Marketing Strategies and Plans
Marketing Strategies and Plans
Marketing Strategies and Plans
Components of Strategy
Strategy is a design or plan for achieving a company’s policy goals and objectives. It settles on
how the goals and objectives of a company are to be accomplished, the operational units be
prepared.
There are five components or sets of issues within a well-developed strategy:
1. Scope. The scope of an organization refers to the breadth of its strategic domain the number
and types of industries, product lines, and market segments it competes in or plans to enter.
Decisions about an organization's strategic scope should reflect management's view of the firm's
purpose or mission. This common thread among its various activities and product-markets
defines the essential nature of what its business is and what it should be.
2. Goals and objectives. Strategies should also detail desired levels of accomplishment on one or
more dimensions of performance such as volume growth, profit contribution, or return on
investment over specified time periods for each of those businesses and product-markets and for
the organization.
3. Resource deployments. Every organization has limited financial and human resources.
Formulating a strategy also involves deciding how those resources are to be obtained and
allocated, across businesses, product-markets, functional departments, and activities within each
business or product-market.
4. Identification of a sustainable competitive advantage. One important part of any strategy is a
specification of how the organization will compete in each. Business and product-market within
its domain. How can it position itself to develop and sustain a differential advantage over current
and potential competitors? To answer such questions, managers must examine the market
opportunities in each business and product-market and the company's distinctive competencies or
strengths relative to its competitors.
5. Synergy. Synergy exists when the firm's businesses, product-markets, resource deployments,
and competencies complement and reinforce one another. Synergy enables the total performance
of the related businesses to be greater than it would otherwise be the whole becomes greater than
the sum of its parts.
Hierarchy of Strategies
Strategy is at the foundation of every decision that has to be made within an organization. If the
strategy is poorly chosen and formulated by top management, it has a major impact on the
effectiveness of employees in pretty much every department within the organization. In our
previous article on ‘What is Strategy?!‘ we have already tried to define and explain what
business strategy refers to and what is NOT considered to be part of strategy. In this article, we
will dissect strategy in three different components or ‘Levels of Strategy ‘. These three levels
are: Corporate-level strategy, Business-level strategy, and Functional-level strategy.
1. Corporate Strategy - At the corporate level strategy however, management must not only
consider how to gain a competitive advantage in each of the line of businesses the firm is
operating in, but also which businesses they should be in in the first place. It is about selecting an
optimal set of businesses and determining how they should be integrated into a corporate whole:
a portfolio. Typically, major investment and divestment decisions are made at this level by top
management. Mergers and Acquisitions (M&A) is also an important part of corporate strategy.
This level of strategy is only necessary when the company operates in two or more business
areas through different business units with different business-level strategies that need to be
aligned to form an internally consistent corporate-level strategy. That is why corporate strategy is
often not seen in small-medium enterprises (SME’s), but in multinational enterprises (MNE’s) or
conglomerates.
2. Business level Strategy - The Business-level strategy is what most people are familiar with
and is about the question “How do we compete?”, “How do we gain (a sustainable) competitive
advantage over rivals?”. To answer these questions, it is important to first have a good
understanding of a business and its external environment. At this level, we can use internal
analysis frameworks like the Value Chain Analysis and the VRIO Model and external analysis
frameworks like Porter’s Five Forces and PESTEL Analysis. When good strategic analysis has
been done, top management can move on to strategy formulation by using frameworks as
the Value Disciplines, Blue Ocean Strategy and Porter’s Generic Strategies. In the end, the
business-level strategy is aimed at gaining a competitive advantage by offering true value for
customers while being a unique and hard-to-imitate player within the competitive landscape.
3. Functional Strategies - Functional-level strategy is concerned with the question “How do we
support the business-level strategy within functional departments, such as Marketing, HR,
Production and R&D?”. These strategies are often aimed at improving the effectiveness of a
company’s operations within departments. Within these department, workers often refer to their
‘Marketing Strategy’, ‘Human Resource Strategy’ or ‘R&D Strategy’. The goal is to align these
strategies as much as possible with the greater business strategy. If the business strategy is for
example aimed at offering products to students and young adults, the marketing department
should target these people as accurately as possible through their marketing campaigns by
choosing the right (social) media channels. Technically, these decisions are very operational in
nature and are therefore NOT part of strategy. Therefore, it is better to call them tactics instead
of strategies.