Enterprise Rent-A-Car is an international car rental company with a multi-billion pound
turnover, with over 66,000 employees. It is the largest rental car company in North America
but has the approach and feel of a small business. The business is synonymous with
exceptional customer service. (Business case studies)
This report reviews the current strategic marketing management at Enterprise Rent-A Car,
how strategic marketing management affects its positioning and the positioning of its
products and services. It analyses how Enterprise Rent-A-Car combines product
development, promotion, distribution, pricing, relationship management and other elements
of marketing to achieve its strategic marketing goals and how it is achieved within a
designated time frame.
Enterprise Rent-A-Car Profile
Enterprise Rent-A-Car is a privately owned business founded in 1957, Enterprise was
founded by Jack Taylor, an entrepreneur, in Missouri, USA. Starting with just seven cars he
invested his money and ideas into Executive Leasing, which later became Enterprise. Since
then the company has become the largest car rental company in North America, and arguably
the world, with annual revenues of $14.1 billion and 66,000 employees in 2011. Enterprise
Rent-A-Car is an internationally recognised brand, operating within the United States,
Canada, the UK, Ireland and Germany. It currently has more than 7,000 rental offices in five
countries.(business case studies 2011)
Even though Enterprise is a big company, it is run like a small business. Its branches are
decentralised. This means that local managers have the freedom to make decisions based on
the needs of each location.(Business case studies 2011)
2. Enterprise’s ability to keep the customer at the centre of everything it does depends on the
skills and commitment of its employees. The main focus for Enterprise is to find new ways to
provide real solutions for people and businesses with transportation problems. A focus on
customer service is the driving force behind the business. It is this level of customer service
that makes Enterprise different from its competitors.(business case studies)
Task 1: Understanding the principles of strategic marketing management
Marketing involves a range of processes concerned with finding out what consumers want, and then
providing it for them. This involves four key elements, which are referred to as the 4Ps. A useful
starting point therefore is to carry out market research to find out about customer requirements in
relation to the 4Ps.
There are two main types of market research - quantitative research involving collecting a lot of
information by using techniques such as questionnaires and other forms of survey. Qualitative
research involves working with smaller samples of consumers, often asking them to discuss products
and services while researchers take notes about what they have to say. The marketing department will
usually combine both forms of research.
The marketing department will seek to make sure that the company has a marketing focus in
everything that it does. It will work very closely with production to make sure that new and existing
product development is tied in closely with the needs and expectations of customers.
Modern market focused organisations will seek to find out what their customers want. For example,
financial service organisations, will want to find out about what sort of accounts customers want to
open and the standard of service they expect to get. Retailers like Argos and Homebase will seek to
find out about customer preferences for store layouts and the range of goods on offer. Airlines will
find out about the levels of comfort that customer’s desire and the special treatment that they prefer to
A useful definition of marketing is the anticipation and identification of customer needs and
requirements so as to be able to meet them, make a profit or other key organisational objectives.
3. 1.0 Discuss the role of strategic marketing at Enterprise Rent-A-Car
According to subhash C Jain, strategic marketing provides the underlying process for
developing market strategy. It involves choosing the right products for the right growth
markets at the right time.
Enterprise’s ability to keep the customer at the centre of everything it does depends on the skills and
commitment of its employees. The main focus for Enterprise is to find new ways to provide real
solutions for people and businesses with transportation problems. A focus on customer service is the
driving force behind the business. For example, customers benefit from a local pick-up service to take
them to the branch to collect their car. It is this level of customer service that makes Enterprise
different from its competitors (Business Case Studies)
According to the Chartered Institute of Marketing, ‘Marketing is the management process
responsible for identifying, anticipating and satisfying consumer requirements profitably’. To
do this, Enterprise Rent-A-Car require a marketing strategy.
A marketing strategy is something that affects every part of an organisation. It is about using
everything that a business does to create value for others. This includes customers but it also
benefits employees and shareholders. The main purpose of a marketing strategy is to set out
the means by which agreed marketing objectives are to be achieved.
There are many types of marketing objectives. For example, these might include:
increasing market share
4. growing sales/turnover
enhancing the strength of the brand
creating loyal customers
managing costs effectively, thus increasing profitability.
A common marketing objective is to achieve growth. There are a number of ways in which
organisations can grow. For example, they might expand internally. This is known as organic
growth. A quicker but higher risk option is external or inorganic growth. This involves
acquiring or merging with another business.
One positive benefit of growth is that it helps a business to reduce costs through economies of
scale. These include:
efficiencies arising from use of new technologies
improved buying power as it can bulk buy at lower costs
the ability to recruit more specialists to improve decision making.
