Thursday, May 1, 2014
Developing Successful Marketing Strategies
Over the past few months my posts have focused on strategic marketing topics. I have noticed considerable traffic on some of the topics covered so I thought I would let everyone know on May 15, 2014 my new book, Developing Successful Marketing Strategies, will be available as an e-edition. The print edition will be available on July 1, 2014.
The book is structured along the lines that I teach my undergraduate and MBA courses. It is designed to teach individuals from students to business executives the procedures for developing a marketing strategy and tactics and turning it into an actionable plan.
Below is an abstract of the book, the table of contents and the preface. If you find it interesting you can order the e-edition or pre order the print edition at:
Developing Successful Marketing Strategies uses real market examples to demonstrate the development of effective marketing strategies. The approach uses an organization’s mission and vision statements to guide the development of marketing goals, strategies, and tactics.
Central to the development of marketing strategy is the use of the marketing mix of price, place, product, and promotion. The book neatly weaves the process of developing a marketing strategy with the use of the marketing mix. Throughout the book examples are given to clarify the theories and guide the reader through the strategic marketing planning process.
Managers and executives will use this book as a guide to grow an established business or start a new one. The book can be used as a reference book for unique marketing challenges as well.
The book differs from other business books in that it introduces management techniques and processes and shows how they are critical to executing successful marketing strategies.
The examples used in the Developing Successful Marketing Strategies are from large and small organizations in which the author was personally involved. The techniques introduced in the book are based on those studied at most universities.
Part I: Situation Analysis 1
Chapter 1 Industry and Market 3
Chapter 2 Legal and Technological Changes 9
Chapter 3 Defining the Target Market Approach 15
Chapter 4 Customer Jobs to Be Done 21
Chapter 5 Customer Segmentation 29
Chapter 6 Challenges Faced: Internal and External 33
Part II: Vision and Mission Drive Strategy, Then Tactics 37
Chapter 7 The Vision Driven Strategy 39
Chapter 8 Product 49
Chapter 9 Promotion 63
Chapter 10 Pricing 75
Chapter 11 Place 87
Part III: Implementation 93
Chapter 12 A Process for Execution Management 95
Chapter 13 Organizational Structure 99
Chapter 14 Workforce 107
Chapter 15 Financial Structure and Controls 119
Chapter 16 Putting It All Together 127
Developing a Marketing Strategy
In designing a marketing strategy for a business, understanding the starting point is critical and requires a very detailed description. This description will include market forces and situations that are internal and external to the organization. It should include resources available and potential challenges.
After the starting point or the current state of affairs for the organization is understood, then the objective (this is driven by the vision and mission statement) to be achieved can be stated. The more clearly the objective is stated, the better the chance that any marketing strategy that is developed will be focused on achieving the objective.
After the objective is identified, then development of the marketing strategy can begin. The strategy will recognize how each of the four Ps of marketing will be used to reach the objective.
After the strategy is developed, the real work of creating a tactical plan to successfully execute the strategy must be developed. The tactical plan outlines the tactics for each of the four Ps and describes in detail how the firm’s resources will be utilized and impacted.
The discussion that follows offers a simple example of how strategy, tactics, and the four Ps of marketing work together.
Assess the Current Situation
Before the development of a marketing strategy, it is important to assess the environment in which the organization will operate. This analysis will identify the nature of the industry, the market, the competition, resources available, and other factors that will determine the direction, magnitude, and objectives for the marketing strategy. Once the environment has been assessed, then the strategist can begin considering marketing objectives.
Set an Objective
The marketing effort begins with an objective. This objective can be to create a new business to serve a specific market, launch a new product for an existing business, develop a new market with existing products, and so on.
After establishing the objective, it is important to take a hard look at the business you are in or are hoping to start. This exercise will help to better understand your current position in the industry and possible avenues for growth. For example, if owning a cupcake specialty shop, you should determine whether you are in the cupcake business, confectionary business, restaurant business, or bakery business, and so on. The choice will affect the strategy that might be employed to achieve the objective.
Identify a Customer Base
Also considering the business, it is important to identify the potential customer base (key customers) you will be serving and your business capabilities. For example, if you are entering an established market but have limited resources, you may be forced to serve the least profitable customer. In other words, the market leaders will have developed products and services that serve the most profitable customers and your limited resources will put you at a disadvantage when competing for those customers.
