Marketing Objectives: Strategic Thrust And Strategic Objectives

  

Date Posted: 11/6/2012 4:05:14 AM

Posted By: sashoo  Membership Level: Silver  Total Points: 382

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Marketing Objectives: Strategic Thrust And Strategic Objectives

1. Strategic Thrust

Objectives should be set in terms of which products to sell in which markets. This describes the strategic thrust of the business. The strategic thrust defines the future direction of the business. The alternatives comprise:

a) Existing products in existing markets (market penetration or expansion)
b) New/related products for existing markets (product development)
c) Existing products in new/related markets (market development)
d) New/related products for new/related markets (entry into new markets)

Let’s look deeply into each one of them:

• Market penetration

This strategy is to take the existing product in the existing market and to attempt increased penetration. Existing customers may become more brand loyal (brand-switch less often) and/or new customers in the same market may begin to buy the brand. Other tactics to increase penetration include getting existing customers to use the brand more often (e.g wash their hair more frequently) and to use a greater quantity when they use it (e.g two spoonfuls of tea instead of one). The latter tactic would also have the effect of expanding the market.

• Product development

This strategy involves increasing sales by improving present products or developing new products for current markets. The Ford Mondeo, which replaced the Ford Sierra, is an example of a product development strategy. By improving style, development and comfort, the aim is to gain higher sales and market share among its present market (especially fleet buyers).

• Market development

This strategy is used when current products are sold in new markets. This may involve moving into new geographical markets. Many consumer durable brands, such as cars, consumer electronics and household appliance brands, are sold in overseas markets with no or only very minor modifications to those at home. An alternative market development strategy is to move into new market segments.

• Entry into new markets

This strategy occurs when new products are developed for new markets. This is the

most risky strategy but may be necessary when a company’s current products and markets offer few prospects for future growth. When there is synergy between the existing and new products, this strategy is more likely to work. For example, Apple’s experience and competences in computer electronics provided the platform for designing a new product, the iPod, targeting a different market: young people who want downloadable music on a portable music player.

2. Strategic Objectives

Alongside objectives for product/market direction, strategic objectives for each product need to be agreed. This begins the process of planning at the product level. There are four alternatives:

• build
• hold
• harvest
• divest

For new products, the strategic objective will inevitably be to build sales and market share. For existing products, the appropriate strategic objective will depend on the particular situation associated with the product. This will be determined in the marketing audit, SWOT analysis and evaluation of the strategic options outlined earlier. In particular, product planning portfolio tools such as the Boston Consulting Group Growth-Share Matrix, the General Electric Market Attractiveness-Competitive Position Model and the Shell Directional Policy Matrix may be used to aid this analysis.

It’s important to note that building sales and market share is not the only sensible strategic objective for a product. Of course, it may make commercial sense under certain conditions; harvesting, where sales and market share are allowed to fall but profit margins are maximized, may also be preferable to building; finally, divestment, where the products is dropped or sold, can be the logical outcome of the situation analysis.

Together, strategic thrust and strategic objectives define where the business and its products intend to go in the future.

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