1. Rapid Skimming Strategy:
This strategy consists of introducing a new product at high price and high promotional
expenses. The purpose of high price is to recover profit per unit as much as possible. The
high promotional expenses are aimed at convincing the market the product merits even at a
high price. High promotion accelerates the rate of market penetration, in all; the strategy is
preferred to skim the cream (high profits) from market
2. Slow Skimming Strategy:
This strategy involves launching a product at a high price and low promotion. The purpose
of high price is to recover as much as gross profit as possible. And, low promotion keeps
marketing expenses low. This combination enables to skim the maximum profit from the
market.

3. Rapid Penetration:
The strategy consists of launching the product at a low price and high promotion. The
purpose is the faster market penetration to get larger market share. Marketer tries to
expand market by increasing the number of buyers.
4. Slow Penetration:
The strategy consists of introducing a product with low price and low-level promotion. Low
price will encourage product acceptance, and low promotion can help realization of more
profits, even at a low price.
Marketing Strategies for Growth Stage:
This is the stage of rapid market acceptance. The strategies are aimed at sustaining market
growth as long as possible. Here, the aim is not to increases awareness, but to get trial of
the product. Company tries to enter the new segments. Competitors have entered the
market. The company tries to strengthen competitive position in the market. It may forgo
maximum current profits to earn still greater profits in the future.
Several possible strategies for the stage are as under:
1. Product qualities and features improvement
2. Adding new models and improving styling
3. Entering new market segments
4. Designing, improving and widening distribution network
5. Shifting advertising and other promotional efforts from increasing product awareness to
product conviction
6. Reducing price at the right time to attract price-sensitive consumers
7. Preventing competitors to enter the market by low price and high promotional efforts
Marketing Strategies for Maturity Stage:
In this stage, competitors have entered the market. There is severe fight among them for
more market share. The company adopts offensive/aggressive marketing strategies to
defeat the competitors.
1. To Do Nothing:
To do nothing can be an effective marketing strategy in the maturity stage. New strategies
are not formulated. Company believes it is advisable to do nothing. Earlier or later, the
decline in the sales is certain. Marketer tries to conserve money, which can be later on
invested in new profitable products. It continues only routine efforts, and starts planning for
new products.
2. Market Modification: This strategy is aimed at increasing sales by raising the number of
brand users and the usage rate per user. Sales volume is the product (or outcome) of
number of users and usage rate per users. So, sales can be increased either by increasing
the number of users or by increasing the usage rate per user or by both. Number of users
can be increased by variety of ways.
Marketing Strategies for Decline Stage:
Company formulates various strategies to manage the decline stage. The first important
task is to detect the poor products. After detecting the poor products, a company should
decide whether poor products should be dropped. Some companies formulate a special
committee for the task known as Product Review Committee. The committee collects data
from internal and external sources and evaluates products. On the basis the report

submitted by the committee, suitable decisions are taken.
1. Continue with the Original Products:
This strategy is followed with the expectations that competitors will leave the market.
Selling and promotional costs are reduced. Many times, a company continues its products
only in effective segments and from remaining segments they are dropped. Such products
are continued as long as they are profitable.
2. Continue Products with Improvements:
Qualities and features are improved to accelerate sales. Products undergo minor changes to
attract buyers.
3. Drop the Product:
When it is not possible to continue the products either in original form or with
improvement, the company finally decides to drop the products.
Market Entry Strategies
Pioneer Strategy
Pioneering strategy is one where a company has the first mover advantage in an industry and
uses that advantage to gain a large market share. The pioneer in any market has to defend its
place in the market from competitors that follow it and has to keep up with the
technology/trends or whatever is important to defend its market share. There are other
advantages of capturing the distribution channels and increasing reach without interference of
any competitor in the market
The buzz and the brand loyalty that a brand can build by being a pioneer
can be amazing and it can use this to its advantage to outperform other competitor when they
enter the markets.
For Example: - Nokia had a key advantage in the Cellphone industry as it was a pioneer and
it had the largest market share in India for several years but it lagged in technology from the
new players like Samsung and had to loose on market share.
Another Example: - Mango frooti was a pioneer in the mango drinks industry in India. The
market advantage was such that for several years all mango drinks were referred to as frooti
even if they were of different brands.
Similar Pioneer advantage has been achieved by several other brands such as coca cola, Levi
Strauss Etc. and these were able to outperform their competitors for several years and still
have an advantage over them. Hence, this concludes the definition of Pioneering Strategy
along with its overview.
Advantages: - First-mover advantages are:
1) owning the positive image and reputation of being a pioneer,
2) reduction of total costs through control of new technology, and supply and distribution
channels,
3) the creation of a base of loyal customers,

4) Having the ability to make imitation by competitors as difficult as possible
Disadvantages:-
1) free–rider benefits to followers,
2) market and technological uncertainties,
3) unforeseen changes in technology or customer needs, and
4) incumbent inertia, which results in the gradual updating of existing technology, rather than
the adoption of new and improved technologies.
Market Characteristics essential for Pioneers or first movers:-
Appropriable technology:- A market pioneer that develops unique technology must find a
way to keep that technology proprietary. Patents are a common mechanism, but their
effectiveness varies greatly across industries.
Perceptible resources:- In some markets, superior resources can be acquired preemptively
by the initial entrant. These include raw material inputs, geographic locations, and
potentially, positions in consumers' perceptual space.
Customer switching costs:- Many types of switching costs are commonly identified,
including initial investments made by the buyer in adapting to the seller's product, product
specific learning by the buyer over time, and contractual switching costs intentionally created
by the seller.
Network effects: - In situations where customers seek a common standard or the ability to
interact with other users, the pioneering firm has the first opportunity to develop "network
effects”. network effects may attract valuable alliance partners to the leading firm.
Market Follower Strategy
The rule of business is that when you are a market leader, there are definitely going to be
market followers. Many companies come out with a market follower strategy. In fact, in
today’s world, the competency of all companies is so high that innovation is quickly copied
or imitated in different formats.
Different Types of Follower Strategies: -
1) Adapter
Adapter is white collared market follower strategy. Automobiles use the adaptation form of
market follower strategy. Cars like Maruti 800, Alto, Zen, brio, etc are all adapters and they
adapt the best qualities from each other by changing the style of the automobile. Similarly,
there are technology adapters like the Dell laptop and Sony Vaio laptop. These market
followers have similar products but they try to adapt from their closest competition.
2) Imitation
Imitation is the best form of flattery. But such a flattery can cause a huge dent in your profit
margins if you are a product manufacturer. Imitators make use of your hard
earned brand equity and give a product which has the same characteristics as yours, albeit
at a lower price. The difference might be that the new product is made from poor material
or that it does not have the service or promise that your brand can offer. Nonetheless, there

