A senior essay submitted to St. Mary’s University College in partial fulfillment of the requirements for the degree of Management in Distance Education Division July 2009 Addis Ababa Chapter One Introduction 1. Back ground In present competitive world and business environment things would not move in a steady way and as planned. As a result for the past few years every organization and company follows the pattern of strategic planning process.
In most of business organization, besides creating strategic or business plan, it will be essential to develop and implement marketing strategy of the product or service. Even the company has a smart marketing document, it is not uncommon to face some problems and challenges on the processes of implementation which in turn jeopardize the effectiveness of marketing. On this regard the study of this paper mainly aims to review some of the theory on strategic process of marketing and evaluating the effectiveness of marketing.
To make the study more practical a case study of Tikur Abay Transport would be taken. Some of the theory revealed that organizations that engaged in strategic management generally outperform those that do not. The attainment of an appropriate match or “fit” between an organization’s environment and its strategy, structure, and processes has positive effects on the organization’s performance. For example, a study of the impact of deregulation on U. S. railroads found that railroads that changed their strategy as their environment changed outperformed those that did not change their strategy. Hunger & Wheelen, 2003:4). On making the above highlight when we come to marketing activities, at present successful companies whether large or small, for profit or not- for- profit, domestic or global- share a strong customer focus and a heavy commitment to marketing. Many people think of marketing as only selling or advertising. But marketing combines many deactivates- marketing research, product development, distribution, pricing, advertising, personal selling, and others-designed to sense, serve, and satisfy consumer needs while meeting the organization’s goals.
The goal of marketing is to build and manage profitable customer relationships. Marketing seeks to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction. Marketing operates with in a dynamic global environment. Rapid changes can quickly make yesterday’s winning strategies obsolete. Today smart marketers of all kinds are taking advantage of new opportunities for connecting with their customers their marketing partners, and the world around them. The old marketing thinking saw marketing as little more than selling or advertising.
It viewed marketing as customer acquisition rather than customer care. It emphasizes trying to make a profit on each sale rather than trying to profit by managing customer lifetime value. And it is concerned with trying to sell products rather than to understand, create, communicate and deliver real value to customers. Fortunately, this old marketing thinking is now giving way to newer way of thinking. Modern marketing companies are improving their customer knowledge and customer connections. They are targeting profitable customers, and then finding innovative ways to capture and keep these customers.
They are forming more direct connections with customers and building lasting customer relationships. (Kotler, 2004: 33-34) Today, consumers have more product choices than ever before. They also have more information about the choices. The combination of more competition (from small niche marketers to large dominant category killers such as Toy’s “R” US) and a bombardment of communication from the many competitive alternatives means marketers have to work much harder to affect market behavior in today’s environment.
Thus, it is more important now than at any time in the history of marketing to really understand your target market and to let this understanding drive not only your marketing decisions, but the entire decision making framework of the company. (Hiebing & Cooper, 2004:4). Since the preference of customers vary from time to time and meeting their needs, wants and expectation is an impressive challenge to service providers, strategic thinking of marketing could be the best way to find the right track as competition is stiffer than the past trend. One to this developing marketing strategy is crucial in business firms and as Orville C.
Walker, Jr. , et,al explained the primary focus of marketing strategy is to effectively allocate and coordinate marketing resources and activities to accomplish the firms objectives with in a specific product market. Therefore, the critical issue concerning the scope of a marketing strategy is specifying the target market(s) for a particular product or product line. Next, firms seek competitive advantage and synergy through a well integrated program of marketing mix elements (Primarily the 4Ps of product, price, place, promotion) tailored to the needs and wants of potential customers in that target market. 2004:12). As the study of this paper is attributed to service providing firms like Tikur Abay Transport Share Company it would be vital to examine the behavior of business service from theoretical point of view. Thus for an introductory phrase, as Gross et,al stated business services are the fastest– growing segment in industrialized nations, in 1985 the share of services in the gross domestic product (GPP) of developed market economies averaged 61 per cent, compared with 55 percent in 1965. Business services may be technical, such as computer repair contracts, or non technical, such janitorial service.
Non technical services usually can be sold at cross horizontal markets. Typically the reliability of delivery of the service is important. Because services are intangible, it is important to focus the marketing effort on managing the personal relationships between service personnel and contact people within customer organizations. Research indicates that although business customers have few problems conceptualizing the benefits of a new service they do have difficulty in evaluating the quality of service. Providing the customer with evidence relating to the intangible (land often invisible) services can be helpful in this regard.
Thus, whenever possible, the business marketer should create tangible reminders that the service has been performed. For example, after applying fertilizer or insecticide, a landscaping service might sick a small notice in the lawn indicating the type of treatment and the date before leaving the work site. The key point is that business marketers should strive to communicate to customers the quality of the service they provide. (1998: 15-16). Even the companies do have a marketing strategy and planned accordingly, there may have some challenges on implementation process.
The well known scholar Kotler pointed out that dramatic changes in the market place are creating many marketing opportunities and challenges, and the major marketing developments can be summed up in a single theme: connecting. The explosive growth in connecting technologies-computer, information, telecommunications, and transportation technologies-has created an exciting New Economy, filled with new ways for marketers to learn about and serve consumers, in large groups or one-to-one. Marketers are rapidly redefining how they connect with their customers, with their marketing partners, and with the world around them.
They are choosing their customers more carefully and developing closer, more direct, and more lasting connections with them. Realizing that going it alone is going out of style, they are connecting more closely with other company departments and with other firms in an integrated effort to bring more value to customers. They are taking a fresh look at the ways in which they connect with the broaden world, resulting in increased globalization, growing attention to social and environmental responsibilities, and greater use of arketing by not- for- profit and public sector organizations. The new, connected millennium offers exciting possibilities for forward thinking marketers. Not only the integration of marketing system could be a challenge to marketing effectiveness but the interaction among various departments and units also pose with service problems. As Kotler pointed out when all the company’s departments work together to serve the customer’s interests, the result is integrated marketing but unfortunately, not all employees are trained and motivated to work for customer. (2000:22).
In addition the effectiveness of marketing is also aggravated by some obstacles in service marketing, and this is addressed in Marketing Management: Knowledge and Skills books as by limited view of marketing, lack of strong competition, and creative management, and no obsolescence. ( Peter & Donnelly, 2007;183). 2. Statement of the problem The Volatile nature of business activities, uncertainty on meeting customer demand combined with lack of commitment on management staff to support the marketing function and the weak integration of marketing information system in most organization creates a big problem on effectiveness of marketing.
From the theoretical point of view, the CIM Handbook of strategic marketing indicates that the ascendancy of market economics has had a dramatic impact on the nature and intensity of competition and, therefore, the requirement for a strategic perspective on markets and the marketing process. The internalization of the world economy and the globalization of many industries are accelerating this requirement; markets which were traditionally parochial and cartel-like in nature are nowadays subjectd to unprecedented levels of sophisticated rivalry. Egan & Thomas, 2001:1) Even though designing a marketing strategy demands key marketing skill and has a paramount importance in competitive business, the traditional practice of marketing activities and lack of concerted effort on line and functional units pose enormous challenges on the implementation process. Egan and Thomas also argued on this point that the implementation issue in strategic marketing cannot be avoided.
Indeed, some would go as far as to say that implementation is strategy-on the grounds that without a systematic management approach to the execution of plans and strategies, they simply will not happen, and so remain ideas which never become strategy in any real sense. Others suggest that implementation is different to strategy – it is the difficult part-they argue that finding out what a company needs to do in its markets is easy, it is putting new things into effect is difficult. Whichever view is taken, to ignore implementation when we look at marketing strategy is to ignore an important part of the reality which executives face. 228-229). 3. Objective of the study The objectives of this study in wider view are to focus the theoretical review of marketing strategy and evaluate the contemporary challenges on effectiveness of marketing. In particular, the study focuses on Tikur Abay Transport Share Company and will attempt to: – review the nature of marketing strategy, – Evaluate the contemporary challenges on marketing. At the end, to make recommendation for better implementation of marketing strategy, and further improvement of marketing effectiveness. 4. Significance of the study
Currently there is a tendency of moving business from the traditional practice of marketing to strategic way of thinking which would lead to position the company as market leader. Even they could craft their marketing strategy in a professional manner, the real challenge to most of the executives is measuring and evaluating the effectiveness of marketing. Since this paper is the first by its nature on examining the marketing effectiveness of the selected company, i. e. , Tikur Abay Transport Sh. Co. , the paper will help primarily to the company as a general and marketing and line functions in particular.
