MARKETING STRATEGY

Marketing Strategy is a defined “course of action” designed to maximize the use of an organization’s resources in pursuit of its objectives, and it is the driving force behind the tactics presented in the Marketing Plan.  The Marketing Strategy starts with a thorough Situation Analysis and Market Analysis.  It is formulated after the answers to key Strategic Modeling Questions (listed below) are measured and compared to a variety of generic strategies, tools, principles, exercises and business models that are applicable to the specific organization and its environment.  It is ready to put in to action after the formulation of a Marketing Strategy Statement that clarifies the analysis conclusions, and focuses on the issues and assumptions that will underpin how the strategy will be executed.  An effective Marketing Strategy, like an effective Business Plan, is constantly evolving, and therefore never finished.

.

Strategic Modeling Questions:

Note:  The strategic modeling questions and explanations listed below are based off the concepts presented in the following books, and augmented with additional information. References:  Inside The Tornado, Crossing the Chasm, Living on the Fault Line, The Chasm Companion, and Positioning: The Battle For Your Mind

.

1.     Who is the Target Customer?

Describe the ideal customer, both in terms of the target organization profile, and the key decision makers within those organizations.  Focus on organizations or people that currently have money and are willing and able to transfer it to you.  If it’s a B-to-B business, have an understanding of the target organization’s decision-making power structure, and the roles of the individuals that will typically need to “buyoff” on the sale.  Identify the target “sponsor” or “champion” for your product / service within the organization.  A common framework for this process is the Economic Buyer (e.g. CFO, CIO or other sr. level executive), the Technical Buyer (IT Director, Technical Evaluator), and the End User (Dept. Manager, Lead End User), however the target sponsor will often change as the company / product matures and progresses through it’s life cycle.

 .

2. What is the customer’s compelling reason to buy?

The motive to purchase a product or service (a.k.a. compelling reason to buy), particularly in B-to-B transactions, is often a function of the following:

A) The economic consequences of doing nothing

B) To exploit a current opportunity

C) To address a current problem

Define the answer to this question from the customer’s perspective, not your company’s perspective.  Don’t make the answer about the features and benefits of the product / service, make it about why they should buy, and how their situation will be improved when they do.

.

3.  What is the “whole product” solution that fulfills this reason to buy?

The “whole product” is the core product augmented with everything that is needed (additional products / services) for the customer to have a compelling reason to buy it, and for it to exceed their expectations when they do. If a personal computer is the core product, then the whole product would include software applications, training classes, peripheral devices (mouse, keyboard, printer, etc.), internet service, etc.  —  even exceptional packaging and design can be included here (e.g. Apple products).  It’s all the additional elements that accentuate the compelling value of the core product.  The ability to deliver a whole product is often the difference between a “me too” product that may satisfy customer expectations but does not stand out from competitors, and the “killer app” type product that dominates a market and produces “hockey stick” type revenue growth.  They key to this answer is determining what additional products and services are needed to make the core product stand out from competitors and exceed customer expectations.

.

4.  Who are the key partners and allies who might be part of a whole product solution?

The criteria for pursuing strategic alliances / partnerships should be driven by two main fundamental motives:

A)     Achieving market leadership by accelerating the formation of whole product solutions

B)     Achieving and sustaining market leadership by differentiation through distribution and / or value added services

The long-term goal is to create a market ecosystem that will evolve into a desirable, compelling and durable Value Chain.  Therefore, the key to answering this question is to research potential partners that help your company achieve one of more of the following:

  • Validation of the product / service through brand name association / recognition
  • A complete product that us repeatable, scalable, and delivers a quantifiable ROI
  • A system for delivering / distributing the product in a value added manner for the chosen market segments
  • Value add to the end user experience of the existing product / service
  • Mutually beneficial partnership that will incentivize the partner to commit resources to the partnership

.

5.  What is the optimal, value-adding distribution model?

The key to selecting and building an effective distribution channel is to ensure that you create and sustain a relationship with the target customer. The right choice of distribution model will be a function of Solution Complexity (how difficult the product is to install / deploy / use) and Marketing Complexity (how difficult the product is to source / sell / support).  Products that have both low solution and marketing complexity may be able to be sold online, while those with high solution and marketing complexity may require an experienced Systems Integrator.  Retail, VARs, and Direct Sales fall in between as seen on the graphic.  Problems in the marketplace arise when the complexity for either the solution or marketing is high and the other is low.  This creates a bad deal for either the customer, originating vendor, or the distribution partner because the price point does not match the services required to distribute the product.