is a huge market for imitators where people want to buy products at lower cost as they
can’t afford the higher one.
Imitation jewellery is probably the best and largest example of imitation as a market
follower strategy. Second example can be the imitation of Tata sky, where Tata sky is the
market leader and brought digital TV revolution to India but was soon imitated
by Videocon, Airtel, Reliance and others.
3) Cloner
There is a silver lining between an imitator and a cloner. An imitator might copy some of
your product qualities, but it maintains its own product qualities as well. For example –
timesjobs.com is an imitator of naukri.com, but then timesjobs has its own unique product
characteristics as well. However, if you get watches made from Rado, or bags of Gucci, with
Rado spelled as RADA and Gucci spelled as GUCCA, than that’s cloning..
4) Counterfeiter
The best example of counterfeiting is selling the originals via piracy. Where cloning involves
manufacturing of slightly altered products, counterfeiting involves thieving and is a black
market follower strategy. The best example is pirated DVDs and CDs of movies and music.
If you notice, time and time again the movie industry wakes up against piracy. This is
because, piracy and counterfeiting steals their work. Similarly, you can find shoes
from Reebok and Adidasas well as numerous other products in the market which are
counterfeited.
Advantages of Market Follower Strategy:-
Leverage available to non-pioneering firms for gaining long-term competitive advantage by
virtue of their late entry into a market: as it was with IBM over Apple, and is with Dell over
IBM. The follower can benefit from the
(1) clarification of the demand-uncertainty and market-uncertainty,
(2) knowledge of the effects of changing customer needs and new technologies,
(3) opportunity to free-ride the pioneer's investments in consumer-education,
(4) distribution channel and infrastructure development,
(5)pioneer's mistakes in product positioning and pricing, and in its promotional efforts.
Market Leaders Strategies
Flanker Strategy
Flanker brand is an extension to a brand in the same product category from the same
company. The purpose of flanker brand is to capture additional market by additional
offering. It targets those sections of the market that their existing products already don’t
serve. Such brands can vary in different attributes but still remain an extension.
Companies employ flanker brands to defend against flank attack i.e. to counter attack
competitor who attacks the existing main brand with a unique offering.
The advantages of flanker brand

 Attracts new set of customers which is not served by existing product
 Protects the company, in case of one of the brands fail, other brands survive
 Can introduce lower quality brand without compromising on existing high quality brands
The process of introducing a new brand in the market for a different target market by a
company which already has its own brand image for the existing product is known as flanker
brand strategy. Flanker brand strategy aims at launching new brand without harming the
reputation of the current brand for the existing customers. It involves designing the new
product for a different group of customers. The new product may be of different quality,
size or other feature but it falls in the same product category of the earlier one.
Let us consider a common example of a company P&G. It launched a detergent known as
Ariel which was of premium quality and higher price. Then it launched a detergent with the
name Tide at lower price for a target market or set of lower income consumers who
demanded good detergent at lower price. This didn't harm the market of the existing
customers for the brand Ariel and also helped P&G to create a larger market by launching
Tide.
Confrontation Strategy
An organizational strategy in which company management decides to confront, rather than
avoid, competition; an organizational strategy in which company management still attempts
to differentiate company products through new features or to develop a price leadership
position by dropping prices, even though management recognizes that competitors will
rapidly bring out similar products and match price changes; an organizational strategy in
which company management identifies and exploits current opportunities for competitive
advantage in recognition of the fact that those opportunities will soon be eliminated.
This is a strategy of identifying a weakness in an attacker and aggressively going after that
market niche so as to cause the competitor to pull back its efforts to defend its own
territory .When a leader is attacked, he may base his counterattack in the attacker’s
territory.
The attacker has to deploy resources to this territory for defence. When Ceat tyres attacked
TVS Srichakra in Tamil Nadu markets, TVS decided to expand its coverage to Ceat tyre’s hub
in the north and west of India through innovative campaigns like road rallies, road shows
and attractive public campaigns.
Expansion Strategy
The Expansion Strategy is adopted by an organization when it attempts to achieve a high
growth as compared to its past achievements. In other words, when a firm aims to grow
considerably by broadening the scope of one of its business operations in the perspective of

customer groups, customer functions and technology alternatives, either individually or
jointly, then it follows the Expansion Strategy.
The reasons for the expansion could be survival, higher profits, increased prestige,
economies of scale, larger market share, social benefits, etc. The expansion strategy is
adopted by those firms who have managers with a high degree of achievement and
recognition. Their aim is to grow, irrespective of the risk and the hurdles coming in the way.
A market expansion growth strategy, often called market development, entails selling
current products in a new market. There several reasons why a company may consider a
market expansion strategy. First, the competition may be such that there is no room for
growth within the current market. If a business does not find new markets for its products,
it cannot increase sales or profits.
A small company may also use a market expansion strategy if it finds new uses for its
product. For example, a small soap distributor that sells to retail stores may discover that
factory workers also use its product.
Product Expansion Strategy
A small company may also expand its product line or add new features to increase its sales
and profits. When small companies employ a product expansion strategy, also known as
product development, they continue selling within the existing market. A product expansion
growth strategy often works well when technology starts to change. A small company may
also be forced to add new products as older ones become outmoded.
Growth Through Diversification
Growth strategies in business also include diversification, where a small company will sell
new products to new markets. This type of strategy can be very risky. A small company will
need to plan carefully when using a diversification growth strategy. Marketing research is
essential because a company will need to determine if consumers in the new market will
potentially like the new products.
Acquisition of Other Companies
Growth strategies in business can also includes an acquisition. In acquisition, a company
purchases another company to expand its operations. A small company may use this type of
strategy to expand its product line and enter new markets. An acquisition growth strategy
can be risky, but not as risky as a diversification strategy.
One reason is that the products and market are already established. A company must know
exactly what it wants to achieve when using an acquisition strategy, mainly because of the
significant investment required to implement it.

