MARKETING STRATEGY DEVELOPMENT
Company Products & Services
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MARKETING STRATEGY DEVELOPMENT FOR THE INDUSTRY |
~ .. MARKETING STRATEGY DEVELOPMENT |
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~ ...... ~ Competitors |
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~ .... BASIS FOR A MARKETING STRATEGY |
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~ ...... MARKET SEGMENTATION |
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~ ...... ~ Trade Cell |
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~ ...... ~ Product Range |
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~ ...... MARKET POSITIONING |
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~ ...... ~ Operational Facets |
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~ ...... MARKET ENTRY STRATEGY |
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~ ............ MARKET POSITION |
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~ ~ ...... 1: Sufficient Current Market Segmentation |
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~ ~ ...... 2: Potential Growth for Market Segmentation |
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~ ~ ...... 3: Competitive Market Segmentation Position |
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~ ~ ...... 4: Unsatisfied Market Segmentation |
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~ ~ ...... 5: Competitor Dominated Market Segmentation |
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~ ~ ............ Operations |
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~ ~ ............ Markets + Trade Cell |
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~ ~ ............ Products |
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~ ~ ............ Competitors |
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~ ...... MARKETING-MIX |
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~ ...... ~ Product |
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~ ...... ~ Place |
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~ ...... ~ Promotion |
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~ ...... ~ Price |
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~ ...... ~ QUALITY -v- PRICE |
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~ ...... ~ Premium Strategy |
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~ ...... ~ Average-Quality Strategy |
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~ ...... ~ Penetration Strategy |
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~ ............ MARKETING MIX |
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~ ~ ...... 1: Product |
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~ ~ ...... 2: Place |
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~ ~ ...... 3: Promotion |
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~ ~ ...... 4: Price : Premium Strategy |
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~ ~ ...... 5: Price : Average Strategy |
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~ ~ ............ Operations |
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~ ~ ............ Markets + Trade Cell |
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~ ~ ............ Products |
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~ ~ ............ Competitors |
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~ .... TIMING STRATEGY |
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~ ...... Present Products -v- New Products |
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~ .... BASIS FOR MARKETING TACTICS |
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~ ...... FORMULATING PLANS |
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~ ...... SALES TARGETS |
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~ ...... MARKETING BUDGET |
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~ ...... MARKETING SPEND |
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~ ...... PRODUCT PRICING |
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~ ...... MARKETING BUDGET ALLOCATION |
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~ ...... MARKETING IMPLEMENTATION + CONTROL |
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~ ............ MARKETING TACTICS G7QG7 |
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~ ~ ...... 1: Sales Targeting |
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~ ~ ...... 2: Overall Marketing Mix |
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~ ~ ...... 3: Product Pricing |
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~ ~ ...... 4: Marketing Budgets |
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~ ~ ...... 5: Marketing Control |
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~ ~ ............ Operations |
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~ ~ ............ Markets + Trade Cell |
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~ ~ ............ Products |
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~ ~ ............ Competitors |
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~ .... MARKETING SUMMARY |
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~ .... MARKETING OBJECTIVES |
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~ .... HISTORIC FINANCIAL DATA |
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~ .... Historic Balance Sheet |
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~ ~ ...... Historic Costs & Margins |
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~ ~ ........ Historic Financial Ratios & Margins |
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~ ~ .......... Historic Operational Ratios & Margins |
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~ .... Financial forecast notes |
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~ .... MARKETING STRATEGY DEVELOPMENT FORECASTS |
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~ .... Base Forecast : Best Market Scenario Balance Sheet Forecast |
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~ ...... Base Forecast : Best Market Scenario Operational Costs Forecast |
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~ ........ Base Forecast : Best Market Scenario Financial Ratios |
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~ .......... Base Forecast : Best Market Scenario Operational Margins |
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~ .... Base Forecast : Median Market Scenario Balance Sheet Forecast |
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~ ...... Base Forecast : Median Market Scenario Operational Costs Forecast |
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~ ........ Base Forecast : Median Market Scenario Financial Ratios |
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~ .......... Base Forecast : Median Market Scenario Operational Margins |
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~ .... Base Forecast : Worst Market Scenario Balance Sheet Forecast |
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~ ...... Base Forecast : Worst Market Scenario Operational Costs Forecast |
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~ ........ Base Forecast : Worst Market Scenario Financial Ratios |
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~ .......... Base Forecast : Worst Market Scenario Operational Margins |
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~ .... Marketing Expenditure Balance Sheet Forecast |
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~ ...... Marketing Expenditure Operational Costs Forecast |
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~ ........ Marketing Expenditure Financial Ratios |
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~ .......... Marketing Expenditure Operational Margins |
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~ .... Market Segmentation Balance Sheet Forecast |
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~ ...... Market Segmentation Operational Costs Forecast |
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~ ........ Market Segmentation Financial Ratios |
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~ .......... Market Segmentation Operational Margins |
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~ .... Distribution Channel Improvement Balance Sheet Forecast |
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~ ...... Distribution Channel Improvement Operational Costs Forecast |
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~ ........ Distribution Channel Improvement Financial Ratios |
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~ .......... Distribution Channel Improvement Operational Margins |
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~ .... Export Sales Improvement Balance Sheet Forecast |
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~ ...... Export Sales Improvement Operational Costs Forecast |
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~ ........ Export Sales Improvement Financial Ratios |
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~ .......... Export Sales Improvement Operational Margins |
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~ .... Fixed Marketing Cost Objectives Balance Sheet Forecast |
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~ ...... Fixed Marketing Cost Objectives Operational Costs Forecast |
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~ ........ Fixed Marketing Cost Objectives Financial Ratios |
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~ .......... Fixed Marketing Cost Objectives Operational Margins |
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~ .... Variable Marketing Cost Objectives Balance Sheet Forecast |
