Factors Influencing Marketing Strategy

The strategic plan outlines the company’s overall mission and objectives. Marketing plays an important role in helping achieve overall strategic objectives.

Factors Influencing Marketing Strategy

The figure shows the marketing’s role and activities in the organization. The figure shows at a glance the entire marketing process and the forces influencing company marketing strategy.

The marketing process consists of four tasks;

  1. analyzing marketing opportunities,
  2. selecting target markets,
  3. developing the marketing mix, and
  4. managing the marketing effort.

We will discuss the first three tasks in this lesson, and the fourth one will be discussed in the next lesson. As this figure shows, target consumers are located in the center.

The company identifies the whole market, splits it into smaller segments, selects the most lucrative segments, and concentrates on serving and satisfying these segments. It formulates a marketing mix that includes factors under its control – product, price, place, and promotion.

For designing the best marketing mix and implementing it, the company undertakes marketing analysis, planning, implementation, and control.

Target Consumers

In the context of intense competition, marketers must be customer-oriented to be successful. This means customer satisfaction should be the ultimate goal of a company.

For providing satisfaction to customers, a company must first understand their needs and wants, which requires a careful analysis of consumers. As there are myriad types of consumers with myriad types of needs, a company can’t satisfy all consumers in a given market.

Therefore, the company must divide up the total market into segments, select the best segments, and design the strategies for serving chosen segments most efficiently.

This task consists of four steps;

  1. demand measurement and forecasting,
  2. market segmentation,
  3. market targeting, and
  4. market positioning.

The brief discussions of the above steps are presented below:

Demand Measurement and Forecasting

Before launching a new product, the company must make a careful estimate of the current and future size of the market and its various segments.

For estimating the current market size, the company needs to identify all competing products, estimate the current sales of these products, and determine whether the market is large enough to accommodate yet another product profitably.

The company must also estimate future market growth. The growth potential of a market may be dependent on the growth rate of a certain age, income, and nationality groups that use the product.

Certain environmental developments also influence growth, such as economic conditions, the crime rate, and lifestyle changes. Complex techniques are followed to measure and forecast demand.

Market Segmentation

If the demand forecast seems encouraging, the company looks for ways to enter the market. The market is composed of many types of customers, products, and needs. The marketer has to identify which segments offer the best opportunity for accomplishing objectives.

Consumers can be grouped in several ways. They can be grouped based on geographic factors (countries, regions, cities); demographic factors (sex, age, income, education); psychographic factors (social classes, lifestyles); and behavioral factors (purchases occasions, benefits sought, usage rates).

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products or marketing mixes is called market segmentation.

A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. In the car market, for example, consumers who choose the biggest, most comfortable car regardless of price make up one market segment—another market segment would-be customers who care mainly about price and operating economy.

It would not be easy to make one model of car that was the first choice of every consumer. Companies are wise to focus their efforts on meeting the distinct needs of one or more market segments.

Market Targeting

Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. A company should target those segments in which it can create the greatest customer value and sustain it over time. A company with limited resources might decide to enter only one or a few special segments.

Or a company might decide to serve more than one segment, which consists of different kinds of customers having the same basic wants. Or a large company might decide to approach all market segments with a complete range of products.

Initially, most companies enter a new market by deciding to operate in a single segment. If it proves rewarding, they add new segments.

Big companies ultimately go for covering the full market. They want to be the leading companies in their industry. The leading company offers different products designed to fulfill the special needs of each segment.

Market Positioning

Market positioning refers to the task of arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. It also involves formulating competitive positioning for a product and a detailed marketing mix.

Companies position their products in a way that distinguishes their products from competing brands and gives them the best strategic advantage in their target markets. For example, Chrysler compares its car to those of various competitors and concludes, “Advantage: Chrysler.”

At Ford, “quality is job one,” and Mazda “just feels right.” Jaguar is positioned as “a blending of the art machine,” whereas Saab is “the most intelligent car ever built.”

Mercedes is “engineered like no other car in the world,” the Lincoln Town car is “what a luxury car should be,” and the luxurious Bentley is “the closest a car can come to having wings.” Such deceptively simple statements form the backbone of a product’s marketing strategy.

In the first step of product positioning, the company identifies possible competitive advantages on which the position would be built.

