Approaches to Marketing Strategy (CIE A Level Business)

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Author

Lisa Eades

Marketing Strategies to Achieve Objectives

Marketing strategies need to be coordinated carefully to ensure that they are consistent and focused on achieving the marketing objectives

Features of an Effective Marketing Strategy

Consistent

Coordinated

Focused

Marketing strategies reflect and reinforce business and brand values
They are appropriate for the product to which they are applied
They are suitable for the intended target market such as mass or niche markets

Marketing budgets, the marketing mix and the promotional mix must be tied together
The cooperation of relevant functional managers is vital
Mixed messages need to be avoided to ensure customers fully buy in to the product

Strategies must be focused on achieving the business's specific marketing objectives
They should be adapted when objectives change and regularly reviewed to ensure they retain this focus
Unfocused strategies should be discarded

Customer Relationship Marketing (CRM)

Customer relationship marketing (CRM) involves a business focusing their marketing efforts around building a deep understanding of customers, consistently meeting customer needs and developing long-term customer loyalty
Marketing strategies and tactics are focused on four key areas

Diagram: CRM Strategies & Tactics

Customer relationship marketing involves the acquisition, retention, expansion and reactivation of customers

Customer acquisition

Attracting interested consumers and converting them into customers to achieve growth, make money and improve chances of business survival
Businesses can acquire customers in many different ways, including
- Building a strong brand identity
- Delivering excellent customer experiences
- Providing clear information
- Offering special rewards, such as price promotions

Customer retention

Customer retention involves encouraging customers to remain loyal to a business and its brands over time
Encouraging loyalty is important for several reasons
- Attracting new customers often costs more than retaining current customers
- Loyal customers tend to be valuable repeat customers
- Retained customers can refer new customers to a business
  - Word-of-mouth marketing is a form of free marketing for a brand
  - Happy customers talking about a business or brand in positive ways can help persuade people they know to become loyal customers as well
Businesses can retain customers in many different ways, including
- Customer loyalty schemes
- Regular communication about new products or promotional offers
- Targeted price promotions or other perks for existing customers

Customer expansion

Customer expansion is the process of encouraging existing customers to increase the value and frequency of their spending on products and services over time
Businesses can achieve customer expansion in several different ways, including
- Upselling by encouraging customers to upgrade to premium products
- Cross-selling by offering customers a related product or service
- Providing add-ons such as insurance policies, extra features or extended warranties

Customer reactivation

Customer reactivation involves reaching out to customers who have previously expressed interest in or purchased a product but have since become disengaged
Businesses can adopt a range of techniques to reactivate customers, including
- Social media engagement
- Targeted price promotions for returning customers
- Direct mailings via post or email

An Evaluation of CRM Strategies & Tactics

Benefits of CRM

Drawbacks of CRM

CRM involves a business developing a detailed understanding of customer needs and preferences that allows them to precisely target promotional activity
Focusing on keeping loyal customers is usually less costly than persuading new customers to choose a businesses products over those of rivals

It requires investment in training and development of staff to ensure that high customer service expectations are consistently met
Without a relentless and expensive focus on researching and understanding customer needs, CRM is unlikely to be successful

Information Technology in Marketing

Information Technology (IT) tools and applications are extensively used in marketing for a variety of purposes

Uses of IT Tools & Applications in Marketing

Application

Purpose

Example

Social media

Businesses can establish and maintain a presence on platforms such as Instagram, TikTok and Youtube
Regular posts that link products to trends can be shared, creating the modern equivalent of word-of-mouth promotion
Social media channels allow for rapid communication with followers that can include interactive content such as videos and sound
Customers can leave comments and reviews that can be used for market research purposes

US-based fashion brand Forever 21 has a significant presence on Instagram, using its profile to share images and short videos that showcase new products and special events

Websites

Most businesses have a web presence in the form of a corporate website, a sales website, and/or a page on a sales platform, such as Etsy or Ebay
Websites allow businesses to sell their products online and share company information, such as press releases, swiftly and efficiently
Tools such as blogs and vlogs can be used to drive customers to sales websites

Zalando is an online shopping mall located in Germany, providing a sales platform for leading European fashion and footwear brands as well as its own brands, including Kickz sportswear

Email

Businesses build databases of those customers who have chosen to opt-in to email communications
Information about new products ranges, as well as special offers and events, can be shared swiftly and at minimal cost with interested consumers

Austrian stationery brand Paper Republic sends regular email updates to loyal customers, with targeted reminders to purchase time-critical products such as diaries

Mobile

Most businesses have developed optimised applications that allow customers to browse and purchase their products on a mobile device
Text messaging can be used to communicate special offers, links to websites and product surveys to customers

Logistics company Evri sends customers text messages containing links to review recent delivery experiences

In-store

IT technology is increasingly used in physical stores to attract, inform and engage customers
Digital signage can draw customers' attention to special offers, highlight product ranges and create a particular ambience in stores
Bespoke information systems can provide staff and customers with up-to-date information on inventory levels

Customers in IKEA's warehouse-style stores can check inventory levels and the location of products online and in-store using terminals located throughout the building

Artificial Intelligence in Marketing

It is argued that marketing is the business function where artificial intelligence (AI) has the greatest potential to make a positive financial impact
Current uses of AI include
- Analysis and interpretation of large volumes of data on customer behaviour gathered from social media, devices such as smart speakers, online sales and other interactions such as reviews
  - AI can swiftly roll out targeted promotional activity based on the nature of actual customer activity
  - Personalised digital communications based on behavioural patterns, interests and interactions can be designed and distributed
- Organisation and interrogation of complex customer profile databases that combine behavioural data from a range of electronic devices and applications
  - Product designers and creative marketers can use detailed information to develop and promote products that meet customer needs precisely
  - Real-time product suggestions based on past and current behaviour can be used to influence which product is purchased
- Communication with consumers through AI-generated chatbots
  - E.g. AI-generated influencer Lil Miquela is a chatbot with millions of followers who are happy to go along with her recommendations, meaning she earns large fees from brands including Calvin Klein and Prada
There is some concern about the use of AI in marketing

AI in Marketing: Key Concerns

Consumer resistance

Capital investment requirements

Careful human supervision is required

Many consumers are unhappy about the large-scale collection of data
The use of AI in marketing can increase the possibility of discrimination and the misuse of information
E.g. A customer's credit rating is reduced because AI determines that others who shopped where he shopped had a poor repayment history

AI systems require a significant investment in hardware, processing power, software, highly skilled employees such as programmers and training
These high costs increase barriers to entry for small firms and increase the competitive advantage of already-powerful firms
This may have the effect of reducing competition and choice for customers

AI systems require close supervision to ensure that programming errors are identified and corrected swiftly
AI systems lack the creativity and imagination of humans so output may be perfected by human touch
Ensuring that AI-generated promotional activity is focused on marketing objectives is a judgement best made by a human

Exam Tip

You will not be required to demonstrate in-depth knowledge of current applications of IT and AI in marketing. It is more important that you are able to analyse the impact of using IT and AI solutions on stakeholder groups, especially employees and customers, as well as the ways in which they can be used to improve performance.

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