Analyze The Scope And Importance Of Marketing Strategies Marketing Essay

ABSTRACT

This study purpose is to identify how competitive marketing strategies can help firms to succeed in the market and also to analyze the scope and importance of marketing strategies for successful firms. The Strategic marketing is to identifying competitor is based on the differences in firms strategic for competing in an industry. Like the business definition approach, the concept is intuitively appealing and understandable. However, academics are understandably surprised at reported empirical results that 85% of all promotions are losing money to the promoters, and that only half of the advertising expenditures generate economic benefits to the advertisers (Abraham and Lodish 1990). Economic downturn is the most important fact for the present world. Realizing this, it is necessary to extract the fact in this present situation. This paper seeks to investigate the current debate regarding the threats and vulnerabilities of the recession economic condition and to study some possible remedial action to defend the threats of economic situation. This research revealed a lot of risk and way to save the company in this recession economy. In economic crisis firm need to change their marketing policy to makes the profit. Marketing mix strategy, product strategy, pricing strategy, promotion strategy and distribution strategy can make successful in economic crisis. In marketing mix strategy firms withdraw their product and service from the weak market. Avoid introducing new product in product strategy. Pricing strategy firm improve the product or service quality and promotion strategy they maintain their advertising budget and open new wholesale centers under distribution strategy. By changing their marketing strategy firm can be successful in the recession economy. This research also showed how company can survive by using competitive marketing strategy and also by controlling the shrinkage in the recession economy. For example, a hypothetical industry may be composed of three strategic groups:

A set of large firms pursuing a strategy of low-cost production of a full line of standardized products through mass-market outlets

Another set of firms whose strategy emphasized high-quality, differentiated and products sold through speciality shops

A group of smaller firms which have gained strategic advantage by specializing in serving either specific customer group or producing a very narrow range of products.

Table of Contents

ABSTRACT 3

Chapter -1

Introduction: Purpose of this study is to identify how competitive marketing strategies can help firms to succeed in the market and also to analyze the scope and importance of marketing strategies for successful firms. The Strategic marketing is to identifying competitor is based on the differences in firms strategic for competing in an industry. Recession means slowdown economic condition for the sustain period of time. In this period customer feel insecure about their job and more sensitive about all financial matter (Shama1978). Consumer also changes their shopping habits and behavior for the adjustment of changing economic condition (Ang et al. 2000). Because of consumer behavior company should take some change in their market place by reducing costs and investment, improve their efficiency, cutting production and re-structuring debt (Michael 1997; Beaver and Ross 1999). Shrinkage captures the firm’s liquidity LJ Carranza et al. (2003). This study shows company should not take only competitive strategy they also aware about the shrinkage of the company which reduce the liquidity, so they can make profit in the recession economy. Now the question is how firm utilizing their competitive marketing strategy to increase the profit in recession economy and how do firm stop their shrinkage to achieve the goal.

Problem Statement:

What are the reasons for the observed reaction behavior?

How do competitors react to each other’s price-promotion and advertising attacks?

Very difficult to face and overcome this situation without changing marketing strategy.

Insecure economy is the main problem of this situation.

Lake of enough knowledge, which step should be take in this economic condition

1.2 Aims and Objectives: The objective of this report is to acquire the practical knowledge about the market to conduct a Business run successfully and also develop our knowledge how can Firms survive in down turn economy or recession economy by changing competitive marketing strategy. Recession affects different company differently. So it’s necessary for the Firms change their marketing strategy to survive in the recession economy. They should aware about the shrinkage of the Firm, follow the low cost strategy, improve the employee effectiveness by proper training and reduce the wastes of the Firms.

1.3        Research Question:

What is Competitive Marketing Strategy?

What is downturn economy or recession economy?

How can company use these strategies to survive in recession economic condition?

1.4       Significance of Research: Recession economy is very impotent in this           present situation for all the company all over the world. So, it is very important to find the            way to survive the company. This research is important because it’s showing importance            of marketing strategies to survive the company and make succeed in the market during the            recession economy.

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1.5 Limitation of Research: This is very difficult to collect the data from the firm            what strategy they are using to overcome the recession economic condition because            different company using the different strategy and also its very confidential for the            company so the company don’t want to flash their marketing policy or strategy.

1.6 Overview of the Research: This research showing some technique to save           company and make the profit in downturn economic condition. Its also showed how firm            can survive by utilized the competitive marketing strategy.