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~ ...... Variable Marketing Cost Objectives Operational Costs Forecast |
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~ ........ Variable Marketing Cost Objectives Financial Ratios |
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~ .......... Variable Marketing Cost Objectives Operational Margins |
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~ .... General Marketing Process Cost Objectives Balance Sheet Forecast |
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~ ...... General Marketing Process Cost Objectives Operational Costs Forecast |
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~ ........ General Marketing Process Cost Objectives Financial Ratios |
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~ .......... General Marketing Process Cost Objectives Operational Margins |
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~ .... Distribution & Product Delivery Cost Objectives Balance Sheet Forecast |
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~ ...... Distribution & Product Delivery Cost Objectives Operational Costs Forecast |
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~ ........ Distribution & Product Delivery Cost Objectives Financial Ratios |
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~ .......... Distribution & Product Delivery Cost Objectives Operational Margins |
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~ .... Selling Cost Objectives Balance Sheet Forecast |
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~ ...... Selling Cost Objectives Operational Costs Forecast |
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~ ........ Selling Cost Objectives Financial Ratios |
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~ .......... Selling Cost Objectives Operational Margins |
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~ .... Advertising Cost Objectives Balance Sheet Forecast |
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~ ...... Advertising Cost Objectives Operational Costs Forecast |
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~ ........ Advertising Cost Objectives Financial Ratios |
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~ .......... Advertising Cost Objectives Operational Margins |
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~ .... Promotional & Pricing Cost Objectives Balance Sheet Forecast |
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~ ...... Promotional & Pricing Cost Objectives Operational Costs Forecast |
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~ ........ Promotional & Pricing Cost Objectives Financial Ratios |
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~ .......... Promotional & Pricing Cost Objectives Operational Margins |
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~ .... Sales Cost Improvement Balance Sheet Forecast |
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~ ...... Sales Cost Improvement Operational Costs Forecast |
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~ ........ Sales Cost Improvement Financial Ratios |
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~ .......... Sales Cost Improvement Operational Margins |
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~ .... Promotional Expenditure Balance Sheet Forecast |
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~ ...... Promotional Expenditure Operational Costs Forecast |
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~ ........ Promotional Expenditure Financial Ratios |
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~ .......... Promotional Expenditure Operational Margins |
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~ .... Target Markets Development Balance Sheet Forecast |
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~ ...... Target Markets Development Operational Costs Forecast |
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~ ........ Target Markets Development Financial Ratios |
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~ .......... Target Markets Development Operational Margins |
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~ .... Product Positioning Balance Sheet Forecast |
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~ ...... Product Positioning Operational Costs Forecast |
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~ ........ Product Positioning Financial Ratios |
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~ .......... Product Positioning Operational Margins |
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~ .... Product Branding + Multi-branding Investment Balance Sheet Forecast |
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~ ...... Product Branding + Multi-branding Investment Operational Costs Forecast |
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~ ........ Product Branding + Multi-branding Investment Financial Ratios |
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~ .......... Product Branding + Multi-branding Investment Operational Margins |
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~ .... Sales Personnel + Staff Improvement Balance Sheet Forecast |
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~ ...... Sales Personnel + Staff Improvement Operational Costs Forecast |
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~ ........ Sales Personnel + Staff Improvement Financial Ratios |
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~ .......... Sales Personnel + Staff Improvement Operational Margins |
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~ .... Financial data definitions |
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As a general introduction to this section it is useful to define the Objectives
facing the industry and make some broad statements as to where the company
management may want to go in the next few years. This discussion relates to the
Strategy or grand design to enable the industry to actually get there. This Strategy
is a suggested battle plan using the resources of marketing, finance and
processes elements; albeit, here one will emphasize the marketing elements.
One can, and should, use the scenarios and theoretical situations in order to
illustrate the concept of strategy. Thus this section provides a large number
of Scenarios which are available to ensure that corporate managers
and/or prospective investors are aware and cognizant of many of the foreseeable
eventualities.
Whether or not a particular company is a major player in the product Markets,
with a noteworthy market share of the countries in which they operate, is not
important - the essential question is whether the company wishes to evaluate
the Marketing Strategy options and act accordingly.
Clearly companies feel that the product markets will continue to have high
growth in the coming years and the Market data given below will confirm or deny
this proposition. The company managers will seek to provide many reasons for
the Medium and Long-Term growth of the product Markets. It is however
necessary for any observer to ensure that this optimism is well founded.
Any manager seeking to invest in the industry must assume an ambitious
objective - being the realization that the industry must retain, and expand,
its share of the market in relation to competitive and parallel products.
The questions managers and potential investors must ask are:-
Is product quality in the industry so well
regarded that buyers are willing to pay a premium of 5 to 10 percent more than
for comparable or parallel products?
Are service factors in the industry considered
the best by customers?
Is the distribution system of the industry so
structured that it can guarantee product and service delivery within a period less than
competitors or parallel products suppliers in each of the national markets?
Does the industry have dedicated
distribution channels and do these channels carry other competitive or parallel products?
Are the distribution channels for the industry
of a unit size greater than their competitors or parallel products suppliers and do they
thus have the necessary strengths and resources in their own local and/or
national markets?
In the product industry, companies face significant and aggressive
competitors:-
THIS SECTION COVERS THE COMPETITORS
COMPETITORS Industry Chief Overall Service Competitor Industry Main National Market Competitor Industry Main Regional / Local Market Competitor Industry Main Trade Cell Market Competitor Industry Main National Product Superiority Competitor Industry Main Trade Cell Product Superiority Competitor Industry Main National Price Competition Competitor Industry Main Trade Cell Price Competition Competitor Industry Main National Financial Strength Competitor Industry Main Trade Cell Financial Strength Competitor Industry Main National Customer Satisfaction Competitor Industry Main Trade Cell Customer Satisfaction Competitor Industry Main National Marketing Aggression Competitor Industry Main Trade Cell Marketing Aggression Competitor Industry Main New Product Development Competitor TIC |
These competitors are extremely unlikely to allow their opponents to gain any major competitive advantage in the near future.
BASIS FOR A MARKETING STRATEGY
MARKET SEGMENTATION
Market segmentation is the basic recognition that every market is made up of
distinguishable segments consisting of buyers with different needs, buying
styles, responses and product variations offered by the industry. No one offer
or approach by the industry to the market will satisfy all buyers. Each segment
of the market represents a somewhat different opportunity and the industry will
need to study the opportunities in different parts of the market before making product positioning moves.