Not only this, the paper would also use as a reference to those who need to review some theories and essential practice on the field. 5. Scope (delimitation) of the study Though the field of marketing and marketing strategy are broader in its nature and the challenges that could occurred in business environment vary widely in the globe, the boundary of this paper is confined to some theoretical review and a case study of Tikur Abay Transport Share Company. On this respect the study is not conducted on extensive coverage of reviewing most of the literature that has been written by so many scholars and contributors on the field. . Data Source and methodology The data for the study is gathered from both primary and secondary sources. On primary sources, the data is collected on developing questioner on sample size of 25 respondents that have close interaction with marketing activities. While on secondary sources, books, magazines and unpublished materials are used as a main reference to make a detail review of literature. The methodology used for this study is descriptive type and some relevant figures stated on the table are used to supplement the analysis part. . Limitations of the study As the organization set up of the company is placed geographically in various towns in the country, the researcher is restricted to conduct the study on covering a few areas, and due to this it is unable to undertake some field observations which related to marketing functions of the company. Hence the study is confined to on assessing the marketing department of various activities and because of geographical placement data is collected by Facsimile from offices outside Addis Ababa. 8. Organization of the study
The paper is structured in such a way that chapter one brings an introduction and a brief ideas about marketing and marketing strategy. Chapter two provides detail review of literature on strategy, marketing strategy and the contemporary challenges on marketing effectiveness. In addition, chapter three gives evaluation of marketing activities supplemented with case studies. Lastly, the fourth chapter concludes on reviewing some theories and point out the possible recommendation on how to improve the effectiveness of marketing. Chapter Two Literature Review . 1 The Concept of Marketing, Marketing Management, Strategic Management and Strategic Planning Process 2. 1. 1 The Concept of Marketing As Kotler and Armstrong pointed out, marketing is more than any other business function deals with customers. Marketing is managing profitable customer relationships. Building customer relationships based on customer value and satisfaction is at the very heart of modern marketing. Sound marketing is critical to the success of every organization – large or small, for-profit or not-for-profit, domestic or global.
Many people think of marketing only as selling and advertising. And no wonder – every day we are bombarded with television commercials, newspaper advertisement, direct-mail offers, sales calls, and internet picture. However, selling and advertising are only the tip of the marketing iceberg. Although they are important, they are only two of many marketing functions and are often not the most important ones. Today, marketing must be understood not in the old sense of marketing a sale – “telling and selling”- but in the new sense of satisfying customer needs.
If the marketer does a good job of understanding consumer needs, develops products that provide superior value and prices, distributes, and promotes them effectively, these products will sell very easily. Thus, selling and advertising are only part of a larger “marketing mix”- a set of marketing tools that work together to affect the market place. (2004:1). As Gross & et,al discuss on Business Marketing book, Marketing is the creation and adaptation of products and services to provide greater utility or value to customers than do competing products and services.
Marketing involves selection of potential customers (target markets) and management of the marketing mix (product, price, place and promotion). (1998:5). The 12 principles to great marketing as elaborated in strategies for marketing book indicates: 1. Honor the customer If the customer purchase your product or service, nothing else matters. 2. Organization of intelligence know your market as well as know yourself. 3. Maintenance of the objective A clear intention and a steady aim. 4. A secure position Occupy a position that cannot easily be taken by your opponents. 5. Offensive action Keep on the offensive to secure freedom of action. . Surprise Surprise is the best way to gain psychological dominance gain and deny the initiative to your opponent. 7. Maneuver The easiest routes are often the most heavily defended; the longest way round can be the shortest way home. 8. Concentration of resources Mass sufficiently superior force at the decisive place and time. 9. Economy of force Assess accurately where you employ your resources. 10. Command structure The management process unleashes the power of human resources. 11. Personal leadership It requires the leader’s faith in his or her people and their faith in the leader’s ability to win. 2. Simplicity Even the simplest plans are difficult to execute. (Tzu, 2004: 3-4). 2. 1. 2 Marketing Management Kotler and Armstrong noted that Marketing Management involves getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Thus, marketing management involves managing demand, which in turn involves managing customer relationships. The five alternative concepts or marketing management orientation are: i/ The Production Concept The production concept holds that consumers will favor products that are available and highly affordable.
Therefore, management should focus improving production and distribution efficiency. This concept is one of the oldest orientations that guides sellers. Although useful in some situations the, the production concept can lead to marketing myopia. Companies adapting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real objective- satisfying customers’ needs. ii/ The Product Concept The product concept holds that consumers will favor products that offer the most in quality, performance, and innovative features.
Thus, an organization should devote energy to making continuous product improvements. The product concept also can lead to marketing myopia. For instance, railroad management once thought that users wanted trains rather than transportation and overlooked the growing challenge of airlines, buses, trucks, and automobiles. iii/ The Selling Concept Many companies follow the selling concept, which holds that consumers will not buy enough of the firm’s products unless it understands a large-scale selling and promotion effort.
The concept is typically practiced with unsought goods- those that buyers do not normally think of buying, such as insurance or blood donations. Most firms practice the selling concept when they face overcapacity. Their aim is to sell what they make rather than make what the market wants. Such marketing carries high risks. It focuses on creating sales transactions than on building long-term profitable customer relationships. iv/ The Marketing Concept The marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.
Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a product- centered “make and sell” philosophy, the marketing concept is a customer-centered “sense and respond” philosophy. Implementing the marketing concept often means more than simply responding to customers, stated desires and obvious needs. Customer- driven companies’ research current customers deeply to learn about their desires, gather new product and service ideas, and test proposed product improvements. Such customer- driven marketing usually works well when a clear need exists and when customers know what they want. / The Societal Marketing Concept The Societal Marketing Concept holds that the organization should determine the needs, wants, and interests of target markets. It should then deliver superior value to customers in a way that maintains or improves. (2004: 11- 14). 2. 1. 3 Strategic Management and Strategic Planning The idea explained by most scholars’ portrait that the company marketing strategy is derived from the corporate strategic planning process, and due to this there could be a cascading process to generate marketing strategy.
Because of these it may be crucial to look on the notion of strategic management and strategic planning before directly moving to marketing strategy. According to Lomash and Mishra (2005), the strategic management or strategic planning encompasses long-range plans, new venture management, planning, programming, budgeting, business policy, etc. with greater emphasis on environmental scanning and forecasting and taking into account external and internal factors in formulating and implementing the plans.
The word strategy is derived from the Greek word “strategia” that was evolved during 400 BC. the word strategia meant science of guiding and directing military forces. Today, strategic management is understood as a process of formulating objectives of an organization and developing methods to achieve them. It is a process of designing a path and selecting one path, after due evaluation of various alternatives for reaching a goal. The objective can be in the form of a mission statement or it may be clearly defined in the form of postulates.
Strategic management is a science of choosing the alternatives from the designed and available courses. The managers have to decide on a process that will be most suitable to their conditions and that would enable them to achieve a desired position for their organization. Strategic management is a process of systematically analyzing various opportunities and threats vis-a-vis organizational strengths and weaknesses, formulating, and arriving at strategic choices through critical evaluation of alternatives and implementing them to meet the set objectives of the organization.
The idea noted by Kenneth Andrews also indicated that strategy as, “The pattern of objectives for achieving these goals and the major policies and plans for achieving these goals stated in such a way so as to define what business the company is in or to be and kind of company it is or is to be. ” Thus, strategic management is a set of rules aimed at taking decisions for sustenance and growth of an organization in a given environment. The strategy covers the following aspects. • Exploring and determining the vision of the company in the form of a vision statement. Developing a mission statement of the company that should include statement of methodology for achieving the objectives, purposes, and the philosophy of the organization adequately reflected in the vision statement. • Defining the company profile that includes the internal culture, strengths and capabilities of an organization. • Critical study of external environmental factors, threats, opportunities etc. • Finding out ways by which a company profile can be matched with its environment to be able to accomplish mission statement. • Deciding on the most desirable courses of actions for accomplishing the mission of an organization. Selecting a set of long-term objectives and also the corresponding strategies to be adopted in line with vision statement. • Evolving short-term and annual objectives and defining the corresponding strategies that would be compatible with the mission and vision statement. • Implementing the chosen strategies in a planned way based on budgets and allocation of resource, outlining the action of the programs and tasks. • Installation of a continuous compatible review system to create a controlling mechanism and also generate data for selecting future course of action.
The strategic thinking is a technique that enables firms to adapt to environmental changes. This awareness of being adaptive to the external environment is an active process with high creativity and tough decisions for profitability of the company and can be compared with the adaptive process of living beings with their environment. (6-8). As M. Sakathivel Murugan pointed out the term strategy has been customarily used in repect of army organizations and games. In view growing competition and rapidly changing environment, it has become equally relevant for business organizations.
