Marketing strategy

Marketing strategy involves segmenting the market, choosing which segments to target, differentiating the product to appeal to the segments, and positioning it distinctly in the minds of target consumers. These strategic processes are described briefly as follows:

• Market Segmentation: Partitioning a market into groups of consumers that have similar needs and preferences for products.
• Targeting: Target consumer segments with a common need that the brand is capable of fulfilling better than competition.
• Product Differentiation: Distinguish the product from competing products to make it more attractive to the target market. Differentiation may be achieved through product quality (functional benefits), price, distribution and advertising.
• Positioning: Impart a distinct and valued image of the brand in the minds of consumers. Associate the brand with those attributes and themes so that consumers think about the product in the desired manner.

Marketing Mix Decisions

A well devised strategy drives all elements of the marketing mix into a coordinated programme designed to differentiate the offering. Marketing mix decisions pertain to:

• Product development entails trade-off between quality and cost. Marketers constantly seek to develop products with the ideal combination of ingredients, to market at a price target consumers are willing to pay.
• New product launch: Manufacturer teams possess a number of product formulations under research and development that have still to be launched. They may choose to launch these products into the market at any period during the course of the simulation. They may also alter the composition of these products at any time period, even prior to launch.
• Advertising and Positioning: Advertising works by associating relevant images, messages, symbols, and emotions with the brand in a memorable way to instil the brand with personality, and sustain consumer interest in the brand. Manufacturers need to decide how much to spend on advertising, and what attributes or aspects, about their brands, to communicate. In Destiny, the teams refine their advertising message by changing the emphasis they place on the product’s attributes, so that they position it in a manner that appeals to their target consumers.
• Pricing: Manufacturers need to work with retailers to ensure that the retail prices are set at a level that target consumers are willing to pay. Their trade price is the price at which the goods are offered to retailers. Getting it right is a complex task that is based both on marketing and financial considerations. ‘It’s the only element in the marketing mix that produces revenue; all other elements represent cost.’
• Promotion and Trade Support: As in-store activities and promotions result in huge gains in sales, it is in the manufacturers' interest to incentivise retailers to support their brands. The trade negotiations provides the framework for the partners to agree on aspects such as quantity discounts, in-store promotions, special displays, co-op advertising and merchandising. Manufacturers usually support retailers through discounts on bulk purchases, sharing co-op advertising fees, and funding a proportion of the promotional activities.
• Production quantity: Manufacturers need to produce adequate quantities to meet retailers’ purchasing requirements. Good production planning would allow manufacturers to effectively control inventory, optimize production facilities, eliminate stock outs, and contain the cost of production and logistics.
• Production capacity: Manufacturers need to assess demand in the foreseeable future and build production facilities in advance, to cater for the growth of their brands.