By lowering costs, an organisation increases its profitability and becomes more competitive.
1.2 Explain the processes involved in strategic marketing at Enterprise Rent-A-Car
The strategic marketing process involves three crucial phases. These phases include:
planning, implementation and control. Although the planning phase is often referred to as the
most important, each of the steps is equally responsible for the success of a firm's marketing
The planning phase is the most crucial stage in a firm's strategic planning process. The first
step is to perform a thorough SWOT analysis. It will help the organization determine its own
5. situation in relation to the market. This analysis is key in fully understanding the internal and
external factors that are favorable or unfavorable to the organization's activities. This is done
through analyzing a firm's strengths, weaknesses, threats and opportunities. The results from
this analysis should directly help in the formation of a firm's strategy which will aim to
minimize threats while maximizing on opportunities as well as reveal new product and
market opportunities. This information will also be the basis for setting a firm's marketing
mix or plan as well as setting realistic and attainable goals and objectives.
The second step in the planning phase takes a market-product approach and involves goal and
objective setting (Kerin-Hartley-Rudelius, 2007). This begins with understanding the
consumer's wants and needs and involves conducting market research. From a strategic
marketing perspective it is important to identify critical issues and attitudes related to the
product amongst other things. The specific information to be gathered in the research process
must reflect the individual needs of the product, and the external and internal competencies of
the organization (article). This will include and analysis of the organizations special
capabilities, points of difference, skills and technologies that set it apart from its competitors
(Kerin et al, 2007). Once collected, this data can also be used to set measurable objectives
and goals for the marketing plan which can later be used as benchmarks for comparison in the
control phase and will help in the development of goals and objectives. A business portfolio
analysis would be a good tool to use in order to determine whether a new product or SBU
would be advantageous or not, and also to evaluate market share and growth potential. The
results yielded will provide performance measures and growth targets for an SBU.
This data is invaluable when an organization is trying how to allocate its resources. Also
during the planning phase
6. you must identify the target market of the product or service. This involves identifying the
segment of consumers who will potentially purchase your product, or those who the strategic
marketing process will be aimed at. Another good tool that would be useful would be a
market product analysis which would yield results with regards to the attractiveness of the
potential product and the market in which it would exist. This would tell a firm which
direction is has to go as in such areas as market and product development as well as market
penetration and diversification. This will also help to decide on the positioning of your
product or service. This is the process of deciding how to position your product in the minds
of your primary and secondary audience (how they will perceive it). This will take careful
analysis of how the public views your product or idea.
(McFarland, 2001). The planning phase is crucial for gathering data to set benchmarks which
can later be measured against in the following stages.
The third and final phase of planning would be to decide on the marketing process. In this
step the marketing mix will also have to be set. This step involves deciding on strategies the
product, price, place and promotion (4 p's). The end result of the planning phase is to set
measurable and attainable goals which can be measured in the control phase. The market
research completed earlier in the planning phase will provide the necessary data to organize
the marketing mix. Strategies need to be analyzed and combines to properly set the marketing
mix. The product is very important and must be desirable to the market segment specified
during the planning stage. Price, promotion and placement must also be worked out bases on
the data supplied through the planning phase.
The next step would be the implementation phase in which all the planning begins to turn into
action. Here the firm obtains resources and designs the market organization which is then put
7. into action. Schedules are developed and the marketing programs are executed (strategy and
tactics). The product or service will now be available to the public, at the places and prices
decided upon in the planning stage. The implementation phase also requires close monitoring
to make sure necessary changes occur if internal or external contingencies are affected
The control phase involves comparing results against the goals and benchmarks set in the
planning phase. This is where the organization evaluates its process, outcomes and consumer
satisfaction (McFarland, 2001). This will allow the firm to view the planning gap to see
where the results deviated from the plan. The organization can then act on the data to exploit
positive deviations while correcting the negative. This analysis and is necessary for a firm to
ensure that their marketing plan is moving in the directions set out in the planning phase and
critical for success in measuring whether objectives were met.
Kerin, R., Hartley,S., Rudelius, W. (2007). Marketing: The Core, 2nd ed., New York:
McFarland, Allison (2001). Developing A Strategic Marketing Plan For Physical
Education. Physical Educator. Early Winter 2001, Vol. 58 Issue 4, p191-198.
1.3 evaluate the links between strategic marketing and corporate strategy
This paper describes the application of grand strategy and balanced scorecard within the
organization and deciding factors that impacts the organization as a whole. Grand strategy
covers four major areas both internal and external and how consideration of these areas in the
8. beginning helps company to design, develop and follow the vision and mission statement.
