Marketing Efforts Must be Sustainable – Marketing is a dynamic process of ensuring a close fit between the capabilities of an organization and the demands placed upon it by its external environment. It follows that the marketing mix will need to continually evolve over time in order to meet changes in a company’s internal objectives and in its business environment. It is not good enough for a company to develop a marketing mix strategy that works for a short period, but then fails to make good long-term profits for the company.
History is full of marketing plans that looked too good to be true, and haven’t been sustainable. It is not difficult to develop short-term marketing strategies which at first appear highly successful when judged by sales levels. It is much more difficult to develop a marketing strategy that is sustainable over the longer-term by producing adequate levels of continuing profits.
In the UK, companies such as Next, Amstrad, Laura Ashley and British and Commonwealth have all risen rapidly and gained much “Business of the Year” type of awards on the way. But each of these examples ended up in serious financial difficulties just a short while later. Very few of the so-called “excellent” companies identified by Peters and Waterman in their book “In Search of Excellence” were considered to be excellent 15 years later.
Who are the Competitors?
Any plan to develop a competitive advantage must be based on a sound analysis of just who a company’s competitors are. At first, it may seem obvious who the competitors are, but as Theodore Levitt pointed out, a myopic view may focus on the immediate and direct competitors while overlooking the more serious threat posed by indirect and less obvious sources of competition.
Direct competitors are generally similar in form and satisfy customers’ needs in a similar way. Indirect competitors may appear different in form, but satisfy a fundamentally similar need. A sound analysis of the direct and indirect competitors for a firm is crucial in defining the business mission of an organization.
A useful framework for analyzing the competition facing a company has been provided by Michael Porter. His model illustrates the relationship between existing competitors and potential competitors in a market and identifies five forces requiring evaluation
- The threat of new entrants
- The threat of substitute products
- The intensity of rivalry between competing firms
- The power of suppliers
- The power of buyers
Developing a Sustainable Competitive Advantage
Comprehensive, longitudinal studies of the factors contributing to marketing success are relatively few and far between. However, a major study undertaken by the Chartered Institute of Marketing and Cranfield School of Management identified ten guidelines for “world-class marketing”
- Develop a true marketing orientation
- Develop a differentiated product offer
- Monitor changes in the marketing environment
- Understand your competitors
- Market segmentation is crucial
- Understand your Strengths and Weaknesses
- Understand the dynamics of product/market evolution
- Pay attention to portfolio management
- Identify strategic priorities
- Develop professional management skills
Creating a Strategy for Differential Advantage There have been many prescriptions for marketing strategies that give a firm a long-term competitive advantage. A framework that has received much attention is based on the work of Michael Porter (Porter 1980). The basis of his analysis is that firms identify those activities for which they have a competitive advantage over their competitors.
Competitive advantage based strategies can be divided into three generic types –
- Overall Cost Leadership – To achieve competitive advantage in such markets, a company needs to put a lot of effort into lowering its production and distribution costs so that it can charge lower prices than its competitors
- Differentiation – In order to try and reduce their dependence on market forces, many firms have sought to differentiate their products. They seek to achieve superior performance by adding value to the product which is reflected in the higher price that customers are prepared to pay.
- Focus – A focus strategy involves an organization becoming familiar with the needs of specific market segments and gaining competitive advantage by cost leadership or differentiation within its chosen segments, or both.
For firms pursuing a similar strategy aimed at similar market segments, Porter contends that the one which pursues its strategy most effectively will meet its objectives most effectively.
Positioning Strategy
Positioning strategy is used by a company to distinguish its products from those of its competitors in order to give it a competitive advantage within a market. Positioning is more than merely advertising and promotion but involves the management of the whole marketing mix. Essentially, the mix must be managed in a way that is internally coherent and sustainable over the long-term.
Selecting a product position involves three basic steps –
- Undertake a marketing audit to analyze the position opportunities relative to the Company’s strengths.
- Evaluate the position possibilities and select the most appropriate –
- Use the marketing mix to develop and communicate a position
Repositioning
Markets are dynamic and what was once an appropriate position for a company may eventually cease to be so. A company’s environmental monitoring should identify any factors that may call for a repositioning. Repositioning could become necessary for a number of reasons, e.g. false assumptions about the market; an over-estimation of the company’s advantages; and a desire to “trade up” to a new market position. Any attempt at repositioning must ensure that it doesn’t alienate a large and profitable group of core customers.
