Is Marketing Planning a Strategic or Tactical Process?

Last week in this blog I complained that too many small and medium-sized enterprises see marketing solely as a tactical exercise. I regularly see small businesses advertising for marketing staff and predominantly the job description focuses on day to day activities such as writing social media content, designing print adverts or entering product content onto websites. These activities are no doubt related to marketing; BUT THEY ARE NOT MARKETING.

That last statement may seem counter-intuitive but bear with me.

Advertising is an activity closely linked to marketing.  It is the process which will likely follow the determination of a marketing mix. You can also say the same of sales force management, copywriting and web design.  Those are all activities which derive from the creation of a marketing mix. Marketing isn’t the derivative activities needed after the creation of a marketing mix; it is the analysis of the market, and of an organisation within that market, and the development of a plan which allows that organisation to make best use of profitable gaps in that market.

Marketing is the process of taking the aims, goals and mission of an organisation and putting a consumer focus upon them.  Marketing is the process of giving an organisation a clear and differentiated identity in the minds of consumers.

Business Planning should be structured and systematic process.  It has three main components:

  1.  Objectives: which have to be achieved,
  2.  Actions: which define how objectives are to be achieved
  3.  Resources: what is required to implement those actions

Corporate planning involves creating objectives for all parts of a business.  It is the overall coordination of an organisation’s functionality. Different functions contribute to common organisation wide goals e.g. turnover, profit generation and dividend value. A corporate plan will integrate functional objectives e.g. productivity levels, creation of market share, sales volumes, cash flow, efficiency, quality assurance.

So a corporate plan which aims to improve customer retention will likely lead to a marketing plan focused on key account management and customer service; a human resources plan aimed at attracting high quality staff and an operations plan focused on quality control and assurance.

A strategic corporate plan will be integrative; coordinating functional activity towards common goals.  It will take a whole organisation view and provide collective targets for functional groups.  It’s aim should be to provide focus by defining the overall scope of a business e.g. the markets served, the nature of its activities, so appropriate functional strategies and tactics can be developed.

Corporate plans should be concerned with making major business decisions over the long-term and set required resource profiles.  A corporate plan should match the organisation to the current and future business environment.

I suspect the senior management of many small businesses get the fact that corporate plans are long-term strategy documents. What they then do is assume that anything below the corporate plan level is a short-term tactical planning process.  So marketing is a campaign to campaign process where ad hoc activities are collated in the short-term. So a corporate plan is for five years, but a marketing plan is annual, or seasonal.

Many businesses will also see a marketing plan as being at the same level as other functional plans. I do not see marketing planning in this way.

Marketing is about having a consumer focus to your business.  That focus should be represented in your marketing mix. We know the seven Ps of that mix; Product, Price, Promotion, Place, People, Physical Evidence, Process.

So a marketing plan will directly influence other ‘functional’ plans.  So the process element of the mix will directly affect your operations planning; the price element of the mix will affect your financial planning; the place element of the mix affects your distribution and logistical plans; the people element will affect your human resources planning; The physical evidence element will affect your location and facilities planning; and so on.

So marketing planning is not a traditional functional plan. It sits between your corporate plan and your functional planning because your marketing plan reflects your corporate plan and influences your functional plans.

In truth marketing is both a long-term strategic process and a short-term tactical process. Your marketing plans should have both long-term goals and targets and short-term activities which deliver those long-term goals.

A marketing plan should have a broad focus that defines the market and your organisation’s place in that market.  Bear in mind that the information and problem-solving at this level may appear unstructured, external to the organisation and speculative.

So marketing can impinge on long-term strategic processes such as new product development.  This is strategic marketing planning.

Marketing planning can also be short-term.  These are the day to day activities involved in keeping your organisation on track with its strategic goals.

For example, your strategic plan may require your business to be the market leader (in terms of market share) within five years. However, the market is not static. it changes constantly. New competitors enter the market; others leave; consumers are fickle and change their preferences. So to achieve your long-term strategy, you need to constantly tweak the tactics used to achieve your goal of gaining market share.

So tactical marketing is the process of adapting your plan to the changing market.  This often involves addressing structural processes which are internal to your organisation and which may be repetitive.