CHAPTER – 2

Literature Review

The Strategic marketing is to identifying competitor is based on the differences in firms strategic for competing in an industry. This study shows company should not take only competitive marketing strategy to survive in downturn economic condition but firms also aware about the shrinkage of the company which reduces the liquidity, so they can make profit in the recession economy. Now the question is how firm utilizing their competitive marketing strategy to increase the profit in recession economy and how do firm stop their shrinkage to achieve the goal.

How do competitors react to each other.s price-promotion and advertising attacks? What are the reasons for the observed reaction behavior? Steenkamp et al. (2003) answer these questions by performing a large-scale empirical study on the short-run and long-run reactions to promotion and advertising attacks in over 400 consumer product categories, over a four-year time span.

The main finding of the study is that competitive reaction is predominantly passive. When it is present, it is usually retaliatory in the same instrument, i.e., promotion attacks are countered with promotions, and advertising attacks are countered with advertising. There are very few long-run consequences of any type of reaction behavior. The authors are able to draw these inferences because their models examine the .chain reaction. of consumer and competitor response following the initial advertising or promotion campaign.

The study also reports on a number of moderating effects, such as power asymmetry, promotional intensity and perishability of the product category, that support the presence of a certain amount of rationality in competitive reaction behavior. Finally, by linking reaction behavior to both cross and own marketing effectiveness, they demonstrate that passive behavior is often a sound strategy. On the other hand, firms that opt to retaliate often use ineffective instruments, resulting in .spoiled arms.. Accommodating behavior is observed in only a minority of cases, and often results in a missed sales opportunity when promotional support is reduced.

The authors. overall conclusion is that the ultimate impact of most promotion and advertising campaigns depends primarily on the nature of consumer response, not the vigilance of competitors. In order words, the strong link in the chain reaction is the consumer. This is an important finding for marketing strategy, especially as it counters a prevailing belief in the management strategy literature that the ultimate effectiveness of an action depends largely on the defenders response. While marketing scientists are understandably focused on consumer and competitor response to marketing actions, it is equally important to study how these actions influence investor behavior. In particular, do investors place a premium value on firms that advertise heavily? Do they value new-product activity and/or promotional campaigns? The finance discipline has long established that stock prices follow random walks, i.e. new information that is profit relevant is incorporated immediately and fully in valuation. As a result, stock prices are always evolving, and persistence models may be used to uncover how marketing actions influence that evolution, above and beyond their sales- and profit impact. This principle has been used in two contexts to date. First, Pauwels, Silva-Risso, Srinivasan and anssens (2004) contrasted investor reactions to auto companies. new-product introductions vs. rice promotions over a five-year period. They found that new-product introductions have a gradually increasing influence on stock price.

2.1 Competitive Marketing Strategy: Porter (1985) examined that low cost, differentiation and focuses these three type competitive strategies. Low cost strategy, a firm set out to become the low cost player in the industry. It can achieve by pursuing of economic scale, preferential accessing to raw materials, proprietary technology and other factor. Firm try to provide unique products or service that call differentiation strategy. By using this strategy firm can able to set premium price for their unique product and service. Cost focus and differentiation focus comes under focus strategy that firm can set their target segment. In recession economy requires to change the marketing strategy and action by marketing manager which can be profitable and responsive from the customer. Shama (1978) described that customer change their buying patterns under economic hardship and stress. Different company affect differently by recession, so think about company pattern of business, size and profit marketing manager change marketing policy and make profit in recession economic environment. According to Ang et al. (2000) we can discuss that in recession economy marketing manager can take bellow action:

General Action

Product Adjustment

Price Adjustment

Promotion Adjustment

Reduce wastefulness

Serve necessary product rather than luxuries

Emphasize product life cycle costs

Much rational approach about promotion

Careful about Decision making

Choose similar cheaper product

Emphasis on cheaper price

Reduce attraction of free gifts

Provide local product rather than foreign brand

Informative advertisement

Shopping Adjustment

Increase the window shopping

Preference for discount

Preference neighborhood stores

According to Ang et al., (2000) in economic recession marketing strategies can be               synthesized as follows:

Marketing mix strategies:

Withdraw products or service from weak market

Acquire the weak competitor

Fortify the product in market where the brand is strong

Consider non- Asian and youth market

Consider resale market for durable product

   Product Strategies:

Avoid introducing new products

Trim the weak product

Concentrate on simple and durable product.

