Marketing Strategies for a Newly Opened Delicatessen - Essay Example

Marketing Strategies for a Newly Opened Delicatessen Literature review A marketing strategy is defined as “ the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (www.ama.org). At the beginning of the 20th century there were some rudimentary ideas about marketing though the real concepts of marketing were comprehensively articulated much later. The post World War II period noticed a relatively heightened interest in the subject. Marketing strategies have proliferated during the last few years. Among them the following marketing strategies have received the attention of many analysts and researchers (Rosenbaum, 1998). Initially market dominance strategies acquired much greater recognition. These strategies are based on the understanding that any marketing strategy must have as its core objective the domination of the market. In other words the firm seeks either to lead, challenge, simply follow or develop a niche market (Treacy & Wiersema, 1997). According to market dominance strategies the typical behavior of the market dominating firm is to set prices (price leadership) or set a quantity (market leadership). Challengers do not have the same amount of market share or power. But nevertheless they are in a better position to challenge the market leader. Challengers usually have one or few advantages associated with such areas as technology, Research & Development (R&D) and so on (Cooper, 2001). On the other hand firms which do not have anything of the above capabilities would follow the market leader especially in price. Finally the firm which seeks to develop a niche market will do so without concentrating its resources much on wider strategic marketing initiatives. For a newcomer what matters first and foremost are the resource capabilities and an appropriate product placement strategy. For example The word “delicatessen” is a loanword in the English language borrowed from German. In German language it means delicacy or delicacies. However in English it has undergone a phenomenal shift in nuances. However this paper would take its secondary meaning which refers to a shop or a market where delicacies such as foie gras, caviar, truffle mushrooms, charcuterie, red wine, gourmet chocolate and so on are sold and eaten ( www.cba.ufl.edu) . An entrepreneur of a delicatessen has no much choice except to target a particular segment of consumers in the market. Even the choice of location is limited by the fact that many downtowners happen to visit such joints as delicatessens and bars while visitors from other areas might be less inclined to visit such joints. Thus the choice of the marketing strategy for the owner of the delicatessen depends on a number of factors (Hooley, Saunders, Piercy & Nicoulaud, 2008) . External variables on which the entrepreneur’s choice of a marketing strategy depends will be determined by how best the entrepreneur is able to identify his resource capacity and mobility. For instance resources might be available in plenty but they need to be suitable and readily employable in extreme competitive environments. The current concentration ratio of delicatessens in popular cities like, New York, Washington DC, California, London and Paris shows that the level of competition is becoming stiffer (www.iddba.org). Therefore any marketing strategy available to the entrepreneur of a delicatessen will be influenced by such exogenous factors as different price elasticities of demand, age distribution of the population and related demographics including income levels. Thus it is obvious enough that a new comer in to the market will have more any other choice except to adopt either a follower’s strategy or a nicher’s strategy, because it can neither lead no challenge the existing delicatessens (Urban, Carter, Gaskin & Mucha, 1986). Above all a degree of overlapping substitution can be seen at a variety of other shops which are strictly speaking not delicatessens. For example there are specialized meat and wine shops which sell identical delicacies including caviar and fish roe. Despite these limitations a newcomer in to deli marketing business would have a greater degree of freedom in applying other marketing principles including the marketing mix. A strategic marketing mix would enable the owner of the delicatessen to identify a series of strengths and weaknesses of his rivals (Harvard Business Review (Compiler), 1998). For instance his rivals might adopt a market penetration pricing strategy rather than a market skimming pricing strategy because given the greater price elasticity of demand for delicacies sellers would be compelled to sell at lower prices. Next Porter’s Generic Strategies have been studied and analyzed in different contexts as very important for newcomers into a market (Porter, 1984). While the owner of a delicatessen might adopt Porter’s Generic Strategies like product differentiation and market segmentation, the probability of increasing market share in a highly competitive market segment depends