Too many SMEs view marketing as only a short-term, tactical, exercise.  They ignore its strategic intent. Marketing is both a long-term corporate process AND a short-term functional process.

Marketing planning is key to adapting to environmental change, allocating resources, consistency in business practice, integration of activities via the marketing mix, motivating and communication with stakeholders and developing control over your organisation.  Marketing is not simply the process of producing some adverts or putting up social media content.

 

Making the most of your offer

the products and services you offer are key to the survival and growth of your business.  But if your product mix is static, its effectiveness will weaken.

As stated previously in this blog, your customers have needs that they want satisfied; they have jobs that they want completed.  Customers want solutions, not products.  They want a four millimetre diameter hole, not a four millimetre drill bit.  Their focus is on the solution that will get the job done, not the product needed to provide that solution.

Over time, it is likely that consumers will move from one product to another if it is shown that the new product option offers a better solution to the consumer’s need than the existing product.  Consumers will switch to another product if they perceive it offers a better way to get the job done – cleaner, faster, safer, more environmental – and less costly!

No product, service or organisation is indispensable if a better offer exists elsewhere.

Take the example of the mangle.  A mangle used to be an indispensable, but exceedingly dangerous, tool for doing the laundry.  no household would be without access to a mangle on wash day.  When the first washing machines appeared in the late 19th century they were fitted with a mangle to squeeze excess water from the wash. Often these mangles were electrically powered.

But no one uses a mangle today.  Modern washing machines with high speed spin cycles use centrifugal force to remove water from the laundry.  Modern machines are safer; you aren’t going to crush your hand in a modern machine (a common injury with mangles); they are less time consuming and use less effort on the part of the consumer; and because they use a lot less water, they are more environmental.

So consumers have switched away from mangles to remove water from their weekly wash; there is no longer a market for mangles in the United Kingdom.

However, in many businesses there is a problem.  Product portfolio management is seen as a tactical, not a strategic activity.  Small drops in sales levels are often dealt with at a local or regional level, not a strategic responsibility of senior management.  The solution isn’t to alter the product mix but to offer additional incentives to salesmen and agents.  Little or no thought is given as to whether the drop in sales is a result of an incorrect product strategy.

Often products are placed in organisational silos.  Issues with product management are contained within those silos and no one looks to see if the overall product strategy is at fault.

Reviewing the management of your product portfolio is more than examining sales figures.  You need to:

  •  Review customer needs
  •  Review product or service attributes
  •  Are needs changing over time?
  •  Review your customer value proposition
  •  Examine your wider business model
  •  Assess existing and potential risks
  •  Manage the product life cycle
  •  Examine distribution and supply chains; are you using the most appropriate use to market?
  •  Are you using the right tactics to implement your marketing strategy?

The starting point for considering your product mix strategy is the consideration of value.  There are two forms of value;

  1. Organisational Value: The flow of cash and the reputation gained through the sale of your goods and services
  2. Customer Value: The benifits of your products and the solutions they offer.

Successful businesses are those who gain more value from consumers than is spent delivering products and services.

Customers get value from seeing a job well done or a need satisfied.  A firm will be profitable if the customer value it generates exceeds the costs of delivering a satisfying solution to the customer.

And remember, best value does not necessarily mean cheapest price.  It is a measure of overall utility. Customers will trade off different perceived values from a range of product offers. This is often a primary source of marketing differentiation.

Remember value equals benefits of the product or service minus the effort needed to obtain those benefits, minus the risk involved in the product choice, minus the price charged for the product or service.

Reducing the price is only one way of maximising customer value. Alternatively, you can increase the benefits of usage; you can reduce the effort needed to access the benefits of your offer; you can reduce the risk inherent in a consumer choosing your product.

And it isn’t just your target customer who needs a value proposition.

Prospective customers need a value proposition to compare your products with others in the market.  Your salesforce needs a value proposition to present to customers.  Your distributors and retailers need a value proposition to ensure appropriate prominence for your products; and your internal stakeholders and shareholders need a value proposition to assess your organisation’s market value.

Teacy and Wiersema see three potential areas for a value proposition to be developed; management efficiency, product leadership and customer intimacy.

