Developing Marketing Strategies and Plans - Essay Example

Introduction The current business environment requires vigilance, strong reactions to external markets and extra product offerings. Gone are the days when business would only focus on the needs of their clients; this approach is no longer viable in the market today. Companies need to keep a close eye on their competitors. How marketers identify primary competitors Companies need to identify their competitors through two major perspectives; thy can choose an industrial outlook or alternatively utilize a market approach. Marketers using the industrial outlook need to realize that all companies providing similar products or services fall in the same categories. Marketers need to ask themselves whether their companies represent the monopolistic structure, oligopolistic structure, monopolistic competition structure or pure competition structures since each of these structures will have different primary competitors. The first structure is made up of only one company providing a particular good or service. Such companies may not need marketers as they dominate the market. Oligopolistic structures may have some competitors in the market but they are fe in number. On the other hand, monopolistic competition applies to those who specialize in certain products. This category has to identify their competitors. Lastly, there is the pure competition structure where all competitors offer the same products. The automobile industry can be classified under the pure competition sector but there may be instances when it also falls under the monopolistic competition structure. (Brown, 1995) After marketers have determined the kind of structure which they operate in, they now need to look at specific factors that affect their industry in order top identify which competitors are the most important o them. An industry that has low entry barriers and high exit barriers, then it will most likely have numerous competitor who may be struggling to stay afloat. Most of them may be surviving on the basis of covering their operating cots. However, others may have the ability to cover their daily cost and even meet their capital cots too; these are the kinds of competitors that marketers need to watch out for. Marketers also need to be careful about their cost structures. Companies that seem to have firm control over their cost especially in relation to industry requirements are the primary competitors. Also, if a company operates in an industrial that is largely international, then chances are that the most competitive companies are the ones who have a well established global markets and they qualify as primary competitors. On the other hand, some companies may be operating in industries with high levels of vertical integration. For instance, a company liaises with its suppliers to create a larger market force. Such companies end up dominating the market and therefore qualify s primary competitors. (Hope, 1997) The automobile industry is affected by cost structure. It can be argued that they spend most of this cost on production and advertising. In the nineties, Honda managed to establish a name for itself especially in the US market because it invested in new technologies. Consequently, its products were superior to those ones offered by other competitors such as Toyota and it became a primary competitor for Toyota. The second approach that companies can use to identify their primary competitors is through marketing. In this approach, companies need to look out for those companies that satisfy the same needs that they do. The current market has changed drastically. Primary competitors are not just those companies offering the exact same things offered by the company; they are firms that can serve similar needs. This approach requires that marketers trace all the captivities involved while using their product and then examine what other firms perform the same activities. The closest match will be the primary competitors while the next category of firms will be called indirect customers. (Porter, 1985) In the automobile industry, some of the central activities include; driving in dangerous terrains, preventing accidents while driving, having some sort of entertainment when driving, filling up the car with fuel, sitting in comfort and others. Based on these features, Toyota would identify its primary competitors on the basis of these features. The Subaru Forester is a primary competitor because it has lash seat belt, airbags, door locks and mirrors for safety or for prevention of accidents. It has an FM/AM/CD player for entertainment. The Nissan is also a primary competitor because it version of the Forrester has dual transmission plus AM/CD/FM player, air-conditioning, cruise control, storage space and central locking for prevention of accidents. On the other hand, the Honda model is also primary competitor because it has a picnic table that can be pulled out after driving; it has dual airbags for comfort among other things. Ways of analyzing competitor's strengths weaknesses objectives and strategies Competitor's strategies need to be analyzed by examining the kind of product they offer to the market (where product on this case refers to the tangible good and the services that are offered beside it. Thereafter, marketer needs to examine the level of vertical integration adopted by a given company. These two features form the backbone of any competitors'; strategy. It should be noted that companies that have these to feature in common also fall under the same group and will be subjected top the same level of entry barriers. Some companies may be offering a wide range of products for instance, in the automobile industry, Toyota, Honda, Subaru and Nissan happen to follow similar product offerings such as the SUVs, Jeeps and others. Additionally, marketers must ask themselves what kind of services o their competitors offer to attract clientele. Also, marketers must know the kind of prices offered by their competitors. All these will give a hint of the kind of strategies adopted by the competitor. Competitor's objectives are analyzed by the kind of financial approach adopted by a company. If a company is constantly chasing after profits, then it is likely that the company is in the business on a short term basis. On the other hand, competitor's objectives are also subject to their history. A company like Toyota has operated for a long period of time in the automobile industry. In the mid nineteenth Century, Toyota was responsible fro producing another company called Honda through one of its workers. During the formative stages of Honda, the company was trying to fulfill objectives based on its mother company and its competitor's had acknowledged that. However, after breaking away, the company became independent and its objectives changed. (Hope, 1997) Competitor's strengths need to be analyzed through the kind of share that they possess in the market. If a company has a large share in the market, then chances are that it is a force to reckon with. For example, in the automobile industry, specifically in the 4WD wagon models, the company with the largest share is Honda, followed by Toyota, Subaru and Nissan is the newest candidate in this market segment. Consequently, Honda is the strongest. Company' strengths and weaknesses can also be analyzed by the kind of images that the draw from people's minds. For instance, when one is asked to name the most influential firm in a certain industry, they are likely to mention one particular company; such a company can be considered as a strong company. Additionally, some companies may be more influential in that they have the highest form of loyalty from customers. For example, when one is asked what kind of company they would choose in order to buy a product then most of them will choose a particular company. A company's weaknesses may be indicated the nature of its product availability. Additionally, if the company provides minimal