Contraction Strategy
This strategy involves retrenching into areas of strength and is often used in later stages of a
product life cycle or when the firm has been under considerable attack. For example, HUL
decided to concentrate on its core business areas, that is, soaps and detergents, and has
emerged as the clear leader in the toilet industry.
This technique is often used by the market leader and is often times seen as the last resort
strategy as it involves giving up some portion of the business to maintain leadership.
In this the market leader withdraws from one segment of the market where it is not strong
or profitable enough in order that the resources used in that segment may be withdrawn
and be put to better use in a segment where chances of success are higher owing to greater
strength of the leader. This could happen when there is extreme competition and leading to
continuous bleeding or when there is not enough expertise in the leader to handle this
business. This is also known as strategic withdrawal and frees up resources that the
company can then put to use in areas where it has the critical mass and capability to
succeed.
Market Challenger Strategies
Frontal Attack
Frontal attack is one of the marketing strategies inspired by war tactics. Frontal attack
involves a head on attack on the competitor by matching the competitor in all aspects –
product, price, place promotion. For a frontal attack to be successful it is believed that the
player should have more than three times the fire power of the opponent.
Frontal attack is a highly risky marketing strategy, it has better chances of success if the
player attacks the weakest element of the opponent, and also if the opponent is constrained
in its ability to react.
There are different types of frontal attack:
 Pure frontal attack: It involves matching the competitors in all aspects of marketing
 Limited frontal attack: It involves attacking in specific customer segments
 Price based frontal attack: Every product attribute is matched by the competitor
 Research and development attack
Example – Pepsi introduces Diet Pepsi when Coke introduces Diet coke. Both have strength
of product expansion and a diverse product portfolio. So in a direct frontal attack, Pepsi also
launches a product in response to its market challenger.

Flank Attack
It is a marketing strategy employed by firm to capture the market which is not well served
by established players. Flank attack targets competitor’s weak spots.
Large companies offer wide range of products and services. They may not be leader in every
category. There are some markets in which they are under performers and thus susceptible
to flanking attacks. Flanking company targets this weakness forcing the company to re-
allocated the resources to keep the market or end up losing it to flanking company.
Flank attack can be used to replace the competitor’s not so strong product or to serve
uncovered needs of the market.
Salient features of flank attack:
 It does not confront competitors in open
 Gains market presence stealthily before competitor realizes (surprise element)
 Follow through once the leading position is established
 Flank attack does not require new product, but different enough to capture latent needs
of the market
Flank attack is generally employed by nimble, innovative business against established
players.
Examples:
Auto-industry in 1970, when Japanese car-makers exploited the vulneblitrity of US car-
makers in small, fuel-efficient car segment
In 1980s, Canon took over Xerox’s copier market by focusing on small size copier market
that could not afford Xerox’s large copiers.
Leapfrog Strategy
Bypass Strategy or Leap Frog strategy is defined as way to surpass or overthrow the
superior competition in the business field by usually by engaging in one enormous,
determined, ruthless, brilliant leap of mastermind that results in extraordinary growth,
profit, and management position. It majorly focuses on the marketing division of
incorporation where the top end management; where individuals work with executives to
put marketing strategy to aggressively push itself. It results over about a wide range of
detailed strategies for a congregation of situations:, fortress strategy, promotion strategy,
expansion pricing strategy, pioneer strategy, follower strategy ,channel strategy, strategy –
and which now is popularly called as “leapfrog strategy.”
This strategy undertakes a challenger bypassing its opposition totally and capturing the
competitor’s clients in one fell swoop. It is a ground-breaking strategy that re-writes the set
of laws of the game. A contender has the best chance of “leapfrogging” by budding new
technologies or creating new trade models. For example, the beginning of the iPod
leapfrogged the compact disc market completely and mobile phones are overtaking
landlines in Africa and India.

This strategy is efficient when it can be realize. But leapfrogging is not feasible for all
challengers. To be victorious, the challenger must have a exclusive and inimitable and
game-changing knowledge and technology that is superior and better in every way possible
to that of all conventional competitors. Further, the challenger must have the creation and
development engineering capabilities to revolve that technology into a tempting offering.
What did Ipod do to the Sony walkman? It simply by passed it. There can be no simpler
example of the Bypass attack form of market challenger strategy.
Guerilla Attack
Making small but useful changes, which repeatedly puts your brand in the forefront, and
slowly but surely makes it a huge name in the market, is the crux of Guerrilla marketing. A
small brand, which wants to take on huge competitors, which first become famous in a local
market, then will introduce price discounts and trade discounts.
Guerrilla marketing is a marketing strategy which focuses on unconventional approach to
market a brand to target audience. It is mostly low cost, unexpected and different than
usual strategies of marketing. In today's world of internet and social media, many
companies use videos for marketing. If they go viral and actually promotes the brand or
product, this is an example of Guerrilla marketing. Guerrilla marketing is also a type of
market challenger strategy where a firm chooses the general attack strategy as launching
small, intermittent attacks, conventional and unconventional, including selective price cuts,
intense promotional blitzes and occasional legal action to harass the opponent and
eventually secure permanent foot hold
Advantages of Guerilla Attack:-
 Cheap to execute. Whether using a simple stencil or a giant sticker, guerrilla
marketing tends to be much cheaper than classic advertising.
Allows for creative thinking. With guerrilla marketing, imagination is more
important than budget.
 Grows with word-of-mouth. Guerrilla marketing relies heavily on word-of-mouth
marketing, considered by many one of the most powerful weapons in a marketer’s
arsenal. There’s nothing better than getting people to talk about your campaign on
their own accord.
 Publicity can snowball. Some especially noteworthy or unique guerrilla marketing
campaigns will get picked up by local (and even national) news sources, resulting in a
publicity powerhouse affect that marketers drool over.

Disadvantages:-
 Mysterious messages can be misunderstood. There’s often an air of mystery to
guerrilla marketing campaigns, and while it’s this sense of mystery that can often
propel a campaign’s attention and notice, the lack of clarity can also skew audience
interpretation.
 Authority intervention. Some forms of guerrilla marketing, such as non-
permissioned street graffiti, can result in tension with authorities.
Market Followers Strategy
The firms prefer to follow leader rather than to challenge are called the followers. They do
not face the leader directly. Some followers are capable to challenge but they prefer to
follow. However, market followers always react strongly in case of any loss.
In some capital goods industries like steel, cement, chemical, fertilizer, etc., product
differentiation is low, service qualities are similar, and price sensitivity is high. They decide
to provide similar offers by copying the market leader. But, one must be aware that
followership is not always rewarding path to pursue.
Market followers prefer to follow the leader doesn’t mean that they don’t require specific
market strategies. They cannot be simply passive or a carbon copy of leaders. They must
know how to hold current customers and win a fair share of new customers. Followers must
keep manufacturing cost low and offer better quality products with satisfactory services. At
the same time, they must enter new markets as and when there are opportunities.
They have following strategic options:
1. Counterfeiter or Fraudster:
It is a simple way to follow the leader. The follower who wants to be counterfeiter
duplicates the leader’s product as well as package and sells it in the market through
disrepute distributors. Products are marketed secretly to avoid legal complications.
The product seems exactly similar to original product except basic quality and features. This
is common strategy in auto-parts and electronics products. People, knowingly or
unknowingly, buy such duplicate products as they are made available at low price.

