Marketing Strategy Marketing strategy is a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. Marketing strategy Includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contributes to the goals of the company and Its marketing objectives.
Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished In the current year. Time horizons covered by the marketing plan vary by company, by Industry, and by nation, however, time horizons are becoming shorter as the speed of change in the environment increases.
Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to Impact success.
A key component of marketing strategy is often to keep marketing in line with a company’s overarching mission statement. Once a thorough environmental scan is complete, strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. A final step in developing a marketing strategy is to create a plan to monitor progress and a set of contingencies if problems arise in the Implementation of the plan. “An organization’s strategy that combines all of its marketing goals into one comprehensive plan.
A good marketing strategy should be drawn from market research & focus on the right product mix in order to achieve the maximum profit potential & sustain the business. The marketing strategy is the foundation off marketing plan. ” 1. 2 Export Marketing – The concept A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation’s gross output. If used for trade, exports are exchanged for other products or services.
Exports are one of the oldest forms of economic transfer. And occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies. Export marketing is not Just a process to find buyers/ landed strategic marketing process one should follow & performed well to get success in international market. Major export marketing efforts get failed due to lack of implementing strategic marketing action plan. Export marketing strategy 2. 1 Export Marketing Export Marketing Strategy is about staff, logistics and the expertise to increase your exports.
In today’s increasing worldwide competition and evermore sophisticated marketing & sales arena, it is difficult and costly to develop the necessary expertise in-house keep up with the challenges involved in opening new markets. While modern communications has created the global competition you are facing, it has also brought the solution for your new overseas business development. With the globalization of commerce and the dominance of “search” in Internet marketing, it is now easier than ever for your company to enter international markets. The process of planning and executing the conception, pricing, marketing communication and distribution of ideas, products and services to create exchanges that satisfy individual and organizational goals. ” From this definition can be distilled a number of key elements. The first is the question of exchange. Exchanges occur when at least two parties that each have something of value, and who wish to transact with the other person, communicate with each other and then either accept or reject the other’s offer. The second is the issue of satisfying customer needs and organizational goals.
The focus of any marketer is the customer; indeed, marketing can be said to be customer-centric. To begin with, the marketer must identify who the customer is and their needs . This information is vital in shaping your future export marketing efforts. The information so far gathered will suggest what changes o need to incorporate into your product, what price you can pitch your product at, how best to inform the marketplace of your product, its attributes and where they can purchase it, and, finally, how best to get the product to the customer.
In addition to having a customer focus, it is important to realize that the companies do not go into business or export for no good reason. All organizations – whether profit-making firms or non-profit organizations – have certain goals. These goals may be to generate a return on investment for the firm’s shareholders or to delivery certain services to heir target audience. As we are mainly dealing with private sector companies, the profit motive is the main organizational goal.
The process of planning and executing the activities that we have outlined above, suggests that the firm must bring together all of its resources (financial, equipment, labor and management skills) to achieve customer satisfaction and organizational goals. A total systems approach by the firm to its activities is therefore another key element of this definition. 2. 2 Marketing Strategy A systematic approach to foreign market entry translates in strategic planning and an effective organizational structure for the marketing function.
High performing advantages” . Therefore, exporting companies will design their marketing strategy in order to build sustainable competitive advantages. These advantages are communicated to the customer through a low price (low cost) or a non-price differentiation implemented using specific marketing mix programs for the different segments and countries. Moreover, exporting companies following “pure differentiation strategies” have been found to outperform those with “cost leadership strategy’, specially in the case of exporters in developed country markets.
Firms following a differentiation strategy aim at creating a product or service that customers see as unique. This is usually accomplished through such means as a superior brand image, technology, customer service or innovative products. Presumably, high performing exporters confront and respond to the foreign country task environment more effectively. They do so through a strategic planning process that develops and implements unique strategies based on differentiating competitive advantages. High performing exporters follow marketing strategies based on differentiating competitive advantages.
