Developing a Marketing Strategy
I have noticed over the years that many of my clients seem surprised at the depth I go into when I complete a marketing strategy for them. So I thought I might share with you the way I produce a marketing strategy which you could use as a template for producing your own.
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First, it is important to realise that we are not talking about a promotional / advertisement plan and media schedule. That is the last part of the job.
A good marketing strategy should, in my opinion, provide a clear business direction for the organisation in terms of PRODUCT, PRICING, DISTRIBUTION and PROMOTION, based on the market / industry they operate in. This should be in line with the business manager’s or owner’s business objectives.
Clearly if the owner’s objective is to sell the business and retire, the approach will be different to that used if the owner wants to embark on an expansion program or market new products.
There are as many approaches to writing marketing strategies as there are marketing books and consultants. My method works for me and will, I hope, help you in your business.
Stage 1: BACKGROUND INFORMATION
Where is the Organisation Now?
The first stage is assembling and organising information, which involves an in depth review of the business and sales history by product, customer and market segment, and the completion of a “marketing audit” questionnaire. This information is then assembled under the following headings:
Background Information List
Background
This includes general information about the business and its history and owners, including why it was started. Number of customers – overall results by sales / profit etc.
Product
Description of the product or service sold including special features and benefits currently offered to customers. Also sales breakdown by product over the last few years.
Price
Price of the product and where it stands in the marketplace versus competitors. Also methods of payment such as business accounts, credit cards, EFTPOS accepted, plus the level of gross / net profit currently gained.
Place / Distribution
The current area of distribution serviced, eg. Southern suburbs, whole city, State/s, Countrywide or International. For some organisations, this might be better defined in terms of customers, EG. Recycling plants nationally. Plus any data on sales by particular distribution criteria. EG. counter sales / van sales / internet sales / Queensland / New South Wales / Victoria / South Australia / Tasmania / Northern Territory / Canberra.
Promotional Activity
The current and past promotional activity and media used and the results achieved against promotional costs. How are current enquiries and sales generated and how are enquiries handled?
Competitors / Industry-Market Overview Who are the competitors and how the market works now to meet customer needs?
Stage 2: Business Objectives
Where does the Organisation Want to Be?
These have to be defined objectives split into either short term (this year / 12 months) or medium term (two (2) to three (3) years)
Example
Objectives have to be real and sensible business objectives, not “wishes”.
They should also include the business owner’s personal objectives, so that if the objective is to retire and sell the business in two (2) years, then that is clearly stated. The strategy required to achieve an exit objective will be different from that of a business planning for long term results.
Your Business Objectives can also include marketing objectives like recognition as the industry’s premier brand, first choice for consumers etc.
Stage 3: Identify the Organisation's Target Markets
Who Buys the Product or Service Now?
Who Could be a Potential Customer?
I try to define the customer groups under the headings “DEMOGRAPHIC” (who, what, where and how etc) and also “PSYCHOGRAPHIC” (what motivates them to buy the product or service).
For example, home services like VIP Mowing have psychographic profile of customers who are time poor, have disposable income, like to enjoy the home / garden but not work in it, or who may be unable to do the job due to disability / old age.
Stage 4: SWOT Analysis
Exploring the Possibilities & Options Available
STRENGTHS
What are the strengths of your business / organisation? Explore everything from established brand name, loyal customer database, experienced staff, etc.
WEAKNESSES
An honest assessment of the organisation’s areas of weakness, eg. lack of capital, low profits / margins, shrinking market, high staff turnover etc.
OPPORTUNITIES
This is usually the biggest section. Do a little brainstorming and think outside the square. For example, new markets, franchising the business, increasing prices (reduce stockholding, reduce product range (80:20 rule), use the customer database and cross-sell, form strategic alliance etc.
THREATS
Define the threats to your business or product. For example, cheap imports from overseas, internet buying, new competitors, substitute products, economic downturn etc.
Key Strategic Issues
Having done the SWOT analysis, list at least, four (4) to six (6), “KEY STRATEGIC ISSUES”, that arise from the SWOT analysis that you will need to address in order to move forwards.
By the time you have completed the first three stages of your marketing strategy, you will have gained a clear idea of:
Marketing Strategy
The Second Part
Once you have completed the first part of the exercise, the business background, objectives, target markets, SWOT and Key Strategic Issues, you should find yourself full of ideas to improve your business and gain more customers and profit.
You now need to use this information to build a strategy that gives your business a clear direction and focus.
1. The Market Overview
I start this creative process with an analysis of the market in which the business operates – a “MARKET OVERVIEW”.
In this written summary I try to define and analyse what is happening in the market (to the businesses’ customers). Are there any trends? Is the market growing or shrinking? Is there underlying reasons for what is happening and finally, what will the market look like and require in products and services in the short / medium term.