There is no unique way to segment a market and if the management of the
industry has been professional they would already have found creative new ways
of presenting and marketing their products and services.
The first objective is that of geographic
segmentation and whilst companies cannot be strong everywhere it is necessary
for the company management to seriously consider where geographically
the best market potential will be found.
In general terms this section assumes that the potentially most valuable
geographic markets for companies (within the national market) are as follows in
terms of the trade cell:-
THIS SECTION COVERS THE TRADE CELL
TRADE CELL Industry Trade Cell Market / Sector 1 Industry Trade Cell Market / Sector 2 Industry Trade Cell Market / Sector 3 Industry Trade Cell Market / Sector 4 Industry Trade Cell Market / Sector 5 Industry Trade Cell Market / Sector 6 Industry Trade Cell Market / Sector 7 Industry Trade Cell Market / Sector 8 Industry Trade Cell Market / Sector 9 Industry Trade Cell Market / Sector 10 Industry Trade Cell Market / Sector 11 Industry Trade Cell Market / Sector 12 Industry Trade Cell Market / Sector 13 Industry Trade Cell Market / Sector 14 Industry Trade Cell Market / Sector 15 CT |
There is obviously considerable scope for and nationally based company to
improve its geographic coverage and the company's job is to study the
propensity to consume, the growth rates of different regions and nations, find
out where competitors are relatively weak (but the growth strong), and give top
consideration to those markets which fulfill the criteria.
Another way to break down the product market is by End
Uses and this too can prove useful in a geographic context.
Each discrete End Use calls for different types and mixes of product and
services as well as defining different types of customers. An analysis must be
made of the character, growth, and potential profitability of these different
segments of the market.
The product markets can also be analyzed by buyer description variables; for
example, type of buyer, customer size, customer class - customers can be
classified by their buying motive (economy, quality, service, etc.) or some
other variable. There are a host of alternative parts of the market on which
the industry could concentrate.
The market can also be approached in terms of specific
products and the industry can attempt to provide and market the best version of
those types of products and services that will experience the most rapid growth
in demand.
An easier course for any nationally based company is the provision of existing
products in new geographic markets and the provision of new or improved
products in existing geographic markets.
Can the industry face the challenge of the development of its existing product
ranges?
THIS SECTION COVERS THE PRODUCTS
PRODUCTS Industry Product Sector 1 Industry Product Sector 2 Industry Product Sector 3 Industry Product Sector 4 Industry Product Sector 5 Industry Product Sector 6 Industry Product Sector 7 Industry Product Sector 8 Industry Product Sector 9 Industry Product Sector 10 Industry Product Sector 11 Industry Product Sector 12 Industry Product Sector 13 Industry Product Sector 14 Industry Product Sector 15 CP |
The second objective of the industry marketing strategy is to select a specific
pattern of market concentration that will afford the
maximum opportunity to the company management to achieve its leadership
objective.
Companies cannot be everywhere and they must now go after more a viable market
position which will afford better profitability and prospects for future
success.
Can the industry follow the principle of more aggressive target marketing?
What makes any part of the market an attractive one for the industry?
The optimum target market segmentation for
the industry would have four characteristics:
1) The market segmentation is of sufficient current size.
2) The market segmentation has the potential for further growth.
3) The market segmentation is not exclusively dominated by one
competitor.
4) The market segmentation has some relative unsatisfied needs that a company
can serve particularly well.
If company management decide to seek a leadership position in only one market
segment, a so called single
segment concentration strategy, this will undoubtedly hamper the long-term
prospects for that company.
Usually one would expect company management to cultivate a mix of market
segments that hopefully have synergistic relations, that is, where strength in
one market segment gives the company an advantage in the other market segments.
This strategy is called a multiple segment
concentration.
The chosen company pattern of market concentration has set the course and
determines the products the company will offer, the customers the company will
serve, and the competitors the company will face.
In making Market Positioning decisions the industry needs to consider its
existing strategic structure, its operational facets and its existing
resources:
THIS SECTION COVERS THE OPERATIONS OF THE INDUSTRY
OPERATIONS Industry Operations & Activities 1 Industry Operations & Activities 2 Industry Operations & Activities 3 Industry Operations & Activities 4 Industry Operations & Activities 5 Industry Operations & Activities 6 Industry Operations & Activities 7 Industry Operations & Activities 8 Industry Operations & Activities 9 Industry Operations & Activities 10 Industry Operations & Activities 11 Industry Operations & Activities 12 Industry Operations & Activities 13 Industry Operations & Activities 14 Industry Operations & Activities 15 CO |
The third element of marketing strategy for company managers is to determine
how to enter a target market segment. The company can proceed through acquisition, internal
development, or collaboration with other companies. Indeed
this section may represent a similar Market Entry Strategy for an investor in
the industry.
Acquisition of an existing product or company is the easiest and quickest way
to enter a new market as it obviates the costly and time-consuming process of
attempting to build up internally the knowledge, resources and reputation
necessary to become an effective participant in that part of the market. In
fact, the following factors would favor acquisition:
1) The acquiring company has very little knowledge of the industry.
2) There is a strong advantage in entering the new market as soon as possible.
3) The predator would face several barriers to entry through internal
development, such as patents, substantial economies of scale, closed or
difficult-to-enter channels of distribution, costly advertising requirements,
or lack of raw materials or other supplies.
Some companies prefer to achieve most of their growth through internal
development. They feel that true leadership is only achieved by running their
own new product or research and development effort; they might feel that
acquiring a company will raise the brows of shareholders and others and/or face
the possibility of running foul of competition or fair trading legislation; or
indeed they could feel that the companies prone to acquisition are not very
good or are too highly priced. Finally there may simply be no suitable
companies available to acquire.
Entry into a new market or market segment may also be accomplished by
collaboration with others to jointly exploit the new opportunity. A major
advantage is that the risk is shared, and therefore reduced, for each of the
participating companies. Another advantage may be that each company brings
specific skills or resources whose lack makes it impossible for either company
to venture by itself. In the best joint-venture combinations, there are not
only complementary benefits but also a real synergy of resources and corporate
thought.
