Marketing Management - Essay Example

Marketing Management Marketing Management The key goal of every business is to achieve its desired profits and to obtain long-term performance. However, with the current competition in the business environment, managers need to use their innovation and marketing skills in order to stay afloat. Currently, consumers are treated to a plethora of goods and services in the market. Moreover, due to technological advancements market competition is increasing at an alarming rate. Therefore, there is a need for business managers to provide valid information about a product in order to create interest in the mind of the consumer. Managers utilize their innovation and critical thinking in order to market their products in the market. Through the adoption of innovative marketing strategies, companies can successfully compete in the business environment. Marketing is an ideal tool for the growth of a business. Furthermore, marketing ensures that a firm remains relevant and effective in the environment(Sahaf 2008). Recent issues such as liberalization, privatization and globalization have facilitated significant changes in the marketing field. Marketers are currently presented with new challenges such as fragmentation of the market, intense competition both locally and globally, and a harder to sustain competitive advantage (Sahaf 2008). The new challenges threaten to render obsolete, many currently used marketing strategies. This creates a need to adopt new strategies and approaches that would be functional in the constantly changing environment. A marketing strategy is a broad plan of action that directs a firm in how it deploys its strengths for the purpose of meeting the challenges and demands of the target market (Sahaf 2008). One particular example is Porter’s strategic mix, which is one of the most utilized strategic tools. The core purpose of a marketing strategy is to enable a firm to identify and develop its target market. Porter’s generic strategy suggests two essential routes to achieving long-term superior performance by a firm. The first strategy is that of cost leadership and the second strategy is differentiation (Sahaf 2008). Porter advocates that a firm can adopt the low-cost strategy or differentiation strategy for a sustainable competitive advantage in the market (Sahaf 2008). Sahaf observes that a firm can combine these two strategies with the overall scope of activity sought by the firm. This will make a number of generic strategies, that is, cost leadership, differentiation and focus (Sahaf 2008). The Cost leadership strategy entails the incorporation of low-cost compared to competitors for the purpose of achieving above average profits. According to Porter, it entails aggressive construction of efficient scale facilities, vigorous pursuit of cost reductions based on experience, tight cost and overhead control, including avoidance of marginal customer accounts and cost minimisation in relevant areas such as advertising (Porter 2008). This strategy is ideal in several occasions. First, the strategy is ideal if there is a rigorous price competition among rival sellers, the industry’s product is standardized, there are limited ways to achieve product differentiation or in the event that consumers have a high bargaining power (Sahaf 2008). A business must have certain advantages in order to adopt the low-cost strategy effectively. Porter suggests that a firm must have access to low materials for production; a firm must maintain a wide line of related products for the purpose of spreading costs. Lastly, a firm should serve all major customer groups in order to build volume (Porter 2008). Firms should be prepared to have up-front investments, for example, in purchasing innovative equipment, as well as, aggressive pricing (Porter 2008). There are two assumptions based on Porters strategic tool. According to Sahaf, the tool assumes that the stated strategies are functional at any level of the organization. Secondly, a firm is expected to utilize more than one strategy simultaneously at the same level in the organization (Sahaf 2008). Sahaf observes that the cost-leadership strategy suffers from several limitations. According to Sahaf, the model assumes that due to experience a firm would be in a position to reduce production costs. Sahaf argues that in the contemporary business field, uninterrupted technological developments make a firm experience in terms of production and marketing of an item irrelevant (Sahaf 2008). Moreover, a new entrant in the industry can achieve competitive advantage by imitating the low-cost strategy. Sahaf also observes that it is difficult for a company to maintain a low-cost strategy in a competitive environment (Sahaf 2008). The second strategic tool suggested by Porter is differentiation. This strategy entails the development of products or services that are unique in a manner that consumers will perceive them to be better than, or different from the competitor’s products (Porter 2008). There are significant internal strengths that firm should have in order to adopt this strategy. A firm is expected to have access to scientific research, a highly innovative and skilled product development team and a strong sales team that can effectively communicate the strengths of the product to the consumer (Porter 2008). Marketers cannot achieve success in a competitive environment unless they have a competitive differential advantage over their rivals in the business environment (Sahaf 2008). The main advantage of differentiation is that firms can use the products uniqueness to adopt a premium price. The differentiation strategy poses a series of risks. First, the differential