Adaptive positioning

   Pricing Strategies:

Improve the product quality while maintaining price

Reduce the product or service price while maintaining the quality

Consider product life cycle pricing

Promotion Strategies:

Maintain the advertisement budget

Increase the use of print media

Provide assurances through rational appeal

Satisfied customer by product and service

Avoid celebrity endorsement

Capitalize on public relations

Introduce the customer loyalty programs

Distribution strategies:

Location is very important for the company

Provide discount on product

Open the wholesale centers

Prune marginal dealers

Consider alternative channels

2.2 Recession Economy: Shama (1981) noticed that in recession economy time consumer spend more time for their shopping. That time they look the cheaper product in existing market. So recession time manager should use strategies to stimulate consumer demand. This strategy requires expected target consumer and strategies. This includes provide consumer cheaper product, promotional sales increases, narrowing the product line, and discount. As well as firm have to utilize their all resources in the recession economy. Kotler and Amstrong, (2006); Ang et al. (2000) suggested that lower operating cost and improving cooperate within the channel can clearly affect company performance positively.

2.3 Shrinkage: Reduction in inventory due to shoplifting, theft by employee, paperwork error and supplier fraud call shrinkage. Because of shrinkage profit go down that’s why retailer increase the product cost. Global Barometer covers 36 countries in North America, Europe, Latin America, Africa and Asia-Pacific. They collect the data from 920 of largest retail corporations with combined sales of $814 billion. 22/09/2009 by visiting Shrink was United States industry in 2008 for the retail industry 1.48% of sales, Europe 1.27% of sales, Australia 1.42% and Asia-Pacific 3.10% of sales. How can we detect the shrinkage?

Beginning Inventory + Purchases – (Sales + Adjustments) = Inventory

Inventory – Physical Counted Inventory = Shrinkage

This shrinkage occurred by Employee Theft, Shoplifting, Administration and Vendor           Fraud.

Employee Theft: National Retail Security Survey found that biggest shrinkage for the retail business is internal theft or employee theft. Like abuse the discount, abuse the refund and credit card abuse, which cost 36.5% of shrinkage. Sometimes employee theft occurs when employee face financial difficulties such as high debt, gambling problem and drug abuse. This is the big problem for the organization so companies have to strict about employee theft. Firm should take proper step for employee theft. Company gives proper wages to the employee that can meet their basic needs. Employee should think about the profit of the company.

Shoplifting: Second reason for the shrinkage is shoplifting. Sometime customers swap the price tag one product to another product, sometimes by concealment and some time changing the container. By shoplifting retailer cost about $10 billions annually which is closer to employee theft.

Administrative Error: 15% of shrinkage occurred by administrative and paperwork errors such as pricing mistake, physical counting mistake, do not check the delivery properly, lake of employee concentration and training.

Vendor Fraud: This is the small percentage of shrink which occurred by the vendor Fraud. Only 5.8% shrinkage affect by vendor. It’s done by wrong delivery and short delivery.

Prevention of loss by shrinkage:

Routine check: Manager should arrange routine check every day for the employee. Routine check can stop the employee theft.

Use CCTV: It is very very important to use the CCTV around the product storage area and selling point. It can help to stop employee theft and shoplifting.

Security Guard: company should recruits well trained and active security guard who can meet his job role. Trained and active security guard can help to reduce the shrinkage.

Security tag: It’s a great idea to reduce the shrinkage, if companies use security tag for the product than they can stop the shoplifting. Security tag should be small and it should not be open without machine.

Eyes wide open: It’s not possible to reduce the shrinkage only by security guard and security tag, when employee works in the firm they should follow if they see any suspicious behavior.

Employee Training: If company trained their employee properly than it can help to reduce the shrinkage. Maximum Time Company do not give the employee proper training about their job. Such as how to do paperwork’s, counting, pricing and check the delivery. So, when they work they do lots of mistake which cause of shrinkage.

Delivery Check: When company receive the delivery they have to check it properly is there anything missing or not. If they arrange the proper check than it can be helpful for the company to reduce the shrinkage by vendor fraud.

Chapter -3

Methodology

3.1 Type of Research: In this study qualitative research methods are selected with case study approach. Qualitative methods are less structured and more intensive than quantitative methods that’s why they are more flexible in terms of relationship with respondent. Qualitative research involves collecting, analyzing and interpreting data that cannot be quantified. The fundamental differences of phenomena looked for are in the qualities, not in the quantities. Case study approach chosen for this study is appropriate to help to answer the research question ‘how’ of the study, that is a contemporary set of events on which investigator has little or no control. In addition, the case approach allows an investigation to retain the holistic view and meaningful characteristics of real life events like affect of recession economy on behavior of firms. In terms of sample, this study adopted a single case approach in order to conduct an investigation that generates deep insight to the issue. In addition, a single case study is a comprehensive description and analysis of a unique situation of the crisis.

