HOW A COMPANY’S RESOURCES CAN BE ALLOCATED IN A WAY CONSISTENT WITH ITS MARKETING OBJECTIVES (PART 1)
Companies that achieve total market domination have all of the resources, including the personnel, the products, and the vision that are necessary to develop a world-class business. And they have a detailed step-by-step plan of how they can use those resources to achieve their business objective. Providing all of the resource needed to achieve total market domination is an obvious priority, but many factors may make it difficult for your company to do this. For example, if your company lacks the personnel resources that it needs to market all of its products effectively, it will need to prioritize the products and marketing activities that are most likely to help it achieve its sales objectives.
Step 1: Evaluate your primary business objective
The first step in determining how to invest your company’s marketing resources is to define your company’s primary business objective or mission statement. Your company’s mission statement should reflect the value that your business provides to its customers. Many companies expand their mission statement to include that value that their company provides to its employees and shareholders. However, if a company publicizes its mission statement, it should emphasize the value that it provides to its customers. Customers are far more interested in the value that a company can deliver to them than in the value that a company can deliver to its own employees and shareholders.
Step2: Evaluate your short -and longer-term business objectives.
The next step in determining how to invest your company’s resources is to evaluate your company’s short-and longer-term business objectives. You can use the process of defining short-and loner-term business objectives to help you identify your company’s priorities, evaluate its strengths and weaknesses, and make more informed decisions about where and when to invest its marketing resources. But before you can develop a marketing plan for your company, you will need to define your objectives and specify the goals and key results that you will use to monitor your selling success.
If your company does not develop long-term business objectives, it will not have a compass to help it make decisions that will have a long-term impact on its growth and success, such as leasing new facilities, purchasing capital equipment, developing new products, and establishing relationships with business partners.
Step 3: Evaluate your company’s Value Equation
The primary objective of your company’s management team is to increase shareholder value. And the most effective way to do this is to maintain a balance between customer requirements, employee demand, and shareholder expectations. When your company’s “value equation” is in balance, its shareholders are getting a fair return on their investment, its employees are being compensated at or above market wages, and its customers are receiving fair value for the products and services that they purchase.
Balancing your company’s value equation can be very challenging as your company grows and enters new markets. But if your company does not provide a reasonable return on its shareholders’ investment, its managers will be held accountable. If your company’s compensation program is not competitive, it will suffer high employee turnover. And if your company’s customers are dissatisfied, it will lose market share to its competitors.
Step 4: Evaluate where your company is in its business cycle
Markets evolve over time. Identifying where your market, your company, your products, and your competition are in their business cycle will help you anticipate and position your company to take advantage of new market opportunities.
- Market Start-Up/Product Introduction – Markets at this stage are often monopolistic, with one supplier producing one product. Suppliers usually select a narrow, non- overlapping distribution plan and use skimming or penetration price strategies to build market share and to recoup product development and other start-up expense.
- Market Growth –As product sales increase, markets are typically characterized by having monopolistic competition. Although there are usually a few key suppliers, other suppliers may be attracted by the lure of high profitability and rapid market growth. Suppliers differentiate their products and build market share with innovative products, high-profile promotion, and competitive pricing strategies.
- Market Maturity – As the number of suppliers in a market increases and standardized products become available from numerous sources, markets are characterized as moving from monopolistic competition to pure competition (oligopolies). As products become more competitive, pricing often becomes very aggressive, resulting in price wars, and suppliers move towards more intensive distribution strategies with smaller profit margins. Late entrants into the market often wish they had chosen an earlier, more profitable time to jump into the market.
- Market Decline – As markets decline, suppliers often expand distribution level that the market will bear in an attempt to maximize their profits. However, the move toward intensive distribution usually reverses when suppliers realize that over-distribution of their products is putting their company at a competitive disadvantage against competitors that have more controlled distribution.
When customer demand declines, weaker products begin to lose market share, and many companies get out of the market because they can no longer justify the manufacturing and distribution resources needed to compete profitably.
Further reading continues in Part 2
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