Development of a sound marketing strategy is an essential part of starting a business. The marketing strategy determines the use of the company's resources and tactics to achieve its specific marketing objectives based on the needs and desires of its stakeholders, including customers, employees, investors and rivals. The marketing strategy is typically designed around three elements: selecting a target market, specifying the market strategy and creating a marketing mix.
Selection of a Target Market
Identifying the target market may be the most important decision a company makes in the strategic planning process. The company must first specify whom it is trying to attract based on its own strengths and weaknesses, the intensity of the market competition and the potential costs and gains. Businesses may treat the entire market -- called mass marketing -- or target one or more specific segments or groups in the market -- market concentration or multi-segmentation.
Businesses must decide which market position they want to take. The company that gains the largest market share and dominates the competition becomes the market leader. The market challenger is the position when a company confronts the leader of the market. The market follower is a company that follows and copies the leader rather than attacks it. Many small businesses choose to fill a market niche: a position that specializes in a narrow segment of a large market.
Creation of a Marketing Mix
After selecting the target market, specifying the position that the company wants to take and researching the needs and preferences of customers, the company must define its marketing mix along the "4Ps" -- product, price, promotion and place -- to achieve a competitive advantage. For example, its product must be of higher quality, its prices must be lower, its promotion must be more effective, and its distribution must cost less than its competitors must.
Example of a Marketing Strategy
In the 1960s, Nestle summarized its marketing strategy for Kit Kat as "Broad in appeal, young in feel and big in stature." The company decided to sell the Kit Kat chocolate to all age groups and aimed to take a market leader position in the United Kingdom. It built its product strategy on the unique chocolate fingers and its wrapping. It kept the prices stable at all times and used a wide range of promotional tactics, such as free bars in the multi-bar family packs and an instant win deal with Burger King. Nestle developed distribution channels that ensure the overall availability of Kit Kat.
- Foundations of Marketing; William M. Pride and O. C. Ferrell
- Is4profit: Marketing Strategy
- Business Case Studies: Marketing Strategy
- Marketing Strategy; Jones & Bartlett Learning, LLC.
Judit Kozenkow is a visiting fellow at Johns Hopkins University, School of Advanced International Studies (SAIS). She has experience in business and economic research, as well as program and project management in the United States and Europe. She holds a master's degree in international economics and a Ph.D. in economics.