3.2 Data Collection Method: The information collect for this research was gathered the data using multiple sources such as in printed sources like company annual reports, retail journal, magazines, and internet sources such as the company’s website.

3.3 Research Hypothesis: This research showed what the necessary step or method should take the company in recession economy which is very useful. The previous research showed about competitive strategy but they didn’t think about marketing mix and shrinkage which is very important.

Chapter -4

Research Findings

4.1 How to minimize the loss and make profit in downturn economy: This research showed how company can survive by implementing competitive marketing strategy. Firm bringing new promotion and new product in existing market and also minimize their expenses, control their losses and make profit by using competitive marketing strategy and control the shrinkage. large firms pursuing a strategy of low-cost production of a full line of standardized products through mass-market outlets, Another set of firms whose strategy emphasized high-quality, differentiated and products sold through speciality shops and the smaller firms which have gained strategic advantage by specializing in serving either specific customer group or producing a very narrow range of products

4.2 Company strategy: To think about consumer behavior company try to attract the consumer by high-light the unique product, price down, promotion, discount, and improve the product or service in recession economy under competitive strategy. Nguyen and Nhu (2009) in economic crisis company use low cost strategy, increase effectiveness of employees and reduce the wastes. Company also withdraws the slow product from market and follows the narrow line product for highlight. As well as company follow the common strategy but they have to think about shrinkage which reduces the company liquidity.

4.3 Consumer Behavior: In recession economy consumers try to control their expenses. Consumer tendency is only bye the necessary product or service. They send more time to find the cheaper product from the market. That means they try to find the similar product which is cheaper and also looks for the promotion and discount. Shama (1981) noticed that in recession economy time consumer spend more time for their shopping. To change this behavior company should implement new marketing strategy like firm can provide promotional product to the customer its includes buy-one get one free, buy one get one half price, buy one get two free, buy one product the cheapest one is free or half price.

Chapter -5

Conclusion and Recommendation

5.1 Conclusion: Marketing strategy aims at developing a sustainable competitive advantage to the firm or the brand. Therefore, an important aspect of marketing strategy research should be concerned with the long-run impact of marketing actions on business performance.

Persistence modeling provides one such approach; based on the important principle that marketing success depends on the combined influence of customers, competition and the behavior of the firm itself. By carefully measuring the chain reactions that unfold over time as the result of a marketing action, persistence modeling quantifies both the magnitude and the duration of marketing’s impact on business performance. As longitudinal marketing databases continue to improve in scope and in quality, we expect that these techniques will find increased use among academic scholars as well as advanced practitioners of marketing strategy.

Purpose of this study is to investigate how a firm reacts with recession economic condition and to asses the effects of competitive marketing strategies including low cost strategy and focus strategy in such condition; and to identify those that can help firms to maintain successful performance in downturn economy. Result of this study found that appropriate competitive marketing strategy can improve the firm’s performance in crisis time.

In recession economy firms need to exercise the combination of competitive strategy such as low cost focus, differentiation focus strategy, and low cost strategy firms need to increase effectiveness of employee and reduce wastes and use FIFO (first in first out) method for the product display and order as the can sale. For focus strategy firms need to remove the unprofitable product from the self. Different strategy firms need to be more selective in product offers and promotion. So we can report that competitive marketing strategy is very useful for the firm in recession economy.

In economic crisis firm need to change their marketing policy to makes the profit. Marketing mix strategy, product strategy, pricing strategy, promotion strategy and distribution strategy can make successful in economic crisis. In marketing mix strategy firms withdraw their product and service from the weak market. Avoid introducing new product in product strategy. Pricing strategy firm improve the product or service quality and promotion strategy they maintain their advertising budget and open new wholesale centers under distribution strategy. By changing their marketing strategy firm can be successful in the recession economy.

Firms need to control the shrinkage of the firm to save them in recession economy. Recession economy, so company have to arrange routine cheek to prevent the employee theft, use CCTV, security tag to protect the employee theft and shoplifting, train employee to protect the administrative error and cheek the delivery to prevent the vendor fraud.

The objective of this analysis to provide decision maker and strategic planners some effective marketing strategy which can be implement to survive and also make profit during the economic crisis or recession economic condition.

At last we can see an example of competitive marketing strategy advantage. Merged mobile operator to offer users improved signal, (The Times). T-Mobile and Orange Mobile Company merged their network to do better business than any other mobile network provider company.