Strategy may be defined as unified, comprehensive and integrated action plan designed to achieve specific objectives in the event of difficulty. It is concerned with the direction in which various resources of organization will be mobilized and utilized for maximizing the chance of accomplishing specific objectives in a disturbed state of affairs. Strategy may be considered as an action plan, initiative or response of an organization for seeking achievement of the objectives in a changed specific situation. For example, Pepsi and Coca Cola are competitors in soft drink market.
If Pepsi reduces the prices of its products in the market, the counter plan, that is, reaction, initiative or response of Coca Cola to maintain its market share may be considered as strategy. Strategy is a organizational response in the form of deploying, mobilizing and utilizing its resources and strength, either for facing problems or challenges arising out of the changing environment or to exploit the opportunities provided by it. In other words, it is a set moves and counter moves to be used by an organization to get over problematic situation by restricting rival organization. (2005: 87-88).
The well known writers Koteler and Armstrong also noted that each company must find the game plan that makes the most sense given its specific situation, opportunities, objectives, and resources. This is the focus strategic planning – the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. Strategic planning sets the stage for the rest of the planning in the firm. Companies usually prepare annual plans, long range plans, and strategic plans. The annual and long range plans deal with the company’s current business and how to keep them going.
In contrast, the strategic plan involves adapting the firm to take advantages of opportunities in its constantly changing environment. At the corporate level, the company starts the strategic planning process by defining its overall purpose and mission. This mission then is turned into detailed supporting objectives that guide the whole company. Next, headquarters decides what portfolio of business and products is best for the company and how much support to give each one. In turn, each business and product develops detailed marketing and other departmental plans that support the companywide plan.
Thus, marketing planning occurs at the business-unit, product and market levels, supporting company strategic planning with more detailed planning for specific marketing opportunities. (1998: 41). The strategic management writer Hunger and Wheelen explained about strategic management that it is a set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic planning), strategy implementation, and evaluation and control.
The study of strategic management therefore emphasizes the monitoring and evaluating of external opportunities and threats in light of a corporation’s strengths and weaknesses in order to generate and implement a new strategic direction for that corporation. Strategic management consists of four basic elements: (1) Environmental scanning, (2) Strategy formulation, (3) Strategy implementation,(4) Evaluation and control. They also defined strategy of a corporation is a comprehensive plan stating how the corporation will achieve its mission and objectives.
It maximizes competitive advantage and minimizes competitive disadvantages. (2004:2-7). As it is stated on the various books some of the key terms in strategic planning process are: 1. Vision Vision is a theme which gives a focused view of a company. It is a unifying statement and a vital challenge to all different units of an organization that may be busy pursuing their independent objectives. It consists of a sense of achievable ideals and is a fountain of inspiration for performing the daily activities. It motivates people of an organization to behave in a way which would be congruent with the corporate ethics and values. Lomash & Mishra, 2005:37). 2. Mission An organization’s mission is its purpose, or the reason for existence. It tells what the company is providing to society, such as housecleaning or manufacturing automobiles. A well-conceived mission statement defines the fundamental, unique purpose that sets a company apart from other firms of its type and identifies the scope of the company’s operations in terms of products (including services) offered and markets served. It puts into words not only what the company is now, but also what it wants to become: management’s strategic vision of the firm’s future.
It promotes a sense of shared expectations in employees and communicates a public image to important stakeholder groups in the company’s task environment. A mission statement reveals who the company is and what it does. 3. Objectives Objectives are the end results of planned activity. They state what is to be accomplished by when and should be quantified if possible. The achievement of corporate objectives should result in the fulfillment of the corporation’s mission. The term goal is often confused with objective.
In contrast to an objective, a goal is an open-ended statement of what one wishes to accomplish with no quantification of what is to be achieved and no time frame for completion. 4. Policies A policy is a broad guideline for decision making that links the formulation of strategy with its implementation. Companies use policies to make sure that employees throughout the firm make decisions and take actions that support the corporation’s mission, its objectives, and its strategies. 5. Program A program is a statement of the activities or steps needed to accomplish a single-use plan. It makes the strategy action-oriented.
It may involve restructuring the corporation, changing the company’s internal culture, or beginning a new research effort. ( ) Other terms related to strategic management are: 6. Procedures To implement decisions, actions are initiated. Actions require guidelines which are provided by procedures. Procedures may be defined as an administrative action guide, prescribing a sequence in which various activities are to be performed. A procedure is a systematic way of handling regular events. It is stated in terms of steps to be followed in carrying out certain kinds of work. 7. Rules
Every organization attempts to operate in an orderly way by laying down certain rules. Rules are the simplest and the most specific type of standing plans. They are used for guiding what may or may not be done. A rule demands a specific action. It is more rigid than a policy. Rules generally pertain to the administrative area of a procedure. 8. Programmes A programme involves planning for future events and establishing a sequence of required actions. A programme is a complex of objectives, policies, procedures, task assignments, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action. . Budgets A budget is a statement of expected results expressed in numerical terms for a definite period of time in the future. It is a plan expressed in quantitative terms. It is a statement of expected results always expressed in numerical terms. 10. Schedules Scheduling is a part of action plan and it is a process of establishing a time sequences for the work to be done. A schedule prescribes the precise time when each of a series of action should take place. (Murguan, 2005:99-100). 2. 1. 4 The Porter’s Generic Strategies
As Lomash and Mishra identified the porter’s generic strategies in Business Policy and Strategic Management books in to cost leadership, differentiation and focus, and they put as follows. 1. Overall cost leadership entails vigorous cost reduction programs from experience, cost controls and cost minimization in areas viz. R&D, manufacturing, design, quality, sales force, advertising, etc. 2. Differentiation implies creating something which is unique in design, technology, value, features, service, network of distribution, etc. 3.
Forces imply concentrating on a specific buyer group, segment of products, geographic market, customer’s specific requirements, etc. The focus strategy is developed keeping a particular target in focus and policies developed accordingly. The objective of any company in general is to make a niche for itself so that it may gain market share through cost leadership, differentiation and focus. (2005:131). 2. 1. 5 Designing Competitive Strategies To design competitive strategies Kotler classify firms by the role they play in the target market; such as leader, challenger, follower, or nicher.
Their basic differences are: 1. Market-Leader Strategies Many industries contain one firm that is the acknowledged market leader. This firm has the largest market share in the relevant product market. It usually leads the other firms in price changes, new-product introductions, distribution coverage, and promotional intensity. Some of the best-known market leaders are Kodak (photography), Microsoft (computer software), Xerox (copying), Procter & Gamble (consumer packaged goods), Caterpillar (earth-moving equipment), Coca-cola (soft drinks), McDoonald’s (fast food), and Gillette (razor blades).
Remaining number one calls for action on three fronts. First, the firm must find ways to expand total market demand. Second, the firm must protect its current market share through good defensive and offensive actions. Third, the firm can try to increase its market share further, even if market size remains constant. 2. Market-Challenger Strategies Firms that occupy second, third, and lower ranks in an industry are often called runner-up, or trailing, firms. Some, such as Colgate, Ford, Avis, and Pepsi-cola, are quite large in their own right. These firms can adopt one of two postures.
They can attack the leader and other competitors in aggressive bid for further market share (market challengers). Or they can play ball and not “rock the boat” (market followers). 3. Market –Follower Strategies Some years ago, Theodore Levitt wrote an article titled “Innovative Imitation,” in which he argued that a strategy of product imitation might be as profitable as a strategy of product innovation. The innovator bears the expense of developing the new product, getting it into distribution, and informing and educating the market. The reward for all this work and risk is normally market leadership.
However, another firm can come along and copy or improve on the new product. Although it probably will not overtake the leader, the follower can achieve high profits because it did not bear any of the innovation expense. Many companies prefer to follow rather than challenge the market leader. Four broad strategies are counterfeiter, cloner, imitator and adapter. 4. Market-Nicher Strategies An alternative to being a follower in a large market is to be a leader in a small market, or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the largest firms.
Firms with low share of the total market can be highly profitable through smart niching. (2002: 231-246). 2. 1. 6 The Importance of Competitive Strategies There is often need for a competitive strategy. The business review may reveal that a single competitor is almost totally responsible for your company’s decline in market share, a new competitor is entering in the market or a single company or group of competitors may have preempted your unique positioning in the marketplace. In this case, it is essential to develop a competitive marketing strategy in the marketing plan.
