Definition of Marketing Series: Definition of Marketing Strategy

Part of the Definition of Marketing Series:

What is Marketing Strategy?

There’s no concise definition of marketing strategy. It’s kinda like porn; it’s hard to define but you know it when you see it. Most definitions, like the one below, are tautologies rather than true definitions of marketing strategy.

A marketing strategy refers to a business’s overall game plan for reaching prospective consumers and turning them into customers of the products or services the business provides. A marketing strategy contains the company’s value proposition, key brand messaging, data on target customer demographics, and other high-level elements. [source]

In my own words, here’ the definition of marketing strategy:

Marketing strategy is a long-term course of action designed to optimize the allocation of the scarce resources at the disposal of a firm in delivering superior customer experiences and promote the interests of other stakeholders. Scarce resources include monetary capital, human capital, technology, and time.

What is a marketing strategy?:

Marketing strategy is intimately tied to strategic planning – the process of creating a firm’s strategy, including goals, tactics, and metrics. A marketing strategy also links to the firms’ mission and values (although these elements are not strictly part of marketing strategy)

Mission:

A mission defines who the company is, what it does, and for whom. Mission statements must provide direction without being so restrictive they curb opportunity Mission statements should revolve around the needs of the target market or markets.

Early in the life of marketing, which is very short compared to the age of other business disciplines, a Harvard professor, Theodore Levitt introduced the concept of marketing myopia that we still teach.

Marketing myopia happens when a firm defines its mission too narrowly, and, thereby, limits its chances of success. Examples of marketing myopia from history abound — of course marketing myopia exists today but we can only recognize it through the lens of history.

The original derivation of marketing myopia came when Dr. Levitt studied the railroad industry. Originally a critical form of transporting people, the railroad industry thrived, especially once rail crisscrossed the country and made traveling from the east coast to the west (and in between) faster and easier. When compared to a horse and wagon. The railroad companies developed railcars of extreme luxury, as well as cars able to transport less affluent consumers in relative comfort. Railroads survived by charging for passage on a sliding scale depending on the type of railcar, as well as meals.

All that changed at the beginning of the 20th century with the introduction of the internal combustion engine, which enabled the automobile. Once considered a novelty by the rail industry, the auto became more affordable with an adaptation by Henry Ford that made the car more affordable, so that the average American could purchase one.

Unfortunately for the railroad industry, executives defined their business as transporting passengers, which kept them from adapting their business model to changes in the external environment. Once the surest of sure bets, the rail industry declined to the point where, in the middle of the century, the industry required a government bailout or face extinction.

Luckily, the rail industry, or someone, recognized that the automobile made rail travel unappealing and that was never going to change. Today, passenger travel by rail is dwarfed not only by the automobile but by air travel. Instead, the industry now represents one of the most efficient forms of transportation for goods and most goods travel by rail for at least part of their journey to reach the consumer. That’s because rail is the most efficient and cheapest form of transportation of goods moving 500 miles or more, depending on the characteristics of the product.

Thus, a firm must write its mission in a way that expresses the soul of the firm without limiting its ability to change and grow as the world around it changes.

Values:

Organizational values not only guide members in acceptable behaviors but inspire them.

Effective organizational values are:

• Clearly articulated and communicated
• Timeless
• Offer rewards when behavior matches values and punished when they don’t
• Followed by everyone at all levels in the organization

Why is strategy important?:

A strategy is like a roadmap. It tells you:

• How to get where you’re going
• What you’ll need to get you there
• Estimates how long it will take to get there
• Identifies where dangers lie in wait
• Sets realistic expectations that challenge the organization
• Offers metrics that evaluate performance and highlight what aspects of strategy fail to meet expectations

What happens when you don’t have a clear strategy?

You make lots of mistakes, waste time and other resources, and likely never reach intended goals.

Elements of marketing plan:

A marketing plan, which articulates the marketing strategy in great detail, contains multiple elements that, taken together, for a plan to guide the firm’s behavior and decisions.

Situation analysis

A situation analysis or environmental scan is a critical first step in the definition of marketing strategy. Just like you need to identify where you are on a map before you can identify the path necessary to get where you’re going, a situation analysis determines where the business is and acts as the starting point in the firm’s journey toward its goals.

A situation analysis has two parts: internal analysis and external analysis.

The internal analysis investigates where the company is right now relative to internal factors of product, price, promotion, and distribution — often called the 4Ps. The more detail the plan provides regarding these elements, current performance metrics, and operations, the better the next steps are in helping the firm optimize performance.

The external analysis consists of 5 elements (in no particular order):

1. The culture and society surrounding the target market
2. Competitive conditions, including direct and indirect competitors
3. Economic conditions, such as GDP, consumer confidence
4. Technological conditions, including social media, new operational techniques, new products
5. Legal conditions, including regulations and laws

SWOT analysis

An environmental scan includes a SWOT analysis – strengths, weaknesses, opportunities, and threats based on the environmental scan.

Goals

The internal analysis ends with the articulation of specific goals (SMART goals) that guide the development of strategies and tactics to achieve those goals.

Strategic plan

Only after thoroughly completing earlier sections, does the firm move into crafting strategies and tactics to reach their goals. Strategies are developed for plans extending 5 years into the future (in general), although Asian countries often develop strategies for 50 years into the future. Obviously, strategies farther into the future are less defined than those for near terms.

Tactics involve very specific plans to accomplish over the next 12 months, along with metrics to evaluate performance.

If you’re interested, I have a couple of posts that go through the entire marketing plan in great detail. The first part goes through the first part of the marketing plan while the next post goes through the remaining elements of a marketing plan.

Marketing strategy formation

Strategy Formation Builds on the environmental scan already completed. It uses tools such as:

• Perceptual maps
• Portfolio analysis
• Product-market grids
• Competitive advantage
• Diversification analysis

From marketing strategy to implementation:

Marketers translate strategies into implementations using action plans, which are incredibly detailed documents including all the actions necessary to complete a particular strategy.

An example might be the introduction of a new product. Assuming the prospective new product exists as a prototype, the action plan would articulate in detail elements necessary for market testing (action plan #1), distribution strategy (action plan #2), etc.

The action plan also identifies who is responsible for each element of the plan and the person ultimately overseeing the plan, the financial or other resources necessary, and metrics to evaluate performance. After completion, the team evaluates performance and identifies elements to improve future action plans.

Where does marketing strategy come from?

A top-down approach that uses executives, the board of directors, and other advisors to develop strategy, which is then transmitted to operational units of the business for implementation. Conversely, a  bottom-up strategy builds strategies for individual units, which are then coalesced into an overall plan by upper-level executives. Both have merit and businesses choose between these two strategies, or use some hybrid, based on corporate culture.

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