.

6.  How should the solution Pricing be determined such that a measureable ROI can be achieved?

The best way to consider Pricing Strategy is think of it as a reflection of the value (both perceived and actual) of the product in the eyes of the customer, within the context of the prevailing business model associated with delivering this value.  How customers perceive value is a function of the Questions 1 – 5 (above), and since Business Models change over time, so too will the Pricing Models and assumptions. Other Factors affecting Pricing Strategy are positioning, demand / price sensitivity, cost, and revenue / profit maximization, and the competitive environment. Finally, a key part of formulating the right Pricing Strategy is to evaluate Standard Pricing Models to determine which ones best match the unique circumstances of your organization and its environment. You should also consider hybrids of multiple models that will best highlight the value you are delivering to the marketplace, and those that will maximize long-term revenue.

.

7.  Who, what and where is the competition?

The best way to approach this question is to go through the exercise of a true Competitor Analysis.  It’s recommended that this exercise draws of the theories and techniques that Harvard Business School Prof. Michael Porter lays out in his books: Competitive Strategy and Competitive Advantage.  Another book from HBS Prof. Clayton Christensen, The Innovator’s Dilemma, is also recommended.  The answers from a thorough Competitor Analysis will provide context for building competitive advantage and establishing optimal positioning.

.

8.  What is the optimal positioning for the product / service?

In their landmark book on the subject, Positioning: The Battle For Your Mind, Al Reis and Jack Trout say, “Positioning is not what you do to a product, it’s what you do in the mind of the prospect”. Positioning is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company’s management is proactive, reactive or passive about the on-going process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions.  Reaching the desired positioning in the minds of the target customer is a function of two things:

A)     Benefit —  The ability to address the compelling reason to buy

B)     Differentiation  —  The expression of one element in the value chain (e.g. technology, product, application, distribution) that makes the benefit possible, is relevant to the target customer, and is unique to the market alternatives.

The key to effective positioning is understanding that you don’t necessarily have to provide more or superior benefits than your competitors.  Your competitive advantage lies in your commitment to providing a complete solution to your segment’s problems.  The battle is waged on the basis of your providing differentiation points that are at least equivalent to the status quo (which can’t provide equal benefits), and is more relevant than the other new product entries that have not been tailored for the target segment.

.

9.  What is the next target segment that can / should be addressed?

In the early market phase the goal is to acquire as many customers in as many segments as possible because you are validating your new product / technology.  In this phase building a customer base is prioritized over market segmentation strategy. However, after the product matures and the first niche market is penetrated and then dominated with a whole product solution, segmentation strategy becomes more important. In order to gain mass market, accelerated growth, new market segments need to be identified where the same or similar whole product can be utilized by a new segment.  In addition, new applications for the original whole product need to be identified.  This is what is referred to in Moore’s book series as the “Bowling Alley”.  Ideally you should pursue next target segments that are similar enough to be reasonably “addressable”, not so big that they’ll be impossible to dominate, and not so small that dominating them will be insignificant.

.

Generic strategies, tools, principles, exercises and business models for comparison:

Not all of the strategies, tools, principles, exercises and models listed below will apply to all organizations.  The key is to research and select the ones that apply to your organization’s current situation and environment, and then “plug-in” the most current information into those models.  The goal is to utilize proven methodologies to find new perspectives of looking at your situation, and ideally find new useful nuggets of information to add to your Marketing Strategy.

.

Marketing Strategy Statement

A Marketing Strategy Statement is the final “deliverable” document resulting from the research and analysis described above.  It will be unique to each organization, but effective statements will have the following characteristics:

  • Answer the Strategic Modeling Questions (listed above)
  • Define the current position and desired position in the applicable generic business models (listed above)
  • Write it as the “go to document” from which all executives will use to get on the same page, all new executives will use to get up to speed, and all marketing decisions will be based.
  • Treat it as a constantly evolving document that is regularly evaluated and refined.
  • Shoot for a Marketing Strategy Statement that is 1 page long, 2 pages maximum. Limit it to the results of the analysis, rather than the analysis itself. Utilize the Five B’s of Effective Marketing Presentation:   “Be Brief, Brother, Be Brief”