You customer value proposition must relate to all the stakeholders in your organisation and it must integrate the needs of those stakeholders as well as those of customers.  Stakeholders need to be informed of where they sit in the customer value process as well as how different stakeholder groups relate to each other.  You must state clearly how the organisation and its stakeholders create customer value in a unique and differentiated way from that of your competitors.

So:

  •  The roles of organisational stakeholders must be aligned to the process of delivering the customer value proposition
  •  The aim should be to open doors and close sales
  •  You should look to increase revenues by having a clear market position
  •  Aligning stakeholders roles should speed time to market
  •  Aligning the roles of stakeholders should reduce costs and wastage
  •  Alignment or stakeholders to the customer value proposition should improve operational efficiency and increase market share
  •  Align to the customer value proposition to improve customer retention

As the product mix cannot be static, product innovation is a necessary element.  Innovate or die.  Change should be business as usual.  Remember, not everything new will sell; failure is part of the new product development process.  You cannot be responsible for the unpredictability of consumers.

When assessing your product mix, it can be useful to reassess the business you are in.  For example, is Harley Davidson a motorcycle manufacturer or a lifestyle brand?  They don’t just produce bikes, they make clothing, luggage, and license fragrances.

Can you reassess your product mix through segmenting your market in a different way?  Do you segment based on consumer income or psychographic measures?

Do you track the value customers see in your products? Is that value declining? If so what changes can you make to reinvigorate that value?  Are product attributes once seen as optional extras now seen as necessities?  For example, few cars today are sold without a satellite navigation system or passenger airbags.

It can be important to work with your target customers in the development of your offer.  They may provide useful insight into which innovations offer sustainable value.

Management of your product mix is a strategic, not a tactical task.  It is important that development of your offer is considered across your organisation and that it is not solely the responsibility of your sales or marketing team.

 

Positioning Services

In the Brexit debate, much attention has been paid to UK having some form of custom’s union with the European Union.  Conservative politicians who support Brexit, fear such a union will remove the UK’s ability to make trade deals with other nations.  Jeremy Corbyn speaks of a unique ‘custom’s union for goods’; different from the existing EU custom’s union which includes Turkey but which does not include Norway and the other EFTA nations.

What these statements from UK politicians shows is that very few of them understand the details of international trade.  They talk of WTO rules as if they are some sort of magic bullet; not the least worst option in trade; the fall-back position; the last resort of world trade; trading terms so ‘favourable’ not a single nation in the world uses them.

Corbyn’s comment about a ‘custom’s union for goods’ is a clear indication that our politicians don’t know what they are talking about.  Custom’s unions are almost universally focused on goods.  They do not deal in services.  Service markets face different restrictions such as compliance with professional standards and government legislation.  The EU, in recent years has worked hard in recent years to remove such barriers from its single market.  The EU Services Directive, is one piece of legislation that looked to ensure that service providers could operate across the bloc.  This included attempts to provide a level playing field in terms of professional qualifications and standards.  The Consumer Credit Directive, which was largely based on the UK Consumer Credit Act 1974, looks to create a single legislative framework for the sale of unsecured loans across the whole of the EU.

In debating a ‘custom’s union for goods’, UK politicians appear to ignore the fact that since the 1980s Britain has developed as a services-based economy.  Politicians seem focused on manufacturing; they are ignoring the needs and necessary environment for service providers: Which are now the majority part of the UK economy.

Marketing services is different from marketing goods.

Services have immediacy.  They are time dependent.  Once an aircraft has taken off, you can’t put any more passengers on it.  You can’t put any more diners in a restaurant once the sitting has finished. Once a play has started, you can’t put any more patrons in the audience.  This leads to a need to balance supply and demand.  Airlines and holiday firms do this by operating fluid pricing strategies.

Increasingly services are dependent on technology.  They are often delivered remotely and by distance communication tools such as the telephone and the internet.

Increasingly, customers are involved in the delivery of services.  For example, the business who works closely with the developer to design a website.

Increasingly, customers want a customised service to meet their individual needs.  Again, a business may want a bespoke database and will employ a service provider to build it.

Positioning is about creating a distinctive place in the market for both your company and the services you provide.

This requires two decisions to be made:

  1. The choice of a target market: Where you want to compete.
  2. The creation of differential advantage:  How you want to compete.