2. Cloner or Emulator:
The doner clones (emulates) the leader’s products, distribution, advertising and other
aspects. Here, product and packaging may be identical that of leader, but brand name is
slightly different, such as “Colgete” or “Colege” instead of “Colgate” and “Coka-Cola”
instead of “Coca-cola.” This strategy is widely practiced in computer business also. The
cloned products are openly sold in the market due to different brand names.
3. Imitator:
Some followers prefer to imitate/copy some aspects from the leader, but maintain
differentiation in terms of packaging, advertising, sales promotion, distribution, pricing,
services, and so forth. Customers can easily distinguish imitated product from original one.
The leader doesn’t care for imitator until imitator attack the leader aggressively. Quite
obviously, such products are sold at low price.
4. Adaptor:
Some followers prefer to adapt the leader’s products and improve them. They make
necessary changes/improvements in the original products and develop little different
products. The adapter may choose to sell the products in different markets (country or area)
to avoid direct confrontation with the leader. Many Japanese companies have practiced this
strategy and developed superior products. Followers can earn more as they do not bear
innovation expenses. In the same way, they can conserve advertising and other promotional
expenses. However, to be follower of a leader is not always better option to pursue.
Market Nichers (Tiny Firms)Strategy
A niche is a more narrowly defined small market (limited number of buyers) whose needs
are not being well-served by existing sellers. It is a small segment that has distinctive needs
and is, mostly, ready to pay high price. Marketers can identify niches by dividing a segment
into sub-segments or by dividing a group with a distinctive set of traits.
They may seek a special combination of benefits. Niches (small groups of buyers) are fairly
small and normally attract a few competing firms (nichers). A nicher is the small firm serving
only small specific groups of customers called as the niches. The firm’s marketing efforts to
serve the niches successfully is called nichemanship.
Nichers understand their niches’ needs so well and minutely that their customers are willing
to pay a premium price. They design special products with distinctive features, qualities,

uses, and value for special group of limited customers. They have the special skills to serve
the niches in a superior fashion and can gain certain economies through specialization.
For example, a footwear company can create niches by designing shoes for different sports
(like crickets, hokey, athletes, golf, etc.), 3nd exercises (like cycling, running, jogging, waking,
etc). In the same way, niches can be created in hotels, cosmetics, cloths, airways, hospitals,
and others. Nichers can gain comparatively high returns. They can achieve high margin while
large companies can achieve high volume.
Smaller firms normally avoid competing with larger firms by targeting small markets in
which large firms have a little or no interest. Companies with low market shares can be
highly profitable through effective niching. Nichers have to perform three main tasks –
creating niches, expanding niches, and protecting niches. They have to remain alert for all
the time as they can be invaded any time by the large competitors.
Strategies:
Specialization is the basic idea to serve niches. Nichers can apply specialization on various
aspects.
They can practice one or more of following marketing strategies:
1. End-user Specialist:
It is very popular and widely used option to serve niches. The firm prefers to operate one-
type of end-use customers, for example, a legal advisory firm can handle only criminal cases,
or a fashion designer can work only for a few filmstars.
2. Vertical Level Specialist:
The firm can specialize at vertical level of production or distribution, for example, producing
only raw-materials for specific companies, only warehousing services, or it may concentrate
only on retailing. It can serve only a part of the total process.
3. Customer Size Specialist:
The firm can sell products only to small, medium, or large size customers. For example, a
firm can supply one or two components only to large companies.
4. Specific Customer Specialist:
A firm supplies its products only to distinct group of buyers. For example, designing special
two-wheeler for handicapped people or serving special foods to people who are suffering
from certain diseases like diabetes.

5. Geographic Specialist:
The firm serves customers of only specific region or area of the world, for example, specific
need of the people living in the hilly area.
6. Product or Product Line Specialist:
The firm produces or sells only one product or product line, for example, it sells only socks,
ties, or tie pins. A small finance company deals with only car loans or personal loans.
7. Event Specialist:
The firm concentrates its efforts only on particular events or occasions like marriage, grand
inauguration, birthday, anniversary, or some festivals. It offers goods or services for
celebrating the events of target buyers.
MarketingStrategies for the Maturity Stage
At some point, a product will hit peak sales and its growth rate will start to slow
down when new, better and cheaper products enter the market and customers start
switching their allegiance. Without intervention, there's a risk that sales will
stagnate or decrease due to market saturation. This fate is not inevitable, however.
Smart marketing strategies can help to generate sales during the maturity stage of
your product and sustain your market share.
Expand the Customer Base
One broad marketing objective is to capture new customers who are yet to use the product or brand,
either by entering new markets or geographies or by enticing a competitor's customers to become your
own. UGG boots, for example, reached maturity in the niche surfer market before switching focus to
market extensively to young women.
Regarding specific strategies, the aim is to focus right down on your cash cows — products that have
stood the test of time — and invest more resources in promoting these items. New marketing messages,
new distribution channels and new advertising campaigns can help to reach the late adopter and
encourage brand switching.
Increase the Usage Rate
Increasing the usage rate means trying to get your current customer base to use the product more often,
thus increasing sales. The most common tactic here is to discover new uses for the product and
convince customers to use the same product in different ways — fresh juice is not just for breakfast, for
example, and you can use baking soda for whitening teeth and household cleaning as well as for baking
cakes. Aggressive sales promotions and price discounts feature heavily in this strategy to encourage
higher consumption.
Invest in Research and Development
One way to further expand your business is to invest more in research and development (R&D). This
involves developing new products and continuously improving your existing products, technologies and
operations. For example, you may launch a new product line, upgrade existing technologies to create

better products and reduce errors, add new features to something you already offer, prioritize innovation
and more.
These strategies can give you a competitive edge and increase your reach. They also help you identify
ways to maximize productivity and cut marginal costs. Successful companies like Samsung, Microsoft,
Amazon and Google spend billions on R&D — and their efforts are paying off.
Modify the Product
Modifying the product is a tried-and-tested way for companies to boost the sales of mature products —
how many times have you seen a product labeled "new and improved"? Modifying your product means
tweaking it to meet changing customer needs. You can do this by improving the product's quality,
features, durability, reliability, versatility or safety or by updating the product's name, packaging and
style.
Apple Inc. is the master of reinvention. The company "invents" a new iPhone every couple of years by
releasing an upgraded model. Customers typically regard the upgrade as a brand-new product offering
and are happy to do business with Apple again.
Price to Beat the Competition
During the maturity phase, sales for a particular product will flatline and then decline after reaching a
saturation point. Businesses are typically facing increased price competition from new market entrants
and customers are unlikely to pay top dollar for the same old product anymore. One option is to revisit
your pricing strategy.
For example, you could cut prices to attract a competitors' customers or a broader customer base.
Alternatively, you might raise prices. Higher prices, alongside a marketing campaign to stress the brand's
benefits and superiority, can reposition the product as high end. Market research is essential to
understand the pricing strategy that will add the most value to the product you're selling.
Strategic Options in a Declining Market
If a firm decides to continue operating in a declining market, they will likely need to adjust
their strategy from the one they used during the mature stage. There are four basic
strategies that can be used, obviously with some variation, to succeed in a declining market.
 Harvesting: A harvesting strategy is used when a firm is making good profits in the
declining market, but since the market is declining, the company uses those funds to
invest in another market. By no longer investing in the declining market, the firm is
essentially conducting a slow exit.
 Maintenance: A maintenance strategy involves keeping profit margins stable,
primarily by controlling costs, and focusing on not losing current customers. Growth
isn't a primary objective in this strategy. Maintenance is all about not losing ground.
 Profitable survivor: Using a profitable survivor strategy is feasible when the firm feels
the market, or some version of the market, will start to grow again in the future. A
profitable survivor focuses on surviving - gaining market share as other firms leave,
even at a cost - with the plan of being the veteran firm once the market bounces.
 Niche: Even in a declining market, there is a segment of the market that will continue
producing demand. In a niche strategy, a firm focuses almost exclusively on this
niche market, meeting their demands almost exactly and not worrying about other
market participants.