In addition, export performance should also be related to the level of importance of the marketing variables. Firstly, high export performance has been found to be positively associated with export marketing budget allocations and export marketing commitment. Additionally, product adaptation, selling force efficacy and service levels have been identified as determinants of exporting performance. Four different groups of significant variables in determining exporting marketing activity: 1. Company offering: quality, image, and after-sale service. 2.
Role of distributors and agents: incentives. 3. Promotional function: trade promotions, trade fairs, word of mouth. 4. Price / selling terms: competitive prices, credit lines, and warranties. Product adaptation, promotion adaptation, channel development and competitive pricing strategies have been described as the means by which firm’s efficiently responds to the idiosyncrasies of foreign markets. In terms of the product variable, product adaptation enhances performance both in initial market entry and subsequent penetration success. 2. 3 Export Marketing Mix 1 . Product Design Strategy 1 .
Product Innovation :- There are several ways to gauge the overseas market attention of products and services. (For ease of reading, products are mentioned more than services in this guide, but much of the discussion applies to both. ) One of the most important ways is to assess the product’s success in domestic markets. If a company succeeds at selling in a domestic market, there is a good chance that it will also be successful in markets abroad, wherever similar needs and conditions exist. A new product may be launched only for overseas market, which is quite rare. 2.
Product Modification :- In markets that differ significantly from the domestic market, some products may have limited potential. Those differences may be climate and environmental factors, social and cultural factors, local availability of raw materials or product alternatives, lower wage costs, lower purchasing power, the availability of foreign exchange (hard currencies like the dollar, the British pound, product is successful in a domestic market, one strategy for export success may be a careful analysis of why it sells here, followed by a selection of similar markets abroad.
In this way, little or no product modification is required. 3. Product Standardization :- If a product is not new or unique, low-cost market search may already be available to help assess its overseas market potential. In addition, international trade statistics (available in many local libraries) can give a preliminary indication of overseas markets for a particular product by showing where similar or related products are already being sold in significant quantities. If a product is unique or has important features that are hard to duplicate abroad, chances are good for finding an export market.
For a unique product, competition may be nonexistent or very slight, while demand may be quite high. 2. Pricing Strategy 1. Static Pricing :- Selling at the same price to all consumers. 2. Dynamic Pricing :- You adjust your price to what a particular consumer will be prepared to pay. For example airlines will charge you less if you book ahead than if you buy a ticket on the day of travel. 3. Premium Pricing :- This suits products where the customer is prepared to pay a premium over lower positioned alternatives. This is achievable when your product is perceived to be of higher quality or prestige. . Full Cost-Based Pricing :- You account for the costs of production and add an acceptable profit margin. . Penetration Pricing :- Setting a low price may quickly gain you market share if you are new to a market. Please note that it can be difficult to raise prices later. 6. Market Skimming :- If your product is innovative and new to the market you may want to set a high price initially enabling you to make the maximum profit, then lower it gradually. This strategy is common for new consumer electronic product launches.
Any pricing strategy, or strategies, needs to align with your marketing and business plans. You may also find that an approach that works in one market may not work in another. When setting prices, take into account the additional costs of exporting. Examples of additional costs include: Freight and insurance Partner margin Translation costs Tariffs Regulations compliance Protection of intellectual property Exporting always costs more than expected. Allow for the fact that it will almost certainly take longer than you expect to get your product or service into the market.
Make a profit for you Meet the expectations of the marketplace Support the product’s positioning. If it cannot do these three things, you should reconsider your company’s entrance onto that market. 3. Distribution Strategy The most common methods of exporting are indirect selling and direct selling. In indirect selling, an export intermediary such as an export management company (EMCEE) or an export trading company (ETC) normally assumes responsibility for finding overseas buyers, shipping products, and getting paid. In direct selling, the U. S. Producer deals directly with a foreign buyer.
