Essay: Marketing Strategy: Creating Value for the Consumer

Jack Melone
Professor Pirouz
MKT300
1 May 2019
Take Home Final Exam: Marketing Strategy
Marketing is much more than advertisements and getting someone to laugh at your commercial on T.V, rather marketing is all about value exchange. When firms take on a marketing strategy they are looking for a way to express to the consumer how their product or service will be valuable to them. Every product and service is different therefore no two strategies are the same but there are some great examples of how companies have used different methods in the past to achieve success and how they measured that success.
Factors of Success:
Firms that have success in marketing campaigns are ones that generally succeed in executing a well-thought-out marketing plan. Marketing plans consist of many elements but most include the following basic framework: Business Mission’s Statement, SWOT Analysis, Objectives of the campaign, Marketing Strategies, Follow Up. Throughout the marketing plan the firm’s goal is to create value for the customer and that can be achieved in many ways including Production, Sales, Market and Societal Orientation.
Production orientation is a more dated method of marketing in which the firm focuses on making the best possible product leading to the product “selling itself”. The firm focuses internally rather than concerning themselves with the needs of the consumers. Henry Ford was a believer of this strategy with the Model T. The Model T had little to no customization, a basic black car was all you could get. This was successful because competition was weak and demand exceeded supply, if Ford were to attempt this strategy now they would struggle greatly.
Sales orientation marketing focuses entirely on selling their goods or service which usually leads to aggressive sales tactics. Like product orientation, sales orientation does not take into account the needs and values of the consumer and many times even pressures to the consumer into buying something they do not need. Sales orientation is an effective strategy in increasing short term sales but in the long run there are risks with customer relationships due to the sales tactics. One example of a sales orientated marketing strategy that many firms take part in is a “Buy One Get One” promotion. Other examples would be some life insurance companies who focus on only selling as many policies as they can and often use aggressive tactics.
In market orientation marketing, the firm centers its strategy on the consumer and both their needs and wants. Firms need to focus on putting the customer first, building trust with the consumer. The firm must first collect data about the consumers and competitors in their market in order to determine what the values of the market are and how to provide value to the consumer through: providing a satisfactory product or service, building consume loyalty, set prices that are competitive and fair within the market, provide the customer with all the service necessary to enjoy the product. A great example of a firm that follows market orientation marketing is Southwest Airlines, known for some of the best service in the industry Southwest focuses on the consumer. Whether it be though fair pricing, allowing two free bags, complementary beverages on all flights, free seating – Southwest is centered around the consumer by providing the most value. Their flights may not be the cheapest ticket or may not have the nicest jet but they have found a great formula somewhere in the middle optimizing value to their loyal consumers.
Societal orientation marketing is the belief that the firm existence is not only to satisfy the customers wants but to do so in a manner that is in society’s best long term interest. Becoming more and more popular societal orientation marketing is one where firms adopt ethical and social responsibility policies. Firms who focus on societal orientation marketing often times forfeits some of their profits due to their campaign to their societal efforts, but that societal effort is what provides value to their customers. TOMS shoes is a great example of a company who follows societal orientation marketing by following their “One of One” mission, donating a pair of shoes to a child in need. The “One of One” mission has given over 60 million pairs of shoes to children in need according to their website and is also expanding to eyeglasses, clean water and backpacks. On TOMS website their main focus is their societal impact stating, “Wear your beliefs” and “With every TOMS purchase, you stand with us on issues that matter”.
When firms seek to succeed in creating value, profits and relationships with their shareholders they generally focus on one of the above marketing orientations when going through their marketing plan. Although the focus will be primarily on one orientation many firms use aspects of each to increase their value, revenue and connection.
Measuring Success:
Once a firm plans out a marketing plan and becomes aware of how they want to orientate their plan they have to forecast the success of their campaign. When forecasting the success of your marketing plan firms must first define their value proposition. Defining the firm’s value proposition answers the questions: What do we do? Who do we provide value for? How do we do it? And most importantly, Why should a consumer select our product over the competition? With these questions answered, firms know their core of the business making it easier to forecast and then measure success along the way.
