Marketing Strategies (Edexcel A-Level Business): Revision Notes

Marketing strategies

A marketing strategy is a planned set of actions designed to achieve specific marketing objectives. For example, a business aiming to become the market leader might develop a strategy involving improvements to customer service, promotional offers, advertising investment, and establishing an online presence. Effective marketing strategies integrate all elements of the marketing mix and use various promotional techniques to achieve their goals.

Strategies for mass markets

Mass markets are large-scale markets with millions of potential customers, often operating globally. Companies like Procter & Gamble, Heinz, Kellogg's, Coca-Cola and General Motors compete in mass markets. These markets are highly competitive because the potential rewards for success are substantial. While marketing strategies in mass markets vary, certain common characteristics emerge across the marketing mix.

Product strategies in mass markets

In mass markets, numerous products compete for consumer attention. Most products serve as close substitutes for each other, making differentiation crucial. The most successful businesses develop a Unique Selling Point (USP) to help their product stand out from competitors. If differentiation through product features proves difficult, businesses must rely more heavily on other marketing mix elements to gain competitive advantage.

Businesses can analyze their product portfolios using tools like the Boston Matrix to identify which products require investment and which should be maintained or removed from the range.

Price strategies in mass markets

Prices across mass markets tend to be remarkably similar. Businesses typically avoid aggressive price competition because price wars usually reduce revenue for all competitors. This explains why companies often charge the standard market price accepted across the industry.

Price leadership is common in mass markets, where the dominant business (often the one with lowest unit costs) sets the price level and competitors follow. This strategy maintains market stability while protecting profit margins across the industry.

Promotion strategies in mass markets

When price competition is limited, firms turn to non-price competition to gain market advantage. This means heavy investment in advertising and promotion becomes essential in mass markets. The overwhelming majority of television advertising comes from mass market businesses.

Although only a small percentage of viewers (perhaps less than 5%) may purchase the advertised product, this still represents significant sales volume when dealing with audiences of several million. The high cost of mass advertising is justified by the potential reach and sales generation.

Place (distribution) strategies in mass markets

Businesses serving mass markets typically use multiple distribution channels to maximize market coverage. Companies selling fast-moving consumer goods target supermarkets, wholesalers, independent retailers and any other suitable outlets. Some manufacturers pay supermarkets premium fees to display products in prominent positions (at eye level or aisle ends) to increase visibility and sales.

Digital distribution has transformed mass market access. All banks now offer online accounts, and increasing numbers of supermarkets provide online shopping with delivery or "click and collect" services. The internet has democratized mass market access, allowing small businesses to distribute products to individual customers worldwide. For example, a small manufacturer in Scotland could now sell directly to customers across the globe through e-commerce.

Strategies for niche markets

Niche markets serve customers with very particular needs that are sometimes overlooked by larger firms. This creates opportunities for businesses willing to tailor their offerings to small, specialized customer groups. Marketing strategies for niche markets differ significantly from mass market approaches.

Product strategies in niche markets

Products in niche markets typically show significant differentiation from mainstream alternatives. For example, while the UK has approximately 420,000 restaurants, only four hold three Michelin stars (the highest award for food quality and service). These restaurants serve exceptional food quality that differs dramatically from typical offerings, catering to customers seeking the finest dining experience and willing to pay premium prices.

In niche markets, product design is carefully crafted to meet the specific needs of the target customer group. Product becomes the key element in the marketing mix, as the specialized nature of the offering provides the primary competitive advantage.

Price strategies in niche markets

Niche market businesses enjoy greater pricing flexibility due to reduced competition. Higher prices can be charged without losing significant market share to rivals. Customers often willingly pay premium prices when their specific needs are met effectively. For instance, three-Michelin-star restaurants can charge over £100 per person (excluding wine), and customers accept these prices for the exceptional experience provided.

Promotion strategies in niche markets

Promotion and advertising in niche markets tends to be highly targeted. Since these markets are smaller, national media advertising proves inefficient and wasteful. Businesses must accurately identify their customer profile to ensure advertising expenditure reaches the right audience.