So in positioning services, you need to be aware of the particular needs of your target customer.  These needs will determine the target segment of the market.  You then will need to create a services marketing mix which creates differential advantage based on those customer needs.

For services, the extended marketing mix was created.  This extends the 4P mix developed by Philip Kotler (Product, Promotion, Price, Place) and adds three additional ‘P’s; People, Process and Physical Evidence.

Target marketing is based on market segmentation and using positioning tools based on the needs of defined customer groups and their price sensitivity.

Using targeting tools and designing your mix for defined customer segments does not preclude sales to customers outside those groups but by targeting your marketing activity, you make best use of scarce resources such as financial budgets.  targeting marketing is targeting resources on your core customers.  Sales to those outside that core are a bonus.

As stated above, there are three additional elements to the services marketing mix:

  1. People:  People are critical to the provision of services.  Often the creation of a service and its delivery are simultaneous.  People occupy a key position in a customers perception of service quality.  Bad staff often equates to bad service so it is critical to get the right people. Training, monitoring and the REWARDING of staff is critical to good service quality.  People aren’t machines so body language, tone of voice and attitude matter. Airlines spend significant time and money training cabin crew to ensure these attributes send the right message.  If people enjoy their work, this often comes across in their body language.  Systems such as SERVQUAL aim to eliminate harmful interactions by reducing opportunities for cognitive dissonance.
  2. Physical Evidence:  This is the environment in which a service is delivered.  It is tangible evidence of service quality.  When you travel on an airline is your drink served in a plastic tumbler or a glass?  When Gordon Ramsay does a ‘Restaurant nightmare’, a big element of his revamp is to change the restaurant décor. physical evidence can be changing the ergonomics of a service e.g. the layout of equipment in a gym.  There was an outcry when Ryanair proposed ‘standing room only’ on its aircraft (although that was a likely attempt at PR spin).
  3. Process:  is the mechanisms, procedures and flow of activities by which a service is delivered.  Process changes such as the elimination of queuing can radically affect service delivery to target consumers and therefore differential advantage.  So theme parks sell priority tickets which allow patrons to dodge queues.  Airlines offer first class and business lounges. Cruise firms will pick up customers from their homes.  Others such as Amazon Prime offer reduced delivery times.

In Big Ideas in Services Marketing (Berry, 1987), seven guidelines for services marketing were declared:

  1. Marketing happens at all levels of an organisation.
  2. there must be flexibility in service provision (the ability to customise services).
  3. You need to recruit high quality staff.  You need to treat them well and communicate withthem clearly.
  4. You need to increase the usage of services by marketing to existing customers; customer retention is key.  to keep customers you will likely need to offer service extensions.
  5. You need a quick response facilities for customer service and complaint resolution.
  6. You need to engage with new technology to deliver better service at lower cost.
  7.  You need to differentiate your service through branding.  Branding works the minds of target customers.

 

 

Using Portfolio Matrices to Plan for the Future

In previous blog entries, I have discussed the Boston Consulting Group Growth/Share matrix as a tool for product portfolio management.  However, this matrices is seen by many business academics as flawed.  Some academics have tried to amend the BCG model and even the BCG have attempted to mitigate the matrix’s defects through other tools, in particular their Growth/Gain matrix.

Given the difficulty in developing a model of portfolio management, several large multinational firms employed academics to build portfolio management tools.  Two of the tools developed are the General Electric Multifactor Portfolio Matrix and the Shell Directional Policy Matrix.

The General Electric Matrix compares the attractiveness of a particular market or market segment with your business’s competitive position in that market.  The matrix does not rely solely on market growth.  A number of market attractiveness measures are used including:

  1. Market Size
  2. Market Growth Rate
  3. Beatable Rivals
  4. Market Entry Barriers
  5. Social, Political and Legal Factors

Similarly competitive strength is not based solely on market share.  Again a number of criteria can be selected including:

  1. Market Share
  2. Business Reputation
  3. Distribution Capability
  4. Market Knowledge
  5. Service Quality
  6. Innovation Capability; and,
  7. Cost advantages.