Think hard about this. If the market is shrinking or dying, your business will too, unless you take action to look for a new market or customer group.
If the market is booming, you will want to ensure you get your share.
That brings us to the real thinking stage ....
2. The Strategic Direction
How to make it happen
If you have defined what is happening in your market now and the trend trajectory, your task is now to decide how you will hit this target.
Markets are moving targets, so the task is to aim just in front so the market flies into your company’s net, rather than trying to catch them from behind by reacting to each move the market makes. A good example is the introduction of ATM machines. Research said the public did not want them, but when they were put in, the market moved forward and found the convenience was what they really needed.
The marketing / business strategy should identify not only the future market opportunity, but also the essential points of differentiation your business needs in order to capture the opportunity and stand out from the crowd.
Once the overall umbrella marketing business strategy has been completed, we then need to see how to blend the PRODUCT, PRICE, DISTRIBUTION and PROMOTION together to make it work in a practical way.
PRODUCT STRATEGY
It is important to first define what the “product” is in terms of what the customer gains from buying it. For example, buying an ordinary car is getting convenient transport, but someone buying a Mercedes the product is getting the prestige and image associated with ownership of an expensive car.
In a business-to-business sale, the buyer of a widget may be more concerned about the ready availability and quick delivery than he is
about the widget’s latest refinement.
For him a move to guaranteed “Just In Time” supply could be a major product plus. Think of things from the customer’s perspective. MacDonald’s, I heard, define their product not as fast food, but “REFUELING”. Same as a petrol station! Drive in when your tank is empty, fill up and drive on as soon as possible.
The objective of PRODUCT STRATEGY is to clearly establish points of differentiation that match the markets you are selling your products to. These could be Design, Delivery, Efficiency, Speed, Quality, Value, Uniqueness, Prestige, Extra’s, Guarantees (peace of mind), Size, Convenience, Colour, Effectiveness, Advertising, Promotional Activity and Profitability etc.
PRICING STRATEGY
In simple terms, the price must match the marketing and strategy. Prestige product – high price – commodity – same price as others!
In my experience, businesses are far more aware of their prices than customers are. A small increase in price will often not be noticed by customers, but can have a major effect on profit. If you have sales of $1M, a 10% increase is worth $100,000 in clear profit.
Your pricing strategy should also include methods of payment – business accounts, credit card payments.
Perhaps your pricing could encourage customers to buy in bulk (saving you costs) or alternatively to actively discourage small unprofitable orders by increasing small quantity prices.
Relationship pricing is another option, rewarding customers who are regular purchasers with a special price based on their annual purchases.
DISTRIBUTION STRATEGY
Most industries have a pretty standard distribution system which is generally the most efficient way of getting goods or services to the customer, if you are not dealing directly with the
end user.
However, the internet is now used by many organisations now to bypass conventional distribution systems. AMAZON.com for books is a great example of this. So if direct sales’ using the net is an option for your product, this should form part of your distribution strategy.
PROMOTIONAL STRATEGY
There are so many options for promoting products or services. The task is to choose those that reach your target customers most effectively and gain results.
Don't Forget
Now assemble your media plan into a schedule and budget for the year. Promotional activity is a business cost and forms part of the cost of the products you sell.
It is NOT an optional expense item used when you have some spare money or are desperate for sales.
Promotional Message – should match the “PRODUCT” identified and explain how the benefit can be gained.
Finally...
The Action Plan
Any plan, no matter how well written or thought out, is worth nothing without ACTION.
I recommend listing 10 “ACTIONS” that you can start on right away to put your marketing strategy into place.
Once you have broken down your strategies into a series of tasks, the job becomes easier. Each task you complete moves your business nearer to your objectives.
Set up feedback loops to measure your success and the results of promotional activity.
Then diarise to review your marketing strategy monthly against your objectives and after 12 months diarise to review the plan and develop new sales targets for the next year.
There is no ideal time to prepare your Marketing / Business Strategy. It is a time consuming and complex project. But it is one with the potential to deliver big rewards in business growth and profitability.
Using a professional Marketing Consultant to work with you on the Strategy, is an investment, as they are likely to be more objective than you might be as a business owner.
Not all consultants have the same approach so I would suggest you looked for at least the depth of business and market analysis as I have covered in this chapter.
Every business is different and this article is only able to act as a guide for those keen to develop their own marketing / business strategies in a complex and constantly changing market. There are no guarantees except that “failure to plan equals planning to fail”.
Start now at the beginning of this article and work through step by step. It will be one of the best business investments you have ever made!
Complimentary Template
I have developed a template of a “Marketing Strategy” and a template of a “Marketing Audit” you can use as a DIY guide which I can send to you