on the owner’s ability to identify and concentrate on semi-luxurious products such as ice cream sundaes and pancakes (Wilmot & Carlson, 2006). Indeed this is similar to efforts that seek to push marketing and product diversification to an extreme. However it has the promise of keeping the entrepreneur in business. Porter’s product differentiation strategy is based on efforts by sellers to distinguish their products from the rest. While this marketing strategy has substantial scope and value in many industries for newcomers, there is very little application of it in delicatessens because if the delicatessen owner hopes to increase sales by differentiating his products maximally, there would be similar attempts by others (Lawson, 2006). In other words the delicatessen market comes closer to the perfectly competitive market structure where there are many firms selling an almost identical product. In other words the principle of minimum differentiation applies. Assuming that the owner of the deli shop adopts a similar strategy of minimum differentiation he might have the additional advantage of being placed among the lot. On the other hand Porter’s market segmentation strategy is identified with the firm’s efforts to break the market in to different segments according to demographics and other characteristics. The delicatessen owner can identify the most promising growth drivers in some market segments. For example there is an increasing tendency among sellers to move in to gourmet products segments because the number of health conscious consumers is increasing rapidly almost every day. Gourmet delicacies such as low calorie lean meat, red wines, low calorie candy, gourmet chocolates, truffle mushrooms, salads and fruit cocktails in syrups are in great demand nowadays (Fullen & Brown, 2004). Thus the owner of the delicatessen might as well segment the market according to Porter’s Generic Growth Model and cut prices to place itself in a strategically advantageous position. Next innovation related strategies were first formulated in order to assess the first mover advantages. For example, markets where innovation engenders advantages for the pioneer or the first mover can be identified in delicatessen business too (Fallek, 1995). The owner of a delicatessen might recognize the existence of advantages for innovation such as what has been happening in such metropolis as Tokyo and Paris. In Tokyo in particular and rest of Japan in general delicatessens became more innovative in diversifying the uses of blue fin tuna, a delicacy eaten by many Japanese. Innovation does not help always because first movers in to a locality would definitely benefit as against first movers in introducing a product. In the latter case a product may be accepted or rejected by consumers. This principle applies to the deli market. The owner of the delicatessen could at his best become a close innovator following the first movers or pioneers rather than wait till the last moment (Steven and Schnaars, 1997). This principle or strategy has both advantages and disadvantages. For instance there will be many close followers who would scramble among themselves to get a market share. The delicatessen owner would not benefit from eve closely following the first movers if he were to launch his products on a reactive marketing strategy because it is the proactive marketing strategies that help in identifying gaps left behind by first movers. Next growth strategies of marketing such as those related to integration might help the owner of the delicatessen. Indeed the owner can seek to integrate horizontally with another delicatessen. This means that a delicatessen selling similar products can be acquired by the owner in order to integrate in to the competitive market. This strategy has quite a number of advantages such as a readily available market and a brand name and identity (www.luisgalarza.blogspot.com). Or the owner might integrate vertically with another company which is either at the raw material producing stage such as a brewery making wine and a meat processor (backward vertical integration) or a delivery company (forward vertical integration). Here too there are some advantages such as making use of the acquired firm’s resources to integrate faster in to the market. The cost factor would favor the owner in the long run. Similarly diversification also is a growth strategy. For example as mentioned above the owner can diversify in to different fields such as raw material supplier networks and food delivery services (Roberts, 2003). Growth strategies help newcomers to identify market opportunities. For example integration increases economies of scale while at the same time positive market synergies would enable the owner to place himself at an advantageous point on the marketing strategy. In other words a head start means quite a lot for a newcomer. Profit margins of integrated firms tend to rise in keeping with marketing strategy. However there is no guarantee that profit margins would rise simply through integration. As some