When using the GE matrix, management decide which criteria are to be used.  Each factor is weighted.  The weighting of all factors combined cannot exceed ten.  Each factor is then given a relative importance out of ten.  By multiplying the weighting with the importance factor, a score for each factor is calculated. These scores are added to give a market attractiveness and competitive position score for each product line.

These scores are then plotted on a 3×3 matrix.  From this matrix, five strategic zones are defined:

  • Zone One: In this zone both market attractiveness and competitive position is strong.  The aim for products in this zone is to build and manage sales for market share growth.  This equates to star products in the BCG matrix.
  • Zone Two: In this zone, your competitive position is strong but the market is not particularly attractive.  The proposed strategy is that you manage the product for consistent profits whilst maintaining market share.  This zone equates to BCG matrix cash cows.
  • Zone Three: Here the market is highly attractive but your competitive strength is relatively weak.  It is a zone where the strategic product policy can be determined by the relative strength of your competitors.  If your competitors are weak or passive, your strategy would be to build the products position in the market. If you face strong competition, the aim would be to retain the existing market position of your product.  If your commitment to the market is low, your aim would be to harvest the product for cash.
  • Zone Four:  Here both competitive position and market attractiveness are weak.  This position is similar to a ‘cash dog’. This could be a product in a declining market or a dog product which is difficult to divest (e.g. a required accessory).  This is a product to be harvested for cash
  • Zone Five:  Here both competitive position and market attractiveness are extremely weak.  The aim should be to divest the product. To run down production or to sell it to another party.

There have been a number of criticisms of the GE matrix.  It is a richer tool in terms of content and it is therefore more flexible. However, it is much harder to use than the BCG matrix and it can be affected by managerial bias, power games and empire building.  Decisions on the use of the matrix and resulting strategies need to be made above the level of strategic business units.

The Shell Directional Policy (created by research financed by Shell Oil) does something a bit different to the GE matrix and the BCG matrix in that it looks to the future rather than relying on existing product portfolios.

The Shell Matrix compares the attractiveness of a market or segment with the potential for profitability in that market.  Again multiple weighted factors are used to give products scores. Again a three by three matrix is produced which delivers eight strategic positions:

  1. Leader: Here a firm has strong competitive capabilities and strong profitability prospects.  this is your core market where you have a leadership position.
  2. Growth Leader:  Here prospects for profitability are average but you have strong competitive capabilities. Here you look to improve the prospects of profitability using tools such as value chain analysis.
  3. Try Harder:  Here prospects for profitability are strong but your competitive capabilities are only average.  the aim is to improve those competitive capabilities through training and recruitment.
  4. Double or Quit:  Here prospects of profitability are strong but your competitive capabilities are weak.  So the decision is whether it is worth investing in improving those capabilities.
  5. Custodial Growth:   Here both profitability and competitive capabilities are average.  This and Double or Quit are similar to the Question Mark products of the BCG matrix.
  6. Phased Withdrawal:  Here profitability is average but your competitive capabilities are weak. The aim is a managed withdrawal from the market or segment.
  7. Cash Generation: Here you have strong competitive capabilities but the prospects for high profit margins are weak.  This equates to the BCG matrix cash cow.
  8. Disinvest: Here both competitive capabilities and profitability prospects are weak.  This is a dog product ripe for disinvestment.

Both the Shell Matrix and GE matrix require significant levels of information gathering and analysis. However, if your in business, shouldn’t you be doing this anyway?

All portfolio management matrices have strengths and weaknesses.  When using these tools you must be aware of those strengths and weaknesses.  perhaps the best option is to use these matrix tools in combination.

These are tools to help strategic decision-making: They are not the source of mandatory instruction.

So use these tools, in full awareness of their attributes to give a rounded and comprehensive view of your product portfolio.

Declaring Your Mission

On a number of occasions during my career, I have been part of teams tasked with writing an organisational mission statement.  When managers have approached the team the task the response has been one of despondency.  “it isn’t my job to define the corporate mission”, colleagues have complained. “This is not part of my job”, they gripe. “Surely our mission is obvious”, they grumble.

Often the document produced is bland, generic and tells stakeholders nothing about the individuality of the organisation.

