Easy Notes - By Manoj Singh

Mission statements are clear & concise one or two line statement which explains the purpose of existence for the organization. A well drafted Mission statement can define company’s business, goals, customers and its market in a very lucid manner.

Below mentioned are 11 points which should be given due consideration while drafting effective marketing strategies. 

1. Identify your target customers first and focus on them only. Without identifying your customers, you can’t find them. Hence, this is the first step while preparation of marketing strategy.

2. Prepare your marketing budget and plan accordingly. Take special care while preparing budget & try hard on making this more realistic. This can be done by involving all relevant department heads in your company.

3. Measurable & Achievable: Make your plan measurable and achievable. Fix targets / goals in consultation with the marketing team & break them into quarterly, monthly & fortnightly targets.

4. Position yourselves correctly: Don’t confuse your customers as this is the most common mistakes which are generally made by companies. Make your customers clear about one basic questions i.e. what does your product stand for? E.g. If you talk about “Ferrari”, I understand sports car. If you say “Cartier”, I understand luxury watch. 

5. Create awareness: Advertise about your product through most suited advertisement medium. Plan in advance about this spend in your budget as this plays a very vital role in building a brand and impact a lot on revenue. One can choose between print media, online advertisement, TV commercials, outdoor hoardings and many more depending upon your pocket size and target customers. Most of the companies prefer more than one advertisement medium for increasing their presence faster.

6. Focus and strengthen your USP (unique selling proposition): If your product has some unique feature which your competitor doesn't have then please highlight those and harvest on the same through aggressive marketing campaigns. 

7. Watch your competitor closely: Know your competitors thoroughly and keep a close eye on their movement and marketing tactics. 

8. CSR (Corporate social responsibility): Include some CSR initiatives & highlight the same during all your advertisement campaigns. 

9. Flexible: Make your plan flexible enough for further changes as you may be required to alter your plans due to competitor’s move or customer’s requirement.

10. Make your online presence: This has become very important nowadays due to rising online customer base. Below mentioned are few activities which one should do in order to improve your online presence.

a) Get your website ready with user friendly features.

b) Create your pages on social media websites such as Facebook, Twitter, LinkedIn and many more.

c) Manage your reviews & testimonials tactfully and act promptly on negative reviews. 

d) Put product or company video on Youtube.com or other relevant websites.

e) Buy e-tailing space on leading online retailer’s website such as Amazon, e-bay, Alibaba etc by registering your product or company.

f) Get the SEO (search engine optimization) done for your website through good online marketing company. 

g) Submit blogs on relevant websites. 

h) Respond quickly to online queries posted by customers.

11. Control measures: After doing lots of hard work, one needs to know the real impact of the strategies which has been implemented during the year. One can compare the results through measuring sales figure of previous year and current year. If all your marketing strategies are not giving positive result then it would be advisable to re-work on the pricing strategies and re-define your target customers. 

There are various activities involved in order to make the final product available to customers & most of the companies generally involve themselves in one activity of the value chain. E.g. assembly & packaging out of other activities as mentioned in the value chain (See fig. below).  Sometimes, In order to strengthen the position over suppliers or distributors or service providers, companies add up one or more activities either towards raw material or towards end users (See fig.1 below). This strategy of adding up one or more activities is called Vertical integration. Example, Car manufacturing company acquires Tyre manufacturing company or ancillary parts manufacturing company (producing important auto parts) in order to solve their raw material shortage problems and reduce other relevant costs.

You may find few companies which prefer to control each and every activity starting from Raw material to Marketing & Sales and sometimes after sales service as well. E.g. Oil companies, Smartphone manufacturers & many more. Hence, level of integration may vary from industry to industry. Option is left with the companies that whether they want to integrate fully or partially?