Environmental analysis through balanced scorecard helps company to define long-term
objectives. This paper also describes how the evaluation of these objectives from time to time
helps company to achieve target.(punit Baxi Helium)
Environmental analysis is the study of the organizational environment to pinpoint
environmental factors that can significantly influence organizational operations (Certo,
2002). There are certain limiting factors, which influence while defining the vision statement.
Company's vision is limited by its own capabilities, by technology, by competition and by
the demands of customers (Financial Times, 2003). The first step in defining mission and
vision statement for any organization is to identify long-term objectives and balanced
scorecard. Environmental analysis consists of following steps.
1. Identify or Define long term objectives for the company also called internal environment
2. Define mission and vision statement also called operational environment
3. Define a framework or balanced scorecard in different areas like finance , customers,
target market, values to the stakeholders, growth and profitability also called general
Profitability is one of the most important objectives for any organization except non-profit.
Company can be profitable in short-term or in the long-term depending on the nature of
business . Sustainability is another objective; which goes along with the profitability. Some
companies just become profitable in the short run and goes out of market because of the short
term planning. In the case of Nextance Inc., Company never became profitable because of
many issues like heavy operational costs, undefined target market, changes in the consumer
9. demand and technological changes.
Productivity is another important objective. Employee retention and motivation is a major
issue in many organizations. Normally productivity can be measured in terms of items
produced and input-output ratio for the products manufactured. But in the case of Nextance,
productivity can be measured in terms of employee retention and changes or improvements
in the software from the feature and functionality standpoint.
Technological leadership is one of the objectives, which keeps the company ahead of
competition in the market. Nextance was certainly a leader in terms of providing contract
management solution. From all viewpoints like software upgrades, quick configuration,
customization, installation and usability, Nextance's contract management solution was one
of the leading solutions in the market.
In addition of profitability, productivity and technological leadership, there was one more
long-term objective defined for Nextance which was customer satisfaction . Company's
vision and mission statements were focused only towards customer satisfaction, which need
to be changed to focus on all long-term objectives.
The balanced scorecard is a set of measures that are directly linked to company's strategy; in
other words; balanced scorecard provides a framework to translate a strategy into operational
items. Balanced scorecard aligns company's vision and strategy planning to its operational
items like finance, customers, internal business process and growth. Answers to the
following four basic questions will define the balance scorecard for any organization.
To succeed financially, how should we appear to our shareholders?
To achieve our vision of customer satisfaction, how should we appear to our customers?
10. To satisfy our shareholders and customers, at which business process must we excel?
To achieve our vision, how will we sustain our ability to change and improve?
Following picture describes how the balanced scorecard framework helps aligning the vision
and strategy for the organization and helps in performance measurement process.
Aligning strategy planning along different perspectives like objectives, measures, targets and
initiatives will help in defining grand strategy for the company to succeed in the market.
(Strategic Management, Pearce and Robinson). Strategy is not planning, visioning or
forecasting - all remnants of the belief that one can control the future by superior insight and
superior will. The modern subject of business strategy is a set of analytic techniques for
understanding better, and so influencing, a company's position in its actual and potential
market place (Financial Times, 2003). Another aspect of looking at the strategy planning is
consideration of "6Ws of corporate growth ". Here is a brief description of what 6Ws is and
which business area they focus on.
1. Why Vision,
2. What Creating values
3. Where Goals, Strategies
4. When Managing Change
5. Who Leaders, Team
6. How Producing, Selling
In the case of Nextance, management never defined any strategy to align mission and vision
statement. Product development in the company was customer driven as oppose to market
demand and future needs. These resulted in too much customer focused product line. There
was no strategy in place to attract new customers or define the competitive advantages to
11. sustain in the market. These are some of the factors that played an important role in company
getting acquired for a cheaper value and gone out of business.
Strategy is very important from all aspects to run any business . Several environment
variables affect the business at different times depending on the situation but if company
management plans out at least some of these factors then it becomes very helpful to sustain in
the competitive market and achieve long-term objective.
Strategic Management, Ninth Edition by Pierce and Robinson, Chapter 1, Overview of
Strategic Management, Information Retrieved information on Feb 3, 2008
Strategic Management, Ninth Edition by Pierce and Robinson, Chapter 6, Formulating
Long-term objectives and grand strategies, Information Retrieved information on
Feb 3, 2008
Mission, Vision and Information regarding company objectives retrieved from
http://www.nextance.com on Feb 3, 2008.
Balanced Scorecard and 6Ws Concept definition retrieved on Feb 3, 2008 from
Modern Management, Ninth Edition, Samuel C. Certo, 2002, information retrieved on
Feb 4, 2008.
