Marketing objectives are the planned results of marketing and selling your organization’s products and services. A business strategic planning process can be used in developing these objectives. The business objectives are derived from the business’s mission statement and the SWOT analysis. Marketing managers look for marketing opportunities that are feasible and profitable. This analyzing of marketing opportunities is the first step in the marketing process.
The Marketing Process
The marketing process consists of analyzing market opportunities, researching and selecting target markets, designing marketing strategies, planning marketing programs, and organizing, implementing, and controlling the marketing effort.
From the marketing objectives comes the marketing strategy. Marketing strategies state how the marketing objectives are to be achieved. A strategy is a game plan for achieving goals. From the marketing objectives that you have chosen to pursue, how can you accomplish these goals? What resources are required to achieve these results and what specific results do you expect to achieve?
One starting point was proposed by Michael E. Porter. His three generic strategies are: cost leadership, differentiation and focus. With cost leadership, firms work to reduce production and distribution costs and pass some of those saving on to the consumer in an attempt to win a large market share. With differentiation, the business focuses on superior performance in a customer benefit area that is important to customers. The superiority is communicated to customers. With focus, or niche, the business focuses its efforts on one or more narrow market segments and either uses a cost leadership or a differentiation approach.
Profitability depends on the market size, your market share, the price you are charging and your costs. The market size and market share are moving targets that depend on many external factors such as your competition and the needs and wants of consumers. The chart below takes an Income Statement approach to looking at objectives. The chart below has a simple example of a company that has a 10% market share and sells their products for $25 each.
|Amount||Business Objectives||Marketing Objectives|
|Market Size||1000||Increase Market Size||Market Development; Product Development|
|Market Share||10%||Increase Market Share||Attract competitor’s customers; Increase usage of current customers; Discourage competitors|
|Selling Price||$25.00||Raise Prices||Increase real and perceived quality of products and services|
|Unit Cost||$10.00||Reduce Costs||Reduce average unit cost of supplier’s goods and services|
|Other Variable Costs per Unit||$3.50||Reduce Costs||Reduce average unit cost of other goods and services|
|Total Unit Variable Costs||$13.50|
|Total Variable Costs||$1,350.00|
|Fixed Costs||$1,000.00||Reduce Costs||Reduce fixed costs|
|Profit Before Tax||$150.00|
Suppose you want to increase your market size by developing your market. Your market could be developed by increasing the geographic size of your market. To accomplish this you decide that you will advertise and distribute your product to a larger geographic area. Your marketing strategy involves new distribution channels. Another way to increase your market size is to convert non-users of your product. Perhaps there are people in your geographic area that are not using your type of product at all. Could they be convinced to try your product to satisfy a need or want?
If you want to alter your product or service in such a way as to increase customer usage, you may decide to associate your product with another product through a joint venture, for example. You may also decide to develop new products.
Attract Competitor’s Customers
To increase your market share, you may decide to attract customers away from your competitor's product towards your product. One way to do this is to begin to compare your product to the competition’s product and explain how your product is better.
Increase Current Customer’s Usage
If your current customers purchased your products and services more often than they currently do, they may do so at the expense of your competitors, thereby increasing your market share.
If your competition believes that they cannot produce their products and services and sell them at a price level that allows them to compete with you and be successful, they may leave the market or scale down their efforts, thereby causing your market share to increase. This strategy will also delay the entry of new competitors into the market.
Increase Real Product Quality
Through research and development, you may wish to improve the quality of your products and services. Generally, better quality products can be sold for higher prices. This strategy aims to increase total revenues. This strategy will also cost more money. As always, you need to understand what customers want and if they don’t want a higher quality product at a
higher price this strategy will not be financially successful. Also, for this to work, customers should perceive that your products and services are of better quality.
Increase Perceived Product Quality
Customers want to believe that your products are of good or better quality. How the product looks and is package is important. The communication that you have with your customers should emphasize quality and customer benefits.
Reduce Cost of Goods
Paying a low or lower price for the goods that you sell, or the parts that you use to assemble your products will allow you to more easily reduce your selling price and perhaps gain a larger market share.
Reduce Other Variable Costs
Could variable costs such as selling and administrative costs be reduced?
Reduce Fixed Costs
Reducing these costs may take time to accomplish, but if you are spending money on equipment, building space, storage space or motor vehicles that you don’t really need, consider making some changes.