Competitive strategies vary depending upon the situation. Competitive strategies sometimes use an anticategory strategy, establishing your company as better than all competitors in the category. To achieve this, a company often takes a common, consumer-percived problem in the industry (such as lack of customer service attention in retail or delayed flights in the airline business), establishes the problem as inherent to the industry, and then tries to set itself apart as better than the competition in this area of concern. (Hiebing & Cooper, 2004: 180). 2. 2 Marketing Strategy
Marketing strategy as it is defined on the Principles of Marketing book (Kotler & Armstrong), it is the marketing logic whereby the company hopes to achieve its marketing objectives. It consists of specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels. In this section, the planner explains how each strategy responds to the threats, opportunities, and critical issues spelled out earlier in the plan. Additional sections of the marketing plan lay out an action program for implementing the marketing strategy along with the details of a supporting marketing budget.
The last section outlines the controls that will be used to monitor progress and take corrective action. 2. 2. 1 The Marketing Process The marketing process is the process of analyzing marketing opportunities, selecting target markets, developing the marketing mix, and managing the marketing effort. On the marketing process consumers/customers stand in the center. The goal is to build strong and profitable relationships with customers. As a first step, through market segmentation, targeting, and positioning, the company decides which customers it will serve and how.
It identifies the total market, then divides it into smaller segments, selects the most promising segments, and focuses on serving and satisfying these segments. Next, the company designs a marketing mix made up of factors under its control- product, price, place, and promotion. To find the best marketing mix and put it into action, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the actors and forces in the marketing environment. (2004:53-60). 2. 2. 2 Marketing Strategies for Competitive Advantage
To be successful, the company must do a better job than competitors of satisfying target consumers. Thus, marketing strategies must be geared to the needs of consumers but also to the strategies of competitors. Designing competitive marketing strategies begins wit through competitor analysis. The company constantly compares the value and customer satisfaction delivered by its products, prices, channels, and promotion with those of close competitors. In this way it can discern areas of potential advantage and disadvantage. The company asks: Who are our competitors? What are their objectives and strategies?
What are their strengths and weaknesses? And how will they react to different competitive strategies we might use? The competitive marketing strategy a company adopts depends on its industry position. A firm that dominates a market can adopt one or more several market leader strategies. It is also defined on Wikipedia that a marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal.
To develop a marketing strategy there are 5 easy steps, and as written by Laura Lake, the benefits of a planned marketing strategy are numerous. Business owners often rely solely on their intuition to make a business decisions. While this informal knowledge is important in the decision making process, it may not provide you with all the facts you need to achieve marketing results. A marketing strategy will help in defining business goals and develop activities to achieve them. The steps are: 1. Describe your company’s unique selling proposition (USP). 2. Define your target market. 3. Write down the benefits of your products or services. . Describe how will position your products or services. 5. Define your marketing methods. Will advertise, use internet marketing, direct marketing, or public relations? The other writer Hiebing & Cooper wrote the step that has to be taken to develop marketing strategies are: 1. Review the problems and opportunities. 2. Review the target market and marketing objectives. 3. Review the positioning strategy. 4. Develop the strategies The well noted contents of marketing plan as stated on the principles of marketing book portrait that: i/ Executive summary,v/ Marketing strategy, ii/ Current marketing situation,vi/ Action program, ii/ Threats and opportunity analysis,vii/ Budgets, iv/ Objectives and issues,viii/ Controls (2004:53-60). 2. 2. 3 Problems in Formulating Marketing Strategy The marketing in complex world written on The Open University Business School book indicates that there is a recurring problem in formulating strategy, and this is further explained by that the traditional approach to strategy formulation – that the short-term marketing plan feeds into the corporate plan and is the sole marketing input to strategic plans. However, experience indicates that it is not merely preferable but essential to do a separate review of the far future.
Without this, there is a risk that the overall process will be swamped by the shorter-term considerations (and especially the problems) that tend to dominate the main debates about strategy. The preparation of a long-term marketing plan is therefore an essential element of effective strategic planning. The five stages of strategy formulation, which is a perspective approach has been found to work well in a range of organizations and each stage is within the capabilities of most managers and, therefore, presents little threat and should pose few problems.
The five stages and the problems around there is that: • Isolate turning points: There are issues that will decide the long-term future of the organization and its markets. This is arguably the most important step of all, and the one where most organizations fail. If you cannot identify what factors will determine your fate, you will not be able to create the most effective robust strategies. • Decide robust strategies: You then need to develop a set of marketing strategies to protect against (or to capitalize on) what has emerged from the previous step – in terms of the key turning points.
These strategies may take the form of commitment to certain products, markets or processes, or they may take the form of contingency actions to prepare for future eventualities. They are likely to cover a wide range of possibilities, and will be informal and qualitative, unlike the more formal and quantified documentation underpinning conventional corporate strategies. • Test against corporate strategy: This stage requires a degree of self-confidence! It is to map these long-term robust strategies on the shorter-term corporate strategy which is produced through the conventional corporate planning process.
The exact form of this comparison will depend on your organization’s process for preparing and presenting its corporate plans. What is important, however, is that each element of the corporate strategy should be checked against the long-term marketing plan to determine its validity and robustness. • Decide strategic changes: Emerging directly from the previous stage there will be a clear distinction of the divergences, if any, between the two types strategy. This will immediately highlight the nature of any changes to be made.
These should then be addressed, item by item, to determine what changes should be made in the overall corporate strategy. • Translate to action: The final stage of any planning process should always be to do something. The action may be to incorporate these changes in the overall corporate plan. The more through alternative is to produce a separate action plan where the shorter-term elements of the revised strategy are translated into the necessary actions with related time-scales. (254-255). 2. 2. 4 Evaluation of strategies
The IBM Encyclopedia of Marketing explained that management evaluates its strategies before and after implementation. In either case strategies can only be evaluated against some criteria stemming implicitly or explicitly from objectives. Evaluate criteria after strategy implementation revolves around the strategy’s effectiveness and reliability. Thus a strategy is effective if it achieves its goal and it is reliable if it is able to do so consistently. Every proposed strategies should be evaluated for desirability, practical feasibility and commercial viability. Baker, 1999: 183). 2. 3 The Nature of Services Kotler(2002) books shows that service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. 2. 3. 1 Characteristics of Service and Their Marketing Implications Services have four major characteristics that greatly affect the design of marketing programs: intangibility, inseparability, variability, and perishability. i/ Intangibility Services are intangible.
Unlike physical products, they cannot be seen, tasted, felt, heard, or smelled before they are bought. The person getting a face lift cannot see the exact results before the purchase, and the patient in the psychiatrist’s office cannot know the exact outcome. To reduce uncertainty, buyers will look for signs or evidence of the service quality. ii/ Inseparability Services are typically produced and consumed simultaneously. If a person renders the service, then the provider is part of the service. Because the client is also present as the service is produced, provider-client interaction is a special feature of services marketing.
Both provider and client affect the outcome. iii/ Variability Because they depend on who provides them and when and where they are provided, services are highly variable. Service buyers are aware of this variability and often talk to others before selecting a service provider. Service firms can take three steps toward quality control. The first is investing in good hiring and training procedures. Recruiting the right service employees and providing them with excellent training is crucial regardless of whether employees are highly skilled professionals or low-skilled workers.
The second step is standardizing the service-performance process throughout the organization. This helped by preparing a service blueprint that depicts events and processes in a flowchart, with the objective of recognizing potential fail points. The third step is monitoring customer satisfaction through suggestion and complaint systems, customer surveys, and comparison shopping. iv/ Perishability Services cannot be stored. The perishability of services is not a problem when demand is steady. When demand fluctuates, service firms have problems. (429-432).
An Indian writer Nag also wrote that the simplest and broadest definition of service is a residual definitions which states that the service sector(also called the tertiary sector) or the services constitute all the activities in an economy after excluding of agriculture, mining(primary sector), manufacturing and construction(secondary sector). He noted Kotler (1977) more specific definition for service and put in the such a way that “ A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of any thing.
Its production may or may not be tied to a physical product. ” 2. 3. 2 Evolution of Service Marketing In the 1950’s consumer goods companies were considered as the most sophisticated marketers. They were often the first companies to develop formal marketing plans and there was a lot of focus on analyzing and researching consumer markets. In the 1960s, considerable attention was given to industrial markets and marketing books and journals dealing specially with industrial markets started appearing. In the 1970s, marketing in the non-profit organizations and the associated areas of public sector and societal marketing received attention.