Strategy and the Delusion of Grand Designs, John Kay, 2003, information retrieved on
Feb 4, 2008.
Financial Times, 2003, Mastering Strategy, Pearson Education, Delhi, information
12. Retrieved on Feb 4, 2008 from
13. 2.1Marketing model
People often get confused between the marketing of a product and the selling of a product.
Marketing is concerned with identifying, anticipating and meeting the needs of customers in
such a way as to make a profit for the organisation. Market research is thus an important
element of marketing because this is the process involved in finding out what customers
want. Meeting customer requirements then involves applying a relevant marketing mix i.e.
providing the right product, at the right price, through the right distribution channels (place)
and supported by the most suitable promotional and advertising activity.
Strategic and tactical marketing
Marketing operates at two levels within the organisation.
1. At one level marketing is a strategic discipline - it is concerned with major long term
decisions that affect the whole organisation. In particular strategic marketing involves seeing
marketing activity as being essential to everything the organisation does. Given this strategic
approach everyone in the organisation has a responsibility for meeting needs of internal and
2. As well as strategic marketing, marketing activity is also concerned with tactical
marketing. Tactical marketing is all about applying the marketing mix in the most appropriate
way. Tactical marketing involves such activities as:
organising relevant promotions,
setting prices, and adjusting price in line with customer expectations, what the competition
is doing etc.
positioning the product, and periodically organising relaunches and adjustments to the
product in line with changing market conditions.
14. organising the most appropriate channels through which to distribute the product.
The most appropriate marketing model is one that combines marketing strategy with tactics
to create a totally customer facing organisation.
The modern approach to marketing outlined above contrasts with models used twenty years ago
where the organisation focused more on selling existing products rather than finding out about
customer needs and requirements. In those days businesses would seek to use marketing tools
which marketers saw fit rather than finding out what the customer wanted and giving priority to
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A common tool used within marketing was developed by Igor Ansoff in 1965. He suggested that a
business has the potential to grow by using one of four strategies. These strategies involve making
the most of existing markets and products, introducing new products, or entering new target markets.
Ansoff's four strategies are depicted in the matrix below.( www.learnmarketing.net/ansoffs.htm)
15. 1. Market Penetration:
This involves increasing sales of an existing product and penetrating the market further by promoting
the product heavily or reducing prices to increase sales. This strategy has the lowest risk strategy as
the firm knows the product and the market. Market penetration is often used by supermarkets and
large retail chains.( .( www.learnmarketing.net/ansoffs.htm)
2. Product Development:
The business develops/introduces new products into existing markets with the aim of selling the new
product to existing customer groups. For example Microsoft with their Xbox2 game console
introduced the Kinect, an add on that allows customers to play without the use of a controller, much
like the Nintendo Wii. This is an example of a new product which simply needs to be added onto the
existing model aimed at the existing market. Product Development is a medium risk strategy as the
business is familiar with the market but not the new product. .( www.learnmarketing.net/ansoffs.htm
Product development strategies have helped Enterprise to develop services in a market where
it was already an established and profitable business. This was considered to be a medium
risk strategy. Examples of Enterprise’s product development include its unique ‘Pick-up’
service. This helped to lead the market in this product offering.
Enterprise’s Flex-E-Rent service (a long term vehicle rental solution designed to meet the
growing needs of today’s businesses) and its Business Rental Programme (offering customers
a bespoke programme with special pricing) are examples of product developments. These
have widened its service range to improve the customer experience and strengthened its
Factors in the external environment affect decisions about product development. These are
things taking place outside the business that influence decisions within the organisation.
Governments around the world are committed to reduce global warming through more
16. ecofriendly technologies, while consumers are looking for different mobility solutions.
Enterprise therefore created WeCar, a membership car-sharing programme which offers
customers a car at an affordable hourly rate. It typically uses fuel-efficient vehicles or hybrids
to help address concerns about the environment. Car sharing or hourly car rental can also help
to reduce the number of cars on the road. In this way, WeCar members help to contribute to a
Having the ability to respond quickly to the external environment with new products and
services is a benefit of being a privately-owned business. Enterprise allows employees to
make decisions at a local level and has created an entrepreneurial spirit within the
organisation. This means that strategies are constantly reviewed to ensure that Enterprise
remains the market leader. New avenues of business are explored and researched. Underlying
all of these changes are Enterprise’s founding values. These are Enterprise’s driving forces
behind growth and include values such as:
‘Our brand is the most valuable thing we own.
Great things happen when we listen...to our customers and to each other.
Customer service is our way of life.’
As a result, Enterprise’s activities are polycentric. This means that some services are only
offered in certain markets. For example, Rent-A-Car is operated in all markets globally.