Service Marketing
Business owners who offer services to customers might not have a clear idea of how to
market those services. Product marketing tends to be straightforward with the ability to
provide a picture and point to specific features. Services marketing is equally important.
Without a marketing plan that targets the right types of clients, services providers might be
left waiting a long time for the phone to ring.
What's In It For the Customer?
When selling services, the benefits to consumers aren't always clear at face value. Selling a
car doesn't require a lot of basic features and benefits descriptions. Consumers understand
what a car does and usually have self-identified a need to have one. Selling a financial plan
doesn't tell a consumer a lot off the top. Many people might assume they don't even need
the service. This is one reason why services marketing is so important.
Good marketing for services identifies key benefits that consumers know they want or need,
but they may not have identified the services and benefits with a particular company's
name. For example, customers might want to pay off their home mortgage if they die so
their families can continue to live in the home. The customer might not realize that what he
needs is life insurance. By identifying benefits that solve specific consumer problems,
service providers are better able to get leads for new business.
Marketing a service differs from promoting a tangible product because consumers often
need to be educated about a service. Service marketing often requires more explanation as
to why the customer needs the product, how it works and why you are the best entity to
deliver the service. If you're a solo entrepreneur, selling a unique skill you have, you're even
more under the gun to explain what you do. Using a multi-pronged educational approach
for marketing a service will be your best bet to boost sales.
Referrals
One of the best ways to market an intangible is through word of mouth. A happy customer
will not wait to be asked about a service from friends and will often want to share her
experience and tell people why she likes the service. Some service providers use referral
programs as an integral part of their marketing. You can offer clients a cash bonus for each
referral they send to you, offer them a free service for each lead or offer their friends a
reduced rate on service if they mention the customer.
Education
Another way to market a service is to provide customer education. You can do this by
offering free seminars, lunch-and-learns or other educational meetings. You can write

articles for magazines and newspapers and give talks at trade shows and conferences. With
an educational marketing strategy, you do not emphasize your product features or prices,
but the benefits of using the service. For example, if you own a dog grooming business, you
might write articles for local newspapers discussing the effects of pet ticks and fleas on a
family’s health and a pet’s well-being, showing how regular grooming can alleviate these
problems.
Demonstrations
Customers might be gun shy about trying a service if they aren’t sure what they are getting.
Offering free demonstrations helps ease their concerns and can result in immediate sales.
For example, if you offer personal training, you might contact a large company with a
wellness program and offer to give an employee talk and free exercise class. If you offer
public relations services, you might offer meet with a business owner, discuss his current
marketing strategy and suggest PR initiatives he could try and outline the cost to do so.
Social Media
Social media are hard to escape, with millions of people sending texts and emails to friends
when they see interesting items they want to share. They can also be an inexpensive way
for smaller businesses with few advertising dollars to make an impact. A social media
marketing strategy lets service providers take advantage of free tools such as Facebook and
Twitter to educate consumers and get them to spread the word to their network of
contacts. With Facebook, for example, you can create a free business page that lets you
detail your service. Put customer testimonials and case histories on your page or run
contests offering a cash prize or a free session or visit. Place place Facebook "Like" buttons
on your website pages to encourage visitors to share what they find with friends. Send
Twitter messages that give customers free tips. For example, a landscaper might tweet,
"Watering your lawn more than once per week isn't necessary. Once a week for 30 minutes
is all you need."

Chapter 3
Customer-relationshipmanagement
Customer-relationship management (CRM) is an approach to manage a company's
interaction with current and potential customers. It uses data analysis about customers'
history with a company to improve business relationships with customers, specifically
focusing on customer retention and ultimately driving sales growth.[1]
One important aspect of the CRM approach is the systems of CRM that compile data from a
range of different communication channels, including a company's website, telephone,
email, live chat, marketing materials and more recently, social media.[2] Through the CRM
approach and the systems used to facilitate it, businesses learn more about their target
audiences and how to best cater to their needs.
Scope of CRM: -
The scope of CRM can be defined according to its constituencies, how long-term value can
be created for and with them and the benefits of doing so.
The Customer
The customer is of key importance because only relationships with customers generate
revenues for a company. Establishing a good long-term relationship with customers can take
the form of the provision of benefits such as special prices and preferential treatment.
Doing so can bring about drastic increases in value due to frequent sales from satisfied
customers, positive word of mouth, a reduced need for product sampling and advertising,
and increased possibility of cross-selling or purchasing of other products.
The Suppliers
Suppliers provide input, such as raw materials, technologies, components, investment,
human resources and expertise, to the company’s value chain.. Enhanced performance can
result from improved communication and coordination with this set of suppliers. Purchasing
costs can be reduced thanks to elimination of the need to constantly seek cheaper sources.
With fewer vendors, increased cooperation between the remaining parties in the form of
management-information system alignment and customer-information sharing becomes
possible.
The Owners
Companies may remain private for the duration of their lifespan, remaining the property of
single proprietors or many owners. Other companies may start out that way, but at certain
points may elect to go public and sell shares in order to spread liability or raise funds for
future expansion. Whichever category a company may fall under, it is paramount for its
management to establish productive relationships with its owners and create value for them
in the form of enduring company and stock value in the long run. A poor long-term
relationship can result in investors selling out and in drops in stock value or in changes of
ownership if the company is sold.