For gaining competitive advantages on which the position would be built, the company must offer greater value to selected target segments. This can be done either by charging lower prices than competitors do or by offering more benefits to justify higher prices. When the company positions the product as offering greater value, it must then deliver that greater value.

Sound positioning starts with actually differentiating the company’s marketing offer from that of its competitors. After choosing the desired position, the company must take proper steps to deliver and communicate that position to target consumers.

Marketing Strategies for Competitive Advantage

A comprehensive competitor analysis must be done in designing competitive marketing strategies.

The company continuously compares the value and customer satisfaction delivered by its products, prices, channels, and promotion with that of its competitors. This enables the company to locate areas of potential advantages and disadvantages.

The company must watch a competitive environment for seeking answers to some important questions such as; who are our competitors? What are their objectives and strategies? What are their strengths and weaknesses?

And how will they react to different competitive strategies we might use?

The competitive marketing strategy a company adopts depends on its industry position. A firm that dominates a market can adopt one or more of several market-leader strategies.

Well-known leaders include Coca¬Cola (soft drinks), McDonald’s (fast food), Caterpillar (large construction equipment), Kodak (photographic film), Wal-Mart (retailing), and Boeing (aircraft). Market challengers are runner-up companies that aggressively attack competitors to get more market share.

For example, Pepsi challenges Coke and Compaq challenges IBM. The challenger might attack the market leader, other firms of its size, or smaller local and regional competitors.

Some runner-up firms will choose to follow rather than challenge the market leader. Firms using market¬follower strategies seek stable market shares and profits by following competitors’ product offers, prices, and marketing programs.

Smaller firms in a market, or even larger firms that lack established positions, often adopt market-niche strategies. They specialize in serving market

niches that major competitors overlook or ignore. “Nichers” avoid confrontations with the majors by specializing along with the market, customer, product, or marketing-mix lines. Through smart niching, low-share firms in an industry can are as profitable as their larger competitors.

Developing the Marketing Mix

After deciding on an overall competitive marketing strategy, the company proceeds towards planning the details of the marketing mix.

We define the marketing mix as the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.

The marketing mix consists of four groups of variables known as the “four ps.”

  1. product,
  2. price,
  3. place, and
  4. promotion.

This figure illustrates the particular marketing tools under each P.


Product is the combination of “goods-and-service,” which the company offers to the target market. A Ford Taurus “product” consists of nuts and bolts, spark plugs, pistons, headlights, and thousands of other parts.

Ford offers several Taurus styles and dozens of optional features. The car comes fully serviced and with a comprehensive warranty that is as much a part of the product as the tailpipe.


Price is the number of money buyers is required to pay for obtaining the product. Ford calculates suggested retail prices that its dealers might charge for each Taurus. But Ford dealers rarely charge the full sticker price.

Instead, they negotiate the price with each customer, offering discounts, trade-in allowances, and credit terms to adjust for the current competitive situation and to bring the price into line with the buyer’s perception of the car’s value.


Place includes activities that a company undertakes for making the products available to target consumers. Ford maintains a large body of independently owned dealerships that sell the company’s many different models.

It selects its dealers carefully and supports them strongly. The dealers keep an inventory of Ford automobiles, demonstrate them to potential buyers, negotiate prices, close sales, and service the cars after the sale.


Promotion includes activities designed to communicate the value of the product and persuade target customers to buy it. Ford spends more than $600 million each year on advertising to tell consumers about the company and its products.

The dealership, salespeople, assist potential buyers and persuade them that Ford is the best car for them. Ford and its dealers offer special promotions-sales, cash rebates, low financing rates – as added purchase incentives.

The marketing mix elements are the tools used by the company for securing strong positioning in target markets.

However, it should be kept in mind that the four Ps represents marketing tools from the sellers’ viewpoint, which are designed to persuade buyers. It is important to recognize that from a consumer viewpoint, each marketing tool is designed to deliver a customer benefit.

One marketing expert suggests that companies should view the four Ps in terms of the customer’s four Cs. from 4 Ps the 7 Ps are derived to answer the needs of modern marketing.

In conclusion, it can be said that meeting customer needs economically and conveniently with effective communication is the pre-requisite for the success of a company.

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