additional services for its products, then chances are that that it can be considered weak. How market leaders can expand total market and defend total market share Market leaders can expand their market share through a number of platforms. They have the option of using marketing penetration approaches. Here, a company will try to convince the consumers of other similar products to try their product. On the other hand, companies have the option of creating a new market segment. By doing this, companies will be approaching customers that are unaware of the product at all. Lastly, market leaders have the option of expanding into geographical locations that have never been reached before. (Jaworski & Rayport, 2001) Most of the major companies in the automobile industry have applied one of the following strategies to expand their market share. For instance, Toyota and Honda applied geographical expansion after starting their operations in Japan. They marketed their vehicles in Asian countries first and this later on spread to other regions such as the United States and even Canada. Expansion into markets that have never used company product before can also be quite rewarding. This can only be achieved after a company has convinced their potential users about the quality of the brand or product. On the other hand, companies have the choice of making their products more convenient and available to their final consumer. For instance, there are numerous Subaru outlets in its mother country and this has contributed to increased market share because consumers need to invest too much money in the process of transporting the vehicle. However, before companies can contemplate expansion, there are a number of issues that need to be ironed out. For instance, they need to make their share are in line with other players in the industry. When certain competitors feel threatened by a strong company, they may file legal suits claiming that their competitor is trying to monopolize the industry. Besides this, sometimes expanding market share may not be economically feasible especially when economies of scale do not allow it. In the automobile industry, Nisan Company has been trailing Toyota in term of new product lines and expansions because of its labor intensive economy. Toyota is quite efficient at employing technologies in production thus explaining the expansion strategies characteristic of the latter. (Brown, 1995) Market leaders can defend their total market here by ensuring that their pricing strategies are always ahead of the rest. They need o refrain from getting too comfortable with their position in order to avoid most of the inefficiencies that come with it. Additionally, they also need to be on the frontline when it comes to product innovations. Other companies should be trying to catch up with the continuous improvements otherwise market leaders face the danger of being thrown out of business for becoming complacent. Furthermore, market leaders can defend their place in the market by establishing a strong distribution line. They need to be constantly looking out for new market segments in order to expand their products. Also, market leaders can defend their place by setting the pace in the advertisement and promotion sector. Their promotional efforts need to be above all the rest in order to have substantial market shares. How market challengers attack market leaders Market challenging can work best when the challenger feels that he is bringing a superior product to the market or if he is convinced that the current market leader is not doing enough to make the consumer satisfied. Additionally, companies may also decide to establish themselves in pre-existing markets if they feel that they will employ better methods of production though technology. Market challengers have to choose among the following objectives; they could decide to attack the market leader head on. This direct approach is quite risky but it also has high rewards. Market challengers using this approach may decide to make new products or they could decide to improve their products. Another marketing objective for market challengers is trying to attack opponents that have relatively equal capabilities to them. Lastly, challengers can try attacking smaller companies at first and then work their way to the top. (Hope, 1997) After identifying some objectives, challengers then need to identify attacking strategies. They have the option of using frontal attack where every price, distributional, promotional and product strategy of the market leader is met head on. On the other hand, challengers can adopt a flank attack which entails reaching markets that have never been reached before or reaching geographical areas that competitors have not though of. In the automobile industry, Toyota applied flank attack by creating cars that use less fuel. Sometimes companies may decide o choose an encirclement attack where they make contracts with numerous businesses in the industry. By doing this, a challenger will establish its name slowly but surely. Lastly, companies may settle on a bypass attack. Such a company can choose to leave the entire market segment offered by competitors and penetrate easy markets. After identifying the large strategy, challengers will need to employ smaller strategies. This can be done by offering price discounts, lower prices, increasing value of goods, making goods more sophisticated, constant innovation, aggressive advertisements and creating better distribution channel. How market followers or niches compete effectively Market followers stand to loose the moment they try competing directly with the market leaders. This is because it takes a lot in order to erase some of the images that consumers have about their favorite companies. Consequently, market followers should try employing differentiation strategies. Here, they could emphasize on the issue of quality. Additionally they could make their products easily accessible. (Porter, 1985) Market followers need to identify gaps that have been left by the major industry players and then try to fill them the best way possible. On the other hand, market followers need to establish sound marketing strategies. They need to focus their advertisements and promotions on services and products that are frequently purchased. Commodities that are not sold on a regular basis will could be made more expensive in order to earn the company some additional points. It should be noted that market followers cannot reduce all their prices to match their competitor's but they can reduce prices of a few and then market those ones aggressively. Market followers can also compete effectively by adopting cost effective production methods. This will go along way in enhancing their profit margins. The automobile industry is in serious need of this strategy. Their profit margins would really increase if they employed better forms of technology in production. Utilizing such a strategy greatly reduces cost and it also enhances the quality of the vehicle. Conclusion It should be noted that the very definition of a competitor has changed. Firms should keep abreast of small brands that provide similar goods at lower prices. They should also watch for expansion strategies among huge companies. As if this is not enough, some competitors may come in the form of internet dealers. Consequently, competition is a major issue affecting marketing strategies and companies need to be aware of this. Market followers can adopt leaner production strategies and reduce prices of common products. Market challengers can use price, distribution, promotion and product innovation as ways of maintaining competitive advantage. Reference: Porter, M. (1985): Competitive advantage, Free Press, p 82-115 Jaworski, B. & Rayport, J. (2001): E-Commerce, McGraw-Hill Publishers, p 53 Brown, S. (1995): Don't innovate, imitate; Sales and Marketing management Hope, M. (1997): Contrast and Compare, Journal for Mraketing, p 11-13 Read More