Advertisements typically appear in specialized publications. For example, yacht equipment is advertised in magazines like Yachting Monthly and Boating World. Some golf equipment manufacturers advertise on television but only use specialized channels like Sky Sports where their target audience concentrates.

Place (distribution) strategies in niche markets

Niche market businesses are typically more selective with distribution channels. They often use exclusive distributors or handle distribution privately to maintain control over the customer experience. Internet sales provide practical additional distribution where appropriate.

B2B and B2C marketing strategies

Many businesses supply goods and services to other businesses rather than consumers. For example, JCB produces construction machinery sold primarily to construction companies and plant hire firms worldwide. Marketing strategies for Business-to-Business (B2B) markets differ from Business-to-Consumer (B2C) approaches. In B2B marketing, businesses often distinguish between outbound and inbound strategies.

Outbound marketing strategies

Outbound marketing involves directing marketing material at potential customers whether they expect it or not. Common outbound methods include:

• Direct mail campaigns
• Email marketing
• Telemarketing (cold calling)
• Sponsorship arrangements
• Targeted advertisements in specialist publications
• Trade shows and exhibitions

However, outbound marketing faces several challenges. Many people increasingly ignore advertisements, and few can remember specific adverts they've seen. Cold calling and other intrusive methods often generate negative reactions, potentially damaging brand reputation through persistent contact. Many leads obtained through outbound methods prove poor quality, "fizzling out" and wasting resources. Research suggests outbound leads cost significantly more to acquire than inbound leads.

Inbound marketing strategies

Inbound marketing attracts potential customers to websites when they actively seek suppliers or solutions to problems. This customer-initiated approach generates higher quality leads. Common inbound marketing techniques include:

Inbound marketing methods also present challenges. Building sufficient useful website content to convert visitors into leads requires significant effort and resources. Recruiting experienced inbound marketers can prove difficult, and keeping strategies current with rapidly emerging trends demands constant attention.

Hybrid strategies

Hybrid strategies combine both outbound and inbound methods. Since inbound strategies typically require at least six months to generate meaningful results, businesses can employ outbound methods for short-term lead generation. Once inbound methods begin producing leads, less effective outbound approaches can be discontinued, reducing costs while creating sustainable market share growth.

Developing customer loyalty

Customer loyalty – encouraging customers to make repeat purchases – significantly contributes to business success. Several proven methods help develop loyalty:

Communication

Businesses must keep customers informed and engaged. In mass markets, this might involve national advertising campaigns announcing new products. Some businesses use reassuring advertisements that convince customers they made the right purchase decision.

Regular newsletters (usually via email) keep customers updated with company developments. Consistent communication builds relationships between businesses and customers. When genuine bonds form, customers become more likely to return.

Customer service

High-quality customer service encourages repeat business. Employees who interact with customers must demonstrate professionalism, consistency and integrity. Customer service improvements often involve:

• Handling matters more promptly
• Providing effective after-sales service
• Making the purchasing experience pleasant and memorable
• Offering refreshments during transactions

Customer incentives

Many businesses reward repeat customers through loyalty schemes. Supermarket loyalty cards exemplify this approach. For instance, Morrison's "Match & More" card checks prices against competitor databases. When rival products cost less, customers earn points (50 pence difference equals 500 points). Additional points accumulate on hundreds of products. Every 5,000 points generates a £5 voucher.

Such schemes encourage customers to concentrate their spending with one provider to accumulate sufficient points for rewards. The immediate financial benefit reinforces repeat purchase behavior.

Personalization

Treating customers personally strengthens relationships. Businesses may address customers by name in person or in correspondence. Some firms send birthday and Christmas cards to build personal connections.

However, genuine personalization proves easier for smaller businesses than multinationals. Small businesses can more readily maintain individual customer relationships, while large corporations must rely more heavily on database-driven personalization.

Preferential treatment

Many customers value exclusive or preferential treatment. Examples include:

• VIP areas in nightclubs reserved for high-spending customers
• Airline lounges at airports for first class, business class or frequent flyer passengers, offering free refreshments, Wi-Fi, television, comfortable seating and showers
• Priority service or exclusive access to products or services

The principle underlying preferential treatment is simple: customers who receive special recognition and benefits feel valued and are more likely to return for continued preferential experiences.

Remember!