Faculty of Business StudiesPremier University, Chittagong Bangladesh MBA PROGRAM MARKETING MANAGEMENT Course Coordinator: Mr. Tanvirul Islam Chowdhury Assistant Professor, Faculty of Business Studies Premier University Chittagong. Submitted by: Abhijit Pathak Student No: 0817230797 [3rd Semester] Date of Submission: The 22nd November, 2009 MARKETING WARFARE Marketing warfare is an attempt to apply successful military strategy to marketing situations. Marketing, as an academic discipline, is less than 100 years old. Military strategy has been developed in life and death struggles which have been ongoing throughout the whole of recorded history - more than 3,000 years. Successful companies today are competitor oriented - meeting the customers demands better than any other company in their field. By adapting military strategies to their operations, companies can gain and press home strong competitive advantages over all other companies in their industry. FOUR TYPES OF WARFARE 1. DEFENSIVE WARFARE • • • Only a market leader should wage defensive warfare. Leaders must attack themselves by improving products. All moves by competitors must be matched. 2. OFFENSIVE WARFARE • • • Focus on the strengths of no.1 in the market. Find a weakness and attack at that single point. Confine the attack to that single point of attack. 3. FLANKING WARFARE • • • Introduce a new product into an uncontested area. Must be a surprise attack. Never boast in advance. Pour everything into the flanking move if successful. 4. GUERRILLA WARFARE • • • Find a market segment small enough to defend. Never start acting like a market leader. Be ready to move elsewhere at a moment’s notice. FUNDAMENTAL PRINCIPLES • • • • In marketing, the company with the larger resources is always going to win. Therefore, keep the field of battle until you reach a stage where you are in the strongest relative position. The defensive strength of a market leader is formidable. Aggressiveness alone is not the sign of good strategy. reducing • • Marketing battles are fought in the mind of the consumer. Effective strategy should be varied industry by industry. CHARACTERISTICS OF AN EFFECTIVE MARKETING GENERAL 1. Flexibility: The ability to make ongoing adjustments as the battle unfolds. 2. Mental Courage: To stick with the plan, to defend it to others and to boost the morale of their employees. 3. Boldness: To take quick and decisive action when the business opportunity arises. 4. Knowledge of the Facts at the Front Lines: First hand knowledge of how customers are thinking and what they require. 5. Good Luck: An ingredient in any encounter - physical or mental. 6. Knowledge of the Rules: Knowing the basic theories of marketing warfare so well they become subconscious. WHAT IS GUERRILLA MARKETING? Guerrilla Marketing is marketing geared primarily toward small businesses, independent sales reps, professional practices, and other businesses with limited marketing budgets (although larger corporations have been dabbling in it as well lately!). A Guerrilla Marketing campaign enables us to compete against the leaders in a particular search area. Guerrilla's are usually so entrenched in a market by being everything to everyone that they can not make the quick changes due to being too risk-averse and complacent. This gives us the ideal opportunity to forge a sector in their marketplace. To compete against a Guerrilla, a company needs to pull out a full arsenal of integration, sector specialization, and network integration & social media awareness all while being competitive on price. GUERRILLA WARFARE Main Idea 1. Find a market segment small enough to defend. 2. No matter how successful you become in that segment, never start to act like a market leader. 3. Be prepared to move out of that segment at any time. Supporting Ideas The guerrilla is not trying to take business from a market leader -he is trying to take business away from all other competing uses for the money involved. Therefore, the guerrilla targets one small market segment in which he can become the leader. This requires judgment - if too big a market is targeted, it will attract the attention of the overall market leader. The key consideration is the application of resources. Guerrilla forces don’t have the money and organization to take on a broad front of business - they have to focus on one key product, one key service. The most successful guerrillas in marketing history have operated with a different organization and a different timetable from their competition. To quote a military example: In Vietnam, the U.S. had 543,000 troops of which only 80,000 were in combat and the rest were in support services. By contrast, almost every enemy soldier had a gun they used against the U.S. Similarly, guerrilla companies should get a high proportion of their staff into the marketing fray - the actual point of contact between the company and its customers. There should be no organizational charts, etc just all front line and virtually no back room staff. The advantage of flexibility and a lean organization means the guerrilla company can move into another product or service at a moments notice without huge internal pain and stress. A guerrilla company can also make decisions quickly, without massive bureaucratic paperwork. The guerrilla company can quickly jump into a market where an opportunity exists, and just as quickly leave when a huge company with overpowering resources moves into the same market. Or the guerrilla can quickly move into a market being abandoned by a market leader. Guerrillas don’t change the mathematics of the marketing battle -they simply reduce the size of the battlefield until they reach a stage where they have a superiority of firepower in just that one market alone. SECRATES OF GUERRILLA MARKETING 1. Commitment – Determine a marketing plan and commit to it. The more repetition, the more it is remembered. 