The Employees
Employees are central to CRM practitioners. Many businessmen, such as Bill Marriott and
Richard Branson, claim that their employees or “internal customers” are their most
important constituency, not the customers per se. should employees be satisfied and happy
with their jobs, they will be more apt to provide noteworthy service to the company’s
external customers. In short, employee satisfaction drives customer satisfaction. A positive
climate for service is less rule-driven, more customer-orientated, and more supportive of
personal initiatives.
Other Partners
Establishing a partnering relationship with another company, such as a strategic alliance or
joint venture, is done through sharing complementary strengths such as technological
expertise, market reach, supplier networks, customer data and customer bases. Partnering
with another firm can thus support the creation and delivery of value through increasing
efficiency, sharing product development, marketing and distribution costs, and sharing key
resources.
Importance of CRM:-
1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers. This helps in reduced searching and correlating customers and
to foresee customer needs effectively and increase business.
2. CRM contains each and every bit of details of a customer, hence it is very easy for
track a customer accordingly and can be used to determine which customer can be
profitable and which not.
3. In CRM system, customers are grouped according to different aspects according to
the type of business they do or according to physical location and are allocated to
different customer managers often called as account managers. This helps in
focusing and concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful
in acquiring new customers. The process first starts with identifying a customer and
maintaining all the corresponding details into the CRM system which is also called an
‘Opportunity of Business’. The Sales and Field representatives then try getting
business out of these customers by sophistically following up with them and
converting them into a winning deal. All this is very easily and efficiently done by an
integrated CRMsystem.
5. The strongest aspect of Customer Relationship Management is that it is very cost-
effective. The advantage of decently implemented CRM system is that there is very
less need of paper and manual work which requires lesser staff to manage and lesser
resources to deal with. The technologies used in implementing a CRM system are
also very cheap and smooth as compared to the traditional way of business.
6. All the details in CRM system is kept centralized which is available anytime on
fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually
need increases the customer satisfaction. This increases the chance of getting more
business which ultimately enhances turnover and profit.

8. If the customer is satisfied they will always be loyal to you and will remain in
business forever resulting in increasing customer base and ultimately enhancing net
growth of business.
Components of CRM:-
CRM can be broken down into a number of different components which many software
vendors have developed packages for. For the most part, there are three areas which are
core to successful customer relationship management:
 Customer Service
 Sales Force Automation
 Campaign Management .
Customer Service
The customer service function in your company represents the front office functions that
interact with your customers. These are the business processes that allow your company to
sell products and services to your customers, communicate with your customers with
regards marketing and dealing with the after sales service requirements of your customers.
Each interaction with the customer is recorded and stored within the CRM software where
it can be retrieved by other employees if needed.
Sales Force Automation
Your company’s sales department is constantly looking for sales opportunities with existing
and new customers. The sales force automation functionality of CRM software allows the
sales teams to record each contact with customers, the details of the contact and if follow
up is required. This can provide a sales force with greater efficiencies as there is little chance
for duplication of effort. The ability for employees outside of the sales team to have access
to this data ensures that they have the most recent contact information with customers.
This is important when customers contact employees outside of the sales team so that
customers are given the best level of customer service.
Campaign Management
The sales team approach prospective customers in the hope of winning new business. The
approach taken by the sales team is often focused in a campaign, where a group of specific
customers are targeted based on a set of criteria. These customers will receive targeted
marketing materials and often special pricing or terms are offered as an inducement. CRM
software is used to record the campaign details, customer responses and analysis
performed as part of the campaign.

CRM As a Business Strategy
Customer relationship management is often discussed as a technological solution to an
essential business problem: How do I make my customers happier and keep them with my
product longer? The discourse often turns to the newest applications and software
advancements that make it easier to obtain business insights, blend workflows, and keep
salespeople focused on maintaining relationships rather than on tracking the metadata
associated with customer interactions. But CRM doesn’t just comprise the fancy
technology–it’s also the business strategy that demanded the software in the first place.
CRM solutions tend to fail when a business leader gets excited about a new technology
without understanding how it will fit into his or her current operations. Too often do leaders
jump at an opportunity for better customer management only to find that the technology
doesn’t fit the teams who have to do the fieldwork. Team members become frustrated that
the technology doesn’t do what they need it to. They have trouble extracting information or
adapting their sales process to the technology. They have trouble using the technology to its
potential, and find that they can’t close enough sales because they’re spending an
inordinate amount of time dealing with data entry. Money is lost.
Measure the CRM performance
 Increased Customer Retention: It is one thing to acquire new customers, it is another
thing to get them to stay with you. Relationships are key and it is often more cost
effective to retain an existing relationship than building one with a new customer.
The amount of customers that do not defect from your company can be used to
check the performance of CRM.

 Increase in visits and orders made per customer: a well performing CRM should be
able to bring in more traffic to your business. The number of people who visit or
order from you higher than what of used to be. In a case where there is no positive
change the in the in traffic and orders, CRM may not be considered to be performing
well.
 Increased Sales: making profit is the lifeblood of a company and profit cannot be
made without sales. An increase in what customer spend on average for every order
they make should increase with the help of CRM.
 Increased Cross Sale: making cross sales helps creates a balance in sales as a lack of
cross sale might result in company not making profit on certain products. Cross sale
means that customers are purchasing products from different categories. A well
performing CRMshould increase cross sales.
 Increased Up Sale: even within the same company, products may not go for the same
price. It is necessary that a company sells the more expensive products as much as
the less expensive ones. CRM should be able to facilitate the increase in the sales of
higher priced items.
 Increased Win-back: it is not uncommon to nd customers ceasing to patronize a
company for one reason or the other. It is the job of the company and also in their
best interest to and a way of winning back such customers. With the help of a well
performing CRM, this should be possible.
 Increased Referrals: if you have ever heard the saying 'one tree, a forest', you would
realize that one tree births others which birth more. This is the same with customers
and referrals. One customer could influence others to buy from you who can also
make some other set of people buy from you. The rate at with referrals increase as a
reason of CRMis an indicator of how well it is performing.
CRM IN SERVICE SECTOR
The service sector is receiving much deserved attention resulting from its inevitable role in a
country’s economic development. Where it is mainly focusing of developing an inbound
relationship with the customer. Which helps in terms of retaining the customer. Because
service is an “intangible good” include attention, advice, experience, discussion. The scope
of CRM in service sector is vast where it includes Govt, health care /hospitality education,
banking, insurance, financial, legal, consulting, news media, hospitality(restaurants, hotels,
casinos ), tourism, retail sales etc.,
Hospitality opts for CRM
• Developing CRMstrategies
• Information and Communication Technologies(ICT)
• CRM based market research