WeCar is operated in the UK and the USA and Flex-E-Rent is only available in the
UK(Business case studies)
3. Market Development:
17. Under a market development strategy a firm sells existing products to new markets. For example a
sandwich shop which is doing well in one area, expands and opens another sandwich shop in a
different region. Through market development our sandwich shop has the potential to become a
national chain. There are different ways to define new markets including different locations for sales to
aiming products at different customer groups (age, background, interests, income). .(
Jack Taylor’s background in the US Navy made him realise the importance of taking care of
those around you. His motto was, ‘Take care of your customers and employees, and the
profits will follow’. Customer service and good employee relations therefore became the
cornerstone of the business. It was this that helped the business to grow.
From 1957 – 1993 Enterprise concentrated on expanding its operations across the USA. In
this time it opened over 1000 rental branches. Throughout the 90s Enterprise developed into
markets in Canada, the UK, Germany and Ireland.
In the car rental business, as all organisations are providing a similar product, a key factor
that differentiates one organisation from another is the quality of the service that is provided
for customers. Enterprise’s dramatic growth strategy has been made possible through its high
level of customer service. By listening to its customers, it is able to provide greater
satisfaction, with employees being a vital part of that process.
To provide superior customer service, Enterprise locates its branches as close as possible to
its customers. The convenience of this service gives Enterprise a competitive advantage over
its rivals. However, in response to customer needs, Enterprise opened its first on-airport
location in 1995. The demand for this service was so great that by 2005 Enterprise had over
200 on-airport branches. This meant that Enterprise kept ahead of its competitors and
increased its market share.(Business case studies)
18. 4. Diversification:
Diversification involves selling new products to new markets. For example if a business which usually
sells food to families, decides it would like to sell cars to single men it would be diversifying.
Diversification is a high risk strategy as the business is unfamiliar with the product and the target
market. However as it also has the potential to produce the highest rewards many businesses are
prepared to take the risk.. (www.learnmarketing.net/ansoffs.htm)
Diversification strategies involve widening an organisation’s scope across different products
and market sectors. It is associated with higher risks as it requires an organisation to take on
new experience and knowledge outside its existing markets and products. The organisation
may come across issues that it has never faced before. It may need additional investment or
On the other hand, however, it provides the opportunity to explore new avenues of business.
This can spread the risk allowing the organisation to move into new and potentially profitable
areas of operation.
Enterprise’s values help to define what the organisation stands for. They also identify its
capability and competences. Its core values of ‘brand, honesty, service, fun, hard work,
listening, inclusion and community’ are transferable. This means that the skills from the main
business can be applied to other business opportunities through diversification, potentially
reducing the risks associated with this strategy. Examples of Enterprise’s diversification
1. Car Sales was established by Enterprise in 1962. This business involves selling used cars to
both the public and businesses. It is now one of the largest sellers of used cars in the USA.
19. 2. In 1974 Enterprise purchased Keefe Coffee Company, which later developed as the Centric
Group. The 1973 energy crisis had created uncertainty for Enterprise. As fuel became scarce
and expensive, many customers swapped large cars for smaller and more economical
vehicles. This led to a collapse of sales in the used car market. Enterprise relied on that
market to sell on its vehicles. The future of the business was not certain and so Enterprise
diversified to buy Keefe. It was hoped that acquiring small, underdeveloped businesses,
would generate more opportunities for Enterprise.
3. In 1977 Enterprise invested in Mexican Inn Chili Products. However, the company had little
experience of both the packaged goods industry and the packaged food business. Poor sales
and a guaranteed buy-back arrangement with retailers (where unsold goods could be
returned) meant that the business did not make a profit. Therefore the company sold the
business but learned a lot from the experience.
This last example illustrates the risk that diversification poses. Just because a business is
successful, like Enterprise, it can never guarantee success in every venture it undertakes.
However, the experience with Mexican Inn did not put Enterprise off later acquisitions that
were outside the car rental business, for example, TRG Group which is a leading
manufacturer of luggage, backpacks and travel accessories.(Business case studies)
A marketing strategy is something that constantly evolves, adapting to changing market conditions.
Within Enterprise, the outcomes from its many different types of business are constantly reviewed
and evaluated. Judgements are then fed into the decision making process. This enabled new
strategies to be developed to improve operations.
However, while strategies change, one aspect of the business has remained in place. This is a
continued focus on high levels of customer service and employee relations. This strategy has
20. enabled Enterprise to enjoy continued growth for more than 55 years and the prospect of further
growth in the future.
2.2 discuss the links between strategic positioning and marketing tactics
business formulates its strategy to achieve long term objectives. A strategic plan is usually
framed for a five year period. Tactics are employed to achieve these strategic objectives and
to gain a short term advantage.
