Strategic distribution coverage

The distribution of goods is the most important activity in the process of marketing. Distribution refers to procedures and activities undertaken to transfer the products and services from the manufacturer to the consumer. One of the four aspects of marketing mix is distribution; consequently, as the one of the main components, it could lead to attaining marketing goals.

The goal of distribution is to make sure products arrive in usable condition at designated places when needed. Thus distribution strategy is concerned with the channels a firm may employ to make its goods and services available to customers.

There are three methods of distribution of goods to be dispersed in the market.
*Intensive Distribution: As many outlets as possible.
*Selective Distribution: Select outlets in specific locations.
*Exclusive Distribution: Limited outlets.

In intensive distribution, firms distribute their brands through many outlets to ensure their easy availability to the customer. Hence, on the one hand brands are available in the restaurants and five-star hotels and on the other hand they are also available through countless soft drink stalls, kiosks, tea shops, sweat marts and so on.

Selective Distribution: At the retail level, a strategy of selective distribution restricts the sale of the product to a limited number of outlets. Each store selected must meet the company’s performance standard while appealing to select target market. As distribution becomes more selective, the manufacturer may expect a greater effort on the part of retailer.

Exclusive distribution is where possibly only one outlet in a certain geographic area supplies a product. This method of distribution usually relates to specialty products, e.g. special cars, specialist clothing, etc. often exclusive distribution is relevant to niche products.
Strategic distribution coverage

Event promotion strategy

Promotion is vital in creating awareness of the event, a desire to participate, and a feeling by the potential participant that the investment of time and money validates the benefits the event offers.

Events can be related to meetings, sports, shows, performances and social gatherings. Marketing is usually described as managerial process which is responsible for identifying, anticipating and satisfying customer requirements profitably when the event marketing is defined more interactive one when the event management interacts with the event participants and visitors.

The direct experience supplied by the event is used to promote the interaction between consumers and brand and increase the connection between consumers and brand; through the direct interactive contact, the effect brought by event marketing is more significant.

Events must be as interactive and engaging as possible, depending very much on the characteristics and type of event. At the end of the event to give participants promotional gifts, so they could be proud that they took part in the event, providing discounts and incentives for those who wish to purchase products / services, to provide samples within the event, to award, achievement within the event of the prizes with contests or raffles with consistent prizes.

Key success factors for events:
*Clear objective of each event
*Meticulous planning
*Flawless execution
*Solid promotion
*Measurement of result
Event marketing strategy

Product differentiation strategy

Differentiation is a business strategy where firms attempt to gain competitive advantage by increasing the perceived value of their products or services relative to the perceived value of other firms’ products or services.

Product differentiation is the act of making products different from one another. It is a strategy used to influence consumer connoisseurs of unique products that is a competitive advantage over similar products. In essence, a product is considered to have different values and attributes in the eyes of the consumer rather than the attributes of other similar products.

Product differentiation strategy can be a tool of competitive advantage which is adopted by organizations in order to provide products that satisfies individual customer’s needs.

This might involve tangible differences such as quality, reliability, performance, or design. Alternatively (or in addition), it might be based on intangible elements such as reputation and branding. In general, companies that implement strategies based on product differentiation will create differentiation and customer groups.

To be effective, the message of differentiation must reach the clients, as the customers’ perceptions of the company are important.

The implementation of differentiation strategy will produce a high-quality product. This possibility involves high costs in all areas of functioning in order to support differentiation strategies. Differentiation is a viable strategy for earning above average returns in a specific business because the resulting brand loyalty lowers customers' sensitivity to price.

Differentiation1 requires the investment of resources – typically time, capital cost, and higher variable costs – in a risky bet that the customer will respond to the differentiated product by buying it at a premium price and/or more frequently. It is the ability to sell its differentiated product at a price that exceeds what was spent to create it that allows the firm to outperform its rivals and earn above-average returns.

The implementation of differentiation strategy in the long term can improve the company’s performance, increasing brand image, improving distribution channels, and excellent service system, as well as the customer group.
Product differentiation strategy

What does it mean with Skimming Pricing Strategy?

Pricing is the main step in marketing planning that generates revenue. Besides other factors, such as product quality and performance, brand image, distribution channels, and promotion plans, price plays a main role in encouraging customers to buy products. By manipulating the price, the product provider can directly

communicate with the consumers and balance the average profit per unit and the sales, so that the goals in targeted indices (profit, market share, etc.) can be achieved.

In practice, penetration and skimming are two main pricing strategies that are commonly used. Penetration refers to using low price to “penetrate” the market and promote large sales shortly after the product launching.

