Selecting marketing strategies

Selecting marketing strategies 

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1/3/12 1:31 PM
Two different strategic approaches to marketing will be considered in
the chapter:
Porter's generic strategies
Ansoff's Matrix
Porter's Generic strategies: Low cost versus differentiation
If a successful firm's winning formula is easy to copy, its superior
returns will not last long. Rivals will offer either a better price or a
better product, and profitability will be driven downwards. Only if the
winning formula is special in some way , and difficult to imitate, will
superior profitability be sustainable. A formula of this kind represents a
competitive advantage.
Every business strategy needs to find a basis for competitive advantage
that can be defended against the forces of competition. This means that
business strategy must involve the analysis of Porter's five competitive
forces. Five forces analysis considers the following factors:
New entrants
Substitute products
The power of the buyer
The power of the sellers
The level of competition between firms
Thus if customers can see acceptable alternatives from new entrants or
existing competitors, or if suppliers can find alternative markets, the
firm's competitive advantage will be weak. However, if the firm is a
major buyer of its materials, or if there is limited competition in the
market, then the firm's advantage will be strong.
In order to compare in a mass market, a firm needs to make sure that
its product is different from competitors' products. If consumers value
this difference, it will benefit the firm in two ways:
Increased sales volume
Greater scope for charging
Differentiation, also known as value leadership, can be based on a
number of characters, such as:
Superior performance
Product durability
After-sales service
Design, branding and packaging to improve the attractive of product
Clever promotional and advertising campaigns boost brand image and
Different distribution methods

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Avon cosmetics differentiated itself by selling cosmetics directly to the
customer; amazon differentiated itself through internet selling, without
the use of traditional shop outlet.
Pursuing a policy of differentiation can add value by creating a unique
selling point/proposition (USP).…read more

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