2. Confident – What should you be concerned about when you advertise? 5th concern is Price; 4th concern is N Selection; 3rd concern is Service; 2nd concern is Quality; 1st concern is Confidence. 3. Patient – You must have patience to be confident. 4. Assortment – The more Guerilla Marketing tactics you arm yourself with, the more people you reach. 5. Convenient – Be convenient for your customer and it will be easy for them to do business with you. 6. Amazement – Encourage excitement for what you offer. Are you the best? 7. Involvement – Prove you care by staying in touch and listening to your customer. Customers pay you back by referring their friends. 8. Armament – Equip your company with the necessary tools including a web site, cell phone, pager and other technology. 9. Content – Have killer content in your message. Talk directly to your customer with a clear direct message. 10. Measurement – You will have many methods of advertising in operation at one time, some will be a hit and some will miss. Reduce your marketing budget 50% by asking people “Where did you hear of us.” 10 COMMANDMENTS OF GUERILLA MARKETING 1. 2. 3. 4. 5. 6. 7. 8. 9. Know your market Know who your customers are how they think, and where they go Keep your name in front of your in-house list Work with the press Educate the market Put e-marketing to work for you Do the Web right Get a prime spot on the Web's search engines 10. Give talks and presentations at industry association meetings and conferences ADVANTAGES Flexible: Because of small scale nature can be adapted quickly, relatively easy to respond to change Low Cost: One of the founding principles – ideal for firms who do not have massive marketing budgets Targeted: Designed to reach the target market – reduces waste and ineffectiveness Simple: Many of the methods simple and easy to use and implement – ideal for the smaller business NON-TRADITIONAL ADVERTISING METHODS EXAMPLE :: THE COLA WAR :: Coca-Cola Vs. Pepsi Main Idea The principles of marketing warfare provide a strong (and historically accurate) analytical framework for studying the Coca-Cola vs. Pepsi marketing history. Supporting Ideas Coca-Cola was first introduced in the 1870’s as an exotic patent medicine for every affliction known to mankind. In 1902, the company took the cocaine out of the formula and started extensive advertising. The trademark Coke bottles were launched in 1915. In 1939, Pepsi-Cola launched a flanking assault on Coca-Cola by introducing a 12ounce bottle which sold for the same price as Coke’s 7-ounce bottle. This was a brilliant move as Coke had not made that bottle so famous they couldn’t change it readily – nor could they change the price as they had an installed base of hundreds of thousands of soft-drink machines. A strong defensive move would have been for Coke to introduce a second brand which competed directly with Pepsi. They didn’t do that and by the late 1950s their lead over Pepsi was rapidly decreasing. Pepsi next introduced two strong strategic moves: • Large bottles sold at supermarkets for the home market. This was a new concept in a field that had previously been limited to small, single-serving packaging. Unfortunately, Coca-Cola was soon able to match Pepsi’s initiative in this area. The Pepsi generation. All of Pepsi’s advertising suggested Coke was a drink for older people, while the next generation chose Pepsi. While Coke and Pepsi were fighting it out, the No. 3 cola, Royal Crown, introduced Diet Rite Cola. It was a brilliant flanking move that caught Coke and Pepsi by surprise. It took more than 3 years before Coca-Cola responded with Tab and Pepsi with Diet Pepsi. However, instead of building on that success, Royal Crown kept trying to build sales of its regular cola as well as the diet product - diluting the focus of its sales force Diet Rite Cola now has less than 4 percent of the market. By 1985, Coca-Cola was only selling 1.15 as many times the amount of Pepsi. Coca-Cola hit the panic button and suddenly changed their formula - and in the process managed to undermine their own market leadership position. Less than three months later, the company announced the return of the original formula, and the creation of a host of new products - New Coke, Cherry Coke, Diet Coke, Caffeine-Free Coke, etc. This has now created a huge identity crisis for the company, severe warehousing and retailing problems and opened a number of small skirmishes for the company to fight. • The marketing warfare principles project that Pepsi should be able to take advantage of Coke’s strategic mistakes to assume sales leadership of the cola market. Key Thoughts ‘‘Historical examples provide the best kind of proof in the empirical sciences. This is particularly true of the art of war.’’