MODULE 5 MARKETING APPLICATIONS

36.1 DEVELOPING MARKETING STRATEGIES

Nature, Importance & Scope of Strategic Planning:
Serves as a road map for the corporation.
Lays down the growth objectives of the firm & also provides the
strategies needed for achieving them.
Serves as a hedge against uncertainty arising from environmental
turbulence.
Ensures that the firm remains a prepared organization.
Helps the firm understand trends in advance & provides the benefit
of a lead-time for taking crucial decisions & actions.
Helps avoid haphazard response to environment.
Provides the best possible fit between the firm & the external
environment.
Ensures that firms businesses/product/markets are chosen wisely.
Ensures best utilization of the firms resources among the productmarket opportunities.
Helps build competitive advantages & core competencies.
Prepares the firm to not only face the future but also even to shape
the future in its favor.
Helps the firm influence its mega environs in its favor to the extent
possible.
Draws from both intuition & logic.

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36.2 THE BCG MODEL

In a multi-business firm, some businesses may be having a high market
share & certain others a low share & in respect of some businesses, the
industry as a whole may be growing at an attractive rate, while in
others, the growth rate may be poor.
The BCG Growth-Share Matrix deals with this process of evaluation of
industry growth & the relative positi8on of a firm in the industry. The
Matrix classifies the businesses of a firm into 4 distinct categories on the
basis of the above evaluations, i.e. on the basis of the 2 parameters,
industry growth & market share relative to other main players:
STARS: Stars are net users of resources. a Star needs a good deal of
investment support as it operates in a hi-growth market. It normally
does not bring in immediate profits, but holds out great potential for
the future.
QUESTION MARKS: Question Marks too are net users of resources.
But, unlike the Stars, their future is uncertain. In addition, they are
in the high-risk category while Stars are in the medium-risk
category.
CASH COWS: Cash Cows are net generator of resources. A Cash
Cow brings a lot of cash to the company. It also brings in higher
profits. It does not need heavy investment; being in a low-growth
market, expansion possibility & hence investment needs of a Cash
Cow, are minimal.
DOGS: Dogs being businesses with weak market shares in lowgrowth markets, are generally, a drag on a company & its resources.
They are actually cash traps.

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36.3 FORMULATING MARKETING STRATEGY
Basically, formulation of marketing strategy consists of:
1. Selecting the target market
2. Positioning the offer AND
3. Assembling the marketing mix
Selecting the target market: To say that target market selection is a part
of marketing strategy development is just stating the obvious. It does
not fully bring out the import of the inseparable linkage between the
two. When the selection of the target market is over, an important part
of marketing strategy of product is determined, defined & expressed.
For ex, Reliance in 1967 spotted the well to do & fashion loving upper
middle class of urban India as its target market, for its quality fabrics.
Positioning: The firm has already selected the target market & decided
its basic offer. Now, what is the conjunction between the 2 entities? How
do they get connected? What is the edge? In other words,
a. What is the locus the firm seeks among the customers in the chosen
target market with its offering?
b. How would the firm want the consumer to view & receive the offer?
The point is that the firm has to clarify what it proposes to do with its
offering, how it wants the offer to be perceived by the customer, what
position it seeks & what image it proposes to build for its offer.
Assembling the marketing mix: Marketing mix has to be worked out for
every brand because the market fight is finally at the brand level. And it
is the marketing mix that decides how much scope & resources the
brand has at its disposal.
For ex, Lifebuoy & Lux, two brands of HLL in bath soaps, operate with
vastly differing marketing mix. It is natural because they are addressed
to 2 vastly differing target markets. Lifebuoy is the anti-germ, health
soap, mainly targeted at the rural buyer, whereas Lux is the beauty
soap targeted at the complexion conscious city woman.

