Part 2: Marketing strategies
Strategies determine the route to be followed or the framework for action so that all instruments are used in a targeted and effective manner.
The route is determined by means of a strategy concept. The concept serves to ensure a fully optimized steering of the direction of action. The strategy chip shown below can be used optimally for this purpose. It contains the following four directional strategies of marketing:
- Market field strategy
- Market stimulation strategy
- Market parcelling strategy
- Market area strategy
After the respective decisions are made within the individual strategy levels, the bundling of these results, using the strategy board, results in a holistic strategy profile.
(Grafik: AKI-Kommunikation e.K.)
In the first step, the market field strategy is determined. It determines the basic orientation. Market penetration involves positioning a current product in a current market. Market development involves the search for a new market for a current product. The opposite is true for product development. Here, the goal is to develop a new product for the current market. Finally, there is the option of diversification. Diversification means finding a new market for a new product. It can also be divided into three areas. One area is horizontal diversification. In this case, an existing product program is expanded by a new product that is factually related to the existing program. Vertical diversification refers to a new economic stage and can turn in two directions. Backward integration refers to the state when the original distributor mutates into a manufacturer. In forward integration, the manufacturer begins to establish its own sales outlets. Lateral diversification no longer shows any connection between the targeted and previous activity. Here, the company chooses completely new paths away from the original business areas.
In the second step, the market stimulation strategy is determined. Basically, there are seven different strategies for market stimulation. The action (price) policy is characterized by its price-performance ratio (high quality at a low price) and short-term price activity to increase sales with the help of marketing instruments. Thus, it does not represent a real strategy. In the case of the non-pure price-quantity strategy, the attractiveness of the product is increased by the, in relation to the price, disproportionately high quality. The mid-range strategy is not very successful nowadays, because the market for products with mid-range quality at an average price is decreasing. The non-pure preference strategy offers medium quality at high prices. Therefore, it must inevitably be converted into a pure preference strategy if a preference to the product or brand is to be built up permanently. The predatory pricing strategy is a term for the attempted blinding of customers by medium to high prices at low quality. These products last only a short time on the market.
Two basic competitive mechanisms are used in the long term for targeted successful market influence. The pure price-quantity strategy dispenses with preferences. In this case, market stimulation is based solely on price advantage. In the lower market stratum, only aggressive price competition counts, as bargain and price-conscious buyers are also predominantly targeted. The pure preference strategy, on the other hand, profiles itself with a high-quality product, at a high price and thus focuses on so-called brand or quality-conscious buyers. Here, market stimulation takes place through performance and quality advantages in the upper market stratum. By building up preferences and a good image, the high price must be justified. Building on the preferred strategy, there is also the strategy type of upscale preference strategy. This differs from the pure preference strategy in a higher price level, lower sales volume, higher contribution margin and selective distribution. The premium strategy is located at the highest market level. It specifically addresses prestige buyers and is characterized by a very upscale price level, very low sales volume, high contribution margin and exclusive distribution.
The market parceling strategy can be interpreted in two basic ways. The mass market strategy involves the undifferentiated development of mass markets. It is strongly represented in branded product concepts such as Nivea or Persil. The mass market strategy can also be used with total or partial market coverage. Total market coverage means that the search is not for what differentiates the target groups, but for what unites them. The aim here is to reach as many customers as possible. The strategy is to use the entire potential of the market universally, thus generating high sales figures, which enable very low manufacturing costs and correspondingly low prices. The partial market coverage of the mass market strategy is also designed to cover a large area but relates to specific sections. As in the example of the mass market for motorcycles: Harley Davidson serves only a specific target group with its models and thus covers the market only partially. The market segmentation strategy is based on the processing of individual market segments. For this purpose, a market is broken down into individual submarkets in order to identify a homogeneous target group. This target group is selected on the basis of its needs or requirements in order to be able to address it in a targeted manner. For an optimal segmentation of an existing product, there are the following different approaches. Demographic segmentation is based on the criteria of gender, age, income and place of residence. Psychographic segmentation assumes that people with the same demographic characteristics do not have the same buying behavior. Therefore, psychographic segmentation proceeds according to general personality traits, lifestyle habits and attitudes. In the area of lifestyle habits, the lifestyle concept is very good for accurate results. It focuses on different lifestyles and behavior patterns. The milieu approach also deals with consumers' lifestyle habits. However, here, in determining the relevant target group, greater emphasis is placed on lifestyles and value orientation or ideas. Another segmentation approach is purchasing behavior-based segmentation. This segmentation method is based on the results of purchases already made. Using these segmentation principles, a company can cover several segments with corresponding brands/products in total. An example of this is Estee Lauder with various care series, each of which covers different segments. In the area of partial market coverage of the market segmentation strategy, only very few or one segment is specifically served. Vichy offers an example here with only one care series in the body care market. Very small market segments or submarkets are served with niche marketing or customer-specific marketing. Such niches are usually uninteresting for large companies and are thus conceded to smaller companies.
(Grafik: AKI-Kommunikation e.K.)
Market area strategies have an essential function. Depending on the geostrategic choice for consistent market development, decisions must be made within the framework of the marketing mix, i.e. for the product, the price, the distribution, the conditions and the communication. First and foremost, there is a choice between national or international market development. National market development can be local, regional, supra-regional and national. At the international level, a decision must be made between multinational, international and world market development. Starting from one of these levels, a territory-expanding sales policy follows. A territory expansion can be carried out via one of the following three possibilities. The first possibility is a concentric territory expansion. It takes place at individual locations ring-shaped, to gradually enlarge sales castles. The second possible approach is a selective expansion of the territory. However, it must be preceded by a concentric one. In the process of selective territorial expansion, several individual rings merge into one. The strategy of island-shaped territory expansion pursues the goal of developing many large cities as quickly as possible, in order to gain the surrounding sales areas from there and to network them with the already developed islands.
Article written by: LTM - 01.09.22