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Marketing is a broad and diverse buzzword that can describe everything from advertising, distribution, branding, pricing, and product design. Regardless of the types of decisions you might be making within this “umbrella,” the strategic portion of these decisions is vital, but often confusing.
Whether you are trying to plan and implement a digital advertising strategy, or entering into the consumer goods market, there are four common elements you should consider when creating your strategy:
- Understanding Your Market
- Segmentation, Targeting, Positioning
- Defining Success
- Designing the Offer.
Understanding Your Market:
While it may seem trivial, defining your market and understanding where and how your business competes is a necessity when developing a marketing strategy. One of the biggest mistakes in modern marketing is applying an inward approach to marketing, where the marketing for a business is confined to one department or even one individual.
The problem with this approach is that it fails to take into account the journey that a customer may take in interacting with your business. Think about instances in your personal shopping experiences. I’m willing to bet you have had a bad customer service experience (one that probably didn’t align with the brand expectations from the organization). Marketing is the fundamental core of your business: focusing on delivering value for your customer shouldn’t be confined to one department of your organization.
We suggest businesses take an outward approach to marketing, where the goal of understanding and meeting the needs of your customers is consistent in every department. Part of taking this externally focused approach means understanding the environment around your business such as competitive and market forces, politics, externalities, and sociocultural issues. Our businesses don’t operate in a vacuum, so take the time to understand the environment around you to gain a better understanding of the factors affecting your business and your customers.
Segmentation, Targeting, and Positioning:
With the market defined, focus next on the most important piece of any business: the customer.
Researching and dividing the market into distinguishable segments can be a lengthy and tiring step in developing a strategy, but it serves as a stabilizing force for any sound plan. During this process, it can be easy to rely heavily on demographics. Demographics can certainly influence who might be interested in your products or services, but demographics are by no means the most important criteria for choosing your market. Instead, segmenting based on a customer need profile allows for your organization to identify what the customer actually cares about, as well as new opportunities and competitive positioning.
For example, suppose you are entering the bicycle market, and you discover through surveys and research that there are 3 major segments within that market that consider different attributes in the purchase process:
- Casual Riders: Low Price, Aesthetics.
- Racers: High Performance, Price Inelastic.
- Mountain Bikers: High Durability, Mechanically Simple, Off Road Options.
Each of these segments are collections of unique customers with specific needs/attributes that they value. Rather than segmenting on demographics, segmenting based on attributes allows for greater insight into the customers and what they value: allowing your business to craft your products/services to meet those needs.
Whether it be through lengthy consumer research, uncovering differing MAO (Motivation, Ability, Opportunity) characteristics, or simply creating surveys asking customers about what is important to them when choosing a product similar to yours: the customer needs must be understood. After breaking up the market into sizable and distinct segments, your business must decide which segments you will compete for, and learn how competitors are targeting them.
Defining Success:
Your business must take into account both the business goals and marketing strategy. Generally, you either want to increase sales, or improve your profit margins. The way you design your marketing strategy can vary immensely based on these goals, whether it be acquisition vs retention or deciding to stimulate demand or taking market share.
Once those objectives are understood, define what success looks like by choosing key performance indicators. For example, if you are entering into an entirely new market, chances are you won’t be looking immediately into increasing gross margin, but rather growing your market share, or brand awareness.
All of these elements can influence the success of your strategy. Taking the time to understand these different factors, and putting them into practice will help you reach customers in a meaningful way.
Designing the Offer:
Once you understand the market, segment it based on distinct need profiles, and decide how you will position yourself in that segment, your business must then design the offer to your unique customers. This step is traditionally considered to be within the “realm” of marketing activities, the 4 P’s:
Product
Place
Promotion
Price
*Or if you are in the service industry, add three more P’s: People, Process, and Physical*
Use customer need profiles to align elements of the market offer appropriately. If consumers in your target market consider price to be an important attribute, pay special attention to how you decide to price your products or services. Align these components of the market offer and the consumer’s needs in a systematic, distinguishable way. A product/service strategy can make or break a business endeavor, so just remember: the customer comes first. The next steps are straight forward. Keep the goals of your strategy in mind, and prepare to implement the project.
The key element in implementing these four steps in your next strategy is understanding your customer. Once you figure out what your customers truly value, you can craft your offerings to accommodate their specific needs. Understand where you will compete, distinguish the important segments for your business, decide how you will position yourself within those segments, identify your goals, and design the offer to deliver as much value as possible.
-Cameron Greenfield