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36.4 PORTERS 5-FORCES FORMULA

POTENTIAL ENTRANTS

INDUSTRY COMPETITORS
SUPPL
IERS

BUYERS

2
RIVALRY AMONG
EXISTING FIRMS

4
SUBSTITUTES

1. Threat of new entrants

2. Bargaining power of suppliers
3. Bargaining power of buyers
4. Threat of substitute products

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36.5 COMPETITIVE ADVANTAGES SOURCES
Marketing:

Market standing/Market share/Innovation in marketing

Customer satisfaction level/Customer service level
New product leadership/Price leadership
Channel strength/MR capacity
Marketing communication/Advertisement effectiveness

Finance:
Assets/Liquidity/Costs/Capital costs/Profitability/Cash flow
Knowledge & dynamism in tax planning
R&D:
Nature/Depth/Quality of R&D capacity
Quality/Expertise/Experience of R&D personnel
Records of patents generated/Speed of R&D
Manufacturing:
Location advantage/Capacity utilization/Cost of production
Inventory management/Value engineering/Automation
HR:
Morale & motivation of personnel/Personnel turnover/Labor costs
Industrial relations/Expertise of personnel
Corporate Factors:
Company size/Corporate image
CEO/Board of Directors
Corporate performance record/Quality of strategic planning
5

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36.6 VALUE CHAIN APPROACH
The basic ideas in the value chain approach are as follows:
Every firm is a collection of activities
There are 9 distinct activities that create value in any firm; they
would, of course, create costs as well.
The 9 are made up of 5 primary activities & 4 support activities.
The 5 primary activities consist of:
Inbound logistics/Operations (product design, manufacturing etc.)
Outbound logistics/Marketing & Sales/Service
The 4 support activities consist of:
Firms infrastructure/Human Resources
Technology development/Procurement
The 4 support activities occur through all the 5 primary activities.
For ex, technology development, a support activity, occurs in every
one of the primary activities of the firm. Thus, the primary &
support activities together, generate a vast matrix of value creating
in the firm.
This matrix of value creating activities along with their interacting
effects, constitute the value chain of the firm.
Value creation depends on how well each department of the firm
performs its value creating activities. It also depends on how well the
activities at various department level, are coordinated. Value chain
covers this coordination aspect as well.
Business process is basically a value creating & a value delivering
process. And, buyers patronize the firm that offers the highest
delivered value.
Hence, the name of the game is to locate activities in which value can
be created & create maximum possible value in each of them.
6

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36.7 MARKEING STRATEGY CASE OF VIMAL (RELIANCE)
Reliance exploited intelligently the ONLY concept in its promotional
strategy.
Through
well-planned
&
innovative
ad
campaigns/promotional campaigns, the slogan ONLY VIMAL was made
a household phrase among the target audience for fashion textiles.
Reliance claimed uniqueness in many respects:

Only Reliance was producing (at that time), curly polyester yarns in
the country.
Only Reliance had advanced R&D facilities.
Only Reliance was in a position to offer 10K designs & color
combinations in a year, for an item like suiting.
Only Reliance was being rated by bodies like World Bank, as on par
with textile firms in the most developed countries.

Putting all the above ONLYs together, the company evolved the ONLY
VIMAL idea. It was a short, crisp slogan & it epitomized what Reliance
stood for a leader in its field with no competitor close by. ONLY
VIMAL did not remain merely an attractive corporate line. It became
an exhortation to the consumers to go in for ONLY VIMAL fabrics. The
consumers found that the ONLY VIMAL claim had merit & content.

Example of an effective marketing strategy

The Reliance story provides an effective learning experience on the
formulation & implementation of marketing strategies. It serves as a
good example of an Indian firm attaining outstanding marketing
success through a dynamic marketing strategy.
Reliances marketing strategy relied on aggression. From the word go,
Reliance employed an aggressive strategy & dislodged practically all its
competitors from their well-entrenched position in the market. Its
strategies on 4Ps, equipped it for the frontal attacks on its competitors.
Reliance, in fact, changed the very concept of the textile business
through its clever segmentation & market strategy.