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'Generic' strategies and strategies for pricing, distribution, promotion, advertising

Concepts addressed include 'generic' strategies and strategies for pricing, distribution, promotion, advertising and market segmentation. Factors such as market penetration, market share, profit margins, budgets, financial analysis, capital investment, government actions, demographic changes, emerging technology and cultural trends are also addressed.

There are two major components to your marketing strategy:

In today's very competitive marketplace a strategy that insures a consistent approach to offering your product or service in a way that will outsell the competition is critical. However, in concert with defining the marketing strategy you must also have a well defined methodology for the day to day process of implementing it. It is of little value to have a strategy if you lack either the resources or the expertise to implement it.

In the process of creating a marketing strategy you must consider many factors. Of those many factors, some are more important than others. Because each strategy must address some unique considerations, it is not reasonable to identify 'every' important factor at a generic level. However, many are common to all marketing strategies. Some of the more critical are described below.

You begin the creation of your strategy by deciding what the overall objective of your enterprise should be. In general this falls into one of four categories:

Having selected the direction most beneficial for the overall interests of the enterprise, the next step is to choose a strategy for the offering that will be most effective in the market. This means choosing one of the following 'generic' strategies.

Pricing

Having defined the overall offering objective and selecting the generic strategy you must then decide on a variety of closely related operational strategies. One of these is how you will price the offering. A pricing strategy is mostly influenced by your requirement for net income and your objectives for long term market control. There are three basic strategies you can consider.

A SKIMMING STRATEGY

If your offering has enough differentiation to justify a high price and you desire quick cash and have minimal desires for significant market penetration and control, then you set your prices very high.

A MARKET PENETRATION STRATEGY

If near term income is not so critical and rapid market penetration for eventual market control is desired, then you set your prices very low.

A COMPARABLE PRICING STRATEGY

If you are not the market leader in your industry then the leaders will most likely have created a 'price expectation' in the minds of the marketplace. In this case you can price your offering comparably to those of your competitors.

Promotion

To sell an offering you must effectively promote and advertise it. There are two basic promotion strategies, PUSH and PULL.

The PUSH STRATEGY maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising.

The PULL STRATEGY requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.

There are many strategies for advertising an offering. Some of these include:

Product Comparison advertising

In a market where your offering is one of several providing similar capabilities, if your offering stacks up well when comparing features then a product comparison ad can be beneficial.

Product Benefits advertising

When you want to promote your offering without comparison to competitors, the product benefits ad is the correct approach. This is especially beneficial when you have introduced a new approach to solving a user need and comparison to the old approaches is inappropriate.

Product Family advertising

If your offering is part of a group or family of offerings that can be of benefit to the customer as a set, then the product family ad can be of benefit.

Corporate advertising

When you have a variety of offerings and your audience is fairly broad, it is often beneficial to promote your enterprise identity rather than a specific offering.

Distribution

You must also select the distribution method(s) you will use to get the offering into the hands of the customer. These include:

Of course, making a decision about pricing, promotion and distribution is heavily influenced by some key factors in the industry and marketplace. These factors should be analyzed initially to create the strategy and then regularly monitored for changes. If any of them change substantially the strategy should be re-evaluated.

The Environment

Environmental factors positively or negatively impact the industry and the market growth potential of your product/service. Factors to consider include:

The Prospect

It is essential to understand the market segment(s) as defined by the prospect characteristics you have selected as the target for your offering. Factors to consider include:

The Product/Service

You should be thoroughly familiar with the factors that establish products/services as strong contenders in the marketplace. Factors to consider include:

The Competition

It is essential to know who the competition is and to understand their strengths and weaknesses. Factors to consider include:

Each of your competitor's experience, staying power, market position, strength, predictability and freedom to abandon the market must be evaluated.

Your Enterprise

An honest appraisal of the strength of your enterprise is a critical factor in the development of your strategy. Factors to consider include:

Development

A review of the strength and viability of the product/service development program will heavily influence the direction of your strategy. Factors to consider include:

Production

You should review your enterprise's production organization with respect to their ability to cost effectively produce products/services. The following factors are considered:

Marketing/Sales

The marketing and sales organization is analyzed for its strengths and current activities. Factors to consider include:

Customer Services

The strength of the customer service function has a strong influence on long term market success. Factors to consider include:

Conclusion

After defining your strategy you must use the information you have gathered to determine whether this strategy will achieve the objective of making your enterprise competitive in the marketplace. Two of the most important assessments are described below.

Cost To Enter Market

This is an analysis of the factors that will influence your costs to achieve significant market penetration. Factors to consider include:

Profit Potential

This is an analysis of the factors that could influence the potential for generating and maintaining profits over an extended period. Factors to consider include:

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