It was only in the 1980s that services marketing began to attract real attention. The seven stages in the evolutionary process of service marketing are: Stage 1: Selling Stage 2: Advertising and communication Stage 3: Product and service development Stage 4: Differentiation and competitor analysis Stage 5: Customer service Stage 6: Service quality Stage 7: Integrations and relationships marketing. These stages are not to be taken as too rigid or exact, but generally indicative of the course of evolution or development. (2002: 223-226). 2. 3. Marketing Strategies for Service Firms As Kotler noted that until recently, service firms lagged behind manufacturing firms in their use of marketing. Many service business are small (shoe repair, barbershops) and do not use formal management or marketing techniques. There are also professional service businesses (law and accounting firms) that formerly believed it was unprofessional to use marketing. Other service businesses (colleges, hospitals) faced so much demand or so little competition until recently that they saw no need for marketing. But this has changed.
Traditional four Ps marketing approaches work well for goods, but additional elements require attention in service businesses. The three additional Ps are people, physical evidence, and process. Because most services are provided by people, the selection, training, and motivation of employees can make a huge difference in customer satisfaction. Ideally, employees should exhibit competence, a caring attitude, responsiveness, imitative, problem-solving ability, and goodwill. Service marketing requires not only external marketing but also internal and interactive marketing.
External marketing describes the normal work to prepare, price, distribute, and promote the service to customers. Internal marketing describes the work to train and motivate employees to serve customers well. As Berry has argued that the most important contribution the marketing department can make is to be “exceptionally clever in getting everyone else in the organization to practice marketing. ” Interactive marketing describes the employees’ skill in serving the client. Because the client judges service not only by its technical quality (e. g. , was the surgery successful? ) but also by its functional quality (e. . , did the surgeon show concern and inspire confidence? ), service providers must deliver “high touch” as well as “high tech. ” Service companies face three tasks- increasing competitive differentiation, service quality, and productivity. i/ Managing Differentiation Service marketers frequently complain about the difficulty of differentiating their service. The deregulation of several major service industries – communications, transportation, energy, banking – precipitated intense price competition. The alternative to price competition is to develop a differentiated offer, delivery, or image. i/ Managing Service Quality A service firm may win by delivering consistently higher-quality service than competitors and exceeding customers’ expectations. These expectations are formed by their past experiences, word of mouth, and advertising. After receiving the service, customers compare the perceived service with the expected service. If the perceived service falls below the expected service, customers lose interest in the provider. If the perceived service meets or exceeds their expectations, they are apt to use the provider again.
Various studies have shown that excellently managed service companies share the following common practices: a strategic concept, a history of top-management commitment to quality, high standers, systems for monitoring service performance and customer complaints, and an emphasis on employee satisfaction. Strategic Concept Top service companies are “customer obsessed. ” They have a clear sense of their target customers and their needs. They have developed a distinctive strategy for satisfying these needs. Top Management Commitment Companies such as Marriot, Disney, and McDonald’s have through commitments to service quality.
Their management looks not only a financial performance on a monthly basis but also at service performance. High Standards The best service providers set high service-quality standards. Swissair, for example, aims at having 96 percent or more of its passengers rate its service as good or superior. Citibank aims to answer phone calls within 10 seconds and customer letters within 2 days. The standards must be set appropriately high. Monitoring Systems Top firms audit service performance, both their own and competitors’, on regular basis. Satisfying Customer Complaints
Studies of customer dissatisfaction shows that customers are dissatisfied with their purchases about 25 percent of the time but that only about 5 percent complain. The other 95 percent either feel that complaining is not worth the effort, or that they don’t know to whom to complain. Of the 5 percent who complain, only about 50 percent report a satisfactory problem resolution. Yet the need to resolve a customer problem in a satisfactory manner is critical. On average, a satisfied customer tells three people about a good product experience, but the average dissatisfied customer gripes to eleven people.
If each of them tells still other people, the number of people exposed to bad word of mouth may grow exponentially. Satisfying Both Employees and Customers Excellently managed service companies believe that employee relations will affect customer relations. Management carries out internal marketing and provides employee support and rewards for good performance. Management regularly audits employee job satisfaction. (kotler, 2002:434-443). Strategies for services marketing, wrote by Nag (2002) indicates that many feel that a service is just another product9thogh intangible) and a service should be marketed in the same way as a product.
No body would deny that the basic tools (like advertising and promotion) for marketing services do not vary significantly from those for products. But the method of application and people orientation in marketing service are very different. This calls for a distinct strategy for service marketing. In formulating a distinctive strategy for services, market segmentation issues are important. After market segmentation and targeting, proper positioning of services is a key factor in any effective marketing strategy for services.
In addition to this, specific strategies are required to deal with each of the four special characteristics of services, namely, intangibility, heterogeneity, inseparability and perishability. 1. Segmentation issues Generally speaking, a service company has three alternatives for market segmentation and target market selection: these are, • Undifferentiated market approach, • Differentiated market approach, • Concentrated market approach, In an undifferentiated market approach, as it implies, there is no recognition of distinct segments in the market. Some call it market aggregation.
In a differentiated market approach, a company identifies different market segments in the market and develops a separate marketing mix and strategy for each segment. In a concentrated market approach it is recognized that there are a number of distinct segments. But the company develops its marketing mix and strategy for one specific segment. 2. Positioning service Positioning as a tool is not as extensively used for services as for consumer goods. But almost every service company feels the need for differentiating their services to improve marketability and, therefore positioning becomes important.
Every service company and its product (service) has a position or image or perception in the consumer’s mind and this influences purchase decisions. Positioning can sometimes be implicit and unplanned and can naturally evolve over a period of time; but that is passive positioning. Active positioning should be developed as part of the marketing strategy. Positioning can be done at four different levels: ? Industry positioning: positioning of the service industry as a whole, ? Organizational positioning: positioning of the service organization, ?
Product or service sector positioning: positioning of the range or family or services offered by the company, ? Individual service positioning: positioning of a specific service. For a service organization, organizational positioning, service sector positioning and individual service positioning are more directly relevant. For proper positioning, whether it is organizational or product positioning, the most important step or factors is the selection of appropriate bases for service differentiation. The choice or selection of base (s) would depend on the company’s core strength or specialization, competitive offering and the market structure.
The various bases are: i/ Customer benefit,vii/ Use or applications, ii/ Value for money/price value,viii/ Product class, iii/ Users/class of users,ix/ Product endorsement, iv/ Reliability,x/ Physical evidence, v/ Assurancexi/ Emotional appeal, vi/ Service process,xii/ Any special feature. Positioning by process involves two dimensions: complexity and divergence. Complexity relates to the steps or stages involved in service delivery; divergence reflects the variability of these steps or stages. (243-250). The services marketing mix wrote by Kurtz and E.
Clow (2002) shows that it constitutes the variables service firm can manage to produce sales and profits. These variables can be used to differentiate a firm from its competitors and to build a competitive advantage. The elements of the service marketing mix include the service outcome (the product), the price, distribution, promotion, and firm image. 1. Service outcome It has two components: the technical and the functional outcome. The technical outcome is the end result of the service or the “what” of the service. The functional outcome is the process of receiving the service or “how” the service was provided.
Functional service is the way the customer or client was treated by the firm’s staff 2. Price Because services are intangible and experiential in nature, the prices become more important to consumers as a cue of what to expect. Higher prices trend to convey higher quality. However, an extremely high price may be viewed by consumers as a rip-off. The converse is also true; lower price tend to convey lower quality but for some services and for some consumers, this is acceptable. 3. Distribution Because of the inherent characteristics of services, distribution becomes more challenging.
Distribution is the availability and accessibility of a service to consumers. 4. Corporate image An important element in the purchase decision of services is the image consumers have of the firm. Firm image is the overall or global opinion customers have of a firm or organization. Consumers will tend to patronize firms which they perceive to have a high image or an image that is consistent with the expectations of the customer. Personal experience, word-of-mouth communications from others and advertising all have an impact on the image consumers have of a firm.
Once a good image is damaged it is difficult to restore. Not only will dissatisfied customers not return, they will usually tell others about their negative experience. Getting individuals who have heard bad reports about a business to try the firm will be difficult. 5. Promotion Service firms have several means of promoting their firm. Advertising, sales, promotions, and personal selling are the major components. Since services are experiential in nature, promoting a service is more complex than promoting a good. (21-24). 2. 4 The Contemporary Challenges in Marketing Effectiveness
It is the fact that the success of marketing activities and marketing functions are hindered by various challenges that would lead to a decline in sales, weak in productivity and in attainment in company objectives. Thus, some of the challenges and problems are stated below: 2. 4. 1 Problem with Marketing Implementation As Nigel Piercy noted that many of us have concluded that the marketing strategy which looks good, makes managers feel good, but has no effect whatever on the realities of running the business and changing its direction is a harmful and expensive waste of time.