A business strategy is usually based on the vision of the business. The objectives set are
long term goals towards fulfilling that vision. The vision may be stated in terms of how the
business sees itself. The business may want to position itself in a specific market niche where
it provides a service to a particular audience. The strategic objectives should help a business
to identify the direction it must take to achieve its vision.
The tools that a business uses to achieve its strategic objectives are called tactics.
Tactics are short term actions taken to achieve specific results. These tactics may include a
price war, the introduction of a new product range or marketing campaigns.
Microsoft has employed a strategy of market domination of the computer business. By
contrast, Apple has differentiated itself by offering a superior product at a premium price.
Apple has created a niche market for its computers.
A company that aims to achieve (or maintain) market dominance would have this goal as its
primary strategic objective. The company may employ a number of tactics to achieve this
21. The first tactic may be to buy major competitors. Microsoft has used this tactic very
impressively in the past. Employing the acquisition path, Microsoft has managed to enter
almost every aspect of computing and to gain dominance in those areas.
A second tactic may be to develop its own competitively priced products aimed at achieving
market dominance. Microsoft has managed to achieve the dominance of its Office suite
against strong competition by employing all resources needed to achieve a quality product.
A third tactic may be marketing. Strong marketing can help to position a company in the
market and increase sales .
Apple employed a very different strategy. Apple manufactured its own computers with its
own operating system. Apple's strategic goal was to achieve a strong niche market. The
computers and operating system are superior and are favoured by people involved in graphic
arts. Apple's strategy has changed somewhat. The new strategic objective was to gain a larger
slice of the market.
The tactics employed by Apple included the introduction of a robust computer with an
intuitive operating system. It took Microsoft almost twenty years
to copy the Apple operating system with a degree of success. Apple decided not to licence its
operating system to other computer manufacturers. You can only enjoy the Apple operating
system on an Apple.
The newer objective to broaden wider share included the introduction of the highly successful
ipod and the iphone. Capitalising on the popularity of music downloads, Apple introduced the
22. Apple has also strengthened its marketing campaign to sell more computers. These still sell at
a premium, but offer a superior product. What is more, the computers include a whole range
of built in software at no extra cost. But the marketing strategy is unchanged - Apple
computers with Apple software.
Each company has its own strategic objective. The strategy spells out what the company
wants to achieve, how it wants to position itself in the market. The tactics are actions that are
required to achieve the strategic objectives.
Sometimes tactics may be employed without an overall strategy. These are used simply to
gain a short term advantage, and a company's success may be built by simply employing a
succession of tactical manoeuvres that provide an advantage against its competitors. In such a
case, the company's tactics would define its strategy.
2.3 analyse the merits of relationship marketing in a given strategic marketing strategy
In the 90s a transition from brand value to customer value has been noticed. In mature
markets, as opposed to growth markets, customers became more sophisticated and
consequently more demanding and less easily persuaded by the marketing hype. In addition,
the impact of advertising declined because of a more detailed market segmentation, which led
to higher advertising costs. In order to adjust to new market realities, companies engaged in
price competition, which however did not result in increased brand loyalty. Finally, there was
a continuing concentration of the buying power due to mergers and acquisitions, which
resulted in the fragmentation of consumer markets due to the extensive market segmentation.
This paradigm shift created the difference between transactional marketing and relationship
marketing as it moved beyond customer acquisition to a more balanced focus on customer
acquisition and retention.
23. Transactional marketing emphasizes on the management of the key marketing mix elements
(product, place, price, promotion) within a functional context. The goal of each party is to
maximize the benefit received from each transaction. There is no concern about future
exchanges, customer satisfaction, or customer loyalty to the business, but it is all about
delivering the functional components of value delivery. This type of marketing generates
reactive relationships with the customer, and tends to be short-term in nature.
A simple example of transactional marketing would be to phone a physician to make a
therapeutic recommendation. This can be viewed as a single event or as one in a series of
events over time. A pharmacist with a transactional viewpoint is concerned only with
completing the call and getting on with work. The outcome of the call is less important than
the desire to conclude it as quickly as possible.
Relationship marketing reflects the need to create an integrated, cross-functional focus on
collaboration. The focus is on emphasizing customer retention and maximizing lifetime value
of desired customer segments. The relationship marketing approach brings quality, customer
service and marketing closely together.
A simple example of relationship marketing would be sending new customers a "Welcome
Kit," which might have an incentive to make a second purchase. If 60 days pass and the
customer has not made a second purchase, a follow up with an e-mailed discount should
occur. The company uses customer behavior over time (the customer LifeCycle) to trigger the
marketing approach. Assuming that the customer visits the company's website until suddenly
he stops implies that he might be unhappy with the content, or he found an alternative source.
