Marketing Strategy-The first steps

Prof R K Gupta
BE (Hons), MBA, FIE
Aravali Institute of Management
Jodhpur (Rajasthan)
E-mail : /

The most important factors driving product or service development should be customers and the market. Development should reflect the current and future needs of customers, potential customers and the business environment.The natural life cycle of products and services is always important. Constant updating and modification is essential to stay competitive.

Product/service development may seem straightforward in theory but the reality of changing working practices can be difficult. Companies with successful product / service development often display:

  • Clear development strategies
  • Well organized product / service teams
  • Cultures of continuous improvement and creative thinking
  • Management commitment to product / service development
  • Well defined product/service development processes

Perhaps most important is a clear product / service development strategy in the marketing plan. This should highlight short and long term opportunities for development and decide a strategic line. Several options can be considered:


Businesses can sell their existing products and services, or develop new ones. With either approach, they can target familiar (existing) or new markets. The Ansoff matrix is a marketing planning model used to map alternative directions for a business, with their associated risk factors. At its simplest, the Ansoff Matrix uses a classic 2 by 2 box to give alternative growth strategies, each with a different level of risk attached.

Market Development
e.g. exporting to different countries,
finding new audience / use for
Existing product

e.g. introduce completely new
product or service to new audience

Increase Market Penetration
e.g. reduce price, increase
promotion, increase distribution
(do not change product or service)

Product / Service Improvement
e.g. improve the production,
performance, delivery or
appearance of existing products or

By analyzing your current position with your existing products and services you can then highlight new opportunities and decide on a strategic line.


A business may plan to develop its product range, by gradually phasing out, modifying and introducing products or services. There are various ways to generate new products / services ideas.

Market Research This applies to existing and new products or services. Knowledge about competitor activity and market direction will be rewarded with shorter development timescales.

Brainstorming This can be an effective way for creating new ideas for products and services. Sessions can include staff, customers and suppliers. All idea's, however trivial should be written down for analysis later on. Often, what might seem a strange idea can lead to other idea's being generated by other people.

Idea suggestion schemes encouraging all members of staff to contribute can be important for any business. These schemes not only prove that companies welcome change, but more importantly, encourage staff involvement in continuous improvement. There are two types of scheme:

  • Individual suggestions
  • Group suggestions.

Suggestion schemes let staff speak out about problems and share ideas. In Long term, they can build positive employee participation. Total commitment to these schemes helps avoid an "us and them" environment. Employees should, where possible, be given responsibility and ideas implemented quickly and efficiently. Reward systems may be appropriate. Studies have shown that implementing an idea is the most rewarding aspect for an employee.


A large number of new product/service opportunities can be generated by:

  • Referring to relevant sources
  • Using analytical brainstorms
  • Applying creative idea generation

Clearly, no business can develop all ideas, so screening is needed to evaluate development potential. Based on identical principals, the key evaluation criteria should harmonize with planned strategies. A development team can consider all options, removing any 'wild cards', to find the most promising opportunities.

Strategy and planning

A planned strategy for successful development is central to any business. Not only is a strategy integral to starting a business, but marketing plans can be adapted and expanded as the business develops. A marketing and sales strategy expresses how the company intends to meet its stated objectives.


A company's Mission Statement expresses what a business is, and what it wants to become. These overall business objectives are defined by:

  • The market and the products offered
  • Why the company is selling those products
  • Unique aspects of the company to customers and against competition
  • The company's ambitions
  • Targets for achievement

In a marketing plan, these long-term objectives must be stated as quantified  goals - e.g. 'improving profits' might be targeted by setting a goal of profit growth of 20% in one year. Goals should also be prioritized.


Before finalizing its marketing plan, a company needs to look at itself and its markets to analyze:

  • Its internal strengths and weaknesses
  • Why customers buy its products
  • How and where customers buy
  • Success or failure of past initiatives

A company should also take an outward look at its environment - the world, the market, the market segment and competitors. External factors affecting buying can include:

  • Environmental – such as weather or  season.
  • Socio-economic and political change
  • Market size
  • Channels for promotion and selling
  • Competitors' products
  • Consumer interests


With information about the situation in hand, and factors causing it, the company next needs to modify its marketing plan to adjust business activities towards increased profitability. This could include:

  • Finding alternative channels for selling
  • Improving internal systems and situations
  • Adjusting products to the market


After a marketing and sales plan is implemented, a business must regularly measure and review its progress. It should:

  • Track - monthly, or quarterly - each sales person and product area
  • Analyze the cost per customer of converting sales
  • Monitor and analyze numbers of customers acquired and lost
  • Examine external factors

Make adjustments for changes in market


  • Companies need to set overall business objectives
  • Objectives should be stated as reasonable goals
  • Marketing plans are based on many factors
  • External and internal situations need to be considered
  • Implementation of a marketing plan requires adjustment to many factors
  • Regular monitoring and measurement of marketing and sales activity is essential

Successful businesses focus on getting the basics of marketing right. Marketing is based on identifying and satisfying customers' needs – profitably. It encompasses market research, pricing, promotion, distribution, selling, customer care, and much more. In the following briefing important points will help you plan and monitor your marketing. It covers:

-The basic objectives of all marketing.
-Reviewing your market and how you fit into it.
-Creating a marketing strategy.
-Setting out your marketing action plan.

Basic marketing objectives

Every marketing activity you undertake should help you to achieve at least one of the four results below – which, in turn, will lead to increased profitability.

A. You retain your existing customers, provided they contribute to your profitability.
A poor retention rate means you have to spend heavily on promotion and sales, to replace the customers you have lost.

B. Your customers make larger purchases. Replacing two Rs10,000 orders with a single order for Rs 20,000 improves your profitability, as you halve the cost of selling and administration.

C. Your customers purchase more products from your range. It is generally much easier, and therefore more profitable, to make an additional sale to an existing customer than to make a first sale to a new customer.

D. You win new customers.
Identify your best customers and target new customers with similar profiles.

The market

Understanding the market allows you to target promising market segments which suit your strengths.

A. Who are the users of products like yours? Divide them into different categories (segments), to help you spot the best opportunities. For example, a pet products company might use three levels of segmentation:
Pets generally, type of pet (e.g. dog), and Breed (e.g. Labrador). The corresponding products are feeding dishes (for all pets), dog leads, and a Labrador video.

B. What do the users value most in your products? How do they choose between different suppliers?

C. How can you reach the customers? Or, put in another way, how do your customers purchase your product?
The obvious channels might include direct sales, wholesalers, retail, agents and distributors and the Internet.
Consider alternative channels and influencers. For example, one accounting software company built its success on using the accountancy profession as a channel to reach smaller businesses.

D. What size is the market? Is it expanding or declining? What are the key trends?
Be realistic. For example, the market for a high street shop is probably restricted to people who already visit the town center.

E. What is the competition doing? Profile your competitors and their products. Ask their customers why they prefer the competitor's products to yours.

F. What other factors influence your business environment? For example, government expenditure, imports, new technology or quality standards.

SWOT analysis

SWOT analysis reveals your strengths, weaknesses, opportunities and threats. It is a good way of summarizing your position in each key market segment vis-à-vis your competitors.

A. Identify the critical success factors for you and your competitors. Give each factor a weighting (out of ten) according to its importance. Critical success factors might include product performance, range of products, speed of order fulfillment, customer service and low costs.

B. Score your business for each factor and multiply the score by its weighting. Then repeat the process for each competitor. By listing the results in a table you can present a clear picture of your relative strengths and weaknesses.

C. Identify opportunities and threats by brainstorming ideas using two headings:
-Organizations (and individuals) that directly affect your business.
-The broader business environment (e.g. new technology, tax, legislation).

Marketing audit

Your marketing audit pulls together the key information. It gives you a clear understanding of your market, how you fit into it, and how effective your previous marketing has been.

A. Analyze each market segment you sell into

B. Rank your customers in order of their importance to your business.Your top customers are those which account for the most sales and profit – or which will in the future.
Consider the opportunities to grow customer accounts by selling them additional products in your range.

C. Rank which products (or parts of your business) are the most profitable. Once you have accounted for their proper share of overhead costs, some activities may turn out to be loss-making.

"When segmenting your market, consider factors like age, gender, income, location, occupation and interests. Or, for business customers, factors like size and industry sector." (Mike Ewart-Smith, White grove Group)

Barriers to entry
Barriers to entry prevent new businesses competing with you, and vice versa. Three common barriers are:

A. Product differentiation.
For example, a specialist prepared meats supplier can thrive alongside the major food companies (which service the mass market).

B. Access to distribution channels.
For example, if you want a retailer to stock your product, you may have to displace an existing product to win shelf space.

C. Customer loyalty.
For example, a firm of accountants with good customer service should have excellent customer retention (even if its prices are high), due to the personal nature of the relationship.
"Research shows that it can cost up to 30 times as much to get a new customer as it does to keep an existing one. It pays to stay very close to your customers, so you know their exact needs, today and tomorrow. Your aim is to be irreplaceable as their supplier."
(Mike Johnston, Chartered Institute of Marketing)

D. Analyze the reasons why customers buy from you, and from your competitors.

E. Review every marketing initiative you undertook in the previous period, to see what worked.
Most marketing can be measured

Your marketing strategy
Successful strategies take a deliberate step-by-step approach, focusing on a limited set of well-defined objectives.

A. Which market segments, and which individual customers, will you target?
Aim to consolidate your position in your existing market segments before you try to enter a new one.

B. What adjustments will you make to your product range, to increase sales and profitability?
Almost all products (and services) have a product life cycle. For example, a product can quickly go out of fashion (e.g. a garment), or be overtaken technologically (e.g. software). By contrast, Cadbury's Dairy Milk has sold well since 1921 with little change.
Many products need to be constantly updated, to maintain their position in the market.
Re-packaging, re-sizing, and discovering new uses and new users is all part of this innovative process of renewal.
Extending the life cycle of an existing product is preferable to regularly developing and launching new ones, as the latter is risky and very expensive.

C. How will you price each product?

D. How will you distribute each product?

E. How will you promote each product?
Personal recommendation is often a key source of new customers. Consider ways to increase the number of introductions, starting with thanking each person who recommends your business.

Consider all the options. For example, direct mail, telemarketing, PR, advertising, and the Internet.

F. How will you sell each product? Include a review of terms and conditions (e.g. credit terms) for each customer.

G. How can you improve customer service? This can have a major impact on customer retention and sales, at minimal cost.

H. How will you fulfill the orders? This might require new production capacity, or new skills.

I. How will you measure the effectiveness of each marketing activity?
When considering any marketing strategy, start by testing to see what works on a small scale.

Marketing action plan

Your marketing action plan takes each element of your marketing strategy and allocates detailed budgets, responsibilities, targets and deadlines. In its summary form, the marketing action plan forms part of your overall business plan.

A month of marketing

Your marketing action plan
helps you to plan ahead, like a calendar. In any one month it
probably include a range of activities at different stages. For example:
Completing preparations for the next
month's trade show.
Sending out fulfillment packs after last
month's mail shot.
Updating your sales forecasts.
Writing your quarterly newsletter for
Writing a press release (or briefing a PR agency) about a new product.
Completing the design brief for press
ads to appear in three months' time.
Starting a pricing review, with a view to improving your margins.

A. Include a communication calendar that prompts you to contact each customer regularly.
Most businesses need to do this at least once every 90 days to maintain 'front of mind awareness'. This excludes the actual sales process (e.g. asking for orders, checking on delivery) and routine communication (e.g. newsletters, Xmas).Keep asking your customers for feedback on your performance and on any new developments in the marketplace –including their own news. Ask them for ideas to improve your
products and your customer service.

B. Focus on being visible to your hottest prospects. With your best customers (and potential customers), you might want regular meetings, or at least regular phone contact, as well as doing mail shots. Corporate entertainment can also help you to build stronger relationships. Your less important customers might receive mail shots by post and fax.

C. Get to know the purchasing cycles of your customers.
For example, customers whose new budgets start in April may plan the budget the previous October, so you would need to approach them before then.

D. Plan your promotions for the year.
For example, what mail shots will you do to which market segments?
Who is responsible for implementation, including the fulfillment and measuring the results against your budget? Communicate your marketing plan to all your employees, including those on the shop floor. They can then help you to make it work.

"Sales and profit forecasts

Draw up a budget for the year ahead, showing what you aim to achieve in terms of sales and profits. Then prepare forecasts showing what you expect to achieve. These forecasts should be updated monthly, looking 12 months ahead.

A. Base your sales budget and forecasts on last year's sales figures, so you start from a basis of solid fact. Then make adjustments, allowing for changes in the market and taking into account the impact of each aspect of your marketing activity. If the previous year included exceptional one-off sales, assume they will not be repeated this year.

Small firms can't sell to the world. They
should identify and chase the heavy users, those who will bring large and profitable business. "Dave Patten , Merry Marketing

"Involvement of everyone in the company in seeking customer preference is a pre-condition of successful marketing."
Roger Davies ,Key Results Associates

"A new product may be purchased quickly by the 'early adopters', but expect a considerable time-lag before it is purchased by others. If you supply larger organizations, they may wait until you have built up a complete range of products and a solid track record. "Eric Peacock, Business LinkHertfordshire

B. Focus on the sales you expect to make to your main customers, as these are usually the best indication of overall sales levels.

C. If you understand what the 'driver s' are behind the sales figures, it is easier to forecast sales.
For example, the number of sales leads may be crucial for one business, but the morale of staff may be crucial to another.

D. At the start of each year do three forecasts – pessimistic, realistic, and optimistic. Plan how you would handle each scenario. State the assumptions behind each forecast. For example, major orders, weather, exchange rates, fashion trends, or growth in your sales force. If an assumption turns out to have been optimistic, you are immediately warned that the sales will be lower as a result. Sales forecasts for new product launches and business start-ups are notoriously difficult – be extremely conservative until results prove you wrong.

Measuring marketing success

Track your progress for every monthly (or quarterly) period, for each salesperson and each product area. Check you are achieving your objectives and reaching the targets you have set.

A. Use a standard sales enquiry form to record how people heard of you. Use codes to identify the sources. For example, 'PR EX 7/5/02' for an article in The Express on 7 May 2002, and 'MS 20/5/02' for a mail shot on 20 May.

B. Calculate the conversion rates for each type of marketing. Track both leads and orders. Analyze the acquisition cost per new customer. Contrast the cost to the revenue you earn for  the first sale, and the revenue you can expect to earn over the lifetime of the customer.

C. Monitor how many customers you have acquired, and how many you have lost. Contact customers who have stopped ordering and find out why.

D. Monitor the average value of a transaction, and how many transactions were completed in the period. Focus on chasing the most profitable business – typically large orders, or high margins, or repeat-order business.

E. When reviewing the effectiveness of your marketing, take into account all the external factors. For example, a heat wave during the week you advertised your paddling pools.


Strategic Marketing, Tony Proctor; Routledge/ Vikas Publishing
Strategic Marketing Plannin
g, Malcolm McDonald
The Marketing Plan, John Westwood
Successful Marketing for the Small Business, Dave Patten; Kogan

Prof R K Gupta
BE (Hons), MBA, FIE
Aravali Institute of Management
Jodhpur (Rajasthan)
E-mail : /

Source : E-mail




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