The paramount consideration in determining whether to market indirectly or directly is the level of resources a company is willing to devote to its international marketing effort. Other factors to consider when deciding whether to market indirectly or directly include: The size of your firm; The nature of your products; Previous export experience and expertise; Business conditions in the selected overseas markets. L. Indirect Exporting The principal advantage of indirect marketing for a smaller company is that it provides a way to penetrate foreign markets without the complexities and risks of direct exporting.
Several kinds of intermediary firms provide a range of export services. Each type of firm offers distinct advantages for your company. 1. Confirming Houses :-Confirming houses or buying agents are finders for foreign firms that want to purchase products. They seek to obtain the desired items at the lowest possible price and are paid a commission by their foreign clients. In some cases, they may be foreign government agencies or quasi-governmental firms empowered to locate and purchase desired goods. An example is foreign government purchasing missions. 2.
Export Management Companies :- An EMCEE acts as the export department for one or several producers of goods or services. It solicits and transacts business in the Ames of the producers it represents or in its own name for a commission, salary, or retainer plus commission. Some Emcees provide immediate payment for the producer’s products by either arranging financing or directly purchasing products for resale. Typically, only larger Emcees can afford to purchase or finance exports. 3. Export Trading Companies :- An ETC facilitates the export of goods and services.
Like an EMCEE, an ETC can either act as the export department for producers or take title to the product and export for its own account. Therefore, the terms ETC and EMCEE are often seed interchangeably. A special kind of ETC is a group organized and operated by producers. These Etc can be organized along multiple or single-industry lines and can also represent producers of competing products. 4. Export Agents, Merchants, or from the manufacturer, packing and marking the products according to their own specifications.
They then sell these products overseas through their contacts in their own names and assume all risks for accounts. 5. Piggyback Marketing :- Piggyback marketing is an arrangement in which one manufacturer or service firm distributes a second firm’s product or service. The most common piggy-backing situation is when a company has a contract with an overseas buyer to provide a wide range of products or services. II. Direct Exporting The advantages of direct exporting for a company include more control over the export process, potentially higher profits, and a closer relationship to the overseas buyer and marketplace.
When a company chooses to export directly to foreign markets, it usually makes internal organizational changes to support more complex functions. A direct exporter normally selects the markets it wishes to penetrate, hoses the best channels of distribution for each market, and then makes specific foreign business connections in order to sell its product. 1 . Sales Representatives :- Overseas, a sales representative is the equivalent of a manufacturer’s representative.
The representative uses the company’s product literature and samples to present the product to potential buyers. A representative usually handles many complementary lines that do not conflict. The sales representative usually works on a commission basis, assumes no risk or responsibility, and is under contract for a definite period of mime (renewable by mutual agreement). 2. Agents :- The widely misunderstood term “agent” means a representative who normally has authority, perhaps even a power of attorney, to make commitments on behalf of the firm he or she represents.
Firms in the other developed countries have stopped using the term and instead rely on the term “representative,” since agent can imply more than intended. It is important that any contract state whether the representative or agent does or does not have legal authority to obligate the firm. 3. Distributors :- The foreign distributor is a merchant ho purchases goods from a exporter (often at a substantial discount) and resells it for a profit. The foreign distributor generally provides support and service for the product, thus relieving the company of these responsibilities.
The distributor usually carries an inventory of products and a sufficient supply of spare parts and also maintains adequate facilities and personnel for normal servicing operations. Distributors typically handle a range of non-conflicting but complementary products. End users do not usually buy from a distributor; they buy from retailers or dealers. 4. Foreign Retailers :- A company may also sell directly to foreign retailers, although in such transactions, products are generally limited to consumer lines.