This inaction is a trigger telling to the company something changed in the way this customer
thinks about the site and perhaps the service. The company should look for feedback from the
24. In conclusion, the objective of relationship marketing is to turn new customers into regular
purchasing clients and then convert them from strong supporters of the company to strong
advocates for the company generating positive word of mouth and becoming an important
referral source. In doing so, the company establishes, maintains and enhances mutually
beneficial enduring relationships with its customers realizing a win-win situation through a
joint effort achieving an enduring competitive advantage.(Christina Pomoni August 5 2008)
Thus, customer relationship management (CRM) is the managerially rele-
vant application of relationship marketing across an organization focused on
customers, which leverages IT to achieve performance objectives. If RM is the
science or physics of relationships, then CRM represents its application
Because extant research often fails to differentiate between RM and
CRM, this monograph uses the term relationship marketing in its broad form,
with the recognition that it othat it often encompasses aspects of customer relationship
management as well.
(ROBERT W. PALMATIER)
Definition - What does Customer Relationship Marketing (CRM) mean?
Customer Relationship Marketing (CRM) is a business process in which client relationships,
customer loyalty and brand value are built through marketing strategies and activities. CRM
allows businesses to develop long-term relationships with established and new customers
while helping streamline corporate performance. CRM incorporates commercial and client-
specific strategies via employee training, marketing planning, relationship building and
25. Techopedia explains Customer Relationship Marketing (CRM)
CRM's core strength is an ability to glean insight from customer feedback to create enhanced, solid
and focused marketing and brand awareness. Key motivating drivers for the development of more
innovative CRM strategies are Web technologies and a sharpened global focus on customer loyalty.
Provides a way to directly evaluate customer value. For example, a business that is genuinely
interested in its customers will be rewarded with customer and brand loyalty. Because CRM
is mutually advantageous, market share viability advances at a sound pace.
Provides cross-selling opportunities, where, based on customer approval, a business may
pitch proven marketing or brand strategies to more than one client.
Finally, watch the context -- it can be easy to confuse this with its "Customer Relationship
Management," a related, but unique concept that shares the acronym of CRM.
A marketing strategy is an overall marketing plan designed to meet the needs and
requirements of customers. The plan should be based on clear objectives. A number of
techniques will then be employed to make sure that the marketing plan is effectively
delivered. Marketing techniques are the tools used by the marketing department. The
marketing department will set out to identify the most appropriate techniques to employ in
order to make profits. These marketing techniques include public relations, trade and
consumer promotions, point-of-sale materials, editorial, publicity and sales literature.
Marketing techniques are employed at three stages of marketing:
26. Market research enables the organisation to identify the most appropriate marketing mix. The
mix should consist of:
the right product
sold at the right price
in the right place
using the most suitable promotional techniques.
To create the right marketing mix, marketers have to ensure the following:
The product has to have the right features - for example, it must look good and work well.
The price must be right. Consumers will need to buy in large numbers to produce a healthy
The goods must be in 'the right place at the right time'. Making sure that the goods arrive
when and where they are wanted is an important operation.
The target group needs to be aware of the existence and availability of the product through
promotion. Successful promotion helps a firm to spread costs over a larger output.
Finally techniques need to be applied to monitor the success of marketing activity. For example
when carrying out advertising it is helpful to track consumer awareness of the adverts and their
27. messages. Evaluation can also take the place of other aspects of the marketing mix e.g. which
distribution channels were most effective? Was the chosen price the right one? etc.
Business behaviour: marketing
Today businesses have an increasing market focus. If organisations are to serve the needs of
their customers they need to be structured in such a way as to identify and meet customer
Businesses therefore need to behave in such a way that they recognise the needs of the
A company prospers best when everyone in it believes that success depends on the excellence
of his or her contribution. Short-term decisions made many times a day by individuals
determine the quality of that day's work.
The governing principle should be that everybody has a customer - either outside the
company (the traditional 'customer') or inside the company (the internal customer). Both
kinds of customer expect to be supplied with the product or service they need, on time and as
The principle holds good for everyone in the company, whatever their level of skill and
experience, whether their 'product' is answering a telephone in a helpful way or
masterminding a major new project. It works to everyone's benefit. It gives the individual
genuine responsibility and scope for initiative and it virtually guarantees that the company's
performance will be improved.
However, individual behaviours will only match the organisation objective of being customer
focused if the right sorts of structures are created. Hence the importance of developing
structures such as team working and empowering employees to make decisions rather than be
told what to do.