The real strategic problem is not planning, it is implementation. The underlying danger is that we constantly underestimate the degree and type of change that will have to happen if our marketing plans and strategies are to succeed. In fact, marketing implementation failures often occur for a number of very simple reasons, even if actually solving implementation problems is seldom easy. The real difficulties are: • Separation of planning from management, • Hopeless optimism, • Implementation is recognized too late, • Denial of implementation problems, Implementation bolted on at the end, • Implementation is a black box. (1992: 322 325). 2. 4. 2 Inconsistency in Marketing Activities and Techniques Though the current marketing activities demand a steady scanning of environmental factors, business patterns and competitor situation, it is unlikely that such activities would be undertaken by most of the business firms. As PR Smith pointed out, although there is widespread use of marketing techniques, only a few organizations are actually truly marketing oriented.
They do not constantly research their markets, including their competitors as well as their customers… they do not continually seek improvements in customer care and product quality, and they do not embrace change wholeheartedly. (2003:8). 2. 4. 3 The Service Challenge As stated on Marketing Management: Knowledge and Skills book, despite traditional thinking and practices on the part of many marketing managers and writers concerning the similarities between the operation of manufacturing and services organizations, the past decade has seen the growth of many innovative ways of meeting the service challenge.
The service challenge is the quest to (1) constantly develop new services that will better meet customer needs, (2) improve on the quality and variety of existing services, and (3) provide and distribute these services in a manner that best serves the customer. (Peter & Donnely, 2007:185). 2. 4. 4 Sources of Complexity and Mental Trap The Open Univerity Business School, “Marketing in a Complex World” book shows that there are three mental traps; such as, predictability trap, customer trap and market trap. i/ Predictability trap
The explicit and implicit assumptions underpinning planning processes are commonly based on expectations of stability and continuity in the external environment. But experience tells us that the external environment is not stable and, indeed, most change is triggered by external factors that are outside the control or influence of the organizations affected. The only thing we can be sure of is that forecasts based on extrapolation from the present or recent past will be wrong. We may not be able to control the external environment but we can try to understand it.
Environmental volatility also makes planning a complex and demanding process. ii/ Customer trap Traditional marketing theory is based on the view of the customer as a person who makes rational purchasing decisions on the basis of the information available. The marketing function, therefore, is to identify customer needs, and to provide a product or service that meets some or all of those needs, accessibly and at an acceptable price to the target market. Sine the 1980s, however, it has been recognized that relationships between suppliers and customers are more complex.
Several models of consumer behavior have been developed which attempt to explain how purchasing decisions are made. None of them is completely satisfactory, however, and consumer behavior remains complex, variable and incompletely understood. iii/ Market trap Since the early 1980s we have seen a radical shift in the way organizations perceive their markets, as a result of globalization, technology and the blurring between manufacturing and services. While most managers recognize that these changes are taking place, many feel poorly equipped to cope with the resulting diversity and complexity.
The impact of globalization can lead to the expectation that people behave in the same way and respond similarly to opportunities and threats. In fact, cultural differences – within as well as between societies – are huge and even be increasing. The marketing dilemma is therefore how to respond to this diversity while at the same time exploiting the scale economies that globalization makes possible. (2004: 15-17). 2. 4. 5 Environmental Determinism The issue of environmental determinism has long been debated.
The traditional view is that the external environment is more or less uncontrollable: it determines and shapes the organization and its activities to such an extent that the key skill in marketing is adaptation – adapting the organisation to succeed within the constraints set by its environment. This view likens the organization to a small ship in a storm: the helmsman can adjust the course but, ultimately, the ship goes where the wind takes it. Many traditional strategic marketing techniques reflect this deterministic approach: the product life – cycle model and the five forces analysis of competition are examples.
On the other hand, some writers and many practitioners argue that this approach is too negative and that organizations need not to be merely reactive. It is possible, they argue, for organisations to create their own future. They can mould both people and events through lobbying, public relations, and a host of their techniques – especially where they work together with other organizations in the same sector. This approach was advocated by Philp Kotler, who labeled it megamarketing (Kotler, 1986). The experience of most organizations lies somewhere between these extremes.
Whereas marketers cannot manage the external environment, they can interact with it to improve their chances of success. This is consistent with a relationship marketing approach which, while acknowledging the importance of consumers, recognizes also the role of other forces that were previously considered external to the firm. This perspective emphasizes the two-way interaction between the firm and the external environment. It also reflects the increasing convergence in the approaches used to manage internal and external stakeholders. But what happens if our environment is particularly volatile? And we are constantly being told that environmental volatility will increase for all industries. ) Research has already shown that rational comprehensive approaches to strategic and marketing planning work well in stable environments but may be a hindrance in dynamic or uncertain environments. Comprehensive approaches are time-consuming and are inappropriate in a fast-changing environment where data are not available, relationships are not obvious, and the future is unpredictable. Rationality, therefore, may not be a source of competitive advantage in a volatile environment. 68-69). 6. The Effect of Globalization We are familiar with the impact of globalization on our professional and personal lives. The explosive growth in communications technology and the consequent erosion of barriers of time and distance have become modern cliches. But the global village is not yet upon us, nor does it seem likely to dominate in the future. The same advances in technology and changes in attitudes that have brought countries and people together have also increased awareness of local and regional differences.
This increased awareness is reflected in heightened expectations that products and services will be adapted to meet the needs of the country, the region or even the individual. The expectations that globalizations would sweep all before it and lead to standardized products and services throughout the world are proving to be simplistic. Globalization is therefore increasing the complexity and uncertainty facing marketing managers. The arguments for globalization are powerful. All consumers want basically the same thing: new technology, global fashion and the cheapest products of the highest quality.
But not all products can be global and what is surprising is how many products and services are not global. There seem to be three reasons why the standardization of markets and products is not going as fast as the early advocates anticipated: distribution of purchasing power; cultural differences; and the second-order effects of new technology. (40). Kotler and Armstrong wrote in Principles of Marketing noted that as the world spins into the first decade of the twenty-first century, dramatic changes are occurring in the marketing arena.
Richard Love of Hewlett-Packard observes, “ The pace of change is so rapid that the ability to change has now become a competitive advantage. ” Yogi Berra, the legendary New York Yankees catcher, summed it up more simply when he said, “The future ain’t what it used to be. ” Technological advances, rapid globalization, and continuing social and economic shifts-all are causing profound changes in the market place. As the market place changes, so must those who serve it. The major marketing developments as we enter the new millennium can be summed up in a single theme: connecting.
Marketers are rethinking their relationships with customers, with marketing partners inside and outside the company, and with the world around them. According to the authors, the dramatic changes occurring in the connecting technologies and the changes affecting marketing connections are technologies for connecting and using today’s vastly more powerful computers. marketers create detailed database and use them to target individual customers with offers designed to meet their specific needs and buying patterns.
Some of the connecting is: 1. Connecting with more carefully selected customers Few firms today still practice true mass marketing-selling in a standardized way to any customer who comes along. Today, most marketers realize that they don’t want to connect with just any customers. Instead, most are targeting fewer, more profitable customers. 2. Connecting for a customer life time Just as companies are being more selective about which customers they choose to serve, they are serving those they choose in a deeper, more lasting way. . Connecting with marketing partners In addition to customer relationship management, marketers must also be good at partner relationship management. In these ever more connected times, major changes are occurring in how marketers partner with others inside and outside the company to jointly bring grater value to customers. Partner relationship management is working closely with partners in other company departments and outside the company to jointly bring greater value to customers. 4. Connecting with the world around us
As they are redefining their relationships with customers and partners, marketers are also taking a fresh look at the ways in which they connect with the broader world around them. (2004: 22-28). 2. 5 Marketing Department Organization and Interaction with other Functions As Kotler and Armstrong also pointed out that the company must design a marketing organization that can carry out marketing strategies and plans. If the company is very small, one person might do all of the research, selling, advertising, customer service, and other marketing work.
As the company expands, a marketing department emerges to plan and carry out marketing activities. In large companies, this department contains many specialists. Modern marketing departments can be arranged in several ways. The most common form of marketing organization is the functional organization, in which different marketing activities are headed by a functional specialists- a sales manager, advertising manager, marketing research manger, customer service manger, or new-product manager.
