Marketing Principle

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Marketing Principle

3.1 Developing products to sustain competitive advantage

The sustainable competitive advantage is the performance of an organisation to exceed the industry average and maintain profitability throughout. The competitive advantage can be achieved on two levels, according to Michael Porter (Kotler & Keller, 2006, p.n.d.).

Creating cost advantage

Building differentiation advantage

Resources

The cost and differentiation advantage is gained when the organisation is set to become the low cost producer or has a point of differentiation among others in the industry. The cost and differentiation advantage can be gained through different sources and it depends on the industry structure. These sources include:

Economies of scale production

In-house technology integration and software development

The access to the best quality suppliers

Brand name and image

The resources of cost advantage can be identified internally and externally examining the underutilized or new resources which an organisation might have. Once the organisation gains competitive advantage on cost or differentiation, they can become the industry leader and benchmark.

Capabilities

Capabilities of an organisation can be defined as the ability to efficient and effectively utilize the available resources to achieve cost or differentiation advantage. The sources of these capabilities can be following:

Human resource

Production procedure and policies

Responsiveness to problems or complaints

Innovation

Value Creation

Value creation is a set of additional activities which an organisation performs to increase the worth of products or services. To achieve the competitive advantage through products, organisation integrates one or more value creating elements with the core product. Adding the non-tangible benefits for customers, for example after sales service, warranty or repair the value can be created for customers (Cravens & Piercy, 2009, p.n.d.).

3.2 Distribution is arranged to provide customer convenience

The distribution channel refers to the medium or path through which the goods and services of a producer reaches the final buyer and the ultimate consumer. These distribution channels allow the customer to easy purchase from the nearest point (Kenneth & Baack, 2010, p.n.d.).

Distribution Channel Members

There are two types of channels, direct and indirect. The direct channel links the producer to the ultimate consumer. The producers of the goods and services are seller themselves. The indirect channel has one or more than one channel members which include the intermediaries such as manufacturers, wholesalers or retailers.

Distribution Strategies

The distribution strategy depends upon the products or services. There are three types of strategies through which products and services are distributed (Kenneth & Baack, 2010, p.n.d.).

Intensive distribution: This strategy is adopted when producer wants the goods and services to reach all the possible consumers. For example, juice producers can adopt this strategy.

Exclusive distribution: This involves selling through a single outlet. Usually the products are technical in nature or premium priced. For example, BMW cars.

Selective distribution: Few numbers of retail outlets are selected from the goods to be sold through. When the companies want to sell their products in selective geographical locations they also adopt selective distribution strategy. For example, designer clothes.

3.3 Setting price to reflect an organisation's objectives and market conditions

Price is one element in the marketing mix which provides revenue, while the other 3P's incur ...