Term Paper on "Strategic Change and Marketing Strategy Reformulation"

Term Paper 7 pages (2214 words) Sources: 2 Style: APA

[EXCERPT] . . . .

Strategic Change and Marketing Strategy Reformulation clear strategic approach is vital for the overall success of each organization. But in today's world, however good a strategic move is, it must be constantly changed and adapted to the new and emerging requirements of the market and environment. Foremost, a change in a corporate strategic approach must then be incorporated at all organizational levels, including the marketing department.

Take for instance the case of American vehicle producer Ford Motor Company. For decades now their strategy has been based on manufacturing, promoting and selling large luxurious vehicles. But the contemporary society - due to several factors such as increasing concern over environmental protection, increasing price of oil or fierce competition from the Japanese car manufacturers - now demands smaller size and fuel efficient vehicles. Ford's sales have dropped and a change in their strategic approach is required. This change will be reflected at all corporate levels, including production line, incorporation of newer and more environment-friendly technologies, training of the staff and the development of a more suitable marketing campaign. In this particular sense, the marketing department at Ford Motor Corp will have to develop and implement a marketing campaign based on the benefits of the new cars: reduced size, reduced consumption - making it as such cheaper to upkeep, and reduced waste - reducing as such the negative effects upon the environment.

The introduction of a new strategic approach would have simultaneous effects upon all sub-features of the marketing strategy, which would have to be integrated and correlated. In other words, the marketing mix for a certain product would have to be reconsidered in term of the strategic change implemented. The marketing mix is formed of the 4 Ps of marketing: product, price, place (distribution) and promotion and these are all influenced by a corporate change. Take for instance the situation of a corporate desire to increase its short-term revenues by increasing the retail price to the end consumer. To justify the price increase, the product feature of the marketing mix would have to be presented in a new and innovative manner. The marketing team would emphasize more on the benefits of the products and even on the improvements it has over the previous version of the product.

With the increase in the retail price, the company risks losing part of their customers. This situation is however limited for the company would already posses a formed and loyal customer base. But even so, the promotion strategy is extremely important at this stage. The company could develop newer and more attractive advertisements - an innovation in this particular sense is given by interactive advertisements, seen in the commercials of companies such as Nike or Schweppes, which let the viewers see part of the story on television and then invite them to visit the website as to get the finale of the story. Then, the corporate officials or representatives should appear in public placed, grant interviews to radio stations, television talk-shows, newspapers and magazines as to explain the need for the price increase but also emphasize on the improvements brought to the product and the way in which the buyers would benefit from the changes and improvements.

Pricing strategies as part of the marketing strategy also vary and must be adapted to fit the new corporate approach. Say for instance that an organization desires to launch a new product onto the local market. They would have to choose the most suitable pricing strategy from the available such as variable, penetration or skimming. The final decision depends on various forces such as product features, brand, corporate status and recognition as well as the strategic change implemented.

Aligning the distribution channels to the strategic change is yet another matter of extreme vitality for the marketing team. In this order of ideas, take the example of a software company that wishes to manufacture hardware items. How will they sell them? Will they first present them to their actual customer base or will they sell the new products independently? Then, will they directly sell the products throughout their own retail stores or will they use intermediaries? Establishing their own retail stores generates increased costs but allows the company to come in direct contact with the clients. Using intermediaries implies reduced costs and efforts, but generates a new link in the process, furthering as such the company form its customers. The final decision once again depends on the goal of the implemented strategic change.

Finally, all decisions in regard to product, price, promotion, distribution or any other marketing features must be integrated. This basically means that no decision would be made independently, but in correlation with other elements. The integrated solution would then have to be accordingly implemented. Then, a strict and clear control over the strategies would have to be implemented. Large size corporations often request the services of an audit company to revise and control, but small size companies control the process by themselves. The general aim of the control is to supervise the implementation of the new strategic approaches. The audit team will analyze how the marketing strategies come to sustain the achievement of the goals formulated with the implementation of the corporate strategic change. In case any shortages are identified, the auditors will look for the source of the problems and even propose solutions to resolving the matters. All in all, a strategic change at corporate level generates the need to adaptation at all corporate levels, including marketing, where it often materializes in the reformulation of the current marketing approach.

2. Value and the Pricing of Consumer Goods

The concept of value is not new to the business community and increasing the corporate value of an organization is an ultimate goal for any entity. Employees wish for a superior corporate value in the hope that it would lead to increased wages and shareholders wish for superior value as to gain more dividend payments. But how about value and its effect upon the retail price of a certain product or service? This question can be looked at from two different angles: corporate value and product value, both of which generally having a directly proportionate relationship to the retail price to the end consumer.

In the first instance, that of corporate value, the price generally increases as the value increases. To better explain, a reputable and internationally recognized company with a strong organizational brand will sell its products at rather high prices, whereas a smaller company with a lower value will sell its products at significantly lower prices. In the case of the first company, the price of the product will most often include the brand, most of these purchases and campaigns being based on brand strategies (such as Nike for example). Then, aside from brand, the buyer will also pay for the major advertising campaigns and for other marketing costs integrated to sell the final product to the consumer. In a small company on the other hand, the consumer will often only pay for the costs of manufacturing the product and the costs of operating the facility. These costs basically include commodities, taxes and fees to the state budget, personnel expenditures and other operational costs, such as electricity, heating or water; brand and marketing costs are barely present. Ergo, larger corporate value, larger price.

There is however an exception to this situation - that of economies of scale. This basically implies that an organization has large control over the industry in which it operates and namely the resources involved. As a consequence, it has the capability to produce large volumes of products and sell them at uncompetitive prices. This situation is often assimilated with monopoly as it eliminates the smaller competitors. A relevant example in this case in given by supermarket chain Wal-Mart, which is often perceived with reticence by local communities as along its operations, it has put several mom & pop stores out of existence. In this particular sense, the larger the value of the corporation, the more control they have over the resources and the more power to implement the smallest prices.

The relationship between the value of the product and its retail price to the end consumer is simpler than the previous one but it still has direct implications. In this particular sense, given that the value of a certain product is larger, it means that it has an increased utility for the buyer and its production has incorporated a wide array of resources - ergo, the price will be larger as to cover for all costs and justify its practical application to the client. On the other hand, if the value of the product is lower, meaning that it has a reduced actual utility to the end buyer and its production has incorporated fewer resources, it is natural for its retail price to be reduced.

There are also those products which present different levels of value at different times. To better explain: take for instance the case of an organization manufacturing low… READ MORE

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