The growth of major retail chains in markets such as Canada and Japan has created new opportunities for this type of direct sale. This method relies mainly on traveling sales representatives who directly contact foreign retailers, although results might also be achieved by mailing catalogs, brochures, or other literature. The direct mail approach has the benefits of eliminating commissions, reducing traveling expenses, and reaching a broader audience. For optimal results, a firm that uses direct mail to reach foreign retailers should support it with other marketing activities. 5.
Direct Sales to End Users :- A business may sell its products or services directly to end users in foreign countries. These buyers can be foreign governments; institutions such as through international publications, or through Commerce’s Export Contact List Service. The company should be aware that if a product is sold in such a direct fashion, the company is responsible for shipping, payment collection, and product servicing unless other arrangements are made. Unless the cost of providing these revives is built into the export price, a company could have a narrower profit than originally intended. . Promotion Strategies 1 . Push Strategy :-A “push” promotional strategy makes use of a company’s sales force and trade promotion activities to create consumer demand for a product. The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers. A “push” strategy tries to sell directly to the consumer, bypassing other distribution channels. With this type of strategy, consumer promotions and advertising are the most likely promotional tools. Pull Strategy :- A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers. 3. Standard Promotion Strategy :- Where the same promotion mix is used in all the global markets & with the same promotional theme. 4. Differential Promotion Strategy :- Where different promotion mix is used depending upon market & competitive situation & with different promotion theme.
CHAPTER 3 SILVERS & SONS History Silvers & Sons (S&S) prepares green Arabica coffee beans grown in Brazil for exportation to American specialty roasters and sells to wholesalers on the Brazilian market as well. S&S will expand production capacity from 72,000/keg bags per year to 120-160,000/keg per year. The coffee stands out from that of the competition. S&S prepare the top five percent, in terms of quality standards, of all Arabica beans on the market. S&S’ customers seek this product as it provides them with a point of differentiation to specialty roasters.
In the past six years, demand for the coffee has exceeded the amount S&S is able to supply and have been forced to refuse requests for larger shipments. In three years the plant will run at maximum capacity. S&S has be sold. The keys to success are: 1 . Establishing and maintaining working relationships and contractual agreements with American importers and Brazilian coffee brokers and wholesalers. 2. Bringing the new facility to maximum production within three years of operation. 3. Increasing the profit margin with the use of improved technology in the new facility. . Effectively communicating to current and potential customers, through targeted efforts, our position as a differentiated provider of the highest quality Arabica beans in the world. Coffee has been a growing industry for the past five years. The most notable growth has been in the American market where imports have increased almost one-hundred percent and the market price has nearly doubled. The number of specialty roasters has increased from a handful of well-known companies to thousands of independent entities.
There is a constant struggle within this market to produce the best coffee and serve one or more niches within the larger market. Brazilian coffee producers and exporters have made great efforts to improve agricultural techniques, processing methods, and distribution in order to better serve this growing market. Demand for Brazilian coffee is currently greater than supply. By providing the finest species of coffee, Silvers & Sons has taken the first step towards a differentiated product. To further distinguish their coffee, S&S adheres to higher quality standards than approximately ninety-five percent of the market.
In addition, all of the beans are of the Bourbon Santos variety. The “Bourbon” strain is considered one of the finest Brazil has to offer. It is grown in the mountains rounding SAA Paulo and is highly sought after by specialty roasters from around the world. S&S has assumed the position of a specialized provider of this exceptional coffee. The customers, American and Brazilian specialty roasters, recognize Silvers & Sons for their ability to provide the type of beans they require to produce award winning coffee. Situation Analysis S&S has been in business for six years.
The business has been well received and marketing will be key to elevate the business to the next level. The basic market need is a source of high quality Arabica coffee beans that exceeds the quality of almost every other bean on the market. Market Summary S&S possesses good information about the market and knows a great deal about the commit attributes of the targeted customers. This information will be leveraged to better understand who is served, their specific needs, and how S&S can better communicate with the target market.