The objective of price skimming involves charging a high price in the introductory stage for a short time where a new, innovative, or much-improved product is launched onto the market in order to grab the high profits from the market. The objective is to skim off consumers who are willing to pay more to have the product sooner. Prices are lowered later when demand from the early customers falls or competitors introduce the same product at a lower price.

Market skimming is a very important pricing strategy for the companies making innovative and technology-based products. Market skimming pricing can be best practiced when the company is highly reputable, providing great quality and innovative products and the customers give a great value to the introduced technology and readily adopt it.

Price skimming is used by many companies, especially in the automobile, mobile phone, TV, laptop, and other luxury industries. The examples in practice are also typical and well known, such as the skim pricing adopted for iPhone series, and the penetration pricing strategy used by Sony for its PS3.

A company should use skimming strategy, when the demand of the new products is unsure, the company has spent much on the research and development for making that product, and when it wants to position its products strategically among the competitor’s similar products or when its product is so much innovative that the market is expected to mature very slowly. The high prices of the new markets will also help the company to segment the market. Price skimming is not a viable long-term pricing strategy, as competitors eventually launch rival products and put pricing pressure on the first company.
What does it mean with Skimming Pricing Strategy?

Positioning Strategies

Market position refers to the process of establishing the image or identity of a brand so that customers perceive it a certain way. The brand positioning is a process of creating its own image, distinctive properties, positive associations and values in consumers’ mind in order to create a sustainable trademark image and ensure consumers’ attachment to this trademark.

Positioning is the development of the image of a product directly against to the competitor products and other products produced by the company's own. The purpose is management's attention by the recipient to a certain product and to differ that product in favor of the company, compared with similar products.

The purpose of a positioning strategy is that it allows a company to spotlight specific areas where they can outshine and beat their competition.

This is created through the use of the 4 Ps: promotion, price, place and product. The best way to do this is through a positioning strategy. Carefully considered positions provide development directions for the new products, market expansion, communication, pricing, selection of distribution channels.
Positioning Strategies

Food marketing strategies

Marketing is the key to the success of any business. Marketing, in an agricultural context, has traditionally referred to activities that take place from the farm gate to the final consumer. While farmer markets are one way that this can occur, more highly processed foods, such as a breakfast cereals or frozen dinners go through a more sophisticated system.

Business firms think of marketing differently. To them, it relates to activities that influence sales of their products. Marketing strategies used by firms in the food industry use this concept of marketing.

Food marketing brings together the producer and the consumer. Food manufactures may label products with their brands, or with distributor brands (private label), or sell unbranded products (ingredients and generic). This decision is greatly influenced by the channels of trade that will be used and by product characteristics.

There are two basic views of food marketing:
*the production-focus and
*the consumer-focus.

The production-focused view is an institutional one that is primarily concerned with the producers and the institutions that work with the producers. It is embracing the traditional agricultural view of food. Consumer focused view is primarily concerned with understanding what exactly the consumer wants and then providing it to them in a form, in a way, and at a price that is desired by consumers and is profitable for those institutions in the chain.

Many studies showed that the food product will be marketed profitably by using the right tools and channels to approach and raise awareness of the business among the target customers. On the other hand, understanding the customers’ demands, preferences, and expectations as well as knowing its competitors and the market trends are also critical factors for food marketing. Finally, using the right marketing strategies will help the business build strong customer relationships and deliver remarkable values to the target customers.
Food marketing strategies

Marketers as Political Strategies

Marketers as Political Strategies
Few marketers are trained in the art of politics and are this unaccustomed to using power to achieve favorable transactions. Most marketers think that value, not power, wins in the marketplace.

The growth of protected markets, however, requires marketers to incorporate the notion of power into their strategies. Marketing is increasingly becoming the art if managing power.

What do they need to know about power? They need to know that power in the ability of one party to get another party to do what it might not otherwise have done. It is the party’s ability to increase the probability of another party taking an action. A party can draw on at least five bases of power to influence another party.

Rewards
The part offers to reward to another party for engaging in the desired behavior, the reward might be recognition, entertainment, gifts or payments. Marketers are expert in the use of rewards.

Coercion
Party threatens to harm another party in the absent of compliant behavior. Party may threaten physical, social or financial harm. Marketers have been loath to use coercive power because of its doubtful ethical status, because it does not square with the marketing concept, and because it can create hostility that can backfire on the marketer.

Expertise or information
Party offers another party expertise, such as technical assistance or access to special information, on exchange for another party compliance.