But a clear mission statement which defines the unique purpose and which distinguishes your business from that of competitors is critical to the business planning process.  The mission statement should also define the boundaries within which you want your organisation to operate.

A properly drafted mission statement combines your primary objective and your core organisational values.

There are four major influences on the content of a mission statement.

  1.  Corporate Governance:  To whom is your organisation responsible? What is the regulatory framework in which you operate? Who oversees your organisational executive? Who does your organisation serve?  What constraints are placed on senior management to ensure the rights of stakeholders are upheld?
  2. Stakeholders:  Who are you customers? Your suppliers? Shareholders; Distributors: Retailers; and the wider public.  Are your organisational policies equitable to all groups or do you favour particular stakeholders?  What power and influence does each group wield?
  3. Business Ethics:  What are your organisation’s views on social and corporate responsibility?  What are the cultural attitudes and beliefs of the society(ies) where you operate?
  4. Cultural Context:  Your mission will be affected by the cultural environment.  there will be the internal culture of your organisation and the external culture of society.  Both must be reflected in a mission statement.

Often mission statements are either too narrowly or too broadly defined.  An American shipbuilding firm’s mission statement simply says, “We make good ships”.  this statement has only a product focus and tells you nothing about the organisations wider values and the environment within which it operates.

The mission statement of Scottish Power appears to be too broadly defined:

“To be recognised as a highly-rated utility-based company trading in electricity, other utility and related markets, providing excellent quality and service to customers and above average returns to investors”

What does the Scottish Power say about the organisation.  The mission statement appears to be saying the obvious, it appears generic and trying to be all things to all stakeholder groups. If anything, it reflects the public sector, bureaucratic history of the organisation.

Richer Sounds, the specialist Hi-Fi and home electronics retailer has a mission statement which doesn’t mention electronic audio; although it does say work should be fun.

Is your mission statement too broadly or too narrowly defined?

Successful mission statements are:

  1.  Credible:  It should reflect realistic ambitions from the view of your stakeholders?
  2. Specific Capabilities:  Embrace your core expertise.  Relate that expertise to your organisational future.
  3. Aspiration:  The mission statement should act as a source of motivation to the people in your organisation.  This should matter more than financial returns.  The mission statement must make individuals want to commit to your organisation and encourage internal stakeholders to make valuable contributions.

However, you need to define the boundaries of your ambition within a mission statement.

  1. Product Scope:  How do you categorise your products?  Do you do so in technological terms? Do you offer different products in different target markets or segments? Do you categorise products individually or collectively?
  2. Market Scope:  Who utilises your products?  Are you focused on a B2C or a B2B market?  What demographic groups do you target?  Do you target particular industry segments? What distribution channels do you use?  What features of the consumer do you target?
  3. Geographic Scope:  Are you a ‘local shop for local people’?  Are you regional? Are you national? Are you international?
  4. Stakeholders:  You need to consider both internal and external stakeholders.  Internal are stakeholders with a particular interest in your organisation.  Michael Porter talks of five internal stakeholder groups – ‘The Five Forces’ affecting an organisation.  This includes staff and unions, shareholders, management and business owners.  There are primary and secondary external stakeholders.  Primary external stakeholders include suppliers, distributors, financiers and your competitors. Secondary external stakeholders have a looser relationship with your organisation and include government agencies, local government, political pressure groups and society in general.

As the aim of a mission statement is to give clarity to your business purpose, it cannot be bland or poorly defined.  Some firms use the mission statement to declare strategic intent.  Others prefer to declare such intent in a separate vision statement.

You may receive the following attitudinal responses to the idea of a mission statement:

  1.  Faint Support:  Stakeholders will pay lip service to the mission statement especially if it is dominated by the views of management whose attitude is that stakeholders and corporate governance are constraints on the organisation.
  2. Passionate Support:  This is where the mission statement is central to the values and philosophy of managers.  The mission statement becomes the driver of corporate aims and aspirations.
  3. Dissipated Mission:  Strategic decisions are the responsibility of external stakeholders concerned with corporate governance and regulation.  This is common in public sector bureaucracies.  Sometimes the mission becomes lost; dominated by day to day management and tasks.  This was a criticism of BS5750 companies before the standard morphed into ISO9000 series.  Firms using the standard were criticised for having incredibly well documented systems despite the product of those systems being poor.  The mission focus appeared to be concentrated on process and not the results of that process.
  4. Non-consensual Mission:  Passionate external stakeholders dominate your mission, particularly those stakeholders with strong ideological views.  It becomes impossible to create an organisational mission which satisfies all stakeholder groups’ demands.  Your mission may become highly political.  An example is the nationalised industries of Britain in the early 1970s.  The country entered a period of industrial strife as unions argued that the organisational mission was to satisfy the demands of their members, not the customer, not management and certainly not the demands of government.  If your mission is non-consensual, your organisation will suffer.