Consulting Services
 CRM for Physicians
 Data base Construction
 Communication Services
Health Care Industry opts for CRM
 Consulting Services
 CRM for Physicians
 Data base Construction
 Communication Services
Information Technology opts for CRM
 Customer touch points
 Application server
 Data stores
Telecom sector opts for CRM
 Customer service is Key to sales and loyalty
 Customer service become the differentiator
CRM in product management
For a product-centered business, CRM is typically different. That’s where product
management comes in: Along with analyzing sales, CRM tools for a business or company
producing salable products also focus on the products themselves. That’s why, for many
companies marketing physical products or even intangible service packages, product
management can be an essential part of a greater CRM strategy.
Product management brings many of the same kinds of technical analysis to products that a
service CRM tool brings to customer analysis. With service CRM, for example, a CRM tool
may compile and present data related to a customer or potential customer’s location or
state of residence, age, gender, buying history or anything else that can be legally and
legitimately collected by the business in question. Product management, then, creates a
similar system of measurable properties related to the actual products a company sells. This
might include, for example, product weights and sizes, production chronologies and product
version data or anything that helps business leadership learn more about their products at a
glance.
Some experts might point out a primary difference between product management and
service CRM: With product management, analysis is directed at something directly
controlled by a business. Since the company is already making the products, more than a
few outsiders assessing product management might surmise that the company already has
the product information and that product management is simply redundant. But
professionals that implement these systems argue that product management is not
redundant and that it presents the business with better ways to track how and when
products are being made, assess inventory levels, and generally keep production metrics
and other key data "in the fishbowl" for more effective decision making.

Zero Customer Defection
The real quality revolution is just now coming to services. In recent years, despite their good
intentions, few service company executives have been able to follow through on their
commitment to satisfy customers. But service companies are beginning to understand what
their manufacturing counterparts learned in the 1980s—that quality doesn’t improve unless
you measure it. When manufacturers began to unravel the costs and implications of scrap
heaps, rework, and jammed machinery, they realized that “quality” was not just an
invigorating slogan but the most profitable way to run a business. They made “zero defects”
their guiding light, and the quality movement took off.
Service companies have their own kind of scrap heap: customers who will not come back.
That scrap heap too has a cost. As service businesses start to measure it, they will see the
urgent need to reduce it. They will strive for “zero defections”—keeping every customer the
company can profitably serve—and they will mobilize the organization to achieve it.
Customer defections have a surprisingly powerful impact on the bottom line. They can have
more to do with a service company’s profits than scale, market share, unit costs, and many
other factors usually associated with competitive advantage. As a customer’s relationship
with the company lengthens, profits rise. And not just a little. Companies can boost profits
by almost 100% by retaining just 5% more of their customers.
While defection rates are an accurate leading indicator of profit swings, they do more than
passively indicate where profits are headed. They also direct managers’ attention to the
specific things that are causing customers to leave. Since companies do not hold customers
captive, the only way they can prevent defections is to outperform the competition
continually. By soliciting feedback from defecting customers, companies can ferret out the
weaknesses that really matter and strengthen them before profits start to dwindle.
Defection analysis is therefore a guide that helps companies manage continuous
improvement.
Although service companies probably can’t—and shouldn’t try to—eliminate all defections,
they can and must reduce them. But even to approach zero defections, companies must
pursue that goal in a coordinated way. The organization should be prepared to spot
customers who leave and then to analyze and act on the information they provide.
Watch the door. Managing for zero defections requires mechanisms to find customers who
have ended their relationship with the company—or are about to end it. While compiling
this kind of customer data almost always involves the use of information technology of
some kind, major investments in new systems are unnecessary.
The more critical issue is whether the business regularly gathers information about
customers. Some companies already do. Credit card companies, magazine publishers, direct
mailers, life insurers, cellular phone companies, and banks, for example, all collect reams of
data as a matter of course. They have at their disposal the names and addresses, purchasing
histories, and telephone numbers of all their customers. For these businesses, exposing
defections is relatively easy. It’s just a matter of organizing the data.

CustomerLoyalty
Customer loyalty indicates the extent to which customers are devoted to a company’s
products or services and how strong is their tendency to select one brand over the
competition.
Customer loyalty is positively related to customer satisfaction as happy customers
consistently favor the brands that meet their needs. Loyal customers are purchasing a firm’s
products or services exclusively, and they are not willing to switch their preferences over a
competitive firm.
Brand loyalty stems out of a firm’s consistent effort to deliver the same product, every time,
at the same rate of success. Organizations give special attention to customer service,
seeking to retain their existing current base by increasing customer loyalty. Often, they offer
loyalty programs and customer rewards to the most loyal customers as an expression of
appreciation for doing repeat business with them.
Benefits associated with loyal consumers include:
 Acceptance of product extensions.
 Defense from competitors cutting of prices.
 Creating barriers to entry for firms looking to enter the market.
 Competitive edge in market.
 Customers willing to pay high prices.
 Existing customers cost much less to serve.
 Potential new customers.
Customer Loyalty or Customer retention refers to the ability of a company or product to
retain its customers over some specified period. High customer retention means customers
of the product or business tend to return to, continue to buy or in some other way not
defect to another product or business, or to non-use entirely. Selling organizations generally
attempt to reduce customer defections. Customer retention starts with the first contact an
organization has with a customer and continues throughout the entire lifetime of a
relationship and successful retention efforts take this entire lifecycle into account. A
company's ability to attract and retain new customers is related not only to its product or
services, but also to the way it services its existing customers, the value the customers
actually generate as a result of utilizing the solutions, and the reputation it creates within
and across the marketplace
Customer Loyalty Strategies:-
Marketers and retailers should focus their attention on integrating three core marketing
strategies to increase customer loyalty. Marketers that operate programs integrating these
approaches will see measurable increases in their rewards program enrollment—and a
better lifetime value from their customers:

1. Limited-Time-Only Promotions: Get customers in the store with an effective promotional
strategy (acquisition).
2. Rewards for Purchase: Incentivize customers to repeat store visits and increase average
order value (growth).
3. Points-Based Rewards Program: Enroll customers in a simple points-based
retention/rewards program that builds tangible value (retention).
1. Limited-Time-Only Promotions
Marketers continue to test various pricing promotion strategies, most notably the everyday-
low-price policies. Some believe this is more effective than other pricing strategies because
“studies show” that customers “want it simple and want it now.” Customers are motivated
to purchase when they believe the promotional price is temporary (limited time only) and
are unsure when they might see that product discounted in the future. Limited-time-only
promotions do work, but they won’t build a long-time bond.
2. Rewards for Purchase
In one test, one retailer compared a reward-for-purchase promotion with an instant-
discount-at-the-register promotion. The reward-for-purchase scheme resulted in 14% lift.
The promotion strategy was initially intended to increase store traffic by having the reward-
for-purchase offer redeemed at the same retailer. This strategy resulted in one to two
incremental store visits within 30 to 45 days of the initial purchase, as compared to zero
under the instant discount promotion offered at the register. And, it gets better.
The additional store visits led to an incremental 14% in revenue over the initial purchase
(compared to 0% in the instant promotion), with 4 percentage points representing
additional out-of-pocket funds from the consumer. The remaining 10 percentage points
were initially funded by the retailer to the customer as a Reward for Purchase and then
spent back at the retailer at full value. Interestingly, more than 50% of the rewards were
spent back at the retailer within 60 days of the initial purchase. So, why wouldn’t retailers
bolster their promotional budgets if the funds are spend back at the retailer and drive
additional customer out-of-pocket spend over the course of two to three transactions?
3. Points-Based Rewards Program:
This strategy was also intended to generate two to three additional point-of-sale
transactions, which allowed the retailer to enrol customers in its retention/rewards
program and increase program stickiness. Rewards programs tend to increase stickiness
when there is increased transaction frequency and recency.