Types of Vertical Integration

There are 3 types of Vertical Integration
Backward integration: If company is moving towards source of raw materials then it has adopted backward integration strategy. E.g. adding up manufacturing facility to start production of ancillary products (which was bought earlier from supplier) to support the production process. By doing this, companies can reduce their interdependencies on supplier and gain through reduction in input costs.

Forward integration: If company is adding few activities which make them nearer to the end users then this strategy is known as forward integration. E.g. establishing own distribution network or after sales service centre. E.g. Apparels manufacturer set-up its own stores throughout country and starts selling to customers directly.

Balanced integration: When company has gained control over one step backward and one step forward of the value chain then it is said that they are following balanced integration strategy. In other words, it is combination of both forward & backward integration strategies.

Advantages of Vertical Integration
1. Control over value chain: This strategy helps a lot in gaining control over various activities under value chain.
2. Barriers to entry: Huge capital investment is required for implementing this strategy. Hence, this huge investment creates an entry barrier for new entrants and thus improves the overall position of the company.
3. Reduced production cost: As there are no intermediaries’ & manufacturer’s margin and company is enjoying the benefits of economies of scale, cost of production is bound to decline.
4. Competitive advantage: Economies of scale produces cost effectiveness & barriers to entry. This in turn leads to competitive advantage.
5. Quality product: When you have better control over the production activities & raw materials, then quality of final goods automatically gets improved because of increased supervision & control.
6. Control over scarce resources: Through controlling over raw materials which are scarce & limited, companies have an advantage over competitors as unavailability of the same can cause serious problems to big industrial setup. Think of power companies owning coal blocks, oil companies owning gas basins.

Disadvantages of Vertical Integration
1. Can’t be reversed back: Most important drawback of this strategy is that it couldn’t be reversed back and can prove very fatal if it backfires. Hence, special care is taken while taking or implementing any of the vertical integration strategies.
2. Expensive: These are very expensive as it requires lot of capital infusion into new business line / activity.
3. Expertise issue: Initially you might face with this problem because of lack of experience in added line of businesses resultant from adaptation of any strategies as mentioned above.

Business plans can be seen as a blueprint of your business proposal. It explains every minute detail of your business and gives answer to all major questions which is being asked by an Investor / stakeholders starting from idea origination to financial projections. 

SWOT (Strengths, Weakness, Opportunities & Threats) analysis is a business planning tool to assess the overall situation of the industry by highlighting various external and internal factors affecting your business. This was used for the first time in 1980’s by GE. This helps a lot in understanding your business and shows up improvement areas as well as areas which can provide competitive advantage.

Strengths & Weaknesses arises due to internal factors prevailing within organization such as Work environment, Organizational structure, Operational efficiency, Brand value / image, key personal, financial capacity, market position, Patents & many more. One should build upon their strengths and minimize weaknesses. E.g. Huge cash surplus could be strength of a company and large debt can be seen as a major weakness. 

Overview

This matrix was developed by Mr. Bruce Anderson of Boston Consulting Group (BCG) in 1970’s. Through this matrix, large business groups can take their major decisions on SBUs (Strategic business units) related to growth, diversification & divestment. SBUs are basically business units / organizations which have separate profit centre head and are generally formed with independent missions & objectives. Main purpose of this matrix is to understand the market position of various SBUs on the basis of four combinations obtained from market share & market growth rate. This matrix is most commonly termed as “Growth Share matrix”.

Four combinations are mentioned below:

1. High market share, Low market growth rate – Referred as “Cash Cows”

2. High market share, High market growth rate – Referred as “Stars”

3. Low market share, High market growth rate – Referred as “Question Marks”

4. Low market share, Low market growth rate – Referred as “Dogs”

This topic will add to your knowledge about the underlying sources of competitive pressure which further highlights the critical strengths and weaknesses of the company and clarifies the areas where strategic change may yield the highest payoff. It also highlights the major strengths and weaknesses of industry along with associated opportunities and threats. This model is based upon following five forces.

Fig: Five Forces model by Michael Porter