A mission statement is a reference point for your strategic decision-making.  It is therefore critical that you take time, thought, and care over its development.

The Inevitability of strategic Wear Out

Regardless of your position in the marketplace; whether you are a market leader, a follower, a challenger or a niche marketer; you need to recognise that over time successful marketing strategies begin to wear out and will need to be replaced.  They will lose impact.

It is imperative that you continually adapt your strategy to meet new competitive challenges and to match shifting consumer needs.  Many extremely successful brands, from Kodak to House of Fraser have suffered from over-reliance on their long-standing strategies ignoring the fact that the consumer base has moved on to other new, sparkling concepts.

House of Fraser maintained a department store model based on concessions whilst the fashion brands they relied upon built direct selling through websites and brand-specific stores.

Kodak, despite inventing the digital image sensor, failed to invest in the digital camera and continued to invest heavily in 35 millimetre colour film.

Blockbuster video tried to retain the model of DVD and cassette rental in an age of downloads and Netflix.  Similarly HMV, which has failed twice, ignored the rise of music streaming services such as Spotify and iTunes.

Often management are unwilling to change what they see as successful strategies.  They only see the need to change when it is already too late.

The following effects can contribute to strategic wear out:

  1.  Changes to market structure
  2. The entry and exit of competitors from the market
  3. Changes in your competitors’ strategic positions
  4. Competitive innovations
  5. Changes in consumer expectations
  6. Changes in the macro and micro economy
  7. Changes in legislation
  8. Technological change – including change which at first appears unrelated to your market
  9. Changes to distribution and supply channels
  10. Lack of internal investment
  11. Poor cost control
  12. A tired or uncertain management philosophy.

Perhaps one reason that businesses hold on to outdated marketing strategies is that the process of creating new ones can be painful.  Managers may feel the move away from tired and trusted methods is a black mark against their personal record.  Often, changes to marketing strategy can only be achieved through a change in personnel at board level.

However, there is a law of marketing gravity. Regardless of how big or powerful an organisation is in the marketplace, sooner or later its marketing programme will decline.  Marketing gravity is entropy, that all things break down and become dust.

Four principles are often evident in firms retaining outdated marketing philosophies and strategies:

  1.  Marketing Myopia:  That you ignore the impact of your actions on your brand.  You apply the rules of marketing whilst ignoring the spirit of marketing.  So marketing planning becomes an annual chore.  Marketing is only a sales support activity.  This is the decision by British Airways to redesign the tailfin of their aircraft in an attempt to be more exclusive and ‘international’; the redesign blurred BA’s distinctive image as a national flag carrier and by trying to focus on only high end and executive customers, they restricted the size of their potential market limiting earning potential.
  2. Marketing Arrogance:  You ignore the effect of your actions on your brand. This is the attitude of Gerald Ratner when he may a supposedly humorous after dinner speech about the jewellery sold in his shops being ‘crap’; a speech which hugely damaged the Ratner’s/H Samuel brand.  This is the manager who operates on hunches and that they know what the customer wants without carrying out any research or analysis.
  3. Marketing Hubris:  This is believing in your own PR to the detriment of your brand.  Microsoft believe it could operate free from the constraints of other brands. Richard Branson used to believe Virgin could ignore traditional strategic planning and could do things differently. Both Microsoft and Virgin have reversed these positions.  Branson now says that the strategic planning process is crucial and central to the success of his brand.
  4. Marketing Silliness:  This is putting common sense aside in an attempt at being creative.  We all see TV advertising which is glossy, has startling imagery and artistic flair; but when we are asked what the product or service on offer is, we cannot identify it.