This exercise may also uncover other customer segments that may offer opportunities but may not represent the key customer category. If you, for example, served the least profitable customer you might also find some of the industry’s more profitable customers have a reason to choose your product or service.
Going after the least profitable customers may be an advantage since the market leaders are not likely to focus on customers who would require resources to be taken from efforts to serve their more profitable clients. This approach would make you a disruptor and your product a disruptive innovation since you would be starting with the least profitable customer and work to create ways to “move up the customer chain” in this market.
On the other hand, if you have a new idea or innovation and want to compete for the very profitable customers, then you must consider ways of protecting your market position. Since this innovation can likely be duplicated in some fashion by the competition, it will be important to choose a marketing strategy that makes duplication by competitors more difficult.
Set a Strategy
Strategy is what you will do to reach your objective that is driven by your vision and mission statement.
As an example, let’s say that your objective is to become a leader in providing exterior maintenance service. If, in the beginning, you had some basic equipment and could perform basic pressure washing of concrete, you might decide to start a business to clean concrete surfaces. Your customers would likely be individuals who could not afford or perhaps didn’t need the range of services offered by the more established pressure washing services. A careful look at the type of business, the customer segment, and the resources might be helpful in developing a marketing strategy. In this case, the strategic statement (the what you want to do) might be: “To enter the maintenance service business by providing basic pressure washing services to homeowners with a plan to expand service offerings to homeowners and businesses in Texas.”
In this case, you are a potential market disruptor (trying to make a profit serving the least profitable customer) that will be part of the maintenance service industry and will start with a pressure washing service.
Develop the Tactics
Tactics are how you will successfully execute the strategy.
Tactics will require attention to the price, place, product, and promotion components of marketing and the planning, organizing, directing, and controlling principles of management. Additionally, the tactics will have to consider how the marketing components and management principles fit with the workforce, financial requirements/capabilities, capital equipment needs, and operational procedures.
The more the marketing, management, and operational plans are in concert, the better the chances of achieving the strategic goal. This set of exercises is critical in the sense that they are focused on creating the most efficient, objective driven organization possible.
Considering the pressure washing service, the tactics might involve the following:
Product: Begin with power washing home decks, driveways, and sidewalks; expanding to gutter cleaning, window cleaning, and pool service; then moving into commercial maintenance (this approach provides the ability to grow horizontally and vertically—gateway capacity).
Pricing: Start with simple low-level pricing moving to a bundling approach as more services are added. This allows the ability to sell new services to existing customers and create customer loyalty by providing discounts based on the number of services purchased. Additionally, contract pricing would be provided for longer-term purchase commitments.
Place: Begin in an area easily served by limited manpower and resources with a plan to expand to adjacent areas so that supply chain and resources are not strained.
Promotion: Limit promotion to grow business within the ability to serve the demand. Begin with very targeted, low-cost promotion and expand as territory is increased.
Workforce: Contract labor that can be quickly assigned to complete jobs. As the business grows, evaluate the need for permanent employees with specialized expertise.
Financial requirements: A small amount of start-up cash and initial payment from customers should be enough to cover the cost of completing the job. Consider half payment at sale and half at completion. Put aside 20 percent of each job for investment into company growth and new equipment. Assume 10 percent of each job will be used for repair and maintenance.
Operational procedures: Utilize contract labor at negotiated and contracted rates that allow easy determination and maintenance of profit margins. Require bonding of contractors to provide assurance that the job will be completed and allow some level of comfort to the customer when requiring half of the job cost be paid in advance.
Capital equipment: Lease basic, rugged pressure washing equipment in the beginning. Consider purchasing equipment when it is advantageous. Expand the inventory of equipment as business increases.
This is a simple example but illustrates that there is a sequence that should be followed for the best results. If you start with tactical measures or with a strategy that hasn’t identified the industry or customer base, a great deal of time will be spent course correcting to develop a successful model.
Every time you re evaluate and change direction, internal changes are required that can be costly in that each of the tactical categories listed above will likely be impacted.
This process works for established businesses, new businesses, and businesses that have had a significant change in their industry. Simply stated: “Vision and mission statement before objective, objective before strategy, and strategy before tactics. ”This book is based on the premise that the four Ps of marketing (price, place, product, and promotion) must be used in concert to develop a successful marketing strategy. Further, the strategy must work within the market constraints and challenges and within the firm’s resources to reach the overall marketing objectives.