There are many reasons to define the need for marketing strategy to current businesses. Each of them is discussed below
Each market is divided into shares, which are captured by the players of the market. This fight for market share is intensifying. Because of competition, margins are poor, and hence the increase of market share provides leverage to the company. To increase market share, companies need marketing strategy.
2) External business environment –
Most sectors like Petrol, banking, airlines, logistics as well as telecommunications are regulated by government. Similarly, the PEST environment affects decision-making continuously. As this external business environment keeps changing, the need for marketing strategy arises because you need to be ready for the changes in external environment.
3) Business expansion –
While managing all aspects of businesses, the firm also needs to expand at a rapid pace. This involves various kinds of mergers, acquisitions takeovers or introduction of new product lines, each of which needs to be micro managed. Any business that wants to expands, needs a marketing strategy in place to ensure that the expansion is happening in the right manner, and is maintaining the right pace. The business also needs to be ready for the “Ifs and buts” of business, in case the expansion is slower or faster than forecast.
4) Management of channel structure –
The distribution channel is changing very fast. Many companies now have their own softwares and they can monitor what is happening at the distributor level. The rise of modern retailers and E-retailers is giving more power in the hand of consumers as well as distribution channel. At the same time, changes are happening on the purchase end with buying groups being formed & supply being managed to match demand. All these require the right strategies in place to prepare for good or bad times.
5) Penetration of national and international brands –
Not only do manufacturers have to worry about local brands, but they have to worry about national as well as international brands entering the market. If you look at printers or technology driven products, you will find bulk of the products originating from China or Japan. On the other hand, Automobiles mainly originate from Germany or USA. Thus, a national level manufacturer, needs to have a strong marketing strategy in place to ward off competition from international players. On the other hand, the international player has to enter with the right marketing strategy otherwise he will lose.
6) Increasing segments / product portfolio –
Take any company you want, you will find that the company has multiple products and an in-depth product portfolio. Because economies of scale offers many advantages, companies keep expanding their product portfolios and keep targeting more inter connected market segments. So a FMCG company which is selling chocolates, can also venture into biscuits because the channel is the same. Thus, with so many segments in place, strategic management becomes very important.
7) Technology –
This point requires no explanation because we ourselves know how much humanity has progressed in terms of technology in the last 1 century. There was a time when Barter system was used and there were no quality or price standards in place. But if today, you don’t supply a quality product, your reviews will be plastered on a 100 review sites, on E-commerce portals as well as in consumer forums. Technology has made decision-making very simple. And hence you require strategy in place to handle ever improving technology.
8) Innovation –
The need for marketing strategy does not end at handling the business alone. It is fine to be a “me too” brand. But if you really want to be at the top of the business pyramid, you need innovation at all levels – product, supply or manufacturing to give you a competitive advantage.
9) Demanding customers –
At the end, you have to remember that whatever you do, the success and failure lies in the hands of the customers. The power has shifted from the manufacturers to the customers. And due to the habit of receiving excellent service over a period of time, most customers have become demanding like a spoilt brat. They want only the best. You need marketing strategy to give the best to your customers.