Market Needs S&S is providing its customers with a high quality Arabica coffee bean, exceeding the quality of almost every other bean on the market. S&S seeks to fulfill the following benefits that are important to their customers: Quality beans. Fresh beans. Timely, professional service. Market Trends Coffee is the second largest commodity market next to oil and Brazil has remained coffee in the United States have increased ninety-four percent in the past five years and consumption of coffee within Brazil has seen similar increases.
In addition, demand for green coffee is above the market clearing level, and market price and crop yield estimates are at an all time high. The increase in the number of independent specialty roasters in the United States and Brazil has contributed to and is an indicator of the increased demand for coffee. Within the larger coffee market is the target market, the specialty roaster. These discerning customers want the highest quality coffee beans. They serve the growing “gourmet” coffee market and are represented by large American companies like Cutbacks and thousands of smaller specialty roasters.
The Arabica bean is considered to be the best in the world and as such, the demand for Arabica beans is high on the specialty roaster market. Specialty roasters are willing to pay more for Arabica beans and attempt to distinguish themselves via the characteristics of the bean they use I. E. : the location in which it as grown, farming methods, bean size, etc. The final consumer is relatively price insensitive if the coffee is good, has won awards, or is compatible with a popular trend. S&S estimates that specialty roasting in the U.
S. Alone is a (US) $1 billion market. Market Growth Coffee has been a growing industry for the past five years. The most notable growth has been in the American market where imports have increased almost 100% and the market price has nearly doubled. The number of specialty roasters has increased from a handful of well-known companies to thousands of independent entities. There s a constant struggle within this market to produce the best coffee and serve one or more niches within the larger market.
Brazilian coffee producers and exporters have made great efforts to improve agricultural techniques, processing methods, and distribution in order to better serve this growing market. Demand for Brazilian coffee is currently greater than supply. SOOT Analysts The following SOOT analysis captures the key strength and weaknesses within the company, and describes the opportunities and threats facing S&S. Strengths Strong relationships with growers as well as American and Brazilian wholesalers and coasters. The use of the highest quality beans. Sophisticated technology that drives production costs done while ensuring quality.
Weaknesses Costs of doing business with American firms while S&S is located in Brazil. Dependence on a few suppliers who are the only ones capable of growing the highest quality Arabica beans. A limited marketing budget, necessary for developing brand awareness. Opportunities Participation within a growing industry. Coffee is a universal beverage. The ability to increase the profit margin through the leveraging of technology. Threats The commodity aspect of coffee. Costs associated with international trade, NONFAT not withstanding. Future/potential distribution channels.
Competition Silvers & Sons deals exclusively in the exportation and sale of green Arabica beans. There are approximately 150 Brazilian businesses in this market. However, approximately 30 companies account for approximately eighty percent of the total amount of green Arabica exports. In addition many of these companies prepare, export and sell, to the Brazilian market, other coffee products. Additional products include: Green Robusta (Cannelloni) beans: The Robusta bean is produced in far less annuity, in Brazil, than the Arabica and is considered an inferior species.
The Robusta market represents less than ten percent of all coffee produced in Brazil. Soluble coffee products: These are instant (water soluble) coffees and are either decaffeinated or not. Sales of soluble coffee products account for approximately twelve percent of the total market. Roasted & Ground coffee: Approximately eighty- five percent of all roasted and ground coffee (decaffeinated and non-decaffeinated) goes to internal consumption and represents approximately twenty-seven percent of the total coffee market. Primary competitors include: Golden Brazil, Brazilin, Comedic, and Gnocchi Cafe.
The purchase decision for the customer is based on trust in the process and bean selection. S&S has established relationships with the customers that extend beyond that of the buyer/seller. The Silvers & Sons label means that the product has been chosen and prepared with the highest quality standards in mind. The beans are priced up to nine percent higher than similar products. The customers are willing to pay more for S&S’ product because they are familiar with them and trust in the quality of the beans. There are approximately 150 exporters of green Arabica beans in Brazil.