Legitimacy
Party seen to have a legitimate right top make certain requests of another party. An example would be the Japanese premier asking Nippon Electric Company to put on its approved supplier list.

Prestige
Party has prestige in another party’s mind and draws on this to request another party’s compliance. An example would be Chrysler president requesting a meeting with officials in a foreign country present argument for opening a Chrysler plant in that country.

Power is key to mega-marketers. Companies that find themselves blocked from a market must undertake a three step process for creating an entry strategy:

• Mapping the power structure

• Forging a grand strategy

• Developing a tactical implementation plan

Marketers as Political Strategies

Promotion strategy

When considering the planning of a promotional campaign it is important from the outset to have a clear understanding of what a plan is and what use it has to the management of the promotional campaign.

A plan is simply a design for achieving a specific objective or several objectives.

Promotional strategy is a plan for the optimal use of the promotional mix elements: advertising, public relations, personal selling, sales promotion and social media. Promotional objectives, policies and programmes as a whole and individual approach of each elements blend into the promotional strategy.

The main function of a marketer’s promotional strategy is to convince target customers that the goods and services offered provide a competitive advantage over the competition.

There are two types of sales promotion:
*Push promotion – marketing team push the product-service mix through the service delivery system or channels of distribution. This strategy concentrates on middleman or retailers who push the sale of the product to the final consumers.

*Pull promotion – aiming at stimulating consumer’s interest and having them pull the product through the channels of distribution. It persuades buyers to go to the sellers to buy. Sales promotion, particularly customer promotion, is an important form of pull strategy, which asks the sellers or retailers to attract the buyer.
Promotion strategy

Distribution strategy

Distribution channels are the means by which goods are distributed from the manufacturer to the end user. The American Management Association calls the channels of distribution ‘organization network of agencies and institutions which in combination perform all the activities required to link producers with users to accomplish the marketing task’.

Some companies own their own means of distribution some only deal directly with the most important customers but many companies rely on other companies to perform distribution services for them.

There are many strategic options for the structure of a marketing channel.  A good distribution strategy is essential for success because once a firm selects a channel and makes commitment to it, distribution often becomes highly inflexible due to long-term contracts, sizeable investments and commitments among channel members.

Huggies diaper for intensive distribution channels

The key objective in building an effective distribution strategy is to build a supply chain to the markets. In international marketing, distribution channels are diverse and may vary from one country to another country and even within countries, there may be different modes and systems required to reach the products to the final consumers.

There are three basic structural options for distribution in terms of the amount of market coverage and level of exclusively between vendor and retailer:
*Exclusive distributions – Work with a single intermediary for product that requires special resources or positioning. Examples: BMW car, Rolex watch

*Selective distribution – Work closely with selected intermediaries who meet certain criteria: typically used for shopping goods and some specialty goods. Example: Clothing, Hewlett Packard printers

*Intensive distribution – achieve mass-market selling, goods must be available everywhere. Example: Pepsi-Cola, Frito-Lay, Huggies diaper
Distribution strategy 

Pricing strategy

In today’s marketplace, competitive pricing is important for attracting and retaining customers. Consequently, a well planned pricing policy pays a critical role in market-oriented strategic planning.

It is based on demand for the product and the cost of producing it. Some special considerations can also influence the process. Pricing strategy involves the systematic manipulation or planning or pricing decisions and policies over a period of time in the context of achieving the broader objectives contained in corporate and marketing plans.

Companies must consider different pricing strategies when selecting prices. ‘Pricing to penetrate’ is a pricing strategy that uses a low profit margin to penetrate the market. It is designed to grab market share quickly.

Market share strategy – use to take share points away from competition.

While ‘skimming the cream’, on the other hand, is a strategy that uses high pricing to obtain high profits.

High option pricing strategy used when a product line is declining and competition is minimal or when the product line is new and there is little competition. This allows maximization of profits and relates to skimming strategy.
Pricing strategy

Multiproduct firm

A multiproduct firm is a firm that deals, by definition, with more than one output market, in one or more time periods. This leads, naturally, to a richer set of market –based arrangement.

Multiproduct firms must take strategic decisions at the corporate, business, marketing and sales levels. Business strategy decisions determine how each business unit plans to compete effectively within its industry.

Diversification may deliver a multiproduct company some advantages compared to specialists. For example, a conglomerate may cross-subsidies some activities at the expense of other activities.

Mutual forbearance indicates that multiproduct firms do recognized that their own products have to compete with other multiproduct firms on several markets. When they see this is the case, they may be inclined to compete less severely with other multiproduct firms and some form of oligopoly may rise.