One might suggest that most companies should rely primarily on internal
development to secure its target market positions; but equally, for certain
market opportunities, the company might move towards acquisition, and yet in
other cases, might affect joint venture with other companies.
H87 Grid Definition
A vital constituent of marketing strategy is for the industry to determine how
it will profile its products and services in order to attract and sell to the
particular market segment. The key concept here is one of marketing mix.
Marketing mix is the set of controllable variables that the industry can use to
influence the responses and thereafter purchases of potential customers.
Many variables qualify as marketing-mix variables and the industry tend to use
a popular four-factor classification which they call the four P's:
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Place |
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Distribution Channels |
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Promotion |
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Advertising |
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Sales Promotion |
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Price |
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Pricing |
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END USER |
The industry marketing management will contend that buyers are influenced by
variables related to the product, the place, promotion and price.
Marketing mix functions, as a strategic concept, can be used by the industry to
improve the market position for its products.
If one considers two important factors, being, quality -v- price a matrix can
be formed for each of the products offered by the industry.
Nine different marketing-mix strategies can be generated:-
PRICE | ||||
HIGH | AVERAGE | LOW | ||
PRODUCT QUALITY |
HIGH | |||
MEDIUM | ||||
LOW |
A premium strategy consists of offering a high-quality product at a
premium price. This should be the strategy employed by the industry.
An average-quality strategy consists of offering an average product at
an average price. This is a strategy for the complacent and soon leads to
failure.
In many cases company managers should employ a penetration strategy,
which calls for offering a superior-quality product at a medium price. If
potential buyers can be convinced that products are of a comparable quality to
that of competitors but priced at 10-15% less, they might make their purchase
decision in favor of the company - thereby gaining market share.
Conditions have to be monitored and checked on an annual basis before a company
can confidently select such a strategy and in truth it is not entirely sure if
the industry has paid sufficient attention to this task.
First, company managers must really be convinced that the company's products
possess the same high quality and performance characteristics as the competitors.
This may not be so easy to demonstrate as may be supposed because many buyers
judge the product by its price. Secondly, potential buyers must feel that the
other elements of the marketing mix - such as service and associated products -
are comparable for the company and its competitors. Thirdly, company managers
must be sure that competitors will not react to the penetration strategy of the
company by lowering their prices. This is a real and very likely possibility
and in this case the company will neither gain market share nor recoup an
adequate return on its investment. Finally, company managers must check that
any proposed marketing-mix strategy is compatible with its other departments'
resources and competence. The company must be sure that it can develop the
quality products, achieve the necessary economies of scale, and handle the
necessary cash flows called for by a penetration strategy.
Product | |
Place | |
Promotion | |
H88 Grid Definition
The final element of the industry marketing strategy is that of timing.
Just because a company may have spotted a good market opportunity, set an
objective and thereafter developed a marketing strategy does not mean it would,
or indeed should, immediately enter the market. One may lose by moving too soon
or too late and thus proper sequencing and
timing are a key component of company strategy.
Let us return to the scenario where the company might decide that it would like
to increase its penetration of a particular product range and market sector
through a penetration pricing
strategy. First, it must visualize the sequence of activities that it would
have to initiate to launch this strategy. New products would have to be
designed and tested with potential buyers; process and operational
considerations would surface; distribution channels would have to be
established and trained; and sales promotion would have to be prepared. These
activities would have to be time estimated and sequenced so that company
management could know how long it would be before it could launch its actual
attack. These activities are even more critical during or soon after an
acquisition as staff is lost, margins eroded and cash-flow reduced.
There is also the question of whether this is an opportune time for company
managers to begin the activities in the strategic
sequence. Is the company destined for stagnation or prosperity? Are the major
competitors increasing their market share or are they minded and ready for an
aggressive push? These and other questions must be faced by the industry in
trying to determine the best moment to strike.
NEW MARKETS -v- NEW PRODUCTS | ||
PRESENT PRODUCTS | NEW PRODUCTS | |
PRESENT MARKETS | Market Penetration | Product Development |
NEW MARKETS | Market Development | Product Diversification |
Much of what we have described above can be regarded as basic strategic planning
issues for the industry. The next step is the development of written plans in
the form of specific targets, budgets,
and work assignments which combine to formulate
the tactics of accomplishing the given objectives.
The marketing objectives and targets form the backbone of the company manager's
corporate plan. A commitment is made to achieve a certain level of sales, and
then all of the resource decisions on
marketing, processes, finance and personnel are made. Here we shall concentrate
on the major concepts used in developing tactical
marketing plans and budgets for the industry.
The precise tactics available to the industry are described (in the various
following parts of this report) and this part of the report will simply look at
the broad issues.
The marketing plan begins with a statement of sales targets for each of the
company's operational divisions and products. The sales target does not
represent an arbitrary choice of a sales volume but instead emerges from an
analysis of the profitability of different possible marketing strategies. The
sales target is allocated to the performing units of the company, such as sales
regions, sales districts, and finally individual salesmen. They often go under
the name of sales quotas
and are based on the past performance and estimated potential facing each of
these units.
To enable the various marketing tasks to be carried out, the company develops a
total marketing budget and this budget is fully discussed in this report.
Normally, the company sees the total marketing budget as some conventional
percentage of the sales target. This marketing budget and the viewed percentage
of targeted sales turnover varies for each operating division and product
group. These variations are startlingly different in some cases.
Companies when entering a new market are especially interested in learning what
the marketing budget-to-sales ratio is in
the typical competitor company, although this information is usually highly
confidential and not easy to obtain. Furthermore a particular competitor may
spend more than the normal ratio in the hope of achieving a higher market
share. Ultimately, company managers should analyze the marketing work that has
to be done to attain a given sales volume or market share and then price this
work; the result is the desired marketing budget.
The company has to decide how to allocate the total marketing budget for each
operational division and product group to the various marketing-mix tools, such as advertising, sales
promotion and personal selling.