28. Modern companies like Travis Perkins (builders merchants), and Argos (catalogue retailer)
have recognised the importance of team working in motivating employees and in providing
close links to the consumer. By encouraging staff to listen to consumers these organisations
are best placed to provide the products and the services that ensure ongoing business success.
Empowerment is the process of giving increased power and responsibility to employees at all
levels within an organisation. It involves placing more trust in them.
Decentralisation is the process of handing down power from the corporate centre (e.g. Head
Office) to the various parts of the organisation.
Advertising, promotion, packaging and branding
Advertising, promotion, packaging and branding are important marketing tools which are
used to make products and services more desirable and hence increase sales and profits.
Any form of publicity is advertising. There are two main forms of advertising although in
practice the two are inter-related.
The informational aspect of advertising involves providing information about products,
services, or about important issues. For example, the government provides information about
the dangers of cigarette smoking, which is an example of informative advertising.
Persuasive advertising goes further and uses a persuasive message, for example by:
showing a famous personality (e.g. Gary Lineker) using the product
comparing the advantages of one product with another
using sex appeal.
There are a number of processes involved in producing effective advertising, including:
identifying the most appropriate market segments to target the advertising
29. choosing the best possible media, e.g. television, radio, posters etc
projecting the right message in the adverts
getting the timing of the advertisements right
tracking the effectiveness of the advertising, e.g. checking to see how many people can
recall the advert and its message.
Advertising is just one way of promoting a product. Promotion is the business of communicating
with customers. There are a number of ways of promoting products and services, including:
in-store promotion e.g. giving away free samples in a supermarket
publicity in the media, competitions, and sponsorship
PR - public relations activities - i.e. presenting the public image of a company to a wide
presenting products in attractive packaging
creating an attractive brand for a product.
Packaging typically refers to the material in which a product is packed - or more specifically,
the surface design on the material. However, a wider definition includes all the various
aspects of presenting a product - e.g. the shape size and appearance of the packaging, colour
and design, the convenience of using the packaging etc.
A brand is a product with a unique, consistent and well recognised character. The branding of
the product therefore involves projecting and developing this character. The uniqueness can
come either from an actual product or from its image - usually created by its manufacturer
through advertising and packaging. The consistency comes mainly from the consistence of its
quality and performance, but it also reflects the consistency of the advertising and packaging.
30. A brand is well-recognised because it has been around for a long time. It takes years to
develop a brand.
Shell has spent over a hundred years developing its brand image through the well known
Shell pecten. Audi is associated with its easily recognised four rings logo. McDonald's is
associated with its twin arches. Sponsorship is an important way of promoting the name of an
organisation. Many sports and arts organisations rely on support from sponsors. For example
Vodafone is a major sponsor of Manchester United Football Club, and Bic sponsored Martin
Johnson the England World Cup rugby captain.
In return for sponsorship of a sports club or arts event the name of the sponsor will be
mentioned prominently on advertising hordings, publicity materials, programmes and other
literature associated with the club or event.
The term 'above-the-line' advertising and promotion refers to media such as TV, radio and
press, for which commission is paid to an advertising agency. 'Below-the-line' comprises all
media and promotional techniques for which fees are paid in preference to commissions -
these might include exhibitions, sales literature and direct mail.
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Marketing is the process of developing and implementing a plan to identify, anticipate and
satisfy consumer demand, in such a way as to make a profit. The two main elements of this
31. plan are market research to identify and anticipate customer requirements and the planning of
an appropriate marketing mix to meet these requirements. Market research involves gathering
and recording information about consumers, market, product, and the competition in an
organised way. The information is then analysed and used to inform marketing decisions.
There are three main ways of gathering information for market research:
1.From internal information already held by an organisation, e.g. details of existing customers
and their spending habits.
2. External primary information - i.e. information collected at first hand by interviewing
customers and potential customers to get their views about a company, products and services.
3. External secondary information - using published sources of information e.g. those
produced by marketing organisations about products, markets and brands.
Marketing planning can then be used:
1. To assess how well the organisation is doing in its markets.
2. To identify current strengths and weaknesses in these markets.
3. To establish marketing objectivesto be achieved in these markets.
4. To establish a marketing mix for each market designed to achieve organisational
Service organisations like the Inland Revenue and Abbey will carry out marketing to find out
about the sort of service that their customers and clients require in order to create an
appropriate marketing plan. Manufacturing organisations like Cadbury Schweppes, Corus,
Audi and Nissan will carry out product research in order to create an appropriate marketing
plan for their products (as well as associated services).
A simple definition of market research is 'keeping those who provide goods and services in
touch with the needs and wants of those who buy the goods and services.'