It is also the case that ‘dead cats only bounce once’.  Once a strategy has worn out, you will likely only get one attempt to revive it and gain lost market position.  if that attempt fails, your market share and position will drop dramatically.  We live at a time where many traditional high street retailers are facing oblivion as the internet and home delivery services drive down margins.  To respond, these retailers need to focus on strategies which create unique value for consumers.  Increasingly, to get footfall, these firms will need to create experience beyond that of traditional high street shopping.  Too many of these retailers are relying on consumer inertia or consumer ignorance.  An example is high street banks and utilities firms which often only rely on consumers reluctance to switch to other providers; expecting that consumers will stick with what they know rather than try the new.

You cannot simply stick with what has worked in the past.  The future will be different.

You cannot stand still.  You must always look for the next strategic step. Break away from the past and create strategies for the future.

 

Buying Marketing Technology

We live in a world of increased automation.  Factory production lines which used to employ hundreds are now operated by a handful of individuals.  In my old profession of trading standards I would visit factories operated by less than a dozen people which in times past would be the main employer in a town.  Manufacturing is now a world or robots.

With artificial intelligence developing at an extraordinary pace automation is now occurring in traditional white collar professions; for example, the news feed firms such as Reuters and Associated Press use AI software to write and publish short news stories rather than using a human journalist.

Marketing is no different.  In recent years a plethora of ‘Martech’ has come on the market which looks to automate processes from marketing research to social media content.

For SMEs, the picture is even more complicated as freelance social media management operatives and independent app writers constantly vie for their attention.

So how do you know that the technology or service being offered is good value.  How do you know that you are going to receive an effective automated solution. How do you avoid the panhandler’s, spivs and snake oil salesmen that currently proliferate.

In this month’s Catalyst magazine, a checklist of questions has been published which help managers responsible for the purchase of marketing IT solutions:

  1.  Investment Checklist:
    1. Do you already have the technological capability or necessary data elsewhere in your organisation?  If so, do you need the promoted technology?
    2. How do the end users in your organisation access the technology? Is it in the cloud? Do you need to by a specific brand of computer? Can it be accessed via a tablet or a mobile phone? Are you wholly reliant on a third party to deliver the product?
    3. Is the marketing data used held all in one place, or is it located in silos? How do you ensure that it is held in one place?
    4. What are the integration limitations? How well does the technology sit within your existing marketing processes and procedures? Will it ‘talk’ to your existing technology?
    5. How does the technology ensure compliance with legislative requirements e.g. GDPR?
  2. Vendor Meeting Checklist (i.e. what needs answered by the sales representative offering the Martech):
    1. How does the product meet your organisation’s marketing and business aims and objectives? Does it fit your organisational culture? Does it help achieve your business mission and your corporate vision?
    2. What implementation steps do you need to take to maximise the effectiveness of the Martech?  What issues are likely to occur and does the Martech provider have solutions to those issues?
    3. What do you need to do to manage and maintain the technology? For example, are you reliant on the provider for technical support or can your own staff carry out such maintenance?
    4. What is the product roadmap? Is it regularly updated? Is it still being developed? Do you need to pay for future updates?
    5. How does the product improve your current position? How will it make your marketing processes more efficient? How will it affect your budgeting for marketing?
    6. What system education, services and customer support does the martech provider offer? Are there additional fees for such support?  What are the lead times for such support?
    7. Can the martech provider give examples of existing users/customers?  Do those customers have similar objectives as those of your organisation? Can the representative give examples of the results achieved by existing users, the issues those users experienced and how the solutions to those issues were resolved?
  3. What you shouldn’t ask:
    1. How much does it cost? A better question is how much value the technology delivers to your organisation.
    2. What do your competitors have or do? You are unlikely to get an honest answer to this question.  In any case, do not rely on a ‘Me Too’ attitude, marketing is about doing things differently to your competitors, not imitating them.
    3. Do my competitors do it this way? Don’t limit your options or potential to a narrow field.  Take a broad view of potential opportunities.

The big issue with regard to the use of Martech is expressed in a quote from Sylvia Jensen of the firm Acquia, “(Selecting martech solutions) all comes down to what you want most – convenience or control?”