Products in the multiproduct firm are often interrelated. Some products may be purchased by a common set of customer: alternatively, other products may share common production or other resources (e.g., these products may be sold through a common sales force).
Multiproduct firm

Market positioning

Positioning involves figuring out what meaningful and available niche in the market. It is refer to the development of the marketing mix to yield a distinctive appeal to the target segment.

Different from brand positioning which emphasizes the connection between a brand and the consumer’s mind and emotions, market positioning refers to the competitive position of a company in terms of size and market share.

It is how the consumer views or perceives the product in relation to other similar products.

There are three steps for positioning strategy:
*Identifying a set possible competitive advantages which to build a position
*Selecting the right competitive advantages
*Effectively communicating and levering the chosen position carefully

Market positioning based on price, product differentiation and service position, is central the competitive strategy.
Market positioning

Long Range Planning: Terminology

Long Range Planning: Terminology
Kotler describes the function of the mission statement, the start of the now traditional approaches to corporate planning, thus:

A well worked-out mission statement provides company personnel with a shared sense of opportunity, direction, significance and achievement.

The company mission statement acts as an ‘invisible hand’ that guides geographically scattered employees to work independently and yet collectively toward realizing the organization’s goals.

Goals he describes even more succinctly:
....indicates what the business unit wants to achieve in the planning period.

Goals and objectives often have the same meaning. Kotler stresses that as far as possible they should be quantitative and realistic.

Strategy is about how goals are to be achieved:
Goals tell where a business wants to go; strategy answers how it plans to get there. Every business must tailor a strategy for achieving its goals. The strategy must then be refined into specific programs that are implemented efficiently and corrected if they are failing to achieve the objectives.

This quotation for Kotler also illustrates what is involved in the implementation of programs or tactics, which in turn lead to short term plans with a number of targets being set.

These terms can helpfully be thought of reference to a single factor: time.

The mission is the description of the main, permanent values which ultimately motivate the organization.

Goals or objectives specify where the organization wants to be in the future.

Strategy is the broad course of action planned to enable the organization to achieve its goals. Tactics are the specific programs of activities needed to implement the strategy in the shorter term (typically within the annual budgetary cycle).
Long Range Planning: Terminology

Forging a Grand Strategy

Forging a Grand Strategy
In planning entry into a blocked market, the company must identify opponents, allies and neutral groups.

Its aim is to overcome the opposition, and it can choose from three broad strategies;

1. Neutralize opponents by offering to compensate them for any losses. The theory of welfare economics holds that a proposed action will generally be supported if everyone benefits or if those who benefit can satisfactorily compensate those who are hurt. Compensation costs should be included as part of the total cost when determining whether in pays to go forward with the project.
2. Organize allies into a coalition. The company’s potential supporters may be scattered in the community and their individual power is less that their potential collective power. Thus the company can further its cause by creating a coalition of allies.
3. Turn neutral groups into allies. Most groups in a community will unaffected by the company’s entry and thus indifferent. The company can use influence and rewards to convert these groups into supporters.
   

A growing number of companies are forming strategic alliance – licensing arrangements, joint ventures, management contracts and consortia to overcome blocked markets.

Examples of strategic partnering in the automobile industry include General Motors-Toyota and Ford-Mazda.

Intercompany networking offers a superior means for security entry and operating clout in otherwise blocked markets.

Still another approach is to harness the power of one’s government to aid in opening another country’s market.
Forging a Grand Strategy

Mapping the Power Structure

Mapping the Power Structure
Executives must first understand how power is distributed in the particular target community.

Political scientists identify three types of power structure. The first type is pyramidal power structure in which power is invested in ruling elite, which may be an individual, a family, a company, an industry or a clique.

The elite carries out its wishes through a layer of lieutenants, who in turn manage a layer of doers. The marketing strategist who wants to operate in such a community can get in only if the ruling elite approves or is neutral.

The second type is a factional power structure in which two or more factions (power blocs, pressure groups, special-interest groups) compete for power in the community. Political parties are an example. The competing parties represent different constituencies – labor, business, ethnic minorities, or farmers.

Here the c0ompanyy’s strategists must decide with which factions they want to work. In allying with certain factions, the company usually loses the goodwill of others.

The third type is a coalition power structure in which influential parties from varies power blocs form temporary coalition. When power is in the hands of a coalition, however temporarily, the company has to work through the coalition to secure its objectives, or the company can form a counter-coalition to support its cause.

Identify the power structure as pyramidal, fictional, or coalition is only the first step of the analysis. Executives next have to assess the relative power of various parties.
Mapping the Power Structure