cost between low-cost competitors and the differentiated firm can create a challenge in maintaining brand loyalty. This is because buyers may opt to forgo some of the unique features for the purpose of saving costs. Also, buyers need for the differentiating factor, can decline when consumers become more sophisticated. Lastly, the issue of imitation narrows the perceived differentiation (Porter 2008).Sahaf notes that a marketer may fail to identify sources of differentiation that are important for the consumer and difficult for the competitor to imitate. Moreover, the differentiation strategy may involve costs that would inflate prices (Sahaf 2008). Marketing plays an important role in creating added value for consumers. According to Fahy and Jobber, companies that are market-oriented aim to create customer value for the purpose of attracting and retaining customers (2009). In a competitive environment, a company can implement marketing concepts for the purpose of meeting and exceeding customer needs in a manner that is better than their competitors(Fahy and Jobber 2009). Firms perceive that when consumers purchase products or services that they perceive to be of good quality, then they would communicate the information to other consumers. Consequentially, the power of communication between consumers will contribute to building the product’s brand. Marketing as a business function encompasses activities that must be conducted for the purpose of delivering customer value. Marketing activities such as conducting market research enables the firm to comprehend customer needs and behavior (Fahy and Jobber 2009). Innovation is a competitive strategy that can either enhance or destroy a firm’s performance in the market. The term has been widely used resulting in the proliferation of its meaning (Fortuin 2007). In the business environment, the term innovation surpasses the creation of new products or services and may incorporate innovation of business models, management techniques, strategies and organization structures (Fortuin 2007). Fortuin observes that innovations are difficult to implement by other firms because they do not come with the sufficient context that permits successful application (Fortuin 2007). Organizations may opt to remain competitive by investing scarce resources for the purpose of sustaining innovations in the competitive environment. However, most firms fail to acknowledge the impact of disruptive innovation in the business environment (Fortuin 2007). An effective marketing strategy gives a firm competitive advantage. A SWOT analysis enables companies to identify its strengths, weaknesses, opportunities and threats in the business environment. Through a SWOT analysis, a company is able to perceive potential threats such as the ease of entry by competitors into the industry. A company can use Porter’s five forces model in order to effectively analyse market and competitors. According to Porter,there are for diagnostic components to a competitor’sanalysis (Porter 2008). The four components include motivation, actions, assumptions and capabilities. A firm should first analyse its competitor by developing a competitor’s profile. The analysis enables the firm to identify the likely strategic changes that a competitor can successfully implement (DOWNEY 2007). Secondly, the firm should identify a company’s probable response when facing a range of feasible strategic moves from their competition. Third, a firm should be able to effectively determine the competitor’s probable reaction in the event the industry shifts or environmental changes (DOWNEY 2007). Understanding a competitor’s actions and strategic intent enables a company to effectively respond to the new competition. Strategic intent can be gauged by examining the competitor’s characteristics such as market dependence (Hitt,Hoskisson & Ireland 2009). Competitors with high market dependence are likely to respond strongly to attacks that threaten its market position. Interpretation of collected information is just as important as analysing the information,therefore,companies should opt to invest money so as to accurately assess whether the competitor is a threat(Hitt,Hoskisson & Ireland 2006). Through identifying a competitor’s strengths and weaknesses a firm can enhance its performance through differenciation. A firm can create a brand that aligns with its strategic initiatives and goals (DOWNEY 2007). In conclusion, marketing strategy is an effective tool for enhancing a firm’s performance and adds value to goods and services. Through strategic marketing and competitor analysis, a company is able to assess its position in the industry. Moreover, effective strategies enable the firm to make innovative decisions that can enhance its performance in the market. The plethora of evidence obtained from various companies, strategic marketing and competitor analysis are effective tools of ensuring that businesses make the right decisions in the industry that ensure business success. References Downey J. (2007) Strategic analysis tools. Retrieved from www.cimaglobal.com Fortuin, F (2007) Strategic alignment of innovation to business: balancing exploration and exploitation in short and long life cycle industries (Vol. 2). Wageningen Academic Pub Ireland, R. D., Hoskisson, R., & Hitt, M (2008) Understanding business strategy: Concepts and cases. Cengage Learning Jobber, D., Fahy, J., & Kavanagh, M. (2006)“The Nature of Marketing” Foundations of marketing (ch.1) London: McGraw-Hill Education Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. Simon and Schuster Sahaf, M. A. (2008). Strategic marketing: Making decisions for strategic advantage. PHI Learning Pvt Ltd Read More