A company that sells across the country or internationally often uses a geographic organization, inn which its sales and marketing people are assigned to specific countries, regions, and districts. Geographic organization allows salespeople to settle into a territory, get to know their customers, and work with a minimum of travel time and cost. Many companies are finding that today’s marketing environment calls for less brand focus and more customer focus. They are shifting toward customer equity management- moving away from managing just product profitability and toward managing customer profitability. 61-62). Chapter Three Evaluating Marketing Strategy and Challenges on Effectiveness of Marketing 1. Assessment of Marketing Strategy and the Effectivness of Marketing Activities related to Tikur Abay Transport Share company The IBM Encyclopedia of marketing reveals that marketing strategy can have a broader impact on the business in terms of instilling a marketing orientation among all those in the firm; the way of thinking or philosophy of the whole organization.
However, marketing strategy can alternatively be seen as dealing only with the development of competitive advantages, directly associated with the marketing function such as customer loyalty and distribution channel control (Baker, 1999:161) Though there are two spectrum of marketing orientation as stated above, the strategy developed by marketing department of Tikur Abay Transport has a broader impact on the company when a marketing orientation philosophy is communicated through-out the company.
With regard to marketing strategy of the company 76% of the respondent agree about that the company has a marketing strategy while 24% replied on saying that they did not aware about the design of marketing strategy. Despite being developing a marketing strategy is the prime concern of competitive firm, making of marketing orientation could be crucial to sustain the position of the company. On this case 80% of the respondent argued that the marketing strategy didn’t communicate to related functions.
This shows that even the company has a well developed marketing strategy, to achieve the company objectives and position on leading-edge, communication with concerned units is crucial. As the company is freight transport providing service, delivering quality service, offering competitive price and satisfying customers behind customer expectation are critical success factors and competitive issues in the marketing strategy.
The company already had a five year strategy plan and the marketing strategy is cascaded from the company strategy but on giving due attention to volatile and seasonal nature of transport service. To supplement the importance of strategic marketing, one of the scholars David W. Cravens put out that Business Executives are experiencing an increasingly turbulent market place as the rapidly shrinking world moves toward the 21st century. Successful competing in this constantly changing global business environment requires market driven strategies that are responsive to customer’s needs and wants.
Executives who do not recognize the changes occurring in the vast array of markets for products and services will be unable to cope with the unprecedented competitive pressures in the market place. (1991:3) Once the marketing strategy is developed it is not an end by itself rather proper setting of marketing plan and periodic review of the plan and contingency thinking may be relevant. In this respect 40% the respondent assure that such activities is rarely performed and out of which 7% indicates they didn’t recall the management activities in contingency hinking, planning and periodic review of marketing plan. To favor the above idea Walker and et,al noted on marketing strategy: A decision focused approach that in the future; strategic uncertain will be even more dangerous in many industries because they are facing increasing magnitudes and rates of change in their environments. These changes are rapidly altering the context in which marketing strategies are planned and carried out and the information and tools that marketers have at their disposal. 2004:20) From the above notion we can imply that though the management is engaged on contingency thinking and planning of marketing, more effort will be needed to make a holistic approach of marketing activities. So that the entire effort will lead to proper implementation of marketing plan and attainment of company objectives. Today’s business uncertainty is related in one way or the other to dynamic changes and preference of customer demand.
In this respect 53% of the respondent indicate that management give little attention to satisfy specific customer demand and 14% shows they don’t know whether the management recognize the need to organize the company to satisfy specific customer demand or not. On related topics the questions raised to assess the marketing, operation, other functional staff and senior management of the company to effectively meet customer order or demand shows that 73% accounts for limited respond and 17% rated to absence of respond to customer demand.
Kotler on his marketing management book pointed out that many companies are aiming for high satisfaction because customers who are just satisfied still find it easy to switch when a better offer comes along. Those who are highly satisfied are much less ready to switch. High satisfaction or delight creates an emotional bond with the brand, not just a rational preference. The result is high customer loyalty. For instance, Xerox’s senior management believes that a very satisfied or delighted customer is worth 10 times as much to the company as a satisfied customer.
A very satisfied customer is likely to stay with Xerox many more years and buy more than a satisfied customer will. (2002:36). From the above idea we can infer that due to fierce competition on business environment, satisfying specific customer demand is not a choice rather it would be an advantage to lead the competition and maintain the existence of the firm. On relation to the above idea the question raised to assess the customer handling system shows 34% of the reply agree on the company has rarely structured the customer handling system where as 10% of the respondent indicates there have lack of information on customer handling system.
Though 43% of the respondent agreed on the company has designed a regular structure of customer handling system, it fairly uncertain about the system has been set up in very organized way. To meet the demand of customers and achieve the company objectives in a better way, it would be indispensable of managing marketing information of the company. With respect to this kotler on the principles of marketing pointed out that in order to produce superior value and satisfaction for customers, companies need information at almost every turn.
As the New Coke story highlights, good products and marketing programs begin with a through understanding of customer needs and wants. Increasingly, marketers are viewing information not only as an input for making better decisions but also as an important strategic asset and marketing tool. In today’s more rapidly changing environments, managers need up-to-date information to make timely, high-quality decisions. (2004:142).
Inline with this the questionnaire that has been gathered indicates 24% of the respondent marked the marketing information system of the company is poorly interacted with other departments, while 70% account for the interaction is rated to some degree. On the other hand 54% of the respondents argue that management staff and senior managers didn’t aware at all about the marketing information of the company. However, observations of the researcher on marketing department assure that there is integrated marketing information on telephone and formats that has developed for this purpose with related departments.
Thus from these we can deduce that management and concerned bodies should be aware of the fact that marketing information would be crucial not only for the coordinated effort but also to make the company in better position with that of competitors. The question that posed to assess the sort of relationship that existed between marketing and other units indicate that only 14% of the respondent argued that there is poor relationship while 73% agree on the relationship is satisfactory.
On relation to this 70% of the respondent shows there is a limited degree by senor management of the company to support and integrate the major marketing function while 4% accounts there is no support at all. With regard to marketing system of the company the question raised to evaluate the communication and implementation of the system indicates that 76% rated and acknowledge there is a reasonably well system, where as 14% of the respondent marked the system is integrated in very poor condition.
And those who do not have any information about the system accounted for 7%. 2. Evaluating challenges in Marketing Effectiveness. 1. The organization Set up of Marketing Department Tikur Abay Transport Share Company is organized in encompassing six line and functional departments, two service sections and with branch and coordination offices out side the main office. The departments are Marketing, Operation, Supply, Technique, Finance and Administration & Humana Resource. Out of this Marketing, Operation and Technique Departments are line units.
Marketing department has been structured on such a way that it leads with Department Manager which has reported to General Manager of the company. In line with this marketing department consisted of Marketing Research and Business Development Division on one side and Contract Administration & Customer Service on the other. Under this there are junior and senior officers that has to be reported to Division Heads. At present it is observed that the existing experts and staffs are adequate to run the marketing activities. 2. Performance Evaluation of Marketing Activities
As it is stated above the marketing department of the company has a marketing strategy document, annual and daily plans which used to achieve the objectives. Besides to this it has a system that has been established to receive customer order, customer handling procedure and manuals, and tariff setting procedures to exchange marketing information and daily reporting system. All these are used on integrated manner and are applicable depending on the circumstances of the marketing activities. To assess the marketing performance of the company a five year comparison table is presented below.
Table 1 Performance Comparison of the Available Market |Years in GC |Available Market |Captured and completed Cargo | Changes in | | | | | quantity | %ge | |2004 |488,191. 00 |265,441. 00 |227,750. 00 |45. 6 | |2005 |446,495. 69 |272,389. 21 |174,106. 48 |38. 9 | |2006 |294,702. 65 |204,249. 6 |90,453. 10 |30. 7 | |2007 |587,751. 49 |281,885. 14 |305,866. 35 |52. 0 | |2008 |514,380. 28 |398,457. 00 |115,923. 28 |22. 5 | |Sum |2,331,521. 12 |1,422,421. 91 |909,099. 21 |38. 9 | Source: Adapted From Annual Report of Marketing Department. On looking the above table the size of the un-seized or lost market is quiet significant figure, i. . , 38. 9% for the past five years. Though the available market is fairly good, the cargo that has been captured and completed is not such satisfactory. There may be so many reasons for this as stated on each annual report. Some of the reasons are:- • by offering tariff for target customers, • by selecting the available market on the mature of cargo and customers, • on giving priority to other cargo which has not yet completed. • by offering tariff which is above the prevailing rate • due to low tariff offering by some of the competitors on considering the fleet size of the company, turn around trip of the trucks and operational status of the company. From these, even considering the operational status and technical fitness of all the trucks on the company entails another study; there we can see underutilizing of the available market is a weakness side of the company. On current competitive business environment it would be a strength of the company for utilizing the available market to maximum effort. Table 2: Comparison of Import, Export and Local cargo |Category |Years in G.