Data collected in the additional P-O-S interactions can be used to:
1. Analyze customer data to create specific offers targeted to these newly acquired
customers. The additional offers may increase product attachment or cross-category
success to drive brand affinity or loyalty.
2. Build predictive models to determine the customer profile of individuals likely to
accept “limited-time-only” promotions and increase one-to-one marketing efforts to
other targeted customers who fit the model’s profile, but who may shop with a
competitor.
Building a loyal customer base starts with acquiring the right customers from the start. Your
chances of building a good relationship are greater from the outset because there are
common interests. The key to long-term success lies in demonstrating value to the customer
and building on the foundation established with a properly integrated engagement strategy
International Market Entry Strategies
There are a variety of ways in which a company can enter a foreign market. No one market
entry strategy works for all international markets. Direct exporting may be the most
appropriate strategy in one market while in another you may need to set up a joint venture
and in another you may well license your manufacturing. There will be a number of factors
that will influence your choice of strategy, including, but not limited to, tariff rates, the
degree of adaptation of your product required, marketing and transportation costs. While
these factors may well increase your costs it is expected the increase in sales will offset
these costs. The following strategies are the main entry options open to you.
Direct Exporting
Direct exporting is selling directly into the market you have chosen using in the first instance
you own resources. Many companies, once they have established a sales program turn to
agents and/or distributors to represent them further in that market. Agents and distributors
work closely with you in representing your interests. They become the face of your company
and thus it is important that your choice of agents and distributors is handled in much the
same way you would hire a key staff person.
Licensing
Licensing is a relatively sophisticated arrangement where a firm transfers the rights to the
use of a product or service to another firm. It is a particularly useful strategy if the purchaser
of the license has a relatively large market share in the market you want to enter. Licenses
can be for marketing or production. licensing).
Franchising
Franchising is a typical North American process for rapid market expansion but it is gaining
traction in other parts of the world. Franchising works well for firms that have a repeatable
business model (eg. food outlets) that can be easily transferred into other markets. Two
caveats are required when considering using the franchise model. The first is that your
business model should either be very unique or have strong brand recognition that can be

utilized internationally and secondly you may be creating your future competition in your
franchisee.
Partnering
Partnering is almost a necessity when entering foreign markets and in some parts of the
world (e.g. Asia) it may be required. Partnering can take a variety of forms from a simple co-
marketing arrangement to a sophisticated strategic alliance for manufacturing. Partnering is
a particularly useful strategy in those markets where the culture, both business and social, is
substantively different than your own as local partners bring local market knowledge,
contacts and if chosen wisely customers.
Joint Ventures
Joint ventures are a particular form of partnership that involves the creation of a third
independently managed company. It is the 1+1=3 process. Two companies agree to work
together in a particular market, either geographic or product, and create a third company to
undertake this. Risks and profits are normally shared equally. The best example of a joint
venture is Sony/Ericsson Cell Phone.
Buying a Company
In some markets buying an existing local company may be the most appropriate entry
strategy. This may be because the company has substantial market share, are a direct
competitor to you or due to government regulations this is the only option for your firm to
enter the market. It is certainly the most costly and determining the true value of a firm in a
foreign market will require substantial due diligence. On the plus side this entry strategy will
immediately provide you the status of being a local company and you will receive the
benefits of local market knowledge, an established customer base and be treated by the
local government as a local firm.
Piggybacking
Piggybacking is a particularly unique way of entering the international arena. If you have a
particularly interesting and unique product or service that you sell to large domestic firms
that are currently involved in foreign markets you may want to approach them to see if your
product or service can be included in their inventory for international markets. This reduces
your risk and costs because you are essentially selling domestically and the larger firm is
marketing your product or service for you internationally.
Turnkey Projects
Turnkey projects are particular to companies that provide services such as environmental
consulting, architecture, construction and engineering. A turnkey project is where the
facility is built from the ground up and turned over to the client ready to go – turn the key
and the plant is operational. This is a very good way to enter foreign markets as the client is
normally a government and often the project is being financed by an international financial
agency such as the World Bank so the risk of not being paid is eliminated.
Greenfield Investments
Greenfield investments require the greatest involvement in international business. A
greenfield investment is where you buy the land, build the facility and operate the business

on an ongoing basis in a foreign market. It is certainly the most costly and holds the highest
risk but some markets may require you to undertake the cost and risk due to government
regulations, transportation costs, and the ability to access technology or skilled labour.
International organization
An international organization is an organization with an international membership, scope,
or presence. There are two main types:
 International nongovernmental organizations (INGOs): non-governmental
organizations (NGOs) that operate internationally. These include international non-
profit organizations and worldwide companies such as the World Organization of the
Scout Movement, International Committee of the Red Cross and Médecins Sans
Frontières.
 Intergovernmental organizations, also known as international governmental
organizations (IGOs): the type of organization most closely associated with the term
'international organization', these are organizations that are made up primarily
of sovereign states (referred to as member states). Notable examples include the United
Nations (UN), Organization for Security and Co-operation in Europe (OSCE), Council of
Europe (COE), [[International Lare made up primarily of sovereign states (referred to
as member states). Notable examples include the United Nations (UN), Organization for
Security and Co-operation in Europe (OSCE), Council of Europe (COE), International
Labour Organization (ILO) and International Police Organization (INTERPOL). The UN has
used the term "intergovernmental organization" instead of "international organization"
for clarity.
The first and oldest intergovernmental organization is the Central Commission for
Navigation on the Rhine, created in 1815 by the Congress of Vienna.
The role of international organizations is helping to set the international agenda,
mediating political bargaining, providing a place for political initiatives and acting as
catalysts for coalition- formation. International organizations also define the salient issues
and decide which issues can be grouped together, thus help governmental priority
determination or other governmental arrangements.
Not all international organizations seek economic, political and social cooperation and
integration.
Strategic Alternatives In Global Marketing
To capitalize on opportunities outside the home country, company managers must devise
and implement appropriate marketing programs. Depending on organizational objectives
and market needs, a particular program may consist of extension strategies, adaptation
strategies, or a combination of the two.

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