Apparently the question of the relative emphasis of the tools is settled by the
industry earlier in the forming of a marketing strategy. Yet there may still be
conflict among those in different parts of the marketing operation as to how
much money they need for their job. A sales manager usually feels that hiring
one extra salesman for $10,000 per 3 months will do more good than placing a
one-page ad in a magazine. The market research manager usually feels that
spending $10,000 to get some basic information about customer needs is worth
more than either of the two other uses of the money. Albeit it is clear that
the opportunity cost of this book has in this circumstance been directed by the
reader to this purchase - evidently the opportunity costs associated to Marketing-Mix decisions are varied and wide.
Pricing is the fundamental revenue-producing element in the company marketing
plan. The rough pricing guide-lines would be considered earlier as a matter of
marketing strategy, but the plan requires a specific level of price to be set
within the pre-defined strategic parameters. The planned realized price as well
as the list price before discounts, promotions and allowances must be
determined and the company's marketing management must carefully consider the
three elements of demand, cost, and competition in setting the planned price.
Multi-product firms must resolve each year how much money to allocate to each
of the products in its line. The product line consists of a mixed bag of new
products that are fairly small but have bright futures; important products that
have been around for a while and face continued strong demand; and other
products, both large and small, that are the tried breadwinners of the past and
are just limping along. The company has to make a basic determination of which
products call for increased market budgets, which call for harvesting, and
which call for reduced marketing budgets.
For example, one company competitor and prime practitioner of strategic
planning, recently decided to put the maximum company resources into specific
technology driven products - based on their highly leveraged total earnings
growth in recent years - it decided on a level of steady reinvestment in the
targeted product areas. It decided to disinvest in some smaller product areas;
whilst conversely putting considerable funds into new venture opportunities.
Company managers have to show the same resolve and determination if they are to
succeed in the long-term.
These plan decisions - on sales targets, total marketing budget, marketing mix allocation, pricing, and
marketing budget allocation to products - constitute the key components of the
company's marketing programme.
A plan is nothing unless, as the saying goes, it degenerates into work
and whilst the company's marketing plan is a blueprint for work and
accomplishments, it should define what is supposed to be accomplished during
each period along the way. Thus the company's product sales targets are stated
not only in total and by performing units but also by periods, such as months
and quarters. The same is true of the company's marketing budgets.
One of the major jobs of company functional managers, besides planning,
supervising and doing, is controlling and each manager should know what to
watch. The product sales managers scans each period the sales volumes and
expenses of each sales effort against individual quotas and budgets; he
monitors those periods which do not perform according to target; he resolves
problems and shortfalls by constructive fire-fighting and implementing
ready-formulated emergency plans; he analyses new and potential problem areas
which may cause sales problems during the forecast period.
Simultaneously the company's sales director examines the actual sales of his
operational units and brings in alternative plans when actual income deviates
from targets. Even the Chief Executive of the company gets on the telephone
when he looks at total sales for the period and they are below target.
This is only one aspect of the control system which the company calls the
annual company plan. Company management also exercises profitability control by
examining the real profitability of its various products, markets, and
territories and different marketing channels. Finally, there is the major issue
of strategic control, that is, whether the industry products, resources and
objectives are properly matched to the right markets. In times of rapid change,
the industry marketing strategy can easily become inappropriate to its
opportunities and threats. The job of the Marketing Director is essentially to
evaluate the final and ultimate Objectives of strategic control.
Product Pricing |
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H89 Grid Definition
The Marketing Management in the industry is the catalytic agent that interprets
market needs and translates them into meaningful products and services. To do
this, the industry management goes through a strategic-marketing process
consisting of analyzing opportunities, choosing objectives, developing strategy, formulating plans and carrying
out implementation and control.
The opportunities available to the industry are not simply the general
opportunities in the environment - but that subset for which a particular
operating unit would enjoy a differential advantage in carrying out marketing
actions. It must have a set of distinctive abilities that match well the
success requirements for effectiveness in that area. Company management can
generate a systematic picture of its relevant opportunities by first
considering intensive growth opportunities within its present product-market
scope (such as market penetration, market development and product development),
then considering integrative growth opportunities within its core marketing
system (such as backward, forward and horizontal integration) and finally
considering diversification growth opportunities outside of its core marketing
system (such as concentric, horizontal and conglomerate diversification).
To choose among opportunities, the industry must refer to its basic purpose and
mission, which should be defined in terms of meeting generic needs, not
producing particular products. For any opportunity, it must develop a
well-integrated set of objectives that are hierarchical, quantitative,
realistic and consistent.
Whereas objectives are a statement of where the industry wishes to go, strategy
is a grand design for getting there.
The major elements in formulating marketing strategy are; market segmentation,
market positioning, market entry strategy, marketing-mix strategy and timing
strategy.
A strategy must be translated into a concrete documented plan that specifies
sales targets, budgets and work assignments. The key marketing decisions made
in the plan are sales targets, total marketing budget, marketing-mix
allocation, pricing and marketing budget allocation to products.
Finally, the work specified in the plan must be implemented and controlled. A
good plan provides for periodic checking and corrective action by different
levels of management. In addition to annual plan marketing, management must
carry out profitability control and strategic control.
MARKETING OBJECTIVES |
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Company Objectives |
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Increase Return on Investment |
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Marketing Objectives |
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Increase Return |
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Reduce Investment Base |
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Increase Advertising |
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Reduce Costs |
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Marketing Strategy |
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Sell More |
Increase Use |
Increase Prices |
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Sales Objectives |
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Sell more Basic Products |
Sell more New Products |
Cut Distribution |
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Match Products to Customer Needs |
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Sales Strategy |
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Make Tangible Sales Plans & Customer Service Requirements |
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Study Customer Requirements |
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Advertising Objectives |
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Make Advertising & Promotion Plans |
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Advertising Strategy |
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Implement Advertising & Promotions |
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F_H - FIN_HIST.HTM HISTORIC FINANCIAL DATA
MARKETING STRATEGY DEVELOPMENT BALANCE SHEET FORECASTS
The MARKETING STRATEGY DEVELOPMENT FINANCIAL SCENARIOS BALANCE SHEET FORECASTS
section gives a series of Balance Sheet Forecasts for the industry using a
number of assumptions relating to the strategic marketing decisions available
to the management of the industry.