recent researchers have pointed out integration must include cost cutting measures such as reduction of the labor force and integration of managerial skills. Finally strategic model of archetypes of prospector, analyzer, defender and reactor can be used to identify the prospects of the marketing strategy to be adopted by the delicatessen owner (Lieberman & Montgomery, 1998). For example according to this theory the prospector adopts an aggressive approach to marketing by constantly targeting his competitors. This approach might not be suitable for the delicatessen owner because for newcomer such aggressive marketing techniques would not be helpful. On the other hand the defender’s approach is based on defending the current market share. Actually the delicatessen owner must defend his market share because if gradually other competitors increase their market shares by taking the owner’s share there would not be any benefit left for him. Finally analyzers are not bothered about maintaining stability as defenders are. At the same time they are not as aggressive as those prospectors. Their neutral stand enables them to understand the market much better than prospectors and defenders. Therefore the most suitable marketing strategy under the archetype model to the delicatessen owner is the analyzer’s approach (Santaniello, Evenson & Zilberman, 2002). In the first place he can explore the market before he adopts drastic marketing strategies which might lead him to failure. Authentic marketing situations in the world are combinations of a fairly bigger cross section of marketing strategies mentioned above and therefore the delicatessen owner must be able to recognize advantages and disadvantages associated with each strategy and cull some of the best choices to produce and integrated or holistic strategy so that marketing goals can be achieved in the larger context of the strategic operational environment that includes both PESTEL and SWOT sub environments (West, Ford & Ibrahim, 2006). REFERENCES 01 . Adams, R. , Artis, B. , Bouchard, R. , Robey, T. , & Zaccaria, D. , Deli Visual Marketing and Merchandising Strategy Retrieved from: www.cba.ufl.edu on August 18, 2009 . 02 . Cooper, R. G. , 2001 , Winning at New Products: Accelerating the Process from Idea to Launch , 3rd edn. , Basic Books , New York . 03 . ‘Dairy-Deli-Bakery Digest’ , International Dairy•Deli•Bakery Association , on July 2009 , Retrieved from : www.iddba.org on August 18, 2009 . 04 . Fallek, M. , 1995 , The Off-The-Freeway Delicatessen , Business Plan , American Institute of Small Business , Minnesota . 05 . Fullen, S. , & Brown, D. R. , 2004 , How to Open a Financially Successful Specialty Retail & Gourmet Foods Shop (How to Open & Operate a…), Atlantic Publishing Company, Florida . 06. Galarza, L. , Branding and Viral Marketing Lesson from Kat’s Deli & Bar. , Retrieved from: www.luisgalarza.blogspot.com on August 18, 2009 . 07. Harvard Business Review (Compiler) , 1998 , Harvard Business Review on Strategies for Growth (Harvard Business Review Paperback Series), Harvard Business Press , New York . 08. Hooley, G. , Saunders, J. , Piercy, N. F. , & Nicoulaud, B. , 2008 , Marketing Strategy and Competitive Positioning, 4th Edi., Prentice Hall, London . 09. Lawson, K. , 2006 , Successful Strategies for Growth (Business Buddies Series) , Barrons Educational Series, New York. 10. Lieberman, M. B. , & Montgomery, D. B. , 1998 , ‘First-mover disadvantages: Retrospective and link with the resource-based view’, Strategic Management Journal , Vol. 19, Pp. 1111-1125. 11. Porter, M. E. , 1998 , Competitive Strategy: Techniques for Analyzing Industries and Competitors, The Free Press , New York . 12 . Roberts, W. A. , 2003 , ‘Delis Deliver’ , Prepared foods Networks , on November 30, 2003 , Retrieved from : www.preparedfoods.com on August 18, 2009 . 13. Rosenbaum, D. , 1998 , Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance , Praeger Publishing, Connecticut. 14. Santaniello, V., Evenson, R. E & Zilberman, D. , 2002 ,Market development for genetically modified food, CABI, Oxfordshire. 15. Steven, P. , Schnaars, S. P. , 1997 , Marketing Strategy , 2 Rev Sub edition,Steven P. Schnaars (Author) › Visit Amazons Steven P. Schnaars PagFind all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central Free Press, New York . 16. The definition of Marketing Strategy , The American Marketing Association , Retrieved From : www.ama.org on August 21, 2009 . 17. Treacy, M. , & Wiersema, F. , 1997 , The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, Basic Books , New York . 18 . Urban, G. L. , Carter, T. , Gaskin, S. , & Mucha, Z. , 1986, Market Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Implications, Management Science , Vol. 32, No. 6., Pp. 645-659. 19. West, D. , Ford, J. , & Ibrahim, E. , 2006 , Strategic Marketing : Creating Competitive Advantage, Oxford University Press, New York. 20. Wilmot, W. W. , & Carlson, C. R. , 2006 , Innovation: The Five Disciplines for Creating What Customers Want, Crown Business, New York. Read More