C |Changes in | | |2004 |2008 |Quantity | %ge | |Import |187,776. 90 |255,099. 13 |67,322. 23 |35. 9 | |Export |8,456. 55 |9,273. 27 |816. 72 |9. 7 | |Local |69,207. 75 |134,084. 60 |64,876. 85 |93. 7 | | |265,441. 20 |398,457. 0 |133,015. 8 |50. 1 | Source: Adapted from Annual Report of Marketing Department As shown in table 2, the marketing performance of the company by transported cargo has been grown from 265,441. 20 ton by the year 2004 to 398,457 ton at 2008. This indicates a 50% increase from the year 2004. On the same period the company fleet size is increased from 107 heavy trucks on the year 2004 to 212 by the year 2008. Though such significant increase in number of trucks is registered, the quantity of cargo transported through the same period is not as such progressive.
When we are considering the category of cargo, more is transported to import and local cargo while lesser performance has been achieved in export cargo. If there may be more performance as the company fleet size increases, there could be an opportunity to raise and combine export with import cargo. It is observed that the marketer intention was to secure more market and explore the existing marketing opportunity, however, it is unable to combine export with import cargo and raise the share of market on transported cargo of export items.
The reason is highly attributed to:- • down time problem at various points (related to export system), • unattractive tariff for transport, • reluctant to pay advance payment for working capital, • low efficiency on turn around time of assigned trucks. 3. Shortcomings on Strategy Implementation Process Once strategies are formulated and approved the next phase would be communicating at all levels (particularly to concerned bodies) that would lead to vigorous implementation process.
Thus, as passing through on implementation process demand a concerted effort and a daily monitoring activities, it would be essential to undertake evaluation of the strategy so as to get the right truck, improve the weakness and compete in better position. To support the above idea one of the writer Baker, in his book wrote as management should evaluates its strategies before and after implementation. In either case strategies can only be evaluated against some criteria stemming implicitly or explicitly from objectives.
Evaluating criteria after strategy implementation revolves around the strategy’s effectiveness and reliability. Thus a strategy is effective if it achieves its goals and it is reliable if it is able to do so consistently. Every proposed strategies should be evaluated for desirability, practical feasibility and commercial viability. (1999:183) Though the theory is argued in such a way, the analysis of questioner in the preceding points indicates that 17% the respondent lacks short of information about the marketing strategy and 56% argue that the document has not yet been communicated.
Therefore, it should be essential for the company marketing department to get full support by management of the company, and specifically senior manager’s commitment to better implement the marketing strategy. When as the company and marketing concern is to better satisfy customer demand and order, giving lesser attention and lack of direction on reaching common objectives may hamper the success of the company.
In addition, for better implementation of marketing strategy and good performance on its activities the power vested to it and environment created to drive market led strategy have a prominent place on the company. 4. Problems on Interaction of Marketing with other Units As the marketing department of Tikur Abay Transport is the receiver of customers order; processing, interacting and follow-up till the right delivery of customer goods will definitely lies to the responsibility of this marketing unit.
With regard to marketing functions, the procedures and policies set up to ran the activites and interact with other units are being applied though some difficulty has occurred on exchange of information and interaction process. The usual problems are delay in notification of order to operation departments, misunderstanding on common information, lack of consensus on contractual agreement, late assigning of trucks, delay on deliver of cargo and most importantly giving weak respond to customers.
The analysis part of the questioner also noted that the marketing system and interaction with other units should be improved further as the marketing information would be crucial to meet customers demand and better achieve company objectives. The marketing problem identified by The CIM Handbook of strategic marketing also show that the roots of marketing failure lies in two areas. First, marketers defined the subject as a functional discipline rather than an integrative business process.
Second, marketers have not adapted to the new type of competition that today pits networks rather than single companies against each other. To create the outstanding value markets now demand managers who have to work with other members of the channel to reshape the entire economic chain. (Egan and Thomas, 2003:252) In addition to that as stated on the IBM Encyclopedia of Marketing, Successful organizations will be those knowing their basic competencies and allowing themselves to be defined by their customer’s interims of capabilities and process required to deliver superior value.
Thus, some of the characteristics to delivery superior value may be:- • Customer – focused not product or technology focused; • Customer relationships seen as critical strategic assets; • Business strategies and organizational arrangements linked by flexible customer driven value-delivery processes that evolve in response to changing environments; • The organization itself and its capabilities will be the major competitive weapon; • Successful marketing organizations will have the skills needed to arrange multiple strategic marketing processes, many of which have traditionally not been regarded as with in the domain of marketing (Baker, 199: 193-194).
Eventually, what we learn from the above notion is that as marketing plays a leading role on competitive environment; ignoring its position or undermining its function on the the organization activities will result unprecedented failure and which could be a hard task to turn back to the point. Chapter Four Conclusion and Recommendation 1. Conclusion In today’s turbulent business environment most companies are in a position of pursuing strategic direction which helps to set in advance strategic goals and objectives of the company. As designing companies line and functional strategy is essential to better perform the task of each department, it would be highly significant that the well developed marketing strategy has a leading place in fore sighting the competition that persist in the market and company position in the future.
In this regard the research of this paper is used to a dress on conducting a theoretical review of marketing strategy and evaluating the contemporary challenges in marketing effectiveness that would be useful for better way of doing marketing functions. On making the above highlight to indicate the concluding remarks, as marketing is broad in scope, one of the best acceptable definitions is that marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. In line with this a marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.
The primary focus of marketing strategy is to effectively allocate and coordinate marketing resources and activities to accomplish the firm’s objectives within a specific product market. As the characteristics of service industry is different from that of product or goods offering firm, the nature of marketing strategy is also varied and different in its main points. This is attributed to that the quality of service rendered is realized after the service has been provided to customer and whether it meets the expectation of customer or not. According to these the assessment of this study also indicate that the company has a marketing strategy, which is focused to render better customer service on offering competitive price and reliable delivery of their cargo.
Though such strategy direction is explicitly stated on the company, it should be communicated through out the organization so as to better implement effectively and for the entire service of customer satisfaction. However, the analysis of this paper show that there is a communication gap on making awareness of strategy or meaning that the marketing strategy document is not communicated to concerned bodies of the company. The finding also identified the management didn’t recognize at all to satisfy the customer order or demand, and those functional and operational staff that interacted with marketing department as well is not. As reaching common understanding and proper implementation of marketing strategy is crucial for the success of the company, the support and opinion that should be forwarded by management bodies would have an added value.
On this regard the marketing management scholar Peter R. Dickson point out that implementing marketing decision requires many skills. Two of which are first the ability to structure organizational resources in a way that increases competitive rationality. The second skill is the ability to schedule activities, allocates resources, assign responsibility and monitor progress. Marketing strategy, organization and implementation are closely linked issue and thus required to synchronize in better way. At present competitive market identifying the needs of customer is not only to receive a premium and generate profit but it also has a place to determine the existence of the company in the future.
Once the customer is dissatisfied by the company’s service and has developed negative impression, it would cost much and probably difficult to turn back. The study on this issue reveal that though the customer handling system of the company has been established in very organized way, the system is not maintained on the regular pattern. When we come to marketing information system that has been set-up in the company, the analysis of the study indicate that even though the system is established on developing formats, linking with e-mail and via telephone line, most of the concerned management bodies and staff didn’t have adequate information and close interaction with the system.
The theory in line with this shows in information processing systems organizing, synthesizing, and disseminating information is a major problem in every organization and due to these most companies are plagued with “ islands of information” many people know many things, but no system exists to put it all together for verification and application to specific objectives. Since the role of marketing is inevitable and broaden on mandate in present competitive environment, continuous support and integration with other units should be undertaken by senior managers. In this aspect, the analysis of the study reveals that little effort has been done by concerned bodies to support the integration of marketing functions. Lastly, as developing marketing strategy plays a key role for the company to compete in a stiff environment, an integrated implementation and evaluation process should be undertaken on continuous basis.
This strategy is also has a determining factor for better effectiveness of the marketing functions. Thus, the identified challenges in implementation of marketing strategy and effectiveness of marketing are listed below in summery, and then the possible recommendation is forwarded. • lack of awareness on marketing strategy, • delay on marketing strategy implementation, • weak customer handling system, • poor marketing information system, • lack of information on specific customer demand, • weak integration with other department units, • lack of support for marketing functions. 4. 2 Recommendation As the present customer needs and wants are not always apparent and,