The Balance sheet forecast given shows the effects of financial improvements
which marketing Management is likely to recommend:
MARKETING STRATEGY DEVELOPMENT FINANCIAL SCENARIOS
- Base Forecast : Best Market Scenario
- Base Forecast : Median Market Scenario
- Base Forecast : Worst Market Scenario
- Marketing Expenditure
- Market Segmentation
- Distribution Channel Improvement
- Export Sales Improvement
- Fixed Marketing Cost Objectives
- Variable Marketing Cost Objectives
- General Marketing Process Cost Objectives
- Distribution & Product Delivery Cost Objectives
- Selling Cost Objectives
- Advertising Cost Objectives
- Promotional & Pricing Cost Objectives
- Sales Cost Improvement
- Promotional Expenditure
- Target Markets Development
- Product Positioning
- Product Branding + Multi-branding Investment
- Sales Personnel + Staff Improvement
Managers in the industry will, in both the short-term and the long-term, have
vital decisions to make regarding the marketing improvements, margins and
profitability and these decisions will need to be evaluated in light of the
customers, markets, competitors, products, industry and internal factors. The
scenarios given isolate a number of the most important factors and provide
balance sheet forecasts for each of the scenarios.
The data provides a short and medium term forecast covering the next 6 years
for each of the Forecast Financial and Operational items. The Financial and
Operational Data sections show each of the items listed below in terms of
forecast data and covers a period of the next 6 years.
F0M| MEDIAN FORECAST : Financials
G0M| MEDIAN FORECAST : Margins & Ratios
F0B| BEST FORECAST : Financials
G0B| BEST FORECAST : Margins & Ratios
F0W| WORST FORECAST : Financials
G0W| WORST FORECAST : Margins & Ratios
F01 | MARKETING EXPENDITURE : Financials
G01 | MARKETING EXPENDITURE : Margins & Ratios
F03 | MARKET SEGMENTATION : Financials
G03 | MARKET SEGMENTATION : Margins & Ratios
F06 | DISTRIBUTION CHANNEL IMPROVEMENT : Financials
G06 | DISTRIBUTION CHANNEL IMPROVEMENT : Margins & Ratios
F11 | EXPORT SALES IMPROVEMENT : Financials
G11 | EXPORT SALES IMPROVEMENT : Margins & Ratios
F25 | FIXED MARKETING COST OBJECTIVES : Financials
G25 | FIXED MARKETING COST OBJECTIVES : Margins & Ratios
F26 | VARIABLE MARKETING COST OBJECTIVES : Financials
G26 | VARIABLE MARKETING COST OBJECTIVES : Margins & Ratios
F27 | GENERAL MARKETING PROCESS COST OBJECTIVES : Financials
G27 | GENERAL MARKETING PROCESS COST OBJECTIVES : Margins & Ratios
F28 | DISTRIBUTION & PRODUCT DELIVERY COST OBJECTIVES : Financials
G28 | DISTRIBUTION & PRODUCT DELIVERY COST OBJECTIVES : Margins & Ratios
F30 | SELLING COST OBJECTIVES : Financials
G30 | SELLING COST OBJECTIVES : Margins & Ratios
F31 | ADVERTISING COST OBJECTIVES : Financials
G31 | ADVERTISING COST OBJECTIVES : Margins & Ratios
F32 | PROMOTIONAL & PRICING COST OBJECTIVES : Financials
G32 | PROMOTIONAL & PRICING COST OBJECTIVES : Margins & Ratios
F37 | SALES COST IMPROVEMENT : Financials
G37 | SALES COST IMPROVEMENT : Margins & Ratios
F40 | PROMOTIONAL EXPENDITURE : Financials
G40 | PROMOTIONAL EXPENDITURE : Margins & Ratios
F41 | TARGET MARKETS DEVELOPMENT : Financials
G41 | TARGET MARKETS DEVELOPMENT : Margins & Ratios
F43 | PRODUCT POSITIONING : Financials
G43 | PRODUCT POSITIONING : Margins & Ratios
F44 | PRODUCT BRANDING + MULTI-BRANDING INVESTMENT : Financials
G44 | PRODUCT BRANDING + MULTI-BRANDING INVESTMENT : Margins & Ratios
F48 | SALES PERSONNEL + STAFF IMPROVEMENT : Financials
G48 | SALES PERSONNEL + STAFF IMPROVEMENT : Margins & Ratios
MKT_DEFI.HTM MARKET DEFINITIONS
Acquisition, 6
Advertising, 11, 19
Analyzing opportunities, 25
Associated Products & Services, 11
Average-Quality Strategy, 12
Balance Sheet Advertising Cost Objectives, 82
Balance Sheet Base Forecast : Best Market Scenario, 34
Balance Sheet Base Forecast : Median Market Scenario, 38
Balance Sheet Base Forecast : Worst Market Scenario, 42
Balance Sheet Distribution Channel Improvement, 54
Balance Sheet Distribution & Product Delivery Cost, 74
Balance Sheet Export Sales Improvement, 58
Balance Sheet Fixed Marketing Cost Objectives, 62
Balance Sheet General Marketing Process Cost Objectives, 70
Balance Sheet Historic, 28
Balance Sheet Market Segmentation, 50
Balance Sheet Marketing Expenditure, 46
Balance Sheet Product Branding + Multi-branding, 106
Balance Sheet Product Positioning, 102
Balance Sheet Promotional Expenditure, 94
Balance Sheet Promotional & Pricing Cost Objective, 86
Balance Sheet Sales Cost Improvement, 90
Balance Sheet Sales Personnel + Staff Improvement, 110
Balance Sheet Selling Cost Objectives, 78
Balance Sheet Target Markets Development, 98
Balance Sheet Variable Marketing Cost Objectives, 66
Bargain, 12
BASIS FOR A MARKETING STRATEGY, 3
BASIS FOR MARKETING TACTICS, 18
Branding, 11
Budgets, 18
Budget-to-sales ratio, 18
Buyer description variables, 4
Cheap, 12
Choosing objectives, 25
Collaboration, 6
Competitive Market Segmentation Position, 7
Competitor Dominated Market Segmentation, 7
Competitors, 2
Costs & Margins Historic, 29
Dedicated distribution channels, 1
Developing strategy, 25
Discounts & Promotional Offers, 11
Distribution channels, 1, 11
Distribution Coverage, 11
Distribution system, 1
End Uses, 4
Features & Options, 11
Financial data definitions, 115
Financial forecast notes, 32
Financial Ratios Advertising Cost Objectives, 84
Financial Ratios Base Forecast : Best Market Scenario, 36
Financial Ratios Base Forecast : Median Market Scenario, 40
Financial Ratios Base Forecast : Worst Market Scenario, 44
Financial Ratios Distribution Channel Improvement, 56
Financial Ratios Distribution & Product Delivery, 76
Financial Ratios Export Sales Improvement, 60
Financial Ratios Fixed Marketing Cost Objectives, 64
Financial Ratios General Marketing Process Cost, 72
Financial Ratios Market Segmentation, 52
Financial Ratios Marketing Expenditure, 48
Financial Ratios Product Branding + Multi-branding, 108
Financial Ratios Product Positioning, 104
Financial Ratios Promotional Expenditure, 96
Financial Ratios Promotional & Pricing Cost Objectives, 88
Financial Ratios Sales Cost Improvement, 92
Financial Ratios Sales Personnel + Staff Improvement, 112
Financial Ratios Selling Cost Objectives, 80
Financial Ratios Target Markets Development, 100
Financial Ratios Variable Marketing Cost Objectives, 68
Financial Ratios & Margins Historic, 30
FORMULATING PLANS, 18, 25
Geographic segmentation, 3
Guarantee product, 1
HISTORIC FINANCIAL DATA, 27
Hit & Run, 12
Implementation and control, 25
Internal development, 6
Loss-Leader, 12
Market concentration, 5
MARKET ENTRY STRATEGY, 6
MARKET POSITION, 7
MARKET POSITIONING, 5
MARKET SEGMENTATION, 3
MARKETING BUDGET, 18
MARKETING BUDGET ALLOCATION, 19
Marketing Budgets, 21
Marketing Control, 21
MARKETING IMPLEMENTATION + CONTROL, 20
MARKETING MIX, 13
Marketing mix allocation, 19
MARKETING OBJECTIVES, 26
MARKETING SPEND, 19
MARKETING STRATEGY DEVELOPMENT, 1
MARKETING STRATEGY DEVELOPMENT FORECASTS, 33
MARKETING SUMMARY, 25
MARKETING TACTICS, 21
MARKETING-MIX, 11
Marketing-Mix decisions, 19
Marketing-mix tools, 19
Multiple segment concentration, 5
Operational Costs Advertising Cost Objectives, 83
Operational Costs Base Forecast : Best Market, 35
Operational Costs Base Forecast : Median Market, 39
Operational Costs Base Forecast : Worst Market, 43
Operational Costs Distribution Channel Improvement, 55
Operational Costs Distribution & Product Delivery, 75
Operational Costs Export Sales Improvement, 59
Operational Costs Fixed Marketing Cost Objectives, 63
Operational Costs General Marketing Process Cost, 71
Operational Costs Market Segmentation, 51
Operational Costs Marketing Expenditure, 47
Operational Costs Product Branding + Multi-branding, 107
Operational Costs Product Positioning, 103
Operational Costs Promotional Expenditure, 95
Operational Costs Promotional & Pricing Cost, 87
Operational Costs Sales Cost Improvement, 91
Operational Costs Sales Personnel + Staff Improvement, 111
Operational Costs Selling Cost Objectives, 79
Operational Costs Target Markets Development, 99
Operational Costs Variable Marketing Cost Objectives, 67
Operational Facets, 5
Operational Margins Advertising Cost Objectives, 85
Operational Margins Base Forecast : Best Market, 37
Operational Margins Base Forecast : Median Market, 41
Operational Margins Base Forecast : Worst Market, 45
Operational Margins Distribution Channel Improvement, 57
Operational Margins Distribution & Product Delivery, 77
Operational Margins Export Sales Improvement, 61
Operational Margins Fixed Marketing Cost Objectives, 65
Operational Margins General Marketing Process Cost, 73
Operational Margins Market Segmentation, 53
Operational Margins Marketing Expenditure, 49
Operational Margins Product Branding + Multi-branding, 109
Operational Margins Product Positioning, 105
Operational Margins Promotional Expenditure, 97
Operational Margins Promotional & Pricing Cost, 89
Operational Margins Sales Cost Improvement, 93
Operational Margins Sales Personnel + Staff Improvement, 113
Operational Margins Selling Cost Objectives, 81
Operational Margins Target Markets Development, 101
Operational Margins Variable Marketing Cost Objectives, 69
Operational Ratios & Margins Historic, 31
Optimum target market, 5
Outlet Locations, 11
Overall Marketing Mix, 21
Overpriced, 12
P R & Publicity, 11
Packaging & Merchandising, 11
Parallel products, 1
Parallel products suppliers, 1
Payment & Terms of Trading, 11
Penetration, 12
Penetration pricing strategy, 17
Penetration Strategy, 12
Personal Contact, 11
Personal selling, 19
Place, 11, 13
Potential Growth for Market Segmentation, 7
Premium, 12
Premium Strategy, 12
Present Products -v- New Products, 17
Price, 11
Price : Average Strategy, 13
Price : Premium Strategy, 13
Pricing, 11, 19
Product, 11, 13
Product Availability -v- Locations, 11
Product Handling Factors, 11
Product positioning, 3
PRODUCT PRICING, 19, 21
Product quality, 1
Product Range, 4
Product Ranges, 11
Promotion, 11, 13
Quality, 11
QUALITY -v- PRICE, 12
Resource decisions, 18
Sales Promotion, 11, 19
Sales quotas, 18
Sales Targeting, 21
SALES TARGETS, 18, 19
Sales / Market Territories, 11
Sequencing and timing, 17
Service delivery, 1
Service factors, 1
Service level, 11
Shoddy, 12
Single segment concentration strategy, 5
Specific products, 4
Strategic sequence, 17
Style & Image, 11
Sufficient Current Market Segmentation, 7
Tactical marketing plans, 18
Target marketing, 5
Timing, 17
TIMING STRATEGY, 17
Total marketing budget, 19
Trade Cell, 3
Unsatisfied Market Segmentation, 7
Warranty & After-Sales, 11
Work assignments, 18
acquisition
Advertising Cost Objectives
Advertising
advertising
analyzing opportunities
Associated Products & Services
Average-Quality Strategy
Bargain
Base Forecast : Best Market Scenario
Base Forecast : Median Market Scenario
Base Forecast : Worst Market Scenario
BASIS FOR A MARKETING STRATEGY
BASIS FOR MARKETING TACTICS
Branding
budget-to-sales ratio
budgets
buyer description variables
Cheap
choosing
collaboration
Competitive Market Segmentation Position
Competitor Dominated Market Segmentation
Competitors
dedicated distribution channels
developing
strategy
Discounts & Promotional Offers
Distribution & Product Delivery Cost Objectives
Distribution Channel Improvement
distribution channels
Distribution Channels
Distribution Coverage
distribution system
End Uses
Export Sales Improvement
Features & Options
Fixed Marketing Cost Objectives
FORMULATING
PLANS
formulating
plans
General Marketing Process Cost Objectives
geographic segmentation
guarantee
product
HISTORIC FINANCIAL DATA
Hit
& Run
implementation and control
work assignments
internal development
Loss-Leader
market
MARKET ENTRY STRATEGY
MARKET
POSITION
MARKET
POSITIONING
MARKET
SEGMENTATION
Market
Segmentation
marketing budget allocation
MARKETING BUDGET ALLOCATION
MARKETING
BUDGET
Marketing
Budgets
Marketing
Control
Marketing Expenditure
MARKETING IMPLEMENTATION + CONTROL
marketing mix allocation
MARKETING
MIX
MARKETING
OBJECTIVES
MARKETING
SPEND
MARKETING STRATEGY DEVELOPMENT FORECASTS
MARKETING STRATEGY DEVELOPMENT
MARKETING
SUMMARY
MARKETING
TACTICS
Marketing-Mix
marketing-mix
tools
MARKETING-MIX
multiple
segment
Operational
Facets
optimum target market
Outlet
Locations
Overall Marketing Mix
Overpriced
P
R & Publicity
Packaging & Merchandising
parallel products suppliers
parallel
products
Payment & Terms of Trading
penetration pricing strategy
Penetration
Strategy
Penetration
Personal
Contact
personal
selling
Place
Place
Potential Growth for Market Segmentation
Premium
Strategy
Premium
Present Products -v- New Products
Price : Average Strategy
Price : Premium Strategy
Price
Pricing
pricing
Product Availability -v- Locations
Product Branding + Multi-branding Investment
Product Handling Factors
Product
Positioning
product
positioning
PRODUCT
PRICING
Product
Pricing
product
quality
Product
Range
Product
Ranges
Product
Product
Promotion
Promotion
Promotional & Pricing Cost Objectives
Promotional Expenditure
QUALITY
-v- PRICE
Quality
resource
decisions
Sales / Market Territories
Sales Cost Improvement
Sales Personnel + Staff Improvement
sales
promotion
Sales
Promotion
sales
quotas
Sales
Targeting
SALES
TARGETS
sales
targets
Selling Cost Objectives
sequencing and timing
service
delivery
service
factors
Service
level
Shoddy
single segment concentration strategy
specific
products
strategic
sequence
Style
& Image
Sufficient Current Market Segmentation
tactical marketing plans
target
marketing
Target Markets Development
TIMING
STRATEGY
timing
total marketing budget
Trade
Cell
Unsatisfied Market Segmentation
Variable Marketing Cost Objectives
Warranty & After-Sales
MARKETING STRATEGY DEVELOPMENT
Competitors
BASIS FOR A MARKETING STRATEGY
MARKET
SEGMENTATION
Trade
Cell
Product
Range
MARKET
POSITIONING
Operational
Facets
MARKET ENTRY STRATEGY
MARKETING-MIX
Product
Place
Promotion
Price
QUALITY
-v- PRICE
Premium
Strategy
Average-Quality Strategy
Penetration
Strategy
TIMING
STRATEGY
Present Products -v- New Products
BASIS FOR MARKETING TACTICS
FORMULATING
PLANS
SALES
TARGETS
MARKETING
BUDGET
MARKETING
SPEND
PRODUCT
PRICING
MARKETING BUDGET ALLOCATION
MARKETING IMPLEMENTATION + CONTROL
MARKETING
SUMMARY
MARKETING
OBJECTIVES
HISTORIC FINANCIAL DATA
MARKETING STRATEGY DEVELOPMENT FORECASTS
MARKET
POSITION
Sufficient Current Market Segmentation
Potential Growth for Market Segmentation
Competitive Market Segmentation Position
Unsatisfied Market Segmentation
Competitor Dominated Market Segmentation
MARKETING
MIX
Product
Place
Promotion
Price : Premium Strategy
Price : Average Strategy
MARKETING
TACTICS
Sales
Targeting
Overall Marketing Mix
Product
Pricing
Marketing
Budgets
Marketing
Control
Base Forecast : Best Market Scenario
Base Forecast : Median Market Scenario
Base Forecast : Worst Market Scenario
Marketing Expenditure
Market
Segmentation
Distribution Channel Improvement
Export Sales Improvement
Fixed Marketing Cost Objectives
Variable Marketing Cost Objectives
General Marketing Process Cost Objectives
Distribution & Product Delivery Cost Objectives
Selling Cost Objectives
Advertising Cost Objectives
Promotional & Pricing Cost Objectives
Sales Cost Improvement
Promotional Expenditure
Target Markets Development
Product
Positioning
Product Branding + Multi-branding Investment
Sales Personnel + Staff Improvement