Understanding Core Strategy in Marketing Planning

  

Date Posted: 11/6/2012 5:38:45 AM

Posted By: sashoo  Membership Level: Silver  Total Points: 382

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Core strategy focuses on how objectives can be accomplished and consists of three key elements: target markets, competitor targets and establishing a competitive advantage. Each element will now be examined and the relationship between them discussed.

• Target markets

A central plank of core strategy is the choice of target market(s). Marketing is not chasing about any customer at any price. A decision has to be made regarding those groups of customers (segments) that are attractive to the business and match its supply capabilities.

Usually, the choice of target market will emerge as a result of the SWOT analysis and the setting of marketing objectives (strategic thrust). For example, the marketing audit upon which SWOT analysis is based will include market segmentation analysis and, when considering the strategic thrust of the business, decisions regarding which markets to serve must be made. However, if this is defined only in broad terms—for example, ‘enter the business personal computer market’—there will be a number of segments (customer groups) of varying attractiveness and a choice has to be made regarding which segments to serve.

One way of segmenting such a market is into large, medium and small customers. Information regarding size, growth potential, level of competitor activity, customer requirements and key factors for success is needed is needed to assess the attractiveness of each segment. This may have been compiled during the marketing audit and should be considered in the light of the capabilities of the business to compete effectively in each specific target market. The marketing audit and SWOT analysis will provide the basis for judging capabilities.

For existing products, management should consider its current target markets. If the needs of customers have changed, this should be recognized so that the marketing mix can be adapted to match the new requirements. In other cases, current target markets may have

decreased in attractiveness, so products will need to be repositioned to target different market segments.

• Competitor targets

Alongside decisions regarding markets lie judgments about competitor targets. These are the organizations against which the company chooses to compete directly. Weak competitors may be viewed as easy prey and resources channeled to attack them. The importance of understanding competitors and strategies for attacking and defending against competitors should examine the areas of competitor analysis and competitive strategy.

• Competitive advantage

The link between target markets and competitor targets is the establishment of a competitive advantage. A competitive advantage is the achievement of superior performance through differentiation to provide superior customer value, or by managing to achieve lowest delivered cost. For major success, businesses need to achieve a clear performance differential over competition on factors that are important to target customers. The most successful methods are built upon some combination of three advantages:

1. Being better—superior quality or service
2. Being faster—anticipate or respond to customer needs faster than the competition
3. Being closer—establishing close long-term relationships with customers

Another route to competitive advantage is achieving the lowest relative cost position of all competitors. Lowest cost can be translated into a competitive advantage through low prices, or by producing standard items at price parity when comparative success may be achieved through higher profit margins than those of competitors. Achieving a highly differentiated product is not incompatible with a low price position. In as much as high-quality products suffer lower rejection rates through quality control and lower repair costs through their warranty period, they may incur lower total costs than their inferior rivals.

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