Before a marketing campaign is launched many firms will engage in marketing research in order to forecast the success of their campaign and to see how consumers react to the marketing plan and see the value. To initiate research in the market firms prefer the low cost, low time option of secondary data. Secondary data main flaw is that it is data collected previously for other purposes often leading to a lack of details and answers to the specific question the firm is researching. With the help of the secondary data collected the firm has background knowledge of the market as it enters primary research. Focus groups are the most cost effective and time efficient primary data method, therefore they are the most common. Within the focus groups and other methods of primary data research firms ask questions gaging the customer’s assessment of their product’s value. Marketing research allows the firm to forecast their success more accurately, as well as share the data within the firm to create a more effective marketing strategy.
Once the campaign is launched the firm can use metrics such as revenue, return sales, organic sales, as well as customer reviews (5-star system). The most obvious and arguably the most important metric of success in a marketing campaign is revenue and profits. High profits show that the project was worth the costs and is providing your firm with a positive cash flow. To simply look at revenue and profit is not enough though when it comes to measuring the true success of a project. Firms should also be looking at organic sales and return sales (retention) and the percentage both make up of total sales. A high retention rate is evident of the loyally of your customers. On McKinsey’s Customer Journey Flow Chart this can been seen by following the customer post purchase to when they get to the trigger point and continue on the “loyalty loop”. The more customers a firm can have following the loop, the more success and value the firm created for that customer. Brand loyalty, measured by retention, is a very valuable asset to a firm – a successful marketing strategy will increase and enforce that loyalty. Lastly, customer reviews are a great metric to measure how a customer finds value in your product. With the internet, customer reviews are becoming more and more popular and even lead to other customer picking one product over the other.
Marketing Strategy Structure:
In order for a firm to succeed in their marketing strategy they will need to formulate a marketing strategy that will break though and connect with their target customer. All work done up to this point will be worthless if a firm does not structure their strategy of getting to the consumer correctly. The firm must understand its positioning in the market, recognize their target market then finally decided which channels and at what price they want to market their product.
Regardless of the firm or industry, each firm has a brand positioning in that market. Every firm wants to be the most successful brand in each market but that is just unobtainable, which is easily seen through perceptual mapping. A perceptual map divides the market into two different metrics and help visualize the market position of yourself and your competitors. For example imagine the auto industry if we were to use the metrics of price and quality. BMW may think they are the best in the industry, and alright they do have great quality their cars are expensive – high price, high quality. Some consumers may not be able to afford that expensive of a vehicle, but still seeking high quality may prefer a Hyundai – low cost, high quality. It is important for firms to know where customers view their brand on a perceptual map in order to effectively target consumers.
With a better understanding of the brands position in the market a firm can begin to plan its targeting strategy. A firm’s targeting strategy can be mass niche or multi. Mass targeting is ideal for firms who view the market as having no segments marketing products with low competition such as commodities and utilities. Niche marketing is ideal for smaller companies focusing on a specific market for example Ferrari targeting the uber rich. Multi-segment targeting in which a firm targets few well defined markets leads to the greatest financial success but also requires the highest cost.
Firms need to position their product as valuable to their consumer. An understanding of the consumer’s value framework (CVF), increases the effectiveness of targeting in the firms segment. Consumers have different influences of value that a firm can target, internal and external. Internal influences of a consumer include both personal and psychological factors. Personal factors include their: age, occupation, personality, income, level of education. While psychological factors include: perception, cognition, memory, emotion. Going back to the automobile example used above, if a wealthy arrogant lawyer was shopping for a car they would most likely prefer a brand positioned as a high price perceived as a status of wealth instead of a lower price, less flashy car. External influences can be social (e.g. family, reference groups, leaders) or cultural (e.g. values, subcultures, social class). Because consumers are different and each market is complex, it is crucial for firms to understand how consumers perceive value.
In order to complete the marketing plan, a firm must set a price for their product and select channels for distribution. With an understanding of their market position firms can better set pricing goals. The most common pricing strategy is profit maximization, which sets a price that both the consumer and firm are content with. Once a price is set distribution can begin, either through a retailer, reseller, wholesaler or distributor. When deciding which distribution channel is best for your product you